Bermuda-based American Safety Insurance Group, Ltd. yesterday announced results for the fourth quarter and the fiscal year ended December 31, 2001 and outlined a dispute with one of the company's former reinsurers which may result in legal action.

American Safety Insurance Group (the company) said that during the fourth quarter of 2001, Berkley Insurance Company disputed its obligations under several reinsurance treaties entered into during the "soft reinsurance market" that existed in 1998 and 1999.

The company said: "As a result of adverse loss experience to the reinsurer from certain lines of business, Berkley has stopped reimbursing the company for amounts due under such treaties and has requested that the company retroactively consider taking a greater portion of the losses than is required under the treaties.

"The company is discussing resolution of this matter with Berkley, although the company believes the reinsurer's request has no merit and was made in bad faith. If this dispute cannot be resolved, the company will institute legal and arbitration proceedings against the reinsurer. Berkley is a subsidiary of W.R. Berkley Corp. The company does not believe this dispute will have a material adverse effect on the overall financial condition or liquidity of the company."

Lloyd A. Fox, president and CEO, said, "While we are pleased with our profitability in the fourth quarter and for the year, our earnings from insurance operations in 2001 were negatively impacted by adverse development in our contract surety line of business, due to the economic slowdown last year. We believe that our reserves are adequate and that this adverse development is behind us.

"Overall, ultimate loss ratios improved in 2001 over 2000 as a result of the company's focus on writings in our most profitable lines of business. As the insurance market continues to harden, we expect loss ratios to continue to improve in 2002. We are also pleased with the continuing progress of our Harbour Village Golf & Yacht Club development, where units in Phase 1 have been closing, and pre-sales in Phase 2 are continuing. We believe that opportunities presented in our insurance lines of business and the continuing progress of the Harbour Village development will provide significant profitability to our shareholders in 2002."

Total revenues for the fourth quarter of 2001 increased 311 percent to $46,558,298 over the same quarter of 2000. Net premiums earned for the fourth quarter of 2001 increased 105 percent to $20,041,666 over the same quarter of 2000, although net earnings for the fourth quarter of 2001 decreased 23 percent to $328,072, or $0.07 per diluted share on 4.9 million average shares outstanding, compared with $423,867, or $0.08 per diluted share on 5.2 million average shares outstanding for the fourth quarter of 2000.

Total revenues for 2001 increased 184 percent to $102,349,917 from $36,078,355 in 2000 and net premiums earned for 2001 increased 142 percent to $64,786,816 from $26,804,650 in 2000.

Net earnings for the year ended December 31, 2001 increased to $4,154,269 or $0.84 per diluted share on 4.9 million average shares outstanding, compared to a loss of $1,363,157 or $0.25 per diluted share on 5.5 million average shares outstanding for 2000.

In connection with the development of the Harbour Village Golf & Yacht Club in Ponce Inlet, Florida, during the fourth quarter of 2001, 90 condominium units and 53 boat slips were closed in Phase 1