10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number: 1-14795

AMERICAN SAFETY INSURANCE HOLDINGS, LTD.

(Exact name of registrant as specified in its charter)

Bermuda	30-0666089
(State of incorporation or organization)	(I.R.S. Employer Identification No.)
31 Queen Street 2nd Floor Hamilton, Bermuda	HM 11
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number: (441) 296-8560

Indicate by check mark whether the 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 the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one)

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  x

The aggregate number of shares outstanding of Registrant’s common stock, $0.01 par value, on August 1, 2013, was 9,641,731.

AMERICAN SAFETY INSURANCE HOLDINGS, LTD.

FORM 10-Q

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements		3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3. Quantitative and Qualitative Disclosures About Market Risk		30
Item 4. Controls and Procedures		30
PART II – OTHER INFORMATION
Item 1. Legal Proceedings		31
Item 1A. Risk Factors		31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		32
Item 3. Defaults Upon Senior Securities		32
Item 4. Reserved		32
Item 5. Other Information		32
Item 6. Exhibits		33

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

American Safety Insurance Holdings, Ltd. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(dollars in thousands except share data)

	June 30, 2013 (unaudited)		December 31, 2012
Assets
Investments:
Fixed maturity securities, at fair value (including $9,846 and $9,499 from VIE)	$	311,309	$	829,577
Common stock, at fair value		6,073		8,776
Preferred stock, at fair value		39		3,081
Short-term investments, at fair value (including $1,952 and $2,645 from VIE)		611,267		76,502
Trading securities, at fair value		—		12,712
Total investments		928,688		930,648
Cash and cash equivalents (including $439 and $507 from VIE)		18,567		20,224
Accrued investment income (including $56 and $52 from VIE)		1,693		6,387
Premiums receivable (including $383 and $498 from VIE)		29,249		32,559
Ceded unearned premium (including $218 and $351 from VIE)		35,200		29,821
Reinsurance recoverable (including $4,659 and $5,039 from VIE)		185,644		183,562
Deferred income taxes (including $121 and $0 from VIE)		2,797		—
Deferred acquisition costs (including $715 and $1,100 from VIE)		25,213		26,182
Property, plant and equipment, net		11,942		12,082
Goodwill		20,843		20,843
Funds on deposit (including $114 and $231 from VIE)		36,915		42,088
Accrued premium (including $0 and $0 from VIE)		35,980		42,886
Other assets (including $724 and $1,255 from VIE)		18,431		25,849
Total assets	$	1,351,162	$	1,373,131
Liabilities and Shareholders’ Equity
Liabilities:
Unpaid losses and loss adjustment expenses (including $8,398 and $8,900 from VIE)	$	727,278	$	725,244
Unearned premiums (including $2,878 and $4,325 from VIE)		151,738		146,096
Ceded premiums payable (including $326 and $67 from VIE)		22,291		13,386
Funds held (including $99 and $113 from VIE)		61,642		76,806
Other liabilities (including $0 and $0 from VIE)		14,967		18,601
Deferred income taxes (including $0 and $30 from VIE)		—		8,767
Loans payable		39,183		39,183
Total liabilities	$	1,017,099	$	1,028,083
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 30,000,000 shares; issued and outstanding at June 30, 2013, 9,623,413 shares and at December 31, 2012, 9,505,906 shares		96		95
Additional paid-in capital		85,385		86,568
Retained earnings		237,327		197,015
Accumulated other comprehensive income, net		3,729		53,628
Total American Safety Insurance Holdings, Ltd. shareholders’ equity		326,537		337,306
Equity in non-controlling interests		7,526		7,742
Total equity		334,063		345,048
Total liabilities and equity	$	1,351,162	$	1,373,131

See accompanying notes to consolidated interim financial statements (unaudited).

3

American Safety Insurance Holdings, Ltd. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

(dollars in thousands except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Revenues:
Direct earned premiums	$	65,122		$	60,595		$	128,693		$	121,123
Assumed earned premiums		15,795			15,259			30,724			29,124
Ceded earned premiums		(18,725	)		(13,837	)		(35,301	)		(26,818	)
Net earned premiums		62,192			62,017			124,116			123,429
Net investment income		5,582			7,402			13,214			15,214
Realized gains (losses)		37,482			(13	)		38,936			39
Fee income		335			717			1,563			1,385
Other income		12			12			24			25
Total revenues	$	105,603		$	70,135		$	177,853		$	140,092
Expenses:
Losses and loss adjustment expenses		37,673			40,819			75,636			78,100
Acquisition expenses		13,814			14,337			28,568			29,081
Other underwriting expenses		12,382			12,013			24,523			22,764
Interest expense		358			367			712			785
Corporate and other expenses		655			848			1,436			2,104
Total expenses	$	64,882		$	68,384		$	130,875		$	132,834
Earnings before income taxes		40,721			1,751			46,978			7,258
Income tax expense (benefit)		5,900			(234	)		6,577			872
Net earnings	$	34,821		$	1,985		$	40,401		$	6,386
Less: Net earnings (loss) attributable to the non-controlling interest		10			(182	)		98			163
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	34,811		$	2,167		$	40,303		$	6,223
Net earnings per share:
Basic	$	3.65		$	0.21		$	4.25		$	0.61
Diluted	$	3.54		$	0.21		$	4.12		$	0.59
Weighted average number of shares outstanding:
Basic		9,538,924			10,256,634			9,490,498			10,238,667
Diluted		9,824,228			10,555,222			9,786,953			10,544,627

See accompanying notes to consolidated interim financial statements (unaudited).

4

American Safety Insurance Holdings, Ltd. and Subsidiaries

Consolidated Statements of Comprehensive Earnings

(Unaudited)

(dollars in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Net earnings	$	34,821		$	1,985		$	40,401		$	6,386
Other comprehensive income before income taxes:
Unrealized gains (losses) on securities available-for-sale		(17,295	)		6,608			(22,609	)		10,050
Amortization of (gain) on hedging transactions		(21	)		(41	)		(42	)		(41	)
Reclassification adjustment for realized (gains) losses included in net earnings		(37,482	)		13			(38,936	)		(39	)
Total other comprehensive income (loss) before income taxes		(54,798	)		6,580			(61,587	)		9,970
Income tax expense (benefit) related to items of other comprehensive income (loss)		(9,852	)		1,278			(11,373	)		1,592
Other comprehensive income (loss) net of income taxes		(44,946	)		5,302			(50,214	)		8,378
Comprehensive (loss) income	$	(10,125	)	$	7,287		$	(9,813	)	$	14,764
Less: Comprehensive (loss) income attributable to the non-controlling interest		(251	)		(151	)		(218	)		34
Comprehensive (loss) income attributable to American Safety Insurance Holdings, Ltd.	$	(9,874	)	$	7,438		$	(9,595	)	$	14,730

See accompanying notes to consolidated interim financial statements (unaudited).

5

American Safety Insurance Holdings, Ltd. and Subsidiaries

Consolidated Statements of Cash Flow

(Unaudited)

(dollars in thousands)

	Six Months Ended
	June 30,
	2013			2012
Cash flow from operating activities:
Net earnings	$	40,401		$	6,386
Adjustments to reconcile net earnings to net cash provided by operating activities:
Realized gains on sale of investments		(38,936	)		(39	)
Depreciation expense		1,897			1,414
Stock based compensation expense		1,235			1,237
Amortization of deferred acquisition costs, net		969			(1,390	)
Amortization of investment premium		588			2,030
Deferred income taxes		(205	)		3,709
Change in operating assets and liabilities:
Accrued investment income		4,694			168
Premiums receivable		3,310			(5,785	)
Reinsurance recoverable		(2,082	)		(4,084	)
Ceded unearned premium		(5,379	)		(3,676	)
Funds held		(15,164	)		(7,867	)
Unpaid losses and loss adjustment expenses		2,034			18,264
Unearned premiums		5,642			11,067
Ceded premiums payable		8,905			2,691
Other liabilities		(3,634	)		(1,796	)
Funds on deposit		5,173			(2,328	)
Accrued premium		6,906			(3,846	)
Other assets, net		6,917			(2,426	)
Net cash provided by operating activities		23,271			13,729
Cash flow from investing activities:
Purchases of fixed maturities		(274,493	)		(38,459	)
Purchases of Common Stocks		(3,120	)		—
Proceeds from sales of Common Stocks		5,575			—
Proceeds from sales of fixed maturities		778,947			62,311
Purchases of Preferred Stocks		(165	)		(865	)
Proceeds from sales of Preferred Stocks		5,773			—
Purchase of other investments		—			(3,444	)
Increase in short term investments		(533,775	)		(40,458	)
Purchase of fixed assets		(1,254	)		(781	)
Net cash used in investing activities		(22,512	)		(21,696	)
Cash flow from financing activities:
Shares repurchased to cover employment taxes		(339	)		(204	)
Proceeds from exercised stock options		646			85
Purchases of common stock pursuant to the Stock Repurchase Plan		(2,723	)		(200	)
Net cash used in financing activities		(2,416	)		(319	)
Net increase in cash and cash equivalents		(1,657	)		(8,286	)
Cash and cash equivalents at beginning of period		20,224			43,481
Cash and cash equivalents at end of period	$	18,567		$	35,195
Supplemental disclosure of cash flow:
Income taxes paid (including $120 and $731 from VIE)	$	133		$	749
Interest paid	$	715		$	790

See accompanying notes to consolidated interim financial statements (unaudited).

6

American Safety Insurance Holdings, Ltd. and Subsidiaries

Notes to Consolidated Financial Statements

June 30, 2013

(Unaudited)

Note 1 – Basis of Presentation

The accompanying consolidated financial statements of American Safety Insurance Holdings, Ltd. (“American Safety Insurance”) and its subsidiaries and American Safety Risk Retention Group, Inc. (“American Safety RRG”), a non-subsidiary risk retention group affiliate (collectively, the “Company”), are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as established by the FASB Accounting Standards Codification^© (“Codification” or “ASC”). The preparation of financial statements in conformity with GAAP requires management to make estimates, based on the best information available, in recording transactions resulting from business operations. Certain balance sheet amounts involve accounting estimates and/or actuarial determinations and are therefore subject to change and include, but are not limited to, invested assets, deferred income taxes, reinsurance recoverables, goodwill and the liabilities for unpaid losses and loss adjustment expenses. As additional information becomes available (or actual amounts are determinable), the estimates may be revised and reflected in operating results. While management believes that these estimates are adequate, such estimates may change in the future.

The Company accounts for business combinations using the acquisition method, which requires an allocation of the purchase price of an acquired entity to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Goodwill represents the excess of the purchase price over the net tangible and intangible assets acquired. In the event the net assets acquired exceed the purchase price, the Company will recognize a gain on bargain purchase.

The results of operations for the three and six months ended June 30, 2013, may not be indicative of the results for the fiscal year ending December 31, 2013. 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 on Form 10-K of the Company for the fiscal year ended December 31, 2012.

The unaudited interim consolidated financial statements include the accounts of American Safety Insurance, each of its subsidiaries and American Safety RRG. All significant intercompany balances as well as normal recurring adjustments have been eliminated. Unless otherwise noted, all balances are presented in thousands.

7

Note 2 – Investments

The amortized cost and estimated fair values of the Company’s available for sale investments at June 30, 2013 and December 31, 2012, are as follows (dollars in thousands):

June 30, 2013	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	258,887	$	2,017	$	(3,951	)	$	256,953
States of the U.S. and political subdivisions of the states		4,516		92		(183	)		4,425
Corporate securities		30,401		5,074		(207	)		35,268
Mortgage-backed securities		4,978		90		(202	)		4,866
Commercial mortgage-backed securities		2,684		141		—			2,825
Asset-backed securities		6,304		686		(18	)		6,972
Total fixed maturities	$	307,770	$	8,100	$	(4,561	)	$	311,309
Common stock	$	6,926	$	—	$	(853	)	$	6,073
Preferred stock	$	—	$	39	$	—		$	39

December 31, 2012	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	53,591	$	2,961	$	(11	)	$	56,541
States of the U.S. and political subdivisions of the states		40,100		6,064		—			46,164
Corporate securities		304,725		36,089		(85	)		340,729
Mortgage-backed securities		237,653		11,088		(501	)		248,240
Commercial mortgage-backed securities		57,521		5,694		—			63,215
Asset-backed securities		71,769		3,138		(219	)		74,688
Total fixed maturities	$	765,359	$	65,034	$	(816	)	$	829,577
Common stock	$	9,004	$	6	$	(234	)	$	8,776
Preferred stock	$	2,789	$	317	$	(25	)	$	3,081

During the six months ended June 30, 2013 and 2012, available-for-sale and trading fixed maturity securities were sold for total proceeds of $778.9 million and $18.4 million, respectively, resulting in gross realized gains and losses to the Company. The gross realized gains on these sales totaled $42.7 million and $0.05 million in 2013 and 2012, respectively. The gross realized losses on these sales totaled $4.9 million and $0.01 million in 2013 and 2012, respectively. During the six months ended June 30, 2013, available-for-sale and trading equity securities were sold for total proceeds of $11.3 million, compared to none in 2012, resulting in gross realized gains to the company of $1.1 million and $0.0 million. There were no gross realized losses tied to sales of equity securities in 2013 and 2012. Sales during the second quarter of 2013 were in compliance with the Merger Agreement. For the purpose of determining gross realized gains and losses, the cost of securities sold is based on specific identification.

Trading securities are reported at fair value, with unrealized holding gains and losses reported as part of net earnings. Net unrealized holding losses from trading securities totaled $0.0 million and $0.01 million for the six months ended June 30, 2013 and 2012. These holding losses are included in net realized gains and losses for the period.

8

The amortized cost and estimated fair value of fixed maturity securities at June 30, 2013, is shown below by contractual maturity.

	Amortized cost		Estimated fair value
	(dollars in thousands)
Due in one year or less	$	4,026	$	4,056
Due after one year through five years		19,261		20,340
Due after five years through ten years		19,259		19,533
Due after ten years		251,258		252,717
Mortgage and asset-backed securities		13,966		14,663
Total	$	307,770	$	311,309

The following tables summarize the gross unrealized losses of the Company’s investment portfolio as of June 30, 2013 and December 31, 2012, by category and length of time that the securities have been in an unrealized loss position.

	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2013	(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	185,593	$	(3,951	)	$	—	$	—		$	185,593	$	(3,951	)
States of the U.S. and political subdivisions of the states		3,247		(183	)		—		—			3,247		(183	)
Corporate securities		3,100		(207	)		—		—			3,100		(207	)
Mortgage-backed securities		3,266		(202	)		—		—			3,266		(202	)
Commercial mortgage-backed securities		—		—			—		—			—		—
Asset-backed securities		—		—			48		(18	)		48		(18	)
Subtotal, fixed maturity securities		195,206		(4,543	)		48		(18	)		195,254		(4,561	)
Common stock		—		—			3,573		(853	)		3,573		(853	)
Preferred stock		—		—			—		—			—		—
Total temporarily impaired securities	$	195,206	$	(4,543	)	$	3,621	$	(871	)	$	198,827	$	(5,414	)

9

	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2012	(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	4,985	$	(11	)	$	—	$	—		$	4,985	$	(11	)
States of the U.S. and political subdivisions of the states		—		—			—		—			—		—
Corporate securities		24,489		(85	)		—		—			24,489		(85	)
Mortgage-backed securities		36,345		(336	)		3,751		(165	)		40,096		(501	)
Commercial mortgage-backed securities		—		—			—		—			—		—
Asset-backed securities		7,536		(210	)		59		(9	)		7,595		(219	)
Subtotal, fixed maturity securities		73,355		(642	)		3,810		(174	)		77,165		(816	)
Common stock		1,067		(14	)		4,206		(220	)		5,273		(234	)
Preferred stock		490		(2	)		504		(23	)		994		(25	)
Total temporarily impaired securities	$	74,912	$	(658	)	$	8,520	$	(417	)	$	83,432	$	(1,075	)

We hold a total of 203 available-for sale securities, of which 67 were in an unrealized loss position for less than twelve months and two were in an unrealized loss position for a period of twelve months or greater as of June 30, 2013. Unrealized losses greater than twelve months on fixed maturities were the result of increased credit spreads and higher market yields relative to the date the securities were purchased. We do not consider these investments to be other-than-temporary impaired at June 30, 2013.

We routinely review our investments that have experienced declines in fair value to determine if the decline is other than temporary. These reviews are performed with consideration of the facts and circumstances of an issuer in accordance with the Securities and Exchange Commission (“SEC”), Accounting for Non-Current Marketable Equity Securities; ASC-320-10-05, Accounting for Certain Investments in Debt and Equity Securities, and related guidance. The identification of distressed investments and the assessment of whether a decline is other-than-temporary involve significant management judgment and require evaluation of factors including but not limited to:

• percentage decline in value and the length of time during which the decline has occurred;

• recoverability of principal and interest;

• market conditions;

• ability and intent to hold the investment to recovery;

• a pattern of continuing operating losses of the issuer;

• rating agency actions that affect the issuer’s credit status;

• adverse changes in the issuer’s availability of production resources, revenue sources, technological conditions; and

• adverse changes in the issuer’s economic, regulatory, or political environment.

Additionally, credit analysis and/or credit rating issues related to specific investments may trigger more intensive monitoring to determine if a decline in market value is other than temporary (“OTTI”). For investments with a market value below cost, the process includes evaluating the length of time and the extent to which cost exceeds market value, the prospects and financial condition of the issuer, and evaluation for a potential recovery in market value, among other factors. This process is not exact and further requires consideration of risks such as credit risk and interest rate risk. Therefore, if an investment’s cost exceeds its market value solely due to changes in interest rates, recognizing impairment may not be appropriate. For the six months ended June 30, 2013 and 2012, the Company did not incur any OTTI losses.

10

Note 3 – Segment Information

Our business is classified into insurance operations and other, with the insurance operations consisting of three divisions: E&S, ART and Reinsurance. E&S includes eight products: environmental, construction, products liability, excess, property, surety, healthcare, and professional liability. ART includes two business lines: specialty programs and fully funded. In our Assumed Re segment, the Company assumes specialty property and casualty business from unaffiliated insurers and reinsurers.

Within E&S, our environmental insurance products provide general contractor pollution and/or professional liability coverage for contractors and consultants in the environmental remediation industry and property owners. Construction provides general liability insurance for residential and commercial contractors. Products liability provides general liability and product liability coverages for smaller manufacturers and distributors, non-habitational real estate and certain real property owner, landlord and tenant risks. Excess provides excess and umbrella liability coverages over our own and other carriers’ primary casualty polices, with a focus on construction risks. Our property coverage encompasses surplus lines commercial property business and commercial multi-peril (CMP) policies. Surety products provide payment and performance bonds primarily to the environmental remediation and construction industries. Healthcare provides customized liability insurance solutions primarily for long-term care facilities. Professional liability provides coverage for primary and following-form excess directors and officers liability for public, private and non-profit entities; standalone employment practices liability insurance (EPLI); and fiduciary liability. Primary and excess coverage for miscellaneous professional liability risks such as lawyers and insurance agents.

In our ART division, specialty programs provide insurance to homogeneous niche groups through third-party program managers. Our specialty programs consist primarily of property and casualty insurance coverages for certain classes of specialty risks. Fully funded policies provide our insureds the ability to fund their liability exposure via a self-insurance vehicle. Fully funded policies consist of general and professional liability for businesses operating primarily in the healthcare and construction industries.

Our Reinsurance division focuses on treaty reinsurance for captives, Risk Retention Groups and specialty insurance companies. Lines of business assumed include medical malpractice, general liability across multiple sectors, commercial automobile liability, professional liability, workers compensation and one property catastrophe treaty that provides a finite limit over the exposure period. Business is sourced from a combination of London, U.S. and Bermuda based reinsurance brokers. The portfolio is a spread of treaties across multiple lines of business written on both an excess of loss and quota share basis.

Our Other segment includes lines of business that we have placed in run-off, such as workers’ compensation, excess liability insurance for municipalities, other commercial lines and real estate and other ancillary product lines.

The reportable insurance divisions are measured based on underwriting profit (loss) and pre-tax operating income (loss).

11

The following table presents key financial data by segment for the three months ended June 30, 2013 and 2012, respectively (dollars in thousands):

American Safety Insurance Holdings, Ltd. and Subsidiaries

Segment Data

(Unaudited) (Dollars in thousands)

	Three Months Ended June 30, 2013
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	52,063		$	16,156		$	15,641		$	—		$	83,860
Net written premiums		41,669			3,000			15,641			—			60,310
Net earned premiums		38,844			8,093			15,255			—			62,192
Fee & other income		(362	)		697			—			12			347
Losses & loss adjustment expenses		23,317			5,226			9,130			—			37,673
Acquisition & other underwriting expenses		17,275			3,528			4,623			770			26,196
Underwriting profit (loss)		(2,110	)		36			1,502			(758	)		(1,330	)
Net investment income		3,380			815			1,304			83			5,582
Pre-tax operating income (loss)		1,270			851			2,806			(675	)		4,252
Net realized gains														37,482
Interest and corporate expenses														1,013
Earnings before income taxes														40,721
Income tax expense														5,900
Net earnings													$	34,821
Less: Net earnings attributable to the non-controlling interest														10
Net earnings attributable to ASIH, Ltd.													$	34,811
Loss ratio		60.0	%		64.6	%		59.8	%		NM			60.6	%
Expense ratio		45.4	%		35.0	%		30.3	%		NM			41.6	%
Combined ratio(2)		105.4	%		99.6	%		90.1	%		(1)NM			102.2	%
	Three Months Ended June 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	50,448		$	21,498		$	15,603		$	—		$	87,549
Net written premiums		39,735			14,579			15,603			—			69,917
Net earned premiums		33,600			13,157			15,260			—			62,017
Fee & other income		—			738			—			(9	)		729
Losses & loss adjustment expenses		20,221			11,875			8,751			(28	)		40,819
Acquisition & other underwriting expenses		15,140			5,865			4,471			874			26,350
Underwriting profit (loss)		(1,761	)		(3,845	)		2,038			(855	)		(4,423	)
Net investment income		4,285			1,348			1,595			174			7,402
Pre-tax operating income (loss)		2,524			(2,497	)		3,633			(681	)		2,979
Net realized losses														(13	)
Interest and corporate expenses														1,215
Earnings before income taxes														1,751
Income tax benefit														(234	)
Net earnings													$	1,985
Less: Net loss attributable to the non-controlling interest														(182	)
Net earnings attributable to ASIH, Ltd.													$	2,167
Loss ratio		60.2	%		90.3	%		57.3	%		NM			65.8	%
Expense ratio		45.1	%		39.0	%		29.3	%		NM			41.3	%
Combined ratio(2)		105.3	%		129.3	%		86.6	%		(1)NM			107.1	%

(1) NM = Ratio is not meaningful

(2) The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition and other underwriting expenses net of fee income to earned premiums.

12

The following table presents key financial data by segment for the six months ended June 30, 2013 and 2012, respectively (dollars in thousands):

American Safety Insurance Holdings, Ltd. and Subsidiaries

Segment Data

(Unaudited) (Dollars in thousands)

	Six Months Ended June 30, 2013
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	100,016		$	32,758		$	32,285		$	—		$	165,059
Net written premiums		79,215			12,879			32,285			—			124,379
Net earned premiums		75,385			19,255			29,476			—			124,116
Fee & other income		(30	)		1,468			—			149			1,587
Losses & loss adjustment expenses		45,344			12,619			17,673			—			75,636
Acquisition & other underwriting expenses		33,871			8,358			9,272			1,590			53,091
Underwriting profit (loss)		(3,860	)		(254	)		2,531			(1,441	)		(3,024	)
Net investment income		7,978			2,045			2,974			217			13,214
Pre-tax operating income (loss)		4,118			1,791			5,505			(1,224	)		10,190
Net realized gains														38,936
Interest and corporate expenses														2,148
Earnings before income taxes														46,978
Income tax expense														6,577
Net earnings													$	40,401
Less: Net earnings attributable to the non-controlling interest														98
Net earnings attributable to ASIH, Ltd.													$	40,303
Loss ratio		60.1	%		65.5	%		60.0	%		NM			60.9	%
Expense ratio		45.0	%		35.8	%		31.5	%		NM			41.5	%
Combined ratio(2)		105.1	%		101.3	%		91.5	%		(1)NM			102.4	%
	Six Months Ended June 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	89,059		$	42,676		$	29,579		$	—		$	161,314
Net written premiums		70,468			30,722			29,579			—			130,769
Net earned premiums		64,750			29,501			29,178			—			123,429
Fee & other income		—			1,402			—			8			1,410
Losses & loss adjustment expenses		39,138			21,862			17,100			—			78,100
Acquisition & other underwriting expenses		29,057			12,253			8,801			1,734			51,845
Underwriting profit (loss)		(3,445	)		(3,212	)		3,277			(1,726	)		(5,106	)
Net investment income		8,910			2,778			3,216			310			15,214
Pre-tax operating income (loss)		5,465			(434	)		6,493			(1,416	)		10,108
Net realized gains														39
Interest and corporate expenses														2,889
Earnings before income taxes														7,258
Income tax expense														872
Net earnings													$	6,386
Less: Net earnings attributable to the non-controlling interest														163
Net earnings attributable to ASIH, Ltd.													$	6,223
Loss ratio		60.4	%		74.1	%		58.6	%		NM			63.3	%
Expense ratio		44.9	%		36.8	%		30.2	%		NM			40.9	%
Combined ratio(2)		105.3	%		110.9	%		88.8	%		(1)NM			104.2	%

(1) NM = Ratio is not meaningful

(2) The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition and other underwriting expenses net of fee income to earned premiums.

13

The Company conducts business in two geographic segments: the United States and Bermuda. Significant differences exist in the regulatory environment in each country.

The following table provides financial data about the geographic locations for the three months ended June 30, 2013 and 2012 (dollars in thousands):

	United States			Bermuda		Total
June 30, 2013
Income tax expense	$	5,900		$	—	$	5,900
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	11,483		$	23,328	$	34,811
	United States			Bermuda		Total
June 30, 2012
Income tax benefit	$	(234	)	$	—	$	(234	)
Net earnings (loss) attributable to American Safety Insurance Holdings, Ltd.	$	(273	)	$	2,440	$	2,167

The following table provides financial data about the geographic locations for the six months ended June 30, 2013 and 2012 (dollars in thousands):

	United States		Bermuda		Total
June 30, 2013
Income tax expense	$	6,577	$	—	$	6,577
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	12,426	$	27,877	$	40,303
Assets	$	662,631	$	688,531	$	1,351,162
Equity	$	132,400	$	201,663	$	334,063
	United States		Bermuda		Total
June 30, 2012
Income tax expense	$	872	$	—	$	872
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	1,266	$	4,957	$	6,223
Assets	$	690,251	$	637,806	$	1,328,057
Equity	$	144,004	$	206,370	$	350,374

Note 4 – Income Taxes

United States federal and state income tax (benefit) expense from operations consists of the following components (dollars in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Current	$	5,989		$	(443	)	$	6,782		$	(2,837	)
Deferred		(89	)		209			(205	)		3,709
Total	$	5,900		$	(234	)	$	6,577		$	872

14

Income tax (benefit) expense for the periods ended June 30, 2013 and 2012 differed from the amount computed by applying the United States Federal income tax rate of 34% to earnings before Federal income taxes as a result of the following (dollars in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Expected income tax expense	$	13,845		$	596		$	15,972		$	2,468
Foreign earned income not subject to U.S. taxation		(7,932	)		(830	)		(9,478	)		(1,685	)
Tax-exempt interest		(4	)		(3	)		(7	)		(6	)
State taxes and other		(9	)		3			90			95
Total	$	5,900		$	(234	)	$	6,577		$	872

Note 5 – Equity Based Compensation

The Company’s incentive stock plan grants incentive stock options to employees. The majority of the options outstanding under the plan vest evenly over a three year period and have a term of 10 years. The Company uses the Black-Scholes option pricing model to value stock options. The Company’s methodology for valuing stock options has not changed from December 31, 2012. During the first six months of 2013 and 2012, the Company did not grant any stock options. Stock based compensation expense related to outstanding stock options was $10 and $69 for the three months ended June 30, 2013 and 2012, respectively and $56 and $187 for the six months ended June 30, 2013 and 2012, respectively, and is reflected in the Consolidated Statement of Operations in other underwriting expenses.

In addition to stock options discussed above, the Company grants restricted shares to employees under the incentive stock plan. During the three month period ended June 30, 2013, no restricted stock shares were granted compared to 5,000 in 2012. During the first six months of 2013, the Company granted 380,839 shares of restricted stock compared to 96,330 for the same period in 2012. Of the shares granted, 79,339 shares vest on the grant date anniversary ratably over three years at 25%, 25%, and 50%, respectively. The remaining 301,500 shares vest pursuant to a vesting schedule based on certain performance criteria. Stock based compensation expense related to the restricted shares was $570 and $481 for the three months ended June 30, 2013 and 2012, respectively and is reflected in the Consolidated Statement of Operations in other underwriting expenses. For the six months ended June 30, 2013 and 2012, $1,014 and $885 of compensation expense, respectively, is reflected in the Consolidated Statement of Operations in other underwriting expenses. Additionally, the Company expensed $82 and $83 in expense for the three months ended June 30, 2013 and 2012, respectively, related to stock awards related to Director compensation. For the six months ended June 30, the company expensed $165 and $165 in 2013 and 2012, respectively, related to stock awards made as a portion of Director compensation.

Note 6 – Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability, or in the absence of a principal market, the most advantageous market. Market participants are buyers and sellers in the principal (or most advantageous) market that are independent, knowledgeable, able to transact for the asset or liability, and willing to transact for the asset or liability.

We determined the fair values of certain financial instruments based on the fair value hierarchy established in “Fair Value Measurements”, topic ASC 820-10-05. Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value. The inputs of these valuation techniques are categorized into three levels. The guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.

15

Our Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the reporting date. The Company receives one quote per instrument for Level 1 inputs.

Our Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

Our Level 3 inputs are valuations based on inputs that are unobservable. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.

The Company receives fair value prices from its third-party investment managers who use an independent pricing service. These prices are determined using observable market information such as dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the security’s terms and conditions, among other things. The Company has reviewed the processes used by the third party providers for pricing the securities, and has determined that these processes result in fair values consistent with the GAAP requirements. In addition, the Company reviews these prices for reasonableness and has not adjusted any prices received from the third-party providers as of June 30, 2013.

Assets measured at fair value on a recurring basis for June 30, 2013 and December 31, 2012 are summarized below:

As of June 30, 2013

Fair Value Measurements Using

(dollars in thousands)

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	242,555	$	14,398	$	—	$	256,953
States of the U.S. and political subdivisions of the states		—		4,425		—		4,425
Corporate securities		—		35,268		—		35,268
Mortgage-backed securities		—		4,866		—		4,866
Commercial mortgage-backed securities		—		2,825		—		2,825
Asset-backed securities		—		6,972		—		6,972
Total fixed maturity securities		242,555		68,754		—		311,309
Equity securities		—		39		6,073		6,112
Short term investments		611,267		—		—		611,267
Trading securities		—		—		—		—
Total	$	853,822	$	68,793	$	6,073	$	928,688

16

As of December 31, 2012

Fair Value Measurements Using

(dollars in thousands)

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	31,032	$	25,509	$	—	$	56,541
States of the U.S. and political subdivisions of the states		—		46,164		—		46,164
Corporate securities		—		340,729		—		340,729
Mortgage-backed securities		—		248,240		—		248,240
Commercial mortgage-backed securities		—		63,215		—		63,215
Asset-backed securities		—		74,688		—		74,688
Total fixed maturity securities		31,032		798,545		—		829,577
Equity securities		5,151		—		6,706		11,857
Short term investments		76,502		—		—		76,502
Trading securities		990		11,722		—		12,712
Total	$	113,675	$	810,267	$	6,706	$	930,648

A reconciliation of the beginning and ending balances for the investments categorized as Level 3 at June 30, 2013 and December 31, 2012 are as follows:

	As of June 30, 2013
	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	(dollars in thousands)
	Equity Securities
Balance at December 31, 2012	$	6,706
Total gains (losses) realized (unrealized):
Included in earnings		—
Included in other comprehensive income		(633	)
Purchases		—
Sales		—
Issuance and settlements		—
Net transfers in (out of) Level 3		—
Balance at June 30, 2013	$	6,073
Change in net unrealized losses relating to assets still held at reporting date	$	(633	)

17

	As of December 31, 2012
	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	(dollars in thousands)
	Equity Securities
Balance at December 31, 2011	$	6,751
Total gains (losses) realized (unrealized):
Included in earnings		—
Included in other comprehensive income		(45	)
Purchases		—
Sales		—
Issuance and settlements		—
Net transfers in (out of) Level 3		—
Balance at December 31, 2012	$	6,706
Change in net unrealized losses relating to assets still held at reporting date	$	(45	)

There were no transfers in and out of Level 1 and 2 categories during 2013 or 2012.

A description of the Company’s inputs used to measure fair value is as follows:

Fixed maturities (Available-for-Sale and Trading) Levels 1 and 2

• United States Treasury securities are valued using quoted (unadjusted) prices in active markets and are therefore shown as Level 1.

• United States Government agencies are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

• States of the U.S. and political subdivisions of the states are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

• Corporate securities are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

• Mortgage-backed securities are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

• Commercial mortgage-backed securities are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

• Asset-backed securities are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

Equity securities (Level 1) – For these securities, fair values are based on quoted market prices (unadjusted) in active markets.

Equity securities (Level 2) – These fair value measurements are provided by using quoted prices of securities with similar characteristics.

Equity securities (Level 3) – Includes private equity investments which are carried at the Company’s equity in the estimated net assets of the investments based on valuations provided by the investee or other relevant market data.

We assess the reasonableness of those fair values by evaluating the financial statements and discussions with the investees. Due to the delay of reported information, our estimates are based on the most recent available information. These inputs are considered unobservable and therefore the private equity investments are being classified as Level 3 measurements.

18

Short-term investments are reported at fair value using Level 1 inputs.

As management is ultimately responsible for determining the fair value measurements for all securities, we validate prices received from our investment advisor by comparing the fair value estimates to our knowledge of the current market and investigate any prices deemed not to be representative of fair value.

The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of financial instruments as of June 30, 2013 and December 31, 2012.

	Level in Fair		June 30, 2013				December 31, 2012
	Value Hierarchy		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents		Level 1	$	18,567	$	18,567	$	20,224	$	20,224
Fixed maturities		*	$	311,309	$	311,309	$	829,577	$	829,577
Equity securities		*	$	6,112	$	6,112	$	11,857	$	11,857
Short-term investments		*	$	611,267	$	611,267	$	76,502	$	76,502
Trading securities		*	$	—	$	—	$	12,712	$	12,712
Premiums receivable		Level 2	$	29,249	$	29,249	$	32,559	$	32,559
Reinsurance recoverable		Level 2	$	185,644	$	185,644	$	183,562	$	183,562
Liabilities:
Loans payable		Level 2	$	39,183	$	39,183	$	39,183	$	39,183

Cash and cash equivalents – The carrying amounts approximate fair value because of the short-term maturity of those instruments.

Premiums receivable – The carrying value of premiums receivable approximate fair value due to its short-term nature.

Reinsurance recoverables – The carrying value of reinsurance receivables approximate fair value. The Company has established an allowance for bad debts associated with reinsurance balances recoverable and is primarily related to specific counterparties.

Loans payable – The carrying value of those notes is a reasonable estimate of fair value. Due to the variable interest rate of these instruments, carrying value approximates market value.

Note 7 – Credit Facility

The Company has an unsecured line of credit facility for $20 million that expires August 20, 2013. The principal amount outstanding under the credit facility provides for interest at LIBOR plus 200 basis points with a 3% floor. In addition, the credit facility provides for an unused facility fee of 15 basis points payable monthly. The line of credit facility contains certain covenants and at June 30, 2013, the Company was in compliance with all covenants. The Company has no outstanding borrowings at June 30, 2013.

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Note 8 – Loans Payable

Trust Preferred Offerings

In 2003, American Safety Capital and American Safety Capital II, both non-consolidated, wholly-owned subsidiaries of the Company, issued $8 million and $5 million, respectively, of variable rate 30-year trust preferred securities. The securities require interest payments on a quarterly basis calculated at a floating rate of LIBOR + 4.2% and LIBOR + 3.95% for American Safety Capital and American Safety Capital II, respectively. The securities can be redeemed at the Company’s option any time.

In 2005, the American Safety Capital Trust III, a non-consolidated wholly-owned subsidiary of the Company, issued a 30-year trust preferred securities in the amount of $25 million. The securities require interest payments of LIBOR + 3.4%. The securities may be redeemed at any time.

The balance of loans payable at June 30, 2013 was $39.2 million.

Note 9 – Variable Interest Entity

The Risk Retention Act of 1986 (the “Risk Retention Act”) allowed companies with specialized liability insurance needs that could not be met in the standard insurance market to create a new type of insurance vehicle called a risk retention group. We assisted in the formation of American Safety RRG in 1988 in order to establish a U.S. insurance company to market and underwrite specialty environmental coverages.

American Safety RRG is a variable interest entity (“VIE”) which is consolidated in our financial statements in accordance with ASC 810-10-5, as through the contractual relationships, the Company has the power to direct the activities of American Safety RRG that most significantly impact its economic performance and the right to receive benefits from American Safety RRG that could be significant to American Safety RRG. Due to these criteria being met, American Safety is the primary beneficiary of the variability of the underwriting profits of American Safety RRG. The liabilities of American Safety RRG consolidated by the Company do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of American Safety RRG. Similarly, the assets of American Safety RRG consolidated by the Company do not represent additional assets available to satisfy claims against the Company’s general assets.

The creditors of American Safety RRG do not have recourse to the Company for the obligations outside of obligations that exist due to contractual loss sharing or reinsurance arrangements that exist between American Safety RRG and other entities under common control in the ordinary course of the business. The equity of American Safety RRG is for the benefit of the policyholders and is considered a non-controlling interest in the shareholders’ equity section of the Company’s Consolidated Balance Sheets. Should RRG incur net losses and the equity of RRG decline below regulatory minimum capital levels or result in a deficit, there is no legal obligation of the Company to fund those losses or contribute capital to the VIE. The profit and loss of the VIE increases or decreases the value of the non-controlling interest on the balance sheet of the Company and does not contribute to earnings or equity attributable to American Safety Insurance Holdings, Ltd.

Assets and Liabilities of the VIE as consolidated in the Consolidated Balance Sheets (dollars in thousands):

	June 30, 2013		December 31, 2012
Investments	$	11,798	$	12,144
Cash and cash equivalents		439		507
Accrued investment income		56		52
Premiums receivable		383		498
Ceded unearned premium		218		351
Reinsurance recoverable		4,659		5,039
Deferred income taxes		121		—
Deferred acquisition costs		715		1,100
Funds on deposit		114		231
Other assets		724		1,255
Total Assets	$	19,227	$	21,177
Unpaid losses and loss adjustment expenses		8,398		8,900
Unearned premiums		2,878		4,325
Ceded premiums payable		326		67
Funds held		99		113
Deferred income taxes		—		30
Total Liabilities	$	11,701	$	13,435

20

Note 10 – Commitments and Contingencies

At June 30, 2013, the Company had aggregate outstanding irrevocable letters of credit which had not been drawn amounting to $1.8 million. Those letters of credit included $1.0 million for the benefit of the Vermont Department of Banking, and $0.8 million issued to various other parties.

American Safety Reinsurance Ltd.(ASRe), our reinsurance subsidiary, provides reinsurance protection for risk retention groups, captives and insurance companies and may be required to provide letters of credit to collateralize a portion of the reinsurance protection. In the normal course of business they may provide letters of credit to the companies they reinsure. As of June 30, 2013, ASRe had $84.4 million in letters of credit issued and outstanding, secured by pledged investment assets of $89.4 million.

Litigation Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Based on the information presently available, management does not believe that any pending or threatened litigation or arbitration disputes will have any material adverse effect on our final condition or operating results.

Note 11 – Merger with Fairfax Financial Holdings Limited

On June 2, 2013, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Fairfax Financial Holdings Limited, a Canadian corporation (“Fairfax”), and Fairfax Bermuda Holdings Ltd., a Bermuda exempted company and an indirect wholly-owned Subsidiary of Fairfax.

At the effective time of the Merger (the “Effective Time”), each issued and outstanding common share of the Company (the “Shares”), owned by Fairfax, or any direct or indirect wholly-owned subsidiary of Fairfax, or owned by any shareholders who are entitled to and who properly exercise appraisal rights under Bermuda law, will be cancelled and converted into the right to receive $29.25 in cash, without interest (the “Merger Consideration”). At the Effective Time, each outstanding option to purchase Shares granted under the Company’s equity plans that is outstanding and unexercised as of immediately prior to the Effective Time, whether vested or unvested or exercisable, shall become fully vested and exercisable, and all restricted Shares granted under the Company’s equity plans shall become fully vested and transferable and all restrictions on such restricted shares shall lapse. Each holder of an option that is outstanding and unexercised as of the Effective Time and has an exercise price per Share that is less than the per Share Merger Consideration shall be entitled to receive in exchange for the cancellation of such option an amount in cash equal to the product of (i) the difference between the per Share Merger Consideration and the applicable exercise price of such option and (ii) the aggregate number of Shares that remain issuable upon exercise of such option, subject to applicable withholding requirements.

21

The Company has made customary representations, warranties and covenants in the Merger Agreement, which generally expire at the Effective Time. The Company has agreed not to (i) solicit, encourage or initiate any inquiries or the implementation or submission of any proposal that constitutes or could reasonably be expected to lead to, any Acquisition Proposal (as defined in the Merger Agreement), (ii) engage in, continue or otherwise participate in discussions or negotiations regarding, or furnish to any person any non-public information in connection with, any Acquisition Proposal, (iii) otherwise knowingly facilitate any effort or attempt to make an Acquisition Proposal or (iv) enter into any agreement with respect to any Acquisition Proposal.

The consummation of the Merger is subject to various conditions, including adoption of the Merger Agreement and approval of the Merger by the Company’s shareholders, expiration or termination of applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, receipt of certain insurance regulatory approvals and other customary closing conditions. The consummation of the Merger is not subject to a financing condition. The companies expect to close the transaction during the fourth quarter of 2013.

The Merger Agreement contains termination rights for both the Company and Fairfax, including (i) the right of either party to terminate if the Effective Time has not occurred on or before the End Date (as defined in the Merger Agreement), provided that either party may extend such date by an additional three months under certain circumstances; (ii) the right of either party to terminate following certain breaches by the other party of its representations, warranties and covenants in the Merger Agreement and (iii) the right of the Company to enter into an agreement with respect to a Superior Proposal (as defined in the Merger Agreement) if the Company complies with certain notice and other requirements set forth in the Merger Agreement, including paying Fairfax a termination fee of $9,186,000.

The Merger Agreement provides that upon termination of the Merger Agreement under certain specified circumstances, including the termination by Fairfax if the Company’s Board of Directors changes its recommendation to the Company’s shareholders that they adopt the Merger Agreement and approve the Merger, the Company will be required to pay Fairfax a termination fee of $9,186,000. Upon the termination of the Merger Agreement under certain other circumstances, including if the Company’s shareholders do not adopt the Merger Agreement and approve the Merger, the Company will be required to reimburse Fairfax for its transaction expenses up to a maximum amount of $1.5 million.

The parties to the Merger Agreement are entitled to specific performance of the terms and provisions of the Merger Agreement, in addition to any other remedy to which they are otherwise entitled, including damages for any breach of the Merger Agreement by the other party.

Note 12 – Accounting Pronouncements

In February 2013, the FASB issued an accounting update to improve the reporting of reclassifications out of accumulated other comprehensive income. An entity is required to report the effect of significant reclassifications, by component, out of accumulated other comprehensive income on the respective line items in net income if the item is required under GAAP to be reclassified in its entirety in the same reporting period. The required disclosures of the update are allowed either in the Statement of Operations or in the notes. The amendments in the update are effective for reporting periods beginning after December 15, 2012. This update did not have an impact on our financial disclosures.

At June 30, 2013, there were no recently issued accounting pronouncements where our adoption of such guidance was pending.

Note 13 – Subsequent Events

On July 29, 2013, American Safety Insurance Holdings, Ltd. received an offer from Catalina Holdings (Bermuda) Ltd. (“Catalina”), outlining the acquisition of American Safety by Catalina Holdings (Bermuda) LTD. at a cash price of $29.75. This offer was substantially the same terms as those contained in the initial proposed Merger Agreement with Fairfax Financial Holdings Limited.

On August 7th, 2013, Fairfax Financial Holdings Limited increased its offer to purchase American Safety to $30.25 per share from the previously announced offer of $29.25 per share.

The board of directors of American Safety approved an amendment to the Merger Agreement among American Safety, Fairfax and Fairfax Holdings Bermuda Ltd. reflecting the revised price and an increase in the termination fee to $13.4 million from $9.1 million. The transaction is subject to customary conditions, including approval of American Safety’s shareholders and regulatory approvals.

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

Our business is classified into insurance operations and other, with the insurance operations consisting of three divisions: Excess and Surplus Lines (“E&S”), ART and Reinsurance. E&S includes eight products: environmental, construction, products liability, excess, property, surety, healthcare, and professional liability. ART includes two products: specialty programs and fully funded. In our Assumed Re segment, the Company assumes specialty property and casualty business from unaffiliated insurers and reinsurers.

Within E&S, our environmental insurance products provide general contractor pollution and/or professional liability coverage for contractors and consultants in the environmental remediation industry and property owners. Construction provides general liability insurance for residential and commercial contractors. Products liability provides general liability and product liability coverages for smaller manufacturers and distributors, non-habitational real estate and certain real property owner, landlord and tenant risks. Excess provides excess and umbrella liability coverages over our own and other carriers’ primary casualty polices, with a focus on construction risks. Our property coverage encompasses surplus lines commercial property business and commercial multi-peril (CMP) policies. Surety products provide payment and performance bonds primarily to the environmental remediation and construction industries. Healthcare provides customized liability insurance solutions primarily for long-term care facilities. Professional liability provides coverage for primary and following-form excess directors and officers liability for public, private and non-profit entities; standalone employment practices liability insurance (EPLI); and fiduciary liability. Primary and excess coverage for miscellaneous professional liability risks such as lawyers and insurance agents.

In our ART division, specialty programs provide insurance to homogeneous niche groups through third-party program managers. Our specialty programs consist primarily of property and casualty insurance coverages for certain classes of specialty risks including. Fully funded policies provide our insureds the ability to fund their liability exposure via a self-insurance vehicle. We write fully funded policies consist of general and professional liability for businesses operating primarily in the healthcare and construction industries.

Our Reinsurance division focuses on treaty reinsurance for captives, Risk Retention Groups and specialty insurance companies. Lines of business written include medical malpractice, general liability, commercial automobile liability, professional liability, workers compensation and one property catastrophe treaty that provides a finite limit over the exposure period. Business is sourced from a combination of London, U.S. and Bermuda based reinsurance brokers. The portfolio is a spread of smaller treaties across multiple lines of business written on both an excess of loss and quota share basis.

Our Other segment includes lines of business that we have placed in run-off, such as workers’ compensation, excess liability insurance for municipalities, other commercial lines and real estate and other ancillary product lines.

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The following table presents key financial data by segment for the three months ended June 30, 2013 and 2012, respectively (dollars in thousands):

American Safety Insurance Holdings, Ltd. and Subsidiaries

Segment Data

(Unaudited) (Dollars in thousands)

	Three Months Ended June 30, 2013
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	52,063		$	16,156		$	15,641		$	—		$	83,860
Net written premiums		41,669			3,000			15,641			—			60,310
Net earned premiums		38,844			8,093			15,255			—			62,192
Fee & other income		(362	)		697			—			12			347
Losses & loss adjustment expenses		23,317			5,226			9,130			—			37,673
Acquisition & other underwriting expenses		17,275			3,528			4,623			770			26,196
Underwriting profit (loss)		(2,110	)		36			1,502			(758	)		(1,330	)
Net investment income		3,380			815			1,304			83			5,582
Pre-tax operating income (loss)		1,270			851			2,806			(675	)		4,252
Net realized gains														37,482
Interest and corporate expenses														1,013
Earnings before income taxes														40,721
Income tax expense														5,900
Net earnings													$	34,821
Less: Net earnings attributable to the non-controlling interest														10
Net earnings attributable to ASIH, Ltd.													$	34,811
Loss ratio		60.0	%		64.6	%		59.8	%		NM			60.6	%
Expense ratio		45.4	%		35.0	%		30.3	%		NM			41.6	%
Combined ratio(2)		105.4	%		99.6	%		90.1	%		(1)NM			102.2	%
	Three Months Ended June 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	50,448		$	21,498		$	15,603		$	—		$	87,549
Net written premiums		39,735			14,579			15,603			—			69,917
Net earned premiums		33,600			13,157			15,260			—			62,017
Fee & other income		—			738			—			(9	)		729
Losses & loss adjustment expenses		20,221			11,875			8,751			(28	)		40,819
Acquisition & other underwriting expenses		15,140			5,865			4,471			874			26,350
Underwriting profit (loss)		(1,761	)		(3,845	)		2,038			(855	)		(4,423	)
Net investment income		4,285			1,348			1,595			174			7,402
Pre-tax operating income (loss)		2,524			(2,497	)		3,633			(681	)		2,979
Net realized losses														(13	)
Interest and corporate expenses														1,215
Earnings before income taxes														1,751
Income tax benefit														(234	)
Net earnings													$	1,985
Less: Net loss attributable to the non-controlling interest														(182	)
Net earnings attributable to ASIH, Ltd.													$	2,167
Loss ratio		60.2	%		90.3	%		57.3	%		NM			65.8	%
Expense ratio		45.1	%		39.0	%		29.3	%		NM			41.3	%
Combined ratio(2)		105.3	%		129.3	%		86.6	%		(1)NM			107.1	%

(1) NM = Ratio is not meaningful

(2) The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition and other underwriting expenses net of fee income to earned premiums.

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Three Months Ended June 30, 2013, compared to

Three Months Ended June 30, 2012

Net Earnings

Net earnings attributable to ASIH were $34.8 million, or $3.54 per diluted share, for the three months ended June 30, 2013, compared to $2.2 million, or $0.21 per diluted share, for the same period of 2012 due primarily to after tax net realized gains of $31.4 million.

Combined Ratio

Our underwriting results are measured by the combined ratio, which is the sum of (a) the ratio of incurred losses and loss adjustment expenses to net earned premiums (loss ratio), and, (b) the ratio of acquisition expenses and other underwriting expenses, net of fee income, to net earned premiums (expense ratio). A combined ratio below 100% indicates that an insurer has an underwriting profit, and a combined ratio above 100% indicates that an insurer has an underwriting loss.

The combined ratio of 102.2% consists of a loss ratio of 60.6% and an expense ratio of 41.6%, compared to 65.8% and 41.3%, respectively, for the same quarter of 2012. The decrease in the loss ratio is primarily attributable to lower weather related losses experienced in the second quarter of 2013 as compared to the 2012 quarter. Net operating earnings for the quarter ended June 30, 2013 and 2012 were $3.4 million and $2.2 million, respectively. Operating earnings in the second quarter of 2012 includes $3.0 million of weather related losses.

Gross Written Premiums

Gross written premiums decreased 4.2% to $83.9 million from $87.5 million for the three months ended June 30, 2013 and 2012, respectively. The growth in the E&S division to $52.1 million from $50.4 million was primarily attributable to increased production of the construction, surety and excess lines. Gross written premiums in Assumed Reinsurance were at $15.6 million for both three months ended June 30, 2013 and 2012. The ART Division’s gross written premium declined to $16.2 million from $21.5 million in 2012 due to the non-renewal of certain programs and the de-emphasis of the business.

Net Investment Income

Net investment income is derived from the investment portfolio net of investment expenses. Net investment income was $5.6 million for the three months ended June 30, 2013, compared to $7.4 million for the same period of 2012. Invested assets increased to $928.7 million at June 30, 2013, as compared to $908.6 million for the same period of 2012. Investment income decreased as a result of the sale of the majority of the fixed income and equity investment assets. During the quarter ended June 30, 2013 the Company sold $778.9 million of its investment portfolio in compliance with the merger agreement with Fairfax Financial Holdings Limited. The decline in net investment income in the 2013 quarter was due to the liquidation of a substantial portion of the investment portfolio and subsequent reinvestment of the proceeds. The Company reinvested the proceeds in treasuries with a lower risk and yield.

Acquisition Expenses and Other Underwriting Expenses

Acquisition expenses are commissions paid to producers that are partially offset by ceding commissions or fronting fees. Acquisition expenses also include premium taxes paid to states in which we are admitted to conduct business. Policy acquisition expenses were $13.8 million or 22.2% of earned premium for the three months ended June 30, 2013, as compared to $14.3 million or 23.1% of earned premium for the same period of 2012. Acquisistion expenses as a percentage of net earned premiums decreased primarily to increased ceding commissions in the ART division. Other underwriting expenses were $12.4 million for the three months ended June 30, 2013, compared to $12.0 million for the same 2012 period. As a percentage of net earned premiums, other underwriting expenses increased to 19.9% from 19.4% for the same three months of 2012. Other underwriting expenses increased due to the acquisition of underwriting teams and technology investments placed in service during the later part of 2012.

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Income Taxes

The income tax expense for the three months ended June 30, 2013, was $5.9 million compared to a benefit of $0.2 million for the same period of 2012. The increase is due to taxes on U.S. realized gains on sales of investments. Total realized gains for the quarter were $37.5 million, of which $17.8 million were in the U.S.

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The following table presents key financial data by segment for the six months ended June 30, 2013 and 2012, respectively (dollars in thousands):

American Safety Insurance Holdings, Ltd. and Subsidiaries

Segment Data

(Unaudited) (Dollars in thousands)

	Six Months Ended June 30, 2013
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	100,016		$	32,758		$	32,285		$	—		$	165,059
Net written premiums		79,215			12,879			32,285			—			124,379
Net earned premiums		75,385			19,255			29,476			—			124,116
Fee & other income		(30	)		1,468			—			149			1,587
Losses & loss adjustment expenses		45,344			12,619			17,673			—			75,636
Acquisition & other underwriting expenses		33,871			8,358			9,272			1,590			53,091
Underwriting profit (loss)		(3,860	)		(254	)		2,531			(1,441	)		(3,024	)
Net investment income		7,978			2,045			2,974			217			13,214
Pre-tax operating income (loss)		4,118			1,791			5,505			(1,224	)		10,190
Net realized gains														38,936
Interest and corporate expenses														2,148
Earnings before income taxes														46,978
Income tax expense														6,577
Net earnings													$	40,401
Less: Net earnings attributable to the non-controlling interest														98
Net earnings attributable to ASIH, Ltd.													$	40,303
Loss ratio		60.1	%		65.5	%		60.0	%		NM			60.9	%
Expense ratio		45.0	%		35.8	%		31.5	%		NM			41.5	%
Combined ratio(2)		105.1	%		101.3	%		91.5	%		(1)NM			102.4	%

	Six Months Ended June 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	89,059		$	42,676		$	29,579		$	—		$	161,314
Net written premiums		70,468			30,722			29,579			—			130,769
Net earned premiums		64,750			29,501			29,178			—			123,429
Fee & other income		—			1,402			—			8			1,410
Losses & loss adjustment expenses		39,138			21,862			17,100			—			78,100
Acquisition & other underwriting expenses		29,057			12,253			8,801			1,734			51,845
Underwriting profit (loss)		(3,445	)		(3,212	)		3,277			(1,726	)		(5,106	)
Net investment income		8,910			2,778			3,216			310			15,214
Pre-tax operating income (loss)		5,465			(434	)		6,493			(1,416	)		10,108
Net realized gains														39
Interest and corporate expenses														2,889
Earnings before income taxes														7,258
Income tax expense														872
Net earnings													$	6,386
Less: Net earnings attributable to the non-controlling interest														163
Net earnings attributable to ASIH, Ltd.													$	6,223
Loss ratio		60.4	%		74.1	%		58.6	%		NM			63.3	%
Expense ratio		44.9	%		36.8	%		30.2	%		NM			40.9	%
Combined ratio(2)		105.3	%		110.9	%		88.8	%		(1)NM			104.2	%

(1) NM = Ratio is not meaningful

(2) The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition and other underwriting expenses net of fee income to earned premiums.

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Six Months Ended June 30, 2013, compared to

Six Months Ended June 30, 2012

Net Earnings

Net earnings for the six months ended June 30, 2013, were $40.3 million, or $4.12 per diluted share, compared to $6.2 million, or $0.59 per diluted share, for the same period in 2012 due primarily to after tax net realized gains of $32.6 million, or $3.33 per share. Net operating earnings, exclusive of weather related property losses, were $7.7 million for the six months ended June 30, 2013 compared to $9.2 million in the same period in 2012. The decrease in net operating earnings is primarily attributable to lower net investment income due to the sales of the investment portfolio noted in the quarterly results.

Combined Ratio

The combined ratio was 102.4% compared to 104.2%, composed of a loss ratio of 60.9% and an expense ratio of 41.5%, compared to 63.9% and 40.9%, respectively, in the prior year. Weather related losses during 2012 impacted the 2012 loss ratio by 2.9 points while for the six months ended June 30, 2013 weather related losses were minimal. The increase in expense ratio for the six months ended June 30, 2013 is primarily attributable to the July 1, 2012 acquisition of a surety managing general agency.

Gross Written Premiums

Gross written premiums increased 2.3% to $165.1 million from $161.3 million for the six months ended June 30, 2013 and 2012, respectively. The growth in the E&S division to $100.0 million from $89.1 million was primarily attributable to increased production of the construction, surety and excess lines. ART gross written premiums declined due to non-renewed programs during 2013 and the de-emphasis of the business. Gross written premiums in Assumed Reinsurance increased approximately $2.7 million.

Net Earned Premiums

Net earned premiums increased 0.6% to $124.1 million for the six months ended June 30, 2013, compared to $123.4 million for the same period of 2012 as a result of increased E&S premium production offset for the most part by reduced gross written premiums in the ART division.

Net Investment Income

Net investment income is derived from the investment portfolio net of investment expenses. Net investment income was $13.2 million for the six months ended June 30, 2013, compared to $15.2 million for the same period of 2012 decreasing as a result of lower yields. These lower yields are attributable to the sales of the majority of the Fixed Income and Equity investments and reinvestment in lower yield, lower risk treasuries. Average invested assets increased to $927.8 million at June 30, 2013, as compared to $897.6 million for the same period of 2012. The book yield on the portfolio was 1.0% net of investment fees compared to 3.6% in 2012.

Acquisition Expenses and Other Underwriting Expenses

Acquisition expenses are commissions paid to producers that are partially offset by ceding commissions or fronting fees. Acquisition expenses also include premium taxes paid to states in which we are admitted to conduct business. Acquisition expenses were $28.6 million or 23.0% of earned premium for the six months ended June 30, 2013, as compared to $29.1 million or 23.6% of earned premium for the same period of 2012. The decrease is due to the increase in ceding commissions in the ART division. Other underwriting expenses were $24.5 million for the six months ended June 30, 2013, compared to $22.8 million for the same 2012 period. As a percentage of net earned premiums, other underwriting expenses increased to 19.8% from 18.4% for the same six months of 2012. Other underwriting expenses increased due to the acquisition of underwriting teams and technology investments.

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Income Taxes

The income tax expense for the six months ended June 30, 2013, was $6.6 million compared to $0.9 million for the same period of 2012 due to increased earnings in the U.S. as a result of realized gains generated from the sale of investment assets. Total realized gains for the six months ended June 30, 2013 were $38.9 million, of which $18.7 million were in the U.S.

Liquidity and Capital Resources

The Company meets its cash requirements and finances its growth principally through cash flows generated from operations. The Company has experienced a reduction in premium rates due to the entrance of new competitors and overall market conditions. The Company’s primary sources of short-term cash flow are premium writings and investment income. Short-term cash requirements relate to claims payments, reinsurance premiums, commissions, salaries, employee benefits, and other operating expenses. Due to the uncertainty regarding the timing and amount of settlements of unpaid claims, the Company’s future liquidity requirements may vary; therefore, the Company has structured its investment portfolio to mitigate those factors. The Company believes its current cash flows are sufficient for the short-term needs of its business and its invested assets are sufficient for the long-term needs of its insurance business.

The Company has a line of credit facility of $20 million. The facility is unsecured and expires August 20, 2013. At June 30, 2013, the Company had not drawn on the facility.

Net cash provided by operations was $23.3 million for the six months ended June 30, 2013, compared to net cash provided by operations of $13.7 million for the same period of 2012. Cash provided increased primarily as a result of the collection of accrued premiums.

Our ability to pay future dividends to shareholders will depend, to a significant degree, on the ability of our subsidiaries to generate earnings from which to pay dividends. The jurisdictions in which we and our 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. Given the capital requirements associated with our business plan, we do not anticipate paying dividends on the common shares in the near future.

Forward Looking Statements

This report contains forward-looking statements. These forward-looking statements reflect the Company’s current views with respect to future events and financial performance, including insurance market conditions, 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. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of American Safety to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the timing and completion of the merger, the outcome of any legal proceedings relating to the merger, the effect on American Safety’s customer relationships, operating results and business generally. Such factors also include, but are not limited to, the risks and uncertainties described in Fairfax’s reports filed with the SEC and securities regulatory authorities in Canada, which are available at www.sec.gov and www.sedar.com, and in American Safety’s reports, including its Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC, which are available at www.sec.gov. Fairfax and American Safety disclaim any intention or obligation to update or revise any forward- looking statements, except as required by law.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

For an in-depth discussion of the Company’s market risks, see Management’s Discussion and Analysis of Quantitative and Qualitative Disclosures about Market Risk in Item 7A of the Company’s Form 10-K for the year ended December 31, 2012.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Report, concluded that, as of such date, the Company’s disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company (including consolidated subsidiaries) would be made known to them.

Changes in Internal Control

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation described above that occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company, through its subsidiaries, is routinely party to pending or threatened litigation or arbitration disputes in the normal course of or related to its business. Based upon information presently available, in view of reserve practices and legal and other defenses available to our subsidiaries, management does not believe that any pending or threatened litigation or arbitration disputes will have any material adverse effect on our financial condition or operating results.

Item 1A. Risk Factors

For an in-depth discussion of risk factors affecting the Company, see Part I, Item 1A. “Risk Factors” of the Company’s Form 10-K for the year ended December 31, 2012.

The following are material changes from the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Failure to complete the pending merger with Fairfax could materially and adversely affect our results of operations and our stock price.

On June 2, 2013, American Safety Insurance Holdings, Ltd., a Bermuda exempted company (the “Company”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Fairfax Financial Holdings Limited, a Canadian corporation (“Fairfax”), and Fairfax Bermuda Holdings Ltd., a Bermuda exempted company and an indirect wholly-owned Subsidiary of Fairfax. Under the terms of the Merger Agreement, the Company will be an indirect wholly-owned subsidiary of Fairfax.

At the effective time of the Merger (the “Effective Time”), each issued and outstanding common share of the Company (the “Shares”), other than Shares held in the Company’s treasury or owned by Fairfax, or any direct or indirect wholly-owned subsidiary of Fairfax, or owned by any shareholders who are entitled to and who properly exercise appraisal rights under Bermuda law, will be cancelled and converted into the right to receive $29.25 in cash, without interest (the “Merger Consideration”). At the Effective Time, each outstanding option to purchase Shares granted under the Company’s equity plans that is outstanding and unexercised as of immediately prior to the Effective Time, whether vested or unvested or exercisable, shall become fully vested and exercisable, and all restricted Shares granted under the Company’s equity plans shall become fully vested and transferable and all restrictions on such restricted shares shall lapse. Each holder of an option that is outstanding and unexercised as of the Effective Time and has an exercise price per Share that is less than the per Share Merger Consideration shall be entitled to receive in exchange for the cancellation of such option an amount in cash equal to the product of (i) the difference between the per Share Merger Consideration and the applicable exercise price of such option and (ii) the aggregate number of Shares that remain issuable upon exercise of such option, subject to applicable withholding requirements.

In addition, the pendency of the Merger could adversely affect our operations because:

• the attention of our management and our employees may be diverted from day-to-day operations as they focus on the Merger;

• our insureds, distribution partners and other business partners may cease or delay conducting business with us as a result of the announcement of the Merger, which could cause our revenues to materially decline or any anticipated increases in revenues to be lower than expected;

• our ability to attract new employees and retain our existing employees may be harmed by uncertainties associated with the Merger, and we may be required to incur substantial costs to recruit replacements for lost personnel or consultants; and

• stockholder lawsuits could be filed against us challenging the Merger. If this occurs, even if the lawsuits are groundless and we ultimately prevail, we may incur substantial legal fees and expenses defending these lawsuits, and the Merger could be prevented or delayed.

31

The occurrence of any of these events individually or in combination could have a material adverse affect on our results of operations and our stock price. As a result of the occurrence of any of these events, if the Merger is not completed, our business and operating results could be materially adversely affected.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchase of Equity Securities

On January 24, 2012 and subsequently on October 23, 2012, the Company’s Board of Directors authorized the repurchase of up to 500,000 shares of common stock with a total authorized repurchase of 1,000,000 shares. Pursuant to this authorization, the Company had repurchased a total of 916,002 shares of common stock as of June 30, 2013, at an average cost of $18.51 per share or approximately $17.8 million during 2012 and 2013.

During the quarter, 42,969 shares were purchased at an average cost of $28.92 per share pursuant to the exercise of stock options.

The following table provides information with respect to shares of our common stock that were repurchased or surrendered during the three months ended June 30, 2013:

Period					Total Number of		Maximum Number
					Shares Purchased		of Shares
	Total Number		Average		as Part of Publicly		That May Yet Be
	of Shares		Price Paid		Announced Plan		Purchased Under the
	Purchased		per Share		or Program		Plan or Program
April 1, 2013 through April 30, 2013		0	$	—		0		83,998
May 1, 2013 through May31, 2013		0	$	—		0		83,998
June 1, 2013 through June 30, 2013		42,969	$	28.92		0		83,998
Total		42,969	$	28.92		0

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

32

Item 6. Exhibits

The following exhibits are filed as part of this report:

Exhibit No.	Description
11	Computation of Earnings Per Share
31.1	Certification Pursuant to § 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification Pursuant to § 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification Pursuant to § 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification Pursuant to § 906 of the Sarbanes-Oxley Act of 2002
101.INS*	XBRL Instance Document.
101.SCH*	XBRL Taxonomy Extension Schema Document.
101.CAL*	XBRL Taxonomy Calculation Linkbase Document.
101.LAB*	XBRL Taxonomy Label Linkbase Document.
101.PRE*	XBRL Taxonomy Presentation Linkbase Document.

* Pursuant to applicable securities laws and regulations, we are deemed to have complied with the reporting obligation relating to the submission of interactive data files in such exhibits and are not subject to liability under any anti-fraud provisions of the federal securities laws as long as we have made a good faith attempt to comply with the submission requirements and promptly amend the interactive data files after becoming aware that the interactive data files fail to comply with the submission requirements. Users of this data are advised that, pursuant to Rule 406T, these interactive data files are deemed not filed and otherwise are not subject to liability.

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 8th day of August, 2013.

American Safety Insurance Holdings, Ltd.
By:	/s/ Stephen R. Crim
	Stephen R. Crim
	President and Chief Executive Officer
By:	/s/ Mark W. Haushill
	Mark W. Haushill
	Chief Financial Officer

33

EX-11

Exhibit 11

American Safety Insurance Holdings, Ltd. and Subsidiaries

Computation of Earnings Per Share

(dollars in thousands except per-share data)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Basic:
Earnings available to common shareholders	$	34,811	$	2,167	$	40,303	$	6,223
Weighted average common shares outstanding		9,538,924		10,256,634		9,490,498		10,238,667
Basic earnings per common share	$	3.65	$	0.21	$	4.25	$	0.61
Diluted:
Earnings available to common shareholders	$	34,811	$	2,167	$	40,303	$	6,223
Weighted average common shares outstanding		9,538,924		10,256,634		9,490,498		10,238,667
Weighted average common shares equivalents associated with options and restricted stock		285,304		298,588		296,455		305,960
Total weighted average common shares for diluted purposes		9,824,228		10,555,222		9,786,953		10,544,627
Diluted earnings per common share	$	3.54	$	0.21	$	4.12	$	0.59

EX-31.1

Exhibit 31.1

Certification Pursuant to § 302 of the Sarbanes-Oxley Act of 2002

I, Stephen R. Crim, certify that:

1) I have reviewed this report on Form 10-Q of American Safety Insurance Holdings, Ltd.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2013	/s/ Stephen R. Crim
	Stephen R. Crim
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to § 302 of the Sarbanes-Oxley Act of 2002

I, Mark W. Haushill, certify that:

1) I have reviewed this report on Form 10-Q of American Safety Insurance Holdings, Ltd.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)), for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 8, 2013	/s/ Mark W. Haushill
	Mark W. Haushill
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to § 906 of the

Sarbanes-Oxley Act of 2002

The undersigned, as the Chief Executive Officer of American Safety Insurance Holdings, Ltd., certifies that, to the best of his knowledge and belief, the Quarterly Report on Form 10-Q for the period ended June 30, 2013, which accompanies this certification fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of American Safety Insurance Holdings, Ltd. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of 2003 (18 U.S.C. §1350) and shall not be relied upon for any other purpose.

Date: August 8, 2013	/s/ Stephen R. Crim
	Stephen R. Crim
	Chief Executive Officer

A signed original of this written statement required by § 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by § 906, has been provided to American Safety Insurance Holdings, Ltd. and will be retained by American Safety Insurance Holdings, Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.

The information in this Exhibit 32.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

EX-32.2

Exhibit 32.2

Certification Pursuant to § 906 of the

Sarbanes-Oxley Act of 2002

The undersigned, as the Chief Financial Officer of American Safety Insurance Holdings, Ltd., certifies that, to the best of his knowledge and belief, the Quarterly Report on Form 10-Q for the period ended June 30, 2013, which accompanies this certification fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of American Safety Insurance Holdings, Ltd. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of 2003 (18 U.S.C. §1350) and shall not be relied upon for any other purpose.

Date: August 8, 2013	/s/ Mark W. Haushill
	Mark W. Haushill
	Chief Financial Officer

A signed original of this written statement required by § 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by § 906, has been provided to American Safety Insurance Holdings, Ltd. and will be retained by American Safety Insurance Holdings, Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.

The information in this Exhibit 32.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2013

Commitments and Contingencies [Abstract]

Commitments and Contingencies

Note 10 – Commitments and Contingencies

At June 30, 2013, the Company had aggregate outstanding irrevocable letters of credit which had not been drawn amounting to $1.8 million. Those letters of credit included $1.0 million for the benefit of the Vermont Department of Banking, and $0.8 million issued to various other parties.

American Safety Reinsurance Ltd.(ASRe), our reinsurance subsidiary, provides reinsurance protection for risk retention groups, captives and insurance companies and may be required to provide letters of credit to collateralize a portion of the reinsurance protection. In the normal course of business they may provide letters of credit to the companies they reinsure. As of June 30, 2013, ASRe had $84.4 million in letters of credit issued and outstanding, secured by pledged investment assets of $89.4 million.

Litigation Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. Based on the information presently available, management does not believe that any pending or threatened litigation or arbitration disputes will have any material adverse effect on our final condition or operating results.

XML

Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Revenues:
Direct earned premiums	$ 65,122	$ 60,595	$ 128,693	$ 121,123
Assumed earned premiums	15,795	15,259	30,724	29,124
Ceded earned premiums	(18,725)	(13,837)	(35,301)	(26,818)
Net earned premiums	62,192	62,017	124,116	123,429
Net investment income	5,582	7,402	13,214	15,214
Realized gains (losses)	37,482	(13)	38,936	39
Fee income	335	717	1,563	1,385
Other income	12	12	24	25
Total revenues	105,603	70,135	177,853	140,092
Expenses:
Losses and loss adjustment expenses	37,673	40,819	75,636	78,100
Acquisition expenses	13,814	14,337	28,568	29,081
Other underwriting expenses	12,382	12,013	24,523	22,764
Interest expense	358	367	712	785
Corporate and other expenses	655	848	1,436	2,104
Total expenses	64,882	68,384	130,875	132,834
Earnings before income taxes	40,721	1,751	46,978	7,258
Income tax expense	5,900	(234)	6,577	872
Net earnings	34,821	1,985	40,401	6,386
Less: Net earnings (loss) attributable to the non-controlling interest	10	(182)	98	163
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$ 34,811	$ 2,167	$ 40,303	$ 6,223
Net earnings per share:
Basic	$ 3.65	$ 0.21	$ 4.25	$ 0.61
Diluted	$ 3.54	$ 0.21	$ 4.12	$ 0.59
Weighted average number of shares outstanding:
Basic	9,538,924	10,256,634	9,490,498	10,238,667
Diluted	9,824,228	10,555,222	9,786,953	10,544,627

XML

Segment Information

6 Months Ended

Jun. 30, 2013

Segment Information [Abstract]

Segment Information

Note 3 – Segment Information

Our business is classified into insurance operations and other, with the insurance operations consisting of three divisions: E&S, ART and Reinsurance. E&S includes eight products: environmental, construction, products liability, excess, property, surety, healthcare, and professional liability. ART includes two business lines: specialty programs and fully funded. In our Assumed Re segment, the Company assumes specialty property and casualty business from unaffiliated insurers and reinsurers.

Within E&S, our environmental insurance products provide general contractor pollution and/or professional liability coverage for contractors and consultants in the environmental remediation industry and property owners. Construction provides general liability insurance for residential and commercial contractors. Products liability provides general liability and product liability coverages for smaller manufacturers and distributors, non-habitational real estate and certain real property owner, landlord and tenant risks. Excess provides excess and umbrella liability coverages over our own and other carriers’ primary casualty polices, with a focus on construction risks. Our property coverage encompasses surplus lines commercial property business and commercial multi-peril (CMP) policies. Surety products provide payment and performance bonds primarily to the environmental remediation and construction industries. Healthcare provides customized liability insurance solutions primarily for long-term care facilities. Professional liability provides coverage for primary and following-form excess directors and officers liability for public, private and non-profit entities; standalone employment practices liability insurance (EPLI); and fiduciary liability. Primary and excess coverage for miscellaneous professional liability risks such as lawyers and insurance agents.

In our ART division, specialty programs provide insurance to homogeneous niche groups through third-party program managers. Our specialty programs consist primarily of property and casualty insurance coverages for certain classes of specialty risks. Fully funded policies provide our insureds the ability to fund their liability exposure via a self-insurance vehicle. Fully funded policies consist of general and professional liability for businesses operating primarily in the healthcare and construction industries.

Our Reinsurance division focuses on treaty reinsurance for captives, Risk Retention Groups and specialty insurance companies. Lines of business assumed include medical malpractice, general liability across multiple sectors, commercial automobile liability, professional liability, workers compensation and one property catastrophe treaty that provides a finite limit over the exposure period. Business is sourced from a combination of London, U.S. and Bermuda based reinsurance brokers. The portfolio is a spread of treaties across multiple lines of business written on both an excess of loss and quota share basis.

Our Other segment includes lines of business that we have placed in run-off, such as workers’ compensation, excess liability insurance for municipalities, other commercial lines and real estate and other ancillary product lines.

The reportable insurance divisions are measured based on underwriting profit (loss) and pre-tax operating income (loss).

The following table presents key financial data by segment for the three months ended June 30, 2013 and 2012, respectively (dollars in thousands):

American Safety Insurance Holdings, Ltd. and Subsidiaries

Segment Data

(Unaudited) (Dollars in thousands)

	Three Months Ended June 30, 2013
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	52,063		$	16,156		$	15,641		$	—		$	83,860
Net written premiums		41,669			3,000			15,641			—			60,310
Net earned premiums		38,844			8,093			15,255			—			62,192
Fee & other income		(362	)		697			—			12			347
Losses & loss adjustment expenses		23,317			5,226			9,130			—			37,673
Acquisition & other underwriting expenses		17,275			3,528			4,623			770			26,196
Underwriting profit (loss)		(2,110	)		36			1,502			(758	)		(1,330	)
Net investment income		3,380			815			1,304			83			5,582
Pre-tax operating income (loss)		1,270			851			2,806			(675	)		4,252
Net realized gains														37,482
Interest and corporate expenses														1,013
Earnings before income taxes														40,721
Income tax expense														5,900
Net earnings													$	34,821
Less: Net earnings attributable to the non-controlling interest														10
Net earnings attributable to ASIH, Ltd.													$	34,811
Loss ratio		60.0	%		64.6	%		59.8	%		NM			60.6	%
Expense ratio		45.4	%		35.0	%		30.3	%		NM			41.6	%
Combined ratio (2)		105.4	%		99.6	%		90.1	%		(1) NM			102.2	%
	Three Months Ended June 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	50,448		$	21,498		$	15,603		$	—		$	87,549
Net written premiums		39,735			14,579			15,603			—			69,917
Net earned premiums		33,600			13,157			15,260			—			62,017
Fee & other income		—			738			—			(9	)		729
Losses & loss adjustment expenses		20,221			11,875			8,751			(28	)		40,819
Acquisition & other underwriting expenses		15,140			5,865			4,471			874			26,350
Underwriting profit (loss)		(1,761	)		(3,845	)		2,038			(855	)		(4,423	)
Net investment income		4,285			1,348			1,595			174			7,402
Pre-tax operating income (loss)		2,524			(2,497	)		3,633			(681	)		2,979
Net realized losses														(13	)
Interest and corporate expenses														1,215
Earnings before income taxes														1,751
Income tax benefit														(234	)
Net earnings													$	1,985
Less: Net loss attributable to the non-controlling interest														(182	)
Net earnings attributable to ASIH, Ltd.													$	2,167
Loss ratio		60.2	%		90.3	%		57.3	%		NM			65.8	%
Expense ratio		45.1	%		39.0	%		29.3	%		NM			41.3	%
Combined ratio (2)		105.3	%		129.3	%		86.6	%		(1) NM			107.1	%

(1) NM = Ratio is not meaningful

(2) The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition and other underwriting expenses net of fee income to earned premiums.

The following table presents key financial data by segment for the six months ended June 30, 2013 and 2012, respectively (dollars in thousands):

American Safety Insurance Holdings, Ltd. and Subsidiaries

Segment Data

(Unaudited) (Dollars in thousands)

	Six Months Ended June 30, 2013
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	100,016		$	32,758		$	32,285		$	—		$	165,059
Net written premiums		79,215			12,879			32,285			—			124,379
Net earned premiums		75,385			19,255			29,476			—			124,116
Fee & other income		(30	)		1,468			—			149			1,587
Losses & loss adjustment expenses		45,344			12,619			17,673			—			75,636
Acquisition & other underwriting expenses		33,871			8,358			9,272			1,590			53,091
Underwriting profit (loss)		(3,860	)		(254	)		2,531			(1,441	)		(3,024	)
Net investment income		7,978			2,045			2,974			217			13,214
Pre-tax operating income (loss)		4,118			1,791			5,505			(1,224	)		10,190
Net realized gains														38,936
Interest and corporate expenses														2,148
Earnings before income taxes														46,978
Income tax expense														6,577
Net earnings													$	40,401
Less: Net earnings attributable to the non-controlling interest														98
Net earnings attributable to ASIH, Ltd.													$	40,303
Loss ratio		60.1	%		65.5	%		60.0	%		NM			60.9	%
Expense ratio		45.0	%		35.8	%		31.5	%		NM			41.5	%
Combined ratio (2)		105.1	%		101.3	%		91.5	%		(1) NM			102.4	%
	Six Months Ended June 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	89,059		$	42,676		$	29,579		$	—		$	161,314
Net written premiums		70,468			30,722			29,579			—			130,769
Net earned premiums		64,750			29,501			29,178			—			123,429
Fee & other income		—			1,402			—			8			1,410
Losses & loss adjustment expenses		39,138			21,862			17,100			—			78,100
Acquisition & other underwriting expenses		29,057			12,253			8,801			1,734			51,845
Underwriting profit (loss)		(3,445	)		(3,212	)		3,277			(1,726	)		(5,106	)
Net investment income		8,910			2,778			3,216			310			15,214
Pre-tax operating income (loss)		5,465			(434	)		6,493			(1,416	)		10,108
Net realized gains														39
Interest and corporate expenses														2,889
Earnings before income taxes														7,258
Income tax expense														872
Net earnings													$	6,386
Less: Net earnings attributable to the non-controlling interest														163
Net earnings attributable to ASIH, Ltd.													$	6,223
Loss ratio		60.4	%		74.1	%		58.6	%		NM			63.3	%
Expense ratio		44.9	%		36.8	%		30.2	%		NM			40.9	%
Combined ratio (2)		105.3	%		110.9	%		88.8	%		(1) NM			104.2	%

(1) NM = Ratio is not meaningful

(2) The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition and other underwriting expenses net of fee income to earned premiums.

The Company conducts business in two geographic segments: the United States and Bermuda. Significant differences exist in the regulatory environment in each country.

The following table provides financial data about the geographic locations for the three months ended June 30, 2013 and 2012 (dollars in thousands):

	United States			Bermuda		Total
June 30, 2013
Income tax expense	$	5,900		$	—	$	5,900
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	11,483		$	23,328	$	34,811
	United States			Bermuda		Total
June 30, 2012
Income tax benefit	$	(234	)	$	—	$	(234	)
Net earnings (loss) attributable to American Safety Insurance Holdings, Ltd.	$	(273	)	$	2,440	$	2,167

The following table provides financial data about the geographic locations for the six months ended June 30, 2013 and 2012 (dollars in thousands):

	United States		Bermuda		Total
June 30, 2013
Income tax expense	$	6,577	$	—	$	6,577
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	12,426	$	27,877	$	40,303
Assets	$	662,631	$	688,531	$	1,351,162
Equity	$	132,400	$	201,663	$	334,063
	United States		Bermuda		Total
June 30, 2012
Income tax expense	$	872	$	—	$	872
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	1,266	$	4,957	$	6,223
Assets	$	690,251	$	637,806	$	1,328,057
Equity	$	144,004	$	206,370	$	350,374

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2013

Income Taxes [Abstract]

United States federal and state income tax expense from operations

United States federal and state income tax (benefit) expense from operations consists of the following components (dollars in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Current	$	5,989		$	(443	)	$	6,782		$	(2,837	)
Deferred		(89	)		209			(205	)		3,709
Total	$	5,900		$	(234	)	$	6,577		$	872

Income tax (benefit) expense differed from United States Federal income tax rate

Income tax (benefit) expense for the periods ended June 30, 2013 and 2012 differed from the amount computed by applying the United States Federal income tax rate of 34% to earnings before Federal income taxes as a result of the following (dollars in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Expected income tax expense	$	13,845		$	596		$	15,972		$	2,468
Foreign earned income not subject to U.S. taxation		(7,932	)		(830	)		(9,478	)		(1,685	)
Tax-exempt interest		(4	)		(3	)		(7	)		(6	)
State taxes and other		(9	)		3			90			95
Total	$	5,900		$	(234	)	$	6,577		$	872

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Merger with Fairfax Financial Holdings Limited

6 Months Ended

Jun. 30, 2013

Merger with Fairfax Financial Holdings Limited [Abstract]

Merger with Fairfax Financial Holdings Limited

Note 11 – Merger with Fairfax Financial Holdings Limited

On June 2, 2013, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Fairfax Financial Holdings Limited, a Canadian corporation (“Fairfax”), and Fairfax Bermuda Holdings Ltd., a Bermuda exempted company and an indirect wholly-owned Subsidiary of Fairfax.

At the effective time of the Merger (the “Effective Time”), each issued and outstanding common share of the Company (the “Shares”), owned by Fairfax, or any direct or indirect wholly-owned subsidiary of Fairfax, or owned by any shareholders who are entitled to and who properly exercise appraisal rights under Bermuda law, will be cancelled and converted into the right to receive $29.25 in cash, without interest (the “Merger Consideration”). At the Effective Time, each outstanding option to purchase Shares granted under the Company’s equity plans that is outstanding and unexercised as of immediately prior to the Effective Time, whether vested or unvested or exercisable, shall become fully vested and exercisable, and all restricted Shares granted under the Company’s equity plans shall become fully vested and transferable and all restrictions on such restricted shares shall lapse. Each holder of an option that is outstanding and unexercised as of the Effective Time and has an exercise price per Share that is less than the per Share Merger Consideration shall be entitled to receive in exchange for the cancellation of such option an amount in cash equal to the product of (i) the difference between the per Share Merger Consideration and the applicable exercise price of such option and (ii) the aggregate number of Shares that remain issuable upon exercise of such option, subject to applicable withholding requirements.

The Company has made customary representations, warranties and covenants in the Merger Agreement, which generally expire at the Effective Time. The Company has agreed not to (i) solicit, encourage or initiate any inquiries or the implementation or submission of any proposal that constitutes or could reasonably be expected to lead to, any Acquisition Proposal (as defined in the Merger Agreement), (ii) engage in, continue or otherwise participate in discussions or negotiations regarding, or furnish to any person any non-public information in connection with, any Acquisition Proposal, (iii) otherwise knowingly facilitate any effort or attempt to make an Acquisition Proposal or (iv) enter into any agreement with respect to any Acquisition Proposal.

The consummation of the Merger is subject to various conditions, including adoption of the Merger Agreement and approval of the Merger by the Company’s shareholders, expiration or termination of applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, receipt of certain insurance regulatory approvals and other customary closing conditions. The consummation of the Merger is not subject to a financing condition. The companies expect to close the transaction during the fourth quarter of 2013.

The Merger Agreement contains termination rights for both the Company and Fairfax, including (i) the right of either party to terminate if the Effective Time has not occurred on or before the End Date (as defined in the Merger Agreement), provided that either party may extend such date by an additional three months under certain circumstances; (ii) the right of either party to terminate following certain breaches by the other party of its representations, warranties and covenants in the Merger Agreement and (iii) the right of the Company to enter into an agreement with respect to a Superior Proposal (as defined in the Merger Agreement) if the Company complies with certain notice and other requirements set forth in the Merger Agreement, including paying Fairfax a termination fee of $9,186,000.

The Merger Agreement provides that upon termination of the Merger Agreement under certain specified circumstances, including the termination by Fairfax if the Company’s Board of Directors changes its recommendation to the Company’s shareholders that they adopt the Merger Agreement and approve the Merger, the Company will be required to pay Fairfax a termination fee of $9,186,000. Upon the termination of the Merger Agreement under certain other circumstances, including if the Company’s shareholders do not adopt the Merger Agreement and approve the Merger, the Company will be required to reimburse Fairfax for its transaction expenses up to a maximum amount of $1.5 million.

The parties to the Merger Agreement are entitled to specific performance of the terms and provisions of the Merger Agreement, in addition to any other remedy to which they are otherwise entitled, including damages for any breach of the Merger Agreement by the other party.

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	$ 311,309	$ 829,577
Equity securities	6,112	11,857
Short-term investments, at fair value	611,267	76,502
Trading securities		12,712
Total	928,688	930,648
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	242,555	31,032
Equity securities		5,151
Short-term investments, at fair value	611,267	76,502
Trading securities		990
Total	853,822	113,675
Significant Other Observable Inputs (Level 2) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	68,754	798,545
Equity securities	39
Short-term investments, at fair value
Trading securities		11,722
Total	68,793	810,267
Significant Unobservable Inputs (Level 3) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value
Equity securities	6,073	6,706
Short-term investments, at fair value
Trading securities
Total	6,073	6,706
U.S. Treasury securities and other government corporations and agencies [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	256,953	56,541
U.S. Treasury securities and other government corporations and agencies [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	242,555	31,032
U.S. Treasury securities and other government corporations and agencies [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	14,398	25,509
U.S. Treasury securities and other government corporations and agencies [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value
States of the U.S. and political subdivisions of the states [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	4,425	46,164
States of the U.S. and political subdivisions of the states [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value
States of the U.S. and political subdivisions of the states [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	4,425	46,164
States of the U.S. and political subdivisions of the states [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value
Corporate securities [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	35,268	340,729
Corporate securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value
Corporate securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	35,268	340,729
Corporate securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value
Mortgage-backed securities [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	4,866	248,240
Mortgage-backed securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value
Mortgage-backed securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	4,866	248,240
Mortgage-backed securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value
Commercial mortgage-backed securities [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	2,825	63,215
Commercial mortgage-backed securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value
Commercial mortgage-backed securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	2,825	63,215
Commercial mortgage-backed securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value
Asset-backed securities [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	6,972	74,688
Asset-backed securities [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value
Asset-backed securities [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value	6,972	74,688
Asset-backed securities [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets measured at fair value on a recurring basis
Fixed maturity securities, at fair value

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Investments (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fixed maturity securities:
Amortized cost	$ 307,770	$ 765,359
Gross unrealized gains	8,100	65,034
Gross unrealized losses	(4,561)	(816)
Estimated fair value	311,309	829,577
U.S. Treasury securities and other government corporations and agencies [Member]
Fixed maturity securities:
Amortized cost	258,887	53,591
Gross unrealized gains	2,017	2,961
Gross unrealized losses	(3,951)	(11)
Estimated fair value	256,953	56,541
States of the U.S. and political subdivisions of the states [Member]
Fixed maturity securities:
Amortized cost	4,516	40,100
Gross unrealized gains	92	6,064
Gross unrealized losses	(183)
Estimated fair value	4,425	46,164
Corporate securities [Member]
Fixed maturity securities:
Amortized cost	30,401	304,725
Gross unrealized gains	5,074	36,089
Gross unrealized losses	(207)	(85)
Estimated fair value	35,268	340,729
Mortgage-backed securities [Member]
Fixed maturity securities:
Amortized cost	4,978	237,653
Gross unrealized gains	90	11,088
Gross unrealized losses	(202)	(501)
Estimated fair value	4,866	248,240
Commercial mortgage-backed securities [Member]
Fixed maturity securities:
Amortized cost	2,684	57,521
Gross unrealized gains	141	5,694
Gross unrealized losses
Estimated fair value	2,825	63,215
Asset-backed securities [Member]
Fixed maturity securities:
Amortized cost	6,304	71,769
Gross unrealized gains	686	3,138
Gross unrealized losses	(18)	(219)
Estimated fair value	6,972	74,688
Common stock [Member]
Fixed maturity securities:
Amortized cost	6,926	9,004
Gross unrealized gains		6
Gross unrealized losses	(853)	(234)
Estimated fair value	6,073	8,776
Preferred stock [Member]
Fixed maturity securities:
Amortized cost		2,789
Gross unrealized gains	39	317
Gross unrealized losses		(25)
Estimated fair value	$ 39	$ 3,081

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Variable Interest Entity (Tables)

6 Months Ended

Jun. 30, 2013

Variable Interest Entity [Abstract]

Assets and Liabilities of the VIE as consolidated in the Consolidated Balance Sheets

Assets and Liabilities of the VIE as consolidated in the Consolidated Balance Sheets (dollars in thousands):

	June 30, 2013		December 31, 2012
Investments	$	11,798	$	12,144
Cash and cash equivalents		439		507
Accrued investment income		56		52
Premiums receivable		383		498
Ceded unearned premium		218		351
Reinsurance recoverable		4,659		5,039
Deferred income taxes		121		—
Deferred acquisition costs		715		1,100
Funds on deposit		114		231
Other assets		724		1,255
Total Assets	$	19,227	$	21,177
Unpaid losses and loss adjustment expenses		8,398		8,900
Unearned premiums		2,878		4,325
Ceded premiums payable		326		67
Funds held		99		113
Deferred income taxes		—		30
Total Liabilities	$	11,701	$	13,435

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Merger with Fairfax Financial Holdings Limited (Details Textual) (Merger Agreement with Fairfax, Fairfax Bermuda Holdings Limited and Indirect Wholly Owned Subsidiary [Member], USD $)	Jun. 02, 2013
Merger Agreement with Fairfax, Fairfax Bermuda Holdings Limited and Indirect Wholly Owned Subsidiary [Member]
Change in Control (Textual) [Abstract]
Cancelation of share value	$ 29.25
Termination fees on termination of Merger agreement	$ 9,186,000
Reimburse for transaction expenses maximum	$ 1,500,000

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
United States federal and state income tax expense from operations
Current	$ 5,989	$ (443)	$ 6,782	$ (2,837)
Deferred	(89)	209	(205)	3,709
Total	$ 5,900	$ (234)	$ 6,577	$ 872

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Fair Value Measurements (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Assets:
Trading securities		$ 12,712
Level 1 [Member]
Assets:
Trading securities		990
Level 2 [Member]
Assets:
Trading securities		11,722
Carrying Amount [Member]
Assets:
Fixed maturities	311,309	829,577
Equity securities	6,112	11,857
Short-term investments	611,267	76,502
Trading securities		12,712
Carrying Amount [Member] | Level 1 [Member]
Assets:
Cash and cash equivalents	18,567	20,224
Carrying Amount [Member] | Level 2 [Member]
Assets:
Premiums receivable	29,249	32,559
Reinsurance recoverable	185,644	183,562
Liabilities:
Loans payable	39,183	39,183
Estimated Fair Value [Member]
Assets:
Fixed maturities	311,309	829,577
Equity securities	6,112	11,857
Short-term investments	611,267	76,502
Trading securities		12,712
Estimated Fair Value [Member] | Level 1 [Member]
Assets:
Cash and cash equivalents	18,567	20,224
Estimated Fair Value [Member] | Level 2 [Member]
Assets:
Premiums receivable	29,249	32,559
Reinsurance recoverable	185,644	183,562
Liabilities:
Loans payable	$ 39,183	$ 39,183

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Financial data by segment
Gross written premiums	$ 83,860	$ 87,549	$ 165,059	$ 161,314
Net written premiums	60,310	69,917	124,379	130,769
Net earned premiums	62,192	62,017	124,116	123,429
Fee & other income	347	729	1,587	1,410
Losses & loss adjustment expenses	37,673	40,819	75,636	78,100
Acquisition & other underwriting expenses	26,196	26,350	53,091	51,845
Underwriting profit (loss)	(1,330)	(4,423)	(3,024)	(5,106)
Net investment income	5,582	7,402	13,214	15,214
Pre-tax operating income (loss)	4,252	2,979	10,190	10,108
Net realized gains	37,482	(13)	38,936	39
Interest and corporate expenses	1,013	1,215	2,148	2,889
Earnings before income taxes	40,721	1,751	46,978	7,258
Income tax expense	5,900	(234)	6,577	872
Net earnings	34,821	1,985	40,401	6,386
Less: Net earnings (loss) attributable to the non-controlling interest	10	(182)	98	163
Net earnings attributable to American Safety Insurance Holdings, Ltd.	34,811	2,167	40,303	6,223
Loss ratio	60.60%	65.80%	60.90%	63.30%
Expense ratio	41.60%	41.30%	41.50%	40.90%
Combined ratio	102.20%	107.10%	102.40%	104.20%
E & S [Member]
Financial data by segment
Gross written premiums	52,063	50,448	100,016	89,059
Net written premiums	41,669	39,735	79,215	70,468
Net earned premiums	38,844	33,600	75,385	64,750
Fee & other income	(362)		(30)
Losses & loss adjustment expenses	23,317	20,221	45,344	39,138
Acquisition & other underwriting expenses	17,275	15,140	33,871	29,057
Underwriting profit (loss)	(2,110)	(1,761)	(3,860)	(3,445)
Net investment income	3,380	4,285	7,978	8,910
Pre-tax operating income (loss)	1,270	2,524	4,118	5,465
Loss ratio	60.00%	60.20%	60.10%	60.40%
Expense ratio	45.40%	45.10%	45.00%	44.90%
Combined ratio	105.40%	105.30%	105.10%	105.30%
ART [Member]
Financial data by segment
Gross written premiums	16,156	21,498	32,758	42,676
Net written premiums	3,000	14,579	12,879	30,722
Net earned premiums	8,093	13,157	19,255	29,501
Fee & other income	697	738	1,468	1,402
Losses & loss adjustment expenses	5,226	11,875	12,619	21,862
Acquisition & other underwriting expenses	3,528	5,865	8,358	12,253
Underwriting profit (loss)	36	(3,845)	(254)	(3,212)
Net investment income	815	1,348	2,045	2,778
Pre-tax operating income (loss)	851	(2,497)	1,791	(434)
Loss ratio	64.60%	90.30%	65.50%	74.10%
Expense ratio	35.00%	39.00%	35.80%	36.80%
Combined ratio	99.60%	129.30%	101.30%	110.90%
Reinsurance [Member]
Financial data by segment
Gross written premiums	15,641	15,603	32,285	29,579
Net written premiums	15,641	15,603	32,285	29,579
Net earned premiums	15,255	15,260	29,476	29,178
Fee & other income
Losses & loss adjustment expenses	9,130	8,751	17,673	17,100
Acquisition & other underwriting expenses	4,623	4,471	9,272	8,801
Underwriting profit (loss)	1,502	2,038	2,531	3,277
Net investment income	1,304	1,595	2,974	3,216
Pre-tax operating income (loss)	2,806	3,633	5,505	6,493
Loss ratio	59.80%	57.30%	60.00%	58.60%
Expense ratio	30.30%	29.30%	31.50%	30.20%
Combined ratio	90.10%	86.60%	91.50%	88.80%
Other Run-off [Member]
Financial data by segment
Gross written premiums
Net written premiums
Net earned premiums
Fee & other income	12	(9)	149	8
Losses & loss adjustment expenses		(28)
Acquisition & other underwriting expenses	770	874	1,590	1,734
Underwriting profit (loss)	(758)	(855)	(1,441)	(1,726)
Net investment income	83	174	217	310
Pre-tax operating income (loss)	$ (675)	$ (681)	$ (1,224)	$ (1,416)

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Loans Payable (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2013
Loans Payable (Textual) [Abstract]
Loans payable	$ 39.2
American Safety Capital [Member]
Debt Instrument [Line Items]
Variable rate 30-year trust preferred securities	8
Interest payment at a floating rate of LIBOR	4.20%
Maturity period of trust preferred securities	30 years
American Safety Capital II [Member]
Debt Instrument [Line Items]
Variable rate 30-year trust preferred securities	5
Interest payment at a floating rate of LIBOR	3.95%
Maturity period of trust preferred securities	30 years
American Safety Capital Trust III [Member]
Debt Instrument [Line Items]
Variable rate 30-year trust preferred securities	$ 25
Interest payment at a floating rate of LIBOR	3.40%
Maturity period of trust preferred securities	30 years

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Measurements [Abstract]

Assets measured at fair value on a recurring basis

Assets measured at fair value on a recurring basis for June 30, 2013 and December 31, 2012 are summarized below:

As of June 30, 2013

Fair Value Measurements Using

(dollars in thousands)

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	242,555	$	14,398	$	—	$	256,953
States of the U.S. and political subdivisions of the states		—		4,425		—		4,425
Corporate securities		—		35,268		—		35,268
Mortgage-backed securities		—		4,866		—		4,866
Commercial mortgage-backed securities		—		2,825		—		2,825
Asset-backed securities		—		6,972		—		6,972
Total fixed maturity securities		242,555		68,754		—		311,309
Equity securities		—		39		6,073		6,112
Short term investments		611,267		—		—		611,267
Trading securities		—		—		—		—
Total	$	853,822	$	68,793	$	6,073	$	928,688

As of December 31, 2012

Fair Value Measurements Using

(dollars in thousands)

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	31,032	$	25,509	$	—	$	56,541
States of the U.S. and political subdivisions of the states		—		46,164		—		46,164
Corporate securities		—		340,729		—		340,729
Mortgage-backed securities		—		248,240		—		248,240
Commercial mortgage-backed securities		—		63,215		—		63,215
Asset-backed securities		—		74,688		—		74,688
Total fixed maturity securities		31,032		798,545		—		829,577
Equity securities		5,151		—		6,706		11,857
Short term investments		76,502		—		—		76,502
Trading securities		990		11,722		—		12,712
Total	$	113,675	$	810,267	$	6,706	$	930,648

Summary of reconciliation of the beginning and ending balances for the investments categorized as Level 3

A reconciliation of the beginning and ending balances for the investments categorized as Level 3 at June 30, 2013 and December 31, 2012 are as follows:

	As of June 30, 2013
	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	(dollars in thousands)
	Equity Securities
Balance at December 31, 2012	$	6,706
Total gains (losses) realized (unrealized):
Included in earnings		—
Included in other comprehensive income		(633	)
Purchases		—
Sales		—
Issuance and settlements		—
Net transfers in (out of) Level 3		—
Balance at June 30, 2013	$	6,073
Change in net unrealized losses relating to assets still held at reporting date	$	(633	)

	As of December 31, 2012
	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	(dollars in thousands)
	Equity Securities
Balance at December 31, 2011	$	6,751
Total gains (losses) realized (unrealized):
Included in earnings		—
Included in other comprehensive income		(45	)
Purchases		—
Sales		—
Issuance and settlements		—
Net transfers in (out of) Level 3		—
Balance at December 31, 2012	$	6,706
Change in net unrealized losses relating to assets still held at reporting date	$	(45	)

Fair value of financial instruments

The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of financial instruments as of June 30, 2013 and December 31, 2012.

	Level in Fair		June 30, 2013				December 31, 2012
	Value Hierarchy		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents		Level 1	$	18,567	$	18,567	$	20,224	$	20,224
Fixed maturities		*	$	311,309	$	311,309	$	829,577	$	829,577
Equity securities		*	$	6,112	$	6,112	$	11,857	$	11,857
Short-term investments		*	$	611,267	$	611,267	$	76,502	$	76,502
Trading securities		*	$	—	$	—	$	12,712	$	12,712
Premiums receivable		Level 2	$	29,249	$	29,249	$	32,559	$	32,559
Reinsurance recoverable		Level 2	$	185,644	$	185,644	$	183,562	$	183,562
Liabilities:
Loans payable		Level 2	$	39,183	$	39,183	$	39,183	$	39,183

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Consolidated Statements of Cash Flow (Unaudited) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash flow from operating activities:
Net earnings	$ 40,401	$ 6,386
Adjustments to reconcile net earnings to net cash provided by operating activities:
Realized gains on sale of investments	(38,936)	(39)
Depreciation expense	1,897	1,414
Stock based compensation expense	1,235	1,237
Amortization of deferred acquisition costs, net	969	(1,390)
Amortization of investment premium	588	2,030
Deferred income taxes	(205)	3,709
Change in operating assets and liabilities:
Accrued investment income	4,694	168
Premiums receivable	3,310	(5,785)
Reinsurance recoverable	(2,082)	(4,084)
Ceded unearned premium	(5,379)	(3,676)
Funds held	(15,164)	(7,867)
Unpaid losses and loss adjustment expenses	2,034	18,264
Unearned premiums	5,642	11,067
Ceded premiums payable	8,905	2,691
Other liabilities	(3,634)	(1,796)
Funds on deposit	5,173	(2,328)
Accrued premium	6,906	(3,846)
Other assets, net	6,917	(2,426)
Net cash provided by operating activities	23,271	13,729
Cash flow from investing activities:
Purchases of fixed maturities	(274,493)	(38,459)
Purchases of Common Stocks	(3,120)
Proceeds from sales of Common Stocks	5,575
Proceeds from sales of fixed maturities	778,947	62,311
Purchases of Preferred Stocks	(165)	(865)
Proceeds from sales of Preferred Stocks	5,773
Purchase of other investments		(3,444)
Increase in short term investments	(533,775)	(40,458)
Purchase of fixed assets	(1,254)	(781)
Net cash used in investing activities	(22,512)	(21,696)
Cash flow from financing activities:
Shares repurchased to cover employment taxes	(339)	(204)
Proceeds from exercised stock options	646	85
Purchases of common stock pursuant to the Stock Repurchase Plan	(2,723)	(200)
Net cash used in financing activities	(2,416)	(319)
Net increase in cash and cash equivalents	(1,657)	(8,286)
Cash and cash equivalents at beginning of period	20,224	43,481
Cash and cash equivalents at end of period	18,567	35,195
Supplemental disclosure of cash flow:
Income taxes paid (including $120 and $731 from VIE)	133	749
Interest paid	$ 715	$ 790

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Basis of Presentation

6 Months Ended

Jun. 30, 2013

Basis of Presentation [Abstract]

Basis of Presentation

Note 1 – Basis of Presentation

The accompanying consolidated financial statements of American Safety Insurance Holdings, Ltd. (“American Safety Insurance”) and its subsidiaries and American Safety Risk Retention Group, Inc. (“American Safety RRG”), a non-subsidiary risk retention group affiliate (collectively, the “Company”), are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as established by the FASB Accounting Standards Codification ^© (“Codification” or “ASC”). The preparation of financial statements in conformity with GAAP requires management to make estimates, based on the best information available, in recording transactions resulting from business operations. Certain balance sheet amounts involve accounting estimates and/or actuarial determinations and are therefore subject to change and include, but are not limited to, invested assets, deferred income taxes, reinsurance recoverables, goodwill and the liabilities for unpaid losses and loss adjustment expenses. As additional information becomes available (or actual amounts are determinable), the estimates may be revised and reflected in operating results. While management believes that these estimates are adequate, such estimates may change in the future.

The Company accounts for business combinations using the acquisition method, which requires an allocation of the purchase price of an acquired entity to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. Goodwill represents the excess of the purchase price over the net tangible and intangible assets acquired. In the event the net assets acquired exceed the purchase price, the Company will recognize a gain on bargain purchase.

The results of operations for the three and six months ended June 30, 2013, may not be indicative of the results for the fiscal year ending December 31, 2013. 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 on Form 10-K of the Company for the fiscal year ended December 31, 2012.

The unaudited interim consolidated financial statements include the accounts of American Safety Insurance, each of its subsidiaries and American Safety RRG. All significant intercompany balances as well as normal recurring adjustments have been eliminated. Unless otherwise noted, all balances are presented in thousands.

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Income Taxes

6 Months Ended

Jun. 30, 2013

Income Taxes [Abstract]

Income Taxes

Note 4 – Income Taxes

United States federal and state income tax (benefit) expense from operations consists of the following components (dollars in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Current	$	5,989		$	(443	)	$	6,782		$	(2,837	)
Deferred		(89	)		209			(205	)		3,709
Total	$	5,900		$	(234	)	$	6,577		$	872

Income tax (benefit) expense for the periods ended June 30, 2013 and 2012 differed from the amount computed by applying the United States Federal income tax rate of 34% to earnings before Federal income taxes as a result of the following (dollars in thousands):

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2013			2012			2013			2012
Expected income tax expense	$	13,845		$	596		$	15,972		$	2,468
Foreign earned income not subject to U.S. taxation		(7,932	)		(830	)		(9,478	)		(1,685	)
Tax-exempt interest		(4	)		(3	)		(7	)		(6	)
State taxes and other		(9	)		3			90			95
Total	$	5,900		$	(234	)	$	6,577		$	872

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Investments

6 Months Ended

Jun. 30, 2013

Investments [Abstract]

Investments

Note 2 – Investments

The amortized cost and estimated fair values of the Company’s available for sale investments at June 30, 2013 and December 31, 2012, are as follows (dollars in thousands):

June 30, 2013	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	258,887	$	2,017	$	(3,951	)	$	256,953
States of the U.S. and political subdivisions of the states		4,516		92		(183	)		4,425
Corporate securities		30,401		5,074		(207	)		35,268
Mortgage-backed securities		4,978		90		(202	)		4,866
Commercial mortgage-backed securities		2,684		141		—			2,825
Asset-backed securities		6,304		686		(18	)		6,972
Total fixed maturities	$	307,770	$	8,100	$	(4,561	)	$	311,309
Common stock	$	6,926	$	—	$	(853	)	$	6,073
Preferred stock	$	—	$	39	$	—		$	39

December 31, 2012	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	53,591	$	2,961	$	(11	)	$	56,541
States of the U.S. and political subdivisions of the states		40,100		6,064		—			46,164
Corporate securities		304,725		36,089		(85	)		340,729
Mortgage-backed securities		237,653		11,088		(501	)		248,240
Commercial mortgage-backed securities		57,521		5,694		—			63,215
Asset-backed securities		71,769		3,138		(219	)		74,688
Total fixed maturities	$	765,359	$	65,034	$	(816	)	$	829,577
Common stock	$	9,004	$	6	$	(234	)	$	8,776
Preferred stock	$	2,789	$	317	$	(25	)	$	3,081

During the six months ended June 30, 2013 and 2012, available-for-sale and trading fixed maturity securities were sold for total proceeds of $778.9 million and $18.4 million, respectively, resulting in gross realized gains and losses to the Company. The gross realized gains on these sales totaled $42.7 million and $0.05 million in 2013 and 2012, respectively. The gross realized losses on these sales totaled $4.9 million and $0.01 million in 2013 and 2012, respectively. During the six months ended June 30, 2013, available-for-sale and trading equity securities were sold for total proceeds of $11.3 million, compared to none in 2012, resulting in gross realized gains to the company of $1.1 million and $0.0 million. There were no gross realized losses tied to sales of equity securities in 2013 and 2012. Sales during the second quarter of 2013 were in compliance with the Merger Agreement. For the purpose of determining gross realized gains and losses, the cost of securities sold is based on specific identification.

Trading securities are reported at fair value, with unrealized holding gains and losses reported as part of net earnings. Net unrealized holding losses from trading securities totaled $0.0 million and $0.01 million for the six months ended June 30, 2013 and 2012. These holding losses are included in net realized gains and losses for the period.

The amortized cost and estimated fair value of fixed maturity securities at June 30, 2013, is shown below by contractual maturity.

	Amortized cost		Estimated fair value
	(dollars in thousands)
Due in one year or less	$	4,026	$	4,056
Due after one year through five years		19,261		20,340
Due after five years through ten years		19,259		19,533
Due after ten years		251,258		252,717
Mortgage and asset-backed securities		13,966		14,663
Total	$	307,770	$	311,309

The following tables summarize the gross unrealized losses of the Company’s investment portfolio as of June 30, 2013 and December 31, 2012, by category and length of time that the securities have been in an unrealized loss position.

	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2013	(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	185,593	$	(3,951	)	$	—	$	—		$	185,593	$	(3,951	)
States of the U.S. and political subdivisions of the states		3,247		(183	)		—		—			3,247		(183	)
Corporate securities		3,100		(207	)		—		—			3,100		(207	)
Mortgage-backed securities		3,266		(202	)		—		—			3,266		(202	)
Commercial mortgage-backed securities		—		—			—		—			—		—
Asset-backed securities		—		—			48		(18	)		48		(18	)
Subtotal, fixed maturity securities		195,206		(4,543	)		48		(18	)		195,254		(4,561	)
Common stock		—		—			3,573		(853	)		3,573		(853	)
Preferred stock		—		—			—		—			—		—
Total temporarily impaired securities	$	195,206	$	(4,543	)	$	3,621	$	(871	)	$	198,827	$	(5,414	)

	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2012	(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	4,985	$	(11	)	$	—	$	—		$	4,985	$	(11	)
States of the U.S. and political subdivisions of the states		—		—			—		—			—		—
Corporate securities		24,489		(85	)		—		—			24,489		(85	)
Mortgage-backed securities		36,345		(336	)		3,751		(165	)		40,096		(501	)
Commercial mortgage-backed securities		—		—			—		—			—		—
Asset-backed securities		7,536		(210	)		59		(9	)		7,595		(219	)
Subtotal, fixed maturity securities		73,355		(642	)		3,810		(174	)		77,165		(816	)
Common stock		1,067		(14	)		4,206		(220	)		5,273		(234	)
Preferred stock		490		(2	)		504		(23	)		994		(25	)
Total temporarily impaired securities	$	74,912	$	(658	)	$	8,520	$	(417	)	$	83,432	$	(1,075	)

We hold a total of 203 available-for sale securities, of which 67 were in an unrealized loss position for less than twelve months and two were in an unrealized loss position for a period of twelve months or greater as of June 30, 2013. Unrealized losses greater than twelve months on fixed maturities were the result of increased credit spreads and higher market yields relative to the date the securities were purchased. We do not consider these investments to be other-than-temporary impaired at June 30, 2013.

We routinely review our investments that have experienced declines in fair value to determine if the decline is other than temporary. These reviews are performed with consideration of the facts and circumstances of an issuer in accordance with the Securities and Exchange Commission (“SEC”), Accounting for Non-Current Marketable Equity Securities; ASC-320-10-05, Accounting for Certain Investments in Debt and Equity Securities, and related guidance. The identification of distressed investments and the assessment of whether a decline is other-than-temporary involve significant management judgment and require evaluation of factors including but not limited to:

• percentage decline in value and the length of time during which the decline has occurred;

• recoverability of principal and interest;

• market conditions;

• ability and intent to hold the investment to recovery;

• a pattern of continuing operating losses of the issuer;

• rating agency actions that affect the issuer’s credit status;

• adverse changes in the issuer’s availability of production resources, revenue sources, technological conditions; and

• adverse changes in the issuer’s economic, regulatory, or political environment.

Additionally, credit analysis and/or credit rating issues related to specific investments may trigger more intensive monitoring to determine if a decline in market value is other than temporary (“OTTI”). For investments with a market value below cost, the process includes evaluating the length of time and the extent to which cost exceeds market value, the prospects and financial condition of the issuer, and evaluation for a potential recovery in market value, among other factors. This process is not exact and further requires consideration of risks such as credit risk and interest rate risk. Therefore, if an investment’s cost exceeds its market value solely due to changes in interest rates, recognizing impairment may not be appropriate. For the six months ended June 30, 2013 and 2012, the Company did not incur any OTTI losses.

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Fair Value Measurements (Details Textual) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Fair Value Measurement (Textual) [Abstract]
Transfers in and out of Level 1 and 2 categories	$ 0	$ 0

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Investments (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013
Amortized cost and estimated fair value of fixed maturity securities by contractual maturity
Due in one year or less, Amortized cost	$ 4,026
Due after one year through five years, Amortized cost	19,261
Due after five years through ten years, Amortized cost	19,259
Due after ten years, Amortized cost	251,258
Mortgage and asset-backed securities, Amortized cost	13,966
Amortized cost, Total	307,770
Due in one year or less, Estimated fair value	4,056
Due after one year through five years, Estimated fair value	20,340
Due after five years through ten years, Estimated fair value	19,533
Due after ten years, Estimated fair value	252,717
Mortgage and asset-backed securities, Estimated fair value	14,663
Estimated fair value, Total	$ 311,309

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Segment Information (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Financial data about the geographic locations
Income tax expense	$ 5,900	$ (234)	$ 6,577	$ 872
Net earnings attributable to American Safety Insurance Holdings, Ltd.	34,811	2,167	40,303	6,223
Assets	1,351,162	1,328,057	1,351,162	1,328,057	1,373,131
Equity	334,063	350,374	334,063	350,374	345,048
United States [Member]
Financial data about the geographic locations
Income tax expense	5,900	(234)	6,577	872
Net earnings attributable to American Safety Insurance Holdings, Ltd.	11,483	(273)	12,426	1,266
Assets	662,631	690,251	662,631	690,251
Equity	132,400	144,004	132,400	144,004
Bermuda [Member]
Financial data about the geographic locations
Income tax expense
Net earnings attributable to American Safety Insurance Holdings, Ltd.	23,328	2,440	27,877	4,957
Assets	688,531	637,806	688,531	637,806
Equity	$ 201,663	$ 206,370	$ 201,663	$ 206,370

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Equity Based Compensation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Equity Based Compensation (Textual) [Abstract]
Options outstanding vest period			3 years
Options outstanding term period			10 years
Stock options grant			0	0
Stock based compensation expense related to outstanding stock options	$ 10	$ 69	$ 56	$ 187
Restricted stock granted	0	5,000	380,839	96,330
Shares vest on the grant date	79,339		79,339
Shares granted vest on the grant date anniversary year I			25.00%
Shares granted vest on the grant date anniversary year II			25.00%
Shares granted vest on the grant date anniversary year III			50.00%
Shares were granted pursuant to vesting schedule			301,500
Stock based compensation expense related to the restricted shares	570	481	1,014	885
Expense related to stock award related to Director compensation	$ 82	$ 83	$ 165	$ 165

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Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2013
Commitments and Contingencies (Textual) [Abstract]
Letters of credit issued and outstanding	$ 84.4
Investment assets pledged for line of credit facility	89.4
Irrevocable letters of credit [Member]
Commitments and Contingencies (Textual) [Abstract]
Letters of credit issued and outstanding	1.8
Letters of credit issued to other parties	0.8
Benefit of the Vermont Department of Banking	$ 1.0

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Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Fixed maturity securities, at fair value	$ 311,309	$ 829,577
Short-term investments, at fair value	611,267	76,502
Cash and cash equivalents	18,567	20,224
Accrued investment income	1,693	6,387
Premiums receivable	29,249	32,559
Ceded unearned premium	35,200	29,821
Reinsurance recoverable	185,644	183,562
Deferred income taxes	2,797
Deferred acquisition costs	25,213	26,182
Funds on deposit	36,915	42,088
Accrued premium	35,980	42,886
Other assets	18,431	25,849
Unpaid losses and loss adjustment expenses	727,278	725,244
Unearned premiums	151,738	146,096
Ceded premiums payable	22,291	13,386
Funds held	61,642	76,806
Other liabilities	14,967	18,601
Deferred income taxes		8,767
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	30,000,000	30,000,000
Common stock, shares issued	9,623,413	9,505,906
Common stock, shares outstanding	9,623,413	9,505,906
VIE
Fixed maturity securities, at fair value	9,846	9,499
Short-term investments, at fair value	1,952	2,645
Cash and cash equivalents	439	507
Accrued investment income	56	52
Premiums receivable	383	498
Ceded unearned premium	218	351
Reinsurance recoverable	4,659	5,039
Deferred income taxes	121	0
Deferred acquisition costs	715	1,100
Funds on deposit	114	231
Accrued premium	0	0
Other assets	724	1,255
Unpaid losses and loss adjustment expenses	8,398	8,900
Unearned premiums	2,878	4,325
Ceded premiums payable	326	67
Funds held	99	113
Other liabilities	0	0
Deferred income taxes	$ 0	$ 30

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Credit Facility

6 Months Ended

Jun. 30, 2013

Credit Facility/Loans Payable [Abstract]

Credit Facility

Note 7 – Credit Facility

The Company has an unsecured line of credit facility for $20 million that expires August 20, 2013. The principal amount outstanding under the credit facility provides for interest at LIBOR plus 200 basis points with a 3% floor. In addition, the credit facility provides for an unused facility fee of 15 basis points payable monthly. The line of credit facility contains certain covenants and at June 30, 2013, the Company was in compliance with all covenants. The Company has no outstanding borrowings at June 30, 2013.

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Consolidated Statements of Comprehensive Earnings (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Consolidated Statements of Comprehensive Earnings [Abstract]
Net earnings	$ 34,821	$ 1,985	$ 40,401	$ 6,386
Other comprehensive income before income taxes:
Unrealized gains (losses) on securities available-for-sale	(17,295)	6,608	(22,609)	10,050
Amortization of (gain) on hedging transactions	(21)	(41)	(42)	(41)
Reclassification adjustment for realized (gains) losses included in net earnings	(37,482)	13	(38,936)	(39)
Total other comprehensive income (loss) before income taxes	(54,798)	6,580	(61,587)	9,970
Income tax expense (benefit) related to items of other comprehensive income (loss)	(9,852)	1,278	(11,373)	1,592
Other comprehensive income (loss) net of income taxes	(44,946)	5,302	(50,214)	8,378
Comprehensive (loss) income	(10,125)	7,287	(9,813)	14,764
Less: Comprehensive (loss) income attributable to the non-controlling interest	(251)	(151)	(218)	34
Comprehensive (loss) income attributable to American Safety Insurance Holdings, Ltd.	$ (9,874)	$ 7,438	$ (9,595)	$ 14,730

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Investments:
Fixed maturity securities, at fair value (including $9,846 and $9,499 from VIE)	$ 311,309	$ 829,577
Common stock, at fair value	6,112	11,857
Short-term investments, at fair value (including $1,952 and $2,645 from VIE)	611,267	76,502
Trading securities, at fair value		12,712
Total investments	928,688	930,648
Cash and cash equivalents (including $439 and $507 from VIE)	18,567	20,224
Accrued investment income (including $56 and $52 from VIE)	1,693	6,387
Premiums receivable (including $383 and $498 from VIE)	29,249	32,559
Ceded unearned premium (including $218 and $351 from VIE)	35,200	29,821
Reinsurance recoverable (including $4,659 and $5,039 from VIE)	185,644	183,562
Deferred income taxes (including $121 and $0 from VIE)	2,797
Deferred acquisition costs (including $715 and $1,100 from VIE)	25,213	26,182
Property, plant and equipment, net	11,942	12,082
Goodwill	20,843	20,843
Funds on deposit (including $114 and $231 from VIE)	36,915	42,088
Accrued premium (including $0 and $0 from VIE)	35,980	42,886
Other assets (including $724 and $1,255 from VIE)	18,431	25,849
Total assets	1,351,162	1,373,131
Liabilities:
Unpaid losses and loss adjustment expenses (including $8,398 and $8,900 from VIE)	727,278	725,244
Unearned premiums (including $2,878 and $4,325 from VIE)	151,738	146,096
Ceded premiums payable (including $326 and $67 from VIE)	22,291	13,386
Funds held (including $99 and $113 from VIE)	61,642	76,806
Other liabilities (including $0 and $0 from VIE)	14,967	18,601
Deferred income taxes (including $0 and $30 from VIE)		8,767
Loans payable	39,183	39,183
Total liabilities	1,017,099	1,028,083
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 30,000,000 shares; issued and outstanding at June 30, 2013, 9,623,413 shares and at December 31, 2012, 9,505,906 shares	96	95
Additional paid-in capital	85,385	86,568
Retained earnings	237,327	197,015
Accumulated other comprehensive income, net	3,729	53,628
Total American Safety Insurance Holdings, Ltd. shareholders' equity	326,537	337,306
Equity in non-controlling interests	7,526	7,742
Total equity	334,063	345,048
Total liabilities and equity	1,351,162	1,373,131
Common stock
Investments:
Fixed maturity securities, at fair value (including $9,846 and $9,499 from VIE)	6,073	8,776
Common stock, at fair value	6,073	8,776
Preferred stock
Investments:
Fixed maturity securities, at fair value (including $9,846 and $9,499 from VIE)	39	3,081
Common stock, at fair value	$ 39	$ 3,081

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Investments (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Gross unrealized losses of the Company's investment portfolio
Less than 12 months, Fair Value	$ 195,206	$ 73,355
12 months or longer, Fair Value	48	3,810
Total, Fair Value	195,254	77,165
Temporarily impaired securities, Less than 12 months, Fair Value	195,206	74,912
Temporarily impaired securities, 12 months or longer, Fair Value	3,621	8,520
Temporarily impaired securities, Fair Value	198,827	83,432
Less than 12 months, Unrealized Losses	(4,543)	(642)
12 months or longer, Unrealized Losses	(18)	(174)
Total, Unrealized Losses	(4,561)	(816)
Temporarily impaired securities, Less than 12 months, Unrealized Losses	(4,543)	(658)
Temporarily impaired securities, 12 months or longer, Unrealized Losses	(871)	(417)
Temporarily impaired securities, Unrealized Losses	(5,414)	(1,075)
U.S. Treasury securities and other government corporations and agencies [Member]
Gross unrealized losses of the Company's investment portfolio
Less than 12 months, Fair Value	185,593	4,985
12 months or longer, Fair Value
Total, Fair Value	185,593	4,985
Less than 12 months, Unrealized Losses	(3,951)	(11)
12 months or longer, Unrealized Losses
Total, Unrealized Losses	(3,951)	(11)
States of the U.S. and political subdivisions of the states [Member]
Gross unrealized losses of the Company's investment portfolio
Less than 12 months, Fair Value	3,247
12 months or longer, Fair Value
Total, Fair Value	3,247
Less than 12 months, Unrealized Losses	(183)
12 months or longer, Unrealized Losses
Total, Unrealized Losses	(183)
Corporate securities [Member]
Gross unrealized losses of the Company's investment portfolio
Less than 12 months, Fair Value	3,100	24,489
12 months or longer, Fair Value
Total, Fair Value	3,100	24,489
Less than 12 months, Unrealized Losses	(207)	(85)
12 months or longer, Unrealized Losses
Total, Unrealized Losses	(207)	(85)
Mortgage-backed securities [Member]
Gross unrealized losses of the Company's investment portfolio
Less than 12 months, Fair Value	3,266	36,345
12 months or longer, Fair Value		3,751
Total, Fair Value	3,266	40,096
Less than 12 months, Unrealized Losses	(202)	(336)
12 months or longer, Unrealized Losses		(165)
Total, Unrealized Losses	(202)	(501)
Commercial mortgage-backed securities [Member]
Gross unrealized losses of the Company's investment portfolio
Less than 12 months, Fair Value
12 months or longer, Fair Value
Total, Fair Value
Less than 12 months, Unrealized Losses
12 months or longer, Unrealized Losses
Total, Unrealized Losses
Asset-backed securities [Member]
Gross unrealized losses of the Company's investment portfolio
Less than 12 months, Fair Value		7,536
12 months or longer, Fair Value	48	59
Total, Fair Value	48	7,595
Less than 12 months, Unrealized Losses		(210)
12 months or longer, Unrealized Losses	(18)	(9)
Total, Unrealized Losses	(18)	(219)
Common stock [Member]
Gross unrealized losses of the Company's investment portfolio
Temporarily impaired securities, Less than 12 months, Fair Value		1,067
Temporarily impaired securities, 12 months or longer, Fair Value	3,573	4,206
Temporarily impaired securities, Fair Value	3,573	5,273
Temporarily impaired securities, Less than 12 months, Unrealized Losses		(14)
Temporarily impaired securities, 12 months or longer, Unrealized Losses	(853)	(220)
Temporarily impaired securities, Unrealized Losses	(853)	(234)
Preferred stock [Member]
Gross unrealized losses of the Company's investment portfolio
Temporarily impaired securities, Less than 12 months, Fair Value		490
Temporarily impaired securities, 12 months or longer, Fair Value		504
Temporarily impaired securities, Fair Value		994
Temporarily impaired securities, Less than 12 months, Unrealized Losses		(2)
Temporarily impaired securities, 12 months or longer, Unrealized Losses		(23)
Temporarily impaired securities, Unrealized Losses		$ (25)

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2013

Segment Information [Abstract]

Financial data by segment

The following table presents key financial data by segment for the three months ended June 30, 2013 and 2012, respectively (dollars in thousands):

American Safety Insurance Holdings, Ltd. and Subsidiaries

Segment Data

(Unaudited) (Dollars in thousands)

	Three Months Ended June 30, 2013
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	52,063		$	16,156		$	15,641		$	—		$	83,860
Net written premiums		41,669			3,000			15,641			—			60,310
Net earned premiums		38,844			8,093			15,255			—			62,192
Fee & other income		(362	)		697			—			12			347
Losses & loss adjustment expenses		23,317			5,226			9,130			—			37,673
Acquisition & other underwriting expenses		17,275			3,528			4,623			770			26,196
Underwriting profit (loss)		(2,110	)		36			1,502			(758	)		(1,330	)
Net investment income		3,380			815			1,304			83			5,582
Pre-tax operating income (loss)		1,270			851			2,806			(675	)		4,252
Net realized gains														37,482
Interest and corporate expenses														1,013
Earnings before income taxes														40,721
Income tax expense														5,900
Net earnings													$	34,821
Less: Net earnings attributable to the non-controlling interest														10
Net earnings attributable to ASIH, Ltd.													$	34,811
Loss ratio		60.0	%		64.6	%		59.8	%		NM			60.6	%
Expense ratio		45.4	%		35.0	%		30.3	%		NM			41.6	%
Combined ratio (2)		105.4	%		99.6	%		90.1	%		(1) NM			102.2	%
	Three Months Ended June 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	50,448		$	21,498		$	15,603		$	—		$	87,549
Net written premiums		39,735			14,579			15,603			—			69,917
Net earned premiums		33,600			13,157			15,260			—			62,017
Fee & other income		—			738			—			(9	)		729
Losses & loss adjustment expenses		20,221			11,875			8,751			(28	)		40,819
Acquisition & other underwriting expenses		15,140			5,865			4,471			874			26,350
Underwriting profit (loss)		(1,761	)		(3,845	)		2,038			(855	)		(4,423	)
Net investment income		4,285			1,348			1,595			174			7,402
Pre-tax operating income (loss)		2,524			(2,497	)		3,633			(681	)		2,979
Net realized losses														(13	)
Interest and corporate expenses														1,215
Earnings before income taxes														1,751
Income tax benefit														(234	)
Net earnings													$	1,985
Less: Net loss attributable to the non-controlling interest														(182	)
Net earnings attributable to ASIH, Ltd.													$	2,167
Loss ratio		60.2	%		90.3	%		57.3	%		NM			65.8	%
Expense ratio		45.1	%		39.0	%		29.3	%		NM			41.3	%
Combined ratio (2)		105.3	%		129.3	%		86.6	%		(1) NM			107.1	%

(1) NM = Ratio is not meaningful

(2) The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition and other underwriting expenses net of fee income to earned premiums.

The following table presents key financial data by segment for the six months ended June 30, 2013 and 2012, respectively (dollars in thousands):

American Safety Insurance Holdings, Ltd. and Subsidiaries

Segment Data

(Unaudited) (Dollars in thousands)

	Six Months Ended June 30, 2013
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	100,016		$	32,758		$	32,285		$	—		$	165,059
Net written premiums		79,215			12,879			32,285			—			124,379
Net earned premiums		75,385			19,255			29,476			—			124,116
Fee & other income		(30	)		1,468			—			149			1,587
Losses & loss adjustment expenses		45,344			12,619			17,673			—			75,636
Acquisition & other underwriting expenses		33,871			8,358			9,272			1,590			53,091
Underwriting profit (loss)		(3,860	)		(254	)		2,531			(1,441	)		(3,024	)
Net investment income		7,978			2,045			2,974			217			13,214
Pre-tax operating income (loss)		4,118			1,791			5,505			(1,224	)		10,190
Net realized gains														38,936
Interest and corporate expenses														2,148
Earnings before income taxes														46,978
Income tax expense														6,577
Net earnings													$	40,401
Less: Net earnings attributable to the non-controlling interest														98
Net earnings attributable to ASIH, Ltd.													$	40,303
Loss ratio		60.1	%		65.5	%		60.0	%		NM			60.9	%
Expense ratio		45.0	%		35.8	%		31.5	%		NM			41.5	%
Combined ratio (2)		105.1	%		101.3	%		91.5	%		(1) NM			102.4	%
	Six Months Ended June 30, 2012
	Insurance									Other
	E&S			ART			Reinsurance			Run-off			Total
Gross written premiums	$	89,059		$	42,676		$	29,579		$	—		$	161,314
Net written premiums		70,468			30,722			29,579			—			130,769
Net earned premiums		64,750			29,501			29,178			—			123,429
Fee & other income		—			1,402			—			8			1,410
Losses & loss adjustment expenses		39,138			21,862			17,100			—			78,100
Acquisition & other underwriting expenses		29,057			12,253			8,801			1,734			51,845
Underwriting profit (loss)		(3,445	)		(3,212	)		3,277			(1,726	)		(5,106	)
Net investment income		8,910			2,778			3,216			310			15,214
Pre-tax operating income (loss)		5,465			(434	)		6,493			(1,416	)		10,108
Net realized gains														39
Interest and corporate expenses														2,889
Earnings before income taxes														7,258
Income tax expense														872
Net earnings													$	6,386
Less: Net earnings attributable to the non-controlling interest														163
Net earnings attributable to ASIH, Ltd.													$	6,223
Loss ratio		60.4	%		74.1	%		58.6	%		NM			63.3	%
Expense ratio		44.9	%		36.8	%		30.2	%		NM			40.9	%
Combined ratio (2)		105.3	%		110.9	%		88.8	%		(1) NM			104.2	%

(1) NM = Ratio is not meaningful

(2) The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of losses and loss adjustment expenses, acquisition and other underwriting expenses net of fee income to earned premiums.

Financial data about the geographic locations

The following table provides financial data about the geographic locations for the three months ended June 30, 2013 and 2012 (dollars in thousands):

	United States			Bermuda		Total
June 30, 2013
Income tax expense	$	5,900		$	—	$	5,900
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	11,483		$	23,328	$	34,811
	United States			Bermuda		Total
June 30, 2012
Income tax benefit	$	(234	)	$	—	$	(234	)
Net earnings (loss) attributable to American Safety Insurance Holdings, Ltd.	$	(273	)	$	2,440	$	2,167

The following table provides financial data about the geographic locations for the six months ended June 30, 2013 and 2012 (dollars in thousands):

	United States		Bermuda		Total
June 30, 2013
Income tax expense	$	6,577	$	—	$	6,577
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	12,426	$	27,877	$	40,303
Assets	$	662,631	$	688,531	$	1,351,162
Equity	$	132,400	$	201,663	$	334,063
	United States		Bermuda		Total
June 30, 2012
Income tax expense	$	872	$	—	$	872
Net earnings attributable to American Safety Insurance Holdings, Ltd.	$	1,266	$	4,957	$	6,223
Assets	$	690,251	$	637,806	$	1,328,057
Equity	$	144,004	$	206,370	$	350,374

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Variable Interest Entity (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Assets and Liabilities of the VIE as consolidated in the Consolidated Balance Sheets
Cash and cash equivalents	$ 18,567	$ 20,224	$ 35,195	$ 43,481
Accrued investment income	1,693	6,387
Premiums receivable	29,249	32,559
Ceded unearned premium	35,200	29,821
Reinsurance recoverable	185,644	183,562
Deferred income taxes	2,797
Deferred acquisition costs	25,213	26,182
Funds on deposit	36,915	42,088
Other assets	18,431	25,849
Total assets	1,351,162	1,373,131	1,328,057
Unpaid losses and loss adjustment expenses	727,278	725,244
Unearned premiums	151,738	146,096
Ceded premiums payable	22,291	13,386
Funds held	61,642	76,806
Deferred income taxes		8,767
Total liabilities	1,017,099	1,028,083
VIE [Member]
Assets and Liabilities of the VIE as consolidated in the Consolidated Balance Sheets
Investments	11,798	12,144
Cash and cash equivalents	439	507
Accrued investment income	56	52
Premiums receivable	383	498
Ceded unearned premium	218	351
Reinsurance recoverable	4,659	5,039
Deferred income taxes	121	0
Deferred acquisition costs	715	1,100
Funds on deposit	114	231
Other assets	724	1,255
Total assets	19,227	21,177
Unpaid losses and loss adjustment expenses	8,398	8,900
Unearned premiums	2,878	4,325
Ceded premiums payable	326	67
Funds held	99	113
Deferred income taxes	0	30
Total liabilities	$ 11,701	$ 13,435

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Fair Value Measurements (Details 1) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
Beginning Balance	$ 6,706	$ 6,751
Total gains (losses) realized (unrealized):
Included in earnings
Included in other comprehensive income	(633)	(45)
Purchases
Sales
Issuance and settlements
Net transfers in (out of) Level 3
Ending Balance	6,073	6,706
Change in net unrealized losses relating to assets still held at reporting date	$ (633)	$ (45)

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Income Taxes (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income tax (benefit) expense differed from United States Federal income tax rate
Expected income tax expense	$ 13,845	$ 596	$ 15,972	$ 2,468
Foreign earned income not subject to U.S. taxation	(7,932)	(830)	(9,478)	(1,685)
Tax-exempt interest	(4)	(3)	(7)	(6)
State taxes and other	(9)	3	90	95
Total	$ 5,900	$ (234)	$ 6,577	$ 872

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Income Taxes (Details Textual)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Income Taxes (Textual) [Abstract]
United States federal income tax rate	34.00%	34.00%

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Fair Value Measurements

6 Months Ended

Jun. 30, 2013

Fair Value Measurements [Abstract]

Fair Value Measurements

Note 6 – Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability, or in the absence of a principal market, the most advantageous market. Market participants are buyers and sellers in the principal (or most advantageous) market that are independent, knowledgeable, able to transact for the asset or liability, and willing to transact for the asset or liability.

We determined the fair values of certain financial instruments based on the fair value hierarchy established in “Fair Value Measurements”, topic ASC 820-10-05. Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value. The inputs of these valuation techniques are categorized into three levels. The guidance requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.

Our Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the reporting date. The Company receives one quote per instrument for Level 1 inputs.

Our Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

Our Level 3 inputs are valuations based on inputs that are unobservable. Unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use in pricing the asset or liability.

The Company receives fair value prices from its third-party investment managers who use an independent pricing service. These prices are determined using observable market information such as dealer quotes, market spreads, cash flows, yield curves, live trading levels, trade execution data, market consensus prepayment speeds, credit information, and the security’s terms and conditions, among other things. The Company has reviewed the processes used by the third party providers for pricing the securities, and has determined that these processes result in fair values consistent with the GAAP requirements. In addition, the Company reviews these prices for reasonableness and has not adjusted any prices received from the third-party providers as of June 30, 2013.

Assets measured at fair value on a recurring basis for June 30, 2013 and December 31, 2012 are summarized below:

As of June 30, 2013

Fair Value Measurements Using

(dollars in thousands)

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	242,555	$	14,398	$	—	$	256,953
States of the U.S. and political subdivisions of the states		—		4,425		—		4,425
Corporate securities		—		35,268		—		35,268
Mortgage-backed securities		—		4,866		—		4,866
Commercial mortgage-backed securities		—		2,825		—		2,825
Asset-backed securities		—		6,972		—		6,972
Total fixed maturity securities		242,555		68,754		—		311,309
Equity securities		—		39		6,073		6,112
Short term investments		611,267		—		—		611,267
Trading securities		—		—		—		—
Total	$	853,822	$	68,793	$	6,073	$	928,688

As of December 31, 2012

Fair Value Measurements Using

(dollars in thousands)

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Fixed maturity securities:
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	31,032	$	25,509	$	—	$	56,541
States of the U.S. and political subdivisions of the states		—		46,164		—		46,164
Corporate securities		—		340,729		—		340,729
Mortgage-backed securities		—		248,240		—		248,240
Commercial mortgage-backed securities		—		63,215		—		63,215
Asset-backed securities		—		74,688		—		74,688
Total fixed maturity securities		31,032		798,545		—		829,577
Equity securities		5,151		—		6,706		11,857
Short term investments		76,502		—		—		76,502
Trading securities		990		11,722		—		12,712
Total	$	113,675	$	810,267	$	6,706	$	930,648

A reconciliation of the beginning and ending balances for the investments categorized as Level 3 at June 30, 2013 and December 31, 2012 are as follows:

	As of June 30, 2013
	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	(dollars in thousands)
	Equity Securities
Balance at December 31, 2012	$	6,706
Total gains (losses) realized (unrealized):
Included in earnings		—
Included in other comprehensive income		(633	)
Purchases		—
Sales		—
Issuance and settlements		—
Net transfers in (out of) Level 3		—
Balance at June 30, 2013	$	6,073
Change in net unrealized losses relating to assets still held at reporting date	$	(633	)

	As of December 31, 2012
	Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	(dollars in thousands)
	Equity Securities
Balance at December 31, 2011	$	6,751
Total gains (losses) realized (unrealized):
Included in earnings		—
Included in other comprehensive income		(45	)
Purchases		—
Sales		—
Issuance and settlements		—
Net transfers in (out of) Level 3		—
Balance at December 31, 2012	$	6,706
Change in net unrealized losses relating to assets still held at reporting date	$	(45	)

There were no transfers in and out of Level 1 and 2 categories during 2013 or 2012.

A description of the Company’s inputs used to measure fair value is as follows:

Fixed maturities (Available-for-Sale and Trading) Levels 1 and 2

• United States Treasury securities are valued using quoted (unadjusted) prices in active markets and are therefore shown as Level 1.

• United States Government agencies are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

• States of the U.S. and political subdivisions of the states are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

• Corporate securities are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

• Mortgage-backed securities are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

• Commercial mortgage-backed securities are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

• Asset-backed securities are reported at fair value utilizing Level 2 inputs. These fair value measurements are provided by using quoted prices of securities with similar characteristics.

Equity securities (Level 1) – For these securities, fair values are based on quoted market prices (unadjusted) in active markets.

Equity securities (Level 2) – These fair value measurements are provided by using quoted prices of securities with similar characteristics.

Equity securities (Level 3) – Includes private equity investments which are carried at the Company’s equity in the estimated net assets of the investments based on valuations provided by the investee or other relevant market data.

We assess the reasonableness of those fair values by evaluating the financial statements and discussions with the investees. Due to the delay of reported information, our estimates are based on the most recent available information. These inputs are considered unobservable and therefore the private equity investments are being classified as Level 3 measurements.

Short-term investments are reported at fair value using Level 1 inputs.

As management is ultimately responsible for determining the fair value measurements for all securities, we validate prices received from our investment advisor by comparing the fair value estimates to our knowledge of the current market and investigate any prices deemed not to be representative of fair value.

The following table sets forth the carrying amount, estimated fair value and level within the fair value hierarchy of financial instruments as of June 30, 2013 and December 31, 2012.

	Level in Fair		June 30, 2013				December 31, 2012
	Value Hierarchy		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Assets:
Cash and cash equivalents		Level 1	$	18,567	$	18,567	$	20,224	$	20,224
Fixed maturities		*	$	311,309	$	311,309	$	829,577	$	829,577
Equity securities		*	$	6,112	$	6,112	$	11,857	$	11,857
Short-term investments		*	$	611,267	$	611,267	$	76,502	$	76,502
Trading securities		*	$	—	$	—	$	12,712	$	12,712
Premiums receivable		Level 2	$	29,249	$	29,249	$	32,559	$	32,559
Reinsurance recoverable		Level 2	$	185,644	$	185,644	$	183,562	$	183,562
Liabilities:
Loans payable		Level 2	$	39,183	$	39,183	$	39,183	$	39,183

Cash and cash equivalents – The carrying amounts approximate fair value because of the short-term maturity of those instruments.

Premiums receivable – The carrying value of premiums receivable approximate fair value due to its short-term nature.

Reinsurance recoverables – The carrying value of reinsurance receivables approximate fair value. The Company has established an allowance for bad debts associated with reinsurance balances recoverable and is primarily related to specific counterparties.

Loans payable – The carrying value of those notes is a reasonable estimate of fair value. Due to the variable interest rate of these instruments, carrying value approximates market value.

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Investments (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2013 Security	Jun. 30, 2012
Investments (Textual) [Abstract]
Available for sale securities	$ 778,900,000	$ 18,400,000
Net realized gains	42,700,000	50,000
Net unrealized holding losses	0	10,000
Available for sale and trading equity securities Sales Proceeds	11,300,000	0
Number of securities available for sale	203
Number of available for sale securities in unrealized loss position for period of less than twelve	67
Number of available for sale securities in unrealized loss position for period of twelve months or greater	2
Available for sale and trading equity securities Realized Gross Gain	1,100,000	0
Fixed Maturities [Member]
Investments (Textual) [Abstract]
Available-for-sale and trading equity securities Gross realized losses	4,900,000	10,000
Equity Securities [Member]
Investments (Textual) [Abstract]
Available-for-sale and trading equity securities Gross realized losses	$ 0	$ 0

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Credit Facility (Details) (USD $)	6 Months Ended
	Jun. 30, 2013
Credit Facility (Textual) [Abstract]
Unsecured line of credit facility	$ 20,000,000
Line of credit facility expiry date	Aug. 20, 2013
Credit facility interest rate description	Libor plus 200 basis points with a 3% floor
Basis points added to base rate	2.00%
Credit facility provided for interest LIBOR floor	3.00%
Unused facility fee payable monthly (basis points)	0.15%
Outstanding borrowings	$ 0

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Variable Interest Entity

6 Months Ended

Jun. 30, 2013

Variable Interest Entity [Abstract]

Variable Interest Entity

Note 9 – Variable Interest Entity

The Risk Retention Act of 1986 (the “Risk Retention Act”) allowed companies with specialized liability insurance needs that could not be met in the standard insurance market to create a new type of insurance vehicle called a risk retention group. We assisted in the formation of American Safety RRG in 1988 in order to establish a U.S. insurance company to market and underwrite specialty environmental coverages.

American Safety RRG is a variable interest entity (“VIE”) which is consolidated in our financial statements in accordance with ASC 810-10-5, as through the contractual relationships, the Company has the power to direct the activities of American Safety RRG that most significantly impact its economic performance and the right to receive benefits from American Safety RRG that could be significant to American Safety RRG. Due to these criteria being met, American Safety is the primary beneficiary of the variability of the underwriting profits of American Safety RRG. The liabilities of American Safety RRG consolidated by the Company do not represent additional claims on the Company’s general assets; rather, they represent claims against the specific assets of American Safety RRG. Similarly, the assets of American Safety RRG consolidated by the Company do not represent additional assets available to satisfy claims against the Company’s general assets.

The creditors of American Safety RRG do not have recourse to the Company for the obligations outside of obligations that exist due to contractual loss sharing or reinsurance arrangements that exist between American Safety RRG and other entities under common control in the ordinary course of the business. The equity of American Safety RRG is for the benefit of the policyholders and is considered a non-controlling interest in the shareholders’ equity section of the Company’s Consolidated Balance Sheets. Should RRG incur net losses and the equity of RRG decline below regulatory minimum capital levels or result in a deficit, there is no legal obligation of the Company to fund those losses or contribute capital to the VIE. The profit and loss of the VIE increases or decreases the value of the non-controlling interest on the balance sheet of the Company and does not contribute to earnings or equity attributable to American Safety Insurance Holdings, Ltd.

Assets and Liabilities of the VIE as consolidated in the Consolidated Balance Sheets (dollars in thousands):

	June 30, 2013		December 31, 2012
Investments	$	11,798	$	12,144
Cash and cash equivalents		439		507
Accrued investment income		56		52
Premiums receivable		383		498
Ceded unearned premium		218		351
Reinsurance recoverable		4,659		5,039
Deferred income taxes		121		—
Deferred acquisition costs		715		1,100
Funds on deposit		114		231
Other assets		724		1,255
Total Assets	$	19,227	$	21,177
Unpaid losses and loss adjustment expenses		8,398		8,900
Unearned premiums		2,878		4,325
Ceded premiums payable		326		67
Funds held		99		113
Deferred income taxes		—		30
Total Liabilities	$	11,701	$	13,435

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Equity Based Compensation

6 Months Ended

Jun. 30, 2013

Equity Based Compensation [Abstract]

Equity Based Compensation

Note 5 – Equity Based Compensation

The Company’s incentive stock plan grants incentive stock options to employees. The majority of the options outstanding under the plan vest evenly over a three year period and have a term of 10 years. The Company uses the Black-Scholes option pricing model to value stock options. The Company’s methodology for valuing stock options has not changed from December 31, 2012. During the first six months of 2013 and 2012, the Company did not grant any stock options. Stock based compensation expense related to outstanding stock options was $10 and $69 for the three months ended June 30, 2013 and 2012, respectively and $56 and $187 for the six months ended June 30, 2013 and 2012, respectively, and is reflected in the Consolidated Statement of Operations in other underwriting expenses.

In addition to stock options discussed above, the Company grants restricted shares to employees under the incentive stock plan. During the three month period ended June 30, 2013, no restricted stock shares were granted compared to 5,000 in 2012. During the first six months of 2013, the Company granted 380,839 shares of restricted stock compared to 96,330 for the same period in 2012. Of the shares granted, 79,339 shares vest on the grant date anniversary ratably over three years at 25%, 25%, and 50%, respectively. The remaining 301,500 shares vest pursuant to a vesting schedule based on certain performance criteria. Stock based compensation expense related to the restricted shares was $570 and $481 for the three months ended June 30, 2013 and 2012, respectively and is reflected in the Consolidated Statement of Operations in other underwriting expenses. For the six months ended June 30, 2013 and 2012, $1,014 and $885 of compensation expense, respectively, is reflected in the Consolidated Statement of Operations in other underwriting expenses. Additionally, the Company expensed $82 and $83 in expense for the three months ended June 30, 2013 and 2012, respectively, related to stock awards related to Director compensation. For the six months ended June 30, the company expensed $165 and $165 in 2013 and 2012, respectively, related to stock awards made as a portion of Director compensation.

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Consolidated Statements of Cash Flow (Unaudited) (Parenthetical) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Income taxes paid	$ 133	$ 749
VIE
Income taxes paid	$ 120	$ 731

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Subsequent Events (Details Textual) (Subsequent Event [Member], USD $)	Jul. 29, 2013 Catalina Holdings [Member]	Aug. 07, 2013 American Safety Fairfax and Fairfax Holding Bermuda [Member]	Jun. 30, 2013 American Safety Fairfax and Fairfax Holding Bermuda [Member]
Subsequent Event [Line Items]
Acquisition cash price per share	$ 29.75	$ 30.25	$ 29.25
Termination fees on termination of Merger agreement		$ 13,400,000	$ 9,186,000

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Segment Information (Details Textual)	6 Months Ended
	Jun. 30, 2013 Segment
Segment Information (Textual) [Abstract]
Number of geographic segments	2
E & S [Member]
Segment Information (Textual) [Abstract]
Number of product line	8
ART [Member]
Segment Information (Textual) [Abstract]
Number of product line	2
Insurance [Member]
Segment Information (Textual) [Abstract]
Number of operating segments	3

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Accounting Pronouncements

6 Months Ended

Jun. 30, 2013

Accounting Pronouncements [Abstract]

Accounting Pronouncements

Note 12 – Accounting Pronouncements

In February 2013, the FASB issued an accounting update to improve the reporting of reclassifications out of accumulated other comprehensive income. An entity is required to report the effect of significant reclassifications, by component, out of accumulated other comprehensive income on the respective line items in net income if the item is required under GAAP to be reclassified in its entirety in the same reporting period. The required disclosures of the update are allowed either in the Statement of Operations or in the notes. The amendments in the update are effective for reporting periods beginning after December 15, 2012. This update did not have an impact on our financial disclosures.

At June 30, 2013, there were no recently issued accounting pronouncements where our adoption of such guidance was pending.

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Loans Payable

6 Months Ended

Jun. 30, 2013

Credit Facility/Loans Payable [Abstract]

Loans Payable

Note 8 – Loans Payable

Trust Preferred Offerings

In 2003, American Safety Capital and American Safety Capital II, both non-consolidated, wholly-owned subsidiaries of the Company, issued $8 million and $5 million, respectively, of variable rate 30-year trust preferred securities. The securities require interest payments on a quarterly basis calculated at a floating rate of LIBOR + 4.2% and LIBOR + 3.95% for American Safety Capital and American Safety Capital II, respectively. The securities can be redeemed at the Company’s option any time.

In 2005, the American Safety Capital Trust III, a non-consolidated wholly-owned subsidiary of the Company, issued a 30-year trust preferred securities in the amount of $25 million. The securities require interest payments of LIBOR + 3.4%. The securities may be redeemed at any time.

The balance of loans payable at June 30, 2013 was $39.2 million.

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Investments (Tables)

6 Months Ended

Jun. 30, 2013

Investments [Abstract]

Amortized cost and estimated fair values of the Company's investments

The amortized cost and estimated fair values of the Company’s available for sale investments at June 30, 2013 and December 31, 2012, are as follows (dollars in thousands):

June 30, 2013	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	258,887	$	2,017	$	(3,951	)	$	256,953
States of the U.S. and political subdivisions of the states		4,516		92		(183	)		4,425
Corporate securities		30,401		5,074		(207	)		35,268
Mortgage-backed securities		4,978		90		(202	)		4,866
Commercial mortgage-backed securities		2,684		141		—			2,825
Asset-backed securities		6,304		686		(18	)		6,972
Total fixed maturities	$	307,770	$	8,100	$	(4,561	)	$	311,309
Common stock	$	6,926	$	—	$	(853	)	$	6,073
Preferred stock	$	—	$	39	$	—		$	39

December 31, 2012	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	53,591	$	2,961	$	(11	)	$	56,541
States of the U.S. and political subdivisions of the states		40,100		6,064		—			46,164
Corporate securities		304,725		36,089		(85	)		340,729
Mortgage-backed securities		237,653		11,088		(501	)		248,240
Commercial mortgage-backed securities		57,521		5,694		—			63,215
Asset-backed securities		71,769		3,138		(219	)		74,688
Total fixed maturities	$	765,359	$	65,034	$	(816	)	$	829,577
Common stock	$	9,004	$	6	$	(234	)	$	8,776
Preferred stock	$	2,789	$	317	$	(25	)	$	3,081

Amortized cost and estimated fair value of fixed maturity securities by contractual maturity

The amortized cost and estimated fair value of fixed maturity securities at June 30, 2013, is shown below by contractual maturity.

	Amortized cost		Estimated fair value
	(dollars in thousands)
Due in one year or less	$	4,026	$	4,056
Due after one year through five years		19,261		20,340
Due after five years through ten years		19,259		19,533
Due after ten years		251,258		252,717
Mortgage and asset-backed securities		13,966		14,663
Total	$	307,770	$	311,309

Gross unrealized losses of the Company's investment portfolio

The following tables summarize the gross unrealized losses of the Company’s investment portfolio as of June 30, 2013 and December 31, 2012, by category and length of time that the securities have been in an unrealized loss position.

	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2013	(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	185,593	$	(3,951	)	$	—	$	—		$	185,593	$	(3,951	)
States of the U.S. and political subdivisions of the states		3,247		(183	)		—		—			3,247		(183	)
Corporate securities		3,100		(207	)		—		—			3,100		(207	)
Mortgage-backed securities		3,266		(202	)		—		—			3,266		(202	)
Commercial mortgage-backed securities		—		—			—		—			—		—
Asset-backed securities		—		—			48		(18	)		48		(18	)
Subtotal, fixed maturity securities		195,206		(4,543	)		48		(18	)		195,254		(4,561	)
Common stock		—		—			3,573		(853	)		3,573		(853	)
Preferred stock		—		—			—		—			—		—
Total temporarily impaired securities	$	195,206	$	(4,543	)	$	3,621	$	(871	)	$	198,827	$	(5,414	)

	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2012	(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities and other government corporations and agencies	$	4,985	$	(11	)	$	—	$	—		$	4,985	$	(11	)
States of the U.S. and political subdivisions of the states		—		—			—		—			—		—
Corporate securities		24,489		(85	)		—		—			24,489		(85	)
Mortgage-backed securities		36,345		(336	)		3,751		(165	)		40,096		(501	)
Commercial mortgage-backed securities		—		—			—		—			—		—
Asset-backed securities		7,536		(210	)		59		(9	)		7,595		(219	)
Subtotal, fixed maturity securities		73,355		(642	)		3,810		(174	)		77,165		(816	)
Common stock		1,067		(14	)		4,206		(220	)		5,273		(234	)
Preferred stock		490		(2	)		504		(23	)		994		(25	)
Total temporarily impaired securities	$	74,912	$	(658	)	$	8,520	$	(417	)	$	83,432	$	(1,075	)

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Subsequent Events

6 Months Ended

Jun. 30, 2013

Subsequent Events [Abstract]

Subsequent Events

Note 13 – Subsequent Events

On July 29 ^th, 2013, American Safety Insurance Holdings, Ltd. received an offer from Catalina Holdings (Bermuda) Ltd. (“Catalina”), outlining the acquisition of American Safety by Catalina Holdings (Bermuda) LTD. at a cash price of $29.75. This offer was substantially the same terms as those contained in the initial proposed Merger Agreement with Fairfax Financial Holdings Limited.

On August 7 ^th, 2013, Fairfax Financial Holdings Limited increased its offer to purchase American Safety to $30.25 per share from the previously announced offer of $29.25 per share.

The board of directors of American Safety approved an amendment to the Merger Agreement among American Safety, Fairfax and Fairfax Holdings Bermuda Ltd. reflecting the revised price and an increase in the termination fee to $13.4 million from $9.1 million. The transaction is subject to customary conditions, including approval of American Safety’s shareholders and regulatory approvals.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 01, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	AMERICAN SAFETY INSURANCE HOLDINGS LTD
Entity Central Index Key	0000783603
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		9,641,731

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Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2013

Accounting Pronouncements [Abstract]

Reclassifications out of accumulated other comprehensive income

In February 2013, the FASB issued an accounting update to improve the reporting of reclassifications out of accumulated other comprehensive income. An entity is required to report the effect of significant reclassifications, by component, out of accumulated other comprehensive income on the respective line items in net income if the item is required under GAAP to be reclassified in its entirety in the same reporting period. The required disclosures of the update are allowed either in the Statement of Operations or in the notes. The amendments in the update are effective for reporting periods beginning after December 15, 2012. This update did not have an impact on our financial disclosures.

At June 30, 2013, there were no recently issued accounting pronouncements where our adoption of such guidance was pending.