UPDATE 1-Slowing improvement in UK life expectancy boosts Legal & General FY profit

(Recasts lead, adds background, CFO comment, analyst)

LONDON, March 7 (Reuters) - A slowdown in improvements in life expectancy in Britain boosted insurer Legal & General’s 2017 results, it said on Wednesday, as it reported a forecast-beating 32 percent rise in operating profit.

Recent actuarial data showing lower than expected life expectancy enables life insurers to set aside less cash for pension payments. “People aren’t dying quicker ...but (the figures) aren’t improving quite as quickly,” Chief Financial Officer Jeff Davies told a media call.

“We are factoring in a slightly lower life expectancy.”

L&G’s operating profit rose to 2.1 billion pounds ($2.92 billion), helped by a 332 million pound release of “mortality” reserves set aside for pension payments, due to the slowdown in life expectancy improvements, the insurer said in a trading statement.

Analysts in a company-supplied consensus poll had forecast operating profit of 1.9 billion pounds.

Barclays analysts said in a note that the insurer had “significant firepower for both organic and inorganic investment,” as they reiterated their “overweight” rating on the stock.

L&G shares rose 0.66 percent to 259 pence at 0801 GMT, compared with a 0.5 percent fall in the FTSE 100 index.

L&G is in advanced talks to buy out Patron Capital, its fellow shareholder in housebuilder Cala Group, in a deal that values the company at more than 500 million pounds, Sky News reported on Monday.

“The (Cala) business has performed really well in our partnership,” Davies said, while declining to comment directly on the report.

“All options are open - buy, sell, hold.”

L&G has also said it wants to buy books of annuity business closed to new customers, after taking over a 3 billion pound book from Dutch insurer Aegon in 2016.

Prudential has put part of its 35 billion pound closed annuity portfolio up for sale. L&G has previously expressed interest in the portfolio, though industry specialists say it is unlikely to be a front-runner.

“We will continue to maintain pricing discipline - we see so much potential out there, we are not pinning anything on a particular deal,” Davies said.

Legal & General Investment Management, one of the largest investors in the UK stock market, saw assets under management rise 10 percent to 983 billion pounds.

L&G said it would pay a total dividend of 15.35 pence per share, up 7 percent and against a forecast 15.31 pence.

$1 = 0.7196 pounds Reporting by Carolyn Cohn; editing by Simon Jessop and Adrian Croft