underwrite

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Underwrite

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.

Underwriting

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.

underwrite

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.

underwrite

(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 ?
The proposal would also continue to prohibit an affiliated bank from knowingly advising a customer to purchase securities underwritten or dealt in by a section 20 affiliate unless it notifies the customer of its affiliate's role The proposal also continues to prohibit a bank public customer information without the customer's consent.
Brown & Others Syndicate 702 has been renamed Markel Syndicate 702 at Lloyd's and is now underwritten by former Deputy Underwriter Andreas Loucaides.
Limited benefits and restrictive maximum policy sizes may be necessary for minimally underwritten classes.
Perhaps a more successful approach is an interactive presentation starting with the least underwritten class and progressing through the classes until the applicant decides the additional information required to move to the next class is not worth the associated premium reduction.
Further information compiled by the stamping offices supports the view that business underwritten by the standard market in recent years is being reunderwritten and is selectively moving back to the surplus lines market.
For applicants underwritten with appropriate underwriting standards and methodology, the initial premiums will be adequate for at least five to 10 years after issue.
The proposals, which emerged from unprecedented cooperation between London's intermediaries and risk carriers, would make several changes regarding policies underwritten by multiple insurers, or subscription policies.
But although violent deaths represent the most common cause of death in the first five policy durations among males underwritten in their 30s, they do not represent the majority.