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Tab 3.0
Audit & Finance Committee
Report to Convocation
October 24, 2019
Committee Members:
Teresa Donnelly (Chair) Lubomir Poliacik (Vice Chair) Ryan Alford Robert Bateman Gary Graham Philip Horgan Vern Krishna Shelina Lalji Nancy Lockhart Michelle Lomazzo Cecil Lyon Isfahan Merali Clare Sellers Tanya Walker
Authored By:
Finance Department Brenda Albuquerque-Boutilier, Executive Director & CFO 416-947-3436
Convocation - Audit and Finance Committee Report
21
Audit & Finance Committee – Report to Convocation
Table of Contents
For Decision:
LibraryCo Inc. 2020 Budget .......................................................................................... 3.1
Law Society of Ontario 2020 Budget ............................................................................. 3.2
For Information:
LAWPRO Quarterly Financial Statements .................................................................... 3.3
LibraryCo Inc. Quarterly Financial Statements .............................................................. 3.4
Law Society of Ontario Quarterly Financial Statements ................................................ 3.5
Review of Investment Performance .............................................................................. 3.6
Investment Compliance Reporting as at June 30, 2019 ................................................ 3.7
Convocation - Audit and Finance Committee Report
22
Audit & Finance Committee – Report to Convocation
TAB 3.1
FOR DECISION
2020 LibraryCo Inc. Budget
Motion
1 . That Convocation approve the LibraryCo Inc. budget for 2020, incorporating Law
Society of Ontario (LSO) funding of $8,019,094.
2. The LSO collects funds for county and district law library purposes and transfers these funds to LibraryCo. Convocation internally restricts these funds for use by LibraryCo and the country and district law libraries to carry out their annual operations and any special projects approved by Convocation.
3. LibraryCo, a wholly-owned, not-for-profit subsidiary of the LSO, was established to develop
policies, procedures, guidelines and standards for the delivery of county law library services
and legal information across Ontario and to administer funding on behalf of the LSO.
4. The LSO holds all of the 100 common shares. Of the 100 special shares, 25 are held by the
Toronto Lawyers Association (TLA) and 75 are held by the Federation of Ontario Law
Associations (FOLA). The LSO may appoint up to four directors, FOLA may appoint up to
three directors and TLA may appoint one director.
5. Under the Unanimous Shareholders Agreement for LibraryCo: “at least ninety days prior to
the commencement of each financial year of the Corporation the Board shall oversee the
preparation and approve a detailed operating plan and budget for the operation of the
Corporation for the coming fiscal year. The budget shall include the request from the
Corporation in respect of the library levy for the next ensuing fiscal year. Once approved, the
budget shall be forthwith presented to the LSO for its approval. If the LSO does not approve
the budget as presented, the board and the LSO shall cooperate in good faith to resolve any
disputes with a view to developing a budget that is mutually acceptable, prior to the
commencement of the fiscal year. In the event a mutually acceptable budget is not
developed within a reasonable period of time, nothing herein shall fetter the budgetary
discretion of the LSO to determine the level of funding for the Corporation.”
6. The budget approved by the LibraryCo Board incorporates an average increase in library
funding of 2%. Despite the increase, there is an overall decrease in the Law Society’s grant
to LibraryCo of $38,842 to $8,019,094 related to the elimination of the
transition/administrative contingency in the 2020 budget.
7. The current draft of the Law Society’s 2020 budget provides LibraryCo funding of $182 per
full fee paying equivalent lawyer, down from $191 in 2019. As in previous years, any
difference between the amount collected from lawyers and remitted to LibraryCo would be
maintained in the County Libraries Fund for the future funding of the county libraries system.
Convocation - Audit and Finance Committee Report
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LIBRARYCO INC. DRAFT 2020 BUDGET
2019 2020
Budget Budget
Expenses $ $
1 Library System (Attachment A) 6,922,219 7,060,663
2 Special Needs Grants 47,000 48,000
3 Electronic Products 352,670 363,250
4 Transition / Administrative Contingency 300,000 -
7,621,889 7,471,913
Delivery of Administrative and Centralized
5 Services (Attachment B) 587,400 635,900
6 Total Expenses 8,209,289 8,107,813
Revenues
7 Law Society Grant 8,057,936 8,019,094
8 Use of General Fund / Reserve Fund 151,353 88,719
8,209,289 8,107,813 9 Total Revenues
10 Excess Revenues over Expenses (Expenses over Revenues) (0) 0
TAB 3.1.1
Convocation - Audit and Finance Committee Report
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LIBRARYCO INC. DRAFT BUDGET ATTACHMENT A
GRANTS TO COUNTY LIBRARIES
ASSOCIATION
2019 LibraryCo
Grant ($)
2020 LibraryCo
Grant ($)
2020 %
Change
Algoma 145,334 148,240 2%Brant 107,964 110,123 2%Bruce 60,215 61,420 2%Carleton 665,352 678,659 2%Cochrane 52,310 53,356 2%Dufferin 50,170 51,173 2%Durham 164,839 168,136 2%Elgin 88,125 89,887 2%Essex 302,681 308,734 2%Frontenac 142,910 145,768 2%Grey 71,302 72,728 2%Haldimand 32,191 32,835 2%Halton 150,213 153,218 2%Hamilton 483,566 493,237 2%Hastings 91,331 93,157 2%Huron 81,715 83,350 2%Kenora 93,967 95,846 2%Kent 75,874 77,392 2%Lambton 81,880 83,518 2%Lanark 42,290 43,136 2%Leeds & Grenville 77,330 78,877 2%Lennox & Addington 28,639 29,212 2%Lincoln 192,170 196,014 2%Manitoulin 2,733 2,788 2%Middlesex 390,269 398,075 2%Muskoka 69,489 70,879 2%Nipissing 92,837 94,694 2%Norfolk 75,898 77,416 2%Northumberland 89,495 91,285 2%Oxford 76,606 78,138 2%Parry Sound 47,343 48,290 2%Peel 320,162 326,565 2%Perth 58,999 60,179 2%Peterborough 142,812 145,668 2%Prescott & Russell 14,976 15,275 2%Rainy River 29,043 29,624 2%Renfrew 133,730 136,405 2%Simcoe 151,202 154,226 2%Stormont, Dundas & Glengarry 83,529 85,200 2%Sudbury 201,744 205,779 2%Temiskaming 46,532 47,463 2%Thunder Bay 183,422 187,091 2%Toronto 633,346 646,013 2%Victoria Haliburton 94,348 96,235 2%Waterloo 268,663 274,037 2%Welland 101,068 103,090 2%Wellington 81,558 83,189 2%York 250,045 255,046 2%
6,922,219 7,060,663 2%
Convocation - Audit and Finance Committee Report
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LIBRARYCO INC. 2020 DRAFT BUDGET
DELIVERY OF ADMINISTRATIVE AND CENTRALIZED SERVICES
2019 2020
$ $
Head Office
1 Insurance 5,300 5,400
2 Publications 4,000 4,000
3 Professional & Consulting Fees 13,300 13,500
4 Administrative Services - 40,000
5 Web Initiatives 3,000 3,000
6 Board of Directors 20,000 20,000
7 Courier and Postage 21,100 21,300
8 Miscellaneous 6,200 6,200
9 Total Head Office Expenses (A) 72,900 113,400
Law Libraries Centralized Purchasing
10 County Library Benefit Plan 270,300 276,000
11 COLAL Education and Meetings 38,300 38,500
12 Publications County Libraries 90,000 90,000
13 Insurance - Counties 95,900 98,000
14 FOLA Meeting Expense 10,000 10,000
15 1-800 Phone Lines 10,000 10,000
16 Total Centralized Expenses (B) 514,500 522,500
17 Total Expenses
(Total of A and B) 587,400 635,900
Convocation - Audit and Finance Committee Report
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Audit & Finance Committee – Report to Convocation
TAB 3.2
FOR DECISION
2020 Law Society Budget
Motion
8 . That Convocation approve the Law Society’s 2020 Budget including the following
annual fee amounts and allocation of fund balances.
9. The budget allocates $5,120,000 from the Lawyer General Fund fund balance and
$1,200,000 from the accumulated surplus investment income in the Errors &
Omissions Insurance Fund (E&O Fund) to mitigate the annual fee increase for
lawyers. $2,400,000 is allocated from the Paralegal General Fund fund balance to
mitigate the annual fee increase for paralegals.
10. The Law Society's draft 2020 budget was reviewed by the Audit & Finance Committee
at its meeting on September 12, 2019. It was subsequently presented to all benchers
for input at a budget information and discussion session held on October 7, 2019.
The Audit & Finance Committee reviewed the budget again at its October meeting.
11. The draft budget incorporates an annual fee decrease for lawyers of $135 (slightly more
than 6%) for an annual fee of $2,066. The annual fee decrease for paralegals is $109
(9.75%) for an annual fee of $1,006.
12. The process for the development of the proposed 2020 Law Society of Ontario budget has
been ongoing since early 2019. Having just completed one full year in office, the CEO, along
with a new Senior Management Executive have taken the opportunity to reconsider the
approach to operations and budget management.
For Lawyers:
General Fund $ 1,574
Compensation Fund $ 219 County Libraries Fund $ 182
Capital Fund $ 91
Total $ 2,066
For Paralegals:
General Fund $ 902 Compensation Fund $ 13
Capital Fund $ 91
Total $ 1,006
Convocation - Audit and Finance Committee Report
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Audit & Finance Committee – Report to Convocation
13. As a general principle, past budgets at the Law Society have tended to include
allowances for policy decisions and program implementation anticipated to be approved
within a coming budget year. The draft budget for 2020 no longer anticipates the
implementation of policy decisions, and therefore does not include any related budget
estimates.
14. The 2020 budget is intended to ensure operational sustainability and ongoing support of
the Law Society’s regulatory functions and the priorities of Convocation.
Compensation Fund
15. The provision for routine grant claims in the Lawyer Compensation Fund remains at $4.8
million based on the most recent valuation. The replenishment of the fund balance is
maintained at $5 million for a total of $9.8 million (2018: total of $9.8 million). The provision
for routine grant claims in the Paralegal Compensation Fund is reduced at $115,000, with
continued growth in the fund balance.
16. The Law Society’s current lawyer Compensation Fund Management Policy is to maintain
the fund balance at an amount sufficient to provide for a minimum of one 99.5th percentile
aggregate claim scenario (a one-in-two-hundred-year event). The latest actuarial report
estimates this balance at $20.5 million.
17. The Lawyer Compensation Fund fund balance at June 30, 2019 is $16.1 million. Based on
current estimates, it is anticipated that the fund balance at year end will be over $19 million.
Due to claims experience from recent past years, the fund balance continues to be below
the minimum ($20.5 million) required by the Lawyer Compensation Fund Balance
Management Policy, however, it appears that the three-year plan to replenish the fund will
be achieved in 2020.
LibraryCo Inc.
18. The current draft of the Law Society’s budget sets the LibraryCo levy at $182 per lawyer
(2019: $191) or $8.0 million taking into account the anticipated increase in the number of
full fee equivalent lawyers. LibraryCo’s budget also projects Law Society funding of $8.0
million. Any difference between amounts collected from lawyers and the amounts
remitted to LibraryCo are maintained in the Law Society’s County Libraries Fund.
Licensing Process
19. The current licensing fees of $4,710 per lawyer candidate has remained unchanged over
the last 6 years, during the Law Practice Program project, and the 2020 budget maintains
the licensing fees at this level.
20. Paralegal licensing fees are unchanged both for the individual candidate and in total.
Convocation - Audit and Finance Committee Report
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2020 Draft Budget
TAB 3.2.1
Convocation - Audit and Finance Committee Report
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Table of Contents
1Budget Vision & Approach
Budget Focus & Development
Key Factors Impacting the Budget
4How is the Budget Funded?
Use of Fund Balances
4
6
8
24
25
2Full Fee Equivalent Licensees
2020 Annual Fee
Historical Annual Fees for Lawyers
Historical Annual Fees for Paralegals
5Governance & Policy
Support of Other Organizations
Professional Development & Competence
Professional Regulation & Tribunal
Client & People Services
Administration
11
12
13
14
27
31
37
43
50
56
32020 Budget Summary - Consolidated
2020 Budget Summary - Lawyers
2020 Budget Summary - Paralegals
2020 General Fund Expense Breakdown
2018-2020 Budget Comparison
2020 Budget by Group
2018-2020 FTE Comparison
6Compensation Funds
Capital Fund
County Libraries Fund
Errors and Omissions Insurance Fund
16
17
18
19
20
21
22
64
66
67
68
Budget Overview
Funding the Budget
Annual Fees
Operations by Division
2020 Budget at a Glance
Other Funds
Convocation - Audit and Finance Committee Report
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Budget Overview
1
Convocation - Audit and Finance Committee Report
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Budget Vision & Approach
The process for the development of the proposed 2020 Law Society of Ontario budget has been
ongoing since early 2019. Having just completed one full year in office, the CEO, along with a new
Senior Management Executive have taken the opportunity to reconsider the approach to operations
and budget management.
The organization has been through a period of change which included a focus on creating enhanced
stability within and across divisions and prioritization of regulatory functions. The activity recalibrated
the tone and approach of our work together, within operational units and with the Board.
As a general principle, past budgeting exercises at the Law Society have tended to include allowances
for policy projects and program implementation anticipated to be approved within a coming budget
year. The draft budget for 2020 no longer anticipates the implementation of policy projects and
programs, and therefore does not include any related budget estimates.
For the 2020 budget, each division was requested to clarify projections based on a three year review
of actual expenditures. This analysis, supported by the CFO and Finance team in partnership with
Senior Managers, has produced a proposed budget that more closely reflects anticipated actual
spending and will tighten variances between projected and actual results.
The change in approach has produced a draft budget that reduces the annual licence fee for lawyers
and paralegals in 2020.
Message from the CEO
Convocation - Audit and Finance Committee Report
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Budget Vision & Approach
This approach to budgeting has an impact on how the organization will address policy and program
activities moving forward. As 2019 comes to a close, and 2020 policy deliberations move forward at
the Board, approval of any new projects or programs will be presented on the basis that costs of
implementation will not be incurred until the following fiscal period (2021). Alternatively, if a project or
program is time sensitive or deemed critical, on recommendation by the relevant policy committee and
confirmation of existing contingency funds by the Audit & Finance Committee, use of contingency
funds may be recommended and approved by Convocation to the extent that monies remain available
and priorities have been assessed.
In addition to these modifications, the CEO has directed management to ensure that all proposals for
policies, projects and programs be presented with cost/benefit/risk recommendations. This may, where
appropriate, also include recommendations for the reduction of costs in other projects and programs,
with a focus on avoiding policy and operational duplication.
With this new approach, the organization will also be in a better position to address decision-making
that results from the deliberations of two new task forces meant to address the scope of the Law
Society’s work – the Proportionate Regulation Task Force and the Program Review Task Force.
Management looks forward to working with newly elected and appointed Board members to further
clarify the Law Society’s project and program approvals process and finances.
Message from the CEO
Convocation - Audit and Finance Committee Report
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Budget Focus and Development
The 2020 budget has been developed with the objectives of:
focusing on the Law Society’s core operations and serving the public, licensees and candidates
reducing the annual fee for licensees and maintaining a zero increase for candidates in the
Licensing Process, and
mitigating risk by ensuring the Law Society’s strong financial position is maintained.
The 2020 budget also takes into account policy decisions that require incremental funding such as the
enhancement of the Practice Management Helpline and trends in the licensee membership relating to
the calculation of full fee equivalent paying licensees.
The 2020 budget is also restructured to introduce a central operations contingency intended to fund
unanticipated scenarios that may arise during the year such as extraordinary litigation matters or short
term costs incurred to implement efficiencies that will result in long term savings. This consolidated
approach to managing for possible in-year impacts allows for a reduction in budgeted funds across
departments. More importantly, this approach supports centralized control of operational spending
related to unanticipated situations with all such matters now requiring CEO approval and enhanced
CFO financial and budgetary oversight.
Message from the CFO
Convocation - Audit and Finance Committee Report
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Budget Focus and Development
This budget plans for the return of the lawyer Compensation Fund fund balance to the required level
under the Law Society fund balance policies. This is the final year of a three year plan to restore the
fund balance and includes an additional $5 million levied from lawyers. The effects of the grant limit
change from $150,000 to $500,000 are now being realized as the initial receipt of claims begins. To
ensure that the fund balance is adequate, and with the benefit of more information since inception of
the increased grant level, an actuarial review of fund balance requirements based on most recent
experience will be undertaken to support 2021 budget planning. The fee related to the paralegal
Compensation Fund remains unchanged with risk to the fund balance managed with a grant limit of
$10,000.
The capital budget incorporates funding for essential information technology and facilities initiatives.
Constant investment in technology and its infrastructure is required to mitigate against the risks
associated with out of date systems, untimely updates or lack of maintenance. With the Law Society
owning a heritage building and grounds, maintenance of the premises is costly and complex, both
from the perspective of maintaining its historical integrity and working with old infrastructure. The
capital budget includes a contingency for in-year unanticipated or urgent needs. Spending against the
contingency requires CEO approval with the CFO providing budgetary oversight.
Message from the CFO
Convocation - Audit and Finance Committee Report
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Key Factors Impacting the Budget
Historical expenditure review by senior executives identified reductions for the 2020 budget
totalling approximately $2.8 million in comparison to the 2019 budget.
There is a net reduction of 6.5 full time equivalent employees (FTEs) compared to 2019.
Funding for the Awareness Campaign’s media buy of $600,000 is not included pending decision
by Convocation to continue it, in which case it will be taken from contingency.
There will be a reduction of $515,000 in the budget related to the bencher cost centre. This
includes removal of the $370,000 budgeted in 2019 to support a possible decision by Convocation
to eliminate or reduce the 26 day deductible period for remuneration purposes.
Convocation - Audit and Finance Committee Report
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Key Factors Impacting the Budget
Contingency funds intended for new policy, program or similar decisions of Convocation is set at
$1,000,000 in the 2020 budget, a reduction of $500,000.
The provision for salary merit increases is 2% and is below CPI.
The full fee equivalent licensees for lawyers is projected to increase by 1,400 to 44,000.
The full fee equivalent licensees for paralegals is projected to increase by 100 to 6,400.
Convocation - Audit and Finance Committee Report
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Annual Fees
2
Convocation - Audit and Finance Committee Report
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Full Fee Equivalent LicenseesAnnual fees for licensees are determined separately for lawyers and paralegals. Paralegals do not
share in all the expenses of the Society nor benefit from all non-annual fee revenue. For example,
paralegals do not contribute to the operations of LibraryCo nor do they share in the portion of
investment income transferred from the Errors & Omissions Insurance Fund as that fund is dedicated
strictly to lawyer related insurance transactions between the Law Society and LAWPRO.
The Law Society utilizes a three tiered fee structure depending on the nature of the licensee’s
practising/employment status. Licensees practising law or providing legal services pay 100% of the
relevant annual fee; those employed but not practising pay 50%; those retired or not working pay 25%.
The number of licensees in each category are prorated to determine what the number of lawyers and
paralegals would equate to at the 100% fee category. This is referred to in the budget materials as the
number of full fee equivalent licensees (FFE).
Lawyers
Fee Category
Estimated
Number
Full Fee
Equivalent
100% 39,500 39,500
50% 6,800 3,400
25% 4,200 1,100
Total 50,500 44,000
Paralegals
Fee Category
Estimated
Number
Full Fee
Equivalent
100% 4,300 4,300
50% 3,200 1,600
25% 2,000 500
Total 9,500 6,400
Convocation - Audit and Finance Committee Report
39
90%
1%
9%
General Fund$902
Compensation Fund$13
Capital Fund$91
2020Annual Fee
For Paralegals
2020 Annual Fee
76%
11%
9%
4%
General Fund$1,574
Compensation Fund$219
LibraryCo$182
CapitalFund$912020
Annual FeeFor Lawyers
$2,066$1,006
Convocation - Audit and Finance Committee Report
40
Historical Annual Fees For Lawyers
35,000
36,000
37,000
38,000
39,000
40,000
41,000
42,000
43,000
44,000
$-
$500
$1,000
$1,500
$2,000
$2,500
2015 2016 2017 2018 2019 Proposed2020
Fu
ll F
ee
Equ
iva
len
t (F
FE
)
FFE Lawyers General Fund Compensation Fund Capital Fund LibraryCo
Annual Fee Breakdown 2015 2016 2017 2018 20192020
Proposed
General Fund $ 1,563 $ 1,555 $ 1,531 $ 1,598 $ 1,693 $ 1,574
Compensation Fund 32 71 87 300 226 219
LibraryCo 202 194 194 194 191 182
Capital Fund 69 47 104 91 91 91
Total Annual Fee $ 1,866 $ 1,867 $ 1,916 $ 2,183 $ 2,201 $ 2,066
FFE Lawyers 38,100 39,500 40,200 41,200 42,600 44,000
Convocation - Audit and Finance Committee Report
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Historical Annual Fees For Paralegals
-500
500
1,500
2,500
3,500
4,500
5,500
6,500
$-
$200
$400
$600
$800
$1,000
$1,200
2015 2016 2017 2018 2019 Proposed2020
Fu
ll F
ee
Equ
iva
len
t (F
FE
)
FFE Paralegals General Fund Compensation Fund Capital Fund
Annual Fee Breakdown 2015 2016 2017 2018 20192020
Proposed
General Fund $ 912 $ 933 $ 925 $ 997 $ 1,009 $ 902
Compensation Fund 15 16 17 12 15 13
Capital Fund 69 47 104 91 91 91
Total Annual Fee $ 996 $ 996 $ 1,046 $ 1,100 $ 1,115 $ 1,006
FFE Paralegals 4,700 5,050 5,600 6,100 6,300 6,400
Convocation - Audit and Finance Committee Report
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Budget at a Glance
3
Convocation - Audit and Finance Committee Report
43
2020 Budget Summary - Consolidated
Approved Draft Change
2019 2020 2019 Budget vs
Budget Budget 2020 Budget
1 Annual Fee Revenue 100,790,100 97,305,400 (3,484,700)
2 Licensing Process 14,157,500 14,478,000 320,500
3 CPD 8,251,000 8,251,000 -
4 Other Revenue 10,625,700 10,693,000 67,300
5 Total Revenues 133,824,300 130,727,400 (3,096,900)
6 Salaries and Benefits 69,961,200 70,483,400 522,200
7 Operating 4,542,300 4,518,500 (23,800)
8 Program 45,292,300 41,757,800 (3,534,500)
9 General Fund 119,795,800 116,759,700 (3,036,100)
10 Capital Fund 4,449,900 4,586,400 136,500
11 LibraryCo 8,152,900 8,019,100 (133,800)
12 Compensation Fund 5,137,100 5,073,600 (63,500)
13 Total Budget Expenditures 137,535,700 134,438,800 (3,096,900)
14 Compensation Fund Replenishment 5,000,000 5,000,000 -
15 Total Funding Required 142,535,700 139,438,800 (3,096,900)
16 Excess of Expenses over Revenues (8,711,400) (8,711,400) -
17 E&O Surplus Investment Income 1,200,000 1,200,000 -
18 Fund Balances 7,511,400 7,511,400 -
19 Total Use of Fund Balances 8,711,400 8,711,400 -
Convocation - Audit and Finance Committee Report
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2020 Budget Summary - Lawyers
Approved Draft Change
2019 2020 2019 Budget vs
Budget Budget 2020 Budget
1 Annual Fee Revenue 93,761,900 90,873,900 (2,888,000)
2 Licensing Process 11,860,900 12,106,400 245,500
3 CPD 7,322,800 7,322,800 -
4 Other Revenue 9,375,400 9,434,600 59,200
5 Total Revenues 122,321,000 119,737,700 (2,583,300)
6 Salaries and Benefits 61,912,400 62,348,400 436,000
7 Operating 4,034,100 4,016,800 (17,300)
8 Program 40,677,300 37,727,900 (2,949,400)
9 General Fund 106,623,800 104,093,100 (2,530,700)
10 Capital Fund 3,876,600 4,004,000 127,400
11 LibraryCo 8,152,900 8,019,100 (133,800)
12 Compensation Fund 4,990,900 4,944,700 (46,200)
13 Total Budget Expenditures 123,644,200 121,060,900 (2,583,300)
14 Compensation Fund Replenishment 5,000,000 5,000,000 -
15 Total Funding Required 128,644,200 126,060,900 (2,583,300)
16 Excess of Expenses over Revenues (6,323,200) (6,323,200) -
17 E&O Surplus Investment Income 1,200,000 1,200,000 -
18 Fund Balances 5,123,200 5,123,200 -
19 Total Use of Fund Balances 6,323,200 6,323,200 -
Convocation - Audit and Finance Committee Report
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2020 Budget Summary - Paralegals
Approved Draft Change
2019 2020 2019 Budget vs
Budget Budget 2020 Budget
1 Annual Fee Revenue 7,028,200 6,431,500 (596,700)
2 Licensing Process 2,296,600 2,371,600 75,000
3 CPD 928,200 928,200 -
4 Other Revenue 1,250,300 1,258,400 8,100
5 Total Revenues 11,503,300 10,989,700 (513,600)
6 Salaries and Benefits 8,048,800 8,135,000 86,200
7 Operating 508,200 501,700 (6,500)
8 Program 4,615,000 4,029,900 (585,100)
9 General Fund 13,172,000 12,666,600 (505,400)
10 Capital Fund 573,300 582,400 9,100
11 Compensation Fund 146,200 128,900 (17,300)
12 Total Expenses 13,891,500 13,377,900 (513,600)
13 Excess of Expenses Over Revenues (2,388,200) (2,388,200) -
14 Fund Balances 2,388,200 2,388,200 -
15 Total Use of Fund Balances 2,388,200 2,388,200 -
Convocation - Audit and Finance Committee Report
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2020 General Fund Expense Breakdown
Salaries &Benefits
$70,483,40060%
Operating$4,518,500
4%
Program$41,757,800
36%
CONSOLIDATED
Salaries & Benefits
$62,348,40060%
Operating$4,016,800
4%
Program$37,727,900
36%
LAWYERS
Salaries & Benefits
$8,135,00064%
Operating$501,700
4%
Program$4,029,900
32%
PARALEGALS
General Fund
Total 2020 Expenses
$116,759,700
Convocation - Audit and Finance Committee Report
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2018 – 2020 Budget Comparison
$136,643,600
$142,535,700
$139,438,800
2018
2019
2020
Salaries &
BenefitsOperating Program
Capital
FundLibraryCo
Compensation
FundTotal
Budget
Expenses
2018 66,951,300 4,449,500 39,910,500 4,304,300 7,993,000 13,035,000 136,643,600
2019 69,961,200 4,542,300 45,292,300 4,449,900 8,152,900 10,137,100 142,535,700
2020 70,483,400 4,518,500 41,757,800 4,586,400 8,019,100 10,073,600 139,438,800
Annual
Fees
Licensing
ProcessCPD
Other
RevenueE&O Surplus
Fund
BalancesTotal
Budget
Funding
2018 96,652,300 13,268,300 8,686,000 10,495,600 600,000 6,941,400 136,643,600
2019 100,790,100 14,157,500 8,251,000 10,625,700 1,200,000 7,511,400 142,535,700
2020 97,305,400 14,478,000 8,251,000 10,693,000 1,200,000 7,511,400 139,438,800
Convocation - Audit and Finance Committee Report
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2020 Budget By Group
Profession Regulation& Tribunal
$44,520,60031.9%
229.0 FTEs
Professional Development& Competence
$32,335,30023.2%
160.5 FTEs
Administration$28,554,800
20.5%125.5 FTEs
Support of OtherOrganizations$11,432,900
8.2%No FTEs
Client & PeopleServices
$11,452,4008.2%
81.0 FTEs
Governance & Policy$6,556,400
4.7%12.5 FTEs
Capital Fund$4,586,400
3.3%No FTEs
2020 $139,438,800
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49
2018-2020 FTE Comparison
606.0 FTEs
615.0 FTEs
608.5 FTEs
2018
2019
2020
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Funding the Budget
4
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How is the Budget Funded?
Sources of Revenue
Licensee fees account for approximately 75% of total revenue sources
in 2020.
Licensing Process fees represent the next significant component of
revenue collected by the Society, making up approximately 11% of
Society revenues, with continuing professional development fees being
the third largest contributor at approximately 6%.
The remaining 8% of revenue is from a variety of sources including
investment income, royalties, late fees, catering and events, and
additional licensee fees for professional corporations, Law Society
referral service and certified specialist.
Annual Fees75%
LicensingProcess Fees
11%
ContinuingProfessionalDevelopment
6%
Other8%
Sourcesof Revenue
Annual FeesThe annual fees represents the amount paid by lawyers and paralegals to
support the operations of the Society. For 2020 the annual fee for lawyers
is $2,066 and for paralegals is $1,006.
Licensing Process FeesLicensing process fees are the fees paid by licensing candidates enrolled in
the lawyer licensing process and the paralegal licensing process. The fees
are $4,710 and $1,400, respectively.
Continuing Professional DevelopmentContinuing professional development revenues are collected from lawyers,
paralegals and others for attendance, in person, online or on demand at
Law Society professional development programs.
$130.7 million
Late Fees
InvestmentIncome
20%
Catering andEvents18%
By-LawAdministration
Fees6%
OrderedCosts
4% Payment PlanFees4%
Law SocietyReferral Service
3%
Certified Specialist3%
Miscellaneous14%
Lexis NexisRoyalties
13%
Breakdownof
OtherRevenue
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Use of Fund Balances
The Society has fund balance management
policies that prescribe the appropriate range of
balances to be maintained in both the General
and Compensation Funds.
When balances exceed the policy approved
minimums, options are available to utilize a
portion of the fund balance to mitigate annual
fees.
This is a best practice in not for profit budgeting
and the 2020 draft budget proposes the
utilization $7.5 million of accumulated fund
balances from the lawyer and paralegal General
Funds and $1.2 million from the E&O Fund.
This will not impair the Society’s financial
position or risk being outside the policy approved
fund balances and will positively impact the
setting of annual licensee fees.
Paralegal GeneralFund
27.4%$2,388,200
E&O Fund13.8%
$1,200,000
Lawyer GeneralFund
58.8%$5,123,200
FundBalances
Used
$8.7 million
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Operations by Division
5
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Governance & Policy
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Overview
Governance & Policy
The Law Society is governed by a board of directors, knownas benchers which includes lawyers, paralegals andappointed representatives (non-lawyers and non-paralegals).The Policy Division groups together a number of functionsimportant to the corporate and governance interests of theLaw Society, including policy, committee and Convocationsupport.
47%
9%
44%
2020 BudgetG&P Portion ofLSO Expenses
AnnualFees97%
Non-AFRevenue
3%
2020 Funding ofG&P Expenses
Bencher
-
Convocation
Office of Treasurer
Policy
–
Equity Initiatives
• Convocation governs the Law Society of Ontario
• Benchers set policy and determine other matters
related to the regulation of Ontario’s lawyers and
paralegals through committee work and
Convocation board meetings
• At the Law Society Tribunal, benchers sit on
hearings as adjudicators to hear discipline cases
concerning lawyer and paralegal conduct,
competence and capacity
• Under the Law Society Act, the Treasurer is the
president and Chair of the Board of the Law
Society
• Supports Committees and the Benchers as they
make decisions governing the regulation of lawyers
and paralegals in the public interest
• Develops policy, in collaboration with Benchers and
Management, in the Committee process
• Assists in strategic communications and supports
organizational alignment of new policy
• Manages the administration of committees,
working groups and task forces
• Develops and implements equity policies and
initiatives pertaining to the professions
$6.6 million
4.7%$6.0 million
4.6%
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Operating Budget Summary
Governance & Policy 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
% Change
Presented /
Prior Year
Approved
Governance & Policy Total
Salaries and Benefits 2,038,100 2,078,900 2,495,300 2,135,200
Operating Expenses 106,700 108,800 126,800 126,800
Program Expenses 2,510,100 2,698,700 5,455,600 4,294,400
Total Expenses 4,654,900 4,886,400 8,077,700 6,556,400 -18.8%
Total Non-Annual Fee Revenues 238,700 243,500 190,000 190,000 0.0%
Excess of Revenues Over Expenses / (Expenses Over Revenues) (4,416,200) (4,642,900) (7,887,700) (6,366,400)
Full Time Equivalent 15.5 12.5
Items of Note
• The change in the program expenses budget is due to a return to the traditional $1M contingency
fund intended for new policy, program or similar decisions of Convocation, a reduction of $500,000,
and a reduction in the budget related to the bencher cost centre of $515,000. The latter includes
removal of the $370,000 budgeted in 2019 in support of a possible decision by Convocation to
eliminate or reduce the 26 day deductible period for bencher remuneration. There is a realignment of
budget related to equity initiatives of $157,000, with funding shifting to other divisions with
appropriate skills to support equity initiatives.
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Operating Budget Details
Governance & Policy 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Bencher | Convocation
Salaries and Benefits - - - -
Operating Expenses - - - -
Program Expenses 1,729,100 1,902,000 4,097,600 3,093,800
Total Expenses 1,729,100 1,902,000 4,097,600 3,093,800
Total Non-Annual Fee Revenues 238,700 243,500 190,000 190,000
Excess of Revenues Over Expenses / (Expenses Over Revenues) (1,490,400) (1,658,500) (3,907,600) (2,903,800)
Full Time Equivalent - -
Office of Treasurer
Salaries and Benefits 54,100 55,200 100,700 99,700
Operating Expenses 5,800 5,900 20,900 20,900
Program Expenses 383,000 390,700 480,800 480,800
Total Expenses 442,900 451,800 602,400 601,400
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (442,900) (451,800) (602,400) (601,400)
Full Time Equivalent 1.0 1.0
Policy | Equity Initiatives
Salaries and Benefits 1,984,000 2,023,700 2,394,600 2,035,500
Operating Expenses 100,900 102,900 105,900 105,900
Program Expenses 398,000 406,000 877,200 719,800
Total Expenses 2,482,900 2,532,600 3,377,700 2,861,200
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (2,482,900) (2,532,600) (3,377,700) (2,861,200)
Full Time Equivalent 14.5 11.5
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Support of Other Organizations
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Overview
Support of Other Organizations
The 2020 budget continues to include support for other
organizations.
11%
15%
2%
2%70%
2020 BudgetSupport Portion of
LSO Expenses
2020 Funding ofSupport Expenses
Federation of Law Societies of
Canada
Canadian Legal Information
Institute (CanLII)LibraryCo
• The national coordinating body of Canada’s 14
provincial and territorial law societies
• The Federation supports the development of
national standards of regulation
• CanLII is a non-profit organization launched in
2001 by the Federation of Law Societies of
Canada on behalf of its 14 member law societies
to provide efficient and open online access to a
comprehensive collection of current judicial
decisions, legislative documents and secondary
resources
• LibraryCo, a wholly-owned, not-for-profit
subsidiary of the Law Society of Ontario, was
established to develop policies, procedures,
guidelines and standards for the delivery of legal
information and library services across Ontario
and to administer funding on behalf of the Society
$11.4 million
8.2%
$10.5 million
8.0%
Annual Fees
100%
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Overview
Support of Other Organizations
The 2020 budget continues to include support for other
organizations.
11%
15%
2%
2%70%
2020 BudgetSupport Portion of
LSO Expenses
2020 Funding ofSupport Expenses
Annual Fees
100%
$11.4 million
8.2%
$10.5 million
8.0%
Pro Bono Ontario
-
Ontario Justice Education Network (OJEN)
-
Law Commission of Ontario
Federation of Ontario Law Associations
(FOLA)
• Pro Bono Ontario helps Ontarians who have essential legal
needs but cannot afford a lawyer
• OJEN develops innovative educational tools that introduce
young people to the justice system, help them understand the
law, and build their legal capability
• The Law Commission of Ontario is an independent
organization that researches issues and recommends law
reform measures to make the law accessible to all members of
Ontario’s communities.
• FOLA is a non-profit organization that coordinates activities for
county law associations
• Advocates for a better justice system that recognizes the
crucial role competent and professional lawyers play in that
system
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Operating Budget Summary
Support of Other Organizations 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
% Change
Presented /
Prior Year
Approved
Support of Other Organizations Total
Salaries and Benefits - - - -
Operating Expenses 55,238 56,300 64,000 64,000
Program Expenses 11,055,544 11,276,700 11,502,700 11,368,900
Total Expenses 11,110,782 11,333,000 11,566,700 11,432,900 -1.2%
Total Non-Annual Fee Revenues - - - - 0.0%
Excess of Revenues Over Expenses / (Expenses Over Revenues) (11,110,782) (11,333,000) (11,566,700) (11,432,900)
Full Time Equivalent - -
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Operating Budget Details
Support of Other Organizations 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Federation of Law Societies of Canada
Salaries and Benefits - - - -
Operating Expenses - - - -
Program Expenses 1,132,977 1,155,600 1,111,000 1,211,000
Total Expenses 1,132,977 1,155,600 1,111,000 1,211,000
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (1,132,977) (1,155,600) (1,111,000) (1,211,000)
Full Time Equivalent - -
Canadian Legal Information Institute (CanLII)
Salaries and Benefits - - - -
Operating Expenses - - - -
Program Expenses 1,604,871 1,637,000 1,815,200 1,715,200
Total Expenses 1,604,871 1,637,000 1,815,200 1,715,200
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (1,604,871) (1,637,000) (1,815,200) (1,715,200)
Full Time Equivalent - -
LibraryCo
Salaries and Benefits - - - -
Operating Expenses - - - -
Program Expenses 7,900,000 8,058,000 8,152,900 8,019,100
Total Expenses 7,900,000 8,058,000 8,152,900 8,019,100
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (7,900,000) (8,058,000) (8,152,900) (8,019,100)
Full Time Equivalent - -
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Operating Budget Details
Support of Other Organizations 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Pro Bono Ontario | Ontario Justice Education Network (OJEN) | Law Commission of Ontario
Salaries and Benefits - - - -
Operating Expenses - - - -
Program Expenses 237,800 242,600 223,300 223,300
Total Expenses 237,800 242,600 223,300 223,300
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (237,800) (242,600) (223,300) (223,300)
Full Time Equivalent - -
Federation of Ontario Law Associations (FOLA)
Salaries and Benefits - - - -
Operating Expenses 55,238 56,300 64,000 64,000
Program Expenses 179,896 183,500 200,300 200,300
Total Expenses 235,134 239,800 264,300 264,300
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (235,134) (239,800) (264,300) (264,300)
Full Time Equivalent - -
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Professional Development & Competence
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Overview
Professional Development & Competence
Professional Development and Competence focuses on the
competency and professional standards of the professions through
the licensing processes, provision of legal information and
supports, competence resources and education programs, and
post-licensing quality assurance programs.
9%
43%
13%
21%
2% 12%
2020 BudgetPD&C Portion of LSO Expenses
Executive Director’s Office
-
Practice Supports & Resources
-
Practice Management
Licensing Process
-
Certified Specialist
Continuing Professional
Development
• Responds to requests for guidance from over 8,000
callers and supports over 130 practice management
and professional responsibility resources including:
Practice Management Guidelines, Practice Guides,
checklists, articles, FAQs, and other tools
• Provides “just in time” guidance and information to
enable licensees and others to make informed
decisions through the Practice Management Helpline
• Manages support services through Coach and
Advisor Network using a mentorship model
• Manages the licensing processes - standardized,
fair, transparent and defensible systems of
assessment for entry-level lawyers and paralegals
• Approximately 2,400 new registered lawyer
candidates and 1,400 new registered paralegal
candidates in the licensing process annually
• Develops and delivers the Licensing Examinations
and the Experiential Training Programs (Articling and
the Law Practice Program/PPD)
• Approximately 2,200 lawyers and 1,300 paralegals
are licensed each year
• Accredits and audits college paralegal programs
• Provides professional credentialing through certifying
specialization in designated practice areas
• Delivers educational programming for the legal
professions on a wide variety of substantive and
professionalism topics via live programs, and live
and archived webcast
• Coordinates the development and presentation of
approximately 140 programs per year
$32.3 million
23.2%
AnnualFees27%
CPD26%
LicensingProcess
46%
Other Non- AFRevenue
1%
2020 FundingOf PD&C Expenses
$31.6 million
24.2%
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Overview
Professional Development & Competence
Professional Development and Competence focuses on the
competency and professional standards of the professions through
the licensing processes, provision of legal information and
supports, competence resources and education programs, and
post-licensing quality assurance programs.
9%
43%
13%
21%
2% 12%
2020 BudgetPD&C Portion of LSO Expenses
$32.3 million
23.2%
AnnualFees27%
CPD26%
LicensingProcess
46%
Other Non- AFRevenue
1%
2020 FundingOf PD&C Expenses
$31.6 million
24.2%
Practice Review
-
Spot Audit
Practice Audits
Great Library
-
Corporate Records & Archives
• Conducts Spot Audits to assess a law firm’s compliance
with the Law Society’s financial record keeping
requirements
• Conducts Practice Management Reviews to assess an
individual lawyer’s practice management activities
• Conducts Entry to Practice Reviews for those licensees
returning to practice after 5 or more years
• Conducts Practice Audits of paralegal practices - a
combined financial audit and practice management
review
• Supports the research and information needs of the
lawyer and paralegal professions through a significant
print collection, and increasingly through electronic
resources, and responds to over 20,000 legal research
and information requests each year
• Administers AccessCLE, a full-text, searchable website
• Shares information through its blog, Know How
• Manages the Law Society’s large and complex
document collection, including the organization’s official
corporate records and artifacts of historical significance
to Ontario’s legal professions
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Operating Budget Summary
Professional Development & Competence 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
% Change
Presented /
Prior Year
Approved
Professional Development & Competence Total
Salaries and Benefits 15,882,600 16,200,100 16,763,900 17,289,800
Operating Expenses 954,900 974,000 1,129,800 1,018,900
Program Expenses 12,568,800 13,242,000 14,700,800 14,026,600
Total Expenses 29,406,300 30,416,100 32,594,500 32,335,300 -0.8%
Total Non-Annual Fee Revenues 22,588,600 23,040,400 22,880,500 23,196,300 1.4%
Excess of Revenues Over Expenses / (Expenses Over Revenues) (6,817,700) (7,375,700) (9,714,000) (9,139,000)
Full Time Equivalent 158.5 160.5
Items of Note
• The increase in salaries and benefits relates to the addition of two FTEs for the Practice
Management Helpline enhancements approved by Convocation in 2018.
• The difference in the 2020 salaries and benefits over projected actuals for 2019 is affected by
staffing vacancies in the Licensing Process, Practice Management and Practice Review departments
and the additional positions for the Practice Management Helpline.
• The change in the program expenses is mainly due to savings identified by management and the
elimination of $570,000 budgeted in 2019 to support development of the family legal services
provider licence with additional funding not needed in 2020.
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68
Operating Budget Details
Professional Development & Competence 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Executive Director’s Office | Practice Supports & Resources | Practice Management
Salaries and Benefits 2,236,500 2,281,200 2,425,200 2,612,200
Operating Expenses 121,800 124,200 126,900 126,900
Program Expenses 68,300 69,700 205,100 267,100
Total Expenses 2,426,600 2,475,100 2,757,200 3,006,200
Total Non-Annual Fee Revenues 27,200 27,700 - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (2,399,400) (2,447,400) (2,757,200) (3,006,200)
Full Time Equivalent 17.0 19.0
Licensing Process | Certified Specialist
Salaries and Benefits 3,235,700 3,300,400 3,573,800 3,729,500
Operating Expenses 152,500 155,600 175,600 159,900
Program Expenses 9,155,800 9,650,000 10,304,100 9,989,300
Total Expenses 12,544,000 13,106,000 14,053,500 13,878,700
Total Non-Annual Fee Revenues 14,440,400 14,729,200 14,457,500 14,778,000
Excess of Revenues Over Expenses / (Expenses Over Revenues) 1,896,400 1,623,200 404,000 899,300
Full Time Equivalent 40.5 40.5
Continuing Professional Development
Salaries and Benefits 2,388,700 2,436,500 2,500,900 2,533,400
Operating Expenses 111,000 113,200 117,600 109,100
Program Expenses 1,550,300 1,581,300 1,779,800 1,664,300
Total Expenses 4,050,000 4,131,000 4,398,300 4,306,800
Total Non-Annual Fee Revenues 7,921,400 8,079,800 8,251,000 8,251,000
Excess of Revenues Over Expenses / (Expenses Over Revenues) 3,871,400 3,948,800 3,852,700 3,944,200
Full Time Equivalent 29.0 29.0
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Operating Budget Details
Professional Development & Competence 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Practice Review | Spot Audit
Salaries and Benefits 5,737,200 5,851,900 5,958,700 6,070,700
Operating Expenses 469,500 478,900 571,300 504,300
Program Expenses 37,300 38,000 38,800 38,800
Total Expenses 6,244,000 6,368,800 6,568,800 6,613,800
Total Non-Annual Fee Revenues 28,200 28,800 - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (6,215,800) (6,340,000) (6,568,800) (6,613,800)
Full Time Equivalent 48.0 48.0
Practice Audits
Salaries and Benefits 472,200 481,600 502,000 546,800
Operating Expenses 51,600 52,600 59,900 59,900
Program Expenses 2,900 3,000 23,500 2,700
Total Expenses 526,700 537,200 585,400 609,400
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (526,700) (537,200) (585,400) (609,400)
Full Time Equivalent 4.0 4.0
Great Library | Corporate Records & Archives
Salaries and Benefits 1,812,300 1,848,500 1,803,300 1,797,200
Operating Expenses 48,500 49,500 78,500 58,800
Program Expenses 1,754,200 1,900,000 2,349,500 2,064,400
Total Expenses 3,615,000 3,798,000 4,231,300 3,920,400
Total Non-Annual Fee Revenues 171,400 174,800 172,000 167,300
Excess of Revenues Over Expenses / (Expenses Over Revenues) (3,443,600) (3,623,200) (4,059,300) (3,753,100)
Full Time Equivalent 20.0 20.0
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Professional Regulation & Tribunal
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Overview
Professional Regulation & Tribunal
Professional Regulation responds to regulatory issues brought
to the Law Society’s attention by resolving and investigating
matters, and representing the Law Society in hearings before
the Law Society Tribunal. Primary activities of Professional
Regulation include complaints handling, investigations,
discipline prosecutions, monitoring and enforcement of orders
and undertakings, trusteeships, and client compensation.
11%
13%
4%
23%16%
4%
24%
5%
2020 BudgetPR&T Portion ofLSO Expenses
AnnualFees94%
InvestmentIncome
3%
OtherNon-AF
Revenue3%
2020 Funding ofPR&T Expenses
Executive Director’s Office
-
Case Management
Complaints Intake &
Resolution
Regulatory Compliance
-
By-Law Administration
Services
Investigation Services
• Oversees the case management system
and the Integrated Regulatory
Information System ("IRIS")
• Monitors quality of case files
• Develops qualitative analysis and
recommendations regarding file
handling, issue management, work
process and procedural improvements
• Develops reporting structures and the
examination and evaluation of reporting
requirements
• Receives, logs, and acknowledges
complaints related correspondence,
assessing whether a written complaint is
within Law Society jurisdiction
• Resolves less serious allegations
transferring serious allegations to
Investigation Services
• Complaints Resolution Commissioner
conducts an impartial review of an
investigation to close the file, often
meeting with the complainant to discuss
the matter
• Administers by-law driven processes,
including annual reporting; enforces,
suspension orders and revocations
• Communicates practice restrictions,
discipline histories and other regulatory
information internally and to the public
• Investigates serious allegations of
licensee misconduct, incapacity and
incompetence
• Investigates issues relating to the good
character of licensee applicants and the
unauthorized practice by non-licensees
• Resolves and closes file, refers the
matter to the Proceedings Authorization
Committee (PAC) or transfers file to
Litigation Services
$44.5 million
31.9%
$41.1 million
31.4%
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Overview
Professional Regulation & Tribunal
Professional Regulation responds to regulatory issues broughtto the Law Society’s attention by resolving and investigatingmatters, and representing the Law Society in hearings beforethe Law Society Tribunal. Primary activities of ProfessionalRegulation include complaints handling, investigations,discipline prosecutions, monitoring and enforcement of ordersand undertakings, trusteeships, and client compensation.
11%
13%
4%
23%16%
4%
24%
5%
2020 BudgetPR&T Portion ofLSO Expenses
AnnualFees94%
InvestmentIncome
3%
OtherNon-AF
Revenue3%
2020 Funding ofPR&T Expenses
$44.5 million
31.9%
$41.1 million
31.4%
Litigation Services Trustee Services Compensation Funds Law Society Tribunal
• Provides advice to investigators on
investigation files
• Prepares memoranda for the
Proceedings Authorization Committee
on recommendations for a hearing
• Represents the Law Society before the
Law Society Tribunal and before the
courts
• Ensures the protection of client funds,
files and property, when a licensee is no
longer able to continue operating his or
her professional business due to death,
incapacity, abandonment of practice or
revocation
• Obtains a court order appointing the
Law Society as trustee of the practice
• Provides information services to assist
with a practice wind-up
• Processes claims by clients who have
lost money as a result of the dishonesty
of a licensee
• The current maximum amounts payable
to a claimant in respect of lawyer or
paralegal dishonesty are $500,000 and
$10,000, respectively
• Processes, hears and decides
regulatory cases about Ontario lawyers
and paralegals in a manner that is fair,
just and in the public interest
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Operating Budget Summary
Professional Regulation & Tribunal 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
% Change
Presented /
Prior Year
Approved
Professional Regulation & Tribunal Total
Salaries and Benefits 24,622,600 25,115,100 28,553,900 28,528,900
Operating Expenses 1,655,400 1,829,175 2,010,500 2,121,900
Program Expenses 5,986,800 6,886,400 14,579,700 13,869,800
Total Expenses 32,264,800 33,830,675 45,144,100 44,520,600 -1.4%
Total Non-Annual Fee Revenues 612,400 2,415,200 2,305,500 2,305,500 0.0%
Excess of Revenues Over Expenses / (Expenses Over Revenues) (31,652,400) (31,415,475) (42,838,600) (42,215,100)
Full Time Equivalent 231.5 229.0
Items of Note
• The variance between the 2020 salaries and benefits and the 2019 projected actuals is related to
significant staffing vacancies. Active recruitment is in progress and the budget is maintained in
anticipation of full staffing. These vacancies are primarily in the Investigation Services and Litigation
Services departments.
• The increase in operating expenses relates to anticipated costs for scanning and digitization of
regulatory process files.
• The difference in the 2020 program expense budget over projected actuals for 2019 relates to
favourable lawyer compensation fund routine grant experience compared to budget and the $5
million provision to replenish the fund balance. A three-year plan was initiated in 2018 to replenish
the fund balance by including an annual $5 million provision above the amount for routine claims.
The plan is on target to achieve its replenishment objective in 2020.
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Operating Budget Details
Professional Regulation & Tribunal 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Executive Director’s Office | Case Management
Salaries and Benefits 2,043,300 2,084,200 3,307,200 2,390,500
Operating Expenses 157,300 187,400 310,500 295,500
Program Expenses 1,850,800 1,887,800 2,680,600 2,312,900
Total Expenses 4,051,400 4,159,400 6,298,300 4,998,900
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (4,051,400) (4,159,400) (6,298,300) (4,998,900)
Full Time Equivalent 23.0 15.5
Complaints Intake & Resolution
Salaries and Benefits 5,091,500 5,193,300 4,857,500 5,342,700
Operating Expenses 176,200 215,675 263,400 269,000
Program Expenses 157,100 160,200 239,700 176,600
Total Expenses 5,424,800 5,569,175 5,360,600 5,788,300
Total Non-Annual Fee Revenues 285,600 291,300 179,900 179,900
Excess of Revenues Over Expenses / (Expenses Over Revenues) (5,139,200) (5,277,875) (5,180,700) (5,608,400)
Full Time Equivalent 45.0 48.5
Regulatory Compliance | By-Law Administration Services
Salaries and Benefits 1,717,500 1,751,900 1,896,300 1,780,700
Operating Expenses 117,500 119,900 167,400 129,900
Program Expenses 21,200 21,600 50,500 50,000
Total Expenses 1,856,200 1,893,400 2,114,200 1,960,600
Total Non-Annual Fee Revenues 788,400 804,200 700,000 700,000
Excess of Revenues Over Expenses / (Expenses Over Revenues) (1,067,800) (1,089,200) (1,414,200) (1,260,600)
Full Time Equivalent 20.0 19.5
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Operating Budget Details
Professional Regulation & Tribunal 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Investigation Services
Salaries and Benefits 7,703,500 7,857,600 8,632,900 8,915,600
Operating Expenses 725,300 810,000 678,400 814,400
Program Expenses 388,300 396,100 296,700 292,700
Total Expenses 8,817,100 9,063,700 9,608,000 10,022,700
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (8,817,100) (9,063,700) (9,608,000) (10,022,700)
Full Time Equivalent 70.5 72.5
Litigation Services
Salaries and Benefits 4,901,100 4,999,100 6,393,800 6,538,300
Operating Expenses 314,600 320,900 403,600 418,600
Program Expenses 187,000 190,700 139,300 152,900
Total Expenses 5,402,700 5,510,700 6,936,700 7,109,800
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (5,402,700) (5,510,700) (6,936,700) (7,109,800)
Full Time Equivalent 41.0 41.0
Trustee Services
Salaries and Benefits 1,412,500 1,440,800 1,476,300 1,483,400
Operating Expenses 57,200 58,300 54,500 58,500
Program Expenses 74,300 100,000 152,600 118,900
Total Expenses 1,544,000 1,599,100 1,683,400 1,660,800
Total Non-Annual Fee Revenues 3,000 3,100 100,600 100,600
Excess of Revenues Over Expenses / (Expenses Over Revenues) (1,541,000) (1,596,000) (1,582,800) (1,560,200)
Full Time Equivalent 14.0 14.0
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Operating Budget Details
Professional Regulation & Tribunal 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Compensation Funds
Salaries and Benefits 480,900 490,500 555,500 616,200
Operating Expenses 11,200 19,000 25,700 29,000
Program Expenses 2,812,300 3,500,000 10,137,100 10,073,600
Total Expenses 3,304,400 4,009,500 10,718,300 10,718,800
Total Non-Annual Fee Revenues (464,600) 1,316,600 1,325,000 1,325,000
Excess of Revenues Over Expenses / (Expenses Over Revenues) (3,769,000) (2,692,900) (9,393,300) (9,393,800)
Full Time Equivalent 5.0 5.0
Law Society Tribunal
Salaries and Benefits 1,272,300 1,297,700 1,434,400 1,461,500
Operating Expenses 96,100 98,000 107,000 107,000
Program Expenses 495,800 630,000 883,200 692,200
Total Expenses 1,864,200 2,025,700 2,424,600 2,260,700
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (1,864,200) (2,025,700) (2,424,600) (2,260,700)
Full Time Equivalent 13.0 13.0
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Client & People Services
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Overview
Client & People Services
Client & People Services division is a collection of business
units, including Human Resources, Corporate Resource &
Training Centre, Client Service Centre, Catering and Events
that offer a diverse range of services to internal and external
stakeholders.
39%
32%
6%
2%
21%
2020 BudgetC&PS Portion of LSO Expenses
AnnualFees76%
Non- AFRevenue
24%
2020 Funding ofC&PS Expenses
Executive Director’s Office
-
Human Resources
-
Corporate Resource & Training
Centre
Client Service Centre
Catering
-
Events
• Partners strategically with business units to recruit,
develop and retain a high performing and diverse
workforce
• Offers advice, consulting and support to enhance
personal and organizational effectiveness
• Develops organization-wide training on matters of
operational improvement and ongoing talent
management
• Receives over 160,000 calls to Resource Centre,
Complaints Reception and Main Reception lines and
receives over 15,000 e-mails to the Law Society
inbox
• Updates licensee information and maintains most of
the contact related database changes
• Produces licensee and staff Law Society photo ID
cards, Certificates of Standing, Status Letters, and
Adjusted Billings for licensees whose status have
changed during the year
• Connects people looking for legal assistance with a
lawyer or paralegal who will provide a free
consultation of up to 30 minutes to help determine
rights and options
• Provides food services for internal and external
meetings and events, manages the Osgoode Hall
Restaurant, and assists in preparation of meals for
the Toronto Lawyers Feed the Hungry Program
• Works closely with Facilities to manage internal and
external room bookings and provides maintenance
of the spaces
$11.5 million
8.2%
$10.7 million
8.2%
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Overview
Client & People Services
Client & People Services division is a collection of business
units, including Human Resources, Corporate Resource &
Training Centre, Client Service Centre, Catering and Events
that offer a diverse range of services to internal and external
stakeholders.AnnualFees76%
Non- AFRevenue
24%
2020 Funding ofC&PS Expenses
$11.5 million
8.2%
$10.7 million
8.2%
Member Assistance Plan (MAP) Parental Leave Assistance Plan (PLAP)
• A confidential service designed to help members to
achieve their health and wellness goals
• Lawyers, paralegals, licensing candidates, law students,
judges, other legal professionals and their families can
access the MAP
• Funded by and fully independent of the Law Society of
Ontario and LAWPRO, Homewood Health provides
services through coaching, counselling, peer support
and resources
• Financial assistance following the birth or adoption of a
child – $750 per week for up to 12 weeks ($9,000 max.
per family)
• For practising lawyers (women and men) in sole
practice, or firms of up to five lawyers, who do not have
access to other parental or adoption benefits
39%
32%
6%
2%
21%
2020 BudgetC&PS Portion of LSO Expenses
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Operating Budget Summary
Client & People Services 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
% Change
Presented /
Prior Year
Approved
Client & People Services Total
Salaries and Benefits 7,277,200 7,422,700 7,647,100 7,715,800
Operating Expenses 319,600 326,000 500,600 489,300
Program Expenses 2,908,200 2,966,400 3,233,800 3,247,300
Total Expenses 10,505,000 10,715,100 11,381,500 11,452,400 0.6%
Total Non-Annual Fee Revenues 2,490,000 2,539,800 2,572,700 2,572,700 0.0%
Excess of Revenues Over Expenses / (Expenses Over Revenues) (8,015,000) (8,175,300) (8,808,800) (8,879,700)
Full Time Equivalent 82.0 81.0
Items of Note
• The variance in 2020 salaries and benefits expense compared to 2019 projected actuals relates to
staffing vacancies.
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Operating Budget Details
Client & People Services 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Executive Director’s Office | Human Resources | Corporate Resource & Training Centre
Salaries and Benefits 2,615,900 2,668,200 2,672,200 2,650,200
Operating Expenses 150,500 153,500 243,400 242,100
Program Expenses 1,374,600 1,402,100 1,730,000 1,580,500
Total Expenses 4,141,000 4,223,800 4,645,600 4,472,800
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (4,141,000) (4,223,800) (4,645,600) (4,472,800)
Full Time Equivalent 21.0 20.0
Client Service Centre
Salaries and Benefits 3,192,500 3,256,400 3,473,000 3,484,100
Operating Expenses 118,900 121,300 205,300 195,300
Program Expenses 21,600 22,000 53,900 18,900
Total Expenses 3,333,000 3,399,700 3,732,200 3,698,300
Total Non-Annual Fee Revenues 479,900 489,500 427,700 427,700
Excess of Revenues Over Expenses / (Expenses Over Revenues) (2,853,100) (2,910,200) (3,304,500) (3,270,600)
Full Time Equivalent 41.0 41.0
Catering | Events
Salaries and Benefits 1,468,800 1,498,200 1,501,900 1,581,500
Operating Expenses 50,200 51,200 51,900 51,900
Program Expenses 759,200 774,400 824,700 822,700
Total Expenses 2,278,200 2,323,800 2,378,500 2,456,100
Total Non-Annual Fee Revenues 1,741,400 1,776,200 1,910,000 1,910,000
Excess of Revenues Over Expenses / (Expenses Over Revenues) (536,800) (547,600) (468,500) (546,100)
Full Time Equivalent 20.0 20.0
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Operating Budget Details
Client & People Services 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Member Assistance Plan (MAP)
Salaries and Benefits - - - -
Operating Expenses - - - -
Program Expenses 597,800 609,800 525,200 625,200
Total Expenses 597,800 609,800 525,200 625,200
Total Non-Annual Fee Revenues 268,700 274,100 235,000 235,000
Excess of Revenues Over Expenses / (Expenses Over Revenues) (329,100) (335,700) (290,200) (390,200)
Full Time Equivalent - -
Parental Leave Assistance Plan (PLAP)
Salaries and Benefits - - - -
Operating Expenses - - - -
Program Expenses 155,000 158,100 100,000 200,000
Total Expenses 155,000 158,100 100,000 200,000
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (155,000) (158,100) (100,000) (200,000)
Full Time Equivalent - -
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Administration
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Overview
Administration
The Society’s administrative functions include executive
oversight, financial administration, information systems,
office of general counsel and facilities management.
6%
12%
25%
12%
27%
6%
12%
2020 BudgetAdministration
Portion ofLSO Expenses
AnnualFees83%
Non- AFRevenue
8%
Late Fees6%
InvestmentIncome
3%
2020 Funding ofAdministration
Expenses
Office of Chief Executive
OfficerFinance Information Technology
External Relations &
Communications
• Leads the operations of the Law
Society
• Provides advice and support to the
Treasurer and benchers and
operational oversight for projects and
activities that bridge strategy, policy and
large-scale implementation
• The office includes the Corporate
Secretary function with oversight and
management of governance functions
• Coordinates the contribution of
benchers and management to
Federation of Law Societies of Canada
• Oversees the Society’s financial
administration including its annual
budget, financial policies and reporting,
internal controls and support for the
Audit and Finance Committee
• Manages the Society’s enterprise risk
management including risk
identification, assessment and
mitigation and compliance reporting
• Provides Financial administration to the
Law Society Foundation and LibraryCo
Inc.
• Supports business applications and
information and communications
technology that enables the Law
Society to operate efficiently and
effectively
• Manages IT related projects and
initiatives for the Law Society
• Coordinates the Society’s
communications, government and
stakeholder relations functions
• Provides strategic communications and
engagement advice and services
• Works closely with the Treasurer,
benchers, management and operational
areas to advance policy initiatives and
strategic priorities by taking a
leadership role in engagement and
communications strategy development,
media relations and issues
management
$28.6 million
20.5%$26.0 million
19.9%
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Overview
Administration
The Society’s administrative functions include executive
oversight, financial administration, information systems,
office of general counsel and facilities management.
6%
12%
25%
12%
27%
6%
12%
2020 BudgetAdministration
Portion ofLSO Expenses
$28.6 million
20.5%
$26.0 million
19.9%
Facilities Office of General Counsel Corporate
• Delivers integrated services to create and
maintain adaptable and optimal spaces that
are safe, sustainable and promote positive
work environments
• Manages capital projects lifecycle renewal for
the Law Society
• Provides oversight for all corporate litigation
• Supports and co-instructs external counsel
appointed by the Law Society’s insurers in
respect of litigation that is insured
• Manages an average of 30 corporate
litigation files each year
• Provides a variety of legal services to the
organization, ranging from advice and
opinions on emerging policy matters through
to legal implications of implementation of
programs and policies including employment
law and other organization obligations
• Includes expenses not aligned specifically
with an operational department including
insurance, audit fees, provision for bad debts,
payment card processing fees and the central
operations contingency.
AnnualFees83%
Non- AFRevenue
8%
Late Fees6%
InvestmentIncome
3%
2020 Funding ofAdministration
Expenses
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Operating Budget Summary
Administration 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
% Change
Presented /
Prior Year
Approved
Administration Total
Salaries and Benefits 13,644,900 13,917,800 14,501,000 14,813,700
Operating Expenses 511,500 521,700 710,600 697,600
Program Expenses 12,878,700 13,341,500 14,109,700 13,043,500
Total Expenses 27,035,100 27,781,000 29,321,300 28,554,800 -2.6%
Total Non-Annual Fee Revenues 4,791,100 4,886,900 5,085,500 5,157,500 1.4%
Excess of Revenues Over Expenses / (Expenses Over Revenues) (22,244,000) (22,894,100) (24,235,800) (23,397,300)
Full Time Equivalent 127.5 125.5
Items of Note
• The variance in the 2020 salaries and benefits in comparison to the 2019 projected actuals is due to
staffing vacancies.
• The change in the program expenses is due to savings identified by management and the removal of
funding for the Awareness Campaign’s media buy of $600,000 pending a decision by Convocation to
continue.
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Operating Budget Details
Administration 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Office of Chief Executive Officer
Salaries and Benefits 1,280,000 1,305,600 1,317,300 1,335,600
Operating Expenses 76,300 77,800 78,600 78,600
Program Expenses 355,700 362,800 295,700 244,500
Total Expenses 1,712,000 1,746,200 1,691,600 1,658,700
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (1,712,000) (1,746,200) (1,691,600) (1,658,700)
Full Time Equivalent 5.0 5.0
Finance
Salaries and Benefits 2,826,100 2,882,600 2,998,500 3,063,200
Operating Expenses 91,500 93,300 161,500 146,500
Program Expenses 149,200 152,200 318,500 288,500
Total Expenses 3,066,800 3,128,100 3,478,500 3,498,200
Total Non-Annual Fee Revenues 552,000 563,000 473,000 473,000
Excess of Revenues Over Expenses / (Expenses Over Revenues) (2,514,800) (2,565,100) (3,005,500) (3,025,200)
Full Time Equivalent 25.0 25.0
Information Technology
Salaries and Benefits 4,540,500 4,631,300 4,831,200 4,914,100
Operating Expenses 108,400 110,600 126,400 126,400
Program Expenses 1,759,700 2,000,000 2,200,200 2,125,200
Total Expenses 6,408,600 6,741,900 7,157,800 7,165,700
Total Non-Annual Fee Revenues 12,000 12,200 12,000 12,000
Excess of Revenues Over Expenses / (Expenses Over Revenues) (6,396,600) (6,729,700) (7,145,800) (7,153,700)
Full Time Equivalent 43.0 43.0
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Operating Budget Details
Administration 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
External Relations & Communications
Salaries and Benefits 1,763,500 1,798,800 1,949,000 1,865,600
Operating Expenses 100,100 102,100 180,800 180,800
Program Expenses 1,766,300 1,801,600 2,339,100 1,519,100
Total Expenses 3,629,900 3,702,500 4,468,900 3,565,500
Total Non-Annual Fee Revenues 60,400 61,600 120,000 120,000
Excess of Revenues Over Expenses / (Expenses Over Revenues) (3,569,500) (3,640,900) (4,348,900) (3,445,500)
Full Time Equivalent 18.0 16.0
Facilities
Salaries and Benefits 1,969,500 2,008,900 2,088,400 2,230,300
Operating Expenses 57,800 59,000 77,200 79,200
Program Expenses 4,768,200 4,863,600 5,175,700 5,285,700
Total Expenses 6,795,500 6,931,500 7,341,300 7,595,200
Total Non-Annual Fee Revenues - - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (6,795,500) (6,931,500) (7,341,300) (7,595,200)
Full Time Equivalent 28.0 28.0
Office of General Counsel
Salaries and Benefits 1,265,300 1,290,600 1,316,600 1,404,900
Operating Expenses 77,400 78,900 86,100 86,100
Program Expenses 188,600 192,400 448,400 248,400
Total Expenses 1,531,300 1,561,900 1,851,100 1,739,400
Total Non-Annual Fee Revenues 250,000 - - -
Excess of Revenues Over Expenses / (Expenses Over Revenues) (1,281,300) (1,561,900) (1,851,100) (1,739,400)
Full Time Equivalent 8.5 8.5
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Operating Budget Details
Administration 2018 Actuals
2019
Projected
Actuals
2019
Approved
Budget
2020
Proposed
Budget
Corporate
Salaries and Benefits - - - -
Operating Expenses - - - -
Program Expenses 3,891,000 3,968,900 3,332,100 3,332,100
Total Expenses 3,891,000 3,968,900 3,332,100 3,332,100
Total Non-Annual Fee Revenues 3,916,700 3,995,000 4,480,500 4,552,500
Excess of Revenues Over Expenses / (Expenses Over Revenues) 25,700 26,100 1,148,400 1,220,400
Full Time Equivalent - -
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Other Funds
6
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Compensation Funds
The Compensation Funds are restricted by the Law Society Act. Under the Act, the Funds’ revenues
are to include licensee annual fees, recoveries and investment income from the investment of the
accumulated fund balances.
The Funds make grants to members of the public who are the victims of licensee dishonesty and
misappropriation of client funds held in trust. Convocation has delegated responsibility for the
approval of grants to the Compensation Fund Committee. Current guidelines for grants cap payments
at $500,000 for the lawyer fund and $10,000 for the paralegal fund.
The lawyer fund is governed by a Convocation approved fund balance management policy. The policy
sets out minimum and maximum fund balance amounts to be maintained and prescribes the use of the
accumulated fund balance and steps to be taken in the event the fund balance is below the policy
minimum. Currently, the minimum balance to be maintained in the lawyer fund is approximately $20.5
million.
A key element of the fund balance management policy is the use of actuarial estimates to predict
future claims activity and the appropriate size of the fund balance. This review is undertaken every
three years with the next scheduled review in 2020.
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Compensation Funds
The Paralegal Fund, due to its relatively short existence, operational since 2008, is not governed by a
fund management policy. However, its current balance of $800,000 is two and one half times the total
grants paid from the fund since inception. The fund is in a very strong position and would be able to
absorb a major defalcation if one were to occur.
Compensation Fund Summary
Lawyers Paralegals Total
Program expenses 104,700 13,300 118,000
Provision for grants 4,840,000 115,600 4,955,600
Fund balance replenishment 5,000,000 - 5,000,000
Toal program expenses 9,944,700 128,900 10,073,600
Salaries and administration 572,600 72,600 645,200
Total expenses 10,517,300 201,500 10,718,800
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Capital Fund
The Law Society maintains a Capital Fund for the purpose of providing funding for the replacement,
upgrade and restoration of its physical assets and information technology systems. Annual fees,
currently $91 per licensee, are reported in the Fund as revenue, and expenditures on approved
projects are made from the Fund.
The Society is undergoing an assessment of the useful life of its physical plant to develop a ten year
plan for the upkeep and eventual replacement of relevant equipment. An assessment of the Society’s
information technology needs will be undertaken to identify and prioritize systems in need of upgrade
or replacement.
On completion of these studies, a plan for capital expenditures will be brought forward to Convocation
for consideration and approval. These studies will inform future capital expenditure plans. A
comprehensive multi-year plan will be presented as part of the 2021 budget process.
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County Libraries Fund
The Society maintains the County Libraries Fund to collect fees from lawyers for the provision of legal
information and the support of county library services across Ontario’s law libraries through its wholly-
owned not-for-profit subsidiary LibraryCo.
On an annual basis the Society approves a budget submission from LibraryCo and levies lawyers their
proportionate share based on the estimated number of full fee equivalent lawyers in the upcoming
year. The revenue raised from the annual fee is reported as revenue of the Fund, and payments made
to LibraryCo are reported as an expense of the Fund. For 2020, the amount to be paid to LibraryCo is
$8,019,000.
To the extent that levies raised exceed payments to LibraryCo, the difference is maintained in the
County Libraries Fund fund balance. This balance is available to mitigate future annual fees raised for
the purpose of funding LibraryCo. The balance in the Fund at the end of 2018 was $131,000.
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Errors and Omissions Insurance Fund
The Society’s Errors and Omissions Insurance Fund (E&O Fund) is maintained for the purpose of
reporting insurance related transactions between the Society, lawyers and LAWPRO. LAWPRO
administers the day to day operations of the E&O Fund under a management services agreement with
the Society at no cost.
The Fund’s surplus funds are managed by the Society’s investment manager under a Convocation
approved investment policy. The Fund has no active claims outstanding and investment income
surplus to the needs of the Fund is available for the use of the Society’s general operations. The 2020
budget proposes utilizing $1.2 million of investment income from the E&O Fund to mitigate the 2020
lawyer annual fee.
The Fund reports the Society’s investment in LAWPRO of $35.6 million at cost.
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Audit & Finance Committee – Report to Convocation
TAB 3.3
FOR INFORMATION
Lawyers’ Professional Indemnity Company (LAWPRO) Financial Statements for the Six
Months ended June 30, 2019
21. Convocation is requested to receive the second quarter financial statements for
LAWPRO for information.
22. The Law Society provides mandatory professional liability insurance to lawyers through
LAWPRO, a provincially licensed insurer and wholly-owned subsidiary of the Law Society.
There is a quarterly financial reporting schedule to the shareholder. These interim financial
statements convey the performance of LAWPRO before the end of the year. The
statements have been approved by LAWPRO’s Board.
23. The professional liability insurance program generally requires practising lawyers to pay
premiums and levies to the Errors & Omissions (E&O) Fund that contribute toward the
premium paid by the Law Society to fund the anticipated costs of professional liability claims
made in each annual policy period.
24. Paralegals typically obtain this form of coverage through independent insurance companies.
In addition to providing mandatory lawyers professional liability insurance, LAWPRO also
sells optional excess lawyers professional liability and title insurance.
25. LAWPRO administers the operations of the E&O Fund at no charge, under an administrative
services agreement.
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Report to the
AAuuddiitt aanndd FFiinnaannccee CCoommmmiitttteeee ooff
TThhee LLaaww SSoocciieettyy ooff OOnnttaarriioo
September 12, 2019
TAB 3.3.1
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Report to the Audit and Finance Committee – Law Society September 12, 2019
INDEX
Key PPooiinntt SSuummmmaarryy 2 LAWPRO Financial SSttaatteemmeennttss aass aatt JJuunnee 3300,, 22001199 3 PPrreemmiiuummss 7 CCllaaiimmss && AAddjjuussttmmeenntt EExxppeennsseess 7 CCllaaiimmss TTrreennddss 8 RReevviieeww ooff IInnssuurraannccee RRaattiiooss 10 CCoommpplliiaannccee wwiitthh IInnvveessttmmeenntt GGuuiiddeelliinneess::
-- CCIIBBCC GGlloobbaall AAsssseett MMaannaaggeemmeenntt IInncc 11 -- LLeettkkoo BBrroosssseeaauu && AAssssoocciiaatteess IInncc 12
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KEY POINT SUMMARY • LAWPRO has sufficient assets to discharge its claims and other liabilities.
• At June 30, 2019, LAWPRO held investment assets totaling $703.6 million, inclusiveof cash and cash equivalents and investment income due and accrued. These fundshave been invested in accordance with the Company’s investment policy. LAWPROwas in compliance with its policy during the six months ended June 30, 2019 (seepages 11 and 12).
• LAWPRO’s net income for the six months ended June 30, 2019 was $0.8 millioncompared to a budgeted loss of $1.3 million and a net income of $5.5 million for thesame period in 2018. During the six months ended June 30, 2019 LAWPROexperienced a total comprehensive income of $8.4 million, which reflects an increasein unrealized gains of $7.6 million on its surplus investments, compared to abudgeted income of $1.4 million and a loss of $4.4 million for the same period in2018.
• Overall, earned premiums on the mandatory program of $48.6 million were $1.1million below budgeted levels, primarily due to transaction levies being $0.8 millionlower than budget. Investment income of $16.8 million for the six months of 2019was higher than budgeted levels by $7.4 million, mainly due to a $7.2 million increasein unrealized gains on its asset-liability matched fixed income securities. Current yearinvestment income was higher than the results for the same period in 2018 by $5.3million, primarily due to the sizable unrealized gains experienced in the currentperiod.
• Claims and adjustment expenses for the six months ended June 30, 2019 of $56.1million were $3.4 million higher than budget and $13.2 million higher than the sameperiod last year, primarily due to the $10.2 million current year discounting expensewhich is driven by lowering market yields. General expenses for the six monthsended June 30, 2019 of $10.6 million were $0.9 million lower than budget and $0.4million lower than the same period in 2018.
• LAWPRO is in compliance with all regulatory requirements regarding solvency andfiling of financial information. A summary of LAWPRO’s position with respect to itsRisk Appetite Statement (including standard insurance ratios) at June 30 is includedon page 10.
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Lawyers' Professional Indemnity CompanySTATEMENT OF FINANCIAL POSITIONStated in thousands of Canadian dollarsUNAUDITED
As atJune 30
2019
As atDecember 31
2018
Assets
Cash and cash equivalents 12,175 10,281 Investments 688,900 655,446 Investment income due and accrued 2,536 2,530 Due from reinsurers 265 637 Due from insureds 3,586 2,048 Due from the Law Society of Ontario 46,939 8,581 Reinsurers' share of provisions for:
Unpaid claims and adjustment expenses 44,999 40,506 Unearned premiums 3,594 -
Deferred policy aquisition expenses 1,734 - Other receivables 1,023 1,052 Other assets 13,126 1,534 Property and equipment 1,536 1,731 Intangible asset 329 439 Income taxes recoverable 2,144 3,455 Deferred income tax asset 5,430 5,663
Total assets 828,316 733,903
Liabilities
Provision for unpaid claims and adjustment expenses 490,165 474,649 Unearned premiums 59,040 1,111 Unearned reinsurance commissions 765 - Due to reinsurers 2,441 683 Due to insureds 19 277 Expenses due and accrued 13,739 3,272 Other taxes due and accrued 334 449
566,503 480,441
Equity
Capital stock 5,000 5,000 Contributed surplus 30,645 30,645 Retained earnings 199,938 199,171 Accumulated other comprehensive income 26,230 18,646
261,813 253,462 Total liabilities and equity 828,316 733,903
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Lawyers' Professional Indemnity CompanySTATEMENT OF PROFIT OR LOSSStated in thousands of Canadian dollarsUNAUDITED
For six months ended June 30 2019 2018
Income
Gross written premiums 112,873 112,207 Premiums ceded to reinsurers (7,130) (7,178) Net written premiums 105,743 105,029 (Increase) decrease in unearned premiums (54,335) (54,275) Net premiums earned 51,408 50,754 Net investment income 16,792 11,455 Ceded commissions 796 948
68,996 63,157
Expenses
Gross claims and adjustment expenses 59,571 44,548 Reinsurers' share of claims and adjustment expenses (3,482) (1,623) Net claims and adjustment expenses 56,089 42,925 Operating expenses 10,603 11,045 Premium taxes 1,653 1,635
68,345 55,605
Profit (loss) before income taxes 651 7,552
Income tax expense (recovery) - current (349) 1,902 - deferred 233 120
(116) 2,022
Profit (loss) 767 5,530
Other comprehensive income / (loss)
Unrealized gains / (losses) - bonds 795 (604) - equities 6,789 (3,815)
Defined benefit remeasurements - - 7,584 (4,419)
Total comprehensive income 8,351 1,111
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Lawyers' Professional Indemnity CompanySTATEMENT OF COMPREHENSIVE INCOMEStated in thousands of Canadian dollarsUNAUDITED
For six months ended June 30 2019 2018
Profit (loss) 767 5,530
Other comprehensive income, net of income tax: Items that will not be reclassified subsequently to profit or loss: Remeasurements of defined benefit plans, net of income tax expense (recovery) of ($0) [2018: $0] - -
Items that may be reclassified subsequently to profit or loss: Available-for-sale assets
Net changes unrealized gains (losses), net of income tax expense (recovery) of $2,609 [2018: ($408)] 7,232 (1,130) Reclassification adjustment for (gains) losses recognized in profit or loss, net of income tax (expense) recovery of ($290) [2018: ($1,256) ] (803) (3,485) Reclassification adjustment for impairments, recognized in profit or loss, net of income tax expense of $416 (2018: $70) 1,155 196
Other comprehensive income 7,584 (4,419)
Comprehensive income 8,351 1,111
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Lawyers' Professional Indemnity CompanySTATEMENT OF CHANGES IN EQUITYStated in thousands of Canadian dollarsUNAUDITED
Capital stock Contributed surplus Retained earningsAccumulated other
comprehensive income
Equity
Balance at December 31, 2017 5,000 30,645 182,716 35,317 253,678
Total comprehensive income for the year - - 16,852 (17,068) (216) Transfer of defined benefit remeasurements from OCI to retained earnings (397) 397 -
Balance at December 31, 2018 5,000 30,645 199,171 18,646 253,462
Total comprehensive income for the year - - 767 7,584 8,351 Transfer of defined benefit remeasurements from OCI to retained earnings - -
Balance at June 30, 2019 5,000 30,645 199,938 26,230 261,813
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LAWYERS’ PROFESSIONAL INDEMNITY COMPANY REPORT TO AUDIT AND FINANCE COMMITTEE - LAW SOCIETY OF ONTARIO MANDATORY E&O INSURANCE PROGRAM SIX MONTHS ENDED JUNE 30, 2019
PREMIUMS
• Overall, written premiums were slightly below expected levels. At June 30, 2019,there were 27,548 full-time equivalent practitioners, compared with the budgetedamount of 27,917, as all of this year’s new calls have not yet been included inthe program.
• For 2019, transaction levies were $0.8 million below budget, but $0.1 million abovethe results for the same period in 2018. Transaction levies collected during the firsthalf of 2019 was $12.3 million, compared to $12.1 million collected during the sameperiod prior year.
CLAIMS & ADJUSTMENT EXPENSES
• Year to date in 2019, there were 1,197 new 2019 fund year claim filesreported compared with 1,155 new 2018 fund year claim files reported for the sameperiod in 2018.
• The number of files remaining open at June 30, 2019 was 4,140, higher than the3,983 files remaining open at June 30, 2018.
• For all fund years, 1,535 new files were opened through June 30, 2019 (including 98which were reopened) and 1.384 closed. The comparable figures for the six monthsended June 30, 2018 were 1,476 claims files activated (including 81 which werereopened) and 1,367 closed.
• On an aggregate basis, for the first six months of 2019 there has been a significantnet favorable development on claims of prior years (in particular fund years 2005,2011, 2013 through 2015, 2017 and 2018, offset somewhat by an unfavourabledevelopment for fund years 2006, 2007, 2009 and 2012). Regarding prior yeardevelopment, in the same period in 2018, there was a net favourable development onclaims of prior years (in particular fund years 2011, 2012, 2016 and 2017, offsetsomewhat by an unfavourable development for fund years 2009, 2010 and 2015).
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5261
4434
3514
34303279
31873056
2994 2798
27282652
2781
2934 3103
3198
3169
3275 3519
3589
3813
36083727
38743989
4140
2500
3000
3500
4000
4500
5000
5500
Open Claims (for fund years 1995 and forward)
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16,588
16,95117,218
17,51717,852
18,01818,647
19,38819,911
20,354
20,789
21,09821,510
22,02722,525
23,04023,596
24,33824,919
25,53726,02126,702
27,3232,3221,982
2,1091,970
1,800
1,8461,947
1,8301,897
1,8552,020
2,1152,175
2,272
2,231
2,4682,567
2,5062,572
2,532 2,6162,7572,774
0
1,000
2,000
3,000
16,00017,00018,00019,00020,00021,00022,00023,00024,00025,00026,00027,00028,00029,000
1996 2008
Cla
ims
Rep
orte
d
Full
time
Equi
vale
nt (F
TE)
New Claims Reported & Full Time Equivalents by Fund Year (as at December 31)
Series2
Series1
140.0
116.9
122.5112.5
100.8
102.5
104.494.4
95.3
91.1
97.2
100.2
101.1
103.1
99.0
107.1
108.8
103.0
103.299.2
100.5
103.2
101.5
0
20
40
60
80
100
120
140
160
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Cla
ims
repo
rted
Claims reported per 1,000 FTE
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INSURANCE RATIOS
JUN DEC JUN DEC
2019 2018 2018 2017
I. Solvency Ratios1. Minimum Capital Test
Preferred: 215-240%
Minimum: 170%
2. Loss reserves to equityPreferred: < 225%
Maximum: 250%
II. Other Select Ratios1. Liabilities as a % of liquid assets
Preferred: < 80%
Maximum: 105%
2. Net premiums written as a % of surplusPreferred: < 80%
Maximum: 100%
3. Comprehensive return on equity
4. General expense ratio
5. Optional business segment
Note:1. Sufficient to maintain/grow MCT.
TEST RECOMMENDED TARGET
(Measures the excess of capital available to capital required based on a risk-based capital adequacy framework and is used to determine capital adequacy of a company.)
237%
(Net risk ratio measures the company's ability to absorbfinancial shocks. The higher the ratio of premiums tosurplus, the greater is the potential risk borne by thecompany in relation to the surplus available to absorbloss variations.)
42%
(Liabilities as a percentage of Cash and other liquidassets-measures company’s ability to meet its financialdemands.)
66%
220% 237%
(Measures unpaid claim and adjustment reserves as apercentage of surplus and provides a simple test of theleveraged position of the company.)
171% 176%170%
225%
173%
(Measures an insurer’s comprehensive income as apercentage of equity. The higher the ratio, the greaterthe return to shareholders per unit of invested capital.Sustainability of earnings is more important than periodsof high returns followed by periods of low returns orlosses.)
43%40%
67%74% 73%
41%
Greater than 0% 6.5% (0.1%) 1.0% 0.1%
414
Within Target
Outside of Target
22%
(Excess program and TitlePLUS title insurance isplanned to achieve break-even or better on a trailing 4year average basis).
Greater than $0 (stated in $'000s) 331 670
(Measures an insurer’s general expenses, excludingcommissions, as a percentage of net earnedpremiums.). This ratio should be maintained at lowerthan or equal to comparable small insurance companies.
Up to small insurance company benchmark (27% as
at Dec 2018)
24%24%
Better Than Target
(325)
25%
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CIBC ASSET MANAGEMENT INSTITUTIONAL
CIBC Asset Management Inc. 18 York Street, Suite 1400 Toronto ON M5J 2T8 Tel: 416-364-5620 Fax: 416-364-3286
Confidential
July 19, 2019
Subject: Quarterly Compliance Report as at June 30, 2019 for Lawyers’ Professional Indemnity Company
As of and for the quarter ending June 30, 2019, we hereby certify that to the best of our knowledge the investments in the Lawyers’ Professional Indemnity Company portfolio were in compliance, based on our records which are issued on a trade date basis, in accordance with the Investment Policy Statement dated January 1, 2018.
Yours truly,
Deborah Lewis, CFA First Vice-President
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LetkoBrosseau
MONTREAL
1800J,_,, McGill Coll�ge �wtc ,,;10, �omrcal (QC) lly\ lfh Crmada
T ,14,499 llOO r 5'-1•4'J9 0361
TORONTO q5 I( mg rr<'Ct W esr �UIIC llOI, 1 oronto (O�) \15111J8 Canada
T 64 7 .pb l<}llj ' ,, 17 ,,c, 1587
CALGARY
Sunc Hoo
15, 41h Avcuuc SW ('alg.ir} (AH) T2Pof1 C:mada
I 5H7.350 1700 F 587 150.1708
Iba.ca T I IIOO. 307,ll<;<;i
July 251h, 2019
Lawyer's Professional Indemnity Company C/O Mr. Daniel E. Pinnington, President & CEO 250 Yonge Street, Suite 3101 P.O. Box 3 Toronto, Ontario M5B 2L7
SUBJECT: COMPLIANCE CERTIFICATE
Dear Mr. Pinnington,
This is to confirm that, at the end of each month of the quarter ending June 301h, 2019, Letko Brosseau was in compliance with the requirements of the Statement of Investment Policies and Procedures, effective January 1st, 2019. To the best of our knowledge, we have no reason to believe that we were not in compliance with all such requirements at any other time during such period.
We also confirm the following, as at June 30, 2019, in regard to your investment in the Letko Brosseau Emerging Markets Equity Fund ('The Fund'):
- The Fund does not hold any securities of law firms- The Fund does not hold any derivative securities- The Fund has not purchased any securities which fall under the 10% basket clause- Starting the end of June 2019, the Fund is engaging in securities lending
Should you require additional information, please do not hesitate to contact us at your convenience.
Regards,
Original letter signed by Sylvie Richard
LL�--� <L�Sylvi��rd, CPA, CA Director, Portfolio Compliance Letko Brosseau & Associates Inc. SR/mn
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Audit & Finance Committee – Report to Convocation
TAB 3.4
FOR INFORMATION
LibraryCo Inc. Financial Statements for theSix Months ended June 30, 2019
26. Convocation is requested to receive LibraryCo Inc.’s second quarter financial
statements for information.
27. LibraryCo is the central manager of the Ontario county courthouse library system in
accordance with the objectives, policies and principles established and approved by the Law
Society of Ontario (Law Society), in consultation with the Federation of Ontario Law
Associations (FOLA) and the Toronto Lawyers’ Association (TLA). LibraryCo is a wholly-
owned subsidiary of the Law Society. LibraryCo has two classes of shares: 100 common
shares and 100 special shares. The Law Society holds all of the common shares
outstanding. Of the special shares outstanding, 25 are held by the TLA and 75 are held by
FOLA. The Law Society may appoint up to four directors, FOLA may appoint up to three
directors and TLA may appoint one director.
28. There is a quarterly financial reporting schedule to the shareholder in compliance with the
Unanimous Shareholders Agreement. These interim statements convey the performance of
LibraryCo before the end of the year. Unlike annual financial statements, interim statements
are not audited.
29. LibraryCo is fully funded by the Law Society through the lawyer’s annual fee. The LibraryCo
component of the fee is currently $191 per lawyer. Grants to the 48 county libraries
comprise 87% of LibraryCo expenditures with the balance being centralized expenses such
as access to online research products.
30. The statements have been approved by LibraryCo’s Board.
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Audit & Finance Committee – Report to Convocation
LIBRARYCO INC.
FINANCIAL REPORTFor the six months ended June 30, 2019
Overall Results
1) Results for the second quarter identify a surplus of $173,357 compared to a budgeted
shortfall of $60,712 for the 6 months. The 2019 budget envisages excess expenses
over revenues of $151,353 for the year through the use of the General Fund balance.
2) The positive variance for the period of $234,069 is primarily attributable to the unused
contingency of $150,000 for the period and a number of positive expense variances
particularly publications and board of directors’ meeting expenses.
Revenues
3) The Law Society grant (line 1) includes amounts for central administration and quarterly
transfers to the 48 libraries. The actual grant from the Law Society was $4,028,968 and
matched budgeted amounts for the period.
Expenses
4) As budgeted, the administrative fee under the Administrative Services Agreement with
the Law Society has not been charged in 2019 (line 4).
5) The timing of the use of the contingency amount (line 6) of $300,000 for the year is not
known at this time as it is dependent on work being undertaken by the Shareholders.
6) Electronic product expenses of $176,334 (line 9) are in line with the agreement with
LexisNexis and budget.
7) Group benefits and insurance (line 10) of $170,799 consist of the group benefits for
library staff and directors & officers and property insurance. Group benefits and
insurance are lower than budget by $5,901 as group benefits premiums are negotiated
after the budget and these are budgeted conservatively. Given that both the Directors
& Officers and property insurance policies were renewed at the end of April, a
conservative increase in insurance for the remainder of 2019 was also taken into
consideration when budgeting for 2019.
8) County and District law libraries grants (line 13) are in line with budget at $3,469,171.
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Audit & Finance Committee – Report to Convocation
Balance Sheet
9) Cash and short-term investments (line 1) have increased from 2018 by $227,422 due
to invoices for electronic products and insurance included in accounts payable and
paid after month end. Liquidity has also been boosted by operating surpluses in the
period.
10) As noted above, invoices for electronic products and insurance are included in
accounts payable and paid after month end meaning accounts payable (line 5) has
increased from $48,757 to $170,533 year-on-year.
11) The General Fund has increased to $381,856 from $268,688 in June 2018 due to
operating surpluses in the period. A projection of the fund balance at year end would
depend on any use of the 2019 contingency.
12) The Reserve Fund has a balance at the end of June of $500,000 comprising a general
component of $200,000, a capital and special needs component of $150,000, and a
staffing and severance component of $150,000 in accordance with Board policy.
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LIBRARYCO INC. Balance Sheet Stated in Dollars As at June 30, 2019 Unaudited
2019 2018Assets
Current Assets1 Cash and short-term investments 948,698 721,276 2 Accounts receivable 24,879 20,334 3 Prepaid expense 79,012 76,035 4 Total Assets 1,052,589 817,645
Liabilities, Share Capital and Fund Balances
Liabilities
5 Accounts payable and accrued liabilities 170,533 48,757 6 Total Liabilities 170,533 48,757
7 Share Capital and Fund Balances8 Share capital 200 200 9 General fund 381,856 268,688
10 Reserve fund 500,000 500,000 11 Total Share Capital and Fund Balances 882,056 768,888
12 Total Liabilities, Share Capital and Fund Balances 1,052,589 817,645
This Balance Sheet includes the financial resources of the LibraryCo entity only.
TAB 3.4.1
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LIBRARYCO INC.Statement of Operating Revenues and ExpensesStated in Dollars For the six months ending June 30, 2019Unaudited
2019 Annual 2018Actual Budget Variance Budget Actual
REVENUES1 Law Society of Ontario grant 4,028,968 4,028,968 - 8,057,936 3,949,968 2 Interest income 7,092 - 7,092 - 4,576 3 Total revenues 4,036,060 4,028,968 7,092 8,057,936 3,954,544
EXPENSESHead office / administration
4 Administration - - - - 152,502 5 Professional fees 9,127 6,660 (2,467) 13,300 25,840 6 Contingency - 150,000 150,000 300,000 - 7 Other 6,160 26,160 20,000 48,800 6,407 8 Total head office / administration expenses 15,287 182,820 167,533 362,100 184,749
Law libraries - centralized purchases9 Electronic products and services 176,334 177,000 666 352,670 171,195
10 Group benefits and insurance 170,799 176,700 5,901 366,200 164,399 11 Other 31,112 60,650 29,538 159,100 29,352 12 Total law libraries - centralized purchases 378,245 414,350 36,105 877,970 364,946
13 County and district law libraries - grants 3,461,110 3,461,110 - 6,922,219 3,384,610 14 Bursaries, capital and special needs grants 8,061 31,400 23,339 47,000 23,637 15 Total county and district law libraries expenses 3,469,171 3,492,510 23,339 6,969,219 3,408,247
16 Total expenses 3,862,703 4,089,680 226,977 8,209,289 3,957,942
17 Excess of revenues over expenses (expenses over revenues) 173,357 (60,712) 234,069 (151,353) (3,398)
This statement includes the revenues and expenses of the LibraryCo entity only.
YTD
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LIBRARYCO INC.Statement of Changes in Fund BalancesStated in DollarsFor the six months ending June 30, 2019Unaudited
2019 2018
General ReserveFund Fund Total Total
1 Balance, beginning of year 208,499 500,000 708,499 772,085
2Excess of revenues over expenses(expenses over revenues) 173,357 - 173,357 -3,397
3 Balance, end of period 381,856 500,000 881,856 768,688
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Audit & Finance Committee – Report to Convocation
TAB 3.5
FOR INFORMATION
Law Society of Ontario Financial Statementsfor the Six Months ended June 30, 2019
31. Convocation is requested to receive the Law Society’s second quarter financial
statements for information.
32. This is part of the quarterly financial reporting schedule to Convocation. These interim
statements convey the performance of the Law Society before the end of the year. Unlike
annual statements, interim statements are not audited.
33. These financial statements present the financial position and operations of the Society and
include the General Funds (or operating funds) and a number of special purpose or
restricted funds.
• The Compensation Funds are restricted by the Law Society Act
• The Errors and Omissions Insurance Fund (E&O Fund), the Capital Allocation
Fund, the Invested in Capital and Intangible Assets Fund, the County Libraries
Fund and the “Other Restricted Funds” (Repayable Allowance Fund, Special
Projects Fund and Parental Leave Assistance Fund) are restricted by
Convocation.
34. The Financial Statements for the six months ended June 30, 2019 comprise the following
statements:
• Balance Sheet
• Statement of Revenues and Expenses and Change in Fund Balances, detailing
results of operations for lawyers and paralegals
• Schedule of Restricted Funds
• Supplemental schedules include Schedules of Revenues and Expenses for the
Combined General Funds, Lawyer and Paralegal General Funds, the
Compensation Funds and the E&O Fund
Financial Statement Highlights
35. The Law Society is in a strong financial position as at June 30, 2019, as
• Excess of revenues over expenses was $8.3 million for the six months ended June
30, 2019 compared to $5.6 million for the same period in 2018
• Expenses increased by $2.3 million to $111.4 million for the six months ended June
30, 2019 compared to $109.1 million for the same period in 2018; however, all
major expense categories were under budget with a total favorable variance of $7.4
million.
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Audit & Finance Committee – Report to Convocation
Statement of Revenues and Expenses and Change in Fund Balances
Lawyer General Fund
36. The Lawyer General Fund reported an excess of revenues over expenses of $4.4 million
for the six months ended June 30, 2019 (2018: $3.7 million), an increase of $0.7 million
compared to last year. Although there were increases in all major categories of expenses
totaling $3.1 million, the increase in revenues of $3.8 million, primarily from annual fees,
more than offset the increased spending.
Paralegal General Fund
37. The Paralegal General Fund reported an excess of revenues over expenses of $96,000 at
the end of the second quarter of 2019, compared to an excess of expenses over revenues
of $309,000 in 2018. The improved financial performance was primarily due to an increase
in annual fees and licensing process revenues with minimal increase in total expenses.
Restricted Funds
38. The Law Society’s restricted funds reported excess of revenues over expenses of $3.8
million (2018: $2.2 million) primarily because of a $4.4 million surplus in the Lawyer
Compensation Fund and $815,000 surplus in the E&O Fund offset by amortization of $1.1
million in the Invested in Capital and Intangible Assets Fund.
Lawyer Compensation Fund
39. The Lawyer Compensation Fund had a fund balance of $16.1 million as at June 30, 2019;
an increase of almost $10 million compared to the $6.7 million balance as at June 30,
2018. The increase arose for the following reasons:
• The Lawyer Compensation Fund fell below the minimum balance of $20.5 million
required by the Lawyer Compensation Fund Balance Management Policy in 2017. A
three-year plan was initiated as part of the 2018 budget to replenish the fund
balance by including an annual $5 million provision above the amount for routine
claims. The $5 million provision has been maintained in the 2020 budget.
• Better claim experience during the first six months of 2019 ($1.1 million) compared
to 2018 ($2.8 million)
• Higher investment income, realized and unrealized gains on investments during the
first six months of 2019 ($1.1 million) compared to 2018 ($403,000)
Annual Fees
40. Lawyer annual fees in the Lawyer General Fund have increased by $3 million to $34.9
million for the six months ended June 30, 2019 (2018: $31.9 million) and were also
$673,000 higher than budget. The higher annual fees were due to an annual fee increase
for lawyers ($95) and an increase in the number of licensees. The 2019 budget projected
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Audit & Finance Committee – Report to Convocation
an increase of 1,400 to a Full Fee Paying Equivalent total of 42,600. To the end of June
the number of Full Fee Paying Equivalents is running ahead of projection.
41. Paralegal annual fees in the Paralegal General Fund have increased by $214,000 to $3
million for the first half of 2019 (2018: $2.8 million) due to an annual fee increase for
paralegals ($12) and an increase in the number of licensees. However, the paralegal
annual fees were $65,000 under budget. The 2019 budget projected an increase of 200 to
a Full Fee Paying Equivalent total of 6,300; the draft 2020 budget projected a smaller
increase of 100 to a Full Fee Paying Equivalent total of 6,400.
42. The annual fees in the Restricted Funds have decreased by $1.2 million mainly due to an
annual fee reduction for the Lawyer Compensation Fund component of $74 as a result of
the improvement in routine claims experience.
Insurance Premiums and Levies
43. LAWPRO’s insurance program for 2019 maintained the base premium unchanged from
2018. Transaction levies to date are consistent with 2018. The number of insureds
continues to trend up resulting in an increase in insurance premiums and levies revenues
from $48.7 million in 2018 to $49.4 million.
Professional Development and Competence Revenues
44. Professional development and competence revenues have increased by $588,000 to
$12.4 million for the six months ended June 30, 2019 (2018: $11.8 million) and were
$591,000 more than budget largely due to increased licensing process revenues.
45. Lawyer and paralegal licensing process revenues have increased by $522,000 to $8.6
million for the six months ended June 30, 2019 (2018: $8.0 million) and were $642,000
greater than budgeted revenues because of an increase in lawyer candidates within the
process. The total lawyer licensing process fee including the fees for the initial application,
the Barrister and Solicitor Licensing Examinations and the Call to the Bar fee, is $4,710,
unchanged from last year. The paralegal license fee is also unchanged.
Change in Fair Value of Investments
46. Change in fair value of investments was $2.2 million for the six months ended June 30,
2019 (2018: $133,000) mainly due to unrealized gains on investments. Realized capital
gains were $129,000.
Other Revenues
47. Other revenues totaling $5.6 million (2018: $5.9 million) include late fees ($1.7 million),
Ontario Report royalties ($815,000), catering revenue ($749,000) and preapproved
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payment plan fees ($514,000). The year-over-year decrease was mainly due to decrease
in late fees and royalties. Total other revenues for the period exceeded budget.
Professional Regulation, Tribunals and Compliance Expenses
48. Professional Regulation, Tribunals and Compliance expenses of $14.7 million (2018 $14.4
million) were $2.8 million under budget, primarily due to staff vacancies ($1.9 million) in
almost all departments, particularly Litigation Services. Expenditures for outside counsel
fees and expert witnesses were $481,000 under budget.
Professional Development and Competence Expenses
49. Professional development and competence (PD&C) expenses have increased to $16
million (2018: $15.2 million) primarily due to higher licensing process expenses. With an
increase in candidates, expenses for facility rental and licensing exam invigilation also
increased. However, total PD&C expenses were $976,000 under budget, mainly due to
staff vacancies ($328,000), delay in the implementation of the family legal services
provider licence ($285,000), and underspending in library book purchases ($187,000).
Corporate Services Expenses
50. Corporate services expenses of $13.7 million have increased by $1 million (2018: $12.7 million) primarily because of reorganization costs ($592,000), higher lease expense
($193,000) and increased IT spending, for examples, cloud services and info security. However, total expenses for the period were $1 million under budget and there were favorable variances in most departments, particularly Human Resources, Information Technology, Facilities and Finance.
Convocation, Policy and Outreach Expenses
51. Convocation, policy and outreach expenses for the first six months in 2019 have increased
by $794,000 to $4.8 million compared to 2018 mainly due to the Awareness Campaign in
spring 2019. The total expenses were $2.4 million below budget since all the significant
components of convocation, policy and outreach expenses, which include External
Relations & Communications, Bencher and Policy expenses, were under budget. In
addition, the contingency for the period of $750,000 has not been used.
Balance Sheet
Portfolio Investments
52. Portfolio investments had fair value of $62.8 million as at June 30, 2019. The decrease of
$1.4 million since June 2018 was mainly due to a $1.2 million withdrawal of capital in the
E&O Fund to fund the transfer of accumulated surplus investment income to the Lawyer
General Fund.
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Investment Loan
53. The investment loan ($1.2 million) represents the Law Society’s participation in the
subordinated loan used to fund CanLII’s acquisition of Lexum in 2018. The interest rate is
4.74%. The term of the Loan is 5 years. Pursuant to the loan arrangement, the Law
Society is committed to pay $280,000 annually for the 2019, 2020 and 2021 years to fund
three annual balance of sale payments to the vendors of Lexum.
Provision for Unpaid Grants/Claims
54. The provision for unpaid grants/claims ($19.4 million) represents the estimate for unpaid
claims and inquiries against the Compensation Fund. The provision has decreased by $9
million from $28 million as a result of clearing up of large inventory of claims that existed
prior to 2019.
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LAW SOCIETY OF ONTARIOBalance Sheet Unaudited Stated in thousands of dollarsAs at June 30 2019 2018
AssetsCurrent Assets
1 Cash 33,052 33,522 2 Short-term investments 54,380 52,096 3 Accounts receivable 45,906 43,266 4 Prepaid expenses 56,770 56,591 5 Total current assets 190,108 185,475
6 Investment in subsidiaries 35,642 35,642 7 Portfolio investments 62,839 64,199 8 Investment loan 1,162 878 9 Capital assets 8,058 8,579
10 Intangible assets 4,128 1,163
11 Total Assets 301,937 295,936
Liabilities and Fund BalancesCurrent Liabilities
12 Accounts payable and accrued liabilities 12,206 10,734 13 Deferred revenue 95,520 93,806 14 Due to LAWPRO 46,843 46,044 15 Total current liabilities 154,569 150,584
16 Provision for unpaid grants/claims 19,379 28,041 17 Unclaimed trust funds 5,562 5,215 18 Lease obligations 585 362 19 Total Liabilities 180,095 184,202
Fund BalancesGeneral funds
20 Lawyers 30,764 27,522 21 Paralegals 3,170 4,168
Restricted funds22 Compensation - lawyers 16,119 6,716 23 Compensation - paralegals 826 705 24 Errors and omissions insurance 54,187 55,387 25 Capital allocation 3,742 6,461 26 Invested in capital and intangible assets 12,186 9,743 27 County libraries 107 47 28 Other 741 985 29 Total Fund Balances 121,842 111,734
30 Total Liabilities and Fund Balances 301,937 295,936
TAB 3.5.1
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LAW SOCIETY OF ONTARIOStatement of Revenues and Expenses and Change in Fund BalancesUnaudited Stated in thousands of dollarsFor the six months ended June 30
2019 2018 2019 2018 2019 2018 2019 2018
General Fund General FundLawyer Paralegal Restricted Funds Total
Revenues1 Annual fees 34,923 31,881 3,046 2,832 11,072 12,255 49,041 46,968
2 Insurance premiums and levies - - - - 49,420 48,672 49,420 48,672
3 Professional development and competence 10,655 10,218 1,717 1,567 - - 12,372 11,785
4 Investment income 396 550 50 75 723 631 1,169 1,256
5 Change in fair value of investments 744 31 53 4 1,359 98 2,156 133
6 Other 4,708 4,971 873 846 32 97 5,613 5,914
7 Total revenues 51,426 47,651 5,739 5,324 62,606 61,753 119,771 114,728
Expenses8 Professional regulation, tribunals and compliance 13,025 12,646 1,651 1,716 - - 14,676 14,362
9 Professional development and competence 14,367 13,557 1,619 1,613 - - 15,986 15,170
10 Corporate services 12,091 11,097 1,581 1,575 - - 13,672 12,672
11 Convocation, policy and outreach 4,337 3,606 479 416 - - 4,816 4,022
12 Services to members and public 3,200 3,035 313 313 - - 3,513 3,348
13 Restricted - - - - 58,782 59,511 58,782 59,511
14 Total expenses 47,020 43,941 5,643 5,633 58,782 59,511 111,445 109,085
15 Excess of revenues over expenses (expenses over revenues) 4,406 3,710 96 (309) 3,824 2,242 8,326 5,643
16 Fund balances, beginning of year 25,138 23,239 3,074 4,477 85,304 78,375 113,516 106,091
17 Interfund transfers 1,220 573 - - (1,220) (573) - -
18 Fund balances, end of period 30,764 27,522 3,170 4,168 87,908 80,044 121,842 111,734
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LAW SOCIETY OF ONTARIOSchedule of Restricted FundsUnaudited
For the six months ended June 302019 2018
Compensation Fund
Lawyer Paralegal
1 Fund balances, beginning of year 11,762 651 54,572 4,144 13,286 131 758 85,304 78,375
Revenues
2 Annual fees 4,739 45 - 2,183 - 4,005 100 11,072 12,255
3 Insurance premiums and levies - - 49,420 - - - - 49,420 48,672
4 Investment income 422 54 247 - - - - 723 631
5 Change in fair value of investments 699 89 571 - - - - 1,359 98
6 Other 28 4 - - - - - 32 97
7 Total revenues 5,888 192 50,238 2,183 - 4,005 100 62,606 61,753
8 Total expenses 1,531 17 49,423 2,585 1,100 4,029 97 58,782 59,511
9 Excess of revenues over expenses (expenses over revenues) 4,357 175 815 (402) (1,100) (24) 3 3,824 2,242
10 Interfund transfers - - (1,200) - - - (20) (1,220) (573)
11 Fund balances, end of period 16,119 826 54,187 3,742 12,186 107 741 87,908 80,044
Errors and omissions insurance
Capital allocation
Invested in capital and intangible
assetsCounty libraries
Other restricted
Total Restricted
funds Total
LAW SOCIETY OF ONTARIOSchedule of Restricted FundsUnaudited Stated in thousands of dollarsFor the six months ended June 30
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LAW SOCIETY OF ONTARIOLawyers and Paralegals General FundSchedule of Revenues and Expenses Unaudited Stated in thousands of dollarsFor the six months ended June 30
2018 2019 Budget Actual Actual YTD Variance
REVENUES1 Annual fees 34,713 37,969 37,361 608 2 Professional development and competence 11,785 12,372 11,781 591 3 Investment income 625 446 388 58 4 Change in fair value of investments 35 797 - 797 5 Other 5,817 5,581 5,018 563 6 Total revenues 52,975 57,165 54,548 2,617
EXPENSES7 Professional regulation, tribunals and compliance 14,362 14,676 17,511 2,835 8 Professional development and competence 15,170 15,986 16,962 976 9 Corporate Services 12,672 13,672 14,689 1,017
10 Convocation, policy and outreach 4,022 4,816 7,180 2,364 11 Services to members and public 3,348 3,513 3,715 202 12 Total expenses 49,574 52,663 60,057 7,394
13 Excess of revenues over expenses (expenses over revenues) 3,401 4,502 (5,509) 10,011
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LAW SOCIETY OF ONTARIOGeneral Fund - LawyersSchedule of Revenues and ExpensesUnaudited Stated in thousands of dollarsFor the six months ended June 30
2018 2019 Budget Actual Actual YTD Variance
REVENUES1 Annual fees 31,881 34,923 34,250 673 2 Professional development and competence 10,218 10,655 10,160 495 3 Investment income 550 396 344 52 4 Change in fair value of investments 31 744 - 744 5 Other 4,971 4,708 4,308 400 6 Total revenues 47,651 51,426 49,062 2,364
EXPENSES7 Professional regulation, tribunals and compliance 12,646 13,025 15,574 2,549 8 Professional development and competence 13,557 14,367 15,071 704 9 Corporate Services 11,097 12,091 12,982 891
10 Convocation, policy and outreach 3,606 4,337 6,554 2,217 11 Services to members and public 3,035 3,200 3,402 202 12 Total expenses 43,941 47,020 53,583 6,563
13 Excess of revenues over expenses (expenses over revenues) 3,710 4,406 (4,521) 8,927
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LAW SOCIETY OF ONTARIOGeneral Fund - ParalegalsSchedule of Revenues and Expenses Unaudited Stated in thousands of dollarsFor the six months ended June 30
2018 2019 Budget Actual Actual YTD Variance
REVENUES1 Annual fees 2,832 3,046 3,111 (65) 2 Professional development and competence 1,567 1,717 1,621 96 3 Investment income 75 50 44 6 4 Change in fair value of investments 4 53 - 53 5 Other 846 873 710 163 6 Total revenues 5,324 5,739 5,486 253
EXPENSES7 Professional regulation, tribunals and compliance 1,716 1,651 1,937 286 8 Professional development and competence 1,613 1,619 1,891 272 9 Corporate Services 1,575 1,581 1,707 126
10 Convocation, policy and outreach 416 479 626 147 11 Services to members and public 313 313 313 - 12 Total expenses 5,633 5,643 6,474 831
13 Excess of revenues over expenses (expenses over revenues) (309) 96 (988) 1,084
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LAW SOCIETY OF ONTARIOCompensation FundSchedule of Revenues and Expenses and Change in Fund BalancesUnaudited
Stated in thousands of dollars 2019For the six months ended June 30 Lawyers Paralegals Total Lawyers Paralegals Total
Revenues1 Annual fees 4,739 45 4,784 6,131 35 6,166 2 Investment income 422 54 476 354 48 402 3 Change in fair value of investments 699 89 788 49 7 56 4 Recoveries 28 4 32 24 3 27
5 Total Revenues 5,888 192 6,080 6,558 93 6,651
Expenses6 Provision for unpaid grants 1,075 (39) 1,036 2,821 65 2,886 7 Administrative 456 56 512 316 40 356
8 Total Expenses 1,531 17 1,548 3,137 105 3,242
9 Excess of revenues over expenses (expenses over revenues) 4,357 175 4,532 3,421 (12) 3,409
10 Fund balances, beginning of year 11,762 651 12,413 3,285 717 4,002
11 Fund Balances, end of period 16,119 826 16,945 6,706 705 7,411
2018
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LAW SOCIETY OF ONTARIOErrors and Omissions Insurance FundSchedule of Revenues and Expenses and Change in Fund BalanceUnaudited Stated in thousands of dollarsFor the six months ended June 30
2019 2018Actual Actual
REVENUES1 Insurance premiums and levies 49,420 48,672 2 Investment income 247 229 3 Change in fair value of investments 571 42 4 Total revenues 50,238 48,943
EXPENSES5 Claims 3 - 6 Insurance 49,420 48,672 7 Total expenses 49,423 48,672
8 Excess of revenues over expenses (expenses over revenues) 815 271
9 Interfund transfers (1,200) (600)
10 Change in fund balance (385) (329)
11 Fund balance, beginning of year 54,572 55,716
12 Fund balance, end of period 54,187 55,387
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TAB 3.6
FOR INFORMATION
Review of Long Term InvestmentPerformance
55. The Committee requests that Convocation receive a report on the performance of the
Law Society’s Investment Manager for the six months to June 30, 2019 for
information.
56. Under the Law Society’s Investment Policy, the Audit & Finance Committee shall periodically
report to Convocation on the performance of the Investment Manager based on returns of
the long term investments. The management of the Society’s investments has been
outsourced to an Investment Manager, Foyston Gordon & Payne (FGP). The LSO’s
investment consultant AON, provides regular reports on FGP’s performance.
57. At June 30, 2019, the investments had a total market value of $62 million made up of
portfolios for the General ($17 million), Compensation ($27 million), and Errors and
Omissions Insurance ($18 million) Funds, governed by one common Investment Policy
which currently sets the investment mix at 70% in fixed income and 30% Canadian equities.
58. According to the Investment Policy, the Investment Manager’s benchmarks are:
a) By asset class:
to outperform the appropriate market index return
b) By benchmark portfolio:
to outperform a static benchmark portfolio consisting of the benchmark of
the asset mix ranges (i.e., a portfolio consisting of 70% of the FTSE TMX
Short-Term Bond Index total return, and 30% of the total return of the
S&P/TSX Composite Index, over a four year moving average or complete
market cycle).
59. According to AON’s report, the Investment Manager has underperformed the performance
benchmarks for the 4 year period ending June 30, 2019 by 0.29%. Their performance for the
period going back one year has lagged the market by 3.93%.
60. FGP is categorized as a value manager and since 2008, equities categorized as growth
investments have outperformed equities categorized as value investments. Based on their
value based investment philosophy, FGP is aligned to the Law Society’s capital preservation
investment philosophy. The most recent four-year period is the first underperformance of
FGP compared to the benchmark since they were retained. FGP have been consistent in
the application of their underlying principles. The underperformance is directly attributable to
investments in a few specific equities. Most of the portfolio is in fixed income and FGP has
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exceeded the fixed income benchmark. While the underperformance will be monitored, AON
has not downgraded its rating of FGP and is not recommending a change in investment
manager at this stage.
61. The Committee is considering shifting the review of the Investment Policy scheduled for
2021 to an earlier time period. A change in the Investment Policy may result in a change in
the investment management approach.
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Visit the Aon Hewitt Retirement and Investment Website (https://retirement-investment-insights.aon.com/canada); sharing our best thinking.
Law Society of Ontario | Semi-Annual Period Ending 30 June 2019
Streamlined Performance Review and Investment Manager Evaluation
TAB 3.6.1
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1 Executive Summary Page 12 Capital Market Performance Page 113 E&O Insurance Fund Analysis Page 144 Compensation Fund Analysis Page 195 General Fund Analysis Page 246 Asset Class Analysis Page 297 Appendix A - Plan Information Page 368 Appendix B - Manager Updates Page 409 Appendix C - Capital Markets Environment Page 4210 Appendix D - Description of Market Indices and Statistics Page 5211 Appendix E - Fee Analysis Page 5712 Appendix F - Compliance Page 5913 Appendix G - Disclosure Page 61
Table Of Contents
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Executive Summary
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Commentary and RecommendationsExecutive Summary
As of 30 June 2019
Comments Recommendations
E&O Insurance Fund Performance
The overall gross return over the 4-year period ending 30 June 2019 was 2.41%,which trailed the benchmark by 0.26%.
Over the most recent 6-month period, the Fund had an absolute return of 4.23%,gross of fees but trailed the benchmark by 2.44%.
Underperformance of the Fund was driven by significant underperformance ofFGP’s Canadian Equity portfolio.
Weak stock selection is the primary driver behind underperformance: Industrials(SNC-Lavalin), Energy (Husky) and Materials (Canfor).
As risk-assets rebounded over the first half of 2019 the portfolio benefited froman overweight position in high quality corporate issues as spreads tightened.However, outperformance was capped by the portfolio’s shorter-than-benchmarkduration.
No action is required.
Compensation Fund Performance
The overall gross return over the 4-year period ending 30 June 2019 was 2.38%,which trailed the benchmark by 0.29%.
Over the most recent 6-month period, the Fund had an absolute return of 4.18%,which trailed the benchmark by 2.49%.
Summarized reasons for the underperformance are provided in the E&OInsurance Fund row.
No action is required.
General Fund Performance
The overall gross return over the 4-year period ending 30 June 2019 was 2.38%,which trailed the benchmark by 0.29%.
Over the most recent 6-month period, the Fund had an absolute return of 4.18%,which trailed the benchmark by 2.49%.
Summarized reasons for the underperformance are provided in the E&OInsurance Fund row.
No action is required.
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Commentary and RecommendationsExecutive Summary
As of 30 June 2019
Comments Recommendations
Portfolio Rebalancing As at 30 June 2019, all asset classes were within their allowable ranges. Continue to monitor.
Statement of Investment Policies and Procedures (SIPP)
The SIPP was last updated in April 2018. The Asset Mix was revised,accordingly.
The Committee is following a threeyear cycle for reviewing the InvestmentPolicy.
Manager Update No significant events impacting Law Society of Ontario Aon maintains the current Buy ratingfor the FGP Canadian Equity Fund.
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Latest Thinking
Executive Summary
During the last quarter, we produced papers on the following topics. Although these topics may not be directly applicable to your fund, they may be of general
interest and provide some insight into Aon’s global research. For more details, please contact your Aon Investment Consultant.
Topic Summary
Introduction to Private
Equity
Private equity can play an important role in institutional portfolios. This typically makes up only a small allocation but can be one of the largest contributors to overall return. For clients that can tolerate higher risk and reduced liquidity levels, opportunities within private equity can offer compelling risk-adjusted opportunities.
This paper provides an introduction to private equity, including how returns are generated, challenges facing the industry, how to access private equity and two real-life case studies.
https://retirement-investment-insights.aon.com/canada/aon-introduction-to-private-equity-canada-whitepaper
What Should Trustees
Do About Climate
Change?
The environmental and economic impacts of climate change pose many long-term challenges, and trustees and investors are likely to be exposed to many of the risks this global threat entails. This paper aims to identify key climate change risks facing trustees today, explain the pressure on trustees to address these risks and suggest actions to help tackle these risks.
This paper was written by our UK colleagues following a recent change in UK legislation. While we don’t have the same rules in Canada, we believe it offers an interesting perspective into how the UK decided to address the challenge.
https://retirement-investment-insights.aon.com/u-k/aon-what-should-trustees-do-about-climate-change-whitepaper
For more timely access to our latest thinking, please visit and subscribe to the Aon Retirement & Investment Solutions website:
https://retirement-investment-insights.aon.com/
Convocation - Audit and Finance Committee Report
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MarketValue($000)
%Performance (%)
6Months
1Year
2Years
3Years
4Years
5Years
SinceInception
InceptionDate
E&O Insurance Fund (Gross) 19,784 100.0 4.23 0.35 2.91 2.95 2.41 2.18 3.69 1/04/2006E&O Insurance Fund Benchmark 6.67 4.22 3.77 3.11 2.67 2.69 3.33Value Added -2.44 -3.87 -0.86 -0.16 -0.26 -0.51 0.36
E&O Insurance Fund (Net) 19,784 100.0 4.14 0.19 2.74 2.78 2.25 2.03 3.54 1/04/2006E&O Insurance Fund Benchmark 6.67 4.22 3.77 3.11 2.67 2.69 3.33Value Added -2.53 -4.03 -1.03 -0.33 -0.42 -0.66 0.21
E&O Canadian Equities 5,584 28.2 7.62 (99) -7.54 (93) 3.65 (82) 7.29 (69) 5.33 (76) 3.07 (87) 5.86 (74) 1/04/2006S&P/TSX Capped Composite 16.22 (24) 3.87 (43) 7.09 (36) 8.39 (46) 6.18 (59) 4.67 (61) 5.33 (86)Value Added -8.60 -11.41 -3.44 -1.10 -0.85 -1.60 0.53Canadian Equity Median 14.96 3.09 6.31 8.16 6.40 5.11 6.60
E&O Canadian Fixed Income 13,006 65.7 2.77 (67) 4.11 (84) 2.55 (42) 2.12 (23) 1.86 (72) 2.09 (88) 3.69 (36) 1/04/2006FTSE Canada Short Term Overall Bond 2.67 (87) 4.08 (87) 2.21 (97) 1.53 (100) 1.54 (100) 1.91 (100) 3.30 (100)Value Added 0.10 0.03 0.34 0.59 0.32 0.18 0.39Canadian Short Term Bonds Median 2.97 4.32 2.53 2.02 1.94 2.26 3.59
total 19,784 100.0
E&O Short Term 1,195 6.0 0.95 (71) 1.83 (68) 1.52 (67) 1.24 (79) 1.10 (79) 1.07 (85) 1.00 (92) 1/10/2009FTSE Canada 91 Day TBill 0.81 (100) 1.59 (100) 1.28 (100) 1.00 (100) 0.87 (100) 0.87 (100) 0.87 (100)Value Added 0.14 0.24 0.24 0.24 0.23 0.20 0.13Money Market Median 0.98 1.90 1.60 1.36 1.24 1.22 1.14
Executive Summary
E&O Insurance Fund Asset Allocation and Annualized PerformanceAs of 30 June 2019
The total fund performance prior to 30 June 2009 includes a U.S. equities component.Parentheses contain percentile rankings.Returns for periods greater than one year are annualized.
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Performance (%)2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
E&O Insurance Fund (Gross) 0.35 5.54 3.01 0.82 1.25 8.45 4.94 1.98 6.54 7.43 -0.46E&O Insurance Fund Benchmark 4.22 3.33 1.81 1.35 2.77 6.72 2.34 1.70 5.70 5.57 -0.80Value Added -3.87 2.21 1.20 -0.53 -1.52 1.73 2.60 0.28 0.84 1.86 0.34
E&O Insurance Fund (Net) 0.19 5.36 2.85 0.70 1.12 8.30 4.82 1.86 6.40 7.29 -0.66E&O Insurance Fund Benchmark 4.22 3.33 1.81 1.35 2.77 6.72 2.34 1.70 5.70 5.57 -0.80Value Added -4.03 2.03 1.04 -0.65 -1.65 1.58 2.48 0.16 0.70 1.72 0.14
E&O Canadian Equities -7.54 (93) 16.19 (4) 14.96 (18) -0.32 (64) -5.53 (88) 30.89 (39) 21.21 (5) -9.83 (58) 22.80 (29) 13.89 (37) -18.85 (26)S&P/TSX Capped Composite 3.87 (43) 10.41 (47) 11.05 (64) -0.20 (63) -1.16 (63) 28.66 (65) 7.90 (93) -10.25 (64) 20.87 (55) 11.95 (55) -25.69 (67)Value Added -11.41 5.78 3.91 -0.12 -4.37 2.23 13.31 0.42 1.93 1.94 6.84Canadian Equity Median 3.09 10.16 11.88 2.02 0.48 29.77 12.34 -9.06 21.20 12.22 -23.06
E&O Canadian Fixed Income 4.11 (84) 1.02 (14) 1.25 (21) 1.10 (99) 3.03 (89) 4.04 (25) 2.37 (13) 3.87 (62) 3.44 (59) 7.43 (1) 6.16 (98)FTSE Canada Short Term Overall Bond 4.08 (87) 0.36 (100) 0.20 (100) 1.56 (81) 3.43 (72) 3.21 (97) 1.36 (100) 3.80 (64) 3.16 (94) 4.31 (100) 8.02 (61)Value Added 0.03 0.66 1.05 -0.46 -0.40 0.83 1.01 0.07 0.28 3.12 -1.86Canadian Short Term Bonds Median 4.32 0.73 0.86 1.93 3.54 3.80 1.84 3.99 3.51 5.47 8.23
E&O Short Term 1.83 (68) 1.21 (73) 0.69 (83) 0.65 (84) 0.99 (71) 1.06 (81) 1.13 (68) 0.96 (88) 0.99 (71) - -FTSE Canada 91 Day TBill 1.59 (100) 0.97 (100) 0.45 (100) 0.49 (100) 0.87 (96) 0.97 (100) 1.00 (89) 0.96 (88) 0.89 (92) 0.33 (80) 1.98 (74)Value Added 0.24 0.24 0.24 0.16 0.12 0.09 0.13 0.00 0.10 - -Money Market Median 1.90 1.28 0.90 0.85 1.11 1.21 1.19 1.18 1.07 0.55 2.20
Executive Summary
E&O Insurance Fund Annual PerformanceAs of 30 June
The total fund performance prior to 30 June 2009 includes a U.S. equities component.Parentheses contain percentile rankings.
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MarketValue($000)
%Performance (%)
6Months
1Year
2Years
3Years
4Years
5Years
SinceInception
InceptionDate
Compensation Fund (Gross) 29,437 100.0 4.18 0.29 2.89 2.93 2.38 2.14 4.56 1/06/2003Compensation Fund Benchmark 6.67 4.22 3.77 3.11 2.67 2.69 4.29Value Added -2.49 -3.93 -0.88 -0.18 -0.29 -0.55 0.27
Compensation Fund (Net) 29,437 100.0 4.09 0.13 2.71 2.76 2.22 1.99 4.45 1/06/2003Compensation Fund Benchmark 6.67 4.22 3.77 3.11 2.67 2.69 4.29Value Added -2.58 -4.09 -1.06 -0.35 -0.45 -0.70 0.16
Compensation Canadian Equities 8,187 27.8 7.58 (99) -7.73 (94) 3.46 (83) 7.17 (73) 5.19 (79) 2.99 (87) 9.17 (63) 1/06/2003S&P/TSX Capped Composite 16.22 (24) 3.87 (43) 7.09 (36) 8.39 (46) 6.18 (59) 4.67 (61) 8.47 (84)Value Added -8.64 -11.60 -3.63 -1.22 -0.99 -1.68 0.70Canadian Equity Median 14.96 3.09 6.31 8.16 6.40 5.11 9.65
Compensation Canadian Fixed Income 19,461 66.1 2.78 (65) 4.12 (79) 2.57 (35) 2.13 (16) 1.87 (69) 2.11 (84) 4.15 (-) 1/06/2003Compensation Fixed Income Benchmark 2.67 (87) 4.08 (87) 2.21 (97) 1.53 (100) 1.54 (100) 1.91 (100) 3.73 (-)Value Added 0.11 0.04 0.36 0.60 0.33 0.20 0.42Canadian Short Term Bonds Median 2.97 4.32 2.53 2.02 1.94 2.26 -
total 29,437 100.0
Compensation Short Term 1,789 6.1 0.95 (70) 1.84 (66) 1.53 (65) 1.25 (78) 1.10 (78) 1.08 (82) 1.60 (100) 1/06/2003FTSE Canada 91 Day TBill 0.81 (100) 1.59 (100) 1.28 (100) 1.00 (100) 0.87 (100) 0.87 (100) 1.69 (100)Value Added 0.14 0.25 0.25 0.25 0.23 0.21 -0.09Money Market Median 0.98 1.90 1.60 1.36 1.24 1.22 1.90
Executive Summary
Compensation Fund Asset Allocation and Annualized PerformanceAs of 30 June 2019
The total fund performance prior to 30 June 2009 includes a U.S. equities component.Parentheses contain percentile rankings.Returns for periods greater than one year are annualized.
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Performance (%)2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
Compensation Fund (Gross) 0.29 5.55 3.02 0.73 1.22 8.43 5.03 1.98 6.49 7.97 3.91Compensation Fund Benchmark 4.22 3.33 1.81 1.35 2.77 6.72 2.34 1.70 5.70 6.40 2.71Value Added -3.93 2.22 1.21 -0.62 -1.55 1.71 2.69 0.28 0.79 1.57 1.20
Compensation Fund (Net) 0.13 5.37 2.86 0.61 1.09 8.28 4.91 1.86 6.46 7.95 3.85Compensation Fund Benchmark 4.22 3.33 1.81 1.35 2.77 6.72 2.34 1.70 5.70 6.40 2.71Value Added -4.09 2.04 1.05 -0.74 -1.68 1.56 2.57 0.16 0.76 1.55 1.14
Compensation Canadian Equities -7.73 (94) 16.00 (5) 14.98 (18) -0.53 (66) -5.36 (87) 30.97 (38) 21.21 (5) -9.83 (58) 22.80 (29) 13.89 (37) -18.85 (26)S&P/TSX Capped Composite 3.87 (43) 10.41 (47) 11.05 (64) -0.20 (63) -1.16 (63) 28.66 (65) 7.90 (93) -10.25 (64) 20.87 (55) 11.95 (55) -25.69 (67)Value Added -11.60 5.59 3.93 -0.33 -4.20 2.31 13.31 0.42 1.93 1.94 6.84Canadian Equity Median 3.09 10.16 11.88 2.02 0.48 29.77 12.34 -9.06 21.20 12.22 -23.06
Compensation Canadian Fixed Income 4.12 (79) 1.04 (13) 1.26 (21) 1.09 (100) 3.10 (86) 4.04 (25) 2.39 (13) 3.87 (62) 3.44 (59) 7.88 (1) 6.33 (97)Compensation Fixed Income Benchmark 4.08 (87) 0.36 (100) 0.20 (100) 1.56 (81) 3.43 (72) 3.21 (97) 1.36 (100) 3.80 (64) 3.16 (94) 5.62 (29) 7.02 (94)Value Added 0.04 0.68 1.06 -0.47 -0.33 0.83 1.03 0.07 0.28 2.26 -0.69Canadian Short Term Bonds Median 4.32 0.73 0.86 1.93 3.54 3.80 1.84 3.99 3.51 5.47 8.23
total
Compensation Short Term 1.84 (66) 1.22 (70) 0.69 (87) 0.65 (85) 0.99 (70) 1.08 (77) 1.12 (69) 0.96 (88) 0.99 (71) -3.72 (100) 5.27 (1)FTSE Canada 91 Day TBill 1.59 (100) 0.97 (100) 0.45 (100) 0.49 (100) 0.87 (96) 0.97 (100) 1.00 (89) 0.96 (88) 0.89 (92) 0.33 (80) 1.98 (74)Value Added 0.25 0.25 0.24 0.16 0.12 0.11 0.12 0.00 0.10 -4.05 3.29Money Market Median 1.90 1.28 0.90 0.85 1.11 1.21 1.19 1.18 1.07 0.55 2.20
Executive Summary
Compensation Fund Annual PerformanceAs of 30 June
The total fund performance prior to 30 June 2009 includes a U.S. equities component.Parentheses contain percentile rankings.
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MarketValue($000)
%Performance (%)
6Months
1Year
2Years
3Years
4Years
5Years
SinceInception
InceptionDate
General Fund (Gross) 17,675 100.0 4.18 0.28 2.90 2.94 2.38 2.15 3.83 1/04/2004General Fund Benchmark 6.67 4.22 3.77 3.11 2.67 2.69 3.72Value Added -2.49 -3.94 -0.87 -0.17 -0.29 -0.54 0.11
General Fund (Net) 17,675 100.0 4.09 0.11 2.72 2.77 2.23 2.00 3.72 1/04/2004General Fund Benchmark 6.67 4.22 3.77 3.11 2.67 2.69 3.72Value Added -2.58 -4.11 -1.05 -0.34 -0.44 -0.69 0.00
General Canadian Equities 4,917 27.8 7.58 (99) -7.83 (94) 3.42 (83) 7.13 (74) 5.16 (79) 2.96 (87) 7.93 (63) 1/04/2004S&P/TSX Capped Composite 16.22 (24) 3.87 (43) 7.09 (36) 8.39 (46) 6.18 (59) 4.67 (61) 7.26 (87)Value Added -8.64 -11.70 -3.67 -1.26 -1.02 -1.71 0.67Canadian Equity Median 14.96 3.09 6.31 8.16 6.40 5.11 8.50
General Canadian Fixed Income 11,685 66.1 2.78 (65) 4.12 (79) 2.56 (36) 2.12 (20) 1.87 (71) 2.11 (85) 3.37 (100) 1/04/2004FTSE Canada Short Term Overall Bond 2.67 (87) 4.08 (87) 2.21 (97) 1.53 (100) 1.54 (100) 1.91 (100) 3.21 (100)Value Added 0.11 0.04 0.35 0.59 0.33 0.20 0.16Canadian Short Term Bonds Median 2.97 4.32 2.53 2.02 1.94 2.26 3.61
total 17,675 100.0
General Short Term 1,073 6.1 0.95 (70) 1.84 (67) 1.53 (66) 1.25 (79) 1.10 (78) 1.07 (85) 1.91 (39) 1/04/2004FTSE Canada 91 Day TBill 0.81 (100) 1.59 (100) 1.28 (100) 1.00 (100) 0.87 (100) 0.87 (100) 1.62 (100)Value Added 0.14 0.25 0.25 0.25 0.23 0.20 0.29Money Market Median 0.98 1.90 1.60 1.36 1.24 1.22 1.87
Executive Summary
General Fund Asset Allocation and Annualized PerformanceAs of 30 June 2019
The total fund performance prior to 30 June 2009 includes a U.S. equities component.Parentheses contain percentile rankings.Returns for periods greater than one year are annualized.
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Performance (%)2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009
General Fund (Gross) 0.28 5.58 3.02 0.75 1.22 8.41 5.03 1.98 6.52 4.68 5.33General Fund Benchmark 4.22 3.33 1.81 1.35 2.77 6.72 2.34 1.70 5.70 5.25 3.58Value Added -3.94 2.25 1.21 -0.60 -1.55 1.69 2.69 0.28 0.82 -0.57 1.75
General Fund (Net) 0.11 5.40 2.86 0.63 1.09 8.27 4.91 1.86 6.48 4.67 5.26General Fund Benchmark 4.22 3.33 1.81 1.35 2.77 6.72 2.34 1.70 5.70 5.25 3.58Value Added -4.11 2.07 1.05 -0.72 -1.68 1.55 2.57 0.16 0.78 -0.58 1.68
General Canadian Equities -7.83 (94) 16.03 (5) 14.98 (18) -0.53 (66) -5.39 (87) 30.97 (37) 21.21 (5) -9.83 (58) 22.80 (29) 13.89 (37) -18.85 (26)S&P/TSX Capped Composite 3.87 (43) 10.41 (47) 11.05 (64) -0.20 (63) -1.16 (63) 28.66 (65) 7.90 (93) -10.25 (64) 20.87 (55) 11.95 (55) -25.69 (67)Value Added -11.70 5.62 3.93 -0.33 -4.23 2.31 13.31 0.42 1.93 1.94 6.84Canadian Equity Median 3.09 10.16 11.88 2.02 0.48 29.77 12.34 -9.06 21.20 12.22 -23.06
General Canadian Fixed Income 4.12 (79) 1.02 (14) 1.26 (21) 1.10 (100) 3.10 (86) 4.04 (25) 2.41 (13) 3.87 (62) 3.44 (59) 3.75 (100) 7.90 (64)FTSE Canada Short Term Overall Bond 4.08 (87) 0.36 (100) 0.20 (100) 1.56 (81) 3.43 (72) 3.21 (97) 1.36 (100) 3.80 (64) 3.16 (94) 4.31 (100) 8.02 (61)Value Added 0.04 0.66 1.06 -0.46 -0.33 0.83 1.05 0.07 0.28 -0.56 -0.12Canadian Short Term Bonds Median 4.32 0.73 0.86 1.93 3.54 3.80 1.84 3.99 3.51 5.47 8.23
General Short Term 1.84 (67) 1.21 (73) 0.69 (87) 0.65 (84) 0.99 (71) 1.08 (78) 1.04 (80) 0.93 (90) 0.90 (91) 0.05 (100) 8.48 (1)FTSE Canada 91 Day TBill 1.59 (100) 0.97 (100) 0.45 (100) 0.49 (100) 0.87 (96) 0.97 (100) 1.00 (89) 0.96 (88) 0.89 (92) 0.33 (80) 1.98 (74)Value Added 0.25 0.24 0.24 0.16 0.12 0.11 0.04 -0.03 0.01 -0.28 6.50Money Market Median 1.90 1.28 0.90 0.85 1.11 1.21 1.19 1.18 1.07 0.55 2.20
Executive Summary
General Fund Annual PerformanceAs of 30 June
The total fund performance prior to 30 June 2009 includes a U.S. equities component.Parentheses contain percentile rankings.
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Capital Market Performance
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6 Months 1 Year 2 Years 3 Years 4 Years 5 Years 10 YearsEquityS&P/TSX Composite 16.2 3.9 7.1 8.4 6.2 4.7 7.8S&P 500 13.6 9.8 12.8 14.3 12.9 15.4 16.1S&P 500 (USD) 18.5 10.4 12.4 14.2 11.5 10.7 14.7MSCI EAFE (Net) 9.3 0.5 4.3 9.3 5.2 6.5 8.2MSCI World (Net) 12.1 5.7 9.1 11.9 9.2 11.1 12.0MSCI ACWI (Net) 11.2 5.0 8.5 11.9 8.8 10.6 11.5MSCI Emerging Markets (Net) 5.8 0.5 5.0 10.9 5.7 6.8 7.1Real EstateMSCI/REALPAC Canada Property Index (IPD) 3.0 7.3 7.6 7.3 7.4 7.3 8.9MSCI/REALPAC Canada Property Fund Index (PFI) 3.6 7.6 8.2 7.9 7.3 7.1 8.4Fixed IncomeFTSE Canada Universe Bond 6.5 7.4 4.0 2.7 3.3 3.9 4.5FTSE Canada Long Term Overall Bond 12.1 11.4 6.5 4.4 5.8 6.6 7.3FTSE Canada 91 Day TBill 0.8 1.6 1.3 1.0 0.9 0.9 0.9Consumer Price IndexCanadian CPI, unadjusted 2.2 2.0 2.2 1.8 1.7 1.6 1.7
Canadian EquitiesThe S&P/TSX Composite Index returned +16.2% over the last six months. Information Technology (+44.0%) was the strongest performing sector while Communication Services(+9.7%) was the worst performer. Growth stocks outperformed value stocks in the last six months (+18.3% vs.+14.2% respectively).
U.S. EquitiesThe S&P 500 Index returned +13.6% in Canadian dollar terms over the last six months. The best performing sectors were Information Technology (+21.6%) and ConsumerDiscretionary (+16.6%) while Health Care (+3.4%) was the worst performer.
Non-North American EquitiesThe MSCI EAFE Index returned +9.3% over six months in Canadian dollar terms. All sectors posted positive returns. Over, the last six months the best performing sector wasInformation Technology (+17.6%) while the worst performer was Communication Services (+3.8%).
Fixed IncomeThe Canadian bond market, as measured by the FTSE Canada Universe Bond Index, returned +6.5% over the last six months. During this time, the bond market was led byProvincial bonds (+8.8%), outperforming both Corporate bonds (+6.8%) and Federal bonds (+4.0%). From a term perspective, long duration bonds (+12.1%) outperformed bothmedium duration (+5.9%) and short duration (+2.7%) bonds over the last six months.
Capital Market Performance
Major Capital Markets' ReturnsAs of 30 June 2019
Returns for periods greater than one year are annualized. Sector returns are sourced from MSCI.
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6 months 1 Year 4 Years
0.0 3.0 6.0 9.0 12.0 15.0 18.0 21.0 24.0 27.0Return
Canadian CPI, unadjusted
FTSE Canada 91 Day TBill
FTSE Canada Long Term Overall Bond
FTSE Canada Universe Bond
MSCI/REALPAC Canada Property Fund (PFI)
MSCI/REALPAC Canada Property (IPD)
MSCI Emerging Markets (Net)
MSCI ACWI (Net)
MSCI World (Net)
MSCI EAFE (Net)
S&P 500 (USD)
S&P 500
S&P/TSX Composite
2.2
0.8
12.1
6.5
3.6
3.0
5.8
11.2
12.1
9.3
18.5
13.6
16.2
2.0
1.6
11.4
7.4
7.6
7.3
0.5
5.0
5.7
0.5
10.4
9.8
3.9
1.7
0.9
5.8
3.3
7.3
7.4
5.7
8.8
9.2
5.2
11.5
12.9
6.2
Capital Market Performance
Comparative PerformanceAs of 30 June 2019
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E&O Insurance Fund Analysis
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Segments Market Value($)
Allocation(%)
Canadian Equity 5,583,534 28.2¢£
Canadian Fixed Income 13,005,522 65.7¢£
Short Term 1,194,523 6.0¢£
30 June 2019 : $19,783,580
Canadian Equity Canadian Fixed Income Short Term
28.2%
6.0%
65.7%
Segments Market Value($)
Allocation(%)
Canadian Equity 6,037,545 29.7¢£
Canadian Fixed Income 13,070,483 64.3¢£
Short Term 1,234,342 6.1¢£
31 December 2018 : $20,342,369
Canadian Equity Canadian Fixed Income Short Term
29.7%
6.1%
64.3%
E&O Insurance Fund
Asset Allocation by SegmentE&O Insurance Fund
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Added Value History (%)
Return Summary
E&O Insurance Fund E&O Insurance Fund Benchmark
0.0
3.0
6.0
9.0
Ret
urn
(%)
6Months
1Year
2Years
3Years
4Years
5Years
6.7
4.2 3.83.1 2.7 2.7
4.2
0.4
2.9 2.9 2.4 2.2
Performance StatisticsQuarters %
Market CaptureUp Markets 41 117.5Down Markets 12 138.1
Batting AverageUp Markets 41 70.7Down Markets 12 33.3Overall 53 62.3
Added Value (up market) Added Value (down market)
Cumulative Added Value Rolling 4 Years Added Value
0.0
4.0
8.0
12.0
-4.0
-8.0
Adde
d Va
lue
(%)
9/09 6/10 3/11 12/11 9/12 6/13 3/14 12/14 9/15 6/16 3/17 12/17 9/18 6/19
Contributors to Quarterly Performance:
· Significant under performance in Canadianequity
· Overweight to short-term detracted value· Underweight to fixed income added value
4-Year Performance Objective Met: No
E&O Insurance Fund Performance SummaryAs of 30 June 2019
E&O Insurance Fund
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Change in Market Value ($000)From 1 January 2013 to 30 June 2019
Summary of Cash Flows ($000)
$0
$20,000
$40,000
$60,000
($20,000)
($40,000)Beginning Market Value Net Additions / Withdrawals Investment Earnings Ending Market Value
$29,670
($15,279)
$5,393
$19,784
Jan-2013To
Jun-2019E&O Insurance Fund Beginning Market Value 29,670 +/- Net Cash Flows -15,279 +/- Income 4,654 +/- Capital Gains / Losses 739 = Ending Market Value 19,784
E&O Insurance Fund Asset SummaryAs of 30 June 2019
E&O Insurance Fund
Note: Capital Gains / Losses also includes Accretion / Amortization
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Target Allocation Actual Allocation
0.0% 15.0% 30.0% 45.0% 60.0% 75.0% 90.0%
Short Term$1,195
Canadian Fixed Income$13,006
Canadian Equity$5,584
0.0%
70.0%
30.0%
6.0%
65.7%
28.2%
MarketValue($000)
MarketValue
(%)
TargetAllocation
(%)
Differences(%)
MinimumAllocation
(%)
MaximumAllocation
(%)
WithinRange
Canadian Equity 5,584 28.2 30.0 -1.8 20.0 40.0 YesCanadian Fixed Income 13,006 65.7 70.0 -4.3 45.0 80.0 YesShort Term 1,195 6.0 0.0 6.0 0.0 15.0 YesTotal Fund 19,784 100.0 100.0 0.0
E&O Insurance Fund
Asset Allocation ComplianceAs of 30 June 2019 ($000)
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Compensation Fund Analysis
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Segments Market Value($)
Allocation(%)
Canadian Equity 8,187,422 27.8¢£
Canadian Fixed Income 19,460,552 66.1¢£
Short Term 1,788,625 6.1¢£
30 June 2019 : $29,436,599
Canadian Equity Canadian Fixed Income Short Term
27.8%
6.1%
66.1%
Segments Market Value($)
Allocation(%)
Canadian Equity 8,384,027 29.7¢£
Canadian Fixed Income 18,154,860 64.3¢£
Short Term 1,717,047 6.1¢£
31 December 2018 : $28,255,933
Canadian Equity Canadian Fixed Income Short Term
29.7%
6.1%
64.3%
Compensation Fund
Asset Allocation by SegmentCompensation Fund
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Added Value History (%)
Return Summary
Compensation Fund Compensation Fund Benchmark
0.0
3.0
6.0
9.0
Ret
urn
(%)
6Months
1Year
2Years
3Years
4Years
5Years
6.7
4.2 3.83.1 2.7 2.7
4.2
0.3
2.9 2.9 2.4 2.1
Performance StatisticsQuarters %
Market CaptureUp Markets 32 113.6Down Markets 8 126.4
Batting AverageUp Markets 32 68.8Down Markets 8 37.5Overall 40 62.5
Added Value (up market) Added Value (down market)
Cumulative Added Value Rolling 4 Years Added Value
0.0
4.0
8.0
12.0
-4.0
-8.0
Adde
d Va
lue
(%)
9/09 6/10 3/11 12/11 9/12 6/13 3/14 12/14 9/15 6/16 3/17 12/17 9/18 6/19
Contributors to Quarterly Performance:
· Significant under performance in Canadianequity
· Overweight to short-term detracted value· Underweight to fixed income added value
4-Year Performance Objective Met: No
Compensation Fund Performance SummaryAs of 30 June 2019
Compensation Fund
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Change in Market Value ($000)From 1 January 2013 to 30 June 2019
Summary of Cash Flows ($000)
$0
$20,000
$40,000
$60,000
($20,000)
($40,000)Beginning Market Value Net Additions / Withdrawals Investment Earnings Ending Market Value
$32,752
($9,999)
$6,684
$29,437
Jan-2013To
Jun-2019Compensation Fund Beginning Market Value 32,752 +/- Net Cash Flows -9,999 +/- Income 5,757 +/- Capital Gains / Losses 927 = Ending Market Value 29,437
Compensation Fund Asset SummaryAs of 30 June 2019
Compensation Fund
Note: Capital Gains / Losses also includes Accretion / Amortization
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Target Allocation Actual Allocation
0.0% 15.0% 30.0% 45.0% 60.0% 75.0% 90.0%
Short Term$1,789
Canadian Fixed Income$19,461
Canadian Equity$8,187
0.0%
70.0%
30.0%
6.1%
66.1%
27.8%
MarketValue($000)
MarketValue
(%)
TargetAllocation
(%)
Differences(%)
MinimumAllocation
(%)
MaximumAllocation
(%)
WithinRange
Canadian Equity 8,187 27.8 30.0 -2.2 20.0 40.0 YesCanadian Fixed Income 19,461 66.1 70.0 -3.9 45.0 80.0 YesShort Term 1,789 6.1 0.0 6.1 0.0 15.0 YesTotal Fund 29,437 100.0 100.0 0.0
Compensation Fund
Asset Allocation ComplianceAs of 30 June 2019 ($000)
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General Fund Analysis
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Segments Market Value($)
Allocation(%)
Canadian Equity 4,916,639 27.8¢£
Canadian Fixed Income 11,684,958 66.1¢£
Short Term 1,073,190 6.1¢£
30 June 2019 : $17,674,787
Canadian Equity Canadian Fixed Income Short Term
27.8%
6.1%
66.1%
Segments Market Value($)
Allocation(%)
Canadian Equity 5,034,357 29.7¢£
Canadian Fixed Income 10,898,372 64.2¢£
Short Term 1,033,224 6.1¢£
31 December 2018 : $16,965,953
Canadian Equity Canadian Fixed Income Short Term
29.7%
6.1%
64.2%
General Fund
Asset Allocation by SegmentGeneral Fund
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Added Value History (%)
Return Summary
General Fund General Fund Benchmark
0.0
3.0
6.0
9.0
Ret
urn
(%)
6Months
1Year
2Years
3Years
4Years
5Years
6.7
4.2 3.83.1 2.7 2.7
4.2
0.3
2.9 2.9 2.4 2.1
Performance StatisticsQuarters %
Market CaptureUp Markets 49 103.6Down Markets 12 106.5
Batting AverageUp Markets 49 57.1Down Markets 12 50.0Overall 61 55.7
Added Value (up market) Added Value (down market)
Cumulative Added Value Rolling 4 Years Added Value
0.0
3.0
6.0
9.0
-3.0
-6.0
Adde
d Va
lue
(%)
9/09 6/10 3/11 12/11 9/12 6/13 3/14 12/14 9/15 6/16 3/17 12/17 9/18 6/19
Contributors to Quarterly Performance:
· Significant under performance in Canadianequity
· Overweight to short-term detracted value· Underweight to fixed income added value
4-Year Performance Objective Met: No
General Fund Performance SummaryAs of 30 June 2019
General Fund
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Change in Market Value ($000)From 1 January 2013 to 30 June 2019
Summary of Cash Flows ($000)
$0
$6,000
$12,000
$18,000
$24,000
Beginning Market Value Net Additions / Withdrawals Investment Earnings Ending Market Value
$14,452
$0
$3,222
$17,675
Jan-2013To
Jun-2019General Fund Beginning Market Value 14,452 +/- Net Cash Flows - +/- Income 2,832 +/- Capital Gains / Losses 391 = Ending Market Value 17,675
General Fund Asset SummaryAs of 30 June 2019
General Fund
Note: Capital Gains / Losses also includes Accretion / Amortization
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Target Allocation Actual Allocation
0.0% 15.0% 30.0% 45.0% 60.0% 75.0% 90.0%
Short Term$1,073
Canadian Fixed Income$11,685
Canadian Equity$4,917
0.0%
70.0%
30.0%
6.1%
66.1%
27.8%
MarketValue($000)
MarketValue
(%)
TargetAllocation
(%)
Differences(%)
MinimumAllocation
(%)
MaximumAllocation
(%)
WithinRange
Canadian Equity 4,917 27.8 30.0 -2.2 20.0 40.0 YesCanadian Fixed Income 11,685 66.1 70.0 -3.9 45.0 80.0 YesShort Term 1,073 6.1 0.0 6.1 0.0 15.0 YesTotal Fund 17,675 100.0 100.0 0.0
General Fund
Asset Allocation ComplianceAs of 30 June 2019 ($000)
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Asset Class Analysis
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-22.0
-16.0
-10.0
-4.0
2.0
8.0
14.0
20.0
26.0
Ret
urn
(%)
6Months
1Year
2Years
3Years
4Years
5Years 2018 2017 2016 2015
FGP Canadian Equity 7.6 (99) -7.5 (93) 3.6 (82) 7.3 (69) 5.3 (76) 3.1 (87) 16.2 (4) 15.0 (18) -0.3 (64) -5.5 (88)¢£
S&P/TSX Capped Composite 16.2 (24) 3.9 (43) 7.1 (36) 8.4 (46) 6.2 (59) 4.7 (61) 10.4 (47) 11.0 (64) -0.2 (63) -1.2 (63)��
5th Percentile 17.7 8.2 8.7 10.3 8.5 7.9 15.9 17.3 7.2 9.81st Quartile 16.1 5.7 7.3 9.1 7.4 6.2 11.7 14.2 3.7 3.7Median 15.0 3.1 6.3 8.2 6.4 5.1 10.2 11.9 2.0 0.53rd Quartile 12.8 0.5 4.2 7.0 5.3 4.1 7.6 10.2 -1.8 -3.195th Percentile 9.5 -8.4 1.1 4.6 3.0 2.1 3.8 6.8 -5.2 -9.7
Population 93 93 93 93 93 93 101 111 113 117
Canadian Equity Funds
Peer Group AnalysisAs of 30 June 2019
Canadian Equity
Parentheses contain percentile rankings.Returns for periods greater than one year are annualized.Source: Aon Hewitt Manager Universe.
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4 Years
0.9
1.8
2.7
3.6
4.5
5.4
6.3
7.2
8.1
9.0
9.9
10.8
Ret
urn
(%)
6.3 7.2 8.1 9.0 9.9 10.8 11.7 12.6 13.5Risk (Standard Deviation %)
5 Years
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Ret
urn
(%)
6.3 7.2 8.1 9.0 9.9 10.8 11.7 12.6Risk (Standard Deviation %)
Return StandardDeviation
FGP Canadian Equity 5.3 11.8¢£
S&P/TSX Capped Composite 6.2 9.3��
Median 6.4 9.3¾
Return StandardDeviation
FGP Canadian Equity 3.1 11.5¢£
S&P/TSX Capped Composite 4.7 9.0��
Median 5.1 9.0¾
Canadian Equity Funds
Peer Group ScattergramPeriods Ending 30 June 2019
Canadian Equity
Returns for periods greater than one year are annualized.Source: Aon Hewitt Manager Universe.
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-1.9
-1.0
-0.1
0.8
1.7
2.6
3.5
4.4
5.3
6.2
Ret
urn
(%)
6Months
1Year
2Years
3Years
4Years
5Years 2018 2017 2016 2015
FGP Short Term Bond Fund 2.8 (67) 4.1 (84) 2.6 (42) 2.1 (23) 1.9 (72) 2.1 (88) 1.0 (14) 1.2 (21) 1.1 (99) 3.0 (89)¢£
FTSE Canada Short Term Overall Bond 2.7 (87) 4.1 (87) 2.2 (97) 1.5 (100) 1.5 (100) 1.9 (100) 0.4 (100) 0.2 (100) 1.6 (81) 3.4 (72)��
5th Percentile 3.3 4.7 2.7 2.3 2.2 2.5 1.4 1.8 2.4 3.81st Quartile 3.1 4.5 2.6 2.1 2.0 2.3 0.9 1.1 2.0 3.7Median 3.0 4.3 2.5 2.0 1.9 2.3 0.7 0.9 1.9 3.53rd Quartile 2.7 4.2 2.5 1.9 1.9 2.2 0.7 0.7 1.8 3.495th Percentile 2.2 3.4 2.3 1.8 1.8 2.1 0.5 0.4 1.1 2.8
Population 15 15 15 15 15 14 16 16 17 16
Fixed Income Funds
Peer Group AnalysisAs of 30 June 2019
Canadian Short Term Bonds
Parentheses contain percentile rankings.Returns for periods greater than one year are annualized.For illustrative purposes, Aon Hewitt has used the FTSE Canada Universe Bond Index for the purpose of a peer group analysis.Note, this is not a direct comparison between FGP's Canadian fixed income mandate and the Canadian bonds universe.Source: Aon Hewitt Manager Universe.
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4 Years
1.4
1.6
1.8
2.0
2.2
2.4
Ret
urn
(%)
0.6 0.8 1.0 1.2 1.4 1.6Risk (Standard Deviation %)
5 Years
1.6
1.8
2.0
2.2
2.4
2.6
2.8
Ret
urn
(%)
0.6 0.8 1.0 1.2 1.4 1.6 1.8Risk (Standard Deviation %)
Return StandardDeviation
FGP Short Term Bond Fund 1.9 1.1¢£
FTSE Canada Short Term Overall Bond 1.5 1.2��
Median 1.9 1.2¾
Return StandardDeviation
FGP Short Term Bond Fund 2.1 1.2¢£
FTSE Canada Short Term Overall Bond 1.9 1.4��
Median 2.3 1.4¾
Fixed Income Funds
Peer Group ScattergramPeriods Ending 30 June 2019Canadian Short Term Bonds
Returns for periods greater than one year are annualized.For illustrative purposes, Aon Hewitt has used the FTSE Canada Universe Bond Index for the purpose of a peer group analysis.Note, this is not a direct comparison between FGP's Canadian fixed income mandate and the Canadian bonds universe.Source: Aon Hewitt Manager Universe.
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-0.4
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2.8
Ret
urn
(%)
6Months
1Year
2Years
3Years
4Years
5Years 2018 2017 2016 2015
FGP Short Term Fund 1.0 (71) 1.8 (68) 1.5 (67) 1.2 (79) 1.1 (79) 1.1 (85) 1.2 (73) 0.7 (83) 0.7 (84) 1.0 (71)¢£
FTSE Canada 91 Day TBill 0.8 (100) 1.6 (100) 1.3 (100) 1.0 (100) 0.9 (100) 0.9 (100) 1.0 (100) 0.5 (100) 0.5 (100) 0.9 (96)��
5th Percentile 1.1 2.1 1.8 1.5 1.4 1.4 1.5 1.0 1.0 1.31st Quartile 1.1 2.0 1.7 1.4 1.3 1.3 1.4 0.9 0.9 1.2Median 1.0 1.9 1.6 1.4 1.2 1.2 1.3 0.9 0.8 1.13rd Quartile 0.9 1.8 1.5 1.3 1.1 1.1 1.2 0.8 0.7 1.095th Percentile 0.9 1.7 1.4 1.1 1.0 1.0 1.1 0.6 0.6 0.9
Population 14 14 14 14 14 14 16 16 16 16
Money Market Funds
Peer Group AnalysisAs of 30 June 2019
Money Market
Parentheses contain percentile rankings.Returns for periods greater than one year are annualized.Source: Aon Hewitt Manager Universe.
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4 Years
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
Ret
urn
(%)
0.1 0.2Risk (Standard Deviation %)
5 Years
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
Ret
urn
(%)
0.0 0.1 0.2Risk (Standard Deviation %)
Return StandardDeviation
FGP Short Term Fund 1.1 0.2¢£
FTSE Canada 91 Day TBill 0.9 0.2��
Median 1.2 0.1¾
Return StandardDeviation
FGP Short Term Fund 1.1 0.1¢£
FTSE Canada 91 Day TBill 0.9 0.1��
Median 1.2 0.1¾
Money Market Funds
Peer Group ScattergramPeriods Ending 30 June 2019
Money Market
Returns for periods greater than one year are annualized.Source: Aon Hewitt Manager Universe.
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Appendix A - Plan Information
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Plan Information
The investment policy contains specific performance objectives for the fund and for the investment manager.
Investment rates of return are reported on a calendar basis and include realized and unrealized capital gains and losses, plus income.
Returns are calculated on a time-weighted basis and are compared to the objectives described below in order to assess the performance of theinvestment manager.
The primary objective is to outperform a benchmark portfolio over moving four-year periods. The specific benchmark weights areprovided on the following page.
Management Mandates: Active management of the asset allocationActive management of the asset classes
Management Structure: One Short Term bond mandate One Canadian equity mandate
Management Firm: Foyston, Gordon & Payne Inc. (FGP)
Prior to From 1 July 2009 From 21 May 2010Investment Products: 30 June 2009 to 21 May 2010 23 June 2014
E&O Insurance Fund- Pooled Pooled
Pooled Pooled SegregatedPooled Pooled Pooled
Short Term Canadian Bonds Canadian Equities Private U.S. Equities Pooled - -
Compensation & General FundPooled Pooled Pooled
Segregated Segregated SegregatedPooled Pooled Pooled
Short Term Canadian Bonds Canadian Equities Private U.S. Equities Segregated - - -
Note: Segregated = Individual Securities
Pooled-
PooledPooledPooled
Summary of Investment Objectives
After23 June 2014
PooledPooled
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E&O Insurance Fund Benchmark Compensation Fund BenchmarkComponents Weight (%)Mar-2006S&P/TSX Composite 15.00S&P 500 15.00FTSE Canada Short Term Overall Bond 70.00
Jul-2009S&P/TSX Composite 15.00FTSE Canada Short Term Overall Bond 85.00FTSE Canada 91 Day TBill 0.00
Jun-2017S&P/TSX Composite 30.00FTSE Canada Short Term Overall Bond 70.00FTSE Canada 91 Day TBill 0.00
Components Weight (%)Jun-2003S&P/TSX Composite 7.50S&P 500 7.50FTSE Canada Short Term Overall Bond 85.00
Jan-2004S&P/TSX Composite 7.50S&P 500 7.50FTSE Canada Universe Bond 85.00
Jul-2009S&P/TSX Composite 13.00FTSE Canada Universe Bond 87.00
Apr-2010S&P/TSX Composite 15.00FTSE Canada Short Term Overall Bond 85.00FTSE Canada 91 Day TBill 0.00
Jun-2017S&P/TSX Composite 30.00FTSE Canada Short Term Overall Bond 70.00FTSE Canada 91 Day TBill 0.00
Plan Information
Summary of Investment ObjectivesBlended Benchmark Composition
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Compensation Fund Fixed Income BenchmarkGeneral Fund BenchmarkComponents Weight (%)Mar-2004S&P/TSX Composite 7.50S&P 500 7.50FTSE Canada Short Term Overall Bond 85.00
Jul-2009S&P/TSX Composite 13.00FTSE Canada Short Term Overall Bond 87.00
Apr-2010S&P/TSX Composite 15.00FTSE Canada Short Term Overall Bond 85.00FTSE Canada 91 Day TBill 0.00
Jun-2017S&P/TSX Composite 30.00FTSE Canada Short Term Overall Bond 70.00FTSE Canada 91 Day TBill 0.00
Components Weight (%)Jun-2003FTSE Canada Short Term Overall Bond 100.00
Jan-2004FTSE Canada Universe Bond 100.00
Apr-2010FTSE Canada Short Term Overall Bond 100.00
Plan Information
Summary of Investment ObjectivesBlended Benchmark Composition
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Appendix B - Manager Updates
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Foyston, Gordon & Payne ("FGP")Q2 2019
BusinessThere were no significant events.
StaffIn April, Kimberley Woolverton, Senior Vice President, was promoted to FGP's Executive Committee. She joined FGP in May 2018 and leads the institutionalsales, marketing and client service activities.Q1 2019
BusinessThere were no significant events.
StaffIn January, Philip Stathopoulos joined the firm as Compliance Manager to oversee day-to-day compliance. Stathopoulos has over 20 years of experience in theinvestment industry, most recently as Chief Compliance Officer at Lorica Investment Counsel.
Manager Updates
Manager UpdatesAs of 30 June 2019
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Appendix C - Capital Markets Environment
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Capital Markets Environment
Capital Markets Environment
As of 30 June 2019
▪ Concerns around slowing global growth and trade
wars rattled equity markets in the middle of thequarter, but signs of increasingly accommodativecentral bank policies and positive steps towards atrade resolution late in the quarter supportedglobal equities. Although not a repeat of the priorquarter's impressive double-digit return, globalequities (MSCI ACWI) rose by 3.2% in Q2 2019 inlocal currency terms, while Canadian equities roseby 2.6%.
▪ In the U.S., there was no change to the FederalFunds rate over the quarter, yet there was a clearsignal of lower rates to come at the June FederalOpen Market Committee (FOMC) meeting. The“patience” stance adopted by the U.S. FederalReserve (Fed) was dropped, suggesting a moredovish Fed in the coming months.
▪ Similarly, the European Central Bank (ECB)shifted to a more dovish stance, stating that moreeasing is achievable through further cuts tointerest rates or through the ECB’s AssetPurchase Program.
▪ The Bank of Canada (BoC) kept its benchmarkinterest rate unchanged at 1.75%. The BoC statedthat the economic slowdown in late 2018 and early2019 was temporary but noted global trade riskshave increased.
▪ Canadian economic growth continued to be soft,with the economy growing by an annualized rate of0.4% in Q1 2019, up from the downwardly revisedrate of 0.3% in the previous quarter. This was theweakest back-to-back quarters since 2015.However, April's monthly GDP growth rate wasstronger than expected and other economic datawas positive, reinforcing the BoC's view that therecent economic slowdown would be temporary.
0.4%
2.5%
4.8%
2.6% 2.0% 1.4% 1.7%
-1.6%
1.2% 1.7%0.8%
6.5%
12.1%
16.2%
13.4%
9.1%
11.9%
5.8%
2.6%
6.4%
-5%
0%
5%
10%
15%
20%
FTSE Canada 91Day T-Bill
FTSE CanadaUniverse
FTSE CanadaLong
S&P/TSXComposite
S&P 500 (CAD) MSCI EAFE(CAD, Net)
MSCI World(CAD, Net)
MSCI EmergingMarkets (CAD,
Net)
MSCI/REALPACCanada Property
Index
HFRI Fund ofFunds (USD)
SHORT TERM RETURNS AS OF 06/30/2019Second Quarter 2019
Year-to-date
Sources: S&P, MSCI, IPD, FTSE. Unless it's otherwise stated, gross CAD returns are shown in this report.
0.9%
3.9%
6.6%
4.7%
15.3%
6.5%
11.1%
6.8%7.2%
2.2%0.9%
4.5%
7.3% 7.8%
16.1%
8.2%
12.0%
7.1%8.9%
3.2%
0%
5%
10%
15%
20%
FTSE Canada 91Day T-Bill
FTSE CanadaUniverse
FTSE CanadaLong
S&P/TSXComposite
S&P 500 (CAD) MSCI EAFE(CAD, Net)
MSCI World(CAD, Net)
MSCI EmergingMarkets (CAD,
Net)
MSCI/REALPACCanada Property
Index
HFRI Fund ofFunds (USD)
LONG TERM ANNUALIZED RETURNS AS OF 06/30/2019
Five-Year Ten-Year
Sources: S&P, MSCI, IPD, FTSE. Unless it's otherwise stated, gross CAD returns are shown in this report.
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Capital Markets Environment
Capital Markets Environment
As of 30 June 2019
Canadian Equity Markets
▪ The S&P/TSX Composite Index rose by 2.6% over the quarter, as gains by the heavily weighted Financials sector more than offset the negativereturns generated by the Energy sector. The Financials sector was boosted by generally encouraging earnings reports from large Canadianbanks, while the Energy sector fell as oil prices moved lower amidst signs of slowing global growth.
▪ Performance was mixed across the sectors. Information Technology (14.3%) and Materials (5.4%) were the best performing sectors over thequarter while Health Care and Energy were the worst performing sectors, falling by 9.3% and 2.8% respectively.
▪ Canadian value stocks rose by 1.7% in Q2 2019, underperforming growth stocks which rose by 3.9%.
▪ Small Cap stocks (-0.3%) underperformed Large Cap stocks (2.6%) in Q2 2019.
2.6%
-0.2%
4.6%1.7%
-2.8%
3.5%
-9.3%
5.1%
14.3%
5.4%
-1.4%
5.4%
16.2%
9.7%
14.9% 12.5%12.3%
14.3%
35.2%
21.1%
44.0%
14.4%
15.8%
22.4%
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
S&P/TSXComposite
5.6%Comm.Serv.
4.2%Cons.Disc.
3.9%Cons.Stap.
17.1%Energy
32.0%Financials
2.0%HealthCare
11.4%Industrials
5.1%IT
11.0%Materials
3.4%Real
Estate
4.3%Utilit ies
S&P/TSX COMPOSITE SECTOR RETURNS (CAD) AS OF 06/30/2019
Second Quarter 2019
Year-to-date
Source: S&P
2.6%
-0.3%
3.9%
1.7%
16.2%
10.4%
18.3%
14.2%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
S&P/TSXComposite
S&P/TSXSmallCap
MSCI CanadaGrowth
MSCI CanadaValue
CANADIAN EQUITY STYLE/SIZE RETURNS (CAD) AS OF 06/30/2019
Second Quarter 2019
Year-to-date
Source: S&P, MSCI
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Capital Markets Environment
Capital Markets Environment
As of 30 June 2019
U.S. Equity Markets
▪ Cyclical stocks outperformed in the U.S., particularly Financials which returned 8.0% in USD terms over the second quarter, as increasingexpectations of monetary easing by the Federal Reserve boosted cyclical sectors. More defensive areas underperformed, but the Energy sectorwas the only sector that posted negative returns in USD terms over the quarter as crude oil prices slipped.
▪ The S&P 500 Index rose by 4.3% in USD terms over the quarter, with the majority of the strong performance coming late in the quarter,reversing the poor performance in May. Similar to the prior quarter, valuation multiple expansion was key to the positive performance asunderlying earnings growth was negative. Overall, the S&P 500 Index rose by 2.0% in CAD terms, as the Canadian dollar appreciated relative tothe U.S. dollar.
▪ All sectors, except Energy and Health Care, posted positive returns over the quarter in CAD terms. Financials (5.6%) and Materials (4.0%) werethe best performers over the quarter, while the Energy and Health Care sectors underperformed, returning -5.0% and -0.8% respectively.
▪ The broad-based appreciation in U.S. stocks was seen across sectors and across the market capitalization spectrum, with both large cap andsmall cap stocks generating positive returns in USD terms. In general, small cap stocks underperformed both large and medium cap stocks,while growth stocks outperformed their value counterparts in Q2 2019.
2.0% 2.2% 3.0%1.5%
-5.0%
5.6%
-0.8%
1.3%
3.7% 4.0%
0.2%
1.2%
13.4% 13.9%16.6%
11.2%
8.2%
12.2%
3.4%
16.1%
21.6%
12.2%
15.2%
9.7%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
S&P 500 10.2%Comm.Serv.
10.2%Cons.Disc.
7.3%Cons.Stap.
5.0%Energy
13.1%Financials
14.2%HealthCare
9.4%Industrials
21.5%IT
2.8%Materials
3.1%Real
Estate
3.3%Utilit ies
S&P 500 GICS SECTOR RETURNS (CAD) AS OF 06/30/2019
Second Quarter 2019
Year-to-date
Source: S&P
1.8% 1.9% 2.1%0.9%
3.1%
-0.8%
0.5%
13.6%
10.4%
15.0%12.9%
20.6%
8.6%
15.2%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
Russell3000
31.0%LargeValue
36.2%Large
Growth
14.8%MediumValue
11.1%MediumGrowth
3.3%SmallValue
3.6%Small
Growth
RUSSELL STYLE RETURNS (CAD) AS OF06/30/2019 Second Quarter 2019
Year-to-date
Source: Russell Indexes
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Capital Markets Environment
Capital Markets Environment
As of 30 June 2019
Global Equity Markets
1.3% 1.7% 2.0% 2.8%1.4%
-1.6%
11.2% 11.9%13.7%
16.2%
9.1%
5.8%
-10%
0%
10%
20%
ACWI World USA Canada EAFE EmergingMarkets
GLOBAL MSCI INDEX RETURNS (CAD) AS OF 06/30/2019
Second Quarter 2019 Year-to-date
Source: MSCI. Gross returns shown for the MSCI Canada and USA indices, w hilst net returns are show n for the other indices.
1.4% 1.8%3.6%
-0.3%-1.8%
2.0%
-0.2%
3.6%4.2%
1.6%
-4.3%-0.7%
9.1%
3.8%
8.9% 9.6%
6.1%6.7%
8.6%
12.0%
17.6%
12.5%
6.7%5.8%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
MSCIEAFE
5.4%Comm.Serv.
11.1%Cons.Disc.
11.7%Cons.Stap.
5.6%Energy
18.9%Financials
11.2%HealthCare
14.8%Industrials
6.7%IT
7.4%Materia ls
3.6%Real Estate
3.6%Utilities
MSCI EAFE GICS SECTOR RETURNS (CAD, Net) AS OF 06/30/2019
Second Quarter 2019
Year-to-date
Source: MSCI
▪ MSCI AC World Index rose by 3.2% in local currency terms androse by 1.3% in Canadian dollar terms over the quarter.
▪ MSCI EAFE equities rose by 2.8% in local currency terms, with UKand European equities generating positive returns while Japaneseequities fell. Despite increasing Brexit uncertainty, UK equitiesperformed well over the quarter, benefiting from a fall in the valueof the pound. Benefiting from the Eurozone's greater exposure tothe global trade volumes, European stocks experienced strongperformance at the beginning and the end of the quarter as tradetensions eased. Benefiting from its status as a safe-havencurrency amid trade war tumult, the Japanese yen strengthenedsignificantly over the quarter, to the detriment of the Japanesestock market in local currency terms with most sectorsunderperforming.
▪ As with the prior quarter, trade concerns continued to be feltthroughout the emerging markets. Those more exposed to therecent trade conflict, whether directly (China) or indirectly (SouthKorea), underperformed. Overall, the MSCI EM Index wasrelatively flat (0.2%) in local currency terms over the quarter.Appreciation of the Canadian dollar dragged down the returns to-1.6% in CAD terms.
▪ Within the MSCI EAFE Index, Information Technology (4.2%) aswell as Consumer Discretionary and Industrials (3.6% each) werethe best performing sectors while Real Estate and Energy werethe worst performers, returning -4.3% and -1.8% respectively.
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Capital Markets Environment
Capital Markets Environment
As of 30 June 2019
Canada Fixed Income Markets
▪ The Canadian yield curve flattened significantly over the quarter as yields fell sharply at longer maturities while holding relatively steady atthe shorter end of the curve. The entire Canadian nominal yield curve was below the BoC target overnight interest rate of 1.75% at the endof Q2, concerning many investors as yield curve inversion is a widely used indicator of a potential upcoming recession.
▪ Canada’s annual inflation rate accelerated to 2.4% in May, ahead of the central bank’s 2.0% target. The pickup in inflation and improvementin economic data reduces the likelihood for near-term monetary easing by the BoC, in contrast to the more dovish stance taken by the Fed.
▪ In Canada, 30-year nominal yields fell by 21bps to 1.69% and 30-year real yields fell by 12bps to 0.32%.
▪ Globally, bond yields fell across major developed markets, driven by a downshift in the economic outlook, lower inflationary expectations andgrowing expectations that central banks would ease monetary policy. The U.S. yield curve steepened over the quarter, with short-maturityU.S. Treasuries falling by over 50bps over the quarter. The 10-year U.S. Treasury yield slipped to 2.01% while the policy-sensitive 2-yearyield dropped to 1.75%.
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
Jun-16 Jun-17 Jun-18 Jun-19
CANADIAN 30-YEAR FEDERAL YIELDSReal 30-year yield
Nominal 30-year yield
Source: Bloomberg
0.9%
1.1%
1.3%
1.5%
1.7%
1.9%
2.1%
2.3%
0 5 10 15 20 25 30
Maturity (years)
CANADIAN FEDERAL YIELD CURVE
06/28/2019
03/29/2019
12/31/2018
06/29/2018
Source: Bloomberg
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Capital Markets Environment
Capital Markets Environment
As of 30 June 2019
2.7%
1.5%
3.4%2.9%
6.8%
4.1%
8.3%
7.5%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
FTSE CanadaCorporate Universe
AA+ A BBB
FTSE CANADA RETURNS BY CREDIT QUALITY AS OF 06/30/2019
Second Quarter
Year-to-Date
Source: FTSE
▪ Canadian bond market performance was positive over thequarter. Canadian Provincial bonds outperformed both Federaland Corporate issues.
▪ In the investment grade corporate market, returns were positiveacross all credit quality grades. 'AA’ grade bondsunderperformed both 'A' grade and 'BBB' grade bonds over thequarter.
▪ Long maturity bonds outperformed both Short and Mediummaturity bonds over the quarter, benefiting from the larger fall inyields at longer maturities.
2.5%
1.5%
2.7%
3.4%
6.5%
4.0%
6.8%
8.8%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
FTSE CanadaUniverse
Federal Corporate Provincial
FTSE CANADA RETURNS BY SECTOR AS OF 06/30/2019 Second Quarter
Year-to-Date
Source: FTSE
2.5%
4.8%
2.1%
0.9%
6.5%
12.1%
5.9%
2.7%
0%
2%
4%
6%
8%
10%
12%
14%
FTSE CanadaUniverse
Long Medium Short
FTSE CANADA RETURNS BY MATURITY AS OF 06/30/2019 Second Quarter
Year-to-Date
Source: FTSE
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Capital Markets Environment
Capital Markets Environment
As of 30 June 2019
Currency
▪ As measured by the broad trade-weighted Canadian dollar index, the Canadian dollar appreciated by 1.1% over the quarter. The CADrebounded especially in June, supported by encouraging economic data, rising oil prices during the month and easing global trade tensions.Other than the Japanese yen, the CAD appreciated against a wide range of currencies, most notably against the pound, where it recorded a4.7% appreciation in Q2 2019.
▪ As measured by the U.S. dollar index (DXY), the U.S. dollar reversed the appreciation seen over the first quarter, falling by 1.2% in Q2 2019.Much of the depreciation occurred in June as expectations of Fed rate cuts grew, pushing the U.S. dollar lower. The USD depreciated by 2.2%against the CAD over the quarter.
▪ The euro strengthened by 1.6% on a trade-weighted basis over the quarter, despite the more dovish stance taken by the ECB. However, theeuro fell by 0.8% against the CAD. The yen benefited from safe-haven flows and appreciated by 0.5% against the CAD.
100
110
120
130
140
150
2010 2011 2012 2013 2014 2015 2016 2017 2018
TRADE WEIGHTED CANADIAN DOLLAR INDEX (1999 = 100)
Source: Bank of Canada
60
70
80
90
100
110
120
130
140
2010 2011 2012 2013 2014 2015 2016 2017 2018
CANADIAN DOLLAR RELATIVE TO EUR, USD AND JPY REBASED TO 100 AT 31/12/2010
EUR USD
JPY
Source: Factset
Stronger C$
Weaker C$
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Capital Markets Environment
Capital Markets Environment
As of 30 June 2019
Commodities
▪ Commodities fell over the quarter, with the Bloomberg Commodity Index returning -3.2%.
▪ The Energy sector fell by 6.5% in CAD terms over the quarter. The price of Brent crude oil fell by 2.7% to $67/bbl, and WTI crude oil pricesfell by 2.8% to $58/bbl. Oil prices got some support from rising tensions in the Middle East as the U.S. re-imposed sanctions on Iranian oiland removed waivers granted to some of Iran's largest customers. However, a sharp rise in U.S. crude inventories and signs of slowingglobal growth put pressure on energy prices, offsetting the effect of potential supply concerns.
▪ Livestock (-12.8%) was the worst performing sector in Q2 2019 while the Precious Metals sector (5.0%) was the best performer.
▪ Within the Agriculture sector, Grains rose by 6.2% while Softs fell by 2.3%.
-3.2%
-2.2%
-6.5%
-9.1%
5.0%
2.4%
-2.3%
6.2%
-12.8%
1.0%
-2.4%
6.3%
0.6%
3.0%
-2.8%
-3.8%
-1.9%
-10.5%
-15.0% -10.0% -5.0% 0.0% 5.0% 10.0%
Bloomberg Commodity Index
Ex-Energy
Energy
Industrial Metals
Prec. Metals
Agriculture
Softs
Grains
Livestock
COMMODITY RETURNS (CAD) AS OF 06/30/2019
Second Quarter 2019
Year-to-dateSource: BloombergNote: Softs and Grains are part of the wider Agriculture sector
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Capital Markets Environment
Capital Markets Environment
As of 30 June 2019
Hedge Fund Markets Overview
▪ Hedge fund performance was positive across all strategies in the second quarter.
▪ Over the quarter, Global Macro and Equity Hedge strategies were the best performers with returns of 2.7% and 1.8% respectively.Conversely, Distressed-Restructuring and Emerging Markets strategies were the worst performers, returning 1.3% and 1.2% respectively.
▪ The HFRI Fund-Weighted Composite Index and the HFRI Fund of Funds Composite Index produced returns of 1.9% and 1.7% respectively.
1.7%
2.7%
1.8%
1.2%
1.4%
1.3%
1.5%
1.9%
1.7%
6.8%
5.0%
9.5%
8.7%
5.6%
4.5%
5.4%
7.4%
6.4%
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%
Fixed Income/Convertible Arb.
Global Macro
Equity Hedge
Emerging Markets
Event-Driven
Distressed-Restructuring
Relative Value
Fund-Weighted Composite Index
Fund of Funds Composite Index
HEDGE FUND PERFORMANCE (USD)AS OF 06/30/2019
Second Quarter 2019
Year-to-dateNote: Latest 5 months of HFR data are estimated by HFR and may change in the future.
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Appendix D - Description of Market Indices and Statistics
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S&P/TSX CompositeS&P/TSX Composite Index comprises approximately 71 percent of market capitalization for Canadian-based, Toronto Stock Exchange listed companies. It iscalculated on a float market capitalization and is the broadest Canadian equity index available. The index also serves as the premier benchmark for Canadianpension funds and mutual market funds.
S&P 500Standard and Poor's 500 Composite Stock Index consists of 500 large companies in the United States chosen for market size, liquidity and industry grouprepresentation. It is a market-value weighted index, with each stock's weight in the index proportionate to its market value. For the purposes of this report, theS&P 500 Index returns are converted from U.S. dollars into Canadian dollars, and therefore reflect currency gains or losses.
FTSE Canada Universe BondThe FTSE Canada Universe Bond Index covers all marketable Canadian bonds with term to maturity of more than one year. The Index contains approximatelyone thousand marketable Canadian bonds with an average term of approximately 10.5 years and an average duration of approximately 7.5 years. The purposeof the Index is to reflect the performance of the broad "Canadian Bond Market" in a similar manner to the S&P/TSX Capped Composite Index in the CanadianEquity Market.
FTSE Canada 91 Day TBillCanada Treasury Bills represent the highest quality short-term instruments available. The Index is constructed by selling and repurchasing Government ofCanada TBills with an average term to maturity of 91 days. The 91 Day TBill Index is calculated and marked to market daily.
Description of Market Indices and Statistics
Index Definitions
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Active ReturnArithmetic difference between the portfolio return and the benchmark return over a specified time period.
Active WeightThe difference between the portfolio weight and the benchmark weight, where the weight is based on the beginning of period weights for the sector/region/assetclass for a certain periodicity (monthly or quarterly, depending upon the reporting frequency), adjusted by the relative return for the sector/region/asset class.
Annualized Value AddedA portfolio's excess return over a benchmark, annualized as it is recorded.
Asset AllocationThe value added or subtracted by under or over weighting sectors/regions/asset classes versus the benchmark weights. Asset allocation measures the impacton performance attributed only to the sector/region/asset class weighting decisions by the manager. It assumes that the manager holds the same securities ineach sector/region/asset class and in the same proportion as in the benchmark. Any differences in return can be attributed to differences in sector weightsbetween the manager's fund and the benchmark.
Batting AverageThe frequency, expressed in percentage terms, of the portfolio's return equaling or exceeding the benchmark's return.
BetaA measure of the sensitivity of a portfolio to the movements in the market. It is a measure of a portfolio's non-diversifiable or systematic risk.
CorrelationAlso called coefficient of correlation, it is a measure of the co-movements of two sets of returns. Indicates the degree in which two sets of returns move intandem.
Cumulative Added ValueThe geometrically linked excess return of a portfolio over a benchmark.
Down Market CaptureThe portfolio's average return as a percentage of the benchmark return, during periods of negative benchmark return. Lower values indicate better portfolioperformance.
Downside RiskA measure similar to standard deviation, but focuses only on the negative movements of the return series. It is calculated by taking the standard deviation of thenegative quarterly set of returns. The higher the factor, the riskier the portfolio.
Description of Market Indices and Statistics
Statistic DefinitionsAs of 30 June 2019
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Description of Market Indices and Statistics
Statistic DefinitionsAs of 30 June 2019
DurationA measure of a bond portfolio's sensitivity to movements in interest rates.
EPSEarnings Per Share
Excess ReturnArithmetic difference between the managers return and the risk-free return over a specified time period.
Excess RiskA measure of the standard deviation of a portfolio's performance relative to the risk free return.
Information RatioMeasured by dividing the active rate of return by the tracking error. The higher the Information Ratio, the more value-added contribution by the manager.
ReturnCompounded rate of return for the period.
R-SquaredThe percentage of a portfolio's performance explained by the behaviour of the appropriate benchmark. High R-Square means a higher correlation of theportfolio's performance to the appropriate benchmark.
Security SelectionThe value added or subtracted by holding securities at weights which differ from those in the benchmark, including securities not in the benchmark or a zeroweight. The security selection return assumes the manager weights for each sector/region/asset class in the portfolio are in the same proportion as in the overallbenchmark, and excess returns are due to security selection. That is, differences in returns between the manager's fund and the benchmark are attributed to thesecurities the manager has chosen.
Sharpe RatioRepresents the excess rate of return over the risk free return divided by the standard deviation of the excess return. The result is the absolute rate of return perunit of risk. The higher the value, the better the portfolio’s historical risk-adjusted performance.
Simple AlphaThe difference between the portfolio's return and the benchmark's return.
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Description of Market Indices and Statistics
Statistic DefinitionsAs of 30 June 2019
Sortino RatioRepresents the excess return over the risk-free rate divided by the downside deviation (i.e. the standard deviation of negative asset returns). Therefore, theSortino Ratio differentiates harmful volatility from general volatility. A large Sortino Ratio indicates there is a low probability of a large loss.
Standard DeviationA statistical measure of the range of a portfolio's performance, the variability of a return around its average return over a specified time period.
Tracking ErrorA measure of the standard deviation of a portfolio's performance relative to the performance of an appropriate benchmark.
Treynor RatioSimilar to Sharpe ratio, but focuses on beta rather than excess risk (standard deviation). Represents the excess rate of return over the risk free rate divided bythe beta. The result is the absolute rate of return per unit of risk. The higher the value, the better the portfolio’s historical risk-adjusted performance.
Up Market CaptureThe portfolio's average return as a percentage of the benchmark return, during periods of positive benchmark return. Higher values indicate better portfolioperformance.
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Appendix E - Fee Analysis
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Fee Analysis
Account Market Value
Percentage of
Portfolio
Estimated
Annual Fee ($)
Estimated
Annual Fee (%)
Total $66,894,966 100.0% $108,198 0.162%
FGP - Equities 0.450% of the first $50 Million $18,687,595 27.9% $84,094 0.450%0.300% of the next $25 Million0.200% of the balance
FGP - Fixed Income 0.050% of the balance $48,207,371 72.1% $24,104 0.050%& Short-Term
Manager Fees
Fee Schedule
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Appendix F - Compliance
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Compliance
E&O Insurance Fund, Compensation Fund and General Fund
Jun-19Confirm whether the following transactions have occurred in the portfolio:Use of non-taxable accounts. noUse of derivatives. noShort selling investments. noUse of margin. noDirect investment in real estate. no
Money Market
Investments
Investments have a minimum rating of R1 or better as established by The Dominion Bond Rating Service or equivalent rating by another recognized bond rating servce, at the time of purchase. yes
Investments have a maximum maturity of 1 year (364 days). yesMoney Market/Short Term Investments are only in these type of investments: yes• Federal Government T-Bills (including Federal and Provincial agencies)• Bankers Acceptance• Commercial Paper
yes
No more than 8% of the total portfolio has been invested with any single issuer other than Government of Canada securities. yesInvestments have a minimum rating of BBB for bonds and debentures or P2 for preferred stocks by The Dominion Bond Rating Service or equivalent rating by another recognized bond rating service, at the time of purchase. yes
Investments are in Canadian Currency. yesNo more than 10% of the market value of the fixed income portfolio has been invested with any one security or issuer other than holdings with Federal and Provincial Governments and their guarantees. yes
Portfolio's weighted average duration is between 1 to 5 years and in-line with the Benchmark (FTSE TMX Short Term Bond Index). yesFixed Income Investments are only in these type of investments: yes• Bonds, Debentures, Notes, Non-Convertible Preferred Stocks, Term Deposits and GICs• Bonds of Foreign Issuers denominated in Canadian Dollars• NHA-insured Mortgage-Backed Securities or Collateralized Mortgage-Backed Securities• Marketable Private Placement of BondsConfirm whether the fixed income portion of the portfolio's asset mix has been within the ranges defined below for the previous month:Federal and Federally Guaranteed Bonds: Min 26% Max 100% yesProcincials, Provincially Guarantees and Municipals: Min 0% Max 38% yesTotal Corporate Issues: Min 0% Max 56% yesTotal BBB Issues with Corporate issues: Min 0% Max 18% yesCash or Money Market: Min 0% Max 5% yesStocks are listed on one of the major stock exchanges.No more than 10% of market value of the total portfolio is invested with a single issuer. yesConfirm whether the portfolio asset mix has been within the ranges defined below for the previous month:
Money Market: Min 0%, Max 15% yesCanadian Fixed Income: Min 45%, Max 80% yesTotal Fixed Income: Min 60%, Max 80% yesCanadian Equities: Min 20%, Max 40% yes
GuidelinesCategory
General
Fixed Income
Investments
Asset Mix (based on
market value)
Equity Securities
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Appendix G - Disclosure
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Aon Hewitt Inc. reconciles the rates of return with each investment manager quarterly. Aon Hewitt Inc. calculates returns from the custodian/trustee statementswhile the managers use different data sources. Occasionally discrepancies occur because of differences in computational procedures, security prices, "tradedate" versus "settlement date" accounting, etc. We monitor these discrepancies closely and find that they generally do not tend to persist over time. However, if amaterial discrepancy arises or persists, we will bring the matter to your attention after discussion with your money manager.
This report may contain slight discrepancies due to rounding in some of the calculations. All data presented is in Canadian dollars unless otherwise stated.
© 2019 Aon Hewitt Inc. (“Aon”)
This report does not constitute accounting, legal or tax advice and should not be relied upon for any such business decisions. This report contains information thatis proprietary to Aon and may not be distributed, reproduced, copied, or amended without Aon’s prior written consent.
Statement of DisclosureDisclosure
As of 30 June 2019
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Audit & Finance Committee – Report to Convocation
TAB 3.7
FOR INFORMATION
Investment Compliance Reports
62. Investment Compliance Statements for the General Fund, Compensation Fund and
Errors & Omissions Insurance Fund as at June 30, 2019 are on the following pages.
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TAB 3.7.1
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Law Society of OntarioCompensation Fund
Manager: Foyston, Gordon & Payne Inc.
Compliance Report(Period ending June 30, 2019)
1. Asset Mix: Min. Mid-Point Max.Compliance*
(Y/N)
Cash & Short Term 0% 0% 15% Y
Bonds 45% 70% 80% Y
Total Fixed Income 60% 70% 80% Y
Canadian Equity 20% 30% 40% Y
Minimum bond rating “BBB” or better by the Dominion Bond Rating Service or equivalent rating byanother recognized bond rating service.
Y
Each bond portfolio may be invested within the following parameters:
Minimum holding in Federal and Federally Guaranteed BondsFTSE TMX Short Term Bond IndexBenchmark Weight minus 20%
Y
Provincials, Provincially Guarantees and MunicipalsFTSE TMX Short Term Bond IndexBenchmark Weight plus or minus 20%
Y
Maximum Total Corporate IssuesFTSE TMX Short Term Bond IndexBenchmark Weight plus 20%
Y
Maximum Total Corporate BBB IssuesFTSE TMX Short Term Bond IndexBenchmark Weight plus 10%
Y
Not more than 10% of the total market value of the bond portfolio will be invested in securities issued by a foreignissuer, or Canadian issuer.
Y
Bond portfolio duration 1 to 5 years. Y
The Market value of any one common equity issuer cannot represent more than 10% of the market value of thetotal portfolio, or that equity’s weight in the S&P/TSX Composite Index, whichever is greater.
Y
Note: In mid-June 2014 Law Society Compensation Fund moved into the FGP Short Term Bond Fund from thesegregated Short Term Bonds.
Investment policy dated February 23, 2017.
*If policy not complied with, comment on specifics.
July 23, 2019Date: Robert Laughton, Vice President –
Institutional Client Services
Audit & Finance Committee – October 10, 2019
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Law Society of OntarioGeneral Fund
Manager: Foyston, Gordon & Payne Inc.
Compliance Report(Period ending June 30, 2019)
1. Asset Mix: Min. Mid-Point Max.Compliance*
(Y/N)
Cash & Short Term 0% 0% 15% Y
Bonds 45% 70% 80% Y
Total Fixed Income 60% 70% 80% Y
Canadian Equity 20% 30% 40% Y
Minimum bond rating “BBB” or better by the Dominion Bond Rating Service or equivalent rating byanother recognized bond rating service.
Y
Minimum holding in Federal and Federally Guaranteed BondsFTSE TMX Short Term Bond IndexBenchmark Weight minus 20%
Y
Provincials, Provincially Guarantees and MunicipalsFTSE TMX Short Term Bond IndexBenchmark Weight plus or minus20%
Y
Maximum Total Corporate IssuesFTSE TMX Short Term Bond IndexBenchmark Weight plus 20%
Y
Maximum Total Corporate BBB IssuesFTSE TMX Short Term Bond IndexBenchmark Weight plus 10%
Y
Not more than 10% of the total market value of the bond portfolio will be invested in securities issued by aforeign issuer, or Canadian issuer.
Y
Bond portfolio duration 1 to 5 years. Y
The Market value of any one common equity issuer cannot represent more than 10% of the market value ofthe total portfolio, or that equity’s weight in the S&P/TSX Composite Index, whichever is greater.
Y
Note: In mid-June 2014 Law Society General Fund moved into the FGP Short Term Bond Fund from the segregatedShort Term Bonds.
Investment policy dated February 23, 2017.
*If policy not complied with, comment on specifics.
July 23, 2019Date: Robert Laughton, Vice President –
Institutional Client Services
Audit & Finance Committee – October 10, 2019
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Law Society of Ontario – E&O Insurance Fund
Foyston, Gordon & Payne Inc.
Compliance Report
July 2019
Ms. Brenda Albuquerque-Boutilier Executive Director, Finance & Chief Financial Officer Law Society of Ontario 130 Queen Street West Osgood Hall, 1First Floor Toronto, Ontario M5H 2N6
Dear Brenda:
Re: Manager Compliance Reporting
For the Law Society Errors and Omissions Insurance Fund, we wish to confirm that the portfolio being managed by Foyston, Gordon & Payne Inc. was in compliance with the Fund’s Investment Policy Statement dated February 23, 2017, for the quarter ending June 30, 2019.
Yours truly,
Robert Laughton Vice President – Institutional Client Services
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