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By Carolyn Cohn
LONDON, Nov 4 (Reuters) - British life insurer and pensionsgroup Legal & General said it generated 12 percent morecash in the first nine months of 2014 than a year ago, ascorporate annuity sales helped cushion the impact of changes torules for individual savers.
Under reforms announced in the UK budget in March, retireesno longer need to use their pension pots to buy an annuity,which gives an income for life, and are free to invest them asthey see fit. Annuity provider L&G has been seen as one of thosemost affected by the change.
Like other dominant players, though, it has sought to offsetthe slump in individual annuity sales by selling so-called "bulkannuities", or deals with companies looking to outsource all orpart of their pension scheme liabilities.
"The pipeline for bulks is good as more companies look toderisk their pension funds," Chief Financial Officer MarkGregory said on a conference call on Tuesday.
Following the budget reforms, individual annuity sales fell61 percent on the quarter from a year earlier and 53 percent onthe first nine months. Bulk annuities, however, were more thantaking up the slack, Gregory said, with 8 billion pounds ($12.8billion) in total annuity transactions expected this year --double last year's premium.
Eamonn Flanagan, analyst at Shore Capital, said L&G wasshowing "excellent cash generation...driven by terrific sales ofbulk annuities," and reiterated his "buy" recommendation.
L&G reported net cash generation of 827 million pounds($1.32billion), compared with 740 million pounds a year earlier.
Legal & General Investment Management's assets undermanagement rose 14 percent from a year ago to 676 billion poundsin the first nine months, though Gregory said the third quartersaw net outflows of 2.4 billion, as investors pulled out ofindex funds amid market turbulence.
L&G shares rose 2.5 percent in early morning trade to asix-week high of 237 pence at 0813 GMT.
(1 US dollar = 0.6253 British pound) (Reporting by Carolyn Cohn; Editing by Clara Ferreira Marques)
Legal & General (LGEN)
