Mark Guthrie is flying high-personally and professionally. In April, he completed his first solo flight on a small airplane, and he was selected to replace Hussein Enan as CEO of InsWeb Corp., effective July 1, 2002.Transforming the Gold River, Calif.-based online insurance distributor into a profitable enterprise will require all the skill and determination Guthrie can muster.

InsWeb was incorporated in February 1995, and has suffered losses every year. Last year, with revenues of $24.9 million, the company reported a net loss of $44.9 million.

Along with so many other dot-coms, InsWeb's stock price also has plunged-from a high of $191.25 per share in August of 1999-shortly after the company went public-to $4.50 per share this May.

Yet, unlike many other Internet firms, InsWeb still is airborne. And, despite the turbulence behind and ahead of him, Guthrie doesn't view himself as a savior coming in to change the course of the company. Nor does he describe his leadership as a significant departure from Hussein Enan's, who co-founded the company and has reigned as its CEO for the past seven years.

From a cultural perspective, Guthrie says he'll continue to promote an open, team-based culture at InsWeb. And, from a business perspective, he says he'll continue to emphasize integrity and results for shareholders.

"(Hussein and I) have been working closely together now for several years," Guthrie explains. "And one of the reasons the transition is taking place-and everyone (here) is comfortable-is that I recognize where we've been and where we need to go. And I'm confident that we've got the right charts in front of us and we're headed in the right direction."

Revitalizing the office

Enan will remain chairman of the board and actively involved in the company. But the time is right for him to step down to spend more time with his family, Enan says.

"I have always believed that a new CEO is needed every five to seven years-to revitalize the office and bring in new ideas," he says. "Since (Mark) joined the company, he has held progressively more challenging positions, always exceeding the board's and my own expectations in filling them."

Indeed, Guthrie joined InsWeb in 1997 with 10 years of experience at San Francisco-based Industrial Indemnity Co. and a master of science degree in management from Boston University, Brussels, Belgium. By January 2000, he was promoted to chief operating officer of InsWeb.

It wasn't long after Guthrie reached the "C-level" that he had the chance to prove he deserved to be there. He played a key role in InsWeb's restructuring during the summer of 2000, shortly after State Farm Mutual Automobile Insurance Co., Bloomington, Ill., cancelled its participation in InsWeb's online marketplace that May.

The restructuring plan

With State Farm generating nearly one-third of InsWeb's revenue at the time, InsWeb quickly regrouped.

Its restructuring plan included consolidating its Los Angeles and San Francisco offices to the Sacramento area, discontinuing initiatives that were not core to the company's business model, reducing its staff by 40%, and expanding its agency operations.

"We've had some pretty big challenges in the last couple of years, going through the whole restructuring of the organization and moving the company to a new location," Guthrie says. "As we went through that, I played a key role, and I think that gave Hussein and the board the confidence that I can be the guy to lead the company in the future."

InsWeb moved to Sacramento to reduce costs and decrease turnover. "We needed to be in a lower-cost environment, and we needed to be in an environment where we could hold on to our employees longer than six to 12 months, which was the going rate of turnover in the (San Francisco) Bay area during the heyday of the Internet," Guthrie says.

"We had invested in a lot of different initiatives, and we began to have some clarity on what was going to work and what wasn't going to work."

A few of InsWeb's weaker performing initiatives included selling its technology and data to insurance companies, and offering small-business and health insurance online. "We looked at the results and said, 'Look, personal lines-auto is a huge opportunity, and it's one we should pursue-as well as term life and homeowners,' " Guthrie says. "The numbers spoke for themselves."

In fact, the numbers showed that automobile insurance accounted for approximately 78% of InsWeb's transaction revenues in 1999, and it has remained the primary source of the company's revenue-69% in 2000 and 67% in 2001.

When the company restructured, Enan also announced plans to expand InsWeb's agency operations-to add some stability to the top line.

The formula for success

"As strong as our model is, it is weakened by an over-dependence on lead-referral revenues," Enan said in June 2000. "Realizing this, we implemented a corrective measure (in October 1999) with the rollout of our insurance agency capabilities, which we plan to significantly expand nationwide over the next 12 to 18 months."

Losing State Farm was certainly painful. And a year later, in February 2001, InsWeb suffered another blow. Sunnyvale, Calif.-based eHealthInsurance suddenly terminated its contract and sued InsWeb over an e-mail campaign touting "NFL's hottest cheerleaders," which was generated by an InsWeb marketing partner. Revenues from the eHealthInsurance partnership had amounted to 22% of InsWeb's revenue at that time.

InsWeb management may have been prudent to seek an alternative to transaction revenues, but new policies sold through InsWeb's agency have not yet increased significantly. They even decreased in the fourth quarter of 2001 (see "Recent Highlights," page 20).

When asked about the company's plans for its agency operations, Guthrie told Insurance Networking in May that InsWeb plans to grow its business with all three types of carriers-captive agent carriers such as American Family, direct writers such as Progressive, as well as with carriers that distribute through independent agents, such as Travelers and The Hartford. With those carriers that work through independent agents, InsWeb will operate as the agent.

Increasing revenues

Regardless of how much revenue InsWeb's agency eventually brings in, Guthrie emphasizes that increasing revenues-not cutting costs-is the way InsWeb will become profitable in the future.

And he plans to increase revenues in two ways: by continuing to promote InsWeb on hundreds of Internet sites, and by partnering with more insurance carriers to provide more quotes to the consumers who shop at

"We're anticipating our expenses to remain consistent and our revenues to go up," Guthrie says. "That is the formula to get to the point where we make more money than we use."

InsWeb invests heavily in technology, and sales and marketing. Technology expenses, which amounted to $14 million in 2001, are critical to the company's business model. InsWeb has a single platform for presenting quotes from more than two dozen carriers-all of whom have very different methods for rating, quoting and underwriting insurance, especially auto insurance.

Approximately 75 of InsWeb's 175 employees are dedicated to information technology. "We've had to be very flexible, very patient, and use all our experience to hook up to (carriers') systems and link the InsWeb system with their systems-because it's a big part of our value-add," Guthrie says.

The platform advantage

InsWeb's technology platform provides the company with a competitive advantage, he says, because "consumers don't want to go to the Web, enter a bunch of information, and then receive a message that says, 'Somebody will call you with some quotes.' That's not the proposition. The proposition is that I go on the Web. I enter my information. And I want to see right then and there the quotes from insurance companies. Then, I-the consumer-will choose to go on with the process or not."

As a result of this "proposition," Ins-Web devotes a lot of its resources to mainframe integration with insurance companies. "That's a big challenge for us and a big investment," Guthrie says. "It's a multi-year-probably a multi-decade-effort to have a single platform hook up to so many diverse IT infrastructures across insurance companies."

But integration with carrier systems is what enables InsWeb to present multiple quotes to consumers. And increasing the number of quotes per customer is one of Guthrie's two main strategies to grow revenues.

Today, InsWeb generates an average of 2.5 quotes for every consumer coming to InsWeb looking for auto insurance, he says. "We need closer to five."

At the end of the first quarter, Ins-Web had 24 participating auto insurers and 12 term-life insurers. The company plans to increase those numbers.

"We're working with our existing insurance companies to get them to expand into new states and new tiers, and we're also working with at least a dozen new insurance companies to come on to the site to offer their products to consumers who come to," Guthrie says.

Promoting the site

In addition to investing heavily in technology, InsWeb has high advertising expenses. Its direct marketing costs from April 1, 2001 to March 31, 2002 totaled $15.3 million. Total sales and marketing expenses for 2001 were $28.8 million.

InsWeb advertises with hundreds of Internet sites, including large online properties such as Yahoo! and Lycos, as well smaller online firms for e-mail campaigns and promotional placements at strategic points on their sites.

Promoting InsWeb online to drive Internet shoppers to its site is Guthrie's second strategy for revenue growth. "We really just try to be there when the consumer is at that point in some transaction in their life where insurance is now important," he says.

"Most consumers don't wake up on Monday and say, 'I'm going to go look for insurance today.' They usually wake up and say, 'I'm going to buy a new car, I'm going to have baby, or I'm going to buy a new house.' And then, when they get to the point where they start tidying up the details, that's when we need to be there."

Even with aggressive marketing and more carrier quotes per consumer, online insurance distribution is still an iffy proposition-for InsWeb as well as its competitors. The World Wide Web has only been around since 1995. And, although online shopping is growing, no one can accurately predict the purchasing patterns of consumers on the Internet-in the short- or long-term future.

So far, visitor sessions to InsWeb's site generally have been rising-from 12.9 million in 2000 to 13.3 million in 2001. And "completed shopping sessions"-which occur when a consumer completes one of InsWeb's quote forms-are also increasing (see "Recent Highlights," above).

An acquisition target

InsWeb has a strong brand and robust offering, according to Matthew Josefowicz, senior analyst, at Celent Communications, Boston, in a February 2002 report, titled "Online Insurance Sales & Marketing." But the company's continued success depends on its ability to draw shoppers while cutting its advertising spending, he says.

Celent believes InsWeb is likely to be acquired within the next 24 months by a large diversified financial services institution-such as a bank or card issuer- that wants to expand its relationship with its existing customers and can support InsWeb's marketing budget.

"InsWeb is targeting the Internet population, which still tends to be very different from the general population," says Kimberly Harris, research director, financial services, at Gartner Inc., Stamford, Conn.

The general population still prefers face-to-face insurance sales, which will take time to change, she notes. As for Internet shoppers, they tend to seek immediate gratification. And InsWeb doesn't sell insurance online; it generates quotes, which are completed offline, she notes.

In the next few years, InsWeb will see some growth, according to Harris. But it will be a slow ramp up. "Will it be a huge moneymaker? I'm not sure," she says. "They're still talking about a niche market-the Internet population."

Risky business

To be sure, basing a business on the Internet is risky. According to Guthrie, one of InsWeb's challenges is that online consumers expect insurance to be easy. "And it's not," he says. "Insurance is really complicated. And it's important to get it right-because . . . if you buy the wrong limits on your personal automobile insurance (for example) . . . you could really damage your family and your finances."

As a result, InsWeb works hard to educate consumers both online and offline about the responsibilities they assume with the self-help approach to buying their insurance, according to Guthrie.

Yet, even though InsWeb is targeting consumers who are active on the Internet, Guthrie doesn't view InsWeb's market as small. "We think there's a huge economic margin to play with out here," he says. "The products we're talking about are well over $200 billion a year in annual premiums. And if we find ourselves in a position where we add value to both (carriers and consumers), Ins-Web can be a very big and profitable business."

Plus, he's confident with the value-proposition InsWeb offers. "Our business model is really about resolving two issues," he says. "On the consumer side, InsWeb presents one form and multiple quotes. And on the carrier's side, insurance companies pay only for the consumers they want. It's pretty unique to be able to solve two problems at once with a business."

Mark P. Guthrie

Age: 41


Master of Science in Management, Boston University, Brussels, Belgium; Bachelor of Science in Business Administration, Finance, California State University, Chico, Calif.


July 2002

CEO, president, COO, InsWeb Corp., Gold River, Calif.

June 2000 to present

President, COO, InsWeb Corp.

January 2000 to present

COO, InsWeb Corp.

1998 to 2000

Executive vice president of operations, InsWeb Corp.

1997 to 1998

Senior vice president of strategic partnerships, InsWeb Corp.

1993 to 1997

Senior operating officer, national programs, Industrial Indemnity Co., San Francisco

1991 to 1992

Student, Boston University. Brussels, Belgium; professor of

international finance, European Business School; executive trainer; finance management consultant

1989 to 1991

Corporate marketing director, Industrial Indemnity Co.

1987 to 1989

Captive account director, Industrial Indemnity Co.

1985 to 1987

Casualty insurance underwriter, Industrial Indemnity Co.

1984 to 1985

Accountant, international accounting department, Intel Corp.,

Santa Clara, Calif.

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