TAIPEI/LONDON (Reuters) - The country's largest insurer Aviva and Taiwan's state-run First Financial have agreed to set up a joint venture to tap Taiwan's life insurance market, the two said on Thursday.

Aviva and First Financial, Taiwan's number four financial holding company, said last October they were in exclusive talks over an insurance tie-up.

The initial paid up capital of the company -- First-Aviva -- will be 34 million pounds (T$2.25 billion), Aviva said, though First Financial said on Thursday it plans to eventually raise the investment to T$5 billion.

The move signals First Financial's ambition to broaden its revenue stream in a highly competitive domestic banking market, from which it derives the bulk of its business.

"Aviva's entry into Taiwan further extends our leading position in international bancassurance and we're excited by the potential of the Taiwanese life insurance market, which is the 4th largest in Asia," Aviva Executive Director Philip Scott said. "The prospects for future growth in the pensions market are particularly positive."

The partners are still awaiting approval from government regulators to set up the venture, but said a definitive deal was expected to be signed on April 27.

(c) Reuters 2007. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.

This is cache, read story here