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UPDATE 1-Generali sells BSI to BTG Pactual for 1.5 bln Swiss francs

(Corrects to clarify currency of share component is 300 million Swiss francs, not euros, in eighth paragraph)

* Sale to lift Solvency I ratio by 9 pct points to over 160%

* Generali to book net loss of 100 mln euros from disposal

* Italian insurer completes disposal of non-core assets

* Deal completion expected in H1 2015

By Lisa Jucca

MILAN, July 14 (Reuters) - Generali has agreed to sell Swiss private bank BSI to Brazil's BTG Pactual for 1.5 billion Swiss francs ($1.7 billion) in cash and stock, offloading an unprofitable non-core unit and boosting its financial strength.

For BTG Pactual, the sale means an expansion of its wealth management business by adding a large presence in Switzerland, still the world's biggest financial offshore market.

The deal, which Chief Executive Officer Mario Greco called a "complex transaction", puts an end to Generali's more-than-two year-search for a suitable buyer for an asset that had lost appeal in the face of relentless pressure by the United States and other western nations on Swiss banking secrecy.

The Italian insurer, which had acquired the Swiss bank for about 1.9 billion Swiss francs in 1998, had hoped to fetch a similar amount. But in the end it was forced to lower the sale price and will suffer a net loss of 100 million euros ($136.4 million) from the disposal.

Yet the sale will lift Generali's Solvency I ratio, a measure of financial strength, by nine percentage points to above 160 percent, allowing Europe's third-largest insurer to meet a key target of Greco's business plan one year early.

With the sale, Generali completes an aggressive disposal plan, selling 3.7 billion euros of non-insurance assets in about 18 months, just shy of its own target of 4 billion euros.

These assets include the sale of a minority stake in a Mexican insurer last year and the disposal of reinsurance activities in the United States.

Under the terms of the deal, Generali will receive 1.2 billion francs in cash and the equivalent of 300 million Swiss francs ($336.81 million) in Banco BTG Pactual ordinary and preference shares.

The transaction, subject to regulatory approval, is expected to be completed in the first half of 2015.

JP Morgan and Mediobanca assisted Generali as financial advisers on the deal. ($1 = 0.8903 Swiss Francs) ($1 = 0.7331 Euros) ($1 = 0.8907 Swiss Francs) (Additional reporting by Gianluca Semeraro; editing by Jane Baird)