American Safety Insurance Holdings, Ltd. Reports 37% Net Earnings Increase for the Year and 6% for the Fourth Quarter

Business Wire, March 5, 2008

Book Value per Outstanding Share Increases 16% for the Year to $21.53

HAMILTON, Bermuda -- American Safety Insurance Holdings, Ltd, (NYSE: ASI) today reported a 6% increase in fourth quarter net earnings to $6.8 million, or $0.61 per diluted share, from $6.4 million, or $0.59 per diluted share for the same period in 2006.

Net earnings for the year ended December 31, 2007 increased 37% to $28.2 million, or $2.56 per diluted share, as compared to $20.5 million, or $2.26 per diluted share for the same period of 2006. Book value per outstanding share increased 16% for the year to $21.53 from $18.59.

Financial highlights for the quarter and year included:

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Fourth Quarter Results

Net earnings for the quarter increased 6% to $6.8 million, or $0.61 per diluted share compared to $6.4 million or $0.59 per diluted share for the same period 2006 due to strong investment income, generating an annualized return on average equity of 12.6%. The results include $1.8 million of prior year adverse reserve development, primarily related to the environmental product line, and a $2.3 million accrual of additional ceded premium triggered by environmental losses in the 2003 treaty year. With this accrual, the Company has ceded its maximum premium under this treaty. The reserve development and additional reinsurance premium increased the combined ratio for the quarter by 11 percentage points. Reserve development in our U.S. subsidiaries resulted in a tax benefit of $1.2 million. Results for the 2006 quarter were adversely affected by the accrual of a $1.9 million reinsurance reinstatement premium and $1.0 million of reserve development.

Revenues for the quarter totaled $42.5 million, a decrease of 7% over the 2006 quarter. Net premiums earned decreased $3.8 million, or 8%, due to the additional reinsurance premium and lower written premiums. Net investment income increased 20% to $7.8 million from $6.5 million for the same period of 2006 as average invested assets increased from $511 million in 2006 to $604 million in 2007. Net realized losses for the quarter were $223,000 compared to a gain of $839,000 in the 2006 quarter.

Year End Results

Net earnings increased 37.3% to $28.2 million for the year ended December 31, 2007, compared to $20.5 million for 2006. Total revenues increased 5.6% to $181 million, as net premiums earned increased 1.4% to $148.8 million and investment income increased 39.0% to $30.3 million. The increase in investment income related to a 20.9% increase in average invested assets and a 13.3% increase in the average yield to 5.1%. Net realized losses on the investment portfolio before taxes for the year were $311,000 compared to a gain of $1.2 million in 2006.

The 2007 combined ratio was 97.4% composed of a loss ratio of 61.3% and an expense ratio of 36.1%. Unfavorable prior year reserve development for the year totaled $2.2 million, and combined with the additional ceded premium in the fourth quarter, increased the combined ratio for the year by 3 percentage points.

Comments by Management

Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said, "We closed out 2007 with strong earnings improving the book value per share to $21.53, an increase of 16% over 2006. Gross premiums written declined for both the quarter and year as we exercised underwriting discipline in the soft market. These premium declines were substantially mitigated by the execution of our product diversification strategy, which generated over $58 million of gross premiums written for the year. We furthered that strategy with the recent acquisition of the LTC Companies, adding a healthcare business line to the ASI specialty product portfolio. While we expect the soft market to place continued downward pressure on profitability in 2008, we believe the product diversification strategy we implemented over the past two years will allow us to achieve growth in gross premiums written of 3-5% and a return on equity of 10-11%."

About Us:

American Safety Insurance Holdings, Ltd. (NYSE:ASI), a Bermuda holding company, offers innovative insurance solutions outside the U.S. in the reinsurance and alternative risk markets through its subsidiaries American Safety Reinsurance, Ltd. and American Safety Assurance, Ltd., and in the U.S. for specialty risks and alternative risk markets through its program administrator, American Safety Insurance Services, Inc., and insurance company subsidiaries and affiliates American Safety Casualty Insurance Company, American Safety Indemnity Company and American Safety Risk Retention Group, Inc. As a group, ASI's insurance subsidiaries and affiliates are rated "A" (Excellent) VIII by A.M. Best.

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