Underwriting

Assessing and taking on financial risk for a fee — in lending, insurance, or securities offerings.

Underwriting is the process of evaluating a risk and agreeing to bear it for compensation. A mortgage underwriter decides whether a borrower is likely to repay; an insurance underwriter prices a policy; a securities underwriter (an investment bank) buys a company's new shares and resells them to investors, guaranteeing the issuer its money. The word comes from Lloyd's of London, where financiers literally wrote their names under the risk they agreed to carry.

After weeks of underwriting, the bank approved the loan at a higher rate to reflect the borrower's thin credit history.