Underwriting is the decision of whether to commit capital to a position and on what terms, made by applying the institution's own mandate and price to the measurements available. It is a separate act from prediction.
Prediction estimates outcome and duration. Underwriting uses those estimates, together with the institution's risk appetite, portfolio context and capital availability, to decide a price, a size and a structure. A model cannot make that decision because it does not know the mandate.
The two acts are kept apart and each is recorded: the prediction trail with its model version, and the underwriting record with the price and structure chosen. When they are mixed, it is impossible to tell whether a result came from measurement or judgment.
Underwriting is not a one-time event. As evidence arrives, the position is re-underwritten, and the decision record is updated with a dated entry.
Working a file that turns on this term?
Working through a diligence process?
Institutional partners evaluating a position against this platform's outcome and duration models are welcome to reach out directly.