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Underwriting in insurance

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Underwriting in insurance 

My classmate just got a job as an insurance underwriter, and further to that, I deemed it fit to discuss underwriting to my wonderful visitors. I am quite sure most people have heard the word underwriting at a point in their lifetime, and it is only natural to relate it to investment banks because their underwriting activities are subject to public scrutiny. What most people don’t know is that insurance companies also extend underwriting services to their clients. Today, we would be focusing on underwriting in insurance, but before we begin, let us take a quick look at the differences between underwriting by investment banks and underwriting by insurance companies.
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Letter of Credit

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Letter of Credit

Letter of credit is an assurance by a bank to guarantee payment to a specified person under specified conditions. Letter of credit is mostly used in international trade, due to the risk of default by the buyer. A letter of credit as such provides complete financial security to the seller (the beneficiary). In a letter of credit, the bank assumes payment obligations on behalf of the buyer.
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Audit Working Papers

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What are Audit working papers?

Audit working papers comprise of documents, records and information which the auditors comes across in the course of their audit. i.e. audit of the financial statements, internal management audits, information systems auditing and investigations. Audit working papers gather documents which records all audit evidence the auditor uses to have a reasonable basis of arriving and forming an opinion on the truth and fairness of an enterprise’s financial statements.
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Social Research

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What is social research?

Social research is a way of finding true , valid and useful information about a particular domain or phenomenon or about problems in our universe. It is a method of getting some assurance about another researcher’s proposition, work or assertions. It is a method of securing some credible or reasonable information, or reasonable answers about some questions or social problems. It is a way of satisfying oneself about issue or phenomenon which seems unbelievable at first.
Functions of social research
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Cash book

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To keep track of transactions, we need to continuously record entries into their respective ledger accounts. Depending on the size of the business, an organization may have millions of cash or bank entries as receiving from debtors and payment to creditors occur on a daily basis. To keep the ledger from getting too congested, a separate book dedicated to recording cash and bank entries are usually maintained. This dedicated book is known as the cash book.
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Pension related Accounts

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What is a pension?

A pension is a benefit that is available to employees only on leaving employment. It is a fund to which contributions both from the employee and employer are added to support the employee during retirement from work. In addressing pension related transactions, it can be looked at from pension scheme accounting and accounting for pension costs.
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Loan financing (Debentures & Term loans)

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Loan financing (Debentures & Term loans)

Hi guyz, how has your week been? Today we would be taking a look at the different types of loan capital for business. I hope you enjoy. Let’s start with debentures and types of debentures.

Debentures

Debentures: Debentures are written acknowledgement of debt incurred by a limited liability company. The thing about debentures is that unlike normal loans that are backed by a collateral, i.e. physical asset of the business, land certificates etc, debentures are generally not secured by any physical asset (except a fixed charge/secured debenture). Instead, they are backed by the general creditworthiness or reputation of the issuer. Due to this, a debenture is generally considered more risky than an asset backed loan.  A debenture like any normal loan provides for repayment of the underlying debt in the future and with interest.
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Preference Shares (preferred stock)

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Preferred stock (Preference Shares)

Preferred stock are equities (capital stock) which gives the holder the right to a fixed dividend  (usually a fixed percentage of the nominal value of the share) from the earnings of the company.

Preferred stocks are generally referred to as a hybrid instrument, meaning it bears properties of both equity and debt instrument. Preference shareholders are given a higher priority than common stockholders when it comes to liquidation and distribution of firm’s earnings. The preferential treatment is that preference shareholders are given precedence over ordinary shareholders with respect to the distribution of the firm’s earnings as well as the distribution of assets in the event of liquidation.
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