2024 Third Quarter Report

The Westaim Corporation

Management's Discussion and Analysis

Three and nine months ended September 30, 2024

(Currency amounts in millions of United States dollars except per share data, unless otherwise indicated)

TABLE OF CONTENTS

1. THE COMPANY
2. OVERVIEW OF PERFORMANCE
3. INVESTMENTS
4. ANALYSIS OF FINANCIAL RESULTS
5. ANALYSIS OF FINANCIAL POSITION
6. OUTLOOK
7. LIQUIDITY AND CAPITAL RESOURCES
8. RELATED PARTY TRANSACTIONS
9. MATERIAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
10. MATERIAL ACCOUNTING POLICIES AND RECENTLY ADOPTED AND PENDING ACCOUNTING PRONOUNCEMENTS
11. QUARTERLY FINANCIAL INFORMATION
12. RISKS
13. ADDITIONAL ARENA FINCOS INVESTMENT SCHEDULES
14. NON-GAAPMEASURES
15. CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

The "Company" in this Management's Discussion and Analysis ("MD&A") refers to The Westaim Corporation ("Westaim") on a consolidated basis. This MD&A, which has been approved by the Board of Directors of Westaim, should be read in conjunction with the Company's unaudited interim consolidated financial statements including notes for the three and nine months ended September 30, 2024 and 2023 as set out on pages 31 to 54 of this quarterly report ("Financial Statements"). Financial data in this MD&A has been derived from the Financial Statements and is intended to enable the reader to assess the Company's results of operations for the three and nine months ended September 30, 2024 and financial condition as at September 30, 2024. The Company reports its consolidated Financial Statements using generally accepted accounting principles ("GAAP") and accounting policies consistent with International Financial Reporting Standards ("IFRS"). All currency amounts are in United States dollars ("US$"), the functional and presentation currency of the Company, unless otherwise indicated. Canadian dollars are referenced as C$. The following commentary is current as of November 12, 2024. Additional information relating to the Company is available on SEDAR+ at www.sedarplus.ca. Certain comparative figures have been reclassified to conform to the presentation of the current year, and certain totals, subtotals and percentages may not reconcile due to rounding.

IFRS for Investment Entities

The Company qualifies as an investment entity under IFRS and uses fair value as the key measure to monitor and evaluate its primary investments. The Company reports its financial results in accordance with IFRS applicable to investment entities.

Functional and Presentation Currency

The US$ is the functional and presentation currency of the Company. International Accounting Standard 21 "The Effects of Changes in Foreign Exchange Rates" describes functional currency as the currency of the primary economic environment in which an entity operates. A significant majority of the Company's revenues and costs are earned and incurred in US$, respectively.

Non-GAAP Measures

The Company uses both IFRS and non-generally accepted accounting principles ("non-GAAP") measures to assess performance. The Company cautions readers about non-GAAP measures that do not have a standardized meaning under IFRS and are unlikely to be comparable to similar measures used by other companies. Management believes these measures allow for a more complete understanding of the underlying business. These measures are used to monitor the Company's results and should not be viewed as a substitute for those determined in accordance with IFRS. Reconciliations of such measures to the most comparable IFRS figures are contained in Section 14, Non-GAAPMeasures of this MD&A.

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The Westaim Corporation

Management's Discussion and Analysis

Three and nine months ended September 30, 2024

(Currency amounts in millions of United States dollars except per share data, unless otherwise indicated)

Cautionary Statement Regarding the Valuation of Investments in Private Entities

In the absence of an active market for its investments in private entities, fair values for these investments are determined by management using the appropriate valuation methodologies after considering the history and nature of the business, operating results and financial conditions, outlook and prospects, general economic, industry and market conditions, capital market and transaction market conditions, contractual rights relating to the investment, public market comparables, net asset value, discounted cash flow analysis, comparable recent arm's length transactions, private market transaction multiples and, where applicable, other pertinent considerations. The process of valuing investments for which no active market exists is inevitably based on inherent uncertainties and the resulting values may differ from values that would have been used had an active market existed. The amounts at which the Company's investments in private entities could be disposed of may differ from the fair value assigned and the differences could be material.

Cautionary Statement Regarding Financial Information of the Arena FINCOs and Arena

Supplementary financial measures concerning the Arena FINCOs (as hereinafter defined) and Arena (as hereinafter defined) (the "Arena Supplementary Financial Measures") contained in this MD&A are unaudited and have been derived from the audited consolidated financial statements of the Arena FINCOs and Arena for the year ended December 31, 2023 and the unaudited consolidated financial statements of Arena FINCOs and Arena for the three and nine months ended September 30, 2024 and 2023, which have been prepared in accordance with either IFRS or US GAAP. Such statements are the responsibility of the management of the Arena FINCOs and Arena. The Arena Supplementary Financial Measures, including any Arena FINCOs and Arena non-GAAP measures contained therein, may not be reconciled to IFRS and so may not be comparable to the financial information of issuers that present their financial information in accordance with IFRS.

The Arena Supplementary Financial Measures should be read in conjunction with the Company's historical financial statements including the notes thereto and the related MD&A as well as the Company's other public filings.

The Arena Supplementary Financial Measures have been primarily provided by the management of the Arena FINCOs and Arena. Although Westaim has no knowledge that would indicate that any of the Arena Supplementary Financial Measures contained herein are untrue or otherwise misleading, neither Westaim nor any of its directors or officers assumes any responsibility for the accuracy or completeness of such information, or for any failure by the Arena FINCOs and Arena to disclose to Westaim events or facts which may have occurred or which may affect the significance or accuracy of any such financial information but which are unknown to Westaim.

Westaim disclaims and excludes all liability (to the extent permitted by law), for losses, claims, damages, demands, costs and expenses of whatever nature arising in any way out of or in connection with the Arena Supplementary Financial Measures, its accuracy, completeness or by reason of reliance by any person on any of it.

Forward-Looking Information

This MD&A may contain forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from these forward-looking statements as a result of various factors, including those discussed hereinafter, and in the Company's Annual Information Form for its fiscal year ended December 31, 2023, which is available on SEDAR+ at www.sedarplus.ca, as same may be modified or superseded by a subsequently filed Annual Information Form. Please refer to Section 15, Cautionary Note RegardingForward-LookingInformation of this MD&A.

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The Westaim Corporation

Management's Discussion and Analysis

Three and nine months ended September 30, 2024

(Currency amounts in millions of United States dollars except per share data, unless otherwise indicated)

1. THE COMPANY
   The Westaim Corporation (TSXV: WED) is a Canadian investment company specializing in providing long-term capital to businesses operating primarily within the global financial services industry. The Company invests, directly and indirectly, through acquisitions, joint ventures and other arrangements, with the objective of providing its shareholders with capital appreciation and real wealth preservation. Westaim's strategy is to pursue investment opportunities with a focus towards the global financial services industry and grow shareholder value over the long term.
   The Company's principal investments consist of the Arena FINCOs and Arena. See discussion in Section 3, Investments of this MD&A for additional information on these investments. See Note 17, Subsequent Events in the Notes to the Financial Statements with respect to the proposed investments in connection with the transactions to be completed with CC Capital Partners, LLC (and its affiliates) (the "Proposed Transactions").
2. OVERVIEW OF PERFORMANCE

1. Westaim's common shares ("Common Shares") are listed and posted for trading on the TSX Venture Exchange ("TSXV") under the symbol "WED".
2. See Section 14,Non-GAAPMeasures of this MD&A.
3. Period end exchange rates: 1.35265 at September 30, 2024 and 1.35535 at September 30, 2023.

Three months ended September 30, 2024 and 2023

The Company reported a (loss) profit and comprehensive (loss) income of $(1.1) and $23.0 for the three months ended September 30, 2024 and 2023, respectively.

Revenue and net change in value of investments was a net increase of $11.4 for the three months ended September 30, 2024 (2023 - $24.8), and consisted of interest income of $4.6 (2023 - $1.0), dividend income paid to the Company from the Arena FINCOs of $1.9 (2023 - $nil), advisory fees of $0.1 (2023 - $0.1), an increase of $9.5 in the value of the investment in Skyward Specialty Insurance Group, Inc. ("Skyward Specialty") (2023 - $20.7), a decrease of $3.0 in the value of the investments in the Arena FINCOs, which was a decrease of $1.1 before dividends paid of $1.9 (2023

• increase of $0.9), the Company's share of Arena's comprehensive loss of $1.7 (2023 - share of Arena's comprehensive income of $2.1) and a decrease in the value of the Company's investment in Arena Special Opportunities Fund, LP ("ASOF LP") of a nominal amount (2023 - increase of a nominal amount).

Net expenses for the three months ended September 30, 2024 of $12.5 (2023 - $1.8) consisted of salaries and benefits of $8.0 (2023 - $1.2), general, administrative and other expenses of $0.2 (2023 - $0.2), professional fees of $5.0 (2023 - $0.5), share-based compensation expense recovery $0.9 (2023 - expense of $0.1), a foreign exchange loss of $0.2 (2023 - gain of $0.3), and interest on preferred securities of $nil (2023 - $0.1).

The Company reported income taxes expense for the three months ended September 30, 2024 of a nominal amount (2023 - recovery of a nominal amount).

Nine months ended September 30, 2024 and 2023

The Company reported a profit and comprehensive income of $5.1 and $148.8 for the nine months ended September 30, 2024 and 2023, respectively.

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The Westaim Corporation

Management's Discussion and Analysis

Three and nine months ended September 30, 2024

(Currency amounts in millions of United States dollars except per share data, unless otherwise indicated)

1. OVERVIEW OF PERFORMANCE (continued)
   Revenue and net change in value of investments was a net increase of $37.5 for the nine months ended September 30, 2024 (2023 - $159.5), and consisted of interest income of $10.2 (2023 - $2.1), dividend income paid to the Company from the Arena FINCOs of $1.9 (2023 - $4.4), advisory fees of $0.3 (2023 - $0.3), an increase of $19.8 in the value of the investment in Skyward Specialty (2023 - $158.4), an increase of $3.2 in the value of the investments in the Arena FINCOs, which was an increase of $5.1 before dividends paid of $1.9 (2023 - decrease of $9.5, which was a decrease of $5.1 before dividends paid of $4.4), the Company's share of Arena's comprehensive income of $2.0 (2023 - $3.9) and an increase in the value of the Company's investment in ASOF LP of $0.1 (2023 - decrease of $0.1).
   Net expenses for the nine months ended September 30, 2024 of $32.5 (2023 - $10.5) consisted of salaries and benefits of $23.6 (2023 - $3.8), general, administrative and other expenses of $0.7 (2023 - $0.7), professional fees of $6.3 (2023 - $1.0), share-based compensation expense $2.1 (2023 - $3.8), a foreign exchange gain of $0.2 (2023 - loss of $0.3), interest on preferred securities of $nil (2023 - $1.0) and an unrealized gain resulting from a change in the fair value of the vested Warrants (as hereinafter defined) of $nil (2023 - $0.1)
   The Company reported income taxes expense recovery for the nine months ended September 30, 2024 of $0.1 (2023 - expense of $0.2).
2. INVESTMENTS
   The Company's principal investments consist of its investments in Skyward Specialty, the Arena FINCOs and Arena.

For additional information on the Company's corporate structure, see the Company's Annual Information Form for its fiscal year ended December 31, 2023, which is available on SEDAR+ at www.sedarplus.ca, as same may be modified or superseded by a subsequently filed Annual Information Form.

Skyward Specialty

The Company had an ownership interest in Skyward Specialty (NASDAQ: SKWD), a U.S. based publicly traded diversified specialty property & casualty insurance holding company that underwrites select property, casualty, surety, and accident and health insurance coverages through its insurance and reinsurance subsidiaries. The Company's investment in Skyward Specialty was recorded under investments in the Company's interim consolidated financial statements. For additional information on Skyward Specialty, see Electronic Data Gathering, Analysis, and Retrieval ("EDGAR") filings at www.sec.gov/edgar/search-and-access.

Arena FINCOs

The Arena FINCOs are private companies which include specialty finance companies that primarily purchase fundamentals-based, asset-oriented credit and other investments for their own account and a company that primarily facilitates the origination of fundamentals-based, asset-oriented credit investments for its own account and/or possible future sale to specialty finance companies, clients of Arena Investors and/or other third parties. Fundamentals-based, asset-oriented credit investments refer to loans or credit arrangements which are generally secured by assets. Fundamentals- based, asset-oriented lenders and investors manage their risk and exposure by carefully assessing the value of the assets securing the loan or investment, receiving periodic and frequent reports on collateral value and the status of those assets, and tracking the financial performance of borrowers. The Company's investments in the Arena FINCOs are recorded under investments in the Company's interim consolidated financial statements. Arena FINCOs refers to WOH, AFHC (as each is defined hereinafter) and each of their respective subsidiaries.

Arena

Arena Investors Group Holdings, LLC ("AIGH" or "Arena"), is a private company, through its wholly-owned subsidiaries and subsidiaries which Arena has a controlling interest. Arena consists of two main business lines, Arena Investors and Arena Institutional Services ("AIS"). Arena Investors operates as a global investment manager offering third-party clients, including the Arena FINCOs, access to fundamentals-based, credit and asset- oriented investments that aim to deliver above-market returns with low volatility. Arena Investors provides investment services primarily to institutional third-party clients consisting of, but not limited to, insurance companies, endowments, foundations, pensions, sovereign funds and other pooled investment vehicles or private investment funds. AIS leverages certain intellectual property to offer third-party services to other entities to assist in the management of their investments.

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The Westaim Corporation

Management's Discussion and Analysis

Three and nine months ended September 30, 2024

(Currency amounts in millions of United States dollars except per share data, unless otherwise indicated)

3. INVESTMENTS (continued)

The Company's investment in Arena is accounted for using the equity method and consists of investments in corporations or limited partnerships where the Company has significant influence and is recorded under investments in the Company's interim consolidated financial statements.

The following chart illustrates a simplified organizational structure of Arena and the Arena FINCOs as of September 30, 2024:

The Westaim Corporation

("Westaim")

1. Legal equity ownership and profit percentage are 51%. Ownership and profit percentage are subject to change over time pursuant to the earn-in rights granted to BP LLC described under "Investment in Arena".
2. On October 4, 2024, AFHC merged into WCA. See Note 17, Subsequent Events in the Notes to the Financial Statements.

For a detailed discussion of the business of Arena and the Arena FINCOs, see the Company's Annual Information Form for its fiscal year ended December 31, 2023, which is available on SEDAR+ at www.sedarplus.ca,as same may be modified or superseded by a subsequently filed Annual Information Form.

Accounting for the Company's Investments

The Company qualifies as an investment entity under IFRS and uses fair value as the key measure to monitor and evaluate its primary investments. Accordingly, the Company's investments in Skyward Specialty, the Arena FINCOs and ASOF LP are accounted for at fair value through profit or loss ("FVTPL"). The Company's investment in Arena is accounted for using the equity method since the Company does not exercise control but exercises significant influence over Arena. For a detailed description of the accounting and valuation of the Company's investments, see Note 4, Investments in the Notes to the Financial Statements.

Dividend income from investments in private entities are reported under "Revenue" in the interim consolidated statements of (loss) profit and comprehensive (loss) income. Changes in the fair value of the Company's investments in Skyward Specialty, the Arena FINCOs and ASOF LP and the Company's share of Arena's comprehensive (loss) income are reported under "Net results of investments" in the interim consolidated statements of (loss) profit and comprehensive (loss) income.

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The Westaim Corporation

Management's Discussion and Analysis

Three and nine months ended September 30, 2024

(Currency amounts in millions of United States dollars except per share data, unless otherwise indicated)

3. INVESTMENTS (continued)

A.INVESTMENT INSKYWARDSPECIALTY

The Company's investment in Skyward Specialty consists of the following:

Three months ended September 30, 2024

1 The Company's share of Skyward Specialty common shares held by the Westaim HIIG Limited Partnership (the "HIIG Partnership").

On January 18, 2023, Skyward Specialty closed its initial public offering (the "IPO"). In connection with the IPO, the Skyward Specialty common shares became listed on the Nasdaq Global Select Market under the ticker symbol "SKWD". Also in connection with the IPO, the Skyward Specialty convertible preferred shares automatically converted into Skyward Specialty common shares, including those owned by the Company which converted into 7,285,359 Skyward Specialty common shares.

On June 12, 2023, Westaim sold 3,987,500 Skyward Specialty common shares at a price to the public of $23.00 per Skyward Specialty common share through a Skyward Specialty secondary offering. The proceeds to Westaim from the 3,987,500 Skyward Specialty common shares it sold, less underwriting commissions of 4.75%, were $87.4.

On July 31, 2023, the HIIG Partnership expired pursuant to the terms of HIIG Partnership's limited partnership agreement, originally made as of March 12, 2014 and amended and restated as of June 27, 2014 and as further amended on November 10, 2022. Accordingly, on July 31, 2023, the HIIG Partnership was dissolved and distributed its net assets to its limited partners, resulting in the Company (in its capacity as a limited partner) receiving 7,281,780 Skyward Specialty common shares valued at $172.5 ($23.69 per Skyward Specialty common share on July 31, 2023) and $0.4 in cash on the dissolution date.

On November 20, 2023, Westaim sold 3,600,000 Skyward Specialty common shares at a price to the public of $30.50 per Skyward Specialty common share through a Skyward Specialty secondary offering. The proceeds to Westaim from the 3,600,000 Skyward Specialty common shares it sold, less underwriting commissions of 4.5%, were $104.9.

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The Westaim Corporation

Management's Discussion and Analysis

Three and nine months ended September 30, 2024

(Currency amounts in millions of United States dollars except per share data, unless otherwise indicated)

3. INVESTMENTS (continued)

On May 9, 2024, Westaim sold 5,060,000 Skyward Specialty common shares at a price to the public of $36.50 per Skyward Specialty common share through a Skyward Specialty secondary offering. The proceeds to Westaim from the 5,060,000 Skyward Specialty common shares it sold, less underwriting commissions of 4.0%, were $177.3.

In September, 2024, Westaim sold its remaining 1,919,639 Skyward Specialty common shares for proceeds, net of commissions, of $79.0 at an average price of $41.16 per Skyward Specialty common share.

Fair Value

At September 30, 2024, the Company no longer had an investment in Skyward Specialty (December 31, 2023 - $236.5 which consisted of 6,979,639 Skyward Specialty common shares at $33.88 per Skyward Specialty common share). See Note 4, Investment in Skyward Specialty in the Notes to the Financial Statements.

The Company recorded an increase in the value of its investment in Skyward Specialty of $9.5 and $19.8 in the three and nine months ended September 30, 2024, respectively, and an increase in the value on its investment in Skyward Specialty of $20.7 and $158.4 in the three and nine months ended September 30, 2023, respectively.

B.INVESTMENT IN THEARENAFINCOS

The following table shows a continuity of the carrying value of the Company's investments in the Arena FINCOs included in the Company's investments in private entities.

The Arena FINCOs invest in debt, equity, hard assets and real estate owned investments, with an emphasis on debt instruments comprised of multiple investment strategies including, but not limited to, corporate private investments, real estate private investments, commercial & industrial assets, structured finance investments, consumer assets, and other securities. The Arena FINCOs do not have a target range of investment; the size of the loans and/or other credit investments acquired depends on, among other things, any diversity requirements which may be imposed by any lender as well as their own investment policy. In the absence of such requirements, the Arena FINCOs are not subject to concentration limitations but the management of the Arena FINCOs will use their best judgment as to what is prudent in the circumstances.

The Arena FINCOs seek to capitalize on opportunities in both private as well as public investments subject to approved investment policies. These investment strategies include:

Corporate Private Investments

Senior private corporate debt, bank debt, including, without limitation, secondary market bank debt, distressed debt such as senior secured bank debt before or during a Chapter 11 bankruptcy filing, corporate bonds, including, without limitation, bonds in liquidation or out-of-court exchange offers and trade claims of distressed companies in anticipation of a recapitalization, bridge loans/transition financing, debtor-in-possession ("DIP") financings, junior secured loans, junior capital to facilitate restructurings, equity co-investments or warrants alongside corporate loans.

Real Estate Private Investments

Real property, secured or unsecured mezzanine financings, DIP loans, "A-tranche" loans (senior secured loans) and "B-tranche" loans (junior secured loans) for real estate properties requiring near-term liquidity, structured letters of credit, real estate loans secured by office buildings, retail centres, hotels, land, single family homes, multi-family apartments, condominium towers, hospitality providers, health care service providers, and corporate campuses, leases and lease residuals.

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