LONDON (Reuters) - Europe's largest mutual life insurer Standard Life (SL.UL: Quote, Profile, Research) said on Wednesday third quarter insurance revenues fell 7 percent and it expected price competition to continue to hit sales of UK pensions.

The Edinburgh-based society, expected to list on the London Stock Exchange next year, said worldwide sales in the third quarter were 250 million pounds compared with 268 million in the same period last year.

Sales in the UK fell 6 percent as stiff price competition in the group pensions and traditional pensions market overshadowed strong sales of Standard's new self-invested pension and good demand for investment products.

"Although we expect many of our chosen markets such as group and individual pensions to remain competitive, the results for this third quarter demonstrate our continued progress in establishing a sound base from which to grow the business," Chief Executive Sandy Crombie said in a statement.

"There is weakness in a number of lines but what we are seeing is strong growth for self-invested personal pensions. They are doing really well there," said Johnny Vo, analyst with Fox-Pitt, Kelton.

Standard Life, expected to enter the FTSE 100 index of shares next year with a value of between 4 billion and 6 billion pounds, has cut commissions to distributors and is turning away unprofitable business as it seeks to woo prospective investors.

Some analysts believe the group is purposely cutting sales this year so that it will be able to produce strong sales growth as a listed company in 2006.

Gross mortgage lending at its Standard Life Bank fell 28 percent in the third quarter to 848 million pounds as a slowdown in the housing market continued to bite.

Third party funds under management at Standard Life's fund arm rose by 3 billion pounds in the third quarter to 25.3 billion pounds compared with the preceding quarter. In total, Standard Life Investments manages 112.5 billion pounds of funds.

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