The Osaka-based insurer, mutually held by policyholders, and PICC Holding, wholly owned by the Chinese government, plan to set up the venture this year after getting approval from local regulatory authorities, according to a statement on Sumitomo's website.

Sumitomo Life and Japanese rivals are seeking expansion in China and elsewhere in Asia as the domestic insurance market stagnates and they face competition in health and pension products from foreign underwriters such as Aflac and Hartford Financial Services Group.

Sumitomo Life said it wants to combine PICC's branding power and management base with its own methods and technology to win business in China's growing market.

``We reached broad agreement and will set up the venture as soon as we get approval from the Chinese authorities,'' a Sumitomo Life spokesman said.

PICC Property & Casualty Co, the first Chinese insurer to sell shares abroad, holds 58 percent of a domestic general insurance market that grew 25.4 percent to 109 billion yuan (HK$102.7 billion) last year.

China's market for life insurance rose 7.2 percent to 322.8 billion yuan.

``The company is in talks with domestic and foreign investors to set up a life insurance venture this year,'' a spokesman at Beijing-based PICC said.

Sompo Japan Insurance - Japan's third-largest non-life insurer by premium income - said last December it paid 8.4 million yen to purchase a stake in a unit of PICC's Property & Casualty.

Nippon Life Insurance - Japan's largest life insurer by assets - started selling life coverage in November 2003 under a joint venture formed two months earlier with Shanghai SVA (Group).

Millea Holdings - Japan's largest non-life insurer - in July 2003 paid 126 million yen to take a 24.9-percent stake in Sino Life Insurance to sell life insurance products.BLOOMBERG