Quotesmith.com Launches New Insurance Order Fulfillment System Ahead of Schedule
Quotesmith.com, Inc. (ticker: QUOT, exchange: NASDAQ) News Release - 12/16/2002
Quotesmith.com Launches New Insurance Order Fulfillment System Ahead of Schedule; Issues Revised Financial Guidance for 2002; Reaffirms Profit Guidance for 2003
- Enhancements to usher in new era of speed and simplicity for life and health insurance shoppers
- Innovative new technology slashes handling costs, provides embedded scalability for Quotesmith.com
- Completion of previously-announced cost-cutting projects to save $2.2 million in annual costs going forward
DARIEN, IL (December 16, 2002) -- Quotesmith.com (NASDAQ: QUOT), the only place on earth where you can get instant auto, life and health insurance quotes from more than 300 leading companies, today announced that it has completed and launched its 2002 order fulfillment technology project ahead of schedule. As a result of this development, Quotesmith.com is today revising its financial guidance for 2002 and reaffirming its profit guidance for 2003. Quotesmith.com will release its 2002 year-end and fourth financial report on January 28, 2003 prior to the market open.
This new technology solution makes it easier than ever to buy insurance online.
The Company's new online order-fulfillment technology, which enables self-directed insurance shoppers to complete their own applications online, is an industry-leading advance and a radical departure from traditional telephone-based, paper-based methods of handling life and health insurance applications. Quotesmith.com confirmed that its new online order entry technology is now powering online orders for 34 of the most popular life and health companies which account for 85 percent of revenues.
Quotesmith.com founder and CEO, Robert Bland, remarked, "Completion of this project is a significant accomplishment and an essential component to our growth and profit plan for 2003. Enthusiastic acceptance of the system's unique point, click and buy capabilities by our self-directed customers in late October emboldened us to spend more money in order to finish this project sooner rather than later. We also expanded the project to include more insurers than originally planned in order to further enhance our competitive posture. We believe that the long-term benefit of having this proprietary technology up and running prior to the start of 2003 outweighs the trade-off of having higher than expected expenses in the 2002 fourth-quarter."
The Company's new order fulfillment system offers many benefits to insurance shoppers and participating insurance companies alike by providing:
- applications which are always 100% complete
- payment by credit card convenience with e-signature capability
- instantaneous routing of orders
- significantly reduced error rates
- faster underwriting which means speedier policy deliveries
- substantially reduced paperwork
- enhanced customer privacy
- never-out-of-stock specialty forms
- elimination or reduced dependence on U.S. mail
- customer-controlled scheduling of needed paramedical exams
Commenting on the successful launch of the new technologies, Quotesmith.com chief information officer, Dr. Hao Chang, remarked, "We listened to our customers and they have spoken loud and clear. Our new online order fulfillment system empowers our customers by enabling them to purchase insurance online in the shortest possible amount of time. Instant routing of the order to the insurance underwriter adds up to an improved buying experience for our customers and a more complete submission for each participating insurance company."
Completion of Online Order-Fulfillment Technology Plus Elimination of Third Party Customer Service Vendors to Save $1.2 Million Annually
By eliminating errors, mistakes and false starts at their root, the Company's new order fulfillment technology keeps the customer in control, delivers to each insurance company a more complete submission and slashes variable handling costs.
The launch of this new technology has enabled the Company to entirely eliminate its reliance upon third party call centers, which had been providing telephone interview and other manual, off-Internet forms completion tasks on behalf of the Company. Elimination of the call center expenses by year-end 2002 will yield a projected savings of $1.2 million in annual operating costs going forward, part of the $2.2 million savings mentioned above, thus accelerating the Company's path to profitability.
Relocation of Insure.com Editorial Office to Save $1 Million Annually
Quotesmith.com also announced today that it has completed the previously announced consolidation of its East Hartford, CT editorial office into the Company's Darien, IL headquarters effective November 1, 2002. As previously announced, the Company will save $1 million in annual operating costs going forward, as part of the $2.2 million savings mentioned above.
Revised 2002 Financial Guidance
Quotesmith.com is today revising the financial targets for 2002 that were announced on October 23, 2002. In October, the Company anticipated 2002 revenues of $10 to $11 million, a net loss of $1.5 to $2 million and year-end cash and investment balances of $14 to $15 million. Depreciation, amortization and other non-cash charges for 2002 were expected to total $1.5 million in 2002.
The Company now anticipates 2002 revenues of approximately $10.75 million, a net loss of approximately $2.75 million and year-end cash and investments of over $16 million. Depreciation, amortization and other non-cash charges for 2002 are still expected to total $1.5 million for 2002. For 2001 Quotesmith.com reported revenues of $8.9 million and a net loss of $6.6 million.
Commenting on these revisions, Quotesmith.com CFO Phillip Perillo stated, "We are increasing our 2002 net loss guidance due to increased programming, overtime, technology team early completion bonus and independent contractor expenses associated with the deliberate decision to accelerate and expand the online order fulfillment technology project. Completion of these enhancements will slash our per-policy handling costs on a going-forward basis. We expect to reduce our handling costs on a typical term life policy to under $50 from over $170 today. We believe that the additional expenses we incurred in the fourth quarter in order to expand and complete this project will provide a sustained competitive advantage for us in the years to come."
Mr. Perillo also indicated that additional expenses in the fourth quarter include higher advertising costs.
Commenting on the Company's balance sheet strength, Mr. Perillo added, "Our cash and investment balances, which were expected to be between $14 and $15 million at year-end 2002, are now expected to exceed $16 million. Furthermore, we expect to be a net generator of cash in 2003 and expect to wind up the year with $17 to $18 million in cash and investments."
Quotesmith.com, Inc. Reiterates 2003 Financial Guidance
Quotesmith.com is today reaffirming the financial targets for 2003 that were announced on October 23, 2002, as follows:
- Revenues of $11 to $12 million
- Net Profit of $1.0 to $1.5 million
- Year-end cash and investment balances of $17 to $18 million
Quotesmith.com believes that its current capital structure is adequate to reach profitability without the necessity of additional debt or equity financing. This guidance, which is subject to change, is based upon a wide range of business factors and assumptions known or believed to be true by the Company as of this date.
Quotesmith.com does not confirm or update its financial projections except in compliance with Regulation FD nor does the Company provide confirmation or update of its financial targets except through public announcements.
On November 20, 2002, Quotesmith.com announced that it had won the distinguished "Forbes Favorite" award for life insurance by Forbes.com in its winter 2002 "Best of the Web" online edition. The following are excerpts from the winter 2002 Best of the Web editorial review:
"Today, thanks to last year's purchase of Insure.com, the site is flush with useful features. There are some 3,000 articles. You'll also get quotes from 92 life insurers. A real stand-out feature, however, is that Quotesmith can provide competitive and customized quotes for people with specific health concerns such as diabetes, asthma, or heart disease. It also gives quotes for those involved in risky hobbies, like scuba diving and flying."
Founded in 1984, Quotesmith.com owns and operates two comprehensive online consumer insurance information services, www.insure.com and www.quotesmith.com. Catering to self-directed insurance shoppers, Quotesmith.com provides a comprehensive array of comparative auto, life and health quotes, combined with news, information and decision-making tools that are not available from any other single source. Insure.com plays home to more than 3,000 originally authored articles on insurance that are all indexed and searchable by subject. Visitors to the Company's Web sites are able to obtain instant quotes from more than 300 leading insurers for twelve different product lines, achieve maximum savings and have the freedom to buy from any company shown. Quotesmith.com also provides personalized insurance brokerage and policy placement services for its customers. Shares of Quotesmith.com trade on the Nasdaq SmallCap Market under the symbol "QUOT."
Cautions about Forward-Looking Statements
This announcement may contain forward-looking statements that involve risks, assumptions and uncertainties pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. This announcement also contains forward-looking statements about events and circumstances that have not yet occurred and may not occur. These forward-looking statements are inherently difficult to predict. Expressions of future goals and similar expressions including, without limitation, "intend," "may," "plans," "will," "believe," "should," "could," "hope," "expects," "expected," "does not currently expect," "anticipates," "predicts," "potential" and "forecast," reflecting something other than historical fact, are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Investors should be aware that actual results may differ materially from the results predicted and reported results should not be considered an indication of future performance. Reported Web site activity and/or quotes are not necessarily indicative of any present or future revenue. The Company will not necessarily update the information in this press release if any forward-looking statement later turns out to be inaccurate. Potential risks and uncertainties include, among others, Quotesmith.com's ability to successfully launch and realize revenues from new products and services, potential business risks associated with generating revenues from the insure.com platform, anticipated losses, unpredictability of future revenues, potential fluctuations in quarterly operating results, seasonality, consumer trends, competition, risks of system interruption, the evolving nature of its business model, the increasingly competitive online commerce environment, dependence on continuing growth of online commerce and risks associated with capacity constraints and the management of growth. More information about potential factors that could affect the Company's financial results are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, and the Company's Quarterly report on Form 10-Q for the quarter ended September 30, 2002, both of which are on file with the United States Securities and Exchange Commission.
Quotesmith.com, Inc. DBA Quotesmith.com Insurance Services in CA under agent #8027712, #OA1358; UT #90093. Quote availability by state or any other factor is subject to change without notice. Quotesmith.com, Insure.com and QuotesmithPro are service marks of Quotesmith.com, Inc. All other names are trademarks of their respective owners. Copyright 2002. All rights reserved. Quotesmith.com, Inc.
SOURCE Quotesmith.com, Inc.
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