Annual Information Form

THEWESTAIMCORPORATION

ANNUALINFORMATIONFORM

in respect of the year ended December 31, 2022

March 30,2023

TABLE OF CONTENTS

INTERPRETATION ..................................................................................................................................................... 1

FORWARD-LOOKING STATEMENTS ..................................................................................................................... 1

CORPORATE STRUCTURE ....................................................................................................................................... 2

Name and Incorporation ........................................................................................................................................... 2

Intercorporate Relationships ..................................................................................................................................... 4

BUSINESS OF THE COMPANY ................................................................................................................................. 5

General Development of the Business ...................................................................................................................... 5

Summary Description of the Business ...................................................................................................................... 7

CURRENT INVESTMENTS ...................................................................................................................................... 10

Skyward Specialty .................................................................................................................................................. 10

Arena ...................................................................................................................................................................... 11

RISK FACTORS ......................................................................................................................................................... 18

Risks Relating to Westaim ...................................................................................................................................... 18

Risks Relating to Skyward Specialty ...................................................................................................................... 20

Risks Relating to Arena .......................................................................................................................................... 39

Risks Relating to the Arena FINCOs ...................................................................................................................... 46

DESCRIPTION OF CAPITAL STRUCTURE ........................................................................................................... 49

Common Shares ...................................................................................................................................................... 49

Class A Preferred Shares ........................................................................................................................................ 50

Class B Preferred Shares ......................................................................................................................................... 51

Fairfax Private Placement ....................................................................................................................................... 51

MARKET FOR SECURITIES .................................................................................................................................... 51

Trading Price and Volume ...................................................................................................................................... 51

DIVIDENDS AND DISTRIBUTIONS ....................................................................................................................... 52

DIRECTORS AND EXECUTIVE OFFICERS ........................................................................................................... 53

Name, Residency and Principal Occupation ........................................................................................................... 53

Shareholdings of Directors and Executive Officers ................................................................................................ 53

Cease Trade Orders, Bankruptcies, Penalties or Sanctions ..................................................................................... 54

Conflicts of Interest ................................................................................................................................................ 55

AUDIT COMMITTEE ................................................................................................................................................ 55

The Audit Committee's Charter .............................................................................................................................. 55

Composition of the Audit Committee ..................................................................................................................... 55

Relevant Education and Experience ....................................................................................................................... 55

Pre-Approval of Audit and Non-Audit Services by Independent Auditors ............................................................ 56

Audit Committee Oversight .................................................................................................................................... 56

Audit Fees ............................................................................................................................................................... 56

Exemption ............................................................................................................................................................... 57

PROMOTERS ............................................................................................................................................................. 57

LEGAL PROCEEDINGS AND REGULATORY ACTIONS .................................................................................... 57

Legal Proceedings ................................................................................................................................................... 57

Regulatory Actions ................................................................................................................................................. 57

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ........................................... 57

TRANSFER AGENT AND REGISTRAR .................................................................................................................. 57

MATERIAL CONTRACTS ........................................................................................................................................ 58

INTERESTS OF EXPERTS ........................................................................................................................................ 58

ADDITIONAL INFORMATION ................................................................................................................................ 58

APPENDIX "A" - AUDIT COMMITTEE CHARTER ........................................................................................... A -1

INTERPRETATION

As used in this Annual Information Form (the "AIF"), unless the context indicates or requires otherwise, the term(s): (a) "Company" or "Westaim" refer to The Westaim Corporation (including, where applicable, its predecessor entities) and its subsidiaries; (b) "Skyward Specialty" refers to Skyward Specialty Insurance Group, Inc. and its subsidiaries; (c) "Arena Investors" refers to Arena Investors Group Holdings, LLC ("AIGH") and its subsidiaries (including, but not limited to Arena Investors, LP ("AI"), Arena Management Co., LLC ("AMC"), Arena Financial Services, LLC, Arena Investors UK Limited, Arena Investment Management (Singapore) Pte. Ltd., Arena Business Solutions, LLC, Quaestor Advisors, LLC and Quaestor Advisors India Private Limited); (d) "Arena FINCOs" refers collectively to Westaim Origination Holdings, Inc. ("WOH") and Arena Finance Holdings Co., LLC, ("AFHC") and each of their respective subsidiaries; and (e) "Arena" refers collectively to Arena Investors and the Arena FINCOs. Unless otherwise stated, the information contained in this AIF is as of March 30, 2023.

All dollar amounts herein are expressed in United States dollars unless otherwise indicated. Unless otherwise indicated, financial information in this AIF regarding the Company has been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board. Skyward Specialty and Arena maintain their accounts in United States dollars. The annual consolidated financial statements of Skyward Specialty are prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") and the annual financial statements of Arena are prepared in accordance with either IFRS or U.S. GAAP.

FORWARD-LOOKING STATEMENTS

This AIF contains certain "forward-looking statements" and "forward-looking information" which reflect the current expectations of management regarding the Company's future growth, results of operations, performance and business prospects and opportunities. In particular, the words "strategy", "may", "will", "continue", "developed", "objective", "potential", "exploring", "could", "expect", "expected", "expects", "tends", "indicates", and words and expressions of similar import, are intended to identify forward-looking statements. Such forward-looking statements include but are not limited to statements concerning: strategies; alternatives and objectives to maximize value for shareholders; expectations and assumptions relating to the Company's business plan; expectations and assumptions relating to the business and operations of Skyward Specialty and Arena; expectations regarding the Company's assets and liabilities; the Company's ability to retain key employees; management's belief that its estimates for determining the valuation of the Company's assets and liabilities are appropriate; and the effect of changes to interpretations of tax legislation on income tax provisions in future periods;. These statements are based on current expectations that are subject to risks, uncertainties and assumptions and Westaim can give no assurance that these expectations are correct.

The Company's actual results or financial position could differ materially from those anticipated by these forward-looking statements for various reasons generally beyond the Company's control, including, without limitation, the following factors: risks inherent in acquisitions generally; the Company's cash flow; liquidity and financing risks; the Company's ability to raise additional capital; regulatory requirements may delay or deter a change in control of the Company; the potential treatment of the Company as a passive foreign investment company ("PFIC") for U.S. federal income tax purposes; market turmoil, risk of volatile markets and market disruption risk; exposure to epidemics and/or pandemics; Company employee error or misconduct; cybersecurity risks; Skyward Specialty's ability to accurately assess underwriting risk; the effect of intense competition and/or industry consolidation on Skyward Specialty's business; Skyward Specialty's reliance on brokers and third parties to sell its products to clients; Skyward Specialty's ability to alleviate risk through reinsurance; Skyward Specialty's reserves may prove to be inadequate; Skyward Specialty's ability to maintain its financial strength and issuer credit ratings; unexpected changes in the interpretation of Skyward Specialty's coverage or claims; Skyward Specialty receiving reimbursement for claims by reinsurers on a timely basis; Skyward Specialty's ability to pay claims accurately and timely; severe weather conditions, including the effects of climate change, catastrophes, pandemics as well as man-made events; plan administrators; Skyward Specialty's reliance on renewal of existing insurance contracts; the effect of environmental, social and governance ("ESG") matters on Skyward Specialty's business; the effect of any changes in accounting practices and future pronouncements on Skyward Specialty's business; adverse economic factors; the cyclical nature of the insurance industry on Skyward Specialty's business; the performance of Skyward Specialty's investment portfolio; Skyward Specialty meeting liquidity requirements; the effect of additional legislation or market regulation enacted by the U.S. federal government on Skyward Specialty's business; Skyward Specialty's ability to utilize net operating losscarryforwards and certain other tax attributes; Skyward Specialty's ability to receive dividends from its subsidiaries; the effect of change of control requirements under Texas insurance laws and regulations on Skyward Specialty's ability to successfully pursue its acquisition strategy; the effect of Skyward Specialty's debt obligations and other financial obligations on its business; the loss by Skyward Specialty of key personnel or an inability to attract and retain qualified personnel; Skyward Specialty's reliance on information technology and telecommunications systems; Skyward Specialty's ability to manage growth effectively; the effect of litigation on Skyward Specialty; Skyward Specialty's reliance on vendor relationships; Skyward Specialty's reliance on its intellectual property rights and Skyward Specialty not infringing the intellectual property rights of others; increased costs of Skyward Specialty being a public company; material weaknesses identified in Skyward Specialty's internal control over financial reporting; Skyward Specialty's reduced reporting and disclosure obligations as an emerging growth company; the volatility or decline in Skyward Specialty's stock price and operating results; substantial future sales of shares of Skyward Specialty's common stock (the "Skyward Shares") or the perception thereof; changes in Skyward Specialty's underwriting guidelines or strategy without stockholder approval; anti-takeover provisions in Skyward Specialty's organizational documents; the Court of Chancery of the State of Delaware has the exclusive forum for substantially all Skyward Specialty disputes; the condition of the global financial markets and economic and geopolitical conditions affecting Arena's business; the variable nature of Arena Investors' revenues, results of operations and cash flows; the effect of rapid changes and growth in assets under management ("AUM") on Arena Investors; Arena Investors' ability to mitigate operational and due diligence risks; the subjective nature of the valuation of the Arena FINCOs' investments; Arena Investors' ability to mitigate regulatory and other legal risks; Arena Investors' ability to find appropriate investment opportunities; Arena Investors' ability to successfully navigate and secure compliance with regulations applicable to it and its business; Arena Investors' ability to mitigate private litigation risks; Arena Investors' ability to manage conflicts of interest; the effects of a decrease in revenues as a result of significant redemptions in AUM on Arena Investors' business; the investment performance of Arena Investors'; Arena Investors investment in illiquid investments; Arena Investors' ability to retain qualified management staff; Arena Investors' ability to mitigate the risk of employee misconduct and employee error; the effect of epidemics, pandemics, outbreaks of disease and public health issues on Arena's business; effect of market conditions on the Arena FINCOs; Arena Investors' ability to implement effective risk management systems; dependence by the Arena FINCOs on the creditworthiness of borrowers; the ability of the Arena FINCOs to mitigate the risk of default by and bankruptcy of a borrower; the ability of the Arena FINCOs to adequately obtain, perfect and secure loans; the ability of the Arena FINCOs to limit the need for enforcement or liquidation procedures; the ability of the Arena FINCOs to protect against fraud; the Arena FINCOs' ability to realize profits; the Arena FINCOs' investment in illiquid investments; loan concentration; changes to the regulation of the asset-based lending industry; United States tax law implications relating to the conduct of a U.S. trade or business; Arena FINCOs' use of leverage; and other risk factors set forth herein or in the Company's annual report or other public filings.

Westaim disclaims any intention or obligation to revise forward-looking statements whether as a result of new information, future developments, or otherwise, except as required by law. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. Although Westaim has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause unanticipated actions, events or results. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. The reader is cautioned not to place undue reliance on forward-looking statements.

CORPORATE STRUCTURE

Name and Incorporation

Westaim was incorporated under theBusiness Corporations Act(Alberta) (the "ABCA") by Articles of Incorporation dated May 7, 1996 (the "Articles"). The Articles were amended effective June 26, 1996 to remove the private company restrictions on the transfer of securities, to create preferred share classes designated as Class A preferred shares and Class B preferred shares and to increase the maximum number of directors to fifteen. Restated Articles of Incorporation were issued under the ABCA on April 17, 2000 and the Articles were further amended on May 24, 2000 to permit meetings of shareholders to be held in certain specified cities outside of Alberta, or in any other city in Canada or the United States and to allow the board of directors of the Company (the "Board") to appoint additional directors between annual meetings, subject to certain limitations. The Articles were amended again on February 8,2010, February 26, 2010 and September 11, 2012 in connection with the creation of the Non-Voting Shares (as defined herein) and the removal of the conversion restrictions attaching thereto. On October 1, 2013, the Articles were further amended to effect a 50:1 share consolidation of the Company's common shares (the "Common Shares").

Westaim's registered office is located at 1500, 850 - 2 Street SW, Calgary, Alberta T2P 0R8 and its head office is located at 70 York Street, Suite 1700, Toronto, Ontario M5J 1S9.

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The Westaim Corporation published this content on 30 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 March 2023 20:19:57 UTC.