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To guarantee, as to guarantee the issuer of securities a specified price by entering into a purchase and sale agreement. To bring securities to market.


1. The process of placing a new issue with investors. Underwriting involves the issuing company using one or (usually) more companies who are each responsible for placing a certain amount of the new issue. The underwriting firms contact potential investors to gauge interest and sell the issue. Underwriters guarantee the price for a certain number of shares of the new issue. See also: Bracketing, Oversubscribed, Undersubsribed.

2. Due diligence a lender conducts to ensure that a potential borrower is able to repay the loan.


To assume the risk of securities' sale by purchasing the securities from the issuer for resale to the public. Investment bankers often assume this underwriting function in order to guarantee that the issuer will receive all the funds needed from the sale. See also best-efforts basis, freed up, hot issue, investment banker, peg, standby underwriting.


(1) To evaluate the risk of a situation,as in loan underwriting to determine the borrower's financial strength,ability to repay the debt in the event of an interruption of cash flow,and willingness to repay the debt as evidenced by the borrower's credit score or credit history. (2) To guarantee a sale, such as an investment banker who underwrites the sale of securities and will purchase any that do not sell on the open market. (3) To assume liability, such as an insurance company that underwrites a policy.

References in periodicals archive ?
ISO HomeValue's latest release enables underwriters to invoke AIR's catastrophe models to generate a catastrophe risk analysis of the individual property at the point of underwriting.
Underwriters are strictly"numbers people"--they use a computerized database to make all of their initial assessments.
Underwriters often want to know the professional background of the audit committee member serving as the financial expert, and they may also want to delve into recent transactions, including related-party transactions in past three years and the existence of special purpose entities (SPEs).
Underwriters may be willing to consider extensions of terms beyond the two weeks under some circumstances.
Due to the frequent absence of good information, the underwriter must make certain assumptions to arrive at a bid and exit strategy.
They are part of the procedures underwriters undertake to perform and document a "reasonable investigation" of unaudited information included in offering documents.
All of the consolidated assets and liabilities of the holding company that formerly owned Underwriters Reinsurance, known as Underwriters Re Holdings Corp.
D&O underwriters are carefully following these options-related matters as they unfold and are generally attempting a balanced, yet prudent, vetting of each company's unique situation.
Plus, we presented thousands of documents to the issuer's counsel, the underwriters and their counsel.
We intend to support the continued growth of Underwriters Reinsurance through additional investment and the accumulation of retained earnings; in particular, we intend initially to make an additional investment in Underwriters Reinsurance sufficient to increase its statutory surplus to at least $250 million by 1993 year-end.
According to the survey results, 41 percent of the underwriters said the greatest benefit of using BlitzDocs is the ability for underwriters, brokers and other mortgage process participants to have access to the loan file.