W.P. Stewart & Co., Ltd. Reports Net Income For First Quarter 2006

Hamilton, Bermuda: April 27 -- W.P. Stewart & Co., Ltd. today reported net income of $12.7 million, or $0.28 per share (diluted) and $0.28 per share (basic), for the first quarter ended 31 March 2006.  This compares with net income in the first quarter of the prior year of $12.8 million or $0.28 per share (diluted) and $0.28 per share (basic).

Net income for the quarter ended 31 March 2006 of $12.7 million, adjusted for the add-back of $1.8 million, representing non-cash expenses of depreciation, amortization and other non-cash charges on a tax-effected basis ("cash earnings"), was $14.5 million, or $0.32 per share (diluted).  In the same quarter of the prior year, cash earnings were $15.3 million (net income of $12.8 million adjusted for the add-back of $2.5 million representing non-cash expenses of depreciation, amortization and other non-cash charges on a tax-effected basis), or $0.33 per share (diluted).

For the first quarter of 2006 there were 45,941,269 common shares outstanding on a weighted average diluted basis compared to 45,861,264 common shares outstanding for the first quarter of 2005 on the same weighted average diluted basis.

Performance: Performance in the W.P. Stewart & Co., Ltd. U.S. Equity Composite (the "Composite") for the first quarter of 2006 was +1.5% pre-fee and +1.2% post-fee. This compares with +4.2% for the S&P 500.

For the twelve month period ending 31 March 2006, performance in the Composite was +14%, pre-fee and +12.8%, post-fee. This compares with +11.7% for the S&P 500.

In each of the one, three, five and ten-year periods ended 31 March 2006, performance of the W.P. Stewart U.S. Equity Composite has exceeded the performance of the S&P 500 on a pre-fee basis and for the one, five and ten year periods on a post-fee basis.  

Assets Under Management: (AUM) at quarter-end were approximately $9.4 billion, compared with approximately $9.5 billion at 31 December 2005, and approximately $8.9 billion at 31 March 2005.

Total net flows of AUM for the quarter ended 31 March 2006 were approximately -$237 million, compared with total net flows of approximately -$232 million and approximately -$43 million in the fourth quarter and in the first quarter of 2005, respectively.

In the quarter, net cash flows of existing accounts were approximately -$31 million, compared with approximately +$17 million and approximately +$31 million in the fourth quarter and in the first quarter of 2005, respectively.

Net new flows (net contributions to our publicly- available funds and flows from new accounts minus closed accounts) were approximately -$206 million for the quarter compared to approximately -$249 million and approximately -$74 million in the fourth quarter and in the first quarter of 2005, respectively. 

Look-Through Earning Power: W.P. Stewart & Co., Ltd. concentrates its investments in large, generally less cyclical, growing businesses. Throughout most of the Company's 30-year history, the growth in earning power behind clients' portfolios, as measured by earnings per share, has ranged from approximately 10% to 20%, annually.

Currently the "look-through" earnings power behind our clients' portfolios remains solidly positive with portfolio earnings per share growth on a trailing four quarter basis having advanced at the high end of the historical range. The Company's research analysts expect "look-through" portfolio earnings growth to be within the 12-15% range over the next few years. 

Revenues and Profitability: Revenues were $36.2 million for the quarter ended 31 March 2006, compared to $34.8 million for the same quarter 2005.

The average gross management fee was 1.14%, annualized, for the quarter ended 31 March 2006, compared to 1.17%, annualized, for the same quarter of the prior year. Excluding performance fee based accounts, the average gross management fee was 1.27% for the quarter ended 31 March 2006, compared to 1.28%, annualized, for the same quarter of the prior year.

Total operating expenses increased approximately $600,000 to $21.2 million, for the first quarter 2006, from $20.6 million in the same quarter of the prior year. 

During 2004, 2005 and through the first quarter of 2006, the Company issued restricted shares to various employees. The non-cash compensation expense related to these restricted share grants for the first quarter of 2006, which is included in "employee compensation and benefits", was approximately $280,000 after adjusting for a reversal of approximately $500,000 related to the forfeiture of previously issued restricted shares. We expect non-cash compensation expense related to these restricted share grants to be at least $6.7 million for 2006.

Pre-tax income of $15.0 million was 41.4% of gross revenues for the quarter ended 31 March 2006 compared to $14.2 million or 40.9% of gross revenues in the comparable quarter of the prior year.

The Company's provision for taxes for the quarter ended 31 March 2006 was $2.3 million versus $1.4 million in the comparable quarter of the prior year.  The tax rate was 15.6% of income before taxes for the quarter ended 31 March 2006 compared to 10% in the quarter ended 31 March 2005. The increase in our tax rate relates to changes in the allocation of our portfolio management activities among various jurisdictions reflecting recent portfolio manager departures and other management changes. The proportion of our various activities based in high-tax jurisdictions has increased somewhat relative to the activity based in lower-tax jurisdictions. We are currently taking steps to restore our historical geographical mix.

Other Events: The Company paid a dividend of $0.30 per common share on 27 January 2006 to shareholders of record as of 13 January 2006, and will pay a dividend of $0.30 per common share on 28 April 2006 to shareholders of record as of 13 April 2006. 

Conference Call: In conjunction with this first quarter 2006 earnings release, W.P. Stewart & Co., Ltd. will host a conference call on Thursday, 27 April 2006.  The conference call will commence promptly at 9:15am (EDT). Those who are interested in participating in the teleconference should dial 1-800-370-0898 (within the United States) or +973-409-9260 (outside the United States).  The conference ID is "W.P. Stewart". To listen to the live broadcast of the conference over the Internet, simply visit our website at www.wpstewart.com and click on the Investor Relations tab for a link to the webcast.The teleconference will be available for replay from Thursday, 27 April 2006 at 12:00 noon (EDT) through Friday, 28 April 2006 at 5:00 p.m. (EDT). To access the replay, please dial 1-877-519-4471 (within the United States) or +973-341-3080 (outside the United States). The PIN number for accessing this replay is 7280245.

You will be able to access a replay of the Internet broadcast through Thursday, 4 May 2006, on the Company's website at http://www.wpstewart.com. The Company will respond to questions submitted by e-mail, following the conference.