Fitch Ratings has modified the credit ratings of six insurers operating in China, downgrading five and affirming one, following its recent decision to lower the country’s sovereign credit rating.
The April 3 downgrade of China’s Long-Term Foreign-Currency Issuer Default Rating (IDR) from “A+” to “A” prompted Fitch to reassess insurers with strong governmental ties, citing the potential impact of reduced state support capacity.
The rating adjustments occur amid broader moves by Chinese financial authorities to stabilise markets in the face of increasing external pressures, including escalating trade tensions with the US.
China’s regulators recently authorised a higher equity allocation threshold for insurance funds, aiming to boost institutional investment in domestic markets. Earlier this year, state-owned insurers were instructed to direct up to 30% of new annual premiums toward A-share investments, a move intended to reinforce liquidity in the stock market.
The following rating actions were announced:
All revised or confirmed ratings carry a stable outlook.
Fitch stated that the rating changes reflect the insurers’ varying degrees of reliance on implicit or explicit government support, which is now seen as slightly weaker due to macroeconomic pressures.
“The downgrades of the five insurers follow the downgrade of China’s sovereign rating, as the insurers’ ratings incorporate various degrees of government support due to their ownership links with the central government. We believe the government’s ability to support these insurers has weakened,” it said,
China Life’s affirmation was based on its strong market fundamentals and financial performance. The agency noted that its rating does not include an uplift from government support and is largely independent of sovereign backing. The company had a sovereign investment-to-capital ratio of 64% at the end of 2024, which did not negatively affect its risk profile under Fitch’s criteria.
SINOSURE’s downgrade was attributed to its close ownership ties to the Ministry of Finance and Central Huijin Investment Ltd and its function in facilitating national export strategies. Fitch employs a top-down assessment approach for this insurer, aligning its credit strength with China’s sovereign outlook.
Fitch’s rating adjustments for TPG and its subsidiaries reflected their structural dependence on state ownership and past instances of support. The Ministry of Finance maintains a controlling interest in the group, and Fitch considers this factor in applying a one-notch support uplift above the firms’ standalone profiles.
Fitch highlighted that insurer ratings closely tied to sovereign credit status, such as SINOSURE, are likely to move in tandem with any future adjustments to the national rating. Structural changes, such as alterations in government ownership or weakening financial indicators, could prompt further downgrades.
Potential upgrades would depend on improvements in standalone financial metrics or an upward revision of the sovereign rating. Fitch emphasised the importance of maintaining strong Prism scores and financial leverage within target thresholds.
