InsWeb soars in debut

InsWeb (Nasdaq:INSW), a Web site which allows users to comparison shop for insurance, closed up 14 9/16, or 86 percent, to 31 9/16 in its initial public offering.

The company priced its 5 million share offering at $17 in a deal that will raise about $85 million. On Thursday InsWeb upped its offering from 4 million shares in a range of $11 to $13 to 5 million shares in a range of $16 to $17.

Goldman Sachs is the lead underwriter for the company, based in Redwood City, California. Similar companies are Quotesmith.com (Nasdaq: QUOT) and E-Loan (Nasdaq: EELN).

According to the regulatory filings, net loss for the 3 months ended June 30, 1999 was $15 million, or 94 cents a share, on revenue of $8.4 million. This compares to a loss of $7.9 million, or 54 cents a share on $1.0 million in the same period in 1998.

Among risks cited in the regulatory filings are the limited types and individual insurers which have agreements with InsWeb. Automobile insurance accounted for about 84 percent of revenue in the six months ended June 30, 1999. A limited number of insurers also have contracts with InsWeb; revenue from State Farm, AIG and American Family accounted for approximately 31%, 12% and 11%, respectively, of revenue for the six months ended June 30, 1999. Furthermore, the company states, they do not have "exclusive relationships or long-term contracts with any insurance companies."

But the deal is expected to do well.

"It allows for one-stop shopping,'' said Randall Roth, an analyst at money manager Renaissance Capital.

Roth said InsWeb also made things easier for insurance companies by reducing the cost of finding new customers.

He said the potential market for personal insurance sold on the Internet could grow from $1.5 billion in 1998 to $11 billion in 2003, citing Forrester Research Inc.

Softbank, which owns 70 percent of Ziff Davis, holds about a 20 percent stake in InsWeb.

Reuters contributed to this report.