Hamilton-based Elwood Insurance Ltd. has been affirmed the financial strength rating of B++ (good) and issuer credit rating of "bbb" by AM Best Co.

The outlook for both ratings is stable.

Elwood's ratings recognise its excellent capitalisation level, history of positive operating performance, conservative reserve practices and effective management of exposures.

Over the past five years, return on surplus has averaged 23.1 percent, while surplus levels have increased at a compound annual growth rate of 24.2 percent through the accumulation of net profits.

Partially offsetting these positive rating factors is Best's concern with the high balance sheet leverage of Elwood's ultimate parent, Celanese Corp., which could negatively impact the operations of its captive.

Additional offsetting rating factors are Elwood's exposure to some low frequency, high severity hazards in its risk profile, coupled with high gross limits and high net retentions.

Celanese's risk management team takes an enterprise-wide approach to managing its risks and utilising the captive as an integral tool in this process. Elwood has utilised its relationships and those of Celanese to develop a variety of unique and non-correlating accounts, which provide a favourable enhancement to its overall book of business. Nonetheless, Elwood's long-term growth opportunities primarily depend on Celanese's business success.