OREANDA-NEWS. Fitch Ratings has upgraded the ratings of three insurance companies in China, following the completion of a portfolio review that covered eight insurance groups within China's insurance sector. The review focused on application of Fitch's recently updated criteria for Country-Specific Treatment of Recovery Ratings, and the purpose was to identify any ratings that should be changed as a result of the application of the updated criteria. Fitch has also considered the appropriateness of the relative ranking of ratings in the Chinese insurance sector, where relevant, after initial consideration of updated recovery guidelines, as part of the portfolio review.

Fitch upgraded by one notch the Insurance Financial Strength (IFS) ratings of Taiping Life Insurance Co., Ltd, Taikang Life Insurance Co., Ltd and Sunshine Property & Casualty Insurance Company. While the change in criteria would now theoretically allow for an uplift in the IFS rating of China Life Insurance Company Limited from the perspective of the recovery assumption embedded in that rating, the rating was nonetheless affirmed at 'A+' as it remains constrained by China's Long-Term Local-Currency Issuer Default Rating (IDR) of 'A+'. We affirmed the IFS ratings of the remaining reviewed entities as their operating scales are commensurate with their IFS rating categories. Standard notching is applied between the IDRs of the insurance operating company and holding company under a group solvency regulatory environment.

Fitch published the updated insurance criteria for Country-Specific Treatment of Recovery Ratings on 22 February 2016, following publication of an exposure draft of proposed criteria on 16 December 2015. While the updated criteria retain the primacy of existing jurisdictional caps, Fitch has changed the reference data when determining country groupings.

Under the updated criteria, the country grouping for China is changed to 'C' from 'D' and the cap for recovery ratings is shifted to 'RR3' from 'RR4'. A 'RR3' recovery rating typically assumes good recovery prospects given default and standard notching is used between the insurance operating company's IFS rating and IDR when the insurance regulation is viewed as effective. In such cases, Fitch assumes regulators will intervene early enough in a distressed scenario to preserve assets to support an above-average recovery for the insurer as a whole, and thus policyholders.

KEY RATING DRIVERS
For this rating review, the key rating driver was the impact of updated criteria for Country-Specific Treatment of Recovery Ratings. See most recently published rating action commentaries or research reports for additional information on other key ratings drivers pertinent to specific entity ratings.

RATING SENSITIVITIES
Not applicable to this portfolio review given its limited focus on implementation of updated criteria for Country-Specific Treatment of Recovery Ratings. See most recently published rating action commentaries or research reports for additional information on rating sensitivities pertinent to specific entity ratings.

FULL LIST OF RATING ACTIONS
China Taiping Insurance Group Ltd.
- Long-Term IDR affirmed at 'A'; Outlook Stable

China Taiping Insurance Group (HK) Company Limited
- Long-Term IDR affirmed at 'A'; Outlook Stable
- Senior unsecured notes issued through China Taiping New Horizon Limited affirmed at 'A-'

China Taiping Insurance Holdings Co Ltd
- Long-Term IDR affirmed at 'A'; Outlook Stable
- Cumulative redeemable perpetual securities affirmed at 'BBB+'
- Senior unsecured notes issued through China Taiping Capital Limited affirmed at 'A-'

Taiping Life Insurance Co., Ltd.
- IFS Rating upgraded to 'A+' from 'A'; Outlook Stable

Taiping Reinsurance Co. Ltd
- IFS Rating affirmed at 'A'; Outlook Stable

China Life Insurance Company Limited
- IFS Rating affirmed at 'A+'; Outlook Stable
- Long-Term IDR affirmed at 'A+'; Outlook Stable
- Junior subordinated securities affirmed at 'A-'

Taikang Life Insurance Co., Ltd.
- IFS Rating upgraded to 'A' from 'A-'; Outlook Stable

Sunshine Property & Casualty Insurance Company
- IFS Rating upgraded to 'A' from 'A-'; Outlook Stable

Huatai Property & Casualty Insurance Co., Ltd.
- IFS Rating affirmed at 'A'; Outlook Stable

Huaxia Life Insurance Company Ltd.
- IFS Rating affirmed at 'BBB+'; Outlook Negative

Yingda Taihe Property Insurance Co. Ltd.
- IFS Rating affirmed at 'A-'; Outlook Stable

Urtrust Insurance Co., Ltd.
- IFS Rating affirmed at 'BBB'; Outlook Stable

LIMITATIONS
The portfolio review was limited in scope, and only included an assessment of updated criteria for Country-Specific Treatment of Recovery Ratings. None of the factors outlined in Section I (Key Rating Factors), or any other elements discussed in Fitch's insurance master criteria were reviewed. Where relevant, Fitch considered the appropriateness of the relative ranking of ratings within China's insurance sector, after initial consideration of updated criteria for Country-Specific Treatment of Recovery Ratings, as part of the review.