UPDATE 1-ACE to buy New York Life Co's Mexican surety unit for $285 mln

Sept 12 (Reuters) - Property and casualty insurer ACE Ltd will buy Mexican surety company Fianzas Monterrey from New York Life Insurance Company for about $285 million in cash to diversify its business.

Zurich-based ACE has been expanding in emerging markets through acquisitions. The insurer, which lost the race for HSBC Holdings Plc's $1 billion general life insurance business in March, acquired Indonesian general insurer PT Asuransi Jaya Proteksi for about $130 million in June.

It bought an Ecuadorian general insurer for $55 million and Penn Millers Holding Corp for $107 million last year.

Fianzas Monterrey, one of Mexico's largest surety lines company, offers administrative performance bonds primarily to clients in the construction and industrial sectors.

The deal, which is slated to close in the first quarter of 2013, will add to ACE's commercial property and casualty, accident and health and life insurance business.

"As part of our specialty P&C business, surety is a growth area for ACE, and Mexico is an attractive market with a strong economic outlook," ACE's CEO Evan Greenberg said in a statement.

ACE shares were marginally up at $75.52 in morning trade on the New York Stock Exchange on Wednesday.