Partially offsetting rating factors for TSP are the company's geographic risk concentration, competitive operating environment and above average underwriting expense ratio relative to the commercial casualty composite. While the underwriting expense ratio reflects the high commission costs, the ratio remains in line with its local market peers. With all business written in Puerto Rico, the company remains exposed to the potential for frequent and severe weather-related events, as well as judicial and regulatory concerns. Despite these concerns and ongoing competitive market pressures, the outlook reflects expectations for continued strong capitalization and profitable operating results over the near term.Factors that could result in upward rating movement for TSS and TSV include continued positive and sustainable trends in premium development and capital growth; prudent and carefully executed geographic diversification initiatives; and improvements in underwriting performance across all lines of business. For TSP, factors that could result in upward rating movement include an improvement in operating earnings and a resulting return on revenue measures, which can be sustained over a period of time. Accordingly, this would enhance the company’s ability to generate additional organic surplus growth while strengthening overall capitalization. For TSS and TSV factors that could result in downward rating movement include deterioration in Puerto Rico’s economy; deterioration in capitalization and the inability to achieve revenue and cash flow targets. For TSP, factors that could result in downward rating pressure over the near term include weakened operating earnings due to deteriorating underwriting performance, or a material increase in catastrophe losses which weakens overall capitalization. A.M. Best believes that TSP is well positioned at its current rating level. The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Understanding BCAR for Life/Health Insurers” and “Risk Management and the Rating Process for Insurance Companies.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.