Life insurer Legal & General said it was set to generate close to 1 billion pounds in cash this year as it reported flat nine-month sales.

L&G, Britain's third-biggest insurer by market value, generated 736 million pounds of cash in the nine months to September 30, it said on Tuesday, putting it on course to hit a full-year target of 900 million pounds.

L&G has been at the forefront of a drive by the industry to boost cash generation by reducing commission payments to brokers and focussing on less capital intensive products.

The move was designed to allay investor worries about the industry's ability to pay dividends after some insurers, including L&G, cut their payouts to preserve capital during the 2008 financial crisis.

We are confident we can continue to grow from a position of strength whilst increasing our balance sheet strength and at the same time supporting a growing dividend, outgoing Chief Executive Tim Breedon said in a statement.

L&G had sales of 1.338 billion pounds in the first nine months of the year, little changed from 1.347 billion pounds in the same period last year, and broadly in line with the 1.331 billion pounds expected by analysts in a company poll.

L&G shares closed at 110.5 pence on Monday, valuing the company at about 6.7 billion pounds.

The stock, seen as insulated from the European sovereign debt crisis due to L&G's low exposure to risky eurozone government bonds, is up 16 percent in the year to date, beating a 9 percent drop in the European insurance sector <.SXIP>.

(Reporting by Myles Neligan; editing by Rosalba O'Brien)