Profits at Bermuda-based W.P. Stewart & Co. Ltd. have dropped by over 25 percent in the first quarter of 2002 compared to a year earlier, with the company blaming the reduction in commission income.

The Hamilton-based asset management company reported net income of $17.3 million, or $0.37 per share (diluted) and $0.39 per share (basic), for the first quarter ended 31 March 2002.

This compares with net income in the first quarter of the prior year of $23.3 million or $0.49 per share (diluted) and $0.53 per share (basic).

In a statement the company said: "A primary factor contributing to the lower earnings was the reduced level of commission income in comparison with annualised commission income in 2001."

In the first quarter of 2002 the company said there were 47,133,614 common shares outstanding on a weighted average diluted basis compared to 47,315,118 common shares outstanding for the first quarter of 2001 on the same weighted average diluted basis.

Cash earnings for the quarter ended 31 March 2002, which exclude non-cash expenses such as depreciation and amortisation, on a tax-effected basis, were $19.1 million, or $0.41 per share (diluted), compared with $24.9 million, or $0.53 per share (diluted) in the same quarter of the prior year.

The company said that performance in the W.P. Stewart US Equity Composite for the first quarter of 2002 was substantially better than the S&P 500, at 4.7 percent pre-fee and 4.4 percent post-fee, compared with 0.3 percent for the broad market average.

The company also pointed to W.P. Stewart's five-year performance record, which it said for the period ended 31 March 2002 averaged 14.1 percent pre-fee (12.9 percent post-fee), compounded annually, compared to an average of 10.2 percent for the S&P 500 in the period.

Assets under management at quarter-end were approximately $9.5 billion, compared with approximately $9.2 billion at 31 December 2001, and approximately $9.3 billion at 31 March 2001.

The company also said that W.P. Stewart concentrates its investments in large, generally less cyclical, growing businesses. Throughout most of the Company's 27-year history, the growth in earning power behind clients' portfolios has ranged from approximately 11 percent to 22 percent annually.

It added: "Currently, portfolio earnings growth remains solidly positive and significantly better than that of the S&P Industrials. The company's research analysts expect portfolio earnings growth to be within the historical range over the next few years."

Revenues were $37.3 million for the quarter ended 31 March 2002, down 23 percent from $48.5 million for the same quarter 2001. The average gross management fee was 1.23 percent for the quarter ended 31 March 2002, compared to 1.25 percent in the same quarter of the prior year.

The company added that this decline in the average gross fee reflected a slight change in account mix.

The company paid a dividend of $0.30 per common share on 31 January 2002 to shareholders of record as of 18 January 2002, and will pay a dividend of $0.30 per common share on 30 April 2002 to shareholders of record as of 19 April 2002.