LONDON, Nov 18 (Reuters) - British insurer L&G said on Friday it expected a small hit to its finances from recent market chaos, adding that a return to health for many pension funds from interest rate rises had given it a strong pipeline of work.

L&G said in a trading update that a blow-up in liability-driven investment (LDI) strategies after the mini-budget of Liz Truss' short-lived government led to clients selling higher fee products to meet collateral requests.

As a result it expected annual revenue and profits in its defined benefit pension asset management business to decline by about 10 million pounds in 2022, the company said.

Analysts said the LDI hit appeared minimal and noted the insurer was benefiting from strength in other parts of the business - including strong performance in bulk annuities.

Insurers are getting a lift from many British pension schemes going into surplus and looking to transfer risk to an insurer, resulting in a strong pipeline for next year, L&G said.

L&G's shares were up 3% at 0845 GMT.

L&G also welcomed reforms to ease capital rules for insurers laid out by finance minister Jeremy Hunt in Thursday's budget.

L&G said the proposed changes would give it more flexibility to invest and would likely boost the insurer's solvency ratio by 3-4 percentage points. The insurer's solvency ratio stands at 225-230%, the company said.

L&G is one of the biggest LDI investment managers in Britain, along with BlackRock and Insight Investment.

It said despite the disclosed hit, its expectations for its overall full-year profit and capital generation remained unchanged. LDI is expected to be around 2% of the insurer's profit this year, unchanged on 2021, the company added.

This meant "limited downside from LDI" for the insurer, analysts at Jefferies said in a note.

($1 = 0.8394 pounds) (Reporting by Iain Withers and Carolyn Cohn; Editing by Jan Harvey, Elaine Hardcastle)