April 12 (Bloomberg) -- PICC Holding Co., the owner of China's biggest general insurer, received approval from the industry regulator to set up a life insurance business with partners led by Japan's Sumitomo Life Insurance Co.

The venture will be 51-percent owned by Beijing-based PICC, according to a statement published in Hong Kong newspapers today by Asia Financial Holdings Ltd., which will hold a 10 percent stake. Sumitomo Life, Japan's fourth-largest life insurer, will own 29 percent of the new company, the statement said.

China's life insurance market grew at an average annual rate of 30 percent in the past five years to $39 billion in 2004, less than a tenth of the premiums collected in the U.S. The Chinese government is cutting social welfare benefits and encouraging the nation's 1.3 billion people to turn to commercial insurers.

Bangkok Bank, Thailand's biggest lender, owns 9 percent of Asia Financial, a Hong Kong-based company that provides banking, insurance and investment services. Bangkok Bank will hold the remaining 10 percent in the PICC venture.

The statement didn't say where the venture will be based or when it will start operations. Its initial capital will be 1 billion yuan, the statement said.

PICC controls PICC Property and Casualty Co., which sold shares to overseas investors in 2003 that trade in Hong Kong.

To contact the reporter for this story: Patricia Cheng in Hong Kong at pcheng9@bloomberg.net

Last Updated: April 11, 2005 20:18 EDT