Underwrite

Description: The term for evaluating the risk of a person, company, or situation. Almost always done by lenders to determine the borrower's financial health and ability to repay a loan.

Within a bank, "underwriters" conduct the research and put together a package on a potential buyer to be reviewed by the loan decision maker.

The term can also refer to guaranteeing a sale, for example an investment banker might underwrite the sale of securities and agree to buy any that don't sell on the open market.

To Underwrite can also mean to assume liability, for example an insurance company that underwrites an insurance policy.