AGF Management Limited

Greg Henderson – SVP and CFO Blake Goldring – Chairman and CEO Mario Causarano – President and COO, AGF Trust Bob Bogart – CFO

Geoffrey Kwan – RBC Capital Markets Doug Young – TD Newcrest John Reucassel – BMO Capital Markets Paul Holden – CIBC Gabriel Dechaine – Genuity Capital Stephen Boland – GMP Securities

Thank you, operator. Good morning, everyone.

It’s a pleasure to have you join us for this call. Please note that the slides supporting today’s call and webcast can be found in the Investor Relations section of agf.com.

Today, Blake Goldring, Chairman and CEO; and I, CFO of AGF Management Limited, will discuss our fourth quarter and fiscal 2009 operation and financial results. Also joining us on the call and available to answer questions are Mario Causarano, President and Chief Operating Officer of AGF Trust; and, Martin Hubbes, Executive Vice President and Chief Investment Officer.

It is also my extreme pleasure to introduce Bob Bogart who will be transitioning into the role of CFO over the coming weeks. I will now turn things over to Blake.

Thank you, Greg, and welcome to everybody that is in today’s conference call. I'd like to take this opportunity to welcome Bob Bogart to AGF, and to say that we're pleased to have someone with his wealth of knowledge and his extensive industry experience to join our executive management team.

So welcome, Bob. It’s going to be Greg's last quarterly call with us.

I want to extend our sincere thanks to Greg for his significant contributions to AGF. I wish you every success in your future endeavors.

Now, as we do in every conference call, I’d like to go on provide a very brief update on what the market’s been doing in the last quarter. Since our previous update in September, markets continue their positive performance that began back in March and (inaudible) optimism around Central Bank’s (inaudible) resulting in an improved economic backdrop.

The Canadian dollar continues to push higher despite of this week’s setback and is expected to approach parity with the US dollar, where (inaudible) reached an all-time high record over $1,200 before settling back to around the $1,100 mark. Generally, we continue to see evidence that economic activity is gaining some traction and modestly improving.

Both the Canadian and US economies posted positive GDP results during the quarter. While the US housing market is showing signs of stability, activity remains somewhat subdued.

Fiscal and monetary policies continue to play an important role in the recovery efforts. There continued to be headwinds facing economic growth, most significantly employment levels.

Consistent with improvements in GDP metrics, the employment situation appears to be stabilizing somewhat albeit from low levels. Compensating relatively weak employment levels is a reality that consumers are repairing their balance sheets and increasing savings rates.

Consumers need to resume spending for economic gains to continue. Finally, while we’ve had significant gains in equity markets since – for most of March 2009, risks remained and investors are still relatively cautious.

As economic activity improves, the impact of a less accommodative monetary policy from Central Banks and budgetary pressures from all levels of governments will mean that we’re going to be watching these things very carefully as the recovery gather steam. Now, turning to our fourth quarter and fiscal 2009 results.

Slide four, I’m pleased, after the relative instability in the markets in 2009, our results reflect our growth strategy. I’m very pleased with what we have achieved in the last year.

Our assets under management grew by 25.5% year-over-year by the end of November 2009. This was due to a combination of recovery of global stock markets and significant gains that we’ve made in the institutional space.

We grew our institutional and strategic account assets under management by 47.8% to $18.9 billion in fiscal 2009, which included approximately $4 billion in net institutional sales. Mutual fund assets under management increased 15.1% to $22.7 billion due to market appreciation.

The level of mutual fund net redemptions in 2009 increased to approximate half of the prior year’s levels. But we’re not where we want to be when it comes to net mutual fund sales.

We’re working hard on our overall growth strategy. (inaudible), our sales team, our fund managers, and I have all spent considerable time and effort traveling across the country, meeting with advisers and listening to what they have to say and what they need from a strong investment firm.

I'll elaborate on our strategy to improve mutual fund sales in a few moments. Revenue in 2009 declined 19.2% to $586 million driven by a 21.6% decline in revenue in our investment management operation segment, which was attributable to lower average assets under management levels during the year.

We reduced our 2009 selling, general, and administrative expenses by 7.5% to $193.7 million, compared with 2008, and continue to focus on running a cost effective operation. Greg's going to elaborate on the factors affecting our SG&A expenses later in the presentation.

Overall, EBITDA declined 13% to $219.5 million in 2009. Meanwhile, at AGF Trust, loan assets declined 18.9% to $3.6 billion at November 30th, 2009, compared with November 30th, 2008.

This will then align with our strategy to insure the Trust Company was well capitalized with reduced balance sheet risk. The strategy resulted in solid fourth quarter and fiscal 2009 profitability.

Trust is an important contributor to our profitability and will continue to play an important role in our success. Provisions for loan losses were $37.6 million, compared with $30.4 million in 2008.

Provisions in the fourth quarter were down significantly to $4 million compared with $20.5 million in the fourth quarter of 2008. Again, Greg is going to elaborate on this shortly.

Consolidated diluted earnings per share were $1.09, compared to $1.42 in 2008. Adjusting for our income tax reduction related to substantially some active tax rates in 2009, diluted EPS was $0.98.

This compares with diluted EPS of $1.61 in 2008, which excludes non-cash impairment charges of $37.7 million net of tax as well as the reduction income taxes. Our cash flow from operations were $206.1 million in 2009, which allowed us to continue to pay dividends at a rate of $0.25 per share for the quarter.

Cash flow was $278.7 million a year earlier. In fiscal 2009, we increased our dividend by 5.3% to $1 per share from $0.95 per share in fiscal 2008.

Based on our cash flow projections for fiscal 2010, we intend to increase our quarterly dividend from $0.25 to $0.06 per share. Moving to slide five, I’d like to talk about our overall growth strategy at AGF.

Currently, I believe our strategy is right on track, but our stock is still undervalued. We’ve built our firm using an integrated strategy of businesses that complement each other and enable us to grow different segments at different times depending on market opportunities and conditions.

We’re diversified enough to provide our shareholders the benefits that other (inaudible) mutual fund companies do not offer. As you can see, based on this slide, our asset growth is strong.

That’s because we’ve got an integrated investment management business that offers (inaudible) in the retail, adviser, institutional, and high network market segments act as some of the best money managers. Under management growth with some of our peers, AGF was a strong number two in year-over-year growth.

As I’ll discuss later, much of the growth we are seeing amongst a certain number of peers is coming from segregated fund assets. While we at AGF are working hard to access these platforms, we’re also targeting more broad-based growth and diversification in our asset base.

We developed and are (inaudible) many a sound strategy to expand our institutional mandate by tapping into this highly interesting market. It was only last year in spring that we opened our Boston office.

And since that time, we’ve had tremendous interest. For example, in October, Touchtone Investments named 10 institutional asset managers to act in a sub-advisory capacity for tending funds, which included an emerging market equity fund managed by AGF.

This relationship gives us access to the US retail market. Our path to success is not near the tragic of peers.

Each of us have chosen to do something a little bit different based on investment excellence. And I believe that AGF has a strong investment management franchise, combined with a strong Trust Company.

Slide six, today, banks represent very strong competition to mutual fund industry. Rather than ignoring this trend, we at AGF had built a solid Trust Company that offers loans and GIC products to Canadians.

We built this business on a simple but effective operating model and taken aspects of the banking industry that we believe best serve our clients. As shown, the Trust business, in spite of the economic downturn, has been a very profitable contributor.

We’ve managed through the downturn by building capital, taking up risks on the balance sheet and improving margins. Now, back to the mutual fund side of the business on slide seven.

If you’ll look at our direct peers, the independent mutual fund companies, we could see that 2009 was a challenging year. However we thought long term mutual funds moved to net positive for the industry overall.

The bulk of these flows were captured by the bank through balance and fixed income mandates. Moving to segregated fund net flows, which again I’d like to emphasize that some of our economics are institutional business, then the sales picture from the industry becomes quite different.

While I'm clearly not happy that our long term net flows on the retail side were down $727 million in 2009. If we were to add the institutional sale, the above picture changes dramatically.

My purpose is to grow assets under management and improve the overall profitability of AGS. Our Trust in the institutional businesses are growing and we opened in Boston the offices and we got the Hong Kong office that will soon be online.

We remain focused on these businesses and are equally focused on our retail side. The next slide details the work being done to improve our mutual fund sales.

Our strategy to return our mutual fund business to positive sales is outlined at slide 8. First, we’re aggressively promoting funds with the greatest opportunity for short-term net sales.

These include our elements program, which offers investors balance, growth, and income opportunities in a low-yielding environment. The AGF emerging markets fund, which is a five-star, morning star rated, has to protect the performance and provide the opportunity to invest in new economies.

The AGF global and Canadian resources fund which were also five-star rated and had great performance. Finally the AGF Canadian conservative inflation managed income fund which ideally positions investors for the future.

These are funds that are currently driving at sales. I want to take this moment to also reinforce the bench strength of our investment management shop.

Each of these mandates, like all other funds, are supported by strong change that work behind the scenes. While some firm managers may have a higher profile, we have talented associate portfolio managers and analysts working hard hand-in-hand with the PMs and focus on the best interest of investors.

And by the way, it maybe stating the obvious, but you gain institutional mandates by demonstrating deep bench strength. Over the past week, there’s been a lot of interest in the departure of one of our managers, Christine Hughes, who has chosen to take a break from the industry for personal and family reasons.

From our perspective, it's our job to ensure succession planning and continuity in the funds management. That’s what we did in this case, Michael White, the portfolio manager is a strong, seasoned investment professional who has the team support and the resources to continue to manage the fund the same manner that investors have come to expect.

Now let's switch gears and talk about products. We know that in this business you have to provide investors with products that meet their needs.

In the next quarter, we’ll be bringing a number of new income balance and currency solutions to our clients to strengthen our product shelf. We’re also working hard to stem redemptions in the currently out of favor asset classes as investor confidence returns and we see return to equities.

But we realize that international and global funds continue to be negative, stands negative flows. We also see the benefits in ensuring investors stay diversified over the long term.

You should also know that relative reforms have also started to improve. We are also aggressively targeting mandates with our current strategic partners in seeking new partnerships.

With market conditions improving and investor confidence higher, I'm confident we have the right product managers that are well positioned as the higher closed sales over the long term. With all the institute and the strategy on the retail side, we plan to continue to grow our institutional business.

Moving to slide nine, this slide illustrates the value of AGF shares by showing EPS as a percentage of the period end share price. Clearly, AGF represents value.

You see, we’ve been very prudent in ensuring the minimum dilution into our shareholders through buybacks, and as such, our shares lead the pack when we look at EPS as a percentage of share price. And with the downward trend in our shares from what – last week, this has only gotten better.

Moving to next slide, our objective has been to reasonable portion of profits to shareholders while prudently managing the balance sheet. This slide provides a further example of how share holders have benefited through our policy, the returning profits to them.

And as of December 31st, 2009, the dividend year in our shares is a highest of our peers. And on the higher side, the company switched its own GFX.

With her ability to generate and pay dividends, clearly, the shares of AGF offers tremendous value. Dividends are our foremost indicator of our ability to generate cash flow, and we’ve always believe that it’s important to share this cash flow with our shareholders.

Slide 11, illustrates our history of suddenly increasingly dividends between 1998 and 2009. And it also shows the dividend we expect to pay in fiscal 2010.

We paid a $0.25 per share dividend on January the 21st on the basis of having cash flow available to pay such a dividend and announced today our intention to increase the quarterly dividend to $0.26 per share. As you can see from slide 12, our stock has performed extremely well in fiscal 2009.

Total return of AGF.B shares were up 121%, compared 28% for the SMP TSX. And looking at another time period, I’m sure they also outperformed the index on a total return basis.

This data reinforces the long term value that AGF delivers to our shareholders. With that, I now have the pleasure to turn the call over to Greg who’ll take you through a more detailed review of the financial results.

Thank you, Blake. This slide provides an overview of our financial results for fiscal 2009 and the fourth quarter, compared to the same periods in 2008.

Certainly the results in an annual basis were down, but the fourth quarter results were very much improved. AUM increased 25.5% on a year-over-year basis in 2009.

However, a 21.3% decline in average retail AUM levels for the year was a significant contributor to revenue declining by 19.2% and EBITDA declining by 30%, compared to 2008. Our financial results in the fourth quarter of 2009, compared to 2008 were positively impacted by the increase in our AUM, which contributed to a 7.3% increase in investment management operations revenue ,offset by 11.3% decline in Trust Company operations revenue in the fourth quarter, which led to a consolidated revenue increase of 3.6%.

EBITDA was higher by 32.6%, compared with Q4 of 2008, primarily lower due to lower loan loss provisions at AGF Trust. If you recall in the fourth quarter of last year, we put the special provision in place to reflect our new loan loss provisioning.

The next slide really shows the true story here. And strong market performance in fiscal 2009 contributed to the 25.5% growth in our AUM.

Since the end of February, which represented the low point in our AUM based on the reported quarters, AUM is up 36.9%. This has resulted in improved revenues on the investment management side of the business.

As Blake discussed earlier, we experienced significant growth in our institutional AUM with $12.8 billion at the end of fiscal 2008. The $18.9 billion at the end of fiscal 2009 was approximately $4 billion coming from net sales in the period.

As Blake indicated, the economies of these institutional sales are as good as Seg fund (inaudible) WB mandates, and clearly has driven much of our success in our fourth quarter profitability. If you look, our institutional assets were at $16 billion at the end of the third quarter and are up to $18.9 billion.

So again, I cannot overemphasize the fact and I believe that these assets have got lost in shuffle when people are analyzing the results and looking at the profitability prospects for AGF. Next slide shows the Trust Company operations.

Loans assets net of provisions have declined by approximately 18.9% from Q4 2008, and are down approximately 5.1% from the third quarter of 2009. As you've heard before, towards the end of 2008, we strategically decided to reduce our Trust balance sheet risk, enhance our capital position, in order to ensure that Trust will be in a position to grow for the future.

Cleary, as our fourth quarter and year-end results have passed, our strategy has been effective. Trust currently has no need of capital from AGF Management Limited nor should it have for the foreseeable future.

Trust has improved its assets to capital multiple to 12 at November 30th, 2009 from 15 at the end fiscal 2008, and has experienced a noticeable increase in EBITDA in the second half of the year as the provision for loan losses expenses come down. And now for a brief discussion of our consolidated SG&A expenses for the year.

This slide shows how we removed costs from the business during fiscal 2009. Overall, we reduced SG&A expenses by $15.7 million or 7.5%.

You would recall at the beginning of the year, we had a more aggressive target for SG&A reduction. However, as the year progressed and we put recovery in the markets, we saw SG&A rise slightly.

On the investment management side of the business, we reduced SG&A expense by 4.9%, compared with the prior year. As shown on this slide, compensation-related expenses were down $7 million due to staff reduction and stock-based compensation expenses such as (inaudible).

Offsetting the decreases, we saw bonus expenses for the year up $2.8 million. And again, I think the important thing to note here is, last year we were in a down market coming into the fourth quarter and we were able to actually pull back on our bonus expenses.

This year we’re on an up-tick. And as a result, and I’ll talk a little bit more, I think that causes expenses to rise.

Severance and restructuring expenses increased $1.7 million while other expenses decreased by $0.2 million due to continued cost savings in travel, meals, and entertainment. Again, the important point here is, we started restructuring activities in 2008.

So when you look at the year-over-year difference in the activities, it’s not significant. But there is – there is a chunk of expenses that will come out of the business permanently.

Excluding the increased year-over-year bonus expense, SG&A would have declined by approximately 9%, which is very close to original targets for expense reduction. And again, there will be a block of permanent restructuring expenses that will come out of the business.

Now let’s take a look at SG&A in the fourth quarter. This slide actually shows an increase of 9% in our overall SG&A expenses in the – in the fourth quarter 2009, compared to 2008.

Investment management operations, SG&A increased by $4.4 million or 14.1% due to higher compensation related expenses. It was to be expected the bonus amounts would be higher in the fourth quarter of 2009 versus 2008 given improvements in the markets.

And as you recall last year, as we went into the fourth quarter, we saw the markets come down dramatically and we reversed some access bonus accrual. So this year we see the markets come up, and I would say our bonus accrual is relatively flat over the four quarters.

But again, on a year-over-year basis, it varies significantly. Moving to slide number 18.

This slide shows our SG&A expenses, AUM and Trust loans assets over the five years. And the point I want to make here is, and I know I’m going to get the question most likely, “Are these savings sustainable?"

And I think they’re sustainable to the extent we took people out of the operation, that we looked at ways to save money. But obviously, a lot of our SG&A expenses are variable, the activities of the business, whether in sales, investor performance, and certainly on the Trust side, the quantity of loan assets that we have.

So again I think – as we see markets improve, as we sales improve, you would expect to see an increase in your SG&A. But again I think, the one thing we’ve learned is, it hurts to take people out of the business.

And I think people will be very cautious in adding people to the business over the next short little while because it was a tough task to remove people from the business. The next slide just shows the overall trends over the last four quarters and compared to the fourth quarter of last year.

So again, things are moving in the right direction. We’re seeing revenue move up.

We’re seeing expenses relatively flat, I would say, and as a result, have substantial improvements in the (inaudible) line. The next slide gives you similar picture for the investment management side of the business where fourth quarter revenues were up 7.3% on a year-over-year basis to $132.1 million.

This is in line with higher average AUM and was driven in large part by our increase in the investment – institutional investment revenues. SG&A expenses as we’ve previously discussed were up 14.1 % as a result of the compensation issues.

EBITDA at $59.2 million increased 7.1% from the fourth quarter 2008 and improved 29.3% from the third quarter of 2009. Overall, we brought our EBITDA margins up to 44.8% in the quarter.

On the Trust side of the business, I’m pleased to say we made great progress. Although revenue declined by 11.3% in the year-over-year basis and 7.1% sequentially mainly due to lower net interest income as a result of declining loan balance, we were able to hold or increase the margins.

SG&A declined by 7.1%, compared with the fourth quarter 2008, primarily as a result of reduced staffing levels. And I think this is one part of the business where, as Mario increases his activity, he’ll have to add staff.

But he knows the pain that he went through to cut staff. EBITDA in the quarter increased to $10.4 million from the loss of $3.8 million in the fourth quarter of 2008 due to significant decline in the loan loss provision expense.

And again, as you recall last year, we put together a new provisioning methodology and we had a one-time impact. This year, the loan loss provision was negligible in the fourth quarter.

And I’ll comment on that a little bit later. The next slide just basically shows the makeup of our loan loss assets and they’re relatively similar to what we’ve seen in our folders.

We launched our 2010 RSP program late in fiscal 2009. And Mario can talk more about that.

And again, I think we’re moving slowly and cautiously back in the business trying to attract much better quality clients from a beacon score perspective than we might have had in the past. The next slide shows our gross impaired loans.

And impaired loans of $48.9 million were up from $45.4 million in Q4 of 2008, but down from the $55.6 million in the third quarter of 2009. And again, that’s important when you note – when you look at the loan loss side of the income statement.

It’s not because we’ve had a lot of write outs. Expense as a percentage of total loans outstanding, they were 1.4%, compared with 1% a year earlier when loan balances were actually 23.3% higher and 1.5% in the third quarter of 2009.

The next slide basically shows our allowance for loan losses expressed as a percentage of total loans outstanding. So again, you can see that we’ve actually moved that up to a high of 1.2% in 2Q of 2009 and it’s flattened out to 1% at the end of the year.

So overall, not big changes and I think we’re adequately provided for. The next slide shows basically the provision for loan losses.

And as you can see on this slide there has been a significant decline in our provision for loan losses on the expense side since the fourth quarter of 2008, which has contributed to the solid financial results. As previously mentioned in other calls, when we were going through and putting our provision together, we earmarked approximately $25 million of high risk loans.

Of this $25 million, we have written off $14 million, taken provisions of $4.2 million, for a total remaining exposure of $6.8 million. So you can see we’re very well provided on what – this group of high risk loans.

In addition, you’ll note in the fourth quarter, we took a general provision of $4 million against our insured mortgage book. This was actually a move which I would say shows how conservative we are in looking at this.

We did this based on the fact we’ve experienced delays in the collection of claims from one of our insurers. The insurer, as most businesses are today, is taking a stricter interpretation of policy exclusions for fraud and its representations as a result of the current environment.

We believe that ultimately this is a conservative position, but in light of the fact we’re experiencing this issue with this particular insurer, we thought we would be wise to take provision. Had we not taken this provision in the quarter, you would have actually seen a negligible expense.

So again, the (inaudible) results would have been much improved. The slide basically shows our current ratio.

And again, you can see that it’s remained relatively constant since the second quarter of 2009. The next slide is my favorite slide, cash flow.

At the beginning of the year when the markets were down, we indicated we were going to remain paying our dividends of $90 million. We also said that we were not going to finance this through increased bank debt.

Overall, when I take a look at our long term bank debt today or our long term bank – less our cash on hand in the investment management segment, our net position was $124.2 million in 2009 versus $121 million in 2008. So that $3 million difference is really just noise and timing of payment of expenditures.

And we were able to certainly meet our dividend obligations as well as finance our DFC without going to the bank. So again, I think that's quite remarkable.

On that note, I’ll turn the call back to Blake.

Thank you, Greg. Well to recap, 2009 was a challenging year, but we continued to grow the business in a controlled manner.

Our assets are up and we see further opportunities to grow the business, particularly on the institutional side. Our expansion into the US last year has generated meaningful results in a very short period of time.

We’re very excited by our prospects both here and Canada as well as our international growth, (inaudible) at our Dublin office with our sales professionals there as well as our soon to be open office in Hong Kong. On the retail side, we have a higher percentage of assets under management in equities, which also generate future growth as markets rebound and investor begin to look for growth opportunities.

Our Trust operations also continue to be profitable and it will capitalize to allow for future growth. With that I’d to now open the call for questions.

The first question I had was for Rob. I don't know if he’s on the line.

But just to – with respect to the institutional side of the business, I just wanted to get a sense of the pipeline, if you can at least try qualify the types of mandate and I guess the demand that you guys are getting for and also the ones that you have gotten over the past year? Are these mandates coming within Canada or they are coming from abroad?

Good morning, Jeff. I am here.

Just into the business growth that we’ve experienced today, it is across the board, and that's growth in Canada, the US as well as the European and Asian markets. So it's pretty broad spread.

In terms of the mandates that we’re getting interest in, it includes our EM mandate, our global core mandate, more recent interests in our global resources mandate. So it’s been again pretty broad spread.

It’s not isolated to one mandate. In terms of the pipeline, it’s probably off a little bit from what we saw at this time last year, but lots of good interest in the products than the last time.

And we fully expect that as we get into the usual year-end review process that the consulting community goes through, that we will see a pick up in the pipeline and CAL level of activity that – I’m not sure we can match what we did in ’09, but certainly we are working hard to get us close to that number as we can.

The question I have for Mario was, on the product side, have you guys given any consideration instead of going more into the prime residential market on the interest side?

Yes, Jeff we have, and that’s really a question of timing. You’re probably not going to see us do it.

We have not given it lots of consideration. We will probably be out in the, I’m going to say, the second quarter in our mortgage program.

We've got some things that we got lined up for that program. We'll end up with some of it in prime because of where we’re – we're moving.

But today, we’re not focused there.

Okay. Great.

Thank you.

Hi. Excuse me.

Just back to the insured mortgage provisioning and the issue there, can you remind us – and these are a few questions. Can you remind us what insurance company you use or what percentage is split between these companies.

If there's a disagreement, what’s the recourse that you have? Is this related to a specific block?

How big of a block of the insured mortgage is this related to?

It's Mario. Doug, I'll take the question.

This is Mario. Greg articulated it very well.

This is really our approach to being very conservative in terms of our practice. And it’s consistent with what we’ve been doing with – with our provisioning right through this period.

And as Greg said, we've got an insurer out there who has taken a strict interpretation to the policy exclusions – exclusions rather on fraud and misrepresentation as a result of the environment. That is a slight change in their business practice.

That’s all that’s really happened here. And they haven’t – they haven't been that strict in the past.

And as a result, we’re having conversions around some – some files. All that I’m saying is, we’re going to have those conversions.

We’re going to take a very conservative approach to this because I don't want any surprises going into 2010, so we said we’re going to put a provision against it. I’m very confident that – we’re conservative here as one time and we’ll just see how it plays out.

I mean this insurer may actually come back and go back to practices that they were adhering to before and we'll just move on.

Yes, Doug. And I would say it’s in keeping with how we’re doing the rest of our provisioning.

So if the count plays out, we provide for them. I know it’s quite unusual to see a provision against an insured mortgage.

But the reality is when you look at the issue, we got some accounts that for whatever reasons they’re not being paid. I just think it’s good – it's good practice from an accounting perspective to make sure that, to Mario’s point, there is no surprises.

How many different insurers do you use? Can you name who – who you’re having this discussion with?

I don't think it’s appropriate to name them. As I said, there's been a slight change in their business practice.

I’m not convinced that they’re not going to go back to the business practice that they were adhering to. This is our view in terms of staying conservative and consistent with the provisioning that we’ve taken right through the – the year.

And so, I think we should just leave it at that. We’ve got it.

We understand it. We understand the implications on the income statement and what it will mean for us going into – into the future.

Now we’re going to 2010 and make sure that there are no surprises around any of these stuff.

I'd add, the bulk of the book, we’re not seeing this issue. So again, I think – we've assessed the one insurer that we’ve got the risk with where payments aren’t being made on a timely basis and we’ve put up a provision that we believe is appropriate and conservative in the circumstances.

And hopefully Mario and his team will work through the issues and get them resolved, and we’ll move forward.

I won't press any further. I’ll follow up with some specifics.

The second is the expense side, Greg, and I think you talked about some of the cuts being permanent. Can you talk about how much or what percentage of the cuts had been – or do you think is permanent?

Is it 20%, 50%? When we look at expenses in investment management obviously, it seems to be bouncing around quite a bit from quarter to quarter.

Is there anything else unusual that came through in Q4 or is $35 million kind of the run rate we should be looking at for that at that division?

No, I think you have to look at the annual – annual SG&A expenses to come up with the run rate. When you go through the various expenses, I think, as assets grow we’ll see our absorption come down.

So again that’s something that is very dependent on asset levels. On the flipside, if our sales improve, you’ll see the sales come to up.

If you’d see our performance numbers spike up, you’ll see the investment managers’ compensation move. If our profitability improves overall, you’ll see the general bonus amounts go up.

So again it’s very – compensation is approximately 60%, 65% of our total SG&A. And a big part of that comp is variable.

So again, as you have these drivers, they’ll move the SG&A. The point I was trying to make is, if things stay flat and asset levels never change, I think with some assurance, we could say quite firmly that our SG&A will remain flatter down.

But I think and due to the fact you’ve got markets that move and sales numbers that move, there is going to be some variability in that market. Last year, we’re accruing a bonus of – in 2008, it looked like things were going along quite well.

And then the market came out from under us in the later part of the year and bonus payouts were lower. This year we had the opposite impact.

We’re starting to see the markets come up. As I indicated in the whole investment management segment, overall bonuses were up by $2.8 million on a year-over-year basis.

So I know I'm probably not answering your question exactly how you want it, but that's about as precise as I can be.

So I guess I'd take – I mean Q4 was just an abnormally good quarter, but not to expect the expenses to stay the same. I guess my last question, just to ask this question is, how much of the cuts were permanent though because you did mention permanent?

Or is that just something that you can't really quantify?

Well again, I can – I can somewhat quantify in the sense if you look at the – if you look at basically how much your compensation expense is down, I'd say of that $7 million, roughly $5 million is probably permanent in nature. Because again, we put some programs in place where we reduce our e-stock contributions and stuff like that to save money.

And also, you'll get – you'll get some of the impact of basically severance and one-time expenses that we paid during the period. So again, that's about another $5 million.

However, I say that on the flipside, there were salary increases this year and stuff like that. So there is – there is an offsetting effect of that.

And the one thing I do know about this business is there's always something that will change. We're opening up a new office in Hong Kong.

You'll have the full year of the Boston office, that impact, so. Again, I think if you look at that chart where I detail the SG&A expenses over the period, the company's moving in the right direction.

They're bringing in sound – people I think understand the need to keep your expenses in line. As I said, I think it's hard for people to cut back.

They know how hard it was to go through that process over the last 12 months. And I think they'll be cognizant of that and not hire new staff on as things improve.

Good. Thank you very much.

Thank you. And Greg, best of luck in your new endeavors and it's been a pleasure.

And I just want to say, "Best of luck."

Thank you.

I'm just going to go back to the general provision, Mario, just for a second. So the positive here is if you had no generals, you had no specific provisions in the quarter.

Is that correct?

That's correct.

Okay. And the insured mortgages, I assume by definition, these are all high LTV mortgages?

That is correct, too.

And are they – are they in any particular province?

Well, the insurer looks at all of them on a consistent basis. So they're not province-specific.

Okay, okay. So the strict interpretation of the rules, so the $4 million, this is what you think the loss could be if you had to foreclose on the loans or–?

Yes. So technically, what happened is that you make a claim to the insurer on – on the loss differential.

And they will either honor the claim or not honor the claim. And as I said, they're taking a strict interpretation in terms of what's misrepresentation and fraud.

And so, they're – to Greg's point, they'd be dragging their feet on some of these claims as they typically haven't done in their business practice before. They turn these around pretty quickly and you get paid out.

That has started to slow up a bit. And I understand it from their perspective.

They are in different difficult economic environment, and so they're – they're taking a harder look at all of these stuff. As I said, I don't want any surprises.

We're going into 2010 based on that change in business practice. We want to be more conservative in terms of our provisioning so we've – we've taken a look at what the impact might be on our – in our books, understanding that it's a higher LTV.

And we've come up with a $4 million provision. We think that's more than adequate to cover anything that's going to materialize out of this.

Okay. And has your – and I apologize, I just have to run the numbers.

Is the impaired loan formation – I guess if you excluded the insurance. Does your impaired loan formation in your insured mortgage book any – a lot better than on the – just your standard insured – uninsured mortgage book?

Well, across the book, it is – it's stabilizing across all of the – and the whole insurance portfolio as a whole is stabilizing with respect things that are going into ultimate resilience and legal action. And my comment would be, generally speaking with respect loan losses, I'm – we're seeing is improved – collateral values have improved, real estate values, declining – declining default rates, and declining loss rates.

That's the trend. And so, I'm – one I'm very satisfied with the way the portfolio has – has performed across the whole portfolios, and to am positive about the portfolio's transfer, future performance.

John, if you look at the right direction. Sorry to interrupt.

John, if you look at page 66, under mortgages and legal action, you'll see that on a year-over-year basis, we have disclosed the amount in – in legal action for insured mortgages. And it was $33.8 million, compared to $30.8 million last year.

It's relatively the same. When you look at the conventional mortgages on a year-over-year basis, it's up.

However, when you look at sequentially the quarter is that it's coming down, so.

Okay. I'll leave that there.

Just to your slide seven on your presentation, which I found very interesting. Blake, is the message you're trying to get out here is that it was tough for the industry without the Seg funds, Seg fund wraps?

And your relative position doesn't look as bad if you look through the Seg fund wraps. Is that–?

If you look at the – take a big step back at the investment management firms, say, it's the assets they're managing and relative economic said the thing or whatever factor that you're in, Seg fund has been phenomenally successful. as a product category, we're not as present as some other firms are.

We're trying to get into then. At the same time, we've been building assets and growing in other areas where the economics pretty much match when you get them the Seg funds.

So that's really the message here, John, to really take a look and (inaudible) fund companies and an investment management firm to really be considered to take a look holistically at the various assets that they're managing and the economics that are driven to them. I don't think that we're getting any credit or little credit for some of the great growths that we've had in our institutional side.

And frankly, that's where I think the whole purpose and message that I wanted to convey in that particular slide, one that's in that message group.

Okay. And the trends or the approach at the end of the year was the Seg funds are not as popular?

Or was this – do the flows start migrating away from Seg funds and the traditional funds as they approach the end of the year? Or was it pretty much the same throughout the course of the year.

Yes. I think, John, it's a good observation.

But I think in fact as we take a look at the product set, there will be some modifications to the various features of these products that made them slightly less attractive so that we're actually seeing slowdown in some of the sales.

Okay. And last question for you, Blake.

There is 93% of your cash and securities invested in the Trust business, and is there any chance – thoughts what $770 million odd cash investments in that. Is that ever – we'd ever – is that ever going to come out of the Trust at some point here in the near future or we looking to re-grow the Trust business again?

Exactly, what could – should we expect (inaudible) –?

Because the whole message, John, today has been about growth. I mean we've got growth in our – our various sectors.

We had a great capital cushion today in our – in our Trust Company. We've got some very interesting and profitable lines of business that are complementary to our main line investment activities.

So I guess the short answer is we're comfortable where – where we sit right now.

So your view is that the returns you're getting on the Trust business are comparable to the investment manages that's – that is just – that you're comfortable with this allocation at this stage?

Absolutely.

Okay. Thank you.

(inaudible) questions on the – on the Trust business. (inaudible) because growth (inaudible) what's a visible (inaudible) or what are you comfortable with.

I'm sorry, Paul. We can't hear you.

Hello, Paul?

Can you hear me?

Sorry, are you able to – we can't get near – you come across very, very faintly.

Can you hear me better now?

Yes.

Okay. Great.

In terms of the Trust business and growth, what kind of growth rate are you comfortable with in terms of growing the (inaudible) systems in 2010 without adjusting any additional capital?

So as Blake said and Greg alluded to as well, we're very, very well capitalized. And so, that leaves us a lot of room for – for growth.

And that doesn't just mean we're going to go out and put on a bunch of assets. We're going to strategically go into markets and – and layer in products as – as we see appropriate going – into the rest of the cycle and into 2010.

So we've already launched our RSP program, and we're out there now, basically, putting assets on. We will, in Q2, look at putting focus on our mortgage program.

And then at some point, we'll look at re-entering in some capacity the IOP program. And that'll all be based on the timing and how we're putting assets on.

And there're a whole bunch of other issues, competitive type issues, in terms of pricing and what we can get out of the marketplace. So we're being very strategic in terms of how we're going back into these markets and the way that we're approaching them.

But from a capital perspective, as Greg said, we got – we got lots of capital we don't foresee getting to play any capital in, in the – in the foreseeable future.

Okay. Paul, I'm not sure if you were at our stakeholder day last year.

But what we indicated based on the earnings level that we've seen from Trust over the past two or three years, we can – we can write about $300 million or $400 million of loans without having to inject any capital. So that's the natural run rate that the business can handle.

Greg, you're talking about on the–

That's just on the profits. Yes.

Okay. If we just decided we were going to let the business grow based on its profits, maybe we will be able to increase this loan book by about $300 million or $400 million a year.

And then as you started increasing your loan book and increase your profitability, obviously, that number grows. But in addition to that, he's sitting with a pretty good position right now that, quite frankly, you would have to – I think we've done some work.

You'd have to grow at a rate even higher than we grew this thing in his prime years. And I don't think that that's going to be the case in the – in the next 18 to 24 months, so.

We have to have significant amounts of volume to utilize the capital we're sitting on right now in terms of growth, and that is not in our plan to – to do that.

Okay. I think that $300 million or $400 million number is what I was – what I was looking for.

Yes.

Can you give us any color in terms of the earlier response from brokers now that you're re-entering the lending business after stopping for a while?

Sorry, Paul. I really couldn't–

Really, what the brokers are saying is you come back into the markets and maybe a couple of (inaudible).

Yes, probably around our RSP program. And what they're saying is they're anxious to get back in and to get back in – in doing business generally.

They went through this economic cycle just like any other financial institution has gone through. And they personally have gone through it.

And they want to get focused on – on doing business. And the RSP is a natural way to – to do that because – an appropriate investment for a Canadian.

And in terms of your Tier capital ratio, I'm not sure if I saw that number in the report. Can you tell us what it was at the end of Q4.

The Tier 1 ratio?

Yes.

Well it's about 12%.

Twelve percent. And in terms of the institutional net sales.

It says $4 billion during the year. How much of that was in Q4?

Well if you look at the growth and the institutional aspects from that slide, a quite of (inaudible) funding team at the latter part of Q3 or early Q4.

Okay. So I think kind of back into it come out–

Yes. I mean a lot of these men, they tell you, "You'd want it."

But it takes some time for them to fund. So again, if you look at the growth in the fourth quarter based on that slide, which was basically slide number 14.

I mean, we ended the third quarter with $16 billon in its total assets. We grew by almost 3 billion, so again if you take other factor for basically market appreciation, you can see that there is pretty healthy funding in that last quarter.

Okay. Okay.

Great. It's all the questions I had.

Thanks, Bob.

Hi, good morning. Just a periphery, I guess the message I’m getting is that 2009 is the – was the costs cutting and Trust book, loan book shrinking period of the – and kind of bad debt hedges but 2010 you're putting your emphasis back on growth and I guess on the investment management side that's seems to be emphasizing a lot more to Seg fund and institutional business.

So that’s correct?

That would be – Gabriel, we saw pretty much growth last year. I think, frankly – I think you probably justified all of the things that management really focused on but we are looking number of initiatives, strategies to drive growth.

So just focus on the seg fund/institutional business here, you are telling us the margins are similar to what you would get in your retail mutual fund business. Correct me, if I am wrong there.

But you also have to acknowledge that you have to get much more asset growth to deliver the same amount of EBITDA for these assets. Would that be – I guess the drawback to that?

Gabriel, let me go back. If you look what rooms are earning on seg fund and GMWB platforms and including those assets in their retail mutual fund sales.

We’re getting those kind of margins on our institutional sales. They are very, very similar, okay.

So that’s the point we are trying to make. We’re not trying to make some point that those assets have the same profitability as the retail asset.

But again going back to that slide where you saw, a lot of firms, a lot of their sales came from those platforms this year. And they were getting accolades for doing so well.

We had $4 billion of sales that were equally profitable as some of those assets where I believe we were getting credit for those assets. So again, that’s the point we are trying to make.

Obviously, we want to grow the retail business and those in our team are working very hard on it.

I guess it is the, Christine Hughes' departure, is that – I guess presented some challenges. That was one your focus on the – at least that I remember from last year's stakeholder day that’s I guess you kind of shifting the focus towards the elements or the balance of the product there?

I’m going to pounce, take a quick (inaudible) past two months who oversees all investment managers and the teams but you know critically getting Mike exposed and getting on the road, I mean, that's critical. And we work as teams.

I don’t, actually so far the feedback has been quite positive. As you know, one of the things that we do in investment management area is we have built up solid teams with the lot of debts around each mandate including this one.

Every mandate has a succession plan built into it. So going forward I don’t think this mandate is going to miss a beat.

Mike has been on the road. The clients know Mike.

He was a very clear and obvious choice to take over the mandate in the season investment professional and supporting Mike the team of North American research analysts and the fixed income team that's both this mandate, so it is a balance mandate remain the same. So I actually don’t think that we need to put the focus on or take the focus off this mandate.

This mandates is being carrying on as it always has. Okay.

Okay. And just a switch over about the SG&A side of the equation there.

If you growing again expenses are probably going to creep up and plus. If my – let's just put this way, if markets go up 10% and you are investing in institutional business and try some more marketing on the retail side.

Net of the permanent costs savings should we expect your SG&A to pop up over the $200 million remark?

Well, I mean again I think if you look back in 2007, we were at the levels I think again, it going to take a while to get back to 200 million mark.

Okay. On the Trust, could you give sense I guess you are talking about the investment loan product is being the main, I guess, product that you are going to be pushing for growth is that – when did that start or when is it going to start?

And then just to – reface one of the earlier questions by Doug, without naming the insurers for your share market but could you at least give us a sense of what your split of business is between the government insurer and private market insurance?

So I think your first question was…can you repeat something get the first part of the question?

What you are doing with the growth of (inaudible) in 2010?

Yes. Sorry, that’s right.

So I would say to just on the M&A portfolio, I mean we have traditionally been in two primary businesses both the mortgage side of our business and investment loan type of our business. And you are reentering, both of those.

The question is the timing and how we re-enter and that are focus. So as I said, we will – we started with the RST book.

You will see us going into in Q2 focusing on mortgages. I had a previous question in terms of whether we had to move straight into the prime business and we actually have a prime product out there.

But there is a strategy, we are not just going to focus there. As we come out in Q2, where we probably have a mix of sometime but strategically we are not making a shift.

And then ultimately at some point, we will come out with ROP program and we will layer those in, again based on timing in terms of what’s a market responsible be, what our economics look like, what pricing look like, what our competitors are doing and that’s have get back in the business.

So Q2 or later on, we should expect our loan balance to start picking up again.

Well, you see pick up on the RSP portfolio, because we’re here – short timeframe and I would expect by end of Q2, you get to start to see some movement in it.

Okay. And then the mortgage insurance questions?

In terms of the insurer between private insurer and the public insurer, good deal of our business is in the public insurance and that’s, I mean that’s the answer I have for you. I mean it's probably its 60% in the public insurance.

Okay. Thank you.

Good morning. Just a few questions and I guess, I will respectfully ask these questions but I guess if you talking about growing the Trust but through 2008 and 2009, it seem that the Trust was obviously gained a big proportion of management intention through the downturn where that’s best of (inaudible) that was contributing a minority part of your EBITDA.

So at what point or what was decision that was made to re-grow decision as opposed to perhaps winding it down, perhaps selling it to a larger financial institution. What was the trigger that occurred in the past, six months or three months that led to that last decision?

Steve, we’ve always been very consistent. Our stake over day talking about the (inaudible) Trust is really being, complement to the investment management business and we do that because well, some strategies that some firms have had is you know, actually purchasing distribution groups.

We chose a different way and that was to go and have a relationship with vendors providing products, services, investment solutions that could be delivered through a different vehicle and that was the Trust company. So there has been a direct tie in there.

If we turn the time back a decade ago when basically we were offered a couple of million dollars relation downtown internal Trust license. In those days, we were purely only a – seeking insured claims in a very small insurance company and that time, we had zero times (inaudible) and then your point has good one then why would you have it.

The business today is completely different and I can tell you that through the downturn, the fact that Trust (inaudible) got lot of attention and yes, indeed imagined did focus on but I am going to tell you today the company despite shrinking inside during this difficult period, not only is it more profitable today than better but its far. I go to tell you some looking at the books and the product lines and the areas that we have targeted and where we want to grow.

We are very nicely positioned perhaps this is a key element of the AGF story. So it seems like a lot my perspective to it.

I mean don’t think there is a financial institution in this country that hasn’t been focused on this economic crisis through 2009 and we are asking about where we at, I am satisfied with the portfolio performance. We have had – I'm satisfied with a positive trends in terms of where these portfolio are doing and the confident in the business plan that we had in the adjustment that’s we made to our program and I'm pleased with the level of capitalization that is in this organization and the foundation that we have going in to 2010.

And I am very clear on the positive contribution in return that this organization is going to make a ML and the group of companies and if that's going to change then at some point what we will look at whether it still makes sense to keep this organization but at this point, we're on plan to delivering the contribution that's appropriates for a group of companies and we did all of that based on the words potential worst economic situation in our history. So although we get much better than that from my perspective in terms of what we have been able to deliver.

Okay.

Steve, I just like to add, I mean, I think if you look at our Trust is that and there is a question earlier, there is tremendous flexibility here because obviously the regulators are going to require you to hold excess capital forever and ever and ever. So again if you look at what Mario can grow the business organically, $400 million a year.

You do have the opportunity to bring capital out of the Trust company when the times is right so you are little bit cross sharing that statement and like I say, I think before you went in to this economic downturn, there was a lot of interest in the Trust companies from other parties and I am sure once everybody gets their businesses back on track, there will be a lot of interests as well going forward. So I think it’s an asset that offers AGF tremendous opportunity.

Okay. The second question is going back to I guess the number that people pretend to focus on a month-to-month basis, this is definitively the gross sales on the retail funds.

So notwithstanding that the institutional business seems to be quiet strong and growing rapidly, I guess, going back to your stakeholder day in May and you have mentioned getting in to the Seg fund platforms perhaps sparing relationships in the – perhaps bank platforms. Is it talking longer than you expected or is it just sort of the appropriate plan that you had in term of getting your product sold, getting more relationships within Seg fund players or getting in the bank platforms?

Is this going according to plan or is it taking longer that you expected?

It's all part of the strategy. I mean, we did get an early success with the annualized in the background their shelf.

There is an another insured that we were just, I don’t think we have liberty to go and say anything at this point. So (inaudible) appreciate to get on this platforms does take time.

It’s just the same thing December to getting on to institutional platforms say, he have to go through screening and have to also to the criteria in order to being hard and the portfolios. I mean, there is all, product market to be so we really would like to move around faster, but again I just say that directionally I think we are moving in the right way.

Great. Thanks.

Thanks. Just had a quick question for Mario.

In terms of the new business, that you are going to be riding and if just a kind of having seen loan bucket performer over the past couple of years, is this a matter of moving up stream in terms of types of also looking and main qualifying the higher if he can scores or is it being more critical on the underwriting aspect in terms of taking a closer look at borrowers that you might also look at two or three years ago?

Yes. I mean it’s a combination of everything, Geoff.

We do a lot of analysis in terms of understanding the segments of the book that are performing and not performing and why they are not performing. And so what we have done is that those segments where we were getting higher loss and we would have liked.

We can just cut them out by making adjustments to the program and so we monitor performances on that basis and then we just continue to make adjustments whether its raising what we will take in on from a credit underwriting perspective in certain segment based on the criteria and the quality of the borrower and the underlying assets that were for taking in and we do that in segments so we understand what we, the kind of performances get on the book. We actually predict what our future loss run rates are going to be based on those segments.

And so we have made all of those adjustments. When you look at what’s happening in our few portfolio, already the quality of that focus already moved up we already started to shift on this new portfolio on getting much higher levels of volumes at the top end of our segments and our quality segments and that’s how we managed the business and its finding the right inner section between those two things and that makes you successful.

(inaudible) part of it as out or you are leaving the profitability on the table and that’s why you got to go deep and you got to understand the performances of our portfolio that way.

Great. Thank you.

Thank you, operator. At this time, I want to thank Blake and rest of the executive teams for giving me a chance to be part of AGF.

I also want to thank all the analyst for their thoughtful questions and coverage and most of all I want to thank my director reports and their staff, who I know will serve Bob well. So on that note I wish Bob the best of luck.

Thank you very much for joining us today. Our next earnings call will take place on March 24 and we will review our first quarter results for fiscal 2010.