TRUST FUND

In captive parlance, an onshore guarantee fund using assets of the captive.

It is used to gain admission onto the 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. A trust fund is often used as an alternative to a captive for more narrowly defined business purposes and risk funding.