Shareholders of Bermuda-registered American Safety Insurance Co. met at the Elbow Beach Hotel on Friday, concluding a week of business meetings.

While American Safety's operating headquarters are in Atlanta, it has continued to maintain its Bermuda connection since it was formed in 1986 to meet the insurance needs of a group of companies in the asbestos removal business.

American Safety typifies the benefits Bermuda can gain from companies which don't have much of a physical presence on the Island.

Since American Safety was formed it has brought about 50 shareholders, directors, and business partners for the week to Bermuda. Spouses and children have also made the trip, which has become a sort of tradition for them.

Except for last year when the hotel was undergoing renovations, they have always stayed at the Elbow Beach Hotel. The company uses Mutual Risk Management services to manage the holding entity and a related reinsurance company in Bermuda, and Conyers Dill & Pearman as legal counsel.

President and chief executive officer Lloyd Fox has also collected about "half-a-dozen'' Bermuda art works which are hanging in the company's Atlanta headquarters.

General counsel Fred Pinckney and his wife Rebecca are a keen collector of Mary Zuill's paintings, several of which he has hanging at home.

Mr. Fox is the prime reason Bermuda was chosen as a home base. Back in 1986 Mr. Fox, then a lawyer in private practice, suggeated that the company be set up in Bermuda.

He had previously done business on the Island and was impressed with its sophistication in the captive industry. He felt that Bermuda's reputation would serve the company well in its US operations.

Like the children who have now become teenagers and adults, American Safety has also grown past its captive roots. Since its formation the company has expanded its lines of business, then went public last year and is now looking at making an acquisition, Mr. Fox said.

The company has signed a letter of intent with a company, the name of which has not yet been publicly disclosed.

From an original 15 shareholders, the company now has 2,300 after the public offering of 3.1 million shares last year.

For the first quarter ended March 31, net operating earnings increased 74 percent to $1.72 million or 28 cents per diluted share on 6.1 million shares outstanding. Net earnings increased 68 percent to $1.72 million. This year the company has launched new specialty insurance programmes and a new financial services subsidiary.

For the 1998 year ended December 31 the company had net earnings of $5.92 million, an 84 percent increase over 1997 results.

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.

Employee leasing firms take over the administration of benefit and payroll programmes for small companies that have limited numbers of employees.

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

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.