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Underwrite Meaning: Definition, Examples, and Translations

๐Ÿ’ฐ
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underwrite

[หˆสŒndษ™rหŒraษชt ]

Definitions

Context #1 | Verb

insurance industry

Underwrite means to assume financial responsibility for a risk or venture. In the insurance industry, underwriters evaluate the risk factors involved in insuring a person or asset and determine the premium to be charged.

Synonyms

back, guarantee, insure.

Which Synonym Should You Choose?

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Word Description / Examples
underwrite

Used in financial contexts, particularly when referring to the act of agreeing to take on the risk of an investment or loan, often by a financial institution.

  • The bank agreed to underwrite the company's $5 million loan.
  • This project was underwritten by a leading investment firm.
insure

Specifically refers to providing insurance, which means offering financial protection against potential future losses or damages.

  • It's important to insure your house against fire and theft.
  • They insured their new car with a comprehensive policy.
guarantee

Used when someone or something assures the fulfillment of a condition or the quality of a product. It implies a promise or assurance, often formal or legal.

  • The manufacturer guarantees that all their products are free from defects.
  • I can guarantee you will love this book.
back

Commonly used in general language when someone supports or funds a project, person, or idea.

  • She decided to back his new business venture.
  • The charity event was backed by several local businesses.

Examples of usage

  • Insurance companies underwrite policies to determine the level of risk involved.
  • The underwriter decided to approve the insurance application based on the risk assessment.
  • The underwriting process involves assessing the likelihood of a claim being made.
  • Investment banks also underwrite securities offerings for companies looking to raise capital.
  • Underwriting involves analyzing data to make informed decisions about risk.
Context #2 | Verb

finance

In finance, underwrite refers to the process of guaranteeing a minimum level of proceeds from a security offering. Underwriters commit to purchasing unsold shares to ensure the success of the offering.

Synonyms

finance, fund, support.

Which Synonym Should You Choose?

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Word Description / Examples
underwrite

Typically used in financial settings where a party, often an insurance company or a financial institution, agrees to take on the financial risk for an event or investment.

  • The bank decided to underwrite the new housing development project.
  • The insurance company will underwrite the policy for natural disasters.
finance

Used when providing the funds necessary for a specific project, business, or purchase. It is often seen in both personal and corporate contexts.

  • They needed a loan to finance their new car.
  • The government plans to finance several infrastructure projects next year.
fund

Commonly used to describe the allocation of money or resources towards a particular purpose, such as a project, organization, or event. It is usually in a formal or official capacity.

  • The startup is looking for investors to fund their innovative app.
  • The charity event was funded by several local businesses.
support

A more general term that means providing assistance, which may include financial help, but can also encompass emotional or logistical support. It is versatile across different situations.

  • Her family supported her decision to study abroad.
  • The company supports various environmental initiatives through donations and volunteer work.

Examples of usage

  • The investment bank underwrote the initial public offering to provide financial support.
  • Underwriters play a crucial role in ensuring the success of new stock offerings.
  • Companies rely on underwriters to help them raise capital through the sale of securities.

Translations

To see the translation, please select a language from the options available.

Interesting Facts

Finance

  • Underwriting is essential in the insurance industry to evaluate risks and determine how much coverage to offer.
  • In the world of finance, underwriters assess the viability of loans and securities before they are issued, ensuring they are financially sound.

Real Estate

  • In real estate, underwriting helps lenders decide whether to grant a mortgage, factoring in property value and buyer creditworthiness.
  • The process involves detailed analysis of property conditions and market trends to mitigate financial risk.

Pop Culture

  • The role of an underwriter has been depicted in films and shows, often showcasing the tension between risk and reward in financial decisions.
  • Many financial thrillers reference the implications of underwriting in high-stakes scenarios like stock market crashes or insurance claims.

Historical Context

  • In the early 20th century, the underwriting process became more formalized, with the establishment of regulatory bodies overseeing practices.
  • Key events, like the Great Depression, led to stricter underwriting guidelines, shaping modern financial stability measures.

Origin of 'underwrite'

Main points about word origin

  • The term comes from the practice of signing the bottom of a document, highlighting oneโ€™s agreement to take on financial responsibility.
  • It first appeared in the late 17th century, evolving from the term 'underwriter' in shipping risk assessments.

The term 'underwrite' originated in the 16th century from the Old English 'underwritan', meaning 'to sign at the bottom of a document'. Over time, it evolved to represent the act of assuming financial responsibility for a risk or venture. The concept of underwriting has since become integral to the insurance and finance industries, shaping the way risks are assessed and managed.

See also: overwrite, rewrite, underwriter, writ, write, writer, writers, writing, written.

Word Frequency Rank

Positioned at #22,160, this word is part of extensive vocabulary. It's relatively rare in general usage but may be important in specific fields or formal writing.