American Safety Insurance Holdings, Ltd. announced that its Board of Directors has approved the suspension of the company’s cash dividend program in order to preserve capital to support the strategic growth plan to expand its core environmental, excess and surplus, and program insurance lines and niche underwriting strategy.
Over the past 18 months, the company’s growth has been limited by available capital and its reinsurance recoverables dispute with Berkley Insurance Company. The recent resolution of the Berkley dispute coupled with the $8 million raised under a private trust preferred offering now enables the company to focus on its strategic growth plan. The Board determined that since the company has opportunities to utilize its capital to expand its core business lines and niche underwriting strategy, shareholders will be better served if the company suspends the payment of dividends.
Stephen Crim, president and CEO of the company, noted, “I am excited about the future of American Safety Insurance. There are tremendous opportunities to profitably grow our core insurance lines and to advance our successful niche underwriting strategy. While I know that the suspension of our cash dividend will disappoint some of our shareholders, insurance is a capital intensive industry, and at the present time we believe that our capital is better used for expanding our core insurance lines and our niche underwriting strategy.”
Crim added, “Pricing and profitability trends continue to be favorable, as evidenced by our insurance operating earnings, which have been steadily increasing over the past year. Our goal is to increase the company’s capital and surplus, which is expected to result in a higher financial rating size from A. M. Best and enable the Company to increase our premium writings.”
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