**SECURITIES AND EXCHANGECOMMISSION**

**Washington,DC 20549**

 

----

 

**FORM 10-Q**

 
| **ý**                                                                                                                                                                                                                 | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934**  |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|
| ** **                                                                                                                                                                                                                 |
| **For the  quarterly period ended March 31, 2005**                                                                                                                                                                    |
| ** **                                                                                                                                                                                                                 |
| **Or**                                                                                                                                                                                                                     |
| ** **                                                                                                                                                                                                                 |
| **o**                                                                                                                                                                                                                      | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE  ACT OF 1934** |
| ** **                                                                                                                                                                                                                 |
| **For the  transition period from                to               ** |
| ** **                                                                                                                                                                                                                 |
| **Commission  file number 0-26083**                                                                                                                                                                                        |

 

----

 

**INSWEB CORPORATION**

(Exactname of Registrant as specified in its charter)

 
| **Delaware**                                                        | ** ** | **94-3220749**                      |
|---------------------------------------------------------------------|------------|-------------------------------------|
| (State or other  jurisdiction ofincorporation or organization)      |       | (IRS EmployerIdentification Number) |
|                                                                |
| **11290  Pyrites Way, Suite 200 Gold River, California 95670** |
| (Address of principal  executive offices)                           |
| ** **                                                          |
| **(916) 853-3300**                                                  |
| (Registrant’s telephone  number, including area code)          |

 

Indicateby check mark whether the Registrant (1) has filed all reports required tobe filed by Sections 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theRegistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days. Yes  **ý**  No  **o**

 

Indicateby check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2of the Exchange Act.) Yes  **o**  No  **ý**

 

Thenumber of outstanding shares of the Registrant’s Common Stock, par value $0.001per share, on May 2, 2005 were 4,043,395 shares.

 

 

----

 

**FORM 10-Q**

**INSWEBCORPORATION**

**INDEX**

 
| **PART I**  | **FINANCIAL  INFORMATION**                                                                                |       |
|------------------|-----------------------------------------------------------------------------------------------------------|------------|
| ITEM 1:          | Financial Statements  (unaudited)                                                                         |       |
|             | Condensed  Consolidated Balance Sheets as of March 31, 2005 and December 31,  2004              |       |
|             | Condensed  Consolidated Statements of Operations for the three months ended March 31,  2005 and 2004 |       |
|             | Condensed  Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004  |       |
|             | Notes  to Condensed Consolidated Financial Statements                                                     |       |
| ITEM  2:         | Management’s  Discussion and Analysis of Financial Condition and Results of Operations               |       |
| ITEM  3:         | Quantitative  and Qualitative Disclosures About Market Risk                                               |       |
| ITEM 4:          | Controls and Procedures                                                                                   |       |
|             |                                                                                                      |       |
| **PART II** | **OTHER INFORMATION**                                                                                     | ** ** |
| ITEM  2:         | Unregistered Sales of Equity Securities and  Use of Proceeds                                              |       |
| ITEM 6:          | Exhibits and Reports on Form 8-K                                                                          |       |
|             |                                                                                                      |       |
| Signature        |                                                                                                      |

 

2

----

 

**PART I:****FINANCIALINFORMATION**

 

**ITEM 1.****  FINANCIALSTATEMENTS**

 

**INSWEBCORPORATION**

 

**CONDENSED CONSOLIDATED BALANCE SHEETS**

 

*(inthousands)*

*(unaudited)*

 
| ** **                                      | ** ** | **March 31,  2005** | ** ** | **December 31,  2004** | ** ** |
|-------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| **Assets**                                      |       |                     |       |                        |       |
| Current assets:                                 |       |                     |       |                        |       |
| Cash and cash equivalents                       |       | $                        | 7,865      |                        | $          | 9,334 |   |
| Short-term investments                          |       | 6,476                    |       | 8,145                       |       |
| Accounts receivable, net                        |       | 2,246                    |       | 1,025                       |       |
| Prepaid expenses and other current assets       |       | 468                      |       | 707                         |       |
| Total current assets                            |       | 17,055                   |       | 19,211                      |       |
| Property and equipment, net                     |       | 686                      |       | 814                         |       |
| Other assets                                    |       | 421                      |       | 450                         |       |
| Total assets                                    |       | $                        | 18,162     |                        | $          | 20,475 |   |
|                                            |       |                     |       |                        |       |
| **Liabilities and stockholders’ equity**   |       |                     |       |                        |       |
| Current liabilities:                            |       |                     |       |                        |       |
| Accounts payable                                |       | $                        | 1,913      |                        | $          | 1,248 |   |
| Accrued expenses                                |       | 3,604                    |       | 3,456                       |       |
| Deferred revenue                                |       | 65                       |       | 56                          |       |
| Total current liabilities                       |       | 5,582                    |       | 4,760                       |       |
|                                            |       |                     |       |                        |       |
| Commitments and  contingencies                  |       |                     |       |                        |       |
|                                            |       |                     |       |                        |       |
| Stockholders’ equity:                      |       |                     |       |                        |       |
| Common stock                                    |       | 7                        |       | 7                           |       |
| Paid-in capital                                 |       | 202,982                  |       | 202,961                     |       |
| Treasury stock                                  |       | (6,334                   | )          | (4,596                      | )          |
| Accumulated other comprehensive loss            |       | (6                       | )          | (8                          | )          |
| Accumulated deficit                             |       | (184,069                 | )          | (182,649                    | )          |
| Total stockholders’ equity                 |       | 12,580                   |       | 15,715                      |       |
| Total liabilities and stockholders’ equity |       | $                        | 18,162     |                        | $          | 20,475 |   |

 

See accompanying notes.

 

3

----

 

**INSWEBCORPORATION**

 

**CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

 

*(inthousands, except per share amounts)*

*(unaudited)*

 
| ** **                                                                     | ** ** | **Three Months  Ended March 31,** | ** ** |
|--------------------------------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                                     | ** ** | **2005**                               | ** ** | **2004** | ** ** |
| Revenues:                                                                      |       |                                   |       |   |   |
| Transaction fees                                                               |       | $                                      | 5,606      |   | $ | 3,830 |   |
| Development and  maintenance fees                                              |       | 88                                     |       | 225 |   |
| Total revenues                                                                 |       | 5,694                                  |       | 4,055 |   |
|                                                                           |       |                                   |       |   |   |
| Operating  expenses:                                                           |       |                                   |       |   |   |
| Technology                                                                     |       | 1,372                                  |       | 1,470 |   |
| Sales and  marketing                                                           |       | 4,702                                  |       | 3,334 |   |
| General and  administrative                                                    |       | 1,132                                  |       | 1,282 |   |
| Total operating  expenses                                                      |       | 7,206                                  |       | 6,086 |   |
| Loss from  operations                                                          |       | (1,512                                 | )          | (2,031 | ) |
| Interest income                                                                |       | 92                                     |       | 71 |   |
| Net loss                                                                       |       | $                                      | (1,420     | ) | $ | (1,960 | ) |
|                                                                           |       |                                   |       |   |   |
| Net loss per  share-basic and diluted                                          |       | $                                      | (0.30      | ) | $ | (0.42 | ) |
|                                                                           |       |                                   |       |   |   |
| Weighted-average  shares used in computing per share amounts-basic and diluted |       | 4,785                                  |       | 4,664 |   |

 

See accompanying notes.

 

4

----

 

**INSWEB CORPORATION**

 

**CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

 

*(inthousands)*

*(unaudited)*

 
| ** **                                                                   | ** ** | **Three Months Ended  March 31,** | ** ** |
|------------------------------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                                   | ** ** | **2005**                               | ** ** | **2004** | ** ** |
| Cash flows from operating activities:                                        |       |                                   |       |   |   |
| Net loss                                                                     |       | $                                      | (1,420     | ) | $ | (1,960 | ) |
| Adjustments to reconcile net loss to net  cash used in operating activities: |       |                                   |       |   |   |
| Depreciation and amortization                                                |       | 157                                    |       | 238 |   |
| Net changes in operating assets and  liabilities:                            |       |                                   |       |   |   |
| Accounts receivable                                                          |       | (1,221                                 | )          | (21 | ) |
| Prepaid expenses and other current assets                                    |       | 239                                    |       | 354 |   |
| Other assets                                                                 |       | —                                 |       | 6 |   |
| Accounts payable                                                             |       | 665                                    |       | 544 |   |
| Accrued expenses                                                             |       | 162                                    |       | (216 | ) |
| Deferred revenue                                                             |       | 9                                      |       | (55 | ) |
| Net cash used in operating activities                                        |       | (1,409                                 | )          | (1,110 | ) |
|                                                                         |       |                                   |       |   |   |
| Cash flows from investing activities:                                        |       |                                   |       |   |   |
| Redemptions of short-term investments                                        |       | 4,246                                  |       | 5,773 |   |
| Purchases of short-term investments                                          |       | (2,576                                 | )          | (11,130 | ) |
| Purchases of property and equipment                                          |       | —                                 |       | (53 | ) |
| Net cash provided by (used in) investing  activities                         |       | 1,670                                  |       | (5,410 | ) |
|                                                                         |       |                                   |       |   |   |
| Cash flows from financing activities:                                        |       |                                   |       |   |   |
| Repayments of debt                                                           |       | (13                                    | )          | (43 | ) |
| Proceeds from issuance of common stock  through stock plans                  |       | 21                                     |       | 137 |   |
| Repurchase of common stock                                                   |       | (1,738                                 | )          | — |   |
| Net cash (used in) provided by financing  activities                         |       | (1,730                                 | )          | 94 |   |
| Net decrease in cash and cash equivalents                                    |       | (1,469                                 | )          | (6,426 | ) |
| Cash and cash equivalents, beginning of  period                              |       | 9,334                                  |       | 15,223 |   |
| Cash and cash equivalents, end of period                                     |       | $                                      | 7,865      |   | $ | 8,797 |   |

 

See accompanying notes.

 

5

----

 

**INSWEBCORPORATION**

 

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

 

***(unaudited)***

 

**1.  Business ofInsWeb**

 

InsWeb operates an online insurance marketplace thatenables consumers to comparison shop online for a variety of insurance products, including automobile and term life.InsWeb’s marketplace electronically matches consumers and insurance providers.InsWeb has combined extensive knowledge of the insurance industry,technological expertise and close relationships with a significant number ofinsurance companies to develop an integrated online marketplace. InsWeb’smarketplace enables consumers to research insurance-related topics, search for,analyze and compare insurance products, apply for and receive insurancecompany-sponsored quotes and to purchase automobile and term life insurancecoverage through InsWeb’s insurance agencies.

 

InsWeb’s principal source of revenues is transactionfees from participating insurance providers, either directly from an insurancecompany or via a local insurance agent. While quotes obtained through InsWeb’sonline insurance marketplace are provided to consumers free of charge, InsWebearns revenues from participating insurance companies or agents based on thedelivery of qualified leads.These fees are earned either from a fee paid by an insurance company for eachclosed policy, from the delivery of a lead to a participating insuranceprovider or local agent, or from a commission or broker fee earned by InsWeb’sinsurance agencies, InsWeb Insurance Services, Inc. and Goldrush InsuranceServices, Inc.

 

Certain consumers, depending on their responses toseveral preliminary screening questions, are provided the opportunity to linkdirectly to an insurance company’s website. In these situations, the consumerwill complete the insurance company’s online application, and InsWeb will bepaid a fee for that consumer link or click-through.

 

InsWeb is subject to all of the risks inherent inthe electronic commerce industry and special risks related to the onlineinsurance industry. These risks include, but are not limited to, unpredictablebusiness model, limited management resources, Internet related security risks,the changing nature of the electronic commerce industry, and variations inconsumer traffic (consumers shopping for insurance on the Internet) andinsurance company participation. Due to the foregoing and other factors, InsWeb’sfuture operating results may be materially affected.

 

Since its inception, InsWeb has incurred significantlosses, and as of March 31, 2005, InsWeb had an accumulated deficit of$184,069,000. These losses, and this accumulated deficit, have resultedfrom the significant costs incurred in the development of InsWeb’s technologyplatform, the establishment of relationships with insurance companies, theirintegration with the InsWeb site, and InsWeb’s marketing and sales activities.InsWeb intends to continue to invest in product development and maintenance, andsales and marketing. In addition, we continue to face the costs associated withcontinuing to function as a publicly listed company, including the costs ofcompliance with the provisions of the Sarbanes-Oxley Act of 2002, which willrequire the Company to comply with Section 404 of the Sarbanes-Oxley Act in fiscal 2006.As a result, InsWeb believes that it will continue to incur operating lossesthrough much of fiscal year 2005. In addition, if InsWeb is unable toultimately achieve profitability, the Company may need to seek additionalfinancing to continue its business operations.

 

InsWeb’s operating results for future periodsare subject to numerous uncertainties, and there can be no assurance thatInsWeb will be able to achieve and sustain profitability. In light of theevolving nature of InsWeb’s business to better capitalize on its position as aleading insurance portal, including the current expansion of InsWeb’s agentnetwork program, InsWeb believes that period-to-period comparisons of itsoperating results are not necessarily meaningful and should not be relied uponas an indication of future performance.

 

InsWeb’s operations to date have consumed substantial amounts of cash,cash equivalents and short-term investments ($8,722,000 in fiscal 2004 and$4,196,000 in fiscal 2003) and will continue to require capital in the nearfuture. In order to remain competitive, the Company must continue to makeinvestments essential to its ability to operate. In the event that InsWeb isunable to generate revenues sufficient to offset its costs, or if its costs ofmarketing and operations are greater than it anticipates, the Company may beunable to grow its business at the rate desired or may be required to delay,reduce, or cease certain of its operations, any of which could materially harmits business and financial results.

 

6

----

 

**2.* *Basis of Presentation**

 

The condensed consolidated financial statementsinclude the accounts of InsWeb Corporation and its wholly-owned subsidiaries,InsWeb Insurance Services, Inc. and Goldrush Insurance Services, Inc.(“InsWeb” or the “Company”).  Allsignificant inter-company accounts and transactions have been eliminated in theconsolidated financial statements.

 

The accompanying unaudited interim financialstatements have been prepared in accordance with U.S. generally acceptedaccounting principles for interim financial information and with theinstructions to Form 10-Q and Rule 10-01 of RegulationS-X.  Accordingly, they do not containall of the information and footnotes required by U.S. generally acceptedaccounting principles for complete financial statements.  In the opinion of management, theaccompanying unaudited interim condensed consolidated financial statementsreflect all adjustments, which include only normal recurring adjustments,necessary to present fairly InsWeb’s financial position as of March 31,2005 and the results of operations and cash flows for the three months ended March 31,2005 and 2004.  The financial data andother information disclosed in these notes to the condensed consolidatedfinancial statements related to these periods are unaudited.  The results for the three months ended March 31,2005 are not necessarily indicative of the results to be expected for the yearending December 31, 2005.

 

These condensed consolidated financial statementsshould be read in conjunction with the consolidated financial statements andnotes thereto included in InsWeb’s Annual Report on Form 10-K andother information as filed with the Securities and Exchange Commission.

 

**3.  Concentration of Risk — Significant Customers**

 

For the three months ended March 31,2005, one customer accounted for 28% of total revenues and represented36% of accounts receivable at March 31, 2005. This customeraccounted for 1% of revenues for the three months ended March 31, 2004.For the three months ended March 31, 2004, two customers accounted for 13%and 12% of total revenues, respectively..

 

7

----

 

**4.  Per ShareInformation**

 

Basic earnings per share is computed using theweighted-average number of shares of common stock outstanding. Diluted earningsper share would reflect the potential dilution that would occur if stockoptions and warrants had been exercised. For the three month period ended March 31, 2005 and 2004, commonequivalent shares from stock options and warrants were excluded from thecomputation of net loss per share-diluted as their effect was antidilutive.

 

InsWeb accounts for its stock-based compensationplans under the recognition and measurement principles of APB Opinion No. 25,“Accounting for Stock Issued to Employees,” and related interpretations.  The following table illustrates the effect onnet loss and net loss per share if InsWeb had applied the fair valuerecognition provisions of Financial Accounting Standards Board Statements No. 123“Accounting for Stock-Based Compensation” and No. 148, “Accounting forStock-Based Compensation-Transition and Disclosure*,*” to stock-based employee compensation (in thousands,except per share amounts):

 
| ** **                                                                                                 | ** ** | **Three months ended  March 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                                                                 | ** ** | **2005**                               | ** ** | **2004** | ** ** |
| Net loss, as reported                                                                                      |       | $                                      | (1,420     | ) | $ | (1,960 | ) |
| Deduct: Stock-based employee compensation  expense determined under fair value based method for all awards |       | (129                                   | )          | (142 | ) |
| Pro forma net loss.                                                                                        |       | $                                      | (1,549     | ) | $ | (2,102 | ) |
|                                                                                                       |       |                                   |       |   |   |
| Net loss per share:                                                                                        |       |                                   |       |   |   |
| Basic and diluted—as reported                                                                         |       | $                                      | (0.30      | ) | $ | (0.42 | ) |
| Basic and diluted—pro forma                                                                           |       | $                                      | (0.32      | ) | $ | (0.45 | ) |

 

Option valuation models require the input of highlysubjective assumptions. Because InsWeb’s employee and director stock optionshave characteristics significantly different from those of traded options, andbecause changes in the subjective input assumptions can materially affect thefair value estimate, in management’s opinion, the existing models do notnecessarily provide a reliable measure of the fair value of its employee stockoptions. For purposes of pro forma disclosures, the estimated fair value of theoptions is amortized over the options’ vesting period. The above pro formadisclosures are not necessarily representative of the effects on reportedincome or loss for future periods, as additional grants are made each year andoptions vest over several years.

 

***Statementof Financial Accounting Standard No. 123(R)***

 

On October 13, 2004, the FASB concluded thatStatement 123R, *Share-Based Payment,*whichwould require all companies to measure compensation cost for all share-basedpayments (including employee stock options) at fair value. As revised in April 2005,this will be effective for public companies for annual periods beginning after June 15,2005. InsWeb may adopt the new standard in one of two ways — the modifiedprospective transition method or the modified retrospective transition method.InsWeb plans to adoptStatement 123R in the firstquarter of fiscal 2006 and is currently evaluating the effect that the adoptionof Statement 123R will have on its financial position and results ofoperations.

 

8

----

 

**5. Accrued Expenses**

 

Accrued expenses consist of the following (inthousands):

 
| ** **                             | ** ** | **March 31,  2005** | ** ** | **December 31,  2004** | ** ** |
|----------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
|                                   |       |                     |       |                        |       |
| Accrued lease obligations (see Note 7) |       | $                        | 2,094      |                        | $          | 2,172 |   |
| Accrued employee compensation          |       | 797                      |       | 559                         |       |
| Deferred rent                          |       | 524                      |       | 522                         |       |
| Other                                  |       | 189                      |       | 203                         |       |
| Total                                  |       | $                        | 3,604      |                        | $          | 3,456 |   |

 

**6. Comprehensive Loss**

 

Total comprehensive loss for the three months ended March 31,2005 and 2003 was as follows (in thousands):

 
| ** **                                                                           | ** ** | **Three months  ended March 31,** | ** ** |
|--------------------------------------------------------------------------------------|------------|----------------------------------------|------------|
| ** **                                                                           | ** ** | **2005**                               | ** ** | **2004** | ** ** |
| Net loss                                                                             |       | $                                      | (1,420     | ) | $ | (1,960 | ) |
| Other comprehensive income (loss) - change  in unrealized gain (loss) on investments |       | 2                                      |       | 1 |   |
| Total  comprehensive loss                                                            |       | $                                      | (1,418     | ) | $ | (1,959 | ) |

 

**7.  Commitments and Contingencies**

 

**Leases**

 

InsWeb is contractually obligated to makefuture lease payments on certain formerly occupied facilities through September 2008.As of March 31, 2005, total future obligations for these facilitiesamounted to $8,500,000; these obligations are offset by total estimated futuresublease income of approximately $7,200,000. Substantially all future subleaseincome is due from a sublessee who is an early-stage company with a limitedoperating history and, therefore, there are inherent risks and uncertaintiesassociated with its future operations and its ability to discharge itsobligations through the term of the sublease. In the event that the sublesseedefaults on its obligations under the amended sublease, InsWeb would beresponsible for making the required lease payments to the landlord through theremaining term of the lease. In connection with this lease and other leaseobligations for formerly occupied facilities, InsWeb must make assumptionsregarding the estimated future sublease income relative to these facilities. Asa result of the above, the Company has recorded an accrual of $2,100,000 as of March 31,2005 for lease commitments related to these formerly occupied facilities, ascompared to an accrual of $2,200,000 as of December 31, 2004. Theseestimates and assumptions are affected by area-specific conditions such as newcommercial development, market occupancy rates and future market prices. Ifthese estimates or their related assumptions change in the future, InsWeb maybe required to record a charge to increase its accrual.

 

9

----

 

**Securities Class Action Lawsuit**

 

A securities class action lawsuit was filedon December 5, 2001 in the United States District Court for the SouthernDistrict of New York, (the “Court”) purportedly on behalf of all persons whopurchased our common stock from July 22, 1999 through December 6,2000. The complaint named as defendants InsWeb, certain current and formerofficers and directors, and three investment banking firms that served asunderwriters for InsWeb’s initial public offering in July 1999. Thecomplaint, as subsequently amended, alleges violations of Sections 11 and 15 ofthe Securities Act of 1933 and Sections 10 and 20 of the Securities ExchangeAct of 1934, on the grounds that the prospectuses incorporated in theregistration statements for the offering failed to disclose, among otherthings, that (i) the underwriters had solicited and received excessive andundisclosed commissions from certain investors in exchange for which theunderwriters allocated to those investors material portions of the shares ofour stock sold in the offerings and (ii) the underwriters had entered intoagreements with customers whereby the underwriters agreed to allocated sharesof the stock sold in the offering to those customers in exchange for which thecustomers agreed to purchase additional shares of InsWeb stock in theaftermarket at pre-determined prices. No specific damages are claimed. Similarallegations have been made in lawsuits relating to more than 300 other initialpublic offerings conducted in 1999 and 2000, all of which have beenconsolidated for pretrial purposes. In October 2002, all claims againstthe individual defendants were dismissed without prejudice. In February 2003,the Court dismissed the claims in the InsWeb action alleging violations of theSecurities Exchange Act of 1934 but allowed the plaintiffs to proceed with theremaining claims. In June 2003, the plaintiffs in all of the casespresented a settlement proposal to all of the issuer defendants. Under theproposed settlement, the plaintiffs will dismiss and release all claims againstparticipating defendants in exchange for a contingent payment guaranty by theinsurance companies collectively responsible for insuring the issuers in allthe related cases, and the assignment or surrender to the plaintiffs of certainclaims the issuer defendants may have against the underwriters. InsWeb and mostof the other issuer defendants have accepted the settlement proposal. Thesettlement was given preliminary approval by the Court in February 2005,pending a modification to the settlement documents. If the Court does notapprove the settlement in final form, InsWeb would defend the lawsuitvigorously. However, the litigation is in the preliminary stage, and we cannotpredict its outcome. The litigation process is inherently uncertain. Anunfavorable outcome could have a material adverse effect on InsWeb’s financialcondition, results of operations and cash flows.

 

**8.  Stockholders’ Equity**

 

#### **Negotiated common stockrepurchases**

 

In March 2005, the Board of Directorsauthorized management to repurchase 755,821 shares of InsWeb Corporation commonstock, consisting of 531,947 shares held by Nationwide Mutual Insurance Companyand 223,874 shares held by Century Capital Partners, L.P. These sharesrepresented 16% of InsWeb Corporation’s total outstanding Common Stock and werepurchased for $1.7 million, or $2.30 per share. Subsequent to the closingof these transactions on March 31, 2005, Nationwide Mutual and CenturyCapital hold no shares.

 

10

----

 

**ITEM 2.****                 ****MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION****ANDRESULTS OF OPERATIONS**

 

*This Quarterly Report on Form 10-Q,and in particular Management’s Discussion and Analysis of Financial Conditionand Results of Operations, contains “forward-looking statements” with respectto InsWeb’s future financial performance. The words or phrases “expects,” “anticipates,”“intends,” “plans,” “believes,” “seeks,” “estimates,” and similar expressionsare generally intended to identify forward-looking statements. Suchforward-looking statements are subject to various known and unknown risks anduncertainties, and InsWeb cautions you that any forward-looking informationprovided by, or on behalf of, InsWeb is not a guarantee of future performance.Actual results could differ materially from those anticipated in suchforward-looking statements due to a number of factors, some of which are beyondInsWeb’s control, including, but not limited to, uncertain economic conditionswhich could result in lower growth rates, decreasing revenue and reducedparticipation in InsWeb’s marketplace, anticipated losses, the unpredictabilityof future revenues, reliance on key customers—property and casualty insurancecarriers- who are themselves subject to volatility in their operating cycles,reliance on a third party intermediary who provides leads to local insuranceagents on InsWeb’s behalf, competition, risks associated with system development and operation risks, managementof potential growth and risks of new business areas, business combinations, andstrategic alliances. These risks and uncertainties, as well as other risks anduncertainties, which are described in greater detail in the section entitled“Factors That May Affect Future Performance” and other documents filedwith the Securities and Exchange Commission, could cause InsWeb’s actualresults to differ materially from historical results or those currentlyanticipated. All forward-looking statements are based on information availableto InsWeb on the date hereof, and InsWeb assumes no obligation to update suchstatements.*

 

**Overview**

 

InsWeb operates an online insurance marketplace thatenables consumers to comparison shop online for a variety of insurance products, including automobile and term life.InsWeb’s marketplace electronically matches consumers and insurance providers.InsWeb has combined extensive knowledge of the insurance industry,technological expertise and close relationships with a significant number ofinsurance companies to develop an integrated online marketplace. InsWeb’smarketplace enables consumers to research insurance-related topics, search for,analyze and compare insurance products, apply for and receive insurancecompany-sponsored quotes and to purchase automobile and term life insurancecoverage through InsWeb’s insurance agencies.

 

InsWeb’s principal source of revenues is transactionfees from participating insurance providers, either directly from an insurancecompany or via a local insurance agent. While quotes obtained through InsWeb’sonline insurance marketplace are provided to consumers free of charge, InsWebearns revenues from participating insurance companies or agents based on thedelivery of qualified leads.These fees are earned either from a fee paid by an insurance company for eachclosed policy, from the delivery of a lead to a participating insuranceprovider or local agent, or from a commission or broker fee earned by InsWeb’sinsurance agencies, InsWeb Insurance Services, Inc. and Goldrush InsuranceServices, Inc.

 

Certain consumers, depending on their responses toseveral preliminary screening questions, are provided the opportunity to linkdirectly to an insurance company’s website. In these situations, the consumerwill complete the insurance company’s online application, and InsWeb will bepaid a fee for that consumer link or click-through.

 

In 2004, InsWeb launched its agent networkprogram which provides online auto insurance consumers access to localinsurance agents. Currently, the agent network program is conductedthrough an intermediary, NetQuote, Inc., who provides auto consumer leadsto local insurance agents. During the first quarter of 2005, this agent networkprogram represented 27% of auto transaction fees as compared to 1% for thefirst quarter of 2004. For fiscal 2004, the agent network program generated 8%of total auto transaction fees.

 

Tolessen InsWeb’s reliance on this intermediary, we are developing internally anagent network program which will provide leads directly to local insuranceagents who have registered with InsWeb. We expect that this initiative willlaunch during the third quarter of 2005. Going forward, we expect that theagent network program, both through its intermediary and through our internallydeveloped network, will continue to represent a significant percentage of autotransaction fees. However, the agent network is subject to a number ofuncertainties, including the cost of developing and marketing the program, andthe continued participation of its third party intermediary. If we are unableto create a positive offering, or if the transition of the agent networkprogram from the intermediary to our internally developed program is delayed orotherwise unsuccessful, the Company’s business may be harmed.

 

11

----

 

In the third quarter of 2004, InsWeb launched itsterm life agency in an effort to increase revenue per consumer within the termlife marketplace. The conversion from a lead-based revenue model to acommission-based revenue model results in lower revenues in the short-term, asit takes 90 to 120 days to complete the sales process for a term lifepolicy, and revenue is recognized when the consumer purchases the insurancepolicy and pays the premium. While this has had a negative effect on revenuesduring the transition period, we believe that this conversion will result in amodest increase in term life revenues by the third quarter of 2005.

 

InsWeb is subject to all of the risks inherent inthe electronic commerce industry and special risks related to the onlineinsurance industry. These risks include, but are not limited to, unpredictablebusiness model, limited management resources, Internet related security risks,the changing nature of the electronic commerce industry, and variations inconsumer traffic (consumers shopping for insurance on the Internet) andinsurance company participation. Due to the foregoing and other factors, InsWeb’sfuture operating results may be materially affected.

 

Since its inception, InsWeb has incurred significantlosses, and as of March 31, 2005, InsWeb had an accumulated deficit of$184.0 million. These losses, and this accumulated deficit, haveresulted from the significant costs incurred in the development of InsWeb’stechnology platform, the establishment of relationships with insurancecompanies, their integration with the InsWeb site, and InsWeb’s marketing andsales activities. We intend to continue to invest in product development andmaintenance, and sales and marketing. In addition, we continue to face thecosts associated with continuing to function as a publicly listed company,including the costs of compliance with the provisions of the Sarbanes-Oxley Actof 2002 that will require the Company to comply with Section 404 of theSarbanes-Oxley Act in fiscal 2006. As a result, management believes thatInsWeb will continue to incur operating losses through much of fiscal year2005. In addition, we are unable to ultimately achieve profitability, we mayneed to seek additional financing to continue its business operations.

 

InsWeb’s operating results for future periodsare subject to numerous uncertainties, and there can be no assurance thatInsWeb will be able to achieve and sustain profitability. In light of theevolving nature of InsWeb’s business to better capitalize on its position as aleading insurance portal, including the current expansion of InsWeb’s agentnetwork program, InsWeb believes that period-to-period comparisons of itsoperating results are not necessarily meaningful and should not be relied uponas an indication of future performance.

 

InsWeb’s operations to date have consumed substantial amounts of cash,cash equivalents and short-term investments ($8.7 million in fiscal 2004 and$4.2 million in fiscal 2003) and will continue to require capital in the nearfuture. In order to remain competitive, we must continue to make investments essentialto our ability to operate. In the event that we are unable to generate revenuessufficient to offset our costs, or if our costs of marketing and operations aregreater than we anticipate, we may be unable to grow our business at the ratedesired or may be required to delay, reduce, or cease certain of ouroperations, any of which could materially harm our business and financialresults.

 

12

----

 

# **Results of Operations**

 

The following table sets forth certain statement ofoperations items as a percentage of total revenues for the three months ended March 31,2005 and 2004:

 
| ** **                        | ** ** | **Three months  ended  March 31,** | ** ** |
|-----------------------------------|------------|-----------------------------------------|------------|
| ** **                        | ** ** | **2005**                                | ** ** | **2004** | ** ** |
| Revenues:                         |       |                                    |       |   |   |
| Transaction fees                  |       | 98                                      | %          | 94 | % |
| Development and  maintenance fees |       | 2                                       | %          | 6 | % |
| Total                             |       | 100                                     | %          | 100 | % |
| Operating  expenses:              |       |                                    |       |   |   |
| Technology                        |       | 24                                      | %          | 36 | % |
| Sales and  marketing              |       | 83                                      | %          | 82 | % |
| General and  administrative       |       | 20                                      | %          | 32 | % |
| Total                             |       | 127                                     | %          | 150 | % |
| Loss from  operations             |       | (27                                     | )%         | (50 | )% |

 

**Revenues**

 
| ** **              | ** ** | **Three months  ended  March 31,** | ** ** |
|-------------------------|------------|-----------------------------------------|------------|
| **(In thousands)**      | ** ** | **2005**                                | ** ** | **2004** | ** ** |
|                    |       |                                    |       |   |   |
| Transaction fees:       |       |                                    |       |   |   |
| Auto insurance          |       | $                                       | 4,698      |   | $ | 2,736 |   |
| Term life  insurance    |       | 828                                     |       | 1,033 |   |
| Other insurance         |       | 80                                      |       | 61 |   |
| Total transaction  fees |       | $                                       | 5,606      |   | $ | 3,830 |   |

 

**Direct Marketing (ConsumerAcquisition)**

 
| ** **                                               | ** ** | **Three months  ended  March 31,** | ** ** |
|----------------------------------------------------------|------------|-----------------------------------------|------------|
| **(In thousands, except per  consumer amounts)**         | ** ** | **2005**                                | ** ** | **2004** | ** ** |
| Direct marketing costs                                   |       | $                                       | 3,156      |   | $ | 1,854 |   |
| Direct marketing costs as a percent of  transaction fees |       | 56                                      | %          | 48 | % |
| Number of consumers                                      |       | 1,091                                   |       | 733 |   |
| Direct marketing cost per consumer                       |       | $                                       | 2.89       |   | $ | 2.53 |   |
| Transaction fees per consumer                            |       | $                                       | 5.14       |   | $ | 5.23 |   |

 

**AutoMarketplace**

 
| ** **                                       | ** ** | **Three months  ended  March 31,** | ** ** |
|--------------------------------------------------|------------|-----------------------------------------|------------|
| **(In thousands, except per  consumer amounts)** | ** ** | **2005**                                | ** ** | **2004** | ** ** |
| Number of  consumers                             |       | 968                                     |       | 585 |   |
| Transaction fees per consumer                    |       | $                                       | 4.85       |   | $ | 4.68 |   |
|                                                  |            |                                         |            |  |  |  |  |

 

**Term LifeMarketplace**

 
| ** **                                       | ** ** | **Three months  ended  March 31,** | ** ** |
|--------------------------------------------------|------------|-----------------------------------------|------------|
| **(In thousands, except per  consumer amounts)** | ** ** | **2005**                                | ** ** | **2004** | ** ** |
| Number of  consumers                             |       | 93                                      |       | 100 |   |
| Transaction fees per consumer                    |       | $                                       | 8.90       |   | $ | 10.33 |   |
|                                                  |            |                                         |            |  |  |  |  |

 

***Definitions:***

* *
| “Direct marketing costs”       |   | Represents expenses incurred by the company  to drive consumer traffic to InsWeb’s online insurance marketplace; |
|------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------|
| “Number of consumers”          |   | Represents a consumer who has started an  InsWeb application;                                                         |
| “Transaction Fee per consumer” |   | Represents transaction revenue earned per  consumer who has started an application.                                   |

 

13

----

 

**Revenues**

 

**Transaction Fees.** Transaction fees (consisting of lead fees, closed policy fees,commissions and sponsored link fees) relating to automobile insurance increasedto $4.7 million for the three months ended March 31, 2005, from$2.7 million for the comparable period in 2004, an increase of 74%. Theincrease for the three months ended March 31, 2005 is primarilyattributable to a 65% increase in consumer traffic (consumers who have startedthe InsWeb auto application) from the comparable period in 2004, while therevenue per consumer increased slightly to $4.85.  As discussed above, we currently rely on andwill to continue to rely on our agent network program, both through an intermediary and through ourinternally developed network, togenerate a significant percentage of our auto marketplace transactionfees.  However, the agent network is subject to a number of uncertainties,including the cost of developing and marketing the program, and the continuedparticipation of our third party intermediary. If we are unable to create apositive offering, or if the transition of the agent network program from theintermediary to our internally developed program is delayed or otherwiseunsuccessful, our business may be harmed. This being said, management’s current expectations are for revenue perauto consumer to remain at or near current levels throughout 2005.

 

Transaction fees (consisting of lead fees andcommissions) relating to term life insurance decreased to $0.8 million forthe three months ended March 31, 2005 from $1.0 million for thecomparable period in 2004. The decrease in revenues was a result of a decreasein revenue per term life consumer to $8.90 for the three months ended March 31,2005, compared to $10.33 for the comparable period in 2004. This decrease, asdiscussed above, is a result of the development of the InsWeb term life agencyand the conversion from a lead-based revenue model to a commission-basedrevenue model. While thisconversion has had a negative effect on revenues during the transition period,management believes it will result in a modest increase in term life revenuesby the third quarter of 2005.

 

**Operating Expenses**

 

**Technology.**  Technology expenses consist primarily ofpayroll and related expenses, including employee benefits, facility and systemscosts, for product and site development personnel involved with the planning,design and implementation of carrier integration to the InsWeb online insurancemarketplace. Technology expensesdecreased to $1.4 million for the three months ended March 31, 2005,from $1.5 million for the comparable period in 2004. The decrease wasprimarily attributable to a reduction in headcount. Technology expenses for theremainder of 2005 are expected to remain at or near current levels.

 

**Sales and Marketing.**  Sales and marketing expenses consist ofdirect marketing expenditures that include advertising, promotions and feespaid to online companies with which InsWeb has contractual relationships todrive consumer traffic to the InsWeb online marketplace. InsWeb’s currentconsumer marketing program is focused on maintaining key online relationshipsand selective cost-effective marketing campaigns designed to maintain consumerawareness of InsWeb and its online insurance marketplace. Also included insales and marketing expenses are payroll and related expenses, includingemployee benefits, facility costs, telecommunications and systems costs, for InsWeb’ssales and marketing personnel and the personnel and related costs for InsWeb’sInsurance Agency operations, which includes selling agents, underwriters,supervisors and customer service and support groups. Overall sales and marketing expenses increasedto $4.7 million for the three months ended March 31, 2005, from $3.3million for the comparable period in 2004. This is primarily a result of anincrease in direct marketing costs to $3.2 million for the three monthsended March 31, 2005, compared to $1.9 million in 2004. This reflectsa 49% increase in the number of consumers to 1.1 million, at an average cost of$2.89 per consumer, an increase of 14% from the first quarter of 2004. The increase in cost per consumer isattributable to an increase in the cost of online consumer advertising andonline marketing relationships. TheCompany expects that for the remainder of 2005, direct marketing costs perconsumer acquired will remain at the current levels. Total direct marketingcosts will fluctuate based on the amount of consumer traffic driven to theInsWeb marketplace, while all other sales and marketing expenditures areexpected to increase for the remainder 2005, as the local agent operations andterm life agency are expanded.

 

**General and Administrative** General and administrative expenses consistprimarily of payroll and related expenses, including employee benefits,facility costs, telecommunications and systems costs, for InsWeb’s generalmanagement, administrative and accounting personnel, as well as other generalcorporate expenses. General andadministrative expenses decreased to $1.1 million for the three monthsended March 31, 2005 from $1.3 million for the comparable period in2004. The decrease was primarily due to a reduction in headcount. General andadministrative expenses are expected to remain at current levels for theremainder of 2005.

 

**Interest Income**

 

Interest income was $92,000 for the three monthsended March 31, 2005 and $71,000 for the three months ended March 31,2004. Interest income is income earned on InsWeb’s short-term investments.

 

14

----

 

**Critical Accounting Policies**

 

InsWeb’s discussion and analysis of its financialcondition and results of operations are based on InsWeb’s consolidatedfinancial statements, which have been prepared in accordance with U.S.generally accepted accounting principles. The preparation of these financialstatements requires InsWeb to make estimates and judgments that affect thereported amounts of assets and liabilities and the disclosure of contingentassets and liabilities at the date of the financial statements and the reportedamounts of revenues and expenses during the reporting period. InsWeb bases itsestimates and judgments on historical experience and on various other factorsthat are believed to be reasonable under the circumstances, the results ofwhich form the basis for making judgments about the carrying values of assetsand liabilities that are not readily apparent from other sources. Actual resultsmay differ from these estimates under different assumptions or conditions.InsWeb believes the following critical accounting policies affect its moresignificant judgments and estimates used in the preparation of its consolidatedfinancial statements.

 

***Accrual forLease Obligations.***  InsWeb is contractually obligated to makefuture lease payments on certain formerly occupied facilities through September 2008.As of March 31, 2005, total future obligations for these facilitiesamounted to $8.5 million; these obligations are offset by total estimatedfuture sublease income of approximately $7.2 million. Substantially all futuresublease income is due from a sublessee who is an early-stage company with alimited operating history and, therefore, there are inherent risks anduncertainties associated with its future operations and its ability todischarge its obligations through the term of the sublease. In the event thatthe sublessee defaults on its obligations under the amended sublease, InsWebwould be responsible for making the required lease payments to the landlordthrough the remaining term of the lease. In connection with this lease andother lease obligations for formerly occupied facilities, InsWeb must makeassumptions regarding the estimated future sublease income relative to thesefacilities. As a result of the above, the Company has recorded an accrual of$2.1 million as of March 31, 2005 for lease commitments related to theseformerly occupied facilities, as compared to an accrual of $2.2 million as of December 31,2004. These estimates and assumptions are affected by area-specific conditionssuch as new commercial development, market occupancy rates and future marketprices. If these estimates or their related assumptions change in the future,InsWeb may be required to record a charge to increase its accrual.

 

***Contingencies*****.**  Asdiscussed in “Item 1 – Note 7 of Notes to Condensed ConsolidatedFinancial Statements,” aclass action lawsuit has been filed that alleges InsWeb violated certain federalsecurities laws at the time of its initial public offering. Although someclaims against InsWeb in this class action have been dismissed and a settlementof these proceedings has been proposed and conditionally accepted, InsWebcannot accurately predict the ultimate outcome of this matter at this time andtherefore, cannot estimate the range of probable loss, if any, due to theinherent uncertainties of litigation. InsWeb believes it has meritoriousdefenses; however InsWeb cannot assure that it will prevail in this action. Anunfavorable outcome could have a material adverse effect on InsWeb’s financialcondition, results of operations and cash flows.

 

***Income Taxes.***  InsWebaccounts for income taxes in accordance with Statement of Financial AccountingStandards No. 109 (SFAS 109), *Accountingfor Income Taxes*. The deferred tax assets and/or liabilities aredetermined by multiplying the differences between the financial reporting andtax reporting bases for assets and liabilities by the enacted tax rates expectedto be in effect when such differences are recovered or settled.

 

The carrying value of InsWeb’s deferred tax assets,which were $70.4 million at December 31, 2004, are dependent upon ourability to generate sufficient future taxable income. The Company hasestablished a full valuation allowance against its net deferred tax assets forcontinuing operations to reflect the uncertainty of realizing the deferred taxbenefits, given historical losses. A valuation allowance is required when it ismore likely than not that all or a portion of a deferred tax asset will not berealized. A review of all available positive and negative evidence needs to beconsidered, including InsWeb’s past and future performance, the marketenvironment in which it operates, the utilization of tax attributes in thepast, and the length of carryforward periods and evaluation of potential taxplanning strategies. InsWeb expects to continue to maintain a full valuationallowance until an appropriate level of profitability is sustained or it isable to develop tax strategies that would enable it to conclude that it is morelikely than not that a portion of its deferred tax assets would be realizable.

 

15

----

 

**Liquidity and Capital Resources**

 

At March 31, 2005 InsWeb’s principal source ofliquidity and overall cash position was $14.3 million, consisting of cash, cashequivalents and short-term investments, a decrease from $17.5 million at December 31,2004.  The decrease resulted from the useof $3.2 million of cash in operating and financing activities. The primarydriver that impacts changes in the Company’s overall cash position is itsoperating income or loss.

 

For the three months ended March 31, 2005, netcash used in operating activities was $1.4 million. The primary components ofthe quarterly use of cash was the net loss of $1.4 million, an increase inaccounts receivable of $1.2 million, offset by an increase in accounts payableof $0.7 million. The increase in accounts receivable was a result of therevenue growth during the quarter, with days sales outstanding holding steadyat 26 days at both March 31, 2005 and December 31, 2004.  The increase in accounts payable was a resultof the significant increase in direct marketing activities during the quarter,increasing consumer traffic to the InsWeb marketplace and a correspondingincrease in direct marketing costs.

 

For the three months ended March 31, 2005, netcash provided by investing activities was $1.7 million, which primarily consistedof redemptions of short-term investments offset by the purchases of short-terminvestments. Investing activities will generally fluctuate in conjunction withoperating activity needs.

 

For the three months ended March 31, 2005, netcash used by financing activities was $1.7 million.  Cash used by financing activities wasattributable to the repurchase of common stock for $1.7 million (see Note 8 toNotes to Condensed Consolidated Financial Statements).

 

InsWeb leases its current office facilities undernon-cancelable operating leases, which expire at various dates through April 2011,including a 10-year lease agreement through 2011 for office space in theSacramento area which houses its corporate headquarters and agency operations.InsWeb has options to extend the lease at the end of the lease term, and hasthe right of first refusal on other office space in the complex. In addition,InsWeb has entered into various sublease arrangements associated withpreviously exited facilities that have terms extending through September 2008.

 

Aggregate contractual cash obligations as of March 31,2005 are summarized as follows (in thousands):

 
| **Years ending December 31,** | ** ** | **Gross lease  commitments** | ** ** | **Sublease  income** | ** ** | **Net lease  commitment** | ** ** |
|------------------------------------|------------|------------------------------|------------|----------------------|------------|---------------------------|------------|
| 2005                               |       | $                            | 2,448      |                 | $          | (1,475                    | )          | $ | 973 |   |
| 2006                               |       | 3,391                        |       | (2,030               | )          | 1,361                     |       |
| 2007                               |       | 3,483                        |       | (2,100               | )          | 1,383                     |       |
| 2008                               |       | 2,936                        |       | (1,615               | )          | 1,321                     |       |
| 2009                               |       | 1,078                        |       | —               |       | 1,078                     |       |
| Thereafter                         |       | 1,437                        |       | —               |       | 1,437                     |       |
|                               |       | $                            | 14,773     |                 | $          | (7,220                    | )          | $ | 7,553 |   |

 

Our operations to date have consumed substantial amounts of cash, cashequivalents and short-term investments ($8.6 million in fiscal 2004 and$9.6 in fiscal 2003) and will continue to require capital in the nearfuture. In order to remain competitive, we must continue to make investmentswhich are essential to our ability to operate, including investments in directmarketing, technology and general administration, including the governance andcompliance costs required of a public company. We anticipate that our cash, cash equivalentsand short-term investments will be sufficient to meet our anticipated cashneeds for working capital and capital expenditures for at least the next12 months. Longer-term, if the enhancements toour auto marketplace, including the expansion of our agent networkprogram,  and the launch of our term life agency are unable togenerate revenues sufficient to offset our costs, or if our costs of marketingand operations are greater than we anticipate, we may be unable to grow ourbusiness at the rate desired; or we may be required to delay, reduce, or ceasecertain of our operations, any of which could materially harm our business andfinancial results. Although wedo not anticipate the need for additional financing, we nevertheless mayrequire additional funds to meet operating needs. We cannot be certain thatadditional financing will be available when required, on favorable terms or atall. If we are not successful in raising additional capital as required, we maydelay, significantly reduce or cease certain of our operations, which could adverselyaffect our results of operations and financial position.

 

16

----

 

**Factors That May Affect Our FuturePerformance**

 

*Our future business,operating results and financial condition are subject to various risks anduncertainties, including those described below.*

 

**Our business is difficult to evaluate becauseour market is evolving rapidly and our business model is unpredictable**

 

An evaluation of our future prospects is verydifficult. An investor in our common stock must consider the uncertaintiesfrequently encountered by early stage companies in new and rapidly evolvingmarkets. These uncertainties include:

 

•      an evolving andunpredictable business model, which makes prediction of future resultsuncertain and an investment in our common stock highly speculative;

 

•      the developmentof comparable services by competitors, which may reduce our market share;

 

•      the uncertaintyof the extent to which the consumer market will adopt the Internet as thepreferred medium for comparison shopping for and purchase of insuranceproducts, which may limit our ability to generate revenue from consumers thatvisit our online marketplace or our insurance agency;

 

•      our ability toretain key employees; and

 

•      our reliance onkey customers and ability to retain customers.

 

Our business strategy may not be successfuland we may not be able to successfully address these uncertainties. Moreover,our ability to take the foregoing steps may be hampered by our limitedfinancial resources should we fail to rapidly increase revenues or shouldincreased revenues be more than offset by increased operating expenses.

 

**We have a history of losses, we expect futurelosses, and we may not achieve or maintain profitability**

 

Given planned investment levels, our abilityto achieve profitability will depend upon our ability to generate and sustainsubstantially increased revenues. As a result, we believe that we will incuroperating losses through much of fiscal year 2005. We incurred operating lossesof $9.2 million for 2004, $7.0 million for 2003, and$15.5 million for 2002. As of March 31, 2005, our accumulated deficitwas $184.1 million. Our operating results for future periods are subjectto numerous uncertainties, and we may not achieve sufficient revenues to becomeprofitable. Even if we achieve profitability, we may not sustain or increaseprofitability on a quarterly or annual basis in the future. If we are unable toachieve profitability or if our profitability is delayed we may need to seekadditional financing to continue our business operations. Such financing couldbe on terms that are dilutive to our existing stockholders or could involve theissuance of securities that have rights and preferences that are senior tothose associated with our common stock. Moreover, if such financing were notavailable or were available only upon terms that were unacceptable to us, wecould be required to delay,reduce, or cease certain of our operations, any of which could materially harmour business and financial results.

 

**If we are unable to achieve cash flow breakeven orgenerate working capital that may be required in the future, our ability tooperate could suffer or cease**

 

Our operations to date have consumed substantial amounts of cash, cashequivalents and short-term investments ($8.6 million in 2004 and $9.6 in 2003)and will continue to require capital in the near future. In order to remaincompetitive, we must continue to make investments essential to our ability tooperate, including investments in direct marketing, technology and generaladministration. In addition, we continue to face the costs of being a publiccompany. In the event that we are unable to generate revenues sufficient tooffset our costs, or if our costs of marketing and operations are greater thanwe anticipate, we may be unable to grow our business at the rate desired or maybe required to delay, reduce, or cease certain of our operations, any of whichcould materially harm our business and financial results.

 

17

----

 

**We may incur unexpected costs or receive less revenue than we plannedfrom recent initiatives that are part of our evolving business model and, as aresult, our operations could be harmed**

 

InsWeb’sbusiness model continues to evolve to better capitalize on its position as aleading insurance portal.  Within the auto insurance marketplace,consumers now have numerous options to find the carrier best suited to theirneeds based on initiatives implemented during 2004, in particularthe launch of an agent network program with an intermediary that providesconsumer leads to local insurance agents. During the first quarter of 2005, theagent program run by this intermediary represented 27% of auto transactionfees, compared to 18% in the fourth quarter of 2004.  To lessen InsWeb’s reliance on thisthird party, the Company is developing internally an agent network programwhich will provide leads directly to local insurance agents who have registeredwith InsWeb. The Company expects that this initiative will launch during thethird quarter of 2005.

 

Inaddition, InsWeb laid the foundation to achieve increased revenue per consumerwithin its term life marketplace through the launch of its Term Life agency andthe shift from a lead payment to a commission payment revenue model, which theCompany believes will offer greater long-term financial benefit.

 

Theseinitiatives are subject to a number of uncertainties, including the cost ofdeveloping and marketing these new products, and the continued participation ofinsurance carriers and our third party agent network partner. Moreover, thereare many insurance agencies selling term life insurance online, and there are anumber of online networks providing consumer leads to local insurance agents.If we are unable to create a positive offering with these initiatives, we maylose business to competitors and/or our business may be harmed.

 

**Our future revenues are unpredictable, ouroperating results are likely to fluctuate from quarter to quarter, and if wefail to meet the expectations of investors, our stock price could declinesignificantly**

 

Due to the evolving nature of our businessmodel and the high proportion of our revenues that are derived from consumertraffic to our website, our future revenues are inherently difficult toforecast. We believe that period-to-period comparisons of our operating resultsmay not be meaningful, and you should not rely upon them as an indication ofour future performance. Moreover, our expense levels are based largely on ourinvestment plans and estimates of future revenues. We may be unable to adjustour spending to compensate for an unexpected shortfall in revenues.Accordingly, any significant shortfall in revenues relative to our plannedexpenditures would harm our results of operations and could cause our stockprice to fall sharply, particularly following quarters in which our operatingresults fail to meet the expectations of investors.

 

Factors that may cause fluctuations in ouroperating results include the following, many of which are outside our control:

 

•      We mayexperience consumer dissatisfaction with our online marketplace as we add orchange features, or as the insurance coverage offered by participatinginsurance companies varies;

 

•      Consumer trafficon our online marketplace may decline as a result of the announcement orintroduction of a competing online insurance marketplace or other new websites,products or services offered by our competitors;

 

•      Consumertraffic may also fluctuate as a result of changes in level of advertising byentities with which we have insurance marketing relationships;

 

•      Our revenuesmay be harmed if we lose one or more significant insurance companyrelationships or if any of our participating insurance companies merge with oneanother;

 

•      Our revenuesmay be harmed if our new agent network initiative is not developed and launchedin a timely or complete manner, or ifthe transition to our internally developed agent network program from ourcurrent third party intermediary is unsuccessful;

 

18

----

 

•      Use of theInternet by consumers may fluctuate due to seasonal factors or otheruncontrollable factors affecting consumer behavior and may be affected by slowInternet performance due to technical problems or traffic bottlenecks on thenetwork;

 

•      Our ability toconvert site visits into transaction fees and/or revenue from insurance agencyactivities may fluctuate due to changes in our user interface or other featureson our site;

 

•      Our ability togenerate transaction fees may be adversely affected by changes in theunderwriting criteria used by our participating insurance companies todetermine which consumers will be offered quotes; and

 

•      Our ability togenerate transaction fees and/or revenue from insurance agency activities mayalso be harmed due to technical difficulties on our website that hamper aconsumer’s ability to start or complete a shopping session.

 

**We are exposed to increased costs and risks associated withcomplying with the increasing regulation of corporate governance and disclosurestandards**

 

We are spending anincreased amount of management time and external resources to comply withchanging laws, regulations and standards relating to corporate governance andpublic disclosure, including the Sarbanes-Oxley Act of 2002, new SECregulations and Nasdaq Stock Market rules. In particular, Section 404 ofthe Sarbanes-Oxley Act of 2002 requires management’s annual review andevaluation of our internal control systems, and attestations of theeffectiveness of these systems by our independent auditors. We have commenceddocumenting our internal control systems and procedures and will need toconsider improvements that may be necessary in order for us to comply with therequirements of Section 404 by the end of 2006. This process may requireus to hire additional personnel and outside advisory services and will resultin significant additional accounting and legal expenses. Accordingly, we mayencounter problems or delays in completing the review and evaluation, theimplementation of improvements and the receipt of a positive attestation by ourindependent auditors. While we believe that we currently have adequate internalcontrols over financial reporting, in the event that our chief executiveofficer or chief financial officer determine that our controls over financialreporting are not effective as defined under Section 404, investorperceptions of our company may be adversely affected and could cause a declinein the market price of our stock.

 

**Seasonality affecting insurance shopping andInternet usage may cause fluctuations in our operating results**

 

We have experienced seasonality in ourbusiness associated with general slowness in the insurance industry during theyear-end holiday period. We expect to continue to experience seasonality as ourbusiness matures. Because of this seasonality, investors may not be able topredict our annual operating results based on a quarter-to-quarter comparisonof our operating results. We believe seasonality will have an ongoing impact onour business.

 

**Because a significant portion of our revenueis attributable to automobile insurance shopping on our online marketplace, weare especially vulnerable to risks related to the online market for automobileinsurance or the automobile insurance industry generally**

 

Automobile insurance accounted forapproximately 77% of our transaction revenues in 2004, approximately 79% in2003 and approximately 83% in 2002. For the three months ended March 31,2005, auto insurance accounted for approximately 84% of our transactionrevenues. We anticipate that automobile insurance will continue to account fora substantial portion of our revenues for the foreseeable future. As a result,if we fail to attract a broad base of consumers to shop for automobileinsurance on our site, our ability to generate revenue will be reduced and ourbusiness will be harmed. In addition, property and casualty insurance,including automobile insurance, is subject to operating cycles. During a cyclein which loss ratios rise, insurance companies may choose to restrict theamount of business they write while they await approval of rate increases fromthe various state insurance departments. Our business could be harmed if ourparticipating insurance companies reduce their participation in our onlinemarketplace.

 

19

----

 

**If we are unable to promote our brand andexpand our brand recognition, our ability to draw consumers to our website willbe limited**

 

A growing number of websites offer servicesthat are similar to and competitive with the services offered on our onlineinsurance marketplace. Therefore, a positive recognition of our brand iscritical to attracting additional consumers to our website, strengthening ourrelationships with participating insurance companies and attracting newinsurance companies. In order to attract and retain consumers and insurancecompanies and to promote and maintain our brand, we are continuing ourfinancial commitment to create and maintain brand awareness. Our currentmarketing program consists of the maintenance of certain network onlinerelationships and other selective cost effective marketing campaigns, designedto maintain consumer awareness of InsWeb and our online insurance marketplace.If our marketing efforts do not generate a corresponding increase in revenuesor we otherwise fail to successfully promote our brand, or if these effortsrequire excessive expenditures, our business will be harmed. Moreover, ifvisitors to our website do not perceive our existing services or the productsand services of our participating insurance companies to be of high quality, orif we alter or modify our brand image, introduce new services or enter into newbusiness ventures that are not favorably received, the value of our brand couldbe harmed.

 

Our ability to maintain a positiverecognition of our brand also depends in part on the quality of the productsand services consumers receive from our participating insurance companies orour insurance agency, including timely response to requests for quotes orcoverage. If we are unable to provide consumers with high-quality products andservices, the value of our brand may be harmed and the number of consumersusing our services may decline.

 

**Competition in the market for onlinedistribution of insurance is intense, and if we are unable to competeeffectively with current competitors or new competitors that enter the market,the fees paid to us by participating insurance companies may fall, the feescharged by online companies with which we have strategic relationships mayrise, and our market share may suffer**

 

The online insurance distribution market is arelatively new industry and, like the broader electronic commerce market, isboth rapidly evolving and highly competitive. Increased competition,particularly by companies offering online insurance distribution, could reducethe fees we are able to charge our participating insurance companies orincrease the fees we are required to pay to online companies with which we havestrategic relationships, resulting in reduced margins or loss of market share,any of which could harm our business. In addition, our current and futurecompetitors may be able to:

 

•      undertake moreextensive marketing campaigns for their brands and services;

 

•      devote moreresources to website and systems development;

 

•      adopt moreaggressive pricing policies; and

 

•      make moreattractive offers to potential employees, online companies and third-partyservice providers.

 

Accordingly, we may not be able to maintainor grow consumer traffic to our website and our base of participating insurancecompanies, our competitors may grow faster than we do, or companies with whomwe have strategic relationships may discontinue their relationships with us,any of which would harm our business.

 

**We may have difficulty integrating newinsurance companies into our online marketplace or agency operations, whichcould harm our ability to offer improved comparison-shopping opportunities andthus limit the attractiveness of our service to consumers**

 

Integration of an insurance company into ouronline marketplace requires a significant commitment of time and resources onour part and on the part of the insurance company, and is a technologicallydifficult process. This integration process typically takes from three to sixmonths to complete and typically requires us to expend between 160 and 2,000man-hours. To develop company-sponsored quotes for consumers, the integrationrequires either the development of a customized interface with the insurancecompany’s own rating system, accessing a third-party rating engine of theinsurance company’s choice, or adding the insurance company’s ratinginformation into InsWeb’s proprietary rating engines. Though integration intoour agency operations may require fewer resources to implement than integrationof an insurance company into our online marketplace, potential participatinginsurance companies may not be willing to invest the time and resourcesnecessary to achieve this integration, or we may not be able to overcome thetechnological difficulties associated with, or devote the time and resourcesnecessary to, successfully integrate the insurance company into our onlinemarketplace or our agency operations.

 

20

----

 

**We do not have exclusive relationships orlong-term contracts with insurance companies, which may limit our ability toretain these insurance companies as participants in our marketplace andmaintain the attractiveness of our services to consumers**

 

We do not have an exclusive relationship withany of the insurance companies whose insurance products are offered on ouronline marketplace, and thus, consumers may obtain quotes and coverage fromthese insurance companies without using our website. Our participatinginsurance companies offer their products directly to consumers throughinsurance agents, mass marketing campaigns or through other traditional methodsof insurance distribution. These insurance companies can also offer theirproducts and services over the Internet, either directly to consumers orthrough one or more of our online competitors, or both. In addition, most ofour agreements with our participating insurance companies are cancelable at theoption of either party upon 90 days’ notice or less. We have experienced,and expect to continue to experience, reductions in the level of participationin our marketplace or complete termination by participating insurancecompanies. These reductions in participation, terminations, or an inability toattract additional insurance companies to our marketplace could materiallyaffect our revenues and harm our business.

 

**The outcome and impact of the securitiesclass action lawsuit involving InsWeb is uncertain**

 

A securities class action lawsuit was filedon December 5, 2001 in the United States District Court for the SouthernDistrict of New York, (the “Court”) purportedly on behalf of all persons whopurchased our common stock from July 22, 1999 through December 6,2000. The complaint named as defendants InsWeb, certain current and formerofficers and directors, and three investment banking firms that served asunderwriters for InsWeb’s initial public offering in July 1999. Thecomplaint, as subsequently amended, alleges violations of Sections 11 and 15 ofthe Securities Act of 1933 and Sections 10 and 20 of the Securities ExchangeAct of 1934, on the grounds that the prospectuses incorporated in theregistration statements for the offering failed to disclose, among otherthings, that (i) the underwriters had solicited and received excessive andundisclosed commissions from certain investors in exchange for which theunderwriters allocated to those investors material portions of the shares ofour stock sold in the offerings and (ii) the underwriters had entered intoagreements with customers whereby the underwriters agreed to allocated sharesof the stock sold in the offering to those customers in exchange for which thecustomers agreed to purchase additional shares of InsWeb stock in theaftermarket at pre-determined prices. No specific damages are claimed. Similarallegations have been made in lawsuits relating to more than 300 other initialpublic offerings conducted in 1999 and 2000, all of which have beenconsolidated for pretrial purposes. In October 2002, all claims againstthe individual defendants were dismissed without prejudice. In February 2003,the Court dismissed the claims in the InsWeb action alleging violations of theSecurities Exchange Act of 1934 but allowed the plaintiffs to proceed with theremaining claims. In June 2003, the plaintiffs in all of the casespresented a settlement proposal to all of the issuer defendants. Under theproposed settlement, the plaintiffs will dismiss and release all claims againstparticipating defendants in exchange for a contingent payment guaranty by theinsurance companies collectively responsible for insuring the issuers in allthe related cases, and the assignment or surrender to the plaintiffs of certainclaims the issuer defendants may have against the underwriters. InsWeb and mostof the other issuer defendants have accepted the settlement proposal. Thesettlement was given preliminary approval by the Court in February 2005,pending a modification to the settlement documents. If the Court does notapprove the settlement in final form, InsWeb would defend the lawsuitvigorously. However, the litigation is in the preliminary stage, and we cannotpredict its outcome. The litigation process is inherently uncertain. Anunfavorable outcome could have a material adverse effect on InsWeb’s financialcondition, results of operations and cash flows.

 

**Laws and regulations that govern theinsurance industry could expose us, or our participating insurance companies,our officers, or agents with whom we contract, to legal penalties if we fail tocomply, and could require changes to our business**

 

We perform functions for licensed insurancecompanies and are, therefore, required to comply with a complex set of rules andregulations that often vary from state to state. If we fail to comply withthese rules and regulations, we, an insurance company doing business withus, our officers, or agents with whom we contract, could be subject to varioussanctions, including censure, fines, a cease-and-desist order or otherpenalties. This risk, as well as changes in the regulatory climate or theenforcement or interpretation of existing law, could expose us to additionalcosts, including indemnification of participating insurance companies for theircosts, and could require changes to our business or otherwise harm ourbusiness. Furthermore, because the application of online commerce to theconsumer insurance market is relatively new, the impact of current or futureregulations on InsWeb’s business is difficult to anticipate.

 

21

----

 

**If we are unable to safeguard the securityand privacy of consumers’ and participating insurance companies’ confidentialdata, consumers and insurance companies may not use our services and ourbusiness may be harmed**

 

A significant barrier to electronic commerceand communications is the secure transmission of personally identifiableinformation of Internet users as well as other confidential information overpublic networks. If any compromise or breach of security were to occur, itcould harm our reputation and expose us to possible liability. A party who isable to circumvent our security measures could misappropriate proprietaryinformation or cause interruptions in our operations. We may be required tomake significant expenditures to protect against security breaches or toalleviate problems caused by any breaches. To date, we have experienced nobreaches in our network security. We rely on encryption and authenticationtechnology licensed from third parties to provide the security andauthentication necessary to effect secure transmission of confidentialinformation, such as names, addresses, Social Security and credit card numbers,user names and passwords and insurance company rate information. Advances incomputer capabilities, new discoveries in the field of cryptography, or otherevents or developments could result in a compromise or breach of the algorithmswe use to protect consumers’ and insurance companies’ confidential information.

 

**System failures could reduce or limit trafficon our website or interrupt our communications with individual insurancecompanies and harm our ability to generate revenue**

 

Since launching our online marketplace, we haveexperienced occasional minor system failures or outages that have resulted inthe online marketplace being out of service for a period ranging from severalminutes to three hours while our technicians brought backup systems online. Wemay experience further system failures or outages in the future that coulddisrupt the operation of our website and could harm our business. Our revenuesdepend in large part on the volume of traffic on our website and, moreparticularly, on the number of insurance quotes generated by our website inresponse to consumer inquiries. Accordingly, the performance, reliability andavailability of our website, quote-generating systems and networkinfrastructure are critical to our reputation and our ability to attract a highvolume of traffic to our website and to attract and retain participatinginsurance companies. Moreover, we believe that consumers who have a negativeexperience with an electronic commerce website may be reluctant to return tothat site. Thus, a significant failure or outage affecting our systems couldresult in severe long-term damage to our business.

 

Additionally, several of our participatinginsurance companies have chosen a technical solution that requires that ourwebsite servers communicate with these insurance companies’ computer systems inorder to perform the underwriting and risk analysis and rating functionsrequired to generate quotes. Thus, the availability of quotes from a giveninsurance company may depend in large part upon the reliability of thatinsurance company’s own computer systems, over which we have no control.

 

**Our facilities and systems are vulnerable tonatural disasters and other unexpected losses, and we may not have adequateinsurance to cover such losses**

 

Our computer hardware operations are locatedin leased facilities in Gold River, California. A third-party service providerlocated in the Sacramento, California area maintains a backup of our criticalsystems. If both of these locations experienced a system failure, the performanceof our website would be harmed. These systems are also vulnerable to damagefrom fire, power loss, telecommunications failures, break-ins, naturaldisasters and similar events. If we seek to replicate our systems at otherlocations, we will face a number of technical challenges, particularly withrespect to database replications, which we may not be able to addresssuccessfully. Although we carry property and business interruption insurance,our coverage may not be adequate to compensate us for all losses that mayoccur. Our servers may also be vulnerable to computer viruses, physical orelectronic break-ins and similar disruptions.

 

**We rely on the services of our executiveofficers and other key personnel, whose knowledge of our business and theinsurance industry and technical expertise would be extremely difficult toreplace**

 

Our future success is substantially dependenton the continued services and continuing contributions of our senior managementand other key personnel, particularly Hussein A. Enan, Chairman of our Boardand Chief Executive Officer, and the loss of the services of any of ourexecutive officers or other key employees could harm our business. InsWeb hasgranted stock options as incentives to executive officers, new employees andcertain other key personnel. As the value of these incentives is highlydependent on an increase in the market price of our common stock, we may beunable to retain such key employees, nor retain or recruit other officers andkey employees in the future.

 

22

----

 

**Regulation of the Internet is unsettled, andfuture regulations could inhibit the growth of the Internet and otherwise harmour business**

 

The growth and development of the market forelectronic commerce may prompt the enactment of more stringent consumerprotection laws that may impose additional burdens on companies conductingbusiness online. For example, the enactment of federal legislation restricting the sending of unsolicitedcommercial email, or “spam”, may impede the implementation of national email-basedmarketing campaigns. New laws also may inhibit the growth of the Internet as amedium for commerce and comparison insurance shopping, which could, in turn,decrease demand for our services, increase our cost of doing business, orotherwise harm our business. In addition, applicability to the Internet ofexisting laws governing issues including property ownership, copyrights andother intellectual property issues, taxation, libel and personal privacy is uncertain.The vast majority of these laws was adopted prior to the advent of the Internetand related technologies and, as a result, do not contemplate or address theunique issues of the Internet and related technologies.

 

**Any acquisitions that we undertake could bedifficult to integrate, disrupt our business, dilute stockholder value and harmour operating results**

 

We may acquire or make investments incomplementary businesses, technologies, services or products if appropriateopportunities arise. The process of integrating any acquired business,technology, service or product into our business and operations may result inunforeseen operating difficulties and expenditures. Integration of an acquiredcompany also may consume much of our management’s time and attention that wouldotherwise be available for ongoing development of our business. Moreover, theanticipated benefits of any acquisition may not be realized. We may be unableto identify, negotiate or finance future acquisitions successfully, or to integratesuccessfully any acquisitions with our current business. Future acquisitionscould result in potentially dilutive issuances of equity securities or theincurrence of debt, contingent liabilities or amortization expenses related togoodwill and other intangible assets, any of which could harm our business.

 

**We may be subject to claims for infringementof intellectual property, with or without merit, which could be costly todefend or settle**

 

We may from time to time be subject to claimsof infringement of other parties’ proprietary rights or claims that our owntrademarks, patents or other intellectual property rights are invalid. We havebeen subject to infringement claims in the ordinary course of business,including claims of alleged infringement of the patent and trademark rights ofthird parties by companies and us with which we have business relationships.Any claims of this type, with or without merit, could be time-consuming todefend, result in costly litigation, divert management attention and resourcesor require us to enter into royalty or license agreements. License agreementsmay not be available on reasonable terms, if at all, and the assertion orprosecution of any infringement claims could significantly harm our business.

 

**We incorporate third-party technologies andservices into our online marketplace, and if the providers of thesetechnologies and services fail in a timely manner to develop, license orsupport technology necessary to our services, market acceptance of our onlinemarketplace could be harmed**

 

We have incorporated technology developed bythird parties into our online marketplace, and we will continue to incorporatethird-party technology in our future products and services. We have limitedcontrol over whether or when these third-party technologies will be developedor enhanced. If a third-party fails to timely develop, license or supporttechnology necessary to our services, market acceptance of our onlinemarketplace could be harmed.

 

**Our stock price has fluctuated widely, andInternet stocks in general have been extremely volatile**

 

The trading price of our common stock hasbeen highly volatile and may be significantly affected by factors includingactual or anticipated fluctuations in our operating results, new products ornew contracts by us or our competitors, loss of key customers, conditions andtrends in the electronic commerce and insurance industries, changes infinancial estimates by securities analysts, general market conditions and otherfactors. The trading prices of many Internet stocks have experienced extremeprice and volume fluctuations. These fluctuations often have been unrelated ordisproportionate to the operating performance of these companies. Thesefluctuations may continue and could harm our stock price. Any negative changein the public’s perception of the prospects of Internet or electronic commercecompanies could also depress our stock price regardless of our results.

 

23

----

 

**ITEM 3.****                  QUANTITATIVEAND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.**

 

There have been no material changes to the Company’sdisclosures related to certain market risks as reported under Part II,Item 7A, “Quantitative and Qualitative Disclosures About Market Risk,” in theAnnual Report of InsWeb to the U.S. Securities and Exchange Commission on Form 10-Kfor the year ended December 31, 2004.

 

**ITEM4.****                  CONTROLS AND PROCEDURES**

 

(a)           Under the supervision and with theparticipation of our management, including our Chief Executive Officer andChief Financial Officer, we evaluated the effectiveness of our disclosurecontrols and procedures, as such term is defined under Rule 13a-15(e) promulgatedunder the Securities Exchange Act of 1934, as amended. Based upon thatevaluation, our Chief Executive Officer and Chief Financial Officer concludedthat our disclosure controls and procedures were effective as of the end of theperiod covered by this quarterly report.

 

(b)           There has been no change in our internalcontrol over financial reporting during the quarter ended March 31, 2005that has materially affected, or is reasonably likely to materially affect, ourinternal control over financial reporting.

 

**PART II:****               ****OTHER INFORMATION**

 

**ITEM 2.****                 ****UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

 

Duringthe three months ended March 31, 2005, we did not issue any of our equitysecurities that were not registered under the Securities Act of 1933, asamended.

 

Thefollowing table sets forth information regarding the repurchase of shares ofour common stock during the three months ended March 31, 2005:

 
| **Period**                                            | ** ** | **Total number of  shares purchased** | ** ** | **Average price paid  per share** | ** ** | **Total number of shares  purchased as part of  publicly announced  plans or programs** | ** ** | **Approximate dollar  value of shares that may  yet be purchased under  the plans or programs** | ** ** |
|-------------------------------------------------------|------------|---------------------------------------|------------|-----------------------------------|------------|-----------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|------------|
| January 1, 2005 through  January 31, 2005   |       | —                                |       | —                            |       | —                                                                                  |       | —                                                                                          |       |
| February 1, 2005 through  February 28, 2005 |       | —                                |       | —                            |       | —                                                                                  |       | —                                                                                          |       |
| March 1, 2005 through  March 31, 2005       |       | 755,821                               | (1)        | $                                 | 2.30       |                                                                                    | —     |                                                                                            | —     |   |
| **TOTAL**                                             | ** ** | **755,821**                           | ** ** | **$**                             | **2.30**   | ** **                                                                              | —     | ** **                                                                                      | —     | ** ** |

 

----

(1)   These shares were purchased pursuant toprivately negotiated transactions.

 

**ITEM 6.****                 ****EXHIBITS**

 
| **Exhibit  Number** | ** ** | **Description  of Document**                                                                                    |
|---------------------|------------|-----------------------------------------------------------------------------------------------------------------|
| 31.1                |       | Certification of Chief  Executive Officer, pursuant to Exchange Act Rule 13a-14(a).                        |
|                |       |                                                                                                            |
| 31.2                |       | Certification of Chief  Financial Officer, pursuant to Exchange Act Rule 13a-14(a).                        |
|                |       |                                                                                                            |
| 32                  |       | Certification of Chief  Executive Officer and Chief Financial Officer, pursuant to 18 U.S.C. Section 1350. |

 

24

----

 

**SIGNATURE**

 

Inaccordance with the requirements of the Securities Exchange Act of 1934, theregistrant has caused this report to be signed on its behalf by the undersignedthereunto duly authorized.

 

 
| Dated: May 10,  2005 | **INSWEB  CORPORATION**          |
|---------------------------|----------------------------------|
| ** **                | **(Registrant)**                 |
|                      |                             |
| ** **                | **/s/ WILLIAM  D. GRIFFIN** | ** ** |
|                      | William D. Griffin               |
|                      | Chief Financial Officer          |

 

25

----