* H1 pretax profit up 7 pct to 636 mln pounds
* Cash generation up 13 pct to 567 mln pounds
* Interim dividend up 21 pct to 2.9 pence a share
* Assets under management up 7 pct to 465.1 bln pounds (Adds quotes, detail from statement, share reaction)
By Richa Naidu
LONDON, Aug 6 (Reuters) - British life insurance andpensions group Legal & General postedbetter-than-expected profit in the first half of the year,boosted by sales of high-margin pension services to companies.
It said sales of so-called "bulk annuities" to firms lookingto outsource all or part of their pension scheme liabilities tothe insurer had more than quadrupled premiums to 3.1 billionpounds ($5.2 billion) and pushed annuity assets up 20 percent to38.5 billion pounds.
That helped operating profit from the company's retirementbusiness hit 188 million pounds in the six months to the end ofJune - above a company supplied consensus for 176 million pounds- and pretax profit climb 7 percent to 636 million pounds.
The 177-year-old life group said it was well positioned toprofit from changes to the pensions market announced in March byBritish Finance Minister George Osborne and was developing newretirement products following the changes.
The reforms included scrapping a requirement for savers tobuy an annuity, a financial instrument that pays out an incomefor life, from an insurer upon retirement.
While all insurers have seen their business hit, L&G hasbeen supported by its dominant position in the bulk annuitiesbusiness, which continues to see strong growth.
"It's no use us moaning and groaning about the change in theannuities market. It was the right thing for (Osborne) to do,"Chief Executive Nigel Wilson told reporters on a media call.
"It's going to cause some short-term issues for those whoare totally dependent on individual annuities - we're clearlynot and we have to transform our business."
INSURANCE MIXED
While the new rules are designed to give individualpensioners more investment choices, many employers prefer buyingannuities in bulk to tidy up their balance sheets and remove theliability of a owing a pension.
Wilson said L&G would also be looking at lifetime mortgages,the greater use of income drawdown products, and that thepension changes were a good thing in the long run.
The company said it expected individual annuity sales tohalve in 2014 and halve again in 2015 as people with largerretirement pots move to the new drawdown products, mirroringcomments from peer Standard Life on Tuesday.
Shares in Legal & General were up 0.3 percent at 1017 GMT,among the top gainers in a 1 percent weaker FTSE 100 andin contrast to insurer Friends Life, which fell 1.2percent after its results.
L&G's insurance business posted mixed results, with premiumsat its British protection business up 7 percent year-on-year,but general insurance gross premiums down 3 percent.
Operating profit at its general insurance arm fell to 28million pounds from 39 million in 2013 after a 12 million poundhit for additional weather-related claims, the company said.
Assets under management at its Legal & General InvestmentManagement unit, the division that invests on behalf of theinsurer and external clients, climbed 7 percent to 465.1 billionpounds.
($1 = 0.5939 British Pounds) (Reporting by Richa Naidu; Editing by Simon Jessop and DavidClarke)
Legal & General (LGEN)
