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By Carolyn Cohn and Emma Rumney
LONDON, Oct 12 (Reuters) - Lloyds Banking Group has agreed to buy Zurich Insurance's UK workplace pensions and savings business as it expands its retirement business, the bank said on Thursday.
Life insurers and asset managers in Britain have been refocusing their businesses to capitalise on rule changes giving pensioners more freedom on how to spend their pension pots.
The deal "is a clear signal of Lloyds Banking Group's commitment to the financial planning and retirement segment", said Antonio Lorenzo, Lloyds' director of insurance and wealth and chief executive of its life insurance business Scottish Widows.
Zurich Insurance is in the middle of a major strategy overhaul, which involves simplifying the group's structure, cutting $1.5 billion in costs and shaping up its underperforming general insurance unit.
Earlier this year, Zurich merged its UK life and general insurance businesses into one division, which it said would lead to a reduction of 240 mainly back-office jobs.
"We are...focusing on markets where we have strong assets and can best serve our customers and distributors," said Tulsi Naidu, chief executive of Zurich UK.
The Zurich UK pensions and savings business has 15 billion pounds ($19.8 billion) in assets under administration and around 500,000 customers, Lloyds said in a statement.
Scottish Widows has more than 124 billion pounds of funds, of which 35 billion pounds are in workplace pensions.
Lloyds has not disclosed the price for the deal.
As part of the deal, Zurich will gain distribution rights for group life protection to some of Lloyds' corporate clients, the bank said.
Around 200 Zurich employees, mainly based in Cheltenham, in the west of England, are expected to transfer to Lloyds.
Bankers have also speculated that Scottish Widows and Standard Life Aberdeen could form an insurance tie-up. Lloyds is a major shareholder in Standard Life Aberdeen.
A Lloyds spokeswoman declined to comment on market speculation.
"In line with our stated strategic aims, Lloyds Banking Group would consider opportunities where we are under-represented," she said in an emailed statement. ($1 = 0.7569 pounds) (Additional reporting by Brenna Hughes Neghaiwi in Zurich; Editing by Rachel Armstrong/Keith Weir)