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Legal & General Increases Cash as Acquisitions Boost Growth

Nov. 5 (Bloomberg) -- Legal & General Group Plc, the largest manager of U.K. pension assets, reported a 20 percent increase in cash generation as acquisitions helped boost its annuities and savings-protection units.

Net cash, defined as earnings before dividends and reinvestment, rose to 740 million pounds ($1.2 billion) in the nine months to Sept. 30 from 616 million pounds a year earlier, the London-based company said today. That beat the 737 million-pound average estimate of 13 analysts surveyed by the company.

Chief Executive Officer Nigel Wilson said the company is seeking more acquisitions to capitalize on global pension changes and an aging population. He has bought four businesses this year, including Lucida Ltd., a bulk annuity buyout firm, and Cofunds Holdings Ltd., an electronic savings portal.

“This has been a record quarter for assets, sales and cash,” Wilson said in a conference call with journalists from London. “Our growth strategy is delivering, and we have the capital and appetite to do more to further enhance growth.”

The company tripled its sales of annuity products to 2.3 billion pounds in the three months to Sept. 30. Lucida contributed 1.4 billion pounds of premiums, according to analysts at Barclays Plc.

Job Cuts

The insurer also said it’s cutting about 600 of the 7,000 jobs at its Legal & General Assurance Society unit after merging its protection and savings operations.

Cofunds, which recorded 3.3 billion pounds of new inflows in the third quarter, helped the insurer increase assets under administration in its savings business by 6.3 percent to 102 billion pounds.

The shares fell 2.2 percent to 213.10 pence in London after rallying 10 percent last month. Insurance stocks dropped after RSA Insurance Plc said it will miss its profitability target on losses stemming from last week’s European windstorms.

Legal & General shares have climbed 46 percent this year, making it the third-best performer in the U.K.’s FTSE 350 Insurance Index.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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