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(Adds comments by company and analysts on H1 performance)
By Carolyn Cohn
LONDON, Aug 5 (Reuters) - British insurer Legal & General posted a forecast-beating 18 percent rise in first-halfoperating profit on Wednesday, helped by strong performance inthe bulk annuity corporate pensions market, sending its sharesup over 3 percent.
Life insurers have looked to the bulk annuity market for newbusiness as personal annuity sales dwindle following Britishreforms to tax rules for pension savers which give retirees morefreedom over what to do with their pension pots.
Bulk annuity business involves insurers taking on the riskof all or part of company defined-benefit, or final-salary,pension schemes.
"We see strong demand for pension derisking and longevityinsurance across the world," said Nigel Wilson, chief executiveat L&G, who added that the insurer's pipeline for bulk deals wasstrong and it hoped to expand that business into the UnitedStates and Europe.
L&G has also branched out from individual annuities, whichfell 53 percent in the first half, into the lifetime mortgagebusiness, in which homeowners release money from theirproperties to fund their retirement.
The firm said in a trading statement it doubled its targetfor lifetime mortgages and expected to write around 200 millionpounds in new business this year and "increasing amountsthereafter".
L&G's operating profit rose to 750 million pounds ($1.17billion) in the six months to the end of June from a yearearlier, which the company said beat a market forecast of 692million pounds according to its own survey of analysts.
Meanwhile Legal & General Investment Management's assetsunder management rose 12 percent from a year earlier to 715billion pounds.
L&G's share price was up 3.2 percent at 272 pence by 0741GMT, making its shares the top performer in the FTSE 100 index.
Analysts highlighted measures L&G is taking to reducecapital costs in annuity sales.
"Concerns over a higher capital requirement have in our viewbeen the main drag on the shares in recent months - and evidenceof its resolution will ... generate substantial relief," saidDeutsche Bank analysts, who have a 'buy' rating for the stock.
L&G said it would pay an interim dividend of 3.45 pence ashare, up 19 percent from a year earlier. ($1 = 0.6433 pounds) (Reporting by Carolyn Cohn; Editing by Greg Mahlich)
