lines company.

Shareholders of Bermuda-registered American Safety Insurance Co. met at Sonesta Beach Hotel to discuss how much more growth-oriented the specialty insurance holding company has become since its February initial public offering (IPO).

The group expects to cede a growing amount of its own premium to its Bermuda-domiciled reinsurance operations, as they grow a specialty book of business.

The annual general meeting was the first as a public company for the 12-year old firm which is now listed on NASDAQ under the symbol AMSFF.

In the year to December 31 the company nearly doubled from the previous year, gross premiums written ($11.6 million), net premiums written ($9 million) and net premiums earned ($8.4 million). Combined ratio was 81.8 percent.

After raising some $31 million in the IPO, boosting capital and surplus to over $52 million, the alternative market company is now looking to acquire an excess and surplus lines company.

President Lloyd A. Fox said, "We are keeping a portion of the capital we raised somewhat liquid because the new company could take as much $10 million to capitalise, in order to get it approved in various states, plus there will be acquisition costs.

"There are some companies with which we are having discussions. But there are no definitive agreements yet. We would like to make that acquisition before the end of the year.

"There are certain types of coverage written on manuscripted forms. These are specialty risk coverages for which there is no boiler-plate insurance policy available.

"It would be a cumbersome process using our admitted insurance carrier because you would have to draft the policy form and get it approved by regulators in each state, because it is not a standard type of cover.

"The excess and surplus lines company would enable us to do that much more quickly. We can get such programmes more quickly to market.'' Through subsidiaries, American Safety develops, underwrites, manages and markets primary casualty insurance and reinsurance programmes in the alternative insurance market for environmental remediation risks, employee leasing and staffing industry risks, and other specialty risks.

It began writing programmes for those in asbestos abatement, at a time when capacity for such insurance protection dried up.

American Safety is now looking for additional opportunities through which to market programmes.

Employee leasing firms will take over the administration of benefit and payroll programmes for small companies that have limited numbers of employees, freeing the small companies from the regulatory burdens.

American Safety began developing workers' compensation programmes for those companies four years ago, and is now growing the business.

The group insures and places risks through US insurance subsidiary American Safety Casualty Insurance Co., and its non-subsidiary risk retention group affiliate American Safety Risk Retention Group, Inc. and substantial unaffiliated insurance and reinsurance companies.

The company also reinsures and places, through its Bermuda reinsurance subsidiary and substantial unaffiliated reinsurers, a portion of the risk underwritten directly by its US insurance subsidiary, its risk retention group affiliate and other insurers.

Last January, the company formed a new Bermuda reinsurance subsidiary, American Safety Reinsurance, Ltd. and transferred a substantial portion of its reinsurance business to the subsidiary.

The group can then select its role as programme developer, primary underwriter, reinsurer, programme manager and broker, based on the assessment of each risk profile.

Mr. Fox said, "We started a new programme for pest control operators, for example. They are small commercial firms that kill bugs in residences and on commercial premises.

"We provide the workers' compensation, the general liability and some professional liability insurance for them. The workers' compensation part of that programme is written through Legion Insurance Co. because they are licensed in all of the right states.

"We are writing the general liability and professional liability through the risk retention group. We choose the different vehicles to provide the coverage based on what the client or programme needs.'' American Safety Insurance Group, Ltd. is managed by Mutual Risk Management, Ltd. in Bermuda, after starting in 1986 as a group captive and being managed by Marsh & McLennan and later by Johnson & Higgins.

Mr. Fox said, "Our companies do business with the Mutual Risk Management Group (MRM), as well. We put together workers' compensation programmes with (MRM subsidiary) Commonwealth Risk Services, Inc. and with (MRM subsidiary) Legion Insurance Co., their US workers' compensation carrier.

American Safety looks to expand horizons "We put together in 1993 a workers' compensation programme for environmental contractors with Commonwealth and Legion. That's how we were introduced to that relationship and subsequent to that we moved our management of American Safety Insurance Group over to Mutual Risk. We've just put together a workers' compensation programme for coal mines, after teaming up with Legion Insurance.

Legion contacted us and we are now the reinsurer on that programme.'' A.M. Best has rated American Safety A7, a rating that requires $50 million in capital and surplus. The proceeds from the IPO has opened new doors for American Safety, because larger insurance brokers require that capital standard before they will place business with a firm.

Apart from the capital standard and the planned purchase of an excess and surplus lines company, a third reason for the IPO was to be able to write more business they are currently writing.