On the eve of announcing its 2003 results, Michelle Hannen speaks to Allianz Cornhill chief executive Andrew Torrance about his plans for 2004

A self-confessed "purist", Allianz Cornhill chief executive Andrew Torrance is not a man of bold, sweeping assertions, nor exaggeration. So when Torrance says the insurer's forthcoming results, due to be released on 22 March, will be "good", it is likely to be an understatement. Underlying his quiet confidence is sound reasoning: "We've talked a lot about the investment we've made over the past three years in the development of underwriting skills through the Underwriting Academy and I think we're beginning to see in our 2003 results some of the benefits of that investment actually beginning to come through and hit the bottom line."Commercial lines, Torrance says, experienced the most rapid growth, with the company's global risks division also having "a very good 2003". However, it was not all plain sailing for Allianz Cornhill in 2003, as the company's legal expenses business got stung by the collapse of no-win, no-fee firm The Accident Group. But Torrance says the company has no plans to pull out of the after-the-event (ATE) legal expenses market, which he describes as "very legitimate". "It's very clear to us that the whole concept of access for justice is here to stay," he says. "What we're very much in the game of is looking to bring the skills of a professional insurance operation to the after-the-event marketplace."He says the company will guard itself against being caught out again by looking more closely at the business models used by ATE companies. "We are being very selective in terms of the producers with whom we will deal and ensuring that we're very comfortable with the business model that those producers have and that the costs that are being incurred in distributing the business are reasonable," Torrance says.As far as 2004 is concerned, Torrance says the strategy is one of business as usual. "At the moment we're pretty comfortable with the overall direction of the business," he said. "The focus remains very much first on profits and, second, where we can grow and be profitable."Torrance has identified three areas of the business where he believes strong growth in profits can be attained in 2004. The first is Allianz Cornhill Engineering, the company's specialist engineering insurance inspection plan business – an area that Torrance says he's "optimistic" that the company can continue to gain market share in. "That is a business that really I think over the past couple of years has established itself as the best provider of those services in the UK," he says.

Intermediary channelSecondly, Torrance is planning to build on the back of the "satisfactory" growth Allianz Cornhill achieved in small and medium enterprise (SME) business in 2003. "We have been investing a fair amount in terms of building a technology platform in that business, so again we can provide the kind of service that intermediaries are looking for, a much more electronic, much more automated service than in the negotiated commercial risks area," he says. But unlike other insurers in the market, Allianz has no plans to sell SME products direct. "Right now we are committed to the intermediary distribution channel and we don't have any plans to deviate from that."Finally, Torrance is expecting big things from the company's pet insurance division, Petplan, in 2004. "We are the leading insurer in animal health and that market is still really very under-developed in terms of a high proportion of pets in this country are still not being insured, so we're expecting to see quite substantial growth in the marketplace over the next three years," he says. "As the leading player in that market we aim to participate in that growth."

Pet projectAllianz sells much of its pet insurance through vets, but Torrance says the upcoming introduction of broker regulations, which also cover part-time intermediaries such as vets, are not of concern. He says: "We are working very closely with those intermediaries to ensure that they are properly accredited. It's certainly an issue for us, but it's an issue that we feel that we've got well under control. Because of our size in that marketplace we have the resources to be able to manage that intermediary base in a way that not everybody else is going to be able to replicate." He also points to a recent deal to sell pet insurance through Asda as evidence that the company does not have all its eggs in one basket. Torrance is expecting big things from the global risks business in 2004. "We are looking to build our participation in that marketplace," he says. Though, given his penchant for understatement, he does not go as far as to categorise it as one of the platforms for profit growth. He says that, given the highly cyclical nature of that business, the company's ability to manage the cycle will be crucial to its success. "We want to participate in it, but we are also looking to participate only in relationships where we believe we can make a fair return on the capital that we employ."