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An underwriter gives financial support and takes responsibility for paying any costs associated with the activity he or she underwrites. An underwriter is often someone in the insurance business who may assess the risks involved with enrolling an applicant for coverage or a particular policy. The underwriter must also compensate for any loss under the terms of the insurance policy. An underwriter may also serve as an intermediary between an issuer of a security and an investor. In this capacity, an underwriter buys an issue of securities from a company and resells it to the investors. As an underwriter, a person (or firm) bears the risk of selling the securities to the public and guarantees the proceeds from a sale, essentially taking ownership of the securities. If the underwriter can't sell the securities at the asking price, the underwriter may have to sell them for less than they paid or retain the securities themselves. |
