UK pension reform hits Just Retirement sales

* Nine-month sales fall 22 pct, pension reform bites

* Individual annuity sales down 59 pct

* Bulk annuity sales rise 10-fold, pipeline strong

* Firm launches new flexible drawdown pension (Adds consensus forecast, analyst quote, share price)

By Carolyn Cohn

LONDON, May 12 (Reuters) - British pension reform which reduced demand for interest-bearing annuities hit specialist provider Just Retirement (LSE: JRG.L - news) 's nine-month sales, but the outlook for newer products cushioned the impact on the share price.

The pension changes, announced last year, mean people who are retiring no longer needed to buy an interest-bearing annuity with their pension pots.

Just Retirement, which listed on the stock market in 2013, specialises in pensions for people whose unhealthy lifestyles or poor health mean they have shorter than average life expectancy. It is backed by private equity group Permira.

"The period before the introduction of the new pension freedoms was always likely to be tough for our industry," said Chief Executive Rodney Cook in a trading statement, though he added that government plans for a secondary market in annuities would offer new opportunities.

Total (Swiss: FP.SW - news) sales in the nine months to March 31 fell 22 percent from a year earlier to 1.1 billion pounds ($1.71 billion), Just Retirement said, though the sales figures beat a company-supplied consensus forecast.

Individual underwritten annuity sales dropped 59 percent to 380 million pounds.

But sales of bulk annuities -- taking on the risk of company defined benefit pension schemes -- rose tenfold to 448 million pounds.

The UK bulk annuity market saw record sales of around 13 billion pounds last year and Cook said the pipeline was strong and the firm expected further growth in this sector.

Just Retirement's shares fell 0.5 percent but performed better than broader European insurance stocks, which dropped 1.6 percent.

Just Retirement's share price more than halved following the unexpected reforms announced last year and has only clawed back some of those losses, with many analysts regarding it as a "buy" at these levels.

The firm also said it was launching a new flexible "drawdown" pension plan, which industry players see as an increasingly popular alternative to an annuity. A drawdown pension enables savers to vary the amount of money they withdraw each year.

"The outlook is promising," said Barrie Cornes at Panmure Gordon, citing the new drawdown pension and increasing demand for medically underwritten bulk annuities and reiterating his "buy" recommendation on the stock.

Just Retirement has also moved into the pension advice market. Closed-life insurance business Phoenix (LSE: PHNX.L - news) has contracted Just Retirement to provide simplified advice to customers reaching retirement. ($1 = 0.6418 pounds) (Reporting by Carolyn Cohn; Editing by Keith Weir)