Berenberg says 'buy' Legal & General on buoyant annuities

Broker Berenberg is advising investors to take cover in Legal & General after the insurer and pension provider doubled its annuity sales target for 2014 despite turbulence caused by a UK government pension shake-up.L&G on Tuesday said its retirement arm completed £3.9bn of annuity sales in the nine months to September thanks to more bulk company pension business, with only about £500m from the individual annuity market.Chancellor George Osborne announced earlier this year that individual pensioners would no longer be forced to buy annuities.The rise in corporate pension business helped to offset a 61% fall in third quarter individual annuity sales to £125m, but L&G said it expected to write about £8bn in total annuity transactions for the full year, double its total annuity premium for 2013.Berenberg said: "While some of this is as a result of a £1.9bn one-off transaction relating to the with-profits business, even excluding this management is signalling annuity sales growth of more than 50%, despite the changes to individual annuities."In our view, this removes any remaining question marks over whether L&G can offset the decline in individual annuities through increased volumes."Berenberg has a 'buy' recommendation on L&G with a 265p price target. Shares in L&G gained 4.8p or 2.1% to 235.4p at 11:27 in London.