American Safety Insurance Holdings, Ltd.
Reports Net Earnings Increases of 42% for the
Fourth Quarter and 40% for the Year

HAMILTON, Bermuda, February 28, 2007 — American Safety Insurance Holdings, Ltd. (NYSE: ASI) today reported a 42% increase in fourth quarter net earnings to $6.4 million, or $0.59 per diluted share, from $4.5 million, or $0.63 per diluted share, for the same period in 2005. Net earnings for the year ended December 31, 2006 increased 40% to $20.5 million, or $2.26 per diluted share, as compared to $14.7 million, or $2.05 per diluted share, for the same period of 2005. Net earnings per diluted share for the quarter and year were negatively impacted by the shares issued in the equity offering in June 2006.

Financial highlights for the quarter and year included:

o     Gross premiums written rose 15.0% for the quarter and 2.4% for the year.
o     Net premiums earned grew 1.2% for the quarter and 6.7% for the year.
o     Net investment income increased 59.2% for the quarter and 52.0% for the year.
o     Loss ratio was 67.1% for the quarter compared to 59.7% for the same period of 2005.
o     Loss ratio was 62.9% for the year and 61.4% for the previous year.
o    Combined ratio was 99.7% for the quarter compared to 100.6% for the same period of 2005.
o     Combined ratio was 98.6% for each of the 2005 and 2006 years.
o     Book value per share increased 6.0% for the year to $18.59.
o     Cash flow from operations was $70.7 million in 2006 compared to $70.4 million in 2005.
o    The annualized return on average equity was 12.1% for the quarter and 12.4% for the year compared to 15.5% and 13.0% for the comparable 2005 periods.

Fourth Quarter Results

The increase in net earnings for the quarter was primarily due to increased investment income, realized gains on investments and a $1.1 million reduction in payroll and related expenses due to the reclassification of certain in-house claims expenses to loss and loss adjustment expenses. These expenses were reclassified due to the elimination of third party claims administrators in our construction line of business and did not increase the ultimate loss ratio. Financial results for the quarter were adversely affected by the accrual of $1.9 million in reinsurance reinstatement premiums and $1.0 million of reserve development.

Revenues for the quarter totaled $45.9 million, an increase of 9% over 2005. Net premiums earned, which were negatively impacted by the reinstatement premium, increased 1.2% to $38.2 million. The increase in investment income related to a 27.8% increase in average invested assets and a 24.6% increase in the average yield to 5.1%. Net realized gains on the investment portfolio after taxes were $621,000.

The accrual of reinsurance reinstatement premiums resulted from claims in our environmental line that penetrated the upper layers of our reinsurance treaties. The prior year loss development related to an environmental program written by our non-subsidiary affiliate risk retention group. The development impacted the combined ratio for the quarter but did not impact overall earnings as the risk retention group’s results are eliminated through minority interest. The net effect of the accrual, loss development and the reduction in payroll and related expenses discussed above increased the reported combined ratio by 4.5 percentage points.


The following information was filed by American Safety Insurance Holdings Ltd (ASI) on Wednesday, February 28, 2007 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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