UPDATE 1-Slowing improvement in UK life expectancy boosts Legal & General FY profit

By Carolyn Cohn

LONDON, March 7 (Reuters) - A slowdown in improvements inlife expectancy in Britain boosted insurer Legal & General's2017 results, it said on Wednesday, as it reported aforecast-beating 32 percent rise in operating profit.

Recent actuarial data showing lower than expected lifeexpectancy enables life insurers to set aside less cash forpension payments."People aren't dying quicker ...but (the figures) aren'timproving quite as quickly," Chief Financial Officer Jeff Daviestold a media call.

"We are factoring in a slightly lower life expectancy."

L&G's operating profit rose to 2.1 billion pounds ($2.92billion), helped by a 332 million pound release of "mortality"reserves set aside for pension payments, due to the slowdown inlife expectancy improvements, the insurer said in a tradingstatement.

Analysts in a company-supplied consensus poll had forecastoperating profit of 1.9 billion pounds.

Barclays analysts said in a note that the insurer had"significant firepower for both organic and inorganicinvestment," as they reiterated their "overweight" rating on thestock.

L&G shares rose 0.66 percent to 259 pence at 0801 GMT,compared with a 0.5 percent fall in the FTSE 100 index.

L&G is in advanced talks to buy out Patron Capital, itsfellow shareholder in housebuilder Cala Group, in a deal thatvalues the company at more than 500 million pounds, Sky Newsreported on Monday.

"The (Cala) business has performed really well in ourpartnership," Davies said, while declining to comment directlyon the report.

"All options are open - buy, sell, hold."

L&G has also said it wants to buy books of annuity businessclosed to new customers, after taking over a 3 billion poundbook from Dutch insurer Aegon in 2016.

Prudential has put part of its 35 billion poundclosed annuity portfolio up for sale. L&G has previouslyexpressed interest in the portfolio, though industry specialistssay it is unlikely to be a front-runner.

"We will continue to maintain pricing discipline - we see somuch potential out there, we are not pinning anything on aparticular deal," Davies said.

Legal & General Investment Management, one of the largestinvestors in the UK stock market, saw assets under managementrise 10 percent to 983 billion pounds.

L&G said it would pay a total dividend of 15.35 pence pershare, up 7 percent and against a forecast 15.31 pence.

($1 = 0.7196 pounds)(Reporting by Carolyn Cohn; editing by Simon Jessop and AdrianCroft)