* Q3 pretax profit 110 mln eur vs Reuters poll avg 104 mln
* Premiums fall to 2.02 bln vs poll avg 2.15 bln
* Says will be unable to avoid earnings volatility this year
* CEO sees Italy loss in high double-digit million euros
* Shares down 0.9 percent, biggest losers in European sector (Adds CEO comments from news conference, writes through)
By Angelika Gruber
VIENNA, Nov 28 (Reuters) - Vienna Insurance Group has demoted a top executive responsible for its Italian automotive business after it suffered heavy losses there, helping drag group pretax profit down more than a fifth in the third quarter.
Emerging Europe's biggest insurer, which earlier this month warned of volatile 2013 results due to competition in Romania and problems in Italy, said Franz Kosyna, in charge of its Donau division in Italy from 2009 to 2012, would leave the management board at year's end.
The group said its Italian car insurance business would lose tens of millions of euros this year after larger than expected claims.
The business had been intended to be relatively small, predictable and focused on the richer north, but instead attracted customers across the country.
Vienna said Kosyna would leave the board because of "the highly negative performance of the motor insurance business" in Italy.
It was now scaling back the Italian business, cutting ties with many brokers, changing local management and focusing on customers in northern Italy who have other insurance as well.
"We have two significant problem children: Romania - which is not new - and Italy, which is especially unsatisfactory," Chief Executive Peter Hagen told reporters on Thursday, declining to rule out more fourth-quarter provisions for both.
The plan to sell car insurance in northern Italy backfired when lots of southern Italians bought policies via brokers, triggering a flood of claims that forced the firm to set aside 50 million euros ($68 million) through the end of September.
Hagen said Vienna expected an Italian loss "in the high double-digit millions" this year.
Its shares fell 0.9 percent to 38.48 euros by 1355 GMT, off a low of 37.82 but still the biggest decliners in the STOXX Europe 600 insurance sector, up 0.5 percent.
Vienna's quarterly group pretax profit fell 22 percent to 110 million euros, wrecking its aim to keep earnings volatility to a minimum. Analysts polled by Reuters had on average expected profit before tax of 104 million euros.
Premiums dropped 6 percent to 2.02 billion euros against an estimated 2.15 billion and the group's combined ratio - a key measure of profitability in the sector - deteriorated to 102.3 from 97.6 a year earlier.
($1 = 0.7367 euros) (Additional reporting by Michael Shields; Editing by David Holmes)