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A.M. Best Co. has assigned a financial strength rating of A (Excellent) and an issuer credit rating of “a” to ACE Seguros S.A. (ACE Seguros) (Panama), whose ultimate parent is ACE Limited (ACE) (Zurich, Switzerland) [NYSE: ACE]. The outlook assigned to both ratings is stable. The ratings of ACE Seguros are enhanced by the financial and operating benefits it receives as a member of ACE, which is evidenced by ACE’s capital contributions in prior years and the internal reinsurance support provided by an affiliate, ACE Tempest Reinsurance Ltd. The ratings also reflect ACE Seguros' capital position, which supports its current and projected levels of writings and expected improvement in underwriting performance following the absorption of its startup costs as well as the benefits of growing its book of business. These strengths are somewhat offset by ACE Seguros’ high net retention on its catastrophe related exposure compared to its policyholders' surplus position, variability in operating results given its start-up status and its ongoing execution risks and limited market presence. ACE Seguros’ strengths are derived from its management’s successful operating strategies and the company's strategic role as the Latin American hub for ACE’s operations as well as affiliated reinsurance. Management’s strategies include consistent focus on underwriting profitability through careful risk selection and pricing and appropriate policy limits within the business model framework. ACE’s experienced management team provides a disciplined underwriting approach and strong risk management capabilities through a comprehensive enterprise risk management program. While A.M. Best believes ACE Seguros is well positioned at its current rating level, factors that may lead to positive rating actions include an improvement in underwriting and operating performance that outperforms its peers over time while maintaining a level of risk-adjusted capital that supports its operations. However, factors that could lead to negative rating actions include a reduction in financial and operating support from ACE and its affiliates, operating performance falling short of A.M. Best's expectations and/or an erosion of surplus that causes a decline in ACE Seguros’ risk-adjusted capital to a level no longer supportive of its current ratings.