UPDATE 1-Korea Life may raise around $2 bln in IPO-sources

* Valued at $10 bln, plans 20 pct public float-sources

* AIA, China Pacific Insurance eye listings (Adds details, background)

By Michael Flaherty and Narayanan Somasundaram

HONG KONG, Nov 6 (Reuters) - Korea Life Insurance Co., the country's No. 2 life insurer, may raise around $2 billion through its public offering, sources with direct knowledge of the matter said, in what would be Korea's largest IPO since 2006.

Korea Life joins a rash of planned insurance offerings in Asia, as the industry seeks to expand and as rising stock markets lift earnings for life insurers, for whom investment returns are a key source of income.

The Asia insurance IPO list includes AIG's AIA, Shanghai-traded China Pacific Insurance (601601.SS), which aims to raise $3.5 billion in Hong Kong, and Reliance Life in India.

Sources on Friday pegged the value of Korea Life at roughly $10 billion, and the expectation is to float a fifth of the business.

If Korea Life manages to raise that much, it would be the biggest IPO in South Korea since Lotte Shopping's (023530.KS) $3.8 billion listing in 2006.

"Internally, nothing has been decided on the IPO size," a Korea Life Insurance spokesman said. "We have just started the preparation process."

The insurance firm has mandated six banks, including Goldman Sachs (GS.N), JPMorgan (JPM.N) and Deutsche Bank (DBKGn.DE), to arrange the IPO.

(Additional reporting by Kim Yeon-hee in SEOUL; Editing by Jonathan Hopfner)