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Chinese conglomerate <keyword id="212412" type="General" weightage="100" keywordseo="tencent" source="Orion">Tencent</keyword> has fired 5,500 employees, after posting a revenue of $19.8 billion in the June quarter, down 3 per cent which is the first decline since going public. China's largest video gaming and social media company trimmed nearly 5,500 employees from its payroll in the second quarter amid a slowing economy, reports <keyword id="62481" type="General" weightage="50" keywordseo="south-china-morning-post" source="Orion">South China Morning Post</keyword>. Tencent has downsized its <keyword id="52626" type="General" weightage="20" keywordseo="workforce" source="Orion">workforce</keyword> for the first time since 2014, slashing the number of employees to 110,715 by the end of June, down from 116,213 in March, according to the company. "During the second quarter, we actively exited non-core businesses, tightened our marketing spending, and trimmed operating expenses, enabling us to sequentially increase our non-IFRS earnings, despite difficult revenue conditions," said Pony Ma Huateng, founder and chief executive of Tencent. Net income reached 18 billion yuan in the period, down 56 per cent from a year ago, missing analysts' estimates of 25 billion yuan. Reports have also surfaced that Tencent was considering selling some or all of its 17 per cent stake in <keyword id="685450" type="General" weightage="50" keywordseo="meituan" source="Orion">Meituan</keyword>, one of China's largest food delivery companies. The company, however, denied this news during the earnings call on Wednesday. Video gaming sales at home and globally both declined. The company attributed the weak performance to "fewer big game releases, lower user spending, and the implementation of minor protection measures". SEE ALSO : <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/centre-to-form-panel-to-seek-views-on-adopting-universal-charger-model/articleshow/93634963.cms">Centre to form panel to seek views on adopting universal charger model</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/news/netflix-will-not-allow-you-to-watch-movies-and-shows-offline-in-the-ad-supported-tier/articleshow/93634420.cms">Netflix will not allow you to watch movies and shows offline in the ad-supported tier</a>

Tencent fires 5.5K workers as sales down for 1st time since going public

<ul class="summary-list"><li>International Financial Reporting Standards (IFRS) guide companies in reporting their financial results.</li><li>IFRS is applied internationally in more than 160 jurisdictions.</li><li>The US uses a different set of standards called Generally Accepted <keyword id="6359983" type="UNKNOWN" weightage="60" keywordseo="accounting" source="Orion">Accounting</keyword> Principles (GAAP). </li></ul>The International Accounting Settings Board (IASB) is an accounting framework used widely by companies around the world to report their financial results.Developed by the International Accounting Settings Board (IASB), the intent of IFRS is to create a single set of standards that are understandable, enforceable, and high quality. IFRS helps guide companies to prepare their financial statements, disclose information, and report their financial results.IFRS also provides investors reliable and transparent information about a company's financial strength, market position, and performance. While IFRS is commonplace for international companies, the US uses a different set of standards, called generally accepted accounting principles (GAAP), which is established by the Financial Accounting Standards Board (FASB).<h2>How do international financial reporting standards work?</h2>While the idea has been around since the 1970s, IFRS was first widely adopted in the early 2000s. IFRS provides accounting standards for how companies must keep records and report their financial information. The basic requirements for financial reporting include the following: <ul><li>Balance sheet: A company's balance sheet helps investors understand its financial position. IFRS influences how data on the balance sheet is reported to ensure accuracy.</li><li>Income statement: This can be one statement, or include both the profit and loss statement as well as the statement of other income</li><li>Statement of changes in equity: This statement displays a company's change of <keyword id="6357061" type="UNKNOWN" weightage="60" keywordseo="earnings" source="Orion">earnings</keyword> or profit for a given financial period, also known as the statement of retained earnings. </li><li>Cash flow statement: This statement separates a company's cash flow into investing, operating and financing activities and summarizes financial transactions for a certain period of time.</li></ul><h2>IFRS vs. GAAP</h2>Currently, the IFRS Foundation is <a href="https://www.ifrs.org/use-around-the-world/use-of-ifrs-standards-by-jurisdiction/" target="_blank" rel="noopener">monitoring</a> the use of the standards in more than 160 jurisdictions, including Canada, Australia, Mexico, and much of Europe. Even though US companies use GAAP, IFRS is permitted for US listings by foreign companies. More than 500 foreign SEC registrants use IFRS in their US filings.While IFRS and GAAP both help guide companies on how to report financial information so that investors and other businesses can make informed decisions, the results can vary depending on which method is used. IFRS is "principles-based," while GAAP is "rules-based." Countries that have adopted the IFRS use guidelines, rather than rigorous rules, to help accountants create financial documents. Critics argue that this can sometimes result in different interpretations for the same or similar transactions, leading to second-guessing, uncertainty, and the need for increased disclosures in financial statements. GAAP provides a list of detailed rules for accountants to follow.The two systems also have different requirements for accounting for some costs, including research and development. Another significant difference is how each allows companies to account for inventory. Both permit First In, First Out (FIFO), weighted-average cost, and specific identification methods for valuing inventories. GAAP, however, also allows the Last In, First Out (LIFO) method, while IFRS does not."While the FASB and the IASB have made progress in recent years converging certain key accounting standards, such as revenue recognition, significant differences still exist between US GAAP and IFRS that can make an entity's financial statements look very different," says Jeffrey Kranzel, CPA and managing director at business advisory firm <a href="https://riveron.com/" target="_blank" rel="noopener">Riveron</a>. "For example, financial instrument accounting under IFRS more frequently results in mark-to-market treatment compared to US GAAP accounting standards. Therefore, an entity that either invests in financial instruments, such as structured debt, or issues financial instruments, such as warrants or convertible bonds, may see more volatility on both the balance sheet and income statement under IFRS."Cecil Nazarath of <a href="https://nazarethcpas.com/about/#team" target="_blank" rel="noopener">Nazarath Global Accountants</a> says differences in the way R&amp;D is treated are among the most significant between the two standards."There has been substantial progress made in bringing the two standards closer together in important areas such as revenue recognition. However, the two standards differ greatly in areas such as research and development," Nazarath says. "Under US GAAP, all R&amp;D costs are expensed. Under IFRS, however, only the research component is expensed - development is capitalized. As a result, companies using IFRS will appear to be more profitable than they would be under US GAAP."<table style="border-collapse: collapse; width: 100%;" border="1"><tbody><tr><td style="width: 50.1299%;" width="335">IFRS</td><td style="width: 49.7403%;" width="331">GAAP</td></tr><tr><td style="width: 50.1299%;" width="335"><ul><li>Principles-based approach that provides general guidance in most accounting situations</li><li>Applied internationally in more than 160 jurisdictions</li><li>Potentially more difficult to compare companies because of different interpretations</li><li>Can only use First In, First Out (FIFO) inventory cost methods</li></ul></td><td style="width: 49.7403%;" width="331"><ul><li>Rules-based approach that includes cite-specific guidelines for handling various transactions</li><li>Only used in the US </li><li>Can be easier to compare companies to one another because of strict regulations</li><li>Can use both First In, First Out (FIFO) or Last In, First Out (LIFO) inventory cost methods</li></ul></td></tr></tbody></table><h2>The financial takeaway</h2>IFRS sets the standards that help guide companies on how to report their financials. They are principles-based. That gives companies flexibility in the way they account for various transactions. But it can also lead to difficulties in comparing one company's performance against another's.While many of the world's jurisdictions have adopted IFRS or are planning to, the US uses its own standards system, known as GAAP. It is rules-based, with stricter and more specific accounting requirements. While this can make it easier to compare companies to one another, it can also make preparing the financial statements more complicated and difficult.Regardless of whether a company uses IFRS or GAAP, the intent of each is for there to be more transparency on the strength and position of companies so that investors can compare one to another more easily.<a data-type="61855e3ee7f71779ea5f1d74">What are antitrust laws? Understanding the legislation designed to protect consumers and maintain competition</a><a data-type="61855e3ee7f71779ea5f1d74">What are antitrust laws? Understanding the legislation designed to protect consumers and maintain competition</a><a data-type="6176aed5d861f93a9f50a256">Fungible: What the 'F' in NFT stands for and why it matters</a><a data-type="6185865e9a6f0261a113f16a">What are assets? The building blocks of wealth for individuals and profits for businesses</a>

IFRS: The accounting framework that sets the rules for most non-US companies' financial reporting

Chinese <keyword id="851525" type="PERSON" weightage="20" keywordseo="Internet-giant">Internet giant</keyword> <keyword id="212412" type="COMPANY" weightage="20" keywordseo="Tencent">Tencent</keyword> has reported a 28 per cent <keyword id="864691" type="PERSON" weightage="20" keywordseo="year-on-year">year-on-year</keyword> growth in revenue for 2020, raking in around 482 billion yuan (about $73.9 billion). The company's net profit, calculated on a non-IFRS basis in order to reflect its core earnings by excluding certain one-time or non-cash items, that rose 30 per cent year on year to reach about 123 billion yuan during the period, according to its financial statement. In the final quarter of 2020, its financial technology and business services brought in 38.5 billion yuan, nearly a third of the company's total revenue, registering a 29 per cent year-on-year increase, reports Xinhua. Tencent for the first time disclosed consumption data for underage game players in its financial statement. In the fourth quarter of last year, players under the age of 18 accounted for 6 per cent of the company's domestic online gaming gross receipts, with gamers under the age of 16 accounting for approximately 3.2 per cent of Tencent's total online gaming income in <keyword id="1334" type="LOCATION" weightage="20" keywordseo="China">China</keyword>. SEE ALSO: <a href="https://www.businessinsider.in/science/space/news/asteroid-apophis-wont-be-hitting-earth-for-at-least-another-century/articleshow/81719171.cms">‘God of Chaos’ asteroid Apophis won’t be crashing into Earth for at least another century</a> <a href="https://www.businessinsider.in/science/health/news/making-vaccines-available-to-indians-may-not-be-enough-it-depends-on-how-judiciously-we-employ-them/articleshow/81720507.cms">Making vaccines available to Indians may not be enough, it depends on how judiciously we employ them</a> <a href="https://www.businessinsider.in/politics/elections/news/checkout-the-list-of-bjp-tmc-and-congress-candidate-names-in-first-phase-west-bengal-election/articleshow/81704142.cms">The entire list and exciting facts about the 30 assembly constituencies going to polls in West Bengal on March 27</a> <a href="https://www.businessinsider.in/policy/news/government-mandates-companies-to-disclose-cryptocurrency-holdings-from-april-1/articleshow/81704174.cms">Indian companies will have to disclose cryptocurrency holdings from April 1 – industry insiders welcome decision</a>

Chinese Internet giant Tencent reports 28% revenue growth in 2020

<table class="image-container float_right" width="200"><tr><td><div class="image"></div><a href="http://www.flickr.com/photos/rainforestactionnetwork/6690406587/">RAN/Flickr</a></td></tr></table>Bank of America's <keyword id="6357061" type="UNKNOWN" weightage="60" keywordseo="earnings">earnings</keyword> are out.
<a href="http://www.businessinsider.com/bank-of-america-earnings-2013-1">Click Here For Updates &gt;</a>
Q4 adjusted revenue came in at $19.6 billion, which was below analysts' forecast for $21.0 billion.
It earned $0.03 per share, which was a tad higher than the $0.02 forecast by analysts.
The stock is trading up 1 percent right now.
It should be noted that bank earnings announcements tend to be very noisy, so the reported EPS may not be comparable to the consensus EPS.
Here's all of that <a href="http://finance.yahoo.com/news/bank-america-reports-fourth-quarter-120000116.html">noise</a>:
As previously announced, financial results in the fourth quarter of 2012 were negatively impacted by a provision of $2.7 billion related to the settlements with Fannie Mae with respect to representations and warranties and compensatory fees; other provision items of $2.5 billion which included a $1.1 billion provision for the Independent Foreclosure Review (IFR) acceleration agreement, total litigation expense of $0.9 billion and a $0.5 billion provision for obligations related to mortgage insurance rescissions; and $0.7 billion of negative debit valuation adjustments (DVA) and fair value option (FVO) adjustments due to improvement in the company's credit spreads. These items were partially offset by a net income tax benefit of $1.3 billion primarily due to the recognition of foreign tax credits of certain non-U.S. subsidiaries; a gain of $0.4 billion on the previously announced sale of the company's 49-percent stake in Mitsubishi UFJ Merrill Lynch PB Securities; and a positive valuation adjustment on mortgage servicing rights (MSR) of $0.3 billion related to the previously announced servicing sales.
Here are some notable items:
<ul>
<li class="bwlistitemmargb">Net Interest Income Increased to $10.6 Billion From $10.2 Billion in Prior Quarter</li>
<li class="bwlistitemmargb">Total Average Deposit Balances up $28 Billion, or 11 Percent (Annualized) From Prior Quarter</li>
<li class="bwlistitemmargb">First-lien Mortgage Production Increased 6 Percent From Prior Quarter</li>
<li class="bwlistitemmargb">Global Wealth and Investment Management Posts Record Quarterly Earnings</li>
<li class="bwlistitemmargb">Period-end Commercial Loans and Leases in the Global Banking Segment, Including Real Estate Loans, Grew 7 Percent From Prior Quarter to $252 Billion</li>
<li class="bwlistitemmargb">Investment Banking Fees; Fees Up 20 Percent From Prior Quarter and 58 Percent From the Year-ago Quarter</li>
</ul>
Read the whole earnings announcement <a href="http://finance.yahoo.com/news/bank-america-reports-fourth-quarter-120000116.html">here</a>.
SEE ALSO: <a href="http://www.businessinsider.com/countries-by-gold-reserves-january-2013-2013-1">10 Countries Hoarding Enormous Piles Of Gold &gt;</a>

Bank Of America Earnings Appear To Be Stronger Than Expected, But There's A Lot Of Noise

<table class="image-container float_right" width="200"><tr><td><div class="image"></div>Ellis Hamburger, Business InsiderNokia CEO Stephen Elop</td></tr></table><keyword id="6354716" type="CITY" weightage="60" keywordseo="Nokia">Nokia</keyword>'s stock is soaring in pre-market trading, rising 23% after announcing preliminary earnings results.
The preliminary results are ahead of Nokia's previous earnings guidance.
The headlines from the release are that Lumia sales are better than expected and operating expenses are lower than expected.
It sold 4.4 million Lumia phones. Lumia phones run Microsoft's Windows Phone 8 software. They are supposed to be the savior of Nokia. This number may be better than expected, but it's going to be ~10% of how many iPhones Apple sells this quarter. And less than 10% of how many smartphones Samsung sells. So Nokia still has a lot of work ahead of it.
Here's the release:
Nokia today provided preliminary information on certain aspects of its fourth quarter 2012 financial performance and also provided preliminary information on its outlook for the first quarter 2013.
Nokia now estimates that Devices &amp; Services has exceeded expectations and achieved underlying profitability in the fourth quarter 2012.
- Mobile Phones business unit and Lumia portfolio delivered better than expected results; and
- Operating expenses were lower than expected.
- Devices &amp; Services non-IFRS operating margin for the fourth quarter 2012 now expected to be between break even and positive 2 percent.
Seasonality and competitive environment are expected to have a negative impact on the first quarter 2013 underlying profitability for Devices &amp; Services, compared to the fourth quarter 2012.
Nokia also estimates that Nokia Siemens Networks has exceeded expectations for the fourth quarter 2012, delivering record underlying profits and a third consecutive quarter of underlying profitability.
- Strong performance in higher margin product categories and geographic regions; and
- Better than expected cost management.
- Nokia Siemens Networks non-IFRS operating margin for the fourth quarter 2012 now expected to be between 13 and 15 percent.
Seasonality is expected to have a negative impact on the first quarter 2013 underlying profitability for Nokia Siemens Networks, compared to the fourth quarter 2012.
Commenting on the preliminary Q4 financial information, Stephen Elop, Nokia CEO, said:
"We are pleased that Q4 2012 was a solid quarter where we exceeded expectations and delivered underlying profitability in Devices &amp; Services and record underlying profitability in Nokia Siemens Networks. We focused on our priorities and as a result we sold a total of 14 million Asha smartphones and Lumia smartphones while managing our costs efficiently, and Nokia Siemens Networks delivered yet another very good quarter."
Preliminary financial information for the fourth quarter 2012:
Nokia currently estimates that Devices &amp; Services net sales in the fourth quarter 2012 were approximately EUR 3.9 billion, with total device volumes of 86.3 million units.
- Mobile Phones net sales of approximately EUR 2.5 billion, with total volumes of 79.6 million units of which 9.3 million units were Asha full touch smartphones.
- Smart Devices net sales of approximately EUR 1.2 billion, with total volumes of 6.6 million units of which 4.4 million units were Nokia Lumia smartphones.
- Total smartphone volumes of 15.9 million units composed of 9.3 million Asha full touch smartphones, 4.4 million Lumia smartphones and 2.2 million Symbian smartphones.
- Devices &amp; Services Other net sales of approximately EUR 0.2 billion, including a positive impact from non-recurring IPR income of approximately EUR 50 million.
Nokia currently estimates that Devices &amp; Services non-IFRS operating margin for the fourth quarter 2012 was between break even and positive 2 percent, which compares to the previous outlook of approximately negative 6 percent, plus or minus four percentage points. Devices &amp; Services non-IFRS operating margin includes a positive impact from non-recurring IPR income of approximately EUR 50 million.
During the fourth quarter 2012, multiple factors positively affected Nokia's Devices &amp; Services businesses to a greater extent than previously expected. Preliminary information indicates that the main factors include:
- Within the Devices &amp; Services business, better than expected financial performance in the Mobile Phones business unit and Lumia smartphones. In addition, Devices &amp; Services recognized non-recurring IPR income of approximately EUR 50 million; and
- Lower than expected Devices &amp; Services' operating expenses, partially due to greater than expected cost reductions under the restructuring program.
Nokia currently estimates that Location &amp; Commerce net sales in the fourth quarter 2012 were approximately EUR 0.3 billion and the non-IFRS operating margin was between 13 and 15 percent.
Nokia and Nokia Siemens Networks currently estimates that Nokia Siemens Networks net sales in the fourth quarter 2012 were approximately EUR 4.0 billion and the non-IFRS operating margin was between 13 and 15 percent, which compares to the previous outlook of approximately positive 8 percent, plus or minus four percentage points. Nokia Siemens Networks non-IFRS operating margin includes a positive impact from non-recurring IPR income of approximately EUR 30 million.
During the fourth quarter 2012, multiple factors positively affected Nokia Siemens Networks' businesses to a greater extent than previously expected. Preliminary information indicates that the main factors include:
- More favorable product and regional mix in Nokia Siemens Networks. In addition, Nokia Siemens Networks recognized non-recurring IPR income of approximately EUR 30 million; and
- Better than expected improvement under Nokia Siemens Networks' restructuring program to reduce operating expenses and production overheads.
Preliminary outlook for the first quarter 2013:
Nokia expects its non-IFRS Devices &amp; Services operating margin in the first quarter 2013 to be approximately negative 2 percent, plus or minus four percentage points. This outlook is based on Nokia's expectations regarding a number of factors, including:
- competitive industry dynamics continuing to negatively affect the Smart Devices and Mobile Phones business units;
- the first quarter being a seasonally weak quarter;
- consumer demand, particularly for our Lumia and Asha smartphones;
- continued ramp up for our new Lumia smartphones;
- expected cost reductions under Devices &amp; Services' restructuring program; and
- the macroeconomic environment.
Nokia expects Location &amp; Commerce non-IFRS operating margin in the first quarter 2013 to be negative due to lower recognized revenue from internal sales, which carry higher gross margin, and to a lesser extent by a negative mix shift within external sales.
Nokia and Nokia Siemens Networks expect Nokia Siemens Networks non-IFRS operating margin in the first quarter 2013 to be approximately positive 3 percent, plus or minus four percentage points. This outlook is based on Nokia Siemens Networks' expectations regarding a number of factors, including:
- competitive industry dynamics;
- the first quarter being a seasonally weak quarter;
- product and regional mix;
- expected continued improvement under Nokia Siemens Networks' restructuring program; and
- the macroeconomic environment.
Nokia will provide more details when it reports fourth quarter and full year 2012 results on January 24, 2013.

Nokia Pre-Announces Earnings And The Stock Is Going Nuts

<ul class="summary-list"><li><keyword id="12554546" type="UNKNOWN" weightage="60" keywordseo="underwriting" source="Orion">Underwriting</keyword> is the process of taking on risk in a financial transaction, typically a <keyword id="6360217" type="UNKNOWN" weightage="60" keywordseo="loan" source="Orion">loan</keyword>, insurance, or investments.</li><li>Underwriters assess risk, determine how much to assume, and at what price.</li><li>Underwriting helps set rates for loans, premiums for insurance policies, and the cost of risk in securities markets.</li></ul>Underwriting determines how risky a financial venture such as a loan, insurance policy, or investment is and whether to accept that risk. If the risk is considered worth taking, the underwriting process determines how much to charge."Underwriting is basically just verifying all of the information the borrower has provided on their loan application — their income, their tax returns, their bank accounts and other assets," says Mayer Dallal, managing director at <keyword id="12212082" type="UNKNOWN" weightage="60" keywordseo="mortgage" source="Orion">Mortgage</keyword> Bank of California. "[Lenders] look at debt-to-income ratio — basically, how much you owe versus how much you earn. [Lenders] also check credit scores — it's difficult to overstate the importance of a credit rating to the process. Then we get an appraisal of the property to see if the loan amount is appropriate, and do a title search to make sure there are no liens on the property."<h2>How the process of underwriting works </h2>The main goal of underwriting is to determine risk. Knowing the amount of risk involved in a financial venture allows for pricing and finally a decision to accept or reject the applicant or venture.The underwriting process varies somewhat depending on the type of underwriting being done, but in general terms here's how it works:Step 1: Review and evaluate the application or other paperwork to determine creditworthiness, medical history (life insurance), financial soundness (investment), or other other factors that vary with the type of risk.Step 2: Obtain an appraisal of property, evaluation of securities, or require a medical exam as required to help further determine risk.Step 3: Process all gathered information and make a decision to:<ul><li>Accept: Approval involves other decisions including loan rates, terms, premium amounts, or price to pay for securities, depending on the type of underwriting decision being made.</li><li>Deny: Denial results when the various factors show unacceptable risk in the eyes of the underwriter.</li><li>Pending: A decision to hold the application typically means the underwriter doesn't have enough or the right information to make a firm decision.</li></ul>Note: The term 'underwriting' is <a href="https://thebasispoint.com/where-the-term-underwriting-comes-from/" target="_blank" rel="noopener">believed to have originated</a> in the early days of Lloyd's of London when risk takers (underwriters) wrote their names below (under) the total amount of risk they were willing to undertake, such as a voyage of a merchant ship for example, in exchange for a specified premium.<h3>What is the role of an underwriter?</h3>The role of an underwriter is to protect the financial interests of the lender, insurer, or investor by assigning appropriate risk and compensation for assuming that risk. Underwriters work in a variety of financial industries including banking, insurance, investing, and more. In fact, anything that involves a combination of risk and money, probably has an underwriter somewhere in the process.In their role of evaluating financial risk, depending on the type of risk, underwriters investigate all financial aspects of an applicant or investment. Medical history and health come into play when someone applies for life insurance. Appraisal or evaluation is also part of the process when you are buying a house, car, boat, or even investing in real estate or a major project.<h2>Types of underwriting </h2>Each type of underwriting comes with specific risks. Underwriters generally specialize in one of several risk types.<h3>Loan underwriting</h3>If you've ever applied for a personal, car, or home loan, you've likely heard the term "underwriting" as part of the application process.Personal and car loans, compared to mortgage loans, are relatively simple. The risk to the lender is that you will not pay back the loan. <a href="https://www.businessinsider.com/personal-finance/how-to-get-a-car-loan" target="_blank" rel="noopener">These types of loans</a> are often underwritten using a computer and strict modeling algorithms. That is not to say they are "untouched by human hands" just that the process is not as complex as with other types of risk.Mortgage/real estate loans <a href="https://www.businessinsider.com/personal-finance/mortgage-underwriting-process" target="_blank" rel="noopener">are more complicated</a>, mostly because the thing you are trying to buy is more expensive and the risk to the lender is greater. As noted above, a home or other real estate loan involves a deep dive into your personal finances including income, assets, debt, and general ability to repay the loan. In addition, the asset (home/real estate) must be appraised, evaluated to make sure you are not overpaying. Other research involves making sure the seller actually owns the property, such as a title search."Many people don't realize how tricky underwriting can be for a self-employed person or an entrepreneur who's applying for a loan at a big bank," notes Dallal. He blames it on automated underwriting that looks for a W-2 and when none is found, rejects the applicant. "But there are mortgage lenders who take a more individualized approach to loan qualification, rather than the cookie-cutter approach old-school lenders use," Dallal adds, advising borrowers to seek out those lenders.<h3>Insurance underwriting</h3>Insurance underwriting involves evaluating an applicant for life or property insurance. It determines the risks of filing large or frequent claims and assessing how much coverage a person can be given, how much they should pay and how much an insurance company is likely to pay to cover the policyholder.Life insurance underwriting involves assessing the risk of the potential insurer by evaluating age, occupation, health, family medical history, lifestyle, hobbies, and other traits. Property and casualty insurance underwriting requires inspection of homes and rental properties for deterioration, crumbling foundations, damaged roof or anything that poses a risk to the insurer.Note: Before the Affordable Care Act (ACA) took effect in 2014, health insurance sold in the individual market in most states was medically underwritten to include consideration of pre-existing conditions. Since 2014, however, pre-existing conditions may no longer be considered. Health insurance must now by guaranteed issue, regardless of pre-existing condition status.<h3>Securities underwriting</h3>In <a href="https://corporatefinanceinstitute.com/resources/knowledge/finance/underwriting-overview/" target="_blank" rel="noopener">securities underwriting</a>, the process involves the sale of stocks or bonds to investors, often in the form of <a href="https://www.businessinsider.com/what-is-ipo" target="_blank" rel="noopener">Initial Public Offerings (IPOs)</a> by an underwriter (bank). In this case the bank relies on a cadre of underwriters who help the bank assess risk, plan for, and execute the agreement to underwrite the IPO and sell securities to fund the IPO.<h1>How long does underwriting take? </h1>It should be no surprise that the amount of time it takes to underwrite a financial transaction depends on the type and complexity of the transaction. Underwriting a personal loan or even a car loan can be completed in minutes using a computer and software. Mortgages and life insurance take longer. Securities underwriting, for example for an IPO, is likely to take the longest.Personal loans or car loans often take a week or less. In some instances, underwriting and approval can be almost instantaneous, happening in minutes.Mortgages often take 30 to 45 days for full approval, although the underwriting process is only part of that timeline and is usually complete in about 72 hours after the underwriter has all the information they need.Life insurance underwriting might be one of the least predictable when it comes to a timeline. Many life insurance policies undergo underwriting and approval in as few as 24 hours. Depending on health and other issues, however, the process can take a month or more.Property and casualty insurance is typically approved as fast as a personal loan, that is in one to seven days. The effective date of insurance, however, is after your payment is received. Being approved for homeowners insurance doesn't mean you have it.Securities underwriting as part of the IPO process typically happens within the six to nine months it takes for a company to transition from private to public. Since underwriters are involved at every step in the process on behalf of the bank, their work is not complete until the IPO is complete.<h2>The financial takeaway</h2>Underwriting is all about risk and determining the cost (value) of that risk. With a loan, the risk is whether the borrower will repay or default and the cost is the amount of interest charged. With insurance, the risk is whether too many policyholders will file claims at the same time. To mitigate that risk, the cost is the premium charged to each policyholder. With securities, the risk is that the underwritten investment will not make a profit. The cost is the difference between the amount the underwriter pays for the shares and the amount the public pays when the shares are sold.The role of underwriting and the underwriter cannot be understated. Without some assessment of risk, all financial transactions would be a matter of "guessing." Underwriting removes guesswork and replaces it with a process designed to be fair to both the lender and the borrower; the insurer and the insured; the investor and the investment.Lenders want to lend, insurers want to insure, and investors want to invest. Conversely, borrowers want to borrow, individuals want insurance, and IPOs want investors. No matter your role in any financial interaction, know that the underwriter is there to ensure fairness.<a data-type="618e6c8bd5155d73e6369c15">IFRS: The accounting framework that sets the rules for most non-US companies' financial reporting</a><a data-type="6185865e9a6f0261a113f16a">What are assets? The building blocks of wealth for individuals and profits for businesses</a><a data-type="6149f6636bf54a3a6e5d45a2">A CFP is an advisor armed with extensive education and ethical standards to help you manage your money</a><a data-type="61325cb22864564f1529e118">What to know about actuaries — the professionals who predict the financial future of companies with math and science</a>

Underwriting: The risk-assessment process used in everything from IPOs to life insurance

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="http://www.apimages.com/Search?query=APTOPIX+and+mediatype+%3D+photo+and+not+%22APTOPIX.JPG%22+and+not+mediatype+%3D+collection+&amp;ss=10&amp;st=kw&amp;entitysearch=&amp;toItem=18&amp;orderBy=Newsfeed">AP/Visar Kryeziu</a>A protester kicks off a tear gas canister during clashes with Kosovo police in front of the central police station in Kosovo capital Pristina after the arrest of a prominent opposition politician Albin Kurti.</div></div></div>Here is what you need to know.<a href="http://www.businessinsider.com/ab-inbev-and-sabmiller-agree-merger-2015-10">AB InBev is taking over SABMiller</a>. There has been an "agreement in principle on the key terms," according to both AB InBev and SABMiller. The two sides have agreed to InBev paying £44 ($67.62) per share of SABMiller, valuing the world's second largest brewer at £71.2 billion ($109.4 billion), a 50% premium to where SAB was trading when InBev made its initial offer. The deal will give AB InBev control of one-third of the world's beer supply even with Miller expected to be spun off to avoid US regulatory concerns. <a href="http://www.businessinsider.com/chinese-imports-plunge-again-adding-to-economic-concerns-2015-10">The slide in China's imports produced a record trade surplus</a>. China's trade surplus hit $60.34 billion (Rmb376.2bn), a near-record in US dollar terms (a record in local currency terms). Imports sank 20.4% year-over year, which was far worse than the 15.0% drop that analysts were anticipating. Meanwhile, exports fell 3.7%, missing the 6.3% gain that was expected. "We continue to believe that the situation is not nearly as dire as the headline contraction in import values, which have been dragged down by global commodity price deflation, suggest. Import volumes are holding up much better," Julian Evans-Pritchard, chief China economist at Capital Economics, wrote. China's yuan eased 0.3% to 6.3410 per dollar.<a href="http://www.bloomberg.com/news/articles/2015-10-13/china-car-sales-grow-at-slowest-pace-in-3-years-before-tax-cut">China's auto sales slowed</a> Passenger-vehicle sales in China rose 5.8% through the first nine months of the year, making for their slowest pace of expansion in three years, according to Bloomberg. Sales have totaled 14.4 million units so far this year, with Mercedes-Benz seeing a 31% jump through September. On the flip side, GM has seen sales fall in give of the past six months, but sales are still up 1.6% this year. October is expected to be a strong month for sales after Beijing cut the sales tax in half for smaller engines, which make up nearly two-thirds of vehicles, Bloomberg reports.<a href="http://www.businessinsider.com/uk-inflation-figures-for-september-2015-10?r=UK&amp;IR=T">UK consumer prices turned negative</a>. UK CPI fell 0.1% YoY in September, making for just the second negative reading since 1960. The drop in prices was largely impacted by oil, but clothing and footwear were also a drag. The British pound is weaker by 0.7% at 1.5247.<a href="http://www.zew.de/en/press/3167/zew-indicator-of-economic-sentiment---further-setback-for-economic-sentiment">German investor confidence is fading</a>. ZEW Economic Sentiment tumbled to 1.9 in October, down from its previous reading of 12.1. ZEW said, "The exhaust gas scandal of Volkswagen and the weak growth of emerging markets has dampened economic outlook for Germany." The surrent assessment also fell, sliding to 55.2 from 67.5. The euro is up 0.2% at 1.1378.<a href="http://global.sap.com/corporate-en/investors/newsandreports/news.epx?articleID=25010&amp;category=45">SAP posted a strong quarter</a>. Europe's largest software maker announced adjusted revenue rose 17% to €4.99 billion ($5.7 billion). A 19% rise in adjusted operating profit ran the total to €1.62 billion, which was ahead of the €1.53 billion that the Bloomberg consensus was expecting. Non-IFRS cloud and software revenue climbed 19% (12% at constant currencies) to €4.12 billion "Our strong double-digit growth in cloud and software revenue was mainly driven by excellent results in mature markets. SAP's global resilience helped us also sail through stormy waters in emerging markets where we expect to continue to see volatility and economic challenges," CFO Luka Mu cic said in the release.<a href="http://www.businessinsider.com/fortress-reportedly-closing-macro-fund-2015-10">Novogratz is leaving Fortress</a>. A person close to the matter told Bloomberg that hedge fund titan Michael Novogratz is leaving Fortress because of a disastrous year. Novogratz's Fortress Macro Fund lost 4.67% in September and is down 17.49% so far in 2015. According to Hedge Fund Research, the fund is greatly lagging its peers, which on average are down 0.64%.Stocks markets around the world are lower. France's CAC (-1.3%) leads the way lower in Europe after Japan's Nikkei (-1.1%) lagged in Asia. China's Shanghai Composite (+0.1%) eked out a gain. S&amp;P 500 futures are lower by 9.50 points at 2001.50.US economic data is light. The Treasury budget crosses the wires at 2 p.m. ET. The US 10-year yield is down 3 basis points at 2.06%.Earnings season picks up. Fastenal and Johnson &amp; Johnson report ahead of the opening bell while CSX, Intel and JPMorgan Chase release their quarterly results after the close. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/global-market-meltdown-stocks-oil-2015-8">RED EVERYWHERE: It's a global market meltdown</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="F3NTU1dzpxuF4acJ9B_9g5mwKWDZ5O4E" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

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