form8k20100303pr1.htm

American Safety Insurance Holdings, Ltd.

Reports Net Earnings of $6.9 Million for the Fourth Quarter and

$24.3 Million for the Year Ended December 31, 2009

Book Value Per Share Increased 24.7% Year Over Year

HAMILTON, Bermuda, March 3, 2010 – American Safety Insurance Holdings, Ltd. (NYSE:ASI) today reported net earnings of $6.9 million for the 2009 fourth quarter, compared to a net loss of $8.2 million for the same period in 2008. Net earnings for the twelve months ended 2009 were $24.3 million, or $2.30 per diluted share, compared to $0.3 million, or $0.03 per diluted share, for the same period of 2008.

Financial Highlights for the quarter and year included:

§	Book value increased to $26.33 per outstanding share and $25.47 per diluted share, compared to $21.12 per outstanding share and $20.55 per diluted share, at December 31, 2009 and 2008, respectively.

§	Return on average equity (adjusted for realized and unrealized gains and losses from investments) for 2009 increased to 10.8% from 6.6% in 2008.

§	Total revenue quarter over quarter and year over year increased more than 6%.

§	Gross premiums written decreased 9.6% for the quarter and 2.6% for the year.

§	Net premiums written increased 1.0% for the quarter and decreased 8.4% for the year.

§	Net investment income increased 3.4% for the quarter and 3.3% for the year.

§	Cash flow from operations totaled $13.2 million for the quarter and $53.4 million for the year, compared to $30.8 million and $101.0 million, respectively, for the same periods in 2008.

§	The combined ratio improved to 99.2% for the quarter and 99.4% for the year compared to 115.4% and 106.0%, respectively, for the same periods in 2008.

Fourth Quarter Results

Pre-tax operating income increased to $9.0 million for the 2009 quarter as compared to $0.9 million for the same quarter in 2008 due to improved underwriting results. The combined ratio for the 2009 quarter was 99.2% with improvements in both the loss ratio and expense ratio. The loss ratio for the three months ended December 31, 2009 was 55.2% compared to 70.1% for the same period in 2008 while the expense ratio was 44.0% compared to 45.3% in 2008.

Total revenue for the quarter increased 7% to $51.9 million as fee income increased $1.5 million, investment income increased modestly and net realized losses on investments were $0.1 million in the 2009 quarter as compared to $6.0 million in 2008.

Net earnings for the quarter of $6.9 million, or $.65 per diluted share compare to a net loss of $8.2 million or $.80 per diluted share for the 2008 quarter. The 2009 results include $1.2 million net favorable adjustments to loss reserves comprised of: $5.2 million of favorable development on prior year loss reserves, which was offset, in part, by a $4.0 million increase in 2009 accident year losses primarily to reflect changes in estimated ceded losses recoverable. Additionally during the fourth quarter the tax provision includes a $0.9 million benefit representing a partial reversal of the valuation allowance established in 2008 relative to deferred taxes associated with the investment portfolio.

For the quarter ended December 31, 2008, the net loss of $8.2 million, or $.80 per fully diluted share, included pre-tax charges of: (a) $6.0 million of realized losses due to other-than-temporary-impairment of investments (b) $3.9 million of net adverse reserve development on prior year loss reserves (c) $1.6 million of reinsurance reinstatement premiums and (d) a $2.5 million increase in the allowance for reinsurance recoverables.

Year End Results

Pre-tax operating income increased 62% to $34.6 million from $21.4 million. The combined ratio for 2009 was 99.4% with improvements in both the loss ratio and expense ratio. The 2009 loss ratio improved to 57.9% compared to 63.1% in 2008 while the 2009 expense ratio was 41.5% compared to 42.9% in 2008. The combined ratios reflect net favorable adjustments to loss reserves of $1.2 million in 2009 compared to $5.4 million of net unfavorable loss reserve adjustments in 2008.

Total revenue for the year increased 6% to $204.7 million as fee income increased $2.8 million, investment income increased modestly and net realized gains on investments were $0.2 million in 2009 compared to $14.3 million of net realized losses in 2008.

Net earnings for the year of $24.3 million, or $2.30 per diluted share, includes the fourth quarter reserve changes noted previously, an increase in fee income and an increase in other underwriting expenses due to the write-off of a receivable in the third quarter of 2009. Net earnings for 2008 of $0.3 million, or $.03 per fully diluted share, were impacted by $14.3 million of net realized losses on investments primarily due to other-than-temporary-impairment of investments, $5.4 million of net adverse development from prior year loss reserves and the reinstatement premium and allowance on reinsurance recoverables noted previously.

Comments by Management:

Commenting on the results, Stephen R. Crim, Chief Executive Officer, said; “I am pleased with the improvements in the Company’s expense ratio, loss ratio and return on equity in the face of a competitive insurance market and difficult economy. We achieved growth in our newer excess and surplus lines products, as well as in shorter tail lines, resulting in a more balanced product portfolio. Looking to 2010, we expect the market to remain very competitive, and will maintain our focus on underwriting discipline to preserve the integrity of the Company’s balance sheet. Also, given our capital position at year end, we expect A.M. Best to increase our financial size category from A VIII to A IX.”

Conference Call

A conference call to discuss fourth quarter 2009 results is scheduled for Thursday, March 4, 2010 at 9:00 a.m. (Eastern Standard Time), which will be broadcast through Vcall’s Investor Calendar at www.investorcalendar.com, or the Company’s website at www.amsafety.bm. If you are unable to participate at this time, a replay will be available for 30 days, beginning approximately two hours after the call. A transcript of the call will be available on the Company’s website beginning several days after the call.

This report contains forward-looking statements and non-GAAP financial measures. The forward-looking statements reflect the Company’s current views with respect to future events and financial performance, including insurance market conditions, combined ratio, premium growth, acquisitions and new products and the impact of new accounting standards. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially, including competitive conditions in the insurance industry, levels of new and renewal insurance business, developments in loss trends, adequacy and changes in loss reserves and actuarial assumptions, timing or collectability of reinsurance recoverables, market acceptance of new coverages and enhancements, changes in reinsurance costs and availability, potential adverse decisions in court and arbitration proceedings, the integration and other challenges attendant to acquisitions, and changes in levels of general business activity and economic conditions.

About Us:

American Safety Insurance Holdings, Ltd. (NYSE:ASI), a Bermuda holding company, offers innovative 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. and American Safety Assurance (Vermont), Inc. and Victore Insurance Company. As a group, ASI’s insurance subsidiaries and affiliates are rated “A” (Excellent) VIII by A.M. Best. For additional information, please visit www.asih.bm.

Contacts:

American Safety Insurance Holdings, Ltd.		American Safety Administrative Services, Inc.
Investor Relations		Media Relations
Mark W. Haushill		Julie McDonald
mark.haushill@amsafety.bm		jmcdonald@amsafety.com
(441) 296-8560		(770) 916-1908

American Safety Insurance Holdings, Ltd. and Subsidiaries

Financial and Operating Highlights

(Unaudited)

(in thousands except per share data and percentages)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2009			2008			2009			2008
INCOME STATEMENT DATA: Revenues:
Direct premiums earned	$	56,654		$	53,678		$	216,710		$	201,735
Assumed premiums earned		8,131			12,869			35,123			48,089
Ceded premiums earned		(22,518	)		(19,959	)		(83,316	)		(75,353	)
Net premiums earned		42,267			46,588			168,517			174,471

Net investment income		7,704			7,450			30,554			29,591
Net realized (losses) gains		(135	)		(5,990	)		163			(14,348	)
Fee income		2,080			615			5,448			2,632
Other income (loss)		7			(16	)		51			(24	)
Total revenues	$	51,923		$	48,647		$	204,733		$	192,322

Expenses:
Losses and loss adjustment expenses		23,324			32,678			97,646			110,146
Acquisition expenses		10,283			12,761			37,203			43,484
Payroll and related expenses		5,818			4,493			22,661			19,891
Other underwriting expenses		4,573			4,440			15,412			13,991
Interest expense		814			793			3,193			3,163
Corporate and other expenses		1,300			766			3,375			153
Total expenses	$	46,112		$	55,931		$	179,490		$	190,828

Earnings (loss) before income taxes		5,811			(7,284	)		25,243			1,494
Income taxes		(879	)		(391	)		541			31
Net earnings (loss) before noncontrolling interest	$	6,690		$	(6,893	)	$	24,702		$	1,463
Net earnings (loss) attributable to the noncontrolling interest		(216	)		1,312			377			1,153
Net earnings (loss)	$	6,906		$	(8,205	)	$	24,325		$	310

Net (loss) earnings per share:
Basic	$	0.67		$	(0.80	)	$	2.36		$	0.03
Diluted	$	0.65		$	(0.80	)	$	2.30		$	0.03
Weighted average number of shares outstanding:
Basic		10,323,875			10,274,368			10,307,592			10,459,161
Diluted		10,628,992			10,274,368			10,557,751			10,685,933

Loss Ratio		55.2	%		70.1	%		57.9	%		63.1	%
Expense Ratio		44.0	%		45.3	%		41.5	%		42.9	%
GAAP combined ratio		99.2	%		115.4	%		99.4	%		106.0	%

BALANCE SHEET DATA:							As Of
							12/31/2009			12/31/2008
Total investments							$	750,425		$	673,739
Total assets								1,147,660			1,026,364
Unpaid losses and loss adjustment expenses								616,444			586,647
Total liabilities								872,148			806,242
Total shareholders’ equity								271,837			217,030

Book value per share							$	26.33		$	21.12

American Safety Insurance Holdings, Ltd.

Segment Data (unaudited)

($ Thousands)	Twelve Months Ended Dec 31, 2009
	E&S			ART			Reinsurance			Run-off			Total
Gross Premiums Written	$	116,968		$	103,155		$	33,397		$	(1	)	$	253,519
Net Premiums Written		89,517			39,036			36,247			(91	)		164,709
Net Premiums Earned		91,970			40,612			36,026			(91	)		168,517

Underwriting Profit (Loss)		4,640			(110	)		(5,176	)		(712	)		(1,358	)

Fee Income		710			4,183			555			-			5,448
Investment Income		21,255			4,563			3,840			896			30,554
Pre-tax Operating Income		26,605			8,636			(781	)		184			34,644

Realized Gains (Losses)														163
Interest and Holding Company Expenses														9,564
Income Before Taxes														25,243
Provision for Taxes														541
Income After Taxes														24,702
Earnings from Non-Controlling Interest														(377	)
Net Income Attributable to ASIH, Ltd.													$	24,325

Loss Ratio		48.1	%		60.3	%		78.5	%	NM				57.9	%
Expense Ratio		46.1	%		29.7	%		34.3	%	NM				41.5	%
Combined Ratio		94.2	%		90.0	%		112.8	%	NM				99.4	%

($ Thousands)	Twelve Months Ended Dec 31, 2008
	E&S			ART			Reinsurance			Run-off			Total
Gross Premiums Written	$	128,103		$	79,249		$	53,032		$	-		$	260,384
Net Premiums Written		89,846			43,849			45,913			257			179,865
Net Premiums Earned		92,976			38,695			42,544			256			174,471

Underwriting Profit (Loss)		(6,818	)		882			(3,077	)		(1,819	)		(10,832	)

Fee Income		456			1,675			501			-			2,632
Investment Income		21,608			3,849			3,079			1,055			29,591
Pre-tax Operating Income		15,246			6,406			503			(764	)		21,391

Realized Gains (Losses)														(14,348	)
Interest and Holding Company Expenses														5,549
Income Before Taxes														1,494
Provision for Taxes														31
Income After Taxes														1,463
Earnings from Non-Controlling Interest														(1,153	)
Net Income Attributable to ASIH, Ltd.													$	310

Loss Ratio		64.2	%		50.6	%		67.6	%	NM				63.1	%
Expense Ratio		42.6	%		42.8	%		38.4	%	NM				42.9	%
Combined Ratio		106.8	%		93.4	%		106.1	%	NM				106.0	%

American Safety Insurance Holdings, Ltd.

Segment Data (unaudited)

($ Thousands)	Three Months Ended Dec 31, 2009
	E&S			ART			Reinsurance			Run-off			Total
Gross Premiums Written	$	31,548		$	13,671		$	8,069		$	(1	)	$	53,287
Net Premiums Written		25,591			9,477			8,953			(1	)		44,020
Net Premiums Earned		23,512			10,178			8,578			(1	)		42,267

Underwriting Profit (Loss)		7,311			(2,020	)		(5,334	)		(712	)		(755	)

Fee Income		95			1,763			222						2,080
Investment Income		5,360			1,151			968			225			7,704
Pre-tax Operating Income		12,766			894			(4,144	)		(487	)		9,029

Realized Gains (Losses)														(135	)
Interest and Holding Company Expenses														3,083
Income Before Taxes														5,811
Provision for Taxes														(879	)
Income After Taxes														6,690
Earnings from Non-Controlling Interest														216
Net Income Attributable to ASIH, Ltd.													$	6,906

Loss Ratio		19.6	%		79.2	%		116.0	%	NM				55.2	%
Expense Ratio		48.9	%		23.3	%		43.3	%	NM				44.0	%
Combined Ratio		68.5	%		102.5	%		159.3	%	NM				99.2	%

($ Thousands)	Three Months Ended Dec 31, 2008
	E&S			ART			Reinsurance			Run-off			Total
Gross Premiums Written	$	29,693		$	18,663		$	10,575		$	-		$	58,931
Net Premiums Written		19,174			12,829			11,310			257			43,570
Net Premiums Earned		22,539			11,270			12,523			256			46,588

Underwriting Profit (Loss)		(3,105	)		(1,367	)		(851	)		(1,818	)		(7,141	)

Fee Income		118			433			64			-			615
Investment Income		5,440			969			775			266			7,450
Pre-tax Operating Income		2,453			35			(12	)		(1,552	)		924

Realized Gains (Losses)														(5,990	)
Interest and Holding Company Expenses														2,218
Income Before Taxes														(7,284	)
Provision for Taxes														(391	)
Income After Taxes														(6,893	)
Earnings from Non-Controlling Interest														(1,312	)
Net Income Attributable to ASIH, Ltd.													$	(8,205	)

Loss Ratio		80.5	%		36.3	%		66.7	%	NM				70.1	%
Expense Ratio		32.7	%		71.9	%		39.5	%	NM				45.3	%
Combined Ratio		113.2	%		108.3	%		106.3	%	NM				115.4	%