The move is a response to increased competition, tougher regulatory standards and the impact on the market from January of the disclosure of commissions that will make sales still harder to achieve.
David Prosser, chief executive, said the sales force had already fallen by 500 from 2,300 at the start of the year. But he expected direct sales volumes to be down only 15 per cent because of the concentration on more productive people.
L&G is among many life assurance companies fined by regulators for the way they conduct sales, and the reorganisation is part of an industry-wide drive to improve the quality of sales forces and cut costs.
The direct sales force is paid entirely on commission and is not on staff, though there will be substantial savings on training costs when the numbers and turnover of people are cut.
Some of the consultants are being hired for salaried staff sales posts, which Mr Prosser said would treble from the present 100.
About 40 per cent of L&G's life assurance business last year came from consultants, one-third from independent financial advisers and a quarter from tied representatives such as building societies.
Mr Prosser saw the life assurance industry heading for a difficult period with strong financial pressures on small and medium companies next year.
He expected mergers and takeovers among weaker companies and said L&G saw opportunities for taking over smaller firms.
Mr Prosser was announcing interim profits before tax and excluding investment losses up from pounds 68.5m a year ago to pounds 110.8m.
Investment losses on general insurance were much lower than at other life companies, he said, because L&G had 30 per cent of its money in cash when the bond market crash came in February. After allowing for investment losses profits fell from pounds 75m to pounds 58m. The dividend was raised 6.9 per cent to 6.95p.Reuse content