In general, an entity assuming a financial risk and receiving an underwriting fee in return; an insurance company. – In particular, a bank that – buys all or part of an issue from the issuer at a fixed price, thereby also assuming the risk that the securities cannot be fully placed on the market, or – gives an underwriting commitment for a certain amount of loans at predetermined conditions; often in the context of a leveraged buyout (the guarantee provided by the bank to the issuer or seller that the deal, be it an issue of securities or a syndicated loan, will find buyers/lenders at the price agreed upon. By underwriting an issue, the bank assumes a risk of a failure of the transaction). – In the context of a securitization, also referred to as the functional element that takes over the corresponding securities from the special purpose entity and places them on the market, also called placement agent. – In an insurance company, also referred to as a specialist engaged in risk assessment; many mathematicians work directly as underwriters, because there is an increasing need for actuarial know-how in this field, an actuary. – See arranger, underwriting, underwriting house, initial purchaser, guarantee syndicate, concert underwriter, LBO financing, market making, secondary offering, warehousing risk, roadshow, securities issues, securities sales prospectus, listing agent, secondary placement. – Cf. Deutsche Bundesbank Monthly Report of April 2007, p. 24 (banks’ risk from underwriting in leveraged buyouts), ECB Monthly Report of February 2008, p. 90 (diagram of functional elements involved in a securitization).
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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