Under reforms announced in the UK budget in March, retirees no longer need to use their pension pots to buy an annuity, which gives an income for life, and are free to invest them as they see fit. Annuity provider L&G has been seen as one of those most affected by the change.

Like other dominant players, though, it has sought to offset the slump in individual annuity sales by selling so-called "bulk annuities", or deals with companies looking to outsource all or part of their pension scheme liabilities.

"The pipeline for bulks is good as more companies look to derisk their pension funds," Chief Financial Officer Mark Gregory said on a conference call on Tuesday.

Following the budget reforms, individual annuity sales fell 61 percent on the quarter from a year earlier and 53 percent on the first nine months. Bulk annuities, however, were more than taking up the slack, Gregory said, with 8 billion pounds in total annuity transactions expected this year -- double last year's premium.

Eamonn Flanagan, analyst at Shore Capital, said L&G was showing "excellent cash generation...driven by terrific sales of bulk annuities," and reiterated his "buy" recommendation.

L&G reported net cash generation of 827 million pounds, compared with 740 million pounds a year earlier.

Legal & General Investment Management's assets under management rose 14 percent from a year ago to 676 billion pounds in the first nine months, though Gregory said the third quarter saw net outflows of 2.4 billion, as investors pulled out of index funds amid market turbulence.

L&G shares rose 2.5 percent in early morning trade to a six-week high of 237 pence at 0813 GMT.

(Reporting by Carolyn Cohn; Editing by Clara Ferreira Marques)

By Carolyn Cohn