SECURITIES AND EXCHANGE COMMISSION
                                                         WASHINGTON D.C. 20549

                                                        ----------------------

                                                               FORM 10-Q

           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

Commission File Number 1-14795


                                                 AMERICAN SAFETY INSURANCE GROUP, LTD.
                                        (Exact name of Registrant as specified in its charter)


               Bermuda                                                                                               Not Applicable
           (State or other                                                                                          (I.R.S. Employer
            jurisdiction                                                                                             Identification
          of incorporation)                                                                                               No.)

                                                           44 Church Street
                                                            P.O. Box HM2064
                                                        Hamilton HM HX, Bermuda
                                          (Address, zip code of principal executive offices)

                                                            (441) 296-8560
                                         (Registrant's telephone number, including area code)

                                                            --------------

Indicate by check mark whether Registrant:  (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  x    No___
                                               ---

The aggregate number of shares outstanding of Registrant's common stock, $.01 par value, on May 3,
2001 was 4,798,547.








                                     AMERICAN SAFETY INSURANCE GROUP, LTD.

                                                   FORM 10-Q

                                               TABLE OF CONTENTS
                                               -----------------
                                                                                           Page

                                         PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.................................................................1
Item 2.  Management's Discussion and Analysis of Financial Condition
                    and Results of Operations................................................14
Item 3.  Quantitative and Qualitative Disclosures About Market Risks.........................22

                                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings...................................................................23
Item 2.  Changes in Securities and Use of Proceeds...........................................23
Item 3.  Defaults Upon Senior Securities.....................................................23
Item 4.  Submission of Matters to a Vote of Security Holders.................................23
Item 5.  Other Information...................................................................23
Item 6.  Exhibits and Reports on Form 8-K....................................................23



                                                                 -2-





                                                           PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

                                        American Safety Insurance Group, Ltd. and Subsidiaries
                                                     Consolidated Balance Sheets



                                                                                December 31,         March 31,
                                                                                    2000               2001
                                                                                    -----              ----
                                                                                                    (unaudited)

                                       Assets
                                       ------
Investments:
         Securities available for sale, at fair value:
                Fixed maturities                                                 $45,985,656         $51,548,449

         Common stock                                                                162,322           1,339,387
         Investment in real estate                                                29,786,224          36,500,716
         Short-term investments                                                   15,312,377          13,272,618
                                                                                  ----------          ----------
           Total investments                                                      91,246,579         102,661,170
Cash                                                                               3,784,102           3,628,591
Restricted Cash                                                                    6,117,682           8,207,472
Accrued investment and interest income                                             1,543,675           2,066,753
Notes receivable                                                                   8,878,018           9,054,183
Premiums receivable                                                               33,344,382          31,554,607
Commissions receivable                                                                     -              26,033
Funds on deposit                                                                     298,000             648,072
Ceded unearned premium                                                            22,190,095          19,717,775
Reinsurance recoverable                                                           27,929,794          35,019,861
Due from affiliate                                                                   985,320           3,348,869
Income tax recoverable                                                               160,333                   -
Deferred income taxes                                                              1,543,272           1,582,589
Deferred Acquisition Costs                                                         3,039,144           4,810,993
Property, plant and equipment                                                        935,743           1,043,815
Prepaid Items                                                                      1,755,191           1,852,558
Goodwill                                                                           1,553,863           1,532,055
Other assets                                                                       1,992,923           2,129,061
                                                                               -------------      --------------
           Total assets                                                         $207,298,116        $228,884,457
                                                                                ============        ============

      Liabilities and Shareholders' Equity
      ------------------------------------
Liabilities:
      Unpaid losses and loss adjustment expenses                                 $50,508,627         $64,649,518
      Unearned premiums                                                           41,953,354          49,692,600
      Reinsurance on paid loss and loss adjustment expenses                          928,865             214,975
      Ceded premiums payable                                                      24,311,656          16,886,168
           Due to affiliate:
           Ceded premiums payable                                                    567,786             328,057
           Reinsurance on paid loss and loss adjustment expenses                     229,790                   -
      Escrow Deposits                                                              6,200,182           8,773,894
      Accounts payable and accrued expenses                                        6,384,429           6,695,623
      Funds held                                                                   4,861,472           4,680,791
      Loan payable                                                                11,435,221          16,253,750
      Collateral held                                                              1,544,839           1,067,319
      Income tax payable                                                                   -             358,938


                                                                 -1-



      Unearned Loan Fees                                                             568,750               487,500
                                                                                 -----------           -----------
Total liabilities                                                                149,494,971           170,089,133
                                                                                 -----------           -----------


Shareholders' equity:

        Preferred stock, $0.01 par value; authorized 5,000,000 shares;
           no shares issued and outstanding                                                -                           -
    Common stock, $0.01 par value; authorized 15,000,000 shares; issued
      and outstanding at December 31, 2000, 6,281,386 shares, and at
      March 31, 2001, 6,281,386 shares                                                62,814                      62,814
      Additional paid-in capital                                                  35,148,577                  35,148,577
      Retained earnings                                                           29,262,582                  31,160,251
      Accumulated other comprehensive income, net                                    428,085                     910,457
           Treasury Stock, 1,267,200 shares at December 31, 2000 and
             1,477,839 shares at March 31, 2001                                   (7,098,913)                 (8,486,775)
                                                                                ------------                ------------
             Total shareholders' equity                                           57,803,145                  58,795,324
                                                                                ------------                ------------
    Total liabilities and shareholders's equity                                 $207,298,116                $228,884,457
                                                                                ============                ============
See accompanying notes to consolidated financial statements (unaudited).


                                                                 -2-





                                        American Safety Insurance Group, Ltd. and Subsidiaries

                                                  Consolidated Statements of Earnings
                                                              (Unaudited)


                                                                     Three Months Ended
                                                                         March 31,
                                                            2000                           2001
                                                            ----                           ----
Revenues:
   Direct premiums earned                              $    3,159,207               $  23,007,062
Assumed premiums earned:
   Affiliate                                                  995,736                   2,462,812
   Nonaffiliates                                            2,412,417                   3,759,342
                                                          -----------                   ---------
   Total assumed premiums earned                            3,408,153                   6,222,154
                                                          -----------                   ---------

Ceded premiums earned:
   Affiliate                                                  846,088                   1,377,007
   Nonaffiliates                                            1,657,949                  14,483,191
                                                          -----------                  ----------
      Total ceded premiums earned                           2,504,037                  15,860,198
                                                          -----------                  ----------
      Net premiums earned                                   4,063,323                  13,369,018
                                                          -----------                  ----------

   Net investment income                                      729,102                     857,512
   Interest on notes receivable                               434,594                     275,932
   Brokerage commission income                                473,139                     490,943
   Management fees from affiliate                             367,000                     363,805
   Net realized gains (losses)                               (126,047)                    239,519
   Other income                                               656,162                     659,859
                                                          -----------                  ----------
      Total revenues                                        6,597,273                  16,256,588
                                                          -----------                  ----------

Expenses:
   Losses and loss adjustment expenses incurred             2,797,099                   8,097,967
   Acquisition expenses                                       763,048                   2,142,255
   Payroll and related expenses                             1,628,224                   2,086,937
   Other expenses                                             886,066                   1,664,789
   Expense due to rescission                                3,541,848                            -
                                                          -----------                  -----------
      Total expenses                                        9,616,285                  13,991,948
                                                          -----------                  ----------

        Earnings (loss) before income taxes                (3,019,012)                  2,264,640

Income taxes (benefit)                                     (1,070,259)                    366,971
                                                           -----------                 ----------

Net earnings (loss)                                       $(1,948,753)                 $1,897,669
                                                          ============                 ==========

Net earnings (loss) per share:
   Basic                                                   $  ( 0.33)                   $   0.39
                                                           ----------                   --------
   Diluted                                                 $  ( 0.33)                   $   0.38
                                                           ----------                   --------

Common shares used in computing earnings per share:
   Basic                                                    5,926,654                   4,882,375
                                                            =========                   =========
   Diluted                                                  5,931,996                   4,962,112
                                                            =========                   =========

See accompanying notes to consolidated financial statements (unaudited).

                                                                 -3-





                                        American Safety Insurance Group, Ltd. and Subsidiaries

                                                 Consolidated Statements of Cash Flow

                                                              (Unaudited)


                                                                                       Three months ended
                                                                                            March 31,
                                                                                            ---------
                                                                                  2000                    2001
                                                                                  ----                    ----
Cash flow from operating activities:
    Net earnings                                                             $(1,948,753)            $1,897,669
    Adjustments to reconcile net earnings to net cash provided by
      operating activities:
      Realized gains/losses on sale of investments                               126,047               (239,519)
      Amortization of deferred acquisition costs                                 678,192             (1,771,849)
      Change in:
         Accrued investment and interest income                                 (259,039)              (523,078)
         Premiums receivable                                                    (969,773)             1,789,775
         Commissions receivable                                                   (5,702)               (26,033)
         Reinsurance recoverable and ceded unearned premiums                  (2,968,321)            (5,331,637)
         Unearned loan fees                                                            -                (81,250)
         Funds held by reinsured                                                  95,734               (180,681)
         Due from affiliate                                                      (74,777)            (2,363,549)
         Funds on Deposit                                                        (11,323)              (386,072)
         Income taxes                                                         (1,554,507)               479,954
         Unpaid losses and loss adjustment expenses                            1,123,014             14,140,891
         Unearned premiums                                                     3,365,859              7,739,246
         Liability for deductible fees held                                      (41,014)                     -
         Ceded premiums payable                                                2,146,443             (7,425,488)
         Due to affiliate                                                        342,945               (469,519)
         Accounts payable and accrued expenses                                 1,561,978                311,194
         Collateral                                                             (283,037)              (477,520)
         Prepaid items                                                            30,806                (97,367)
         Other, net                                                             (210,145)                93,310
                                                                             ------------             ---------
               Net cash provided by operating activities                       1,144,627              7,078,477
                                                                             -----------              ---------

Cash flow from investing activities:
    Purchases of fixed maturities                                                      -            (10,849,760)
    Purchases of Equity Investments                                           (4,898,758)            (1,177,155)
    Proceeds from maturity and redemption of fixed maturities                          -                821,207
    Proceeds from sale of fixed maturities                                     4,008,167              5,016,101
    Proceeds from sale of equity investments                                   4,591,753                      -
    Purchase of Trafalgar Insurance Company                                   (7,050,877)                     -
    Increase  in Investment in Real Estate                                    (1,068,981)            (6,714,492)
    Increase in short-term investments                                         2,178,744              2,039,759
    Proceeds from notes receivable - related parties                           1,530,000                      -
    Advances in notes receivable - other                                        (821,792)              (176,165)
    Purchase of fixed assets, net                                                (64,199)              (108,072)
                                                                            -------------           ------------
      Net cash used in investing activities                                   (1,595,943)           (11,148,577)
                                                                            -------------           ------------

Cash flow from financing activities:
    Purchase of treasury stock                                                  (665,119)            (1,387,862)
    Proceeds from loan payable                                                11,648,855              4,818,529
    Proceeds from escrow deposits                                                      -              2,573,712
                                                                            ------------             ----------
      Net cash provided by financing activities                               10,983,736              6,004,379
                                                                            ------------             ----------

      Net increase (decrease) in cash                                         10,532,420              1,934,279

Cash at beginning of period                                                      427,154              9,901,784
                                                                            ------------             ----------

Cash at end of period                                                        $10,959,574            $11,836,063
                                                                             ===========            ===========

NONCASH ITEMS
    Operating activities:
      Recoverable due to rescission in other assets                           (1,323,000)                     -

    Financing activities:                                                              -                      -
      Issuance of common stock                                                 1,323,000                      -
                                                                            ------------            ---------------

    Net noncash adjustments                                                            -                      -
                                                                            ============            ===============

See accompanying notes to consolidated financial statements (unaudited).

                                                                 -4-





                                        American Safety Insurance Group, Ltd. and Subsidiaries

                                           Consolidated Statements of Comprehensive Earnings
                                                              (Unaudited)


                                                                        Three months ended
                                                                             March 31,
                                                               -------------------------------

                                                                   2000                2001
                                                                   ----                ----

Net earnings (loss)                                            $(1,948,753)         $1,897,669

Other comprehensive earnings before
 income taxes:

Unrealized gains on securities
available for sale                                                  16,913             835,242

Reclassification adjustment for
 realized (gains) losses  included in net
earnings                                                           126,047            (239,519)
                                                               -----------            ---------

    Total other comprehensive earnings before taxes                142,960             595,723

Income tax expense (benefit) related to
 items of comprehensive income                                    (234,263)            113,351
                                                               ------------         ----------

    Other comprehensive earnings net of income taxes               377,223             482,372
                                                               -----------          ----------

  Total comprehensive earnings (loss)                          $(1,571,530)         $2,380,041
                                                               ============         ==========




See accompanying notes to consolidated financial statements (unaudited).




                                                                 -5-





                                        American Safety Insurance Group, Ltd. and Subsidiaries

                                        Notes to Consolidated Financial Statements (Unaudited)

Note 1 - Basis of Presentation

             The accompanying unaudited interim consolidated financial statements of American Safety
Insurance Group, Ltd. ("American Safety") and its subsidiaries (collectively, the "Company") are
prepared in accordance with accounting principles generally accepted in the United States of
America and, in the opinion of management, reflect all adjustments, consisting of normal recurring
adjustments, considered necessary for a fair presentation of the interim period presented. The
preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates, based on the best information available, in recording
transactions resulting from business operations. The balance sheet amounts that involve a greater
extent of accounting estimates and actuarial determinations subject to future changes are the
Company's liabilities for unpaid losses and loss adjustment expenses. As additional information
becomes available (or actual amounts are determinable), the recorded estimates may be revised and
reflected in operating results. While management believes that the liability for unpaid losses and loss
adjustment expenses is adequate to cover the ultimate liability, such estimates may be more or less
than the amounts actually paid when claims are settled.

             The results of operations for the three months ended March 31, 2001 may not be indicative
of the results that may be expected for the full year ending December 31, 2001. These unaudited
interim consolidated financial statements and notes should be read in conjunction with the financial
statements and notes included in the audited consolidated financial statements of American Safety
and its subsidiaries for the year ended December 31, 2000.

             The unaudited interim consolidated financial statements include the accounts of American
Safety and each of its subsidiaries. All significant intercompany balances have been eliminated.

Note 2 - Accounting Pronouncements

             In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and
Hedging Activities.  SFAS No. 133, as amended, is effective for years beginning after June 15, 2000.
The standard requires that all derivatives be recorded as an asset or liability, at estimated fair value,
regardless of the purpose or intent for holding the derivative.  If a derivative is not utilized as a
hedge, all gains or losses from the change in the derivative's estimated fair value are recognized in
earnings.  The gains or losses from the change in estimated fair value of certain derivatives utilized
as hedges are recognized in earnings or other comprehensive income depending on the type of hedge
relationship.  The adoption of SFAS No. 133, as amended, did not have a material impact on the
Company's consolidated financial position and results of operation.


                                                                 -6-





           In September 2000, the FASB issued SFAS No. 140,  Accounting for Transfers and Servicing
of Financial Assets and Extinguishment of Liabilities-a replacement of FASB Statement No. 125.
SFAS No. 140 revises the standards of accounting for securitizations and other transfers of financial
assets and collateral and requires certain disclosures not previously required under SFAS No. 125.
This statement is effective for all transfers and servicing of financial assets and liabilities occurring
after March 31, 2001.  For recognition and reclassification of collateral and for disclosures relating
to securitization transactions and collateral, it is effective for fiscal years ended after December 15,
2000.  The Company is currently assessing the impact of SFAS No. 140, but does not believe that
the statement will have a material impact on the Company's consolidated financial position and
results of operation.

Note 3 - Nature of Operations

             The following is a description of certain risks facing the Company:

             Legal/Regulatory Risk is the risk that changes in the legal or regulatory environment in
which an insurer operates which will create additional expenses not anticipated by the insurer in
pricing its products and beyond those recorded in the financial statements. Regulatory initiatives
designed to reduce insurer profits or otherwise affecting the industry in which the Company operates,
new legal theories or insurance company insolvencies through guaranty fund assessments, may create
costs for the Company beyond those recorded in the financial statements.  The Company attempts
to mitigate this risk by writing insurance business in several states, thereby spreading this risk over
a large geographic area.

             Potential Risk of United States Taxation of Bermuda Operations.  Under current Bermuda
law, American Safety is not required to pay any taxes in Bermuda on either income or capital gains.
American Safety has received an undertaking from the Minister of Finance in Bermuda that will
exempt American Safety from taxation until the year 2016 in the event of any such taxes being
imposed.  The Company, exclusive of its United States subsidiaries, does not consider itself to be
engaged in a trade or business in the United States and accordingly does not expect to be subject to
direct United States income taxation.  The Company's U.S. subsidiaries are subject to taxation in the
United States.

             Whether a foreign corporation is engaged in a United States trade or business or is carrying
on an insurance business in the United States depends upon the level of activities conducted in the
United States.  If the activities of a foreign company are "continuous, regular, and considerable," the
foreign company will be deemed to be engaged in a United States trade or business.  Due to the fact
that American Safety will continue to maintain an office in Bermuda and American Safety and its
Bermuda subsidiary's business is reinsuring contracts via treaty reinsurance agreements, which are
all signed outside of the United States, American Safety does not consider itself to be engaged in a
trade or business in the United States and, accordingly, does not expect to be subject to United States
income taxes.  This position is consistent with the position taken by various other entities that have
the same operational structure as American Safety.

                                                                 -7-



             However, because the Internal Revenue Code of 1986, as amended, the Treasury
Regulations and court decisions do not definitively identify activities that constitute being engaged
in a United States trade or business, and because of the factual nature of the determination, there can
be no assurance that the Internal Revenue Service will not contend that American Safety or its
Bermuda subsidiary are engaged in a United States trade or business.  In general, if American Safety
or its Bermuda subsidiary are considered to be engaged in a United States trade or business, it would
be subject to (i) United States Federal income tax on its taxable income that is effectively connected
with a United States trade or business at graduated rates and (ii) the 30 percent branch profits tax on
its effectively connected earnings and profits deemed repatriated from the United States.

             Credit Risk is the risk that issuers of securities owned by the Company or secured notes
receivable will default or that other parties, including reinsurers that have obligations to the insurer,
will not pay or perform.  The Company attempts to mitigate this risk by adhering to a conservative
investment strategy, by obtaining sufficient collateral for secured note obligations and by maintaining
sound reinsurance, credit and collection policies.

             Interest Rate Risk is the risk that interest rates will change and cause a decrease in the value
of an insurer's investments.  The Company attempts to mitigate this risk by attempting to match the
maturities of its assets with the expected payouts of its liabilities.

Note 4 - Investments

             The amortized cost and estimated fair values of investments at December 31, 2000 and
March 31, 2001 are as follows:


                                                                                Gross            Gross
                                                            Amortized         unrealized       unrealized      Estimated
                                                               Cost             gains            losses        fair value

December 31, 2000:
    Securities available for sale:
      Fixed maturities:
         U.S. Treasury securities and obligations of
            U.S. Government  corporations and
            agencies                                     $ 30,952,452         $615,498       $112,524         31,455,426
      Obligations of states and political subdivisions      6,083,661          190,974              -          6,274,635
      Corporate securities                                  6,799,319           17,688        153,243          6,663,764
      Mortgage-backed securities                            1,562,888           31,997          3,054          1,591,831
                                                            ---------          -------      ---------          ---------
              Total fixed maturities                       45,398,320          856,157        268,821         45,985,656

 Equity investments - common stocks                           162,322                -              -            162,322
                                                          -----------         --------       --------        -----------

      Total                                               $45,560,642         $856,157       $268,821        $46,147,978
                                                          ===========         ========       ========        ===========

March 31, 2001:
    Securities available for sale:
      Fixed maturities:
         U.S. Treasury securities and obligations of
            U.S. Government  corporations and
            agencies                                      $32,711,996       $1,015,802             $13,964        $33,713,834
         Obligations of states and political subdivisions     636,503           20,721                   -            657,224
         Corporate securities                              13,319,497          104,585              17,506         13,406,576
         Mortgage-backed securities                         3,697,393           76,707               3,285          3,770,815
                                                          -----------       ----------           ---------        -----------
              Total fixed maturities                       50,365,389        1,217,815              34,755         51,548,449

 Equity investments - common stocks                         1,339,387                -                    -         1,339,387
                                                          -----------       ----------             --------       -----------

      Total                                               $51,704,776       $1,217,815             $34,755        $52,887,836
                                                          ===========       ==========             =======        ===========


                                                                          -8-



    Note 5 - Segment Information

(a)    Factors used to identify the Company's reportable segments:

       The Company's United States and Bermuda operating segments were identified by
       management as separate operating segments based upon the regulatory environments of
       each of these countries.  Significant differences exist under United States and Bermuda law
       concerning the regulation of insurance entities including differences in:  types of
       permissible investments, minimum capital requirements, solvency monitoring, pricing,
       corporate taxation, etc.

(b)    Products and services from each reportable segment:

       The Company's United States and Bermuda operating segments, develop, underwrite,
       manage and market primary casualty insurance and reinsurance programs in the alternative
       insurance market for environmental remediation risks; employee leasing and staffing
       industry risks; and other specialty risks.  The Company has demonstrated expertise in
       developing specialty insurance coverages and custom designed risk management programs
       not generally available in the standard insurance market.

       The Company is also involved in the development of the Harbour Village Golf and Yacht
       Club project in Ponce Inlet, Florida, as discussed in Note 7 and this item is reflected in the
       segment United States-Real Estate.

       The United States operating segment's specialty insurance programs provide insurance and
       reinsurance for general, pollution and professional liability exposures, for workers'
       compensation and surety, as well as custom designed risk management programs for
       contractors, consultants and other business and property owners who are involved with
       environmental remediation, general construction and other specialty risks.

       Through its United States brokerage and management services subsidiaries, the Company
       also provides specialized insurance program development, underwriting, risk and
       reinsurance placement, program management, brokerage, loss control, claims
       administration and marketing services.  The Company also insures and places risks through
       its United States insurance subsidiary, as well as its non-subsidiary risk retention group
       affiliate and other unaffiliated insurance and reinsurance companies.

       Through its Bermuda operating segment, the Company places and reinsures a portion of
       the risks underwritten directly by its United States segment, its risk retention group
       affiliate and other insurers.

                                                           -9-



(c)    Information about segment profit or loss and assets:

                                                                                   Three Months Ended
                                                                                        March 31,
                                                                            2000                2001
                                                                            ----                ----
United States - Insurance

Net premiums earned - All other                                         $ 4,782,989         $12,726,831
    Net premiums earned - Intersegment                                   (1,551,002)         (2,469,582)
    Net investment income and interest on notes receivable                  312,567             662,588
Other revenues                                                              786,914           1,735,852
                                                                       ------------           ---------
Total revenues                                                            4,331,468          12,665,689
Interest expense                                                                  -                   -
Depreciation and amortization expense                                        34,469              62,182
Equity in net earnings of subsidiaries                                   (3,070,300)            846,942
Income taxes                                                             (1,070,259)            452,197
Segment profit/(loss)                                                    (2,000,041)            849,286
Significant noncash items other than depreciation and
    amortization                                                                  -                   -
Property, plant and equipment                                               462,661             732,046
Total investments                                                        37,997,156          57,823,164
Total assets                                                             87,338,785         169,453,203
Total policy and contract liabilities                                    27,508,968         106,754,585
Total liabilities                                                        60,403,070         140,053,276

United States - Real Estate

Net premiums earned - All other                                                   -                   -
Net premiums earned - Intersegment                                                -                   -
Net investment income and interest on notes receivable                            -                   -
Other revenues                                                                    -                 864
                                                                            -------           ---------
Total revenues                                                                    -                 864
Interest expense                                                                  -                   -
Depreciation and amortization expense                                             -              14,493
Equity in net earnings of subsidiaries                                            -                   -
Income taxes                                                                      -             (85,226)
Segment profit/(loss)                                                             -            (165,439)
Significant noncash items other than depreciation and
    amortization                                                                  -                   -
Property, plant and equipment                                                     -             311,769
Total investments                                                                 -          31,780,364
Total assets                                                                      -          36,497,204
Total policy and contract liabilities                                             -                   -
Total liabilities                                                                 -          27,335,385

                                                                 -10-





                                                                              Three Months Ended
                                                                                   March 31,


Bermuda

Net premiums earned - All other                                        519,589            642,187
Net premiums earned - Intersegment                                   1,551,002          2,469,582
Net investment income and interest on notes receivable                 851,129            470,856
Other revenues                                                         519,515             37,500
                                                                     ---------         ----------
Total revenues                                                       3,441,235          3,620,125
Interest expense                                                             -                  -
Depreciation and amortization expense                                        -                  -
Equity in net earnings of subsidiaries                                (890,890)        (1,626,479)
Income taxes                                                                 -                  -
Segment profit                                                          51,288          1,213,822
Significant noncash items other than depreciation and
    amortization                                                             -                  -
Property, plant and equipment                                          835,832                  -
Total investments                                                   53,602,506         62,911,219
Total assets                                                        95,804,898         89,332,513
Total policy and contract liabilities                               13,837,066         17,903,538
Total liabilities                                                   17,661,013         19,245,358

Intersegment Eliminations

Net premiums earned - All Other                                              -                   -
Net premiums earned - Intersegment                                           -                   -
Net investment income and interest on notes receivable                       -                   -
Other revenues                                                        (178,804)            (20,090)
                                                                      ---------       ------------
Total revenues                                                        (178,804)            (20,090)
Interest expense                                                             -                   -
Depreciation and amortization expense                                        -                   -
Equity in net earnings of subsidiaries                                 890,890             779,537
Income taxes                                                                 -                    -
Segment profit (loss)                                                        -                    -
Significant noncash items other than depreciation and
    amortization                                                             -                    -
Property, plant and equipment                                                -                    -
Total investments                                                   (44,952,489)        (49,853,577)
Total assets                                                        (60,330,326)        (66,398,463)
    Total policy and contract liabilities                            (6,947,583)        (10,316,005)
Total liabilities                                                   (15,377,837)        (16,544,886)




                                                                 -11-





                                                                                         Three Months Ended
                                                                                              March 31,

Total

Net premiums earned - All other                                         5,302,578                     13,369,018
Net premiums earned - Intersegment                                              -                              -
Net investment income and interest on notes receivable                  1,163,696                      1,133,444
Other revenues                                                          1,127,625                      1,754,126
                                                                        ---------                     ----------
Total revenues                                                          7,593,899                     16,256,588
Interest expense                                                                -                              -
Depreciation and amortization expense                                      34,469                         76,675
Equity in net earnings of subsidiaries                                          -                              -
Income taxes                                                           (1,070,259)                       366,971
Segment profit (loss)                                                  (1,948,753)                     1,897,669
Significant noncash items other than depreciation and
    amortization                                                                -                              -
Property, plant and equipment                                           1,298,493                      1,043,815
Total investments                                                       59,755,996                   102,661,170
Total assets                                                            122,813,357                  228,884,457
Total policy and contract liabilities                                    34,398,451                   114,342,118
Total liabilities                                                       62,686,246                   170,089,133


Note 6 - Shareholder Matters

            During the quarter ended March 31, 2001, the Company repurchased 210,639 shares of its
stock at a total price of $1,387,862 in open market transactions pursuant to its share repurchase
program.

Note 7 - Investment in Real Estate

             The Company's investment in the development of the Harbour Village Golf and Yacht
Club project is comprised of 173 acres of property in Ponce Inlet, Florida (the "Property") that was
acquired through foreclosure on April 13, 1999.  At the date of foreclosure, the Company evaluated
the carrying value of its investment in real estate by comparing the fair value of the foreclosed
collateral to the book value of the underlying loan and accrued interest.  As the book value of the
loan and accrued interest was less than the fair value of the collateral, no loss was recognized on
foreclosure and the book balance of the loan and accrued interest became the basis of the real estate.

             As of December 31, 2000 and March 31, 2001, the investment in real estate for the
Harbour Village project is as follows (in thousands):


                                                                 -12-






                                            December 31, 2000          March 31, 2001
                                            -----------------          --------------
Land                                                $11,989              $11,989
Capitalized overhead, interest and
        taxes                                         3,886                4,323
Work in process                                       8,961               15,468
                                                      -----               ------
        Total                                       $24,836              $31,780
                                                    =======              =======


Note 8 - Income Taxes

      Total income tax (benefit) for the quarters ended March 31, 2000 and 2001 were allocated as
follows:


                                                            Quarter Ended
                                                              March 31,
                                                    2000                2001
                                                    ----                ----
Tax benefit attributable to:
    Income from continuing operations             (1,070,259)           366,971
    Unrealized losses  on
         securities available for sale              (232,639)           112,944
                                                -------------           -------
              Total                             $ (1,302,898)          $479,915
                                                 ============           =======

           U.S. Federal and state income tax expense from continuing operations consists of the
following components:


                                                Current           Deferred         Total
                                                -------           --------         -----
March 31, 2000                                (1,132,235)            61,976      (1,070,259)
March 31, 2001                                   519,232           (152,261)        366,971

           The state income tax components aggregated $(4,461) and $21,905 for the quarters ended
March 31, 2000 and 2001, respectively.

           Income tax expense for the quarters ended March 31, 2000 and 2001 differed from the
amount computed by applying the U.S. Federal income tax rate of 34% to earnings before Federal
income taxes as a result of the following:


                                                                 -13-






                                                            March 31,
                                                       2000          2001
                                                       ----          ----

Expected income tax expense                        $(1,026,464)     $769,978
Foreign earned income not subject to U.S.
   taxation                                            (17,438)     (412,699)
Tax-exempt interest                                    (28,643)      (15,275)
State taxes and other                                    2,286        24,967
                                                  ------------      --------

                                                   $(1,070,259)     $366,971
                                                    ===========      =======

           Deferred income taxes are based upon temporary differences between the financial statement
and tax bases of assets and liabilities.  The following deferred taxes are recorded:


                                                                 December 31,            March 31,
                                                                     2000                  2001
                                                                     ----                  ----
Deferred tax assets:
      Loss reserve discounting                                  $  1,075,061         $  1,558,963
      Unearned premium reserves                                    1,209,162            1,859,470
      Difference between tax and GAAP basis of Harbour
           Village Project                                                -             3,854,177
      Net operating loss carry forward                               398,597                    -
                                                                 -----------         ------------
           Gross deferred tax assets                               2,682,820            7,272,610
           less: Valuation allowance                                       -           (3,854,177)
                                                                  ----------           ----------
           Gross deferral tax assets, net of valuation
                allowance                                          2,682,820            3,418,433
                                                                  ----------           ----------

Deferred tax liabilities:
      Deferred acquisition costs                                     978,785            1,562,089
      Unrealized gain on securities                                  159,251              272,195
      Other                                                            1,512                1,560
                                                                  ----------         ------------
           Gross Deferred  tax liabilities                         1,139,548            1,835,844
                                                                  ----------            ---------

                Net deferred tax asset                            $1,543,272           $1,582,589
                                                                   =========            =========


                                                                 -14-



     The  valuation  allowance  in the above  table is  related  to the  Harbour
Village  project.  This allowance  will decrease as  condominium  units and boat
slips are closed. The Company will continue to monitor this valuation  allowance
in future periods.


Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations

General

           American Safety is a specialty insurance and financial services holding company which,
through its subsidiaries, develops, underwrites, manages and markets primary casualty insurance and
reinsurance programs in the alternative insurance market for environmental risks and other specialty
risks, and provides a broad range of financial services and products to middle market businesses.
The Company is also the owner/developer of the Harbour Village Golf & Yacht Club, a residential
condominium, marina and golf course project in Ponce Inlet, Florida..

Forward Looking Statements

           This Report contains certain forward-looking statements within the meaning of United States'
securities laws which are intended to be covered by the safe harbors created thereby.
Forward-looking statements involve risks and uncertainties which may cause actual results to differ,
and are subject to change based on various industry factors, including the outcome of the Company's
lawsuit for rescission of the acquisition of an insurance agency and two related insurance companies,
competitive conditions in the insurance industry, unpredictable developments in loss trends,
adequacy and changes in loss reserves, market acceptance of new coverages and enhancements,
changes in reinsurance costs and availability, and changes in levels of general business activity and
economic conditions.  With respect to the development of the Harbour Village Golf and Yacht Club
project, such forward-looking statements involve risks and uncertainties which may cause actual
results to differ, and are subject to change based on various real estate development industry factors,
including competitive housing conditions in the local market area, risks inherent in new construction,
changes in interest rates and the availability of mortgage financing for prospective purchasers of
condominium units and boat slips, and changes in local and national levels of general business
activity and economic conditions.  All statements, other than statements of historical facts, included
or incorporated by reference in this Report that address activities, events or developments that the
Company expects or anticipates will or may occur in the future constitute forward-looking
statements.  Although the Company believes that the assumptions underlying the forward-looking
statements contained in this Report are reasonable, any of the assumptions could over time prove to
be inaccurate and therefore, there can be no assurance that the forward-looking statements included
in this Report will themselves prove to be accurate.  In light of the significant uncertainties inherent
in the forward-looking statements included in this Report, the inclusion of such information should
not be regarded as a representation by the Company or any other person that the objectives and plans
of the Company will be achieved.


                                                                 -15-





Results of Operations

           The following table sets forth the Company's consolidated revenues:


                                                                                           Three Months
                                                                                          Ended March 31,
                                                   -------------------------------------------------------------------------------------------
                                                                                                           1999 to          2000 to
                                                         1999           2000           2001               2000             2001
                                                   ---------------  ------------ ----------------- ------------------  ---------------
                                                                               (Dollars in thousands)
                                                   -----------------------------------------------------------------------------------
Net Premiums earned:
Reinsurance:
   Workers' compensation                               $1,370         $2,371          $2,711             73.1%               14.3%
   General liability                                      643            744           2,708             15.7               264.0
   Auto Liability                                          13               -              -           (100.0)                  -
                                                      -------        --------        -------           ------              ------
        Total reinsurance                               2,026          3,115           5,419             53.8                74.0
                                                      -------        -------         -------           ------              ------

Primary insurance:
   Commercial Line                                          -            259             771              -                 197.7
   Workers' compensation                                    -              -             639              -                   -
   Surety                                                 283            546           2,025             92.9               270.9
   General Liability                                        -              -           2,969              -                   -
   Program Business                                        18            143           1,546            694.4               981.1
                                                       ------        -------        --------          -------           ---------
        Total primary insurance                           301            948           7,950            215.0               738.6
                                                       ------        -------        --------          -------           ---------
             Total net premiums earned                  2,327          4,063          13,369             74.6               229.0
                                                       ------         ------        --------          -------           ----------

Net investment income                                     699            729             858              4.3                17.7
Interest on notes receivable                              926            435             276            (53.0)              (36.6)
Commission and fee income:
   Brokerage commission income                            443            473             491              6.8                 3.8
   Management fees from affiliate                         341            367             364              7.6                (0.8)
                                                     --------       --------             ---        ---------           ----------
     Total commission and fee income                      784            840             855              7.1                 1.8
                                                     --------       --------             ---        ---------           ----------
Net realized gains (losses)                                (1)          (126)            240        (12,500.0)              290.5
Other income                                                79           656             660            730.4                 0.6
                                                     ---------      --------             ---         ---------           ----------
        Total Revenues                                 $4,814         $6,597         $16,258             37.0%              146.4%
                                                       ------         ------         -------         --------           ---------

             The following table sets forth the components of the Company's GAAP combined ratio for
the periods indicated:

                                                           Three months ended
                                                                March 31,
                                                                ---------

                                                1999              2000        2001
                                                ----              ----        ----
Insurance operations:
 Loss and loss adjustment expense ratio         53.7%             68.8%       60.6%
 Expense ratio                                  16.6              33.3        25.2
                                                ----             -----        ----
    Combined ratio                              70.3%            102.1%       85.8%
                                                ----             -----        ----

Quarter Ended March 31, 2001 Compared to Quarter Ended March 31, 2000

             Net Premiums Earned.  Net premiums earned increased 229% from $4.1 million in the
quarter ended March 31, 2000 to $13.4 million in the quarter ended March 31, 2001.  The principal
factors accounting for the increase were an increase in program business premiums by 981.1% or
$1.4 million, an increase in surety premiums by 270.9% or $1.5 million, an increase in commercial
lines premiums of 197.7% or $512,000, an increase in general liability reinsurance premiums of
264% or $2.0 million, and an increase in workers' compensation premiums of 14.3% or $340,000.

             Net Investment Income.  Net investment income increased 17.7% from $729,000 in the
quarter ended March 31, 2000 to $858,000 in the quarter ended March 31, 2001 due to higher levels
of invested assets generated from positive cash flows from operations.  The average pre-tax yield on
investments was 6.2% in the quarter ended March 31, 2000 and 5.4% in the quarter ended March
31, 2001.  The average after-tax yield on investments was 5.5% in the quarter ended March 31, 2000
and 4.1% in the quarter ended March 31, 2001.

             Interest from Notes Receivable.  Interest from notes receivable decreased 36.6% from
$435,000 in the quarter ended March 31, 2000 to $276,000 in the quarter ended March 31, 2001 due
to repayment of various loans.  Average notes receivable decreased to $9.0 million from $12.6
million for the quarter.

             Brokerage Commission Income.  Income from insurance brokerage operations increased
3.8% from $473,000 in the quarter ended March 31, 2000 to $491,000 in the quarter ended March
31, 2001 due to slightly higher levels of premiums produced by the risk retention group affiliate.

             Management Fees.  Management fees were $364,000 in the quarter ended March 31, 2000
and $367,000 in the quarter ended March 31, 2001.  These fees are derived from services provided
by the Company to its risk retention group affiliate, which services remained consistent as compared
to the prior period.

             Net Realized Gains and Losses.  Net realized gains and losses increased from a loss of
$126,000 in the quarter ended March 31, 2000 to a gain of $240,000 for the quarter ended March 31,
2001 due to the sale of bonds in the Company's investment portfolio.

             Other Income.  Other income increased from $656,000 in the quarter ended March 31, 2000
to $660,000 for the quarter ended March 31, 2001 as a result of fees generated by the Company's
financial services subsidiary.  No assurance can be given as to the regularity or amount of such fees
being generated by the Company's financial services subsidiary.

             Losses and Loss Adjustment Expenses.  Losses and loss adjustment expenses increased
189.5% from $2.8 million in the quarter ended March 31, 2000 to $8.1 million in the quarter ended
March 31, 2001 due to an increase in net premiums earned.  Increases in commercial lines and surety
premiums accounted for the largest portion of the increase in the losses and loss adjustment
expenses.  During the quarter ended March 31, 2001, the Company also recognized $250,000 of

                                                                 -16-





reserve redundancies in certain older accident years relating to the environmental line of business.
The Company will continue to monitor its reserves and recognize any future redundancies if and
when appropriate.

             Acquisition Expenses.  Policy acquisition expenses increased 180.7% from $763,000 in
the quarter ended March 31, 2000 to $2.1 million in the quarter ended March 31, 2001 as a result of
increased premiums earned.  Premium tax expense also increased to $781,000 from $224,000 due
to higher volumes of direct premiums earned.

             Payroll and Other Expenses.  Payroll and other expenses increased 49.2% from $2.5
million in the quarter ended March 31, 2000 to $3.8 million in the quarter ended March 31, 2001 as
a result of increased payroll and related expenses in the Company's newer business units and non-
capitalizable expenses of $252,000 related to the development of the Harbour Village project.

             Income Taxes.  Federal and state income taxes increased from a benefit of $1.1 million in
the quarter ended March 31, 2000 to an expense of $367,000 in the quarter ended March 31, 2001
due to higher levels of income in the Company's U.S. subsidiaries' operations.

Quarter Ended March 31, 2000 Compared to Quarter Ended March 31, 1999

             Net Premiums Earned.  Net premiums earned increased 74.6% from $2.3 million in the
quarter ended March 31, 1999 to $4.1 million in the quarter ended March 31, 2000.  The principal
factor accounting for the increase was the Company's assumption of workers' compensation
reinsurance business from an unaffiliated insurance carrier, which increased net premiums earned
from workers' compensation reinsurance from $1.4 million in the quarter ended March 31, 1999 to
$2.4 million in the quarter ended March 31, 2000.  This increase was a result of additional premiums
from new insureds in this line of business.  Another factor accounting for the increase was an
increase of the Company's surety business by 92.9% from $283,000 in the quarter ended March 31,
1999 to $546,000 in the quarter ended March 31, 2000.  The increase in surety business is
attributable to additional premiums from new business and the Company's new reinsurance program.

             Net Investment Income.  Net investment income increased 4.3% from $699,000 in the
quarter ended March 31, 1999 to $729,000 in the quarter ended March 31, 2000 due to an increase
in the investment portfolio and cash.  The average pre-tax yield on investments was 5.5% in the
quarter ended March 31, 1999 and 6.2% in the quarter ended March 31, 2000.  The average after-tax
yield on investments was 5.2% in the quarter ended March 31, 1999 and 5.5% in the quarter ended
March 31, 2000.

             Interest from Notes Receivable.  Interest from notes receivable decreased 53% from
$926,000 in the quarter ended March 31, 1999 to $435,000 in the quarter ended March 31, 2000 as
a result of interest income lost as a result of the foreclosure on the Harbour Village property in April
1999.


                                                                 -17-



             Brokerage Commission Income.  Income from insurance brokerage operations increased
6.8% from $443,000 in the quarter ended March 31, 1999 to $473,000 in the quarter ended March
31, 2000 as a result of higher levels of premiums produced by our non-subsidiary affiliate.

             Management Fees.  Management fees increased 7.6% from $341,000 in the quarter ended
March 31, 1999 to $367,000 in the quarter ended March 31, 2000 as a result of increased service
levels, provided by the Company, to its risk retention group affiliate.

             Net Realized Losses.  Net realized losses decreased from$1,000 in the quarter ended March
31, 1999 to$126,000 for the quarter ended March 31, 2000 due to the sale of bonds for the purchase
of Trafalgar Insurance Company.

             Other Income.  Other income increased from $79,000 in the quarter ended March 31, 1999
to $656,000 for the quarter ended March 31, 2000.  $590,000 of this relates to the commitment fee
on the proposed sale of Harbour Village.

             Losses and Loss Adjustment Expenses.  Losses and loss adjustment expenses increased
112% from $1.3 million in the quarter ended March 31, 1999 to $2.8 million in the quarter ended
March 31, 2000 due to an increase in net premiums earned.  Increases in workers' compensation
premiums accounted for the largest portion of the increase in the losses and loss adjustment
expenses, as that line of business has a higher loss ratio than the general liability or surety lines of
business.

             Acquisition Expenses.  Policy acquisition expenses increased 336.2% from ($323,000) in
the quarter ended March 31, 1999 to $763,000 in the quarter ended March 31, 2000 as a result of
increased premiums production.

             Payroll and Other Expenses.  Payroll and other expenses increased 56.3% from $1.6
million in the quarter ended March 31, 1999 to $2.5 million in the quarter ended March 31, 2000 as
a result of increases in salary, benefits and operating expense primarily due to increased staffing for
new and existing programs.

             Expense Due to Rescission.  Expense due to rescission was $3.5 million for the quarter and
relates to the rescission of the acquisition of the Michigan group of companies.

             Income Taxes.  Federal and state income taxes decreased from a benefit of $46,000 in the
quarter ended March 31, 1999 to a benefit of $1.1 million in the quarter ended March 31, 2000 due
to decreased taxable income in the Company's U.S. subsidiaries.  The decrease in taxable income
was primarily due to expenses relating to rescission.


                                                                 -18-



Liquidity and Capital Resources

           The Company historically has met its cash requirements and financed its growth principally
through cash flows generated from operations.  During the past decade, the Company has operated
in a soft market cycle which was characterized by excess insurance capacity and declining insurance
premium rates; however, commencing in fiscal year 2000 the Company has operated in a hardening
market with increased insurance premium rates for workers' compensation and excess and surplus
lines.  The Company's primary sources of cash flow are proceeds from the sale or maturity of
invested assets, premiums earned, investment income, commission income and management fees.
The Company's short-term cash requirements are primarily for claims payments, reinsurance
premiums, commissions, salaries, employee benefits and other operating expenses, and the purchase
of investment securities, which requirements have historically been satisfied from operating cash
flows.  Due to the uncertainty regarding settlement of unpaid claims, the long-term liquidity
requirements of the Company may vary, and the Company has attempted to structure its investment
portfolio to take into account the historical payout patterns.  Management believes that the
Company's current cash flows are sufficient for the short-term needs of its insurance business and
the Company's invested assets are sufficient for the long-term needs of its insurance business.  The
Company also purchases reinsurance to mitigate the effect of large claims and to help stabilize
demands on its liquidity.

           On a consolidated basis, net cash provided from operations was $1.1 million for the three
months ended March 31, 2000 and $7.1 million for the three months ended March 31, 2001.  The
positive cash flows for said periods were primarily attributable to net premiums written and net
earnings.  Because workers' compensation and general liability claims may be paid over an extended
period of time, the Company has established loss reserves for such lines of business.  The assets
supporting the Company's reserves continue to earn investment income until claims payments are
made.

           Total assets increased from $207.3 million at December 31, 2000 to $228.9 million at March
31, 2001 primarily due to increases in premiums receivable, reinsurance recoverables and real estate
investments.  Cash, invested assets and notes receivable increased from $110.1 million at December
31, 2000 to $123.5 million at March 31, 2001, as a result of increases in net premiums written,
investment income and real estate.  At March 31, 2001, the Company has repurchased 1,477,839
shares of its common stock at a total cost of $8.5 million since January 1999.

           American Safety is an insurance and financial services holding company whose principal
assets are its investment portfolio and its investment in the capital stock of its subsidiaries.
American Safety's ability to pay dividends to its shareholders will depend, to a significant degree,
on the ability of the Company's subsidiaries to pay dividends to American Safety.  The jurisdictions
in which American Safety and its insurance and reinsurance subsidiaries are domiciled place
limitations on the amount of dividends or other distributions payable by insurance companies in
order to protect the solvency of insurers.

                                                                 -19-





             Harbour Village Development.  The Company announced in March 2000 its plans to
complete development of the Harbour Village Golf and Yacht Club ("Harbour Village"), located in
Ponce Inlet, Florida, consisting of 786 residential condominium units, a marina containing 142 boat
slips, a par 3 golf course and beach club.  The Harbour Village property (comprising 173 acres) was
acquired by the Company  through foreclosure in April 1999, and has been under development by
its subsidiary, Ponce Lighthouse Properties, Inc. and its general contracting subsidiary, Rivermar
Contracting Company. The number of residential condominium units planned for the project has
been increased from 786 to 809.  As of May 10, 2001, the Company's marketing efforts had
generated approximately $90 million of pre-sales of condominium units and boat slips.

           It is anticipated that Harbour Village will be developed in three Phases over the next three
to five years, depending on future sales activities and economic conditions that may impact the
marketing of the condominium units.  In July 2000, the Company closed a $37 million acquisition,
development and construction loan facility in order to commence construction of Phase I of the
project.  Through March 31, 2001, the Company had borrowed approximately $16 million from this
loan facility.  The estimated construction and development cost for the entire Harbour Village project
is approximately $200 million over a three to five year period.  Phase I of the development currently
under construction consists of site work including a 142-boat slip marina, 294 residential units, and
related amenities.  No assurance can be given, however, as to either future sales activities of the
condominium units or the impact of local and national economic conditions on the Company's
marketing efforts for the development of the Harbour Village project.

           Management believes that the bank credit facility, together with anticipated cash flows from
marketing and sales operations, will meet the liquidity needs for the construction and development
of Phase I of the Harbour Village project during the first 24 months of development.  There can be
no assurance, however, that the amounts available from the Company's sources of liquidity,
exclusive of the bank credit facility for the project, will be sufficient or available to meet the
Company's future capital needs for the project.

Income Taxes

             American Safety is incorporated under the laws of Bermuda and, under current Bermuda
law, is not obligated to pay any taxes in Bermuda based upon income or capital gains. American
Safety has received an undertaking from the Minister of Finance in Bermuda pursuant to the
provisions of The Exempted Undertakings Tax Protection Act 1966, which exempts American
Safety and its shareholders, other than shareholders ordinarily resident in Bermuda, from any
Bermuda taxes computed on profits, income or any capital asset, gain or appreciation, or any tax in
the nature of estate, duty or inheritance until March 28, 2016.  The Company, exclusive of its United
States subsidiaries, does not consider itself to be engaged in a trade or business in the United States
and accordingly does not expect to be subject to direct United States income taxation.  The
Company's U.S. subsidiaries are subject to taxation in the United States.


                                                                 -20-



Inflation

             Property and casualty insurance premiums are established before the amounts of losses and
loss adjustment expenses are known and therefore before the extent by which inflation may affect
such expenses is known. Consequently, the Company attempts, in establishing its premiums, to
anticipate the potential impact of inflation. However, for competitive and regulatory reasons, the
Company may be limited in raising its premiums consistent with anticipated inflation, in which event
the Company, rather than its insureds, would absorb inflation costs. Inflation also affects the rate of
investment return on the Company's investment portfolio with a corresponding effect on the
Company's investment income.

Combined Ratio

             The combined ratio of an insurance company measures only the underwriting results of
insurance operations and not the profitability of the overall company.  The Company's reported
combined ratio for its insurance operations may not provide an accurate indication of the Company's
overall profitability from insurance and reinsurance programs due to the exclusion of fee and
commission income and expenses generated in related management and agency subsidiaries.
Depending on the Company's mix of business going-forward, the combined ratio may fluctuate from
time to time and may not reflect the overall profitability of insurance programs to the Company.

Reserves

             Certain of the Company's insurance policies and reinsurance assumed, including general
and pollution liability policies covering environmental remediation risks, as well as workers'
compensation policies, may be subject to claims brought years after an incident has occurred or the
policy period has ended.  The Company is required to maintain reserves to cover its estimated
liability for losses and loss adjustment expenses with respect to reported and unreported claims
incurred.  The Company engages an independent internationally recognized actuarial consulting firm
to provide reserve studies, opinions and rate studies.  Reserves are estimates at a given time, which
are established from actuarial and statistical projections by the Company of the ultimate settlement
and administration costs of claims occurring on or prior to such time, including claims that have not
yet been reported to the insurer.  The establishment of appropriate loss reserves is an inherently
uncertain process, and there can be no assurance that the ultimate payments will not materially
exceed the Company's reserves.

Item 3.  Quantitative and Qualitative Disclosures About Market Risks.

             The Company's market risk has not changed materially since December 31, 2000.





                                                                 -21-





                                                      PART II - OTHER INFORMATION


 Item 1.  Legal Proceedings.

             Not applicable.

 Item 2.  Changes in Securities and Use of Proceeds.

             Not applicable.

 Item 3.  Defaults Upon Senior Securities.

             Not applicable.

 Item 4.  Submission of Matters to a Vote of Security Holders.

             Not applicable.

 Item 5.  Other Information.

             Timothy E. Walsh resigned as a director of the Company effective April 11, 2001.


 Item 6.  Exhibits and Reports on Form 8-K.

             (a)  The following exhibits are filed as part of this Report:

                  Exhibit No.                    Description
                  -----------                    -----------

                      11                         Computation of Earnings Per Share

             (b)  Reports on Form 8-K.

                  None.



                                                                 -22-







                                                              SIGNATURES


             Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant
has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized,
on the 15th day of May 2001.

                                American Safety Insurance Group, Ltd.



                                By:  /s/ Lloyd A. Fox
                                   ----------------------------------------
                                     Lloyd A. Fox
                                     President and Chief Executive Officer



                                By:  /s/ Steven B. Mathis
                                    ---------------------------------------
                                     Steven B. Mathis
                                     Chief Financial Officer
                                     (Principal Financial Officer)





                                                                 -23-




                                                              Exhibit 11

                                        American Safety Insurance Group, Ltd. and subsidiaries
                                                  Computation of Earnings Per Share





                                                                                         Three Months Ended
                                                                                        -------------------

                                                                               March 31,                    March 31,
                                                                                  2000                         2001
                                                                                 ------                       -----

Basic:
Earnings (loss) available to common
shareholders.........................................                        $(1,948,753)                 $1,897,669
                                                                             ============                 ==========

Weighted average common shares
outstanding.................................................                   5,926,654                   4,882,375

Basic earnings (loss) per common shares .............                       $      ( .33)                   $    .39
                                                                             ============                   ========

Diluted:
Earnings (loss) available to common
shareholders.........................................                        $(1,948,753)                  $1,897,669
                                                                              ==========                   ==========

Weighted average common shares
outstanding..........................................                          5,926,654                    4,882,375

Weighted average common shares
equivalents associated with options..................                              5,342                       79,737

Total weighted average common
shares...............................................                           5,931,996                   4,962,112
                                                                                =========                   =========

Diluted earnings (loss) per common shares............                       $        (.33)                 $      .38
                                                                            ==============                 ==========
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