The announcement on Wednesday sent its shares higher.

British life insurers have been reinventing themselves after pensions reform halved the sales of individual annuities, which give a fixed income for life and were a staple product for the sector.

L&G has moved into the bulk annuity market, taking on the risk of defined benefit, or final salary, pension schemes. It has also started offering lifetime mortgages, in which homeowners release money from their properties to fund their retirement.

"The expansion of bulk annuity business internationally is a big strategic opportunity," Chief Financial Officer Mark Gregory told reporters on a media call, after the firm announced its first U.S. bulk deal last month.

"We plan to progress to enter the European market in the next few months."

Gregory said the lifetime mortgage business had exceeded expectations, The firm has doubled its target for this year, aiming to write 200 million pounds in lifetime mortgages.

Net cash generation rose to 943 million pounds and operational cash generation rose 11 percent to 936 million pounds.

Annuity assets rose 8 percent from a year earlier although sales fell in the third quarter.

"This is a lumpy business," Gregory said, explaining the drop in large bulk deals over the quarter, though he added that "the pipeline remains very good".

Legal & General Investment Management's assets under management rose to 717 billion pounds and external net inflows rose 161 percent from a year earlier to 21.7 billion.

AUM were little changed from the previous quarter, in a turbulent period where asset managers such as Jupiter and Hargreaves Lansdown saw a drop in total value of their assets, despite net inflows.

Gregory said the firm's focus on index funds, which passively track the performance of an index, and on strategies which match investors' liabilities, had provided some shelter from the market storm.

"Legal & General reported another strong cash result," said Bernstein analysts in a note, reiterating their outperform rating on the stock and adding L&G "remains compelling".

Legal & General's shares rose 1.7 percent to a 2-1/2 month high of 267 pence per share at 0827 GMT, compared with a 0.6 percent rise in the FTSE 100 index.

(Reporting by Carolyn Cohn; Editing by Tom Heneghan)

By Carolyn Cohn