IGM Financial Inc.
Consolidated Financial Position

IGM Financial's on-balance sheet assets totaled $6.47 billion at December 31, 2004, compared to $6.29 billion at December 31, 2003.

Securities

The Company's holdings of securities were $126.3 million at December 31, 2004, an increase of $20.1 million or 18.9% from 2003. The fair value of the Company's portfolio at December 31, 2004 exceeded cost by $127.8 million compared with $137.8 million at December 31, 2003.

IGM Financial continually strives to ensure that its portfolio holdings are of the highest quality. To manage the market and credit risk associated with the securities portfolio, a Senior Management Investment Committee monitors the Company's portfolio and approves all purchases.

This Committee regularly reviews the portfolio to identify holdings where there has been an other than temporary decline in value. In these circumstances, the carrying amount of the security is written down to recognize the loss.

Loans

Loans, including mortgages and personal loans, decreased by $31.4 million to $496.7 million at December 31, 2004 and represent 7.7% of total assets compared to 8.4% in 2003. This decrease is comprised of $17.1 million in mortgages and personal loans related to the Company's intermediary activities and a decrease of $14.3 million in residential loans related to the Company's mortgage banking operations.

Residential mortgage loans, sourced with the assistance of Investors Group Consultants, are primarily designated for sale to third parties on a fully serviced basis through Investors Group's mortgage banking operations. Mortgage loans sourced through mortgage brokers and personal loans sourced through the MRS Group relate to M.R.S. Trust's intermediary activities.

M.R.S. Trust also sells mortgages and personal loans to third parties on a fully serviced basis through its securitization activities.

At December 31, 2004, impaired loans totalled $0.4 million compared to $2.2 million at December 31, 2003, and represented 0.07% of the total loan portfolio, compared with 0.40% at December 31, 2003. The general allowance for credit losses was $17.8 million at December 31, 2004 compared to $21.5 million in 2003. The Company monitors its credit risk management policies continuously to evaluate their effectiveness. The Company also periodically reviews the credit quality of the loan portfolios and the adequacy of the related general allowance. In 2004, the Company reduced its general allowance by $3.7 million to reflect changes in the size and composition of the portfolios, improving default trends, and continued improvement in underwriting and default management policies and procedures. These policies and practices have resulted in the effective control of impaired loans.

Management continued its conservative policy of maintaining adequate allowances to absorb all known and foreseeable credit-related losses in the mortgage, loan, and real estate portfolios. The allowance for credit losses exceeded impaired mortgages and loans by $17.4 million as at December 31, 2004, compared to $19.3 million at December 31, 2003.

As at December 31, 2004:

• The portfolios were 95% residential and 61% insured.
• The portfolios were in excess of 80% owner occupied.
• Mortgages in the portfolio were geographically diverse.
• Strict credit risk management policies continue to be applied.

The characteristics of the mortgage portfolios at December 31, 2004 described above are consistent with prior years.