Dai-Ichi Mutual Life Insurance Co aims to list its shares in 2010 and sell more than $9 billion worth of them in what is likely to be Japan's third-largest initial public offering.

The listing would put Dai-Ichi's market value at as much as 3 trillion yen ($27 billion), the insurer said in a statement on Thursday, on par with Tokyo blue chips such as Toshiba Corp.

Dai-Ichi Mutual said being publicly listed would give it flexibility in acquiring firms overseas by allowing it to complete share swaps. The listing would also force it to adopt stricter governance, it said.

Japanese life insurers face a tough environment at home, given the country's shrinking population and slow-growth economy. They have also been hit by a scandal involving nonpayment of insurance benefits.

By becoming a publicly listed company it would have an easier time raising funds, said Soichiro Monji, chief strategist at asset manager Daiwa SB Investments.

As an unlisted company, the insurer is currently forced to raise funds through bonds and other interest-bearing instruments, which could become more expensive as Japan's interest rates rise.

Dai-Ichi Mutual would be following in the footsteps of T&D Holdings Inc and Sony Financial Inc, the only two Japanese life insurers to have gone public so far.

Rival Mitsui Life Insurance also plans to list its shares but has yet to announce the exact timing.

Capital markets are not exactly at their best but Sony Financial went ahead anyway and is doing pretty well, which shows there is real demand for life insurance companies, said Yuin Lim, an insurance analyst at brokerage CLSA Asia-Pacific Markets.

Shares of Sony Financial have edged up 2.1 percent since their debut in October, compared with a 7.5 percent drop during that period in the broad TOPIX index of all first-section shares on the Tokyo bourse.

Dai-Ichi's plan to sell up to 1 trillion yen worth of its shares in the market would make it Japan's third-largest IPO, data from Thomson Financial showed.

Listing could also make Dai-Ichi a target for potential buyers. Media reports have quoted the chairman of China's China Life Insurance Co Ltd as being keen to take a stake in a Japanese insurer.

The life insurer is expected to appoint Nomura Holdings Incas lead underwriter for its stock offering, the Nikkei business daily said.

(Reporting by David Dolan, Nathan Layne and Edwina Gibbs; Editing by Lincoln Feast)