Bermuda-based American Safety Insurance Holdings Ltd. took a net loss of $2.5 million, or $.51 per diluted share in the fourth quarter of 2003 after earnings from its insurance and real estate operations were offset by a one-time charge.

The company said it had net earnings of $3.3 million from its insurance and real estate operations for the fourth quarter ended December 31, 2003.

This was offset by the establishment of a $3.9 million valuation allowance related to a note receivable secured by real property, resulting in a net loss for the quarter of $582,000, or $0.09 per diluted share.

The valuation allowance was established in connection with the preparation of the company?s year end financial statements as a result of the review of the 2003 financial performance of the golf course property which secures the loan, coupled with a general economic decline in the value of golf course properties.

In January 2004, the company entered into a settlement agreement under which modified repayment terms have the borrower is required to pay $5.4 million.