American Safety Insurance Holdings Ltd. Reports Second Quarter Earnings

Net earnings are detailed as follows (in thousands):

Quarter EndedJune 30, Six Months EndedJune 30,

2004 2003 2004 2003

Insurance Operations $(1,691) $1,597 $420 $3,225

Real Estate Operations 1,997 284 3,518 (174)

Other 3,791 1,933 3,809 1,983

Net Earnings $4,097 $3,814 $7,747 $5,034

The net loss from insurance operations for the second quarter of 2004 reflects a total of $6.2 million of reserve strengthening as a result of adverse loss development that occurred during the period. Of this amount, $3.0 million represents reserve increases for discontinued lines and the balance of $3.2 million consists of reserve increases for excess and surplus business for accident year 2001 primarily attributable to certain New York commercial contracting risks (which represented 16% of the excess and surplus premium written in 2001). Premium written for New York commercial contracting risks has been reduced annually, and currently represents less than 2% of the Company's excess and surplus premium. Based on the reserve development, the Company is evaluating its actuarial reserving assumptions for its excess and surplus business, which is expected to be completed during the third quarter of 2004. Given that approximately 50% of the reserve development was attributable to discontinued lines and the balance of the development related to its excess and surplus business, the Company does not believe that these reserve adjustments have any material implications with respect to the quality or profitability of the core business lines currently being written by the Company.

The increase in earnings for the second quarter of 2004 from real estate operations was due to increased profits from closings of condominium units at Harbour Village. Earnings from other items for the quarter include a $2.6 million payment received by the Company in settlement of the impaired note receivable that was written off in the fourth quarter of 2003, which represents the final payment from the borrower. Other items also include a $1.8 million payment received by the Company in settlement of professional liability claims against parties who are involved in the Principal Management rescission litigation.

The decrease in insurance earnings for the six months ended June 30, 2004 reflects a total of $9.0 million of reserve strengthening. Of this amount, $4.7 million consists of reserve increases for excess and surplus business relating to accident year 2001 primarily attributable to certain New York commercial contracting risks, and the remaining $4.3 million represents reserve increases for discontinued lines.

The increase in earnings for the six months ended June 30, 2004 from real estate operations was due to increased profits from closings of condominium units at Harbour Village.

Total revenues for the second quarter of 2004 increased 19% to $55 million as compared to the same quarter of 2003 as a result of increased net premiums earned, investment income and real estate income. Net premiums earned for the second quarter of 2004 increased 31% to $32 million from the same quarter of 2003 due to increases in the Company's core business lines. Net cash flow generated from operations was $21 million for the second quarter of 2004.

Total revenues for the six months ended June 30, 2004 increased 39% to $105 million as compared to the same period in 2003 as a result of increased net premiums earned, investment income and real estate income. Net premiums earned for the six months ended June 30, 2004 increased 40% to $66 million from the same period of 2003 due to increases in the Company's core business lines. Net cash flow from operations increased to $44 million for the six months ended June 30, 2004.

The Company's book value per share increased 5% to $14.43 at June 30, 2004 from $13.80 at December 31, 2003. This increase in book value per share is due primarily to the Company's net earnings during the six months ended June 30, 2004 offset, in part, by an increase in unrealized losses in its investment portfolio.

Commenting on the results, Stephen R. Crim, President and Chief Executive Officer of American Safety Insurance Holdings, Ltd., said: "We are disappointed that the reserve strengthening has adversely affected the otherwise strong insurance results. The Company has taken steps in our underwriting and claims areas to address the reserve development. It should be noted that the scope of the development is limited to discontinued lines and a small portion of our excess and surplus business. The insurance market conditions remain favorable for the market segments served by the Company, and we are pleased with the continued growth in our core business lines."

A conference call to discuss second quarter 2004 results is scheduled for Thursday, August 12, 2004 at 11:00 a.m. (Eastern Time), which will be broadcast through the Investor Broadcast Network's Vcall website at www.vcall.com or the Company's website at www.americansafetyinsurance.com. A replay will be available on the Company's website.

American Safety Insurance Holdings, Ltd. is a specialty insurance holding company which, through its subsidiaries, provides innovative insurance solutions in the alternative insurance market for environmental remediation, contracting and other specialty risks. Additional information about the Company can be found at www.americansafetyinsurance.com.

This press release contains forward-looking statements. These forward-looking statements reflect the Company's current views with respect to future events and financial performance, including future insurance claims and losses, the Company's expectations with respect to the outcome of the Principal Management acquisition rescission litigation, and the future profitability and the value of the Harbour Village real estate development project. Forward-looking statements involve risks and uncertainties which may cause actual results to differ materially, and are subject to change based on various factors, including competitive conditions in the insurance industry, levels of new and renewal insurance business, unpredictable developments in loss trends, results of evaluating actuarial reserving assumptions, adequacy and changes in loss reserves, timing or collectibility of reinsurance recoverables, market acceptance of new coverages and enhancements, changes in reinsurance costs and availability, potential adverse decisions in court and arbitration proceedings, and changes in levels of general business activity and economic conditions. With respect to the development of the Harbour Village project, such forward looking statements involve risks and uncertainties which may cause actual results to differ materially, and are subject to change based on various real estate development industry factors, including competitive housing conditions in the local market area, risks inherent in real estate development and new construction, increases in construction costs, construction delays, weather, zoning, litigation, changes in interest rates and the availability of mortgage financing for prospective purchasers of condominium units and boat slips, and changes in local and national levels of general business activity and economic conditions. For additional factors, which could influence the results of the Company's operating and financial performance, see the Company's filings with the Securities and Exchange Commission.

Contacts:

American Safety Insurance Services, Inc. Cameron Associates

Fred J. Pinckney Kevin McGrath

Investor Relations/General Counsel (212) 245-4577

(770) 916-1908