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Trust Fund

Trust Fund

Definition

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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