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* Solvency II ratio 156 pct, down 3 points
* Balance sheet hit at 200 mln pounds - source
* Sees strong cash generation, shares up 8 pct
By Simon Jessop
LONDON, June 28 (Reuters) - Legal & General's balance sheet has proven resilient following Britain's decisionto leave the EU partly because the British insurer trimmed itsexposure to riskier assets before the vote, it said on Tuesday.
Shares in insurers were among the hardest hit after thereferendum result, with investors concerned crucial capitalbuffers would take a pounding from the slide in value ofequities, credit and other assets.
Legal & General (L&G) said its solvency II capital ratio - ameasure of how much extra money it has to act as a cushionshould markets fall - was 156 percent at the close on Monday,down just 3 percentage points due to the market volatility.
Shares in L&G were up 8.7 percent at 0747 GMT, among the topgainers in a 2.2 percent stronger blue-chip FTSE 100,albeit still some 30 percent below their pre-vote level.
"In summary, a resilient trading statement, a robust balanceand solvency position and a materially undervalued stock," saidShore Capital analyst Eamonn Flanagan, who has a "buy"recommendation on L&G stock.
A ratio of 100 percent means insurers have enough capital tocover underwriting, investment and operational risks, soanything above gives them more leeway to cope with any majormarket fallout.
A source close to L&G said the drop in the solvency ratio to156 percent equated to a balance sheet hit of some 200 millionpounds ($266.5 million).
The ratio was 169 percent at the end of 2015 but the insurerhad already reduced that by about 10 percentage points afterpaying out cash in the form of a dividend and funding thepurchase of rival Aegon's UK annuity portfolio this year.
"Overall, our Solvency II balance sheet has demonstrated itsresilience to market volatility, including that caused to dateby the EU Referendum outcome," the company said in a statement.
Ahead of the vote, L&G sold some sub-investment gradecredit, reduced its exposure to European banks' subordinateddebt and hedged some of its equity market exposure, it said.
The insurer said it expected group operational cashgeneration to climb about 5 percent in the first half to around655 million pounds and net cash generation to rise some 15percent to about 720 million pounds.
L&G said it had not taken any action as a result of thedowngrade of UK's sovereign debt rating by Moody's, Standard &Poor's and Fitch as it had already treated the debt as AA ratedin its Solvency II modelling.
($1 = 0.7504 pounds) (Additional reporting by Sinead Cruise; editing by DavidClarke)
