(Adds detail on business divisions, CFO, share price)
By Carolyn Cohn
LONDON, Aug 9 (Reuters) - Lower profits in Legal & General's investment management and general insurance businessestook the shine off an overall 10 percent rise in first-halfoperating profit, making the insurer the largest loser in theFTSE 100 index on Tuesday.
The above-forecast rise in operating profit to 822 millionpounds ($1.07 billion) was boosted by strong growth in itsretirement business.
Analysts expected an operating profit of 812 million pounds,according to a company-supplied forecast.
Legal & General Investment Management's assets undermanagement rose 18 percent to 841.5 billion pounds, after seeingexternal net inflows of 9.6 billion pounds.
But inflows were down 30 percent from a year earlier, andoperating profit fell three percent.
LGIM was continuing to see inflows at a time when marketswere challenging, Chief Financial Officer Mark Gregory toldreporters on a conference call.
"It's not a shoddy effort," he said.
Profits in the division were impacted by weak marketsearlier in the year, but Gregory said he expected strongermarkets in the second half to help profitability.
L&G's general insurance business also saw a 26 percent dropin operating profit.
The firm's shares were down 4.4 percent to 208 pence pershare at 0737 GMT.
The company said it had introduced a new formula for settingits interim dividend, at 30 percent of its 2015 full-yeardividend. This brought the interim dividend to 4 pence pershare, up 16 percent and against a forecast 3.68 pence.
($1 = 0.7700 pounds) (Reporting by Carolyn Cohn; editing by Sinead Cruise and JasonNeely)
Legal & General (LGEN)
