China Life, the country's largest life insurer, is set to hold its $2.5bn listing in New York on December 17 and in Hong Kong the following day in what is on track to be the world's largest initial public offering this year.

The company, which controls 45 per cent of China's life insurance market, has begun pre-marketing the issue and will begin a roadshow on December 1, a person familiar with the offering said.

The company said in its prospectus, filed with the US Securities and Exchange Commission on Thursday, it planned to use proceeds of the offering for general corporate purposes and to strengthen its capital base.

The offering follows the HK$6.2bn listing of PICC Property & Casualty, the country's largest property insurer, earlier this month that attracted huge demand from institutional investors.

China's number two insurer, Ping An, which has about half of China Life's market share, is planning to stage a $2bn listing.

China Life's IPO will be the biggest this year, surpassing the ￡1.14bn ($1.9bn) London listing in July by British telephone directory group Yell, Reuters reported.

China Life, formed from the restructuring of its parent of the same name in June, said in its prospectus pro forma net profit for the six months ended June was Rmb3.1bn ($378m) and was Rmb4.5bn for last year.

However, the company said it did not expect to pay dividends this year, and its ability next year to do the same was "likely to be constrained".

"We expect to begin paying dividends in 2005, at a payout range of between 10 per cent and 20 per cent of our after-tax profits," the company said.

The company also said its parent had set up a special purpose fund to help it meet deficits incurred on policies predating June 30, 1999.

The policies, which were retained by the parent as part of the restructuring, offered guaranteed rates of return that had proven difficult to meet given fluctuations in interest rates.

The Ministry of Finance has committed to bailing out the parent if it was unable to cover net losses resulting from the policies, which reached $86m as of the end of June.

But China Life warned if its parent was unable to satisfy its obligations, it might increase the dividends it required its listed arm to pay or even sell its shareholdings.

"The sale of these holdings or even the market perception of such a sale may materially and adversely affect the price of our shares."

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