Archway Insurance Ltd. is a member-owned heterogeneous group captive domiciled in the Cayman Islands. Each shareholder has equal ownership and makes a one-time cash contribution. Each shareholder appoints one director with a single and equal vote on Archway Insurance Ltd.'s Board of Directors regardless of premium size.

Each Archway Insurance Ltd. members' premiums are developed through the use of an actuarially determined loss forecast. The actuary uses each member’s own loss history to determine appropriate funding for expected losses. Net premium is allocated to each member until losses are paid. The loss funding, derived from the actuarial forecast, is broken out into two categories by the actuary known as the "A & B" Funds. The "A" Fund pays for the first $125,000 of any loss and the "B" Fund contributes to the remainder of the Company's loss layer up to $400,000 total per occurrence. Operating costs for the program, such as excess reinsurance, policy issuance, claims service, brokerage and administration, are also calculated and allocated to each member. Finally, a member’s loss fund and operating costs are added together, producing their premium for each year. The intent of the Archway Insurance Ltd. premium calculation formula is that each member pays a premium to fund for most of its ultimate losses while allowing for risk sharing and risk shifting amongst the entire membership primarily for shock losses. Because each member is expected to pay their own losses, subject to certain formula limits, a member can be billed additional premium up to a predetermined amount should their losses exceed expected levels.

Each member may also earn investment income on its loss funds.

When an underwriting year is closed, the "tail" liability is generally sold and the remaining account balances for such year, including remaining net investment income, are disbursed in correlation to the final performance of each member.

Purchasing both specific and aggregate excess insurance helps protect Archway Insurance Ltd. and its members. Specific excess reinsurance protects a captive against a single catastrophic loss. The aggregate excess protects a captive against a high number of frequency losses that fall within the captive's retained limit. Combining these coverages provides captive members an expected maximum at a predetermined level for each policy year. The amount of excess aggregate insurance purchased by Archway Insurance Ltd. is determined annually by its Board. The captive concept is based upon controlling the predictable losses and reinsuring away the unpredictable losses.

Each captive member has a potential additional premium obligation based on losses. Therefore, each member must provide a letter of credit or cash security as collateral for that obligation. This collateral provides member-to-member security and also supports the letter of credit issued to the policy-issuing carrier (Old Republic).