trust fund

In captive parlance, a trust fund is an onshore guarantee fund using assets of the captive. Another use of the term "trust fund" is a formalized self-insurance vehicle that operates pursuant to its governing trust document.

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It is used to gain admission onto the National Association of Insurance Commissioners approved list or to replace a letter of credit in certain fronting reinsurance arrangements. Often, a trust fund serves as alternatives to captives for more narrowly defined business purposes and risk funding.