Artisans 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 Artisans Insurance Ltd.'s Board of Directors regardless of premium size.

Artisans Insurance Ltd. generally operates on a five year accounting cycle, and the Board of Directors will endeavor to declare an interim distribution for an underwriting year three years after an individual underwriting year has ended. Artisans Insurance Ltd. generally closes underwriting years five years after an underwriting year ends. Each underwriting year's results stand alone and are divided within the Company's equity statements for illustrative purposes.

Each Artisans Insurance Ltd. members' premium is 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 $100,000 of any loss and the "B" Fund contributes to the remainder of the Company's loss layer up to $350,000 total per occurrence.

Each member may also earn investment income on its loss funds. Each member is also responsible for a portion of the Company's operating costs.

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 Artisans 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 Artisans Insurance Ltd. is determined annually by the Board. The captive concept is based upon controlling the predictable losses and reinsuring away the unpredictable losses.

Each Artisans Insurance Ltd. 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 (Zurich).