Also found in: Dictionary, Thesaurus, Medical, Legal, Wikipedia.


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 ?
"We help them underwrite the risk when they don't have any experience.
In the meantime, they find themselves in a capital crunch, between having to reserve for large expected third-quarter losses and putting together funds to underwrite in a more favorable market in 2006.
Four years later, many companies and underwriters struggle to determine the best way to underwrite and price this business.
The uncertainty over the extension of the Terrorism Risk Insurance Act as well as carriers' large deductibles make it prudent for them to understand and underwrite against terrorism.
The model is used to underwrite apartments, condominiums, small retail and wholesale outlets, offices, service establishments and fast-food restaurants, among other risks.
When underwriting rules, analytics and outside data sources are incorporated in the policy management system, agents and brokers could quote and underwrite the majority of smaller commercial risks, while company underwriters handle only cases identified as exceptions.
The capital markets group, which trades, underwrites and sells municipal bonds and U.S.