| Non-Tech : pamc | | PAMC 46.54 | +1.8% | Nov 5 4:00 PM EST |
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Let's focus a little on what our new friend from E-Trade didn't spend much time on. That is the power of PAMC business model versus almost every other internet high flyer. I agree that there is more news to come in the very near future (although signing Aegon is not chicken feed), but there are better reasons why large institutional investors can sink their teeth into this company and feel like they actually have substance and longevity (and beleive me at least two major investors have been soaking up the float the past two weeks).
The two prevailing internet models are to either generate revenue from advertsing by offering services or products that drive cybersurfers to your page or offer the customer signicficant savings on products or services while making access to them easier. The problem with both of these models is simple. The barriers to entry are not very high and they rely on a robust economy with liberal consumer spending. What happens at the end of this year when things slow down. Will Amazon sell as many books? Will Yahoo have as many advertisers banging on their door? Will E-trade be generating as much volume? The answers are no. Even though these companies offer discounts over other retail outlets, they will be hurt like everyone else if spending decreases.
PAMC on the other hand offers a service and product that are a neccesity for millions of Americans. When times are good or even more so, when times are bad, people seek out ways to cut their monthly bills without cutting what they recieve in return. Health Insurance is one of those thankless products that you know you must have, but you get no beneift from until something goes wrong. This is a bill most people would like to pay as little as possible for without sacrificing either quality or service. This is exactly what PAMC is making possible. Savings of up to 20 percent a month, insurance from several high quality carriers, excellent access to processing and claims, along with customer support by telephone if needed.
Unlike other players, this is a recession proff business. In fact, a downturn might make for even more customers. The reality is that this concept is just a cushion to make one feel comfortable about PAMC's future. The real kicker here is that every time they sign a new customer and sell a policy, they have an extremely high probablity of them renewing the policy. This is an annuity that you won't find in most other internet models. PAMC is taking the best aspect of the insurance business (selling policies for commissions) and not dealing with the most unattractive (underwriting policies) part. When the company is in full swing during the summer, I am sure some of these e-commerce analysts and insurance analysts are going to look at this and say wow.
The smartest thing they have done is to lock up real estate, of which I think we will learn they have added some new properites. The wall keeps gettind higher for competitors and the official hard launch with AOL will happen on June 1. Until then, we will likely hear about many more insurance alliances and portals. Maybe even some new private cash as well. |
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