Adverse selection refers to a scenario in the insurance industry where individuals more prone to filing claims are more likely to seek insurance coverage, leading to potential imbalances for insurance providers.
Assimilation in finance refers to the absorption of a new issue of stock by the investing public after all shares have been sold by the issue's underwriters.
A Best Effort Arrangement is a method used by investment bankers, acting as agents, to sell a new issue to the public without actually buying the securities outright. These bankers have the option to buy the securities, but their primary responsibility is to use their best efforts to sell the issue on behalf of the issuer.
In finance and accounting, the term 'book' may refer to preliminary indications of interest in underwriting securities, a record maintained by a specialist of buy and sell orders, the action of giving accounting recognition to transactions, or collectively, the journals, ledgers, and other accounting records of a business.
A method of raising capital where a company sells new shares to an underwriter, who then resells them to the market.
A form of Euro-commercial paper consisting of short-term negotiable bearer notes, typically issued in dollars or euros. Euronote facilities are set up by syndicates of banks who underwrite these notes.
Experience rating is an underwriting method used by insurance companies to determine the correct premium price for a policy by analyzing past loss experience within the insured group to project future claims.
A term with multiple definitions, spanning real estate, finance, bond trading, and general business contexts. The nuanced meanings can significantly impact various industries.
Floating an issue refers to the process by which a company issues new securities to the public in order to raise capital. This process involves several steps, including registering the securities with regulatory bodies and underwriting the issue.
An insurance company is a business entity that provides coverage, by contract, wherein the insurer agrees to compensate or indemnify another party (the insured) for specified loss or damage arising from certain risks.
An issue can refer to securities sold by a corporation, the process of selling new securities, descendants in estate planning, or a point of dispute in legal practice.
A new issue refers to a stock or bond being offered to the public for the first time, the distribution of which is covered by Securities and Exchange Commission (SEC) rules. It usually pertains to initial public offerings (IPOs) by previously private companies but can also include additional stock or bond issues by companies that are already public.
An originator can refer to any entity involved in the initial transaction of a mortgage loan, the planning stages of a new securities offering, or the initiation of money transfer instructions.
Piggybacking is a financial scheme in which an individual with poor credit history is added as an authorized user to a credit account held by someone with a strong credit rating, with the objective of improving the former's credit score. The legality and ethics of this practice are contentious, as it can potentially mislead lenders who base loan decisions on credit scoring.
Portfolio reinsurance is a coverage mechanism where an insurance company's portfolio is ceded to a reinsurer, who reinsures a given percentage of a particular line of business. This approach allows the primary insurer to mitigate risk exposure by transferring some of its liabilities to the reinsurer.
A rated policy is an insurance policy where the applicant is charged a higher-than-standard premium due to unique factors such as health impairments, hazardous occupations, or risky hobbies.
An uninsurable risk is a risk that is considered too extreme or too difficult to quantify, thereby making it undesirable for insurance companies to provide coverage.
