Assante Corp. reported net earnings of $5.7 million in the second quarter of 2002, compared to a net loss of $3.1 million during the same period last year.

The $8.8 million increase was due to several factors, including continuing strong net sales and the adoption of the new accounting standard relating to goodwill recommended by the Canadian Institute of Chartered Accountants.

In the second quarter, assets under management in Canada reached $5.6 billion, up $1.2 billion over the same period last year and up $186 million over the previous quarter. The increase during the second quarter was comprised of net sales of $388 million, offset by a market decline of 4% or $202 million.

Assets under management in the United States was $1.3 billion, unchanged from the last quarter, and up $600 million over the second quarter last year. Overall, assets under administration decreased by $1.3 billion to $21.8 billion due primarily to a general market decline.

Revenue was $95.7 million, up $7.6 million from $88.1 million for the same period last year, due primarily to strong net sales generating significant growth in investment management revenue. Earnings before interest, income tax, depreciation and amortization and restructuring costs were $22 million, an increase of $4.6 million over the second quarter of 2001. This includes $1.1 million from the disposition of investments.

In a conference call followin the Q2 announcement, Assante president and CEO, Marty Weinberg, pointed out that the firm’s net sales in the first six months of this year have already surpassed its full year total for 2001 — $767 million compared to $748 million last year. Net sales more than doubled in the second quarter from $158 million to $388 million.

Weinberg admitted that the firm cannot tell how much of this activity is new money, and how much is converted from third-party assets already under administration with Assante reps. He noted that about 75% of its assets under administration remains in third-party products, so new money is obviously flowing in.

During the call, the firm did reveal that it has consolidated its Canadian asset management and distribution arms, eliminating some management and administrative costs in the process. Its advisor sales force sits at about 1,200.

Weinberg also hinted at new products and services under development with sub-advisors, but he had nothing to announce at this point. He said that the firm is focused on developing new products with a few key partners, and he noted that it is in a good negotiating position for these sub-advisory relationships.

Weinberg said that its sub-advisory costs are in line with, or better than, the industry average, enabling it to make margins on both its internally managed and sub-advised relationships.