Underwriters of listed securities are financial-service companies that create markets in new issues and collect fees from issuers, while insurance underwriters determine coverage risk of applicants. The securities underwriting sector has undergone massive consolidation in 2008 following the global credit crisis and its aftermath.
Securities underwriting has, until recently, been considered a profitable and lucrative part of the investment banking industry but has declined along with its main former protagonists like Bear Stearns, Lehman Brothers and Merrill Lynch. These underwriters profit by both charging the issuers an underwriting fee and by buying the securities from the issuers and then selling them on to investors, presumably at a profit. Insurance underwriting is a more prosaic profession that determines the risks an premiums of writing individual insurance policies. Technology has greatly increased insurance underwriters' productivity but has also reduced employment in the sector.
In Q3 2008 JPMorgan Chase & Co. took over from Citigroup as the world's biggest securities underwriter after the latter's 8-year run at the top of a declining market. JPMorgan, which acquired defunct Bear Stearns and its large underwriting book, underwrote $80.4 billion in new issues in Q3 and gained a 10% share of a market that shrank 43% year-on-year. Merrill Lynch, now part of Bank of America, ranked second behind JPMorgan in reported underwriting fees for the quarter.