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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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


(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.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Along with expansion into the staffing industry, Empire Underwriters is expanding into a number of other industry classes and coverages all coming soon.
Asked if there is any reason agents, brokers or customers of Applied Underwriters should be concerned about the move, Silver replied, "Absolutely not.
In insurance organization, underwriting responsibilities are delegated to line and staff underwriters who coordinate the day to day risk selection decisions and the management level underwriting activates.
Cadence Bancorporation is not selling any shares of class A common stock and will not receive any proceeds from the purchase of the additional shares by the underwriters. The purchase of the additional shares by the underwriters will not affect the number of shares of class-A common stock which are currently outstanding.
In sum, bond sales require access to investors and most often this function is outsourced to underwriters. Governments' outsourcing this function could encourage competition through competitive bidding (or at least use RFPs for sole source procurement of underwriters), focusing on the outcomes of the sales, and evaluating the results.
The battleground over whether mortgage underwriters are exempt is the second prong of the test--whether their primary duty is the performance of office or non-manual work directly related to the management or general business operations of their employer or their employer's customers.
As recently as the 1980s, underwriters were viewed as clear leaders, the people responsible for putting the surplus on the line and defining the company in the marketplace.
Underwriters should embrace that change, not resist it, because by eliminating the mundane, they can focus on the exceptional.
In order to provide value-added service to their producers, many BGAs hire home office underwriters or train underwriters in-house.
Sadly, tension often characterizes relationships between claim adjusters and underwriters. There is unfortunately a professional enmity that develops between these two departments and functional areas within an insurance company.