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82507 TARION AR04 V27.QXD5/5/0512:17 AMPage 3From the President & Chief Executive OfficerGregory W. GeeThe Corporation had a remarkable year of progress and achievement in 2004. Our financial and operating results for theyear were very solid, and we accomplished each of the objectives established for the year under our strategic plan knownas “Mission Excellence”.With respect to our financial results, Revenue for the year increased by 13% from 47.8 million to 54.0 million, due in partto a gain of 6.9 million realized through the sale of certain investments. Expenses declined by 13% from 42.0 millionto 36.4 million, largely due to a reduction in claims incurred. Our claims paid, however, rose significantly by 69% from 7.4 million to 12.5 million, largely due to three major condominium projects. The net cost of these claims was reducedsignificantly by security held from the builder organizations. The Corporation continues to have a strong Balance Sheetwith total assets increasing during the year by 12% from 218.7 million to 245.7 million. Total Surplus grew by 28%from 63.3 million to 80.8 million, of which 50 million represents Appropriated Surplus set aside to voluntarily meetregulatory standards.These favourable financial results are a tribute to the continuing efforts of our Board and management to deliver longterm financial strength and stability. They also reflect strong industry sales in Ontario which have continued unabatedat record levels for each of the past six years. In 2004, 74,845 new homes were enrolled with Tarion representing a modest3.8% increase over the prior year, however, these enrolment numbers were the second highest in our 28-year history.Against this background of record operating activity, the Corporation also moved ahead significantly in terms of implementingits three-year strategic plan to restructure, rebuild and renew the infrastructure of the organization. Some of the key initiativesinclude the development of a new centralized Operations Group with offices in Toronto to manage all of our Field operationsacross the Province using the latest technology. This allowed us to close four of our six regional Offices to reduce operating costs,and many of our field employees were moved into challenging new roles. A new walk-in Customer Centre was developed in aretail setting to provide improved access for our customers. We also re-branded the Corporation during the year with a new nameto symbolize our transformation into a modern, customer-focused business organization.I would like to thank each of our employees for their commitment and dedication to the organization during a significantyear of change. Many employees were affected by the restructuring of our Field operations, and a number were movedinto new roles. I congratulate our management team and employees for their enthusiasm and perseverance throughoutthese changes.I would also like to thank our Board of Directors for their insight, guidance and support during the year. Our Board hasplayed a key role in our restructuring. I also want to welcome our new Chairman, Bob Wade, and look forward to workingwith him in his new role.Looking ahead, our Corporation will continue to evolve as a modern business organization that meets the objectives of ourstakeholders, while serving the needs of our customers – both new home buyers and builders.Gregory W. GeePresident & Chief Executive OfficerTarion Warranty Corporation / Annual Report 20043

82507 TARION AR04 V27.QXD5/5/0512:17 AMPage 4Tarion StakeholdersFor many people, buying a home is the single largest investment they will ever make.Tarion protects new home buyers by backing the statutory new home warrantythat is provided by their builder and by making sure that purchasers understandtheir warranty rights and responsibilities.“We are very happy with our newhome. Tarion helped us workwith our builder to make this thehome we’ve always dreamed offor our family.”Jagjit and Kamlesh Samra with son JasonNew homeowners and Tarion customers4Tarion Warranty Corporation / Annual Report 2004

82507 TARION AR04 V27.QXD5/5/0512:17 AMPage 5Tarion Warranty Corporation / Annual Report 20045

82507 TARION AR04 V27.QXD65/5/0512:17 AMPage 6Tarion Warranty Corporation / Annual Report 2004

82507 TARION AR04 V27.QXD5/5/0512:17 AMPage 7Tarion StakeholdersUnder the Ontario New Home Warranties Plan Act, home builders must meetspecific legal requirements and customer service standards in order to buildand sell new homes in Ontario. Tarion helps to define these requirements andworks with builders to ensure they understand how to comply with them.“Changes introduced by Tarion,such as the Construction PerformanceGuidelines that explain the coveragefor many warranty items, havehelped us improve the relationshipswe have with our customers.”Robert GreenbergExecutive Vice President, Minto Construction Limited, OttawaHome builder and Tarion customerTarion Warranty Corporation / Annual Report 20047

82507 TARION AR04 V27.QXD5/5/0512:18 AMPage 8Tarion StakeholdersTarion’s employees are committed to providing responsive, professional service to our twokey customer groups: consumers and builders. Seven underlying business values provideemployees with common principles and a framework for making decisions and for workingwith our customers.“Understanding the needs of those whocall our Contact Centre is the first part ofmy job. Responding to those needs, eitherpersonally or through another expert atTarion, is the second part of what I do.It is very fulfilling when you are able toprovide someone with the answer to animportant question or help them solve aproblem. To me, that is what customerservice at Tarion is all about.”Kiwana QuintyneCustomer Service Representative, Tarion Warranty Corporation8Tarion Warranty Corporation / Annual Report 2004

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82507 TARION AR04 V27.QXD5/5/0512:18 AMPage 10Key Strategic Initiatives in 2004For the last five years, Ontario’s housing industry has sustained remarkable momentum. In 2004, thenumber of homes under warranty reached a record 433,659 by year-end, and the number of builderlicenses issued reached 5,394. Against this background of growth, Tarion has continued to pursue itsthree year strategic plan to modernize its operations and improve the service it provides to customers.In 2004, this involved a major restructuring of all operations activity in the province, together withthe establishment of a new Operations Group and Customer Centre, the introduction of additionalnew technology, and the launch of a new brand that reflects the organization’s focus on its customers.In 2004, Tarion implementeda comprehensive restructuringof our Field operations using newtechnology in order to reducecosts and improve productivity.This restructuring complementsother changes that were madeover the last two years, includingthe introduction of new customerservice standards for home builders,a modern Contact Centre anduser-friendly educational toolsfor consumers.10Tarion Warranty Corporation / Annual Report 2004Tarion President and CEO Greg Gee welcomesguests to the opening of the Corporation’snew Customer Centre.

82507 TARION AR04 V27.QXD5/5/0512:18 AMPage 11Centralized Operations The restructuring of the Corporation in 2004 began with a re-alignment of allcustomer-facing departments and staff. This involved the establishment of a centralized Operations Groupwhich includes Tarion’s Licensing & Underwriting Department, Enforcement Department and Contact Centre.In addition, two new departments were created: a Claims Department was established to manage allhomeowner claims; and a Builder Relations Department was created to develop and enhance relationshipswith builders. Tarion’s former Regional Offices located in Thunder Bay, Sudbury, Brampton, and Newmarketwere closed and most of the staff in these locations were re-assigned to new roles.The development of a central Operations Group enabled by new technology means that all of our Field operationscan be co-ordinated from one office, which provides quicker access to information for Field Representatives,and allows customer-facing departments to be more integrated when serving our customers.New Claims Department A Claims Department was established to help us manage homeowner andcondominium common element claims throughout the province more professionally and consistently. Thisnew department includes staff based with our Central Operations Group, as well as a large number of home-basedField Claims Representatives who are enabled through technology. The functions and processes of the newClaims Department will be modeled on the claims handling of the property and casualty industry. Staff areorganized in three teams: home-based Field Representatives who conduct inspections with homeowners andbuilders to assess warrantability; Claim Service Representatives, based in our Customer Centre who serve asthe main point of contact for both consumers and builders; and a Technical Unit which will set service standards,and conduct research and internal audits.This new structure has allowed Tarion to decrease the number of Field staff while improving productivity andbetter managing workflow. Benefits for consumers and builders include focused and consistent managementof warranty issues and single points of contact when home inspections are required.New Builder Relations Department A new Builder Relations Department was developed to improvethe level of service provided to registered builders. Staffed by individuals with many years of building industryexperience, this department works with builders across the province to address their quality and service issues,solicit feedback on Tarion’s service delivery, and evaluate the technical and business knowledge of new builders.This Field group will also serve as our representatives to the home building industry on matters of policyand process, construction methods, and customer service. The establishment of a department dedicated toworking with builders will help us identify and proactively address industry-wide issues for home buildersand emerging trends.Tarion Warranty Corporation / Annual Report 200411

82507 TARION AR04 V27.QXD5/5/0512:18 AMPage 12Key Strategic Initiatives in 2004Corporate Re-brandingAs part of our transformation into a modern, customer-focusedorganization, Tarion introduced a new corporate name and logo in2004 to help ensure that our evolution would be broadly recognized.New Identity In early April, we launched our new brand at an industry luncheon in Toronto which wasattended by almost 300 builders and government officials.Our new corporate name is Tarion Warranty Corporation, however, we market the organization under thebrand name Tarion and the tagline: “Protecting Ontario’s New Home Buyers”, which always appear together.The name Tarion was selected for its bold, progressive feel. The logo, which is represented by three pillars ofequal size, is meant to denote the three partners in the warranty process: consumers and builders, each ofwhom is treated equally and impartially, and by Tarion which mediates disputes between them. The logo alsorepresents the three elements of our mandate, which are buyer and builder education, builder licensing andwarranty enforcement.Looking for a new home? Look for our new name TARION is the new name for the Ontario New Home Warranty Program –the company that has been protecting new home buyers for 27 years. Ournew name is just one of the changes we’ve made to make your new homeA NEW HOMEOWNER’S GUIDEwarranty protection and service better than ever. Find out more by calling1-800-668-0124 or visit:RegistrationPackageGetting Readyfor thePre-DeliveryInspectionWarrantyCoveragefor NewHomes inOntario12Tarion Warranty Corporation / Annual Report 2004w w w .t ar i o n . c o mOur new brand is now consistentlyrepresented in all of our corporatematerials, making it easy for ourcustomers to identify informationprovided by Tarion.

82507 TARION AR04 V27.QXD5/5/0512:18 AMPage 13Name Reflects Progress The launch of a new name and logo represents a further significant steptoward completion of our three-year strategic plan known as Mission Excellence, and follows a number ofother improvements introduced over the previous two years. These include: a standard information packagewhich builders must provide to homeowners in advance of closing, a user-friendly website that receives over20,000 visitors per month, a Contact Centre that now handles more than 1,000 telephone and email inquirieseach day, and statutory timeframes within which warranty issues must be resolved by a builder.Research indicated that our former name, “Ontario New Home Warranty Program,” was thought to be outdated,bureaucratic, long and difficult to remember, and the acronym “ONHWP” contained a number of inaccurateor unfortunate associations.Our website provides consumersand builders with instant accessto information about Tarion.In addition, our former website address, www.newhome.on.ca, did not link to our name, which made it difficultfor customers to find us on the Internet. Although the Corporation had made good progress in makingimprovements to benefit builders and consumers, it was clear that a new brand name and an updated lookwere needed to ensure these changes would be widely recognized.Marketing Support We have incorporated the look of our new brand into our advertising and brochures,and created a special logo for registered builders to use when marketing their services. We also updated the lookand feel of our website and our new website address, www.tarion.com, is now featured prominently in all of ouradvertising along with our toll free telephone number 1-877-9TARION. Based on the feedback received, theTarion name has been well received by both consumers and builders throughout Ontario.Tarion Warranty Corporation / Annual Report 200413

82507 TARION AR04 V27.QXD5/6/0510:08 AMPage 14Key Strategic Initiatives in 2004New FacilitiesIn 2004, we opened a new Customer Centre in a retail mallsetting in the Greater Toronto Area to serve consumersand builders.Tarion Launches Retail Presence The Customer Centre features an inviting storefront design thatunderscores our commitment to being a modern, approachable and service-oriented organization. New interiorand exterior signage offer excellent visibility for our new brand, and a central location at a subway stop ensuresconvenient access to visitors who come by public transit or by car.The Toronto-based Operations Group is located in the Customer Centre, making it much easier for them toprovide information and assistance to builders and consumers who visit Tarion’s offices in person. Builderscan come in and ask questions about how to enrol a new home or register with Tarion, or they can inquireabout a particular registration or claim with the Tarion employees who are handling the matter.Knowledgeable staff are also on hand to speak with consumers in several languages about warranty coveragein general, or about their own individual situations. An interactive kiosk in the reception area allows all visitorsto get information from the Tarion website.Behind the storefront of the Customer Centre lies Tarion’s newly centralized Operations Group: our state-ofthe-art Call Centre, the new Claims and Builder Relations Departments, and the Licensing & UnderwritingGuests mingle at the receptionmarking the opening of Tarion’snew Customer Centre.14Tarion Warranty Corporation / Annual Report 2004

82507 TARION AR04 V27.QXD5/5/0512:18 AMPage 15In 2004, we began a pilot project offeringfree, educational seminars to helpconsumers learn about what is involvedin buying a new home and what theycan expect from their warranty coverage.Department. Having all of these customer-facing staff located together is helping Tarion to manage claimsmore efficiently and to identify industry trends and issues as they emerge.Home Buyer Education SeminarsThe Customer Centre will also help us fulfill our mandate toeducate consumers and builders about their warranty rights and responsibilities. In 2004, we began offering freeeducational seminars for consumers in the Customer Centre’s new meeting facilities. The goal of these seminars,which are held two evenings each month, is to improve consumer understanding about the home-buyingprocess and to help manage expectations about warranty coverage. Two types of seminars are being offered:“Buying a New Home” features a panel of industry experts who guide new home buyers through the purchasingprocess; and “Understanding Warranty Coverage” explains what is involved in the warranty claim process.Over time, these seminars may be offered in additional languages, and in other locations across the province.New Corporate Office In conjunction with the opening of the Customer Centre, we relocated all of thestaff in our Corporate Office, which includes Finance, Law, Corporate Affairs, Information Systems, ProjectManagement and Human Resources as well as the office of the President & CEO into a new facility thatreflects the openness and accessibility of our new culture. This new space is 25% smaller than our previousoffice, but offers modern, ergonomically-designed workstations, ample meeting space to allow for collaboration,and easy access to both staff and training facilities.Tarion Warranty Corporation / Annual Report 200415

82507 TARION AR04 V27.QXD5/5/0512:18 AMPage 16Key Strategic Initiatives in 2004TechnologyThe continued implementation of the PeopleSoft Application Suiteprovides the Corporation with a robust series of fully integratedsoftware modules to enable the automation of our business processes.A new state-of-the-art computer equipment facility featuring anInternet-based telephone system links all of our staff across the province.Applications In 2004, we made significant progress inour business process automation through the continuedimplementation of the PeopleSoft Application Suite.The integration of the PeopleSoft customer relationshipmanagement (CRM) software with IBM’s electronicdocument management software has proven to be essentialfor the operation of our Customer Service Standard,implemented in October 2003. This new set of policiesrequires Tarion staff to efficiently and accurately processthousands of forms and documents every day. We nowuse software to store documents in electronic files, toautomatically generate required letters and notices, tocalculate deadlines and timeframes, and to scheduleinspections with homeowners and builders. In addition,electronic scanning capability introduced last year, hasbeen improved and expanded to enable scanning andstorage of non-standard documents such as Agreements ofPurchase and Sale, and to allow the electronic annotationof documents.Infrastructure Tarion’s new computer facility features a number of improvements, such as enhanced localarea network bandwidth and functionality, which will allow us to use technology to further improve the service weprovide to our customers. Changes were also made to the wide area network serving our Eastern and Western Officesin order to improve reliability and accessibility.16Tarion Warranty Corporation / Annual Report 2004

82507 TARION AR04 V27.QXD5/5/0512:19 AMPage 17One of the most significant improvementswas the introduction of a voice-over Internetprotocol (IP) telephone system which enablesthe use of the Internet for the transmissionof audio signals. This new system allows theconvergence of voice and data which hasmany beneficial applications for Tarion’sLarge overhead screens installed in Tarion’s newContact Centre help operators to monitor callflow volumes, and provide key information suchcustomers. For example, we will soon beginas the number of callers waiting for service andto use this system in conjunction with ourthe length of time they have been holding.CRM software, which will give us the abilityto route consumers or builders who contactTarion regarding a specific issue directly tothe individual handling the matter, simply byasking the customer to enter a file number ontheir telephone keypad.Builder Portal Important advancements were also made through the development of an Internet portalthat will enable builders to view their Tarion files online. During the third quarter of 2004, progress was madeon the technical development of this new tool. In addition, an operational prototype of the portal was createdfor pilot testing purposes. The Builder Portal will be an important new customer service tool that will allowbuilders to have access to the same file information as we use at Tarion. This will help to ensure transparencyin our information flow to builders, and will assist them in resolving homeowner issues quickly. The portal isplanned to be introduced to the building industry in 2005.Tarion Warranty Corporation / Annual Report 200417

82507 TARION AR04 V27.QXD5/5/0512:19 AMPage 18Review of OperationsClaimsThe Claims Department is responsible for managing homeownerand condominium common element claims throughout theprovince, which include matters related to construction, contract,and warranty issues, as well as deposits and delayed closings.Our Claims Department consists of a team of 78 staff who are centrally managed from our Operations Group,many of whom are “on the road” each day operating from home-based offices or from Tarion’s Eastern Officelocated in Ottawa, or our Western Office located in London, Ontario.Tarion becomes involved in a claim when an issue related to the construction of a new home arises betweena homeowner and their builder, or when certain types of contractual matters arise. In cases where there is anissue regarding construction, the homeowner or the builder may request a Conciliation Inspection in which aTarion Claims Representative will visit the home to determine whether the item is covered under the statutoryw

Toll Free: 1-877-9TARION Fax: 1-877-664-9710 Email: [email protected] www.tarion.com Tarion Warranty Corporation Annual Report 2004 Tarion . *On April 5,2004 the Corporation changed its name from the Ontario New Home Warranty Program to Tarion Warranty Corporation. Corporate Information Customer Centre 5150 Yonge Street Concourse Level Toronto .