Sumitomo Life Insurance Co. will increase its capital stake in its affiliated asset management company, turning it into a subsidiary and making it the largest asset management firm in Japan, company sources said Wednesday.

The move, expected by January, will become possible with the easing of regulations in December to allow insurers to make asset management firms their subsidiaries.

Sumitomo Life Asset Management Co., established in 1985, will absorb a portion of Sumitomo Life's securities investment operations and assets, greatly expanding the amount of its assets under management to over 10 trillion yen, according to the sources.

The asset management firm currently has capital of 300 million yen, but Sumitomo Life intends to increase this capital base to about 5 billion yen and secure a majority stake. At present, Sumitomo Life has a 10 percent stake in the firm, while entrusting nearly half of the roughly 650 billion yen in assets under management.

Sumitomo Life Asset Management was expected to bring in staff from the parent insurer while also seeking experienced personnel from the outside, including from foreign financial firms.

The sources said the asset management firm will also galvanize operations in overseas markets. The area of asset management in Japan is one that is drawing greater attention from both domestic and foreign financial institutions as the "Big Bang" financial deregulation proceeds.

Mutual funds and pension-related products are especially seen as becoming more attractive in the future as financial companies vie for the 1.2 quadrillion yen in personal assets in this country.