Underwriter(redirected from Underwriting Firm)
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An underwriter, typically an investment banker, may buy an entire new securities issue from the company or government offering it and resell the issue as individual stocks or bonds to the public.
Or, in a best-efforts arrangement on a stock IPO, the underwriter may commit to selling as many shares as possible without actually buying the securities.
Part of the underwriter's job is to weigh the risks involved in taking on the financial responsibility of finding buyers against the profit to be made on the difference between the price paid for the issue and the profit it will generate.
Typically, a number of bankers join forces as a purchase group, or syndicate, to spread the risk around and to reach the widest possible market.
Insurance policies also need an underwriter. In this case, the term refers to a company that is willing to take the risk of insuring your life, property, income, or health in return for a premium, or payment.