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Trust Fund

Trust Fund

Definition

Trust Fund — in captive parlance, an onshore guarantee fund using assets of the captive. It is used to gain admission onto the National Association of Insurance Commissioners (NAIC) approved list or to replace a letter of credit in certain fronting reinsurance arrangements. For another use of this term, a trust fund is a formalized self-insurance vehicle that operates pursuant to its governing trust document. Often used as alternatives to captives for more narrowly defined business purposes and risk funding.

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