Fitch Ratings has today affirmed China Insurance International Holding Co Ltd's ("CIIH") Long-term rating at 'BBB-' (BBB minus). At the same time, the agency has affirmed the senior debt rating of 'BBB-' (BBB minus) assigned to the guaranteed issue by the wholly owned subsidiary CIIH (BVI) Ltd and the ratings of China International Reinsurance Co Ltd ("CIRe") and Tai Ping Life Insurance Co Ltd ("TPL") - both subsidiaries of CIIH - at Insurer Financial Strength 'A-' (A minus) and 'BBB+', respectively. The Outlook for all the ratings is Stable.

The ratings reflect the continued progress made by the life and non-life insurance operating companies of the group in the People's Republic of China ("PRC"), generally good levels of capitalisation, strong operational and financial management across the group, together with good corporate governance. The ratings also take account of the benefits derived from the important strategic partnership maintained between TPL and the Fortis Group and the support received by CIIH group from its association with ICBC (Asia). The agency considers the support of the state owned ultimate holding company, China Insurance (Holdings) Co Ltd ("CIHC"), to be an important additional positive factor.

The ratings take particular account of the well-established and profitable business position of CIIH's subsidiary CIRe, its strong capitalisation and prudent reserving, and strong risk control disciplines. Also key is the operational success achieved by CIIH's rapidly growing subsidiary life operation TPL, which has expanded rapidly over recent years. TPL benefits from strong financial and actuarial management and acceptablecurrent capitalisation.

Incorporated in Hong Kong and ultimately owned by the government of the PRC, CIIH is the holding company for a diversified insurance and reinsurance financial services group operating throughout mainland China and in Hong Kong, with nationwide licences in the PRC for both life and general insurance. Operating subsidiaries are engaged in life and general insurance underwriting, reinsurance underwriting, reinsurance broking and asset management. CIIH is effectively controlled (54.6%) by the state of the PRC, while 36.0% of its shares are widely held through a public listing in Hong Kong. ICBC (Asia), a Hong Kong publicly listed subsidiary of the Industrial and Commercial Bank of China ("ICBC") owns 9.5%.

CIIH's reinsurance subsidiary, CIRe has a long track record as a professional reinsurer, writing both Asian and international reinsurance business, with a strong Hong Kong market presence. Although significantly impacted by the major natural catastrophes of the closing months of 2005, Fitch expects CIRe's full year combined ratio for 2005 to remain close to breakeven and continues to regard this core subsidiary as key to the group's plans to become a leading composite insurance group in the region.

The life insurer, TPL, was established in 2001 and has continued to grow very strongly, with 2004 gross premium volumes reaching RMB6.6 billion (2003: RMB3.3bln). Distribution of life insurance through bank branches continues to be a dominating feature of the company's operations, accounting for 75% of new premiums for 2004 (2003: 76.4%). During 2004, TPL has continued to open new branch offices in major cities and now has an extensive branch network in major cities throughout the PRC. While welcoming the issue by TPL of subordinated debt of RMB1.5bn in October 2005, which has strengthened capitalisation, Fitch recognises that the continuing expansion of TPL will likely place significant demands on CIIH for additional capital support.

By People's Daily Online