The Westaim Corporation – Q4 2021 Investor Presentation

April 13, 2022

Disclaimer

Safe Harbour Statement

This document and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part either directly or indirectly without the prior written consent of each of The Westaim Corporation("Westaim"or the"Corporation"or the"Company"),Skyward Specialty Insurance Group, Inc.("Skyward Specialty"), Arena FINCOs (as defined in the MD&A) and Arena Investors (as defined in the MD&A). The terms"Arena"or"Arena Investors"refer collectively to Arena Investors Group Holdings, LLC("AIGH")and its subsidiary entities.

This document is not and under no circumstances is it to be construed as, an advertisement or a solicitation for any investment or any investment product with respect to Westaim or any of the entities described herein. The information set forth herein does not purport to be complete and no obligation to update or otherwise revise such information is being assumed unless required by law. Where any opinion is expressed in this presentation, it is based on the assumptions and limitations mentioned herein and is an expression of present opinion only. No warranties or representations can be made as to the origin, validity, accuracy, completeness, currency or reliability of the information. In addition, certain of the information contained herein is preliminary and is subject to change. Unless otherwise stated, the information contained herein is current as of the date of this presentation. There is no guarantee that any of the goals, targets or objectives described herein will be achieved. This document is not intended to provide specific investment, financial, legal, accounting and/or tax advice.

This document contains certain historical results and performance data including, without limitation, relating to Skyward Specialty, Arena FINCOs and Arena Investors. Such historical results and performance data have been prepared and provided solely by the relevant party and have not been independently verified or audited. The historical results and performance data have been included in this document for illustrative purposes only. The historical results and performance data are in no way indicative of any future results, performance or returns by any of Westaim, Skyward Specialty, Arena FINCOs and Arena Investors.

Certain statements in this presentation are"forward-lookingstatements". Any statements that express or involve discussions with respect to predictions, target yields and returns, internal rates of return, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always using words or phrases such as"expects", "doesnotexpect", "is expected", "seeks", "endeavours", "anticipates", "doesnotanticipate", "plans", "estimates", "believes", "doesnotbelieve"or"intends", "doesnotintend"or stating that certain actions, events or results may, could, would, might or will occur or be taken, or achieved) are not statements of historical fact and may be"forward-lookingstatements". In particular, butwithout limiting the foregoing, this presentation contains forward-looking statements pertaining to: Skyward Specialty's growth strategy and potential expansion opportunities; Opportunities available to Arena FINCOs and Arena Investors; ArenaInvestors'pipeline; and opportunities for building value at Westaim. Forward-looking statements are based on expectations, estimates and projections as well as other relevant factors at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. These include, but are not limited to, the risk factors discussed inWestaim'sAnnual Information Form for its fiscal year ended December 31, 2021. Except as required by law, Westaim does not have any obligation to advise any person if it becomes aware of any inaccuracy in or omission from any forward-looking statement or to update such forward-looking statement.

Select financial information concerning the Arena FINCOs and Arena Investors contained in this MD&A is unaudited and has been derived from the annual audited financial statements of the Arena FINCOs and Arena Investors for the years ended December 31, 2021 and 2020 and the unaudited consolidated financial statements of Arena FINCOs and Arena Investors for the three months ended December 30, 2021 and 2020, which have been prepared in accordance with either IFRS or US GAAP.

The information contained herein is based on publicly available information, internally developed data and other sources. Although Westaim believes such information to be accurate and reliable, it has not independently verified any of the data from third party sources cited or used. Westaim and each entity described herein disclaims and excludes all liability (to the extent permitted by law) for all losses, claims, damages, demands, costs and expenses of whatever nature arising in any way out of or in connection with the information, its accuracy, completeness or by reason of reliance by any person on it.

All amounts herein are in United States million dollars unless otherwise indicated. 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.

2

Non-GAAP Measures

Westaim

Westaim reports its consolidated financial statements using generally accepted accounting principles("GAAP")and accounting policies consistent with International Financial Reporting Standards("IFRS"). Westaim uses both IFRS and non-generally accepted accounting principles("non-GAAP")measures to assess performance. Westaim 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.

Book Value Per Share("BVPS"),adjusted profit and comprehensive income, and adjusted earnings per share-diluted, excluding unusual items are non-GAAP measures-see section 15 ofWestaim'sMD&A for the quarter and year ended December 31, 2021 for a discussion of these non-GAAP measures including a reconciliation toWestaim'sfinancial results determined under IFRS.

Skyward Specialty

Skyward Specialty uses United States generally accepted accounting principles("US GAAP")and non-GAAP measures to assess performance. Please refer to section 3.A.i ofWestaim'sMD&A for the quarter and year ended December 31, 2021 for SkywardSpecialty'snon-GAAP measures.

The adjustedstockholders'equity of Skyward Specialty as at December 31, 2021 reflects the Skyward Specialtystockholders'equity obtained from the audited financial statements of Skyward Specialty as at and for the quarter and year ended December 31, 2021 prepared in accordance with US GAAP, adjusted for a reclassification of a stock notes receivable from employees relating to their purchase of Skyward Specialty common and convertible preferred shares.

Arena FINCOs and Arena Investors

Arena FINCOs and Arena Investors uses both US GAAP, IFRS and non-GAAP measures to assess performance.

Net Retuon the Arena FINCOs investment portfolios is the aggregate of investment income, net of gains (losses) on investments less interest expense, management, asset servicing and incentive fees, and other operating expenses of the Arena FINCOs divided by average carryingvalues for the Arena FINCOs, for the period.

Gross Retuon the Arena FINCOs investment portfolios is the aggregate of investment income, net of gains (losses) on investments less interest expense divided by average carrying values for the Arena FINCOs, for the period.

Realized IRR: Realized calculations are presented net of investment level expenses and gross of fund level fees (e.g. management and incentive fees), which can impact returns significantly.

Current IRR reflects all investment activity, i.e, prior actual cash flows and future projected cash flows (which are discounted as of the reporting date), from the inception of each applicable investment through December 31, 2021. The current IRR may not be representative of the realized IRR upon exit of each investment, which may increase or decrease.

Underwritten IRRs: Investment-level gross underwritten IRR represents the internal rate of retuprior to or at the time of making the initial investment as reflected in and supported by loan agreements, including, but not limited to, note purchase agreements and origination agreements. The underwritten IRR is one of many metrics considered by Arena prior to investment and is not typically updated after the initial funding date. The underwritten IRR may be presented as a single percentage or a range. Such gross IRRs are estimated and do not take into account any entity level management fees, incentive allocation and/or any other associated fees, all of which may significantly reduce the net retureceived attributable to any investment. These underwritten IRRs are not a proxy for investment performance for any strategy or fund. The underwritten IRRs disclosed herein are being presented for the purpose of providing insight into the investment objectives of Arena, detailing anticipated risk and reward characteristics in order to facilitate comparisons with other investments and for establishing a benchmark for future evaluation ofArena'sstrategy. The IRRs are also being presented because financially sophisticated investors may find this information useful in determining whereArena'sstrategies may fit within their investment portfolios. The IRRs included in this presentation are not intended, and must not be regarded, as a representation, warranty or prediction that any Arena vehicles will achieve any particular retuwith respect to any particular investment opportunity or for a particular time period, or that Arena and its investors will not incur losses. In evaluating these IRRs, it should be noted that (a) there can be no assurance that Arena will be able to source and consummate investments of the type it is seeking to make and (b) the assumptions underlying the IRRs may prove not to be accurate or not materialize. There can be no assurance that the objective of the investment shown can be met or that substantial losses will be avoided.

All amounts herein are in United States dollars unless otherwise indicated. Certain comparative figures have been reclassified to conform to the presentation of the current period, and certain totals, subtotals and percentages may not reconcile due to rounding.

Arena Investors

The following is being provided solely in relation to Arena Investors, LP, its funds, subsidiaries and affiliates:

Returns shown are unaudited.Past performance is not indicative or a reliable indicator of future performance. Actual results may vary.

The information set forth herein does not purport to be complete, is unaudited and subject to change. Arena has no obligation to update or revise such information. Unless otherwise stated, the information contained herein is current as of the date of the presentation.

This document does not constitute investment advice nor is it a recommendation or an offer of investment advisory services or products. No person in any jurisdiction may treat this document as a solicitation or offer of any advisory product or service. A prospective investor must rely solely on the terms and associated disclosures in any final offering memoranda, investment management agreement and associated subscription documents (if any), which would constitute the only basis upon which offerings of any product or service may be made.

Investments in Arena vehicles are speculative in nature and involve risk. There can be no assurance that investment objectives will be achieved and investment results may vary substantially over time. These investments are not intended to be a complete investment program for any investor. There is no secondary market for aninvestor'sinterest in Arena funds and none is expected to develop.Arena'sfunds are not registered under the Investment Company Act of 1940 and accordingly are not extensively regulated. Opportunities for redemption and transferability of interests are restricted, so investors may not have access to capital when it is needed. Leverage may be employed in the funds, which can make investment performance volatile. Valuation of the investments may involve uncertainties and the exercise of judgment. An investor should not make an investment unless the investor is prepared to lose all or a substantial portion of its investment. The fees and expenses charged in connection with investments may be higher than the fees and expenses of other investment alternatives and may offset profits, and the performance-based compensation paid to Arena may create an incentive for Arena to make more speculative investments than would otherwise be the case. Arena has total authority and control over its funds and the use of a single advisor applying generally similar investment programs could mean a lack of diversification and, consequently, higher risk. For a comprehensive list of risk factors, an investor must review the risk factors as specified in the related confidential information memorandum for a specific fund or investment management agreement, which will be made available uponrequest.

The information provided herein should not be considered a recommendation regarding a particular investment. The actual and potential investments discussed herein are meant to be examples ofArena'sinvestment approach. It should not be assumed that any of the investments discussed herein will prove to be profitable, or that the investment recommendations or decisions made by Arena in the future will be profitable. The particular investments discussed herein are those that most closely represent the current average-sized Arena investment in a particular category (Corporate Private Credit, Real Estate Private Credit, Commercial and Industrial Assets, Structured Finance and Consumer Assets).

In addition, performance of market indices is being provided for the purpose of making general market data available as a point of reference only. We believe there are no known directly comparable indices for the Arena Special Opportunities Strategies composite which is comprised of the Arena Special Opportunities Fund, LP and Arena Special Opportunities (Offshore) Master, LP (collectively the"Fund"). TheFund'sinvestments are not limited to the investments listed by the market indices. The Fund may invest in different securities and engage in different trading strategies from the indices. In addition, it should be noted that the sector, industry, stock and country exposures, volatility, risk characteristics and holdings of the Fund differ materially from those of the indices. The indices do not reflect fees and expenses associated with the active management of portfolios. The performance returns of the indices were obtained from Bloomberg and other third-party sources and include the reinvestment of earnings. Although Arena believes these sources to be reliable, it is not responsible for errors or omissions from these sources.

Market indices used: The Standard &Poor'sLSTA Leveraged Loan 100 Index is a capitalization-weighted syndicated loan index that seeks to mirror the performance of the 100 largest syndicated loans in the levered loan market. Leveraged loans are senior secured debt obligations rated below investment grade. The index information provided is for illustrative purposes only. TheFund'sstrategy does not track the index and can significantly vary than that of the performance on the indexes provided.

The Westaim Corporation

Westaimis a publicly listed (TSXV:WED) investment holding company specializing in providing long-term capital to businesses operating primarily within the global financial services industry. Our focus has been, and continues to be, to seek high quality investment opportunities that allow us to partner with businesses and aligned management teams that are well positioned to compound wealth and provide above average returns over the long-term for our shareholders.

Specialty Property and Casualty Insurance 44% look-through ownership(1)

Skyward Specialtyis a US based specialty property and casualty insurance company with approximately $1 billionin annual gross written premium and over $2 billion inassets. Skyward Specialty writes on both an admitted and non-admitted basis with a focus on defined business lines in high profit niche segments to deliver top quartile consistent returns. Rated A- by AM Best.

SkywardSpecialty'shighly experienced team of 395 are represented across 12 offices providing coverage in all 50 states and select international markets.

Alternative Investment Manager 51% ownership(2)

Arena Investorsis a New York based global institutionalmoney manager that originates and underwrites portfolios of asset-backed credit investments that are highly diversified and uncorrelated, delivering consistent returns for investors with a duration of approximately two years.

ArenaInvestors'committed AUM of $3.4 billion includesWestaim'sproprietary capital of $176 million plus third party institutional and high net worth clients.

A highly skilled and experienced team of 100+ full-time employees and consultants across the globe are enabled by robust processes, proprietary infrastructure and access to a global origination network. ArenaInvestors'regularly has been recognized for its performance, investment approach and operational controls.

Westaim'sProprietary Capital Invested with Arena

Investors

100% ownership

TheArena FINCOsare specialty finance companies that primarilypurchase diversified asset-backed credit and other investmentsand in certain circumstances, facilitate the origination and creation of credit investments for their own account and for third parties.

ArenaFINCOs'capital has been and remains very strategic in the development of Arena Investors and the Arena FINCOs have participated as lead investor in several new product offerings.

• (1) TheCompany'slook-through interest in the HIIG Partnership of 22.0% (December 31, 2020-21.3%), combined with its direct ownership of the Skyward Specialty preferred shares, which were convertible into Skyward Specialty common shares representing 22.0% (December 31, 2020-23.2%) of the fully diluted Skyward Specialty common shares outstanding, resulted in a 44.0% (December 31, 2020-44.5%) look-through interest in Skyward Specialty at December 31, 2021. At December 31, 2021, based on theCompany'scontrol of the HIIG Partnership, and its ownership of convertible preferred shares, the Company held a 57.5% voting interest in Skyward Specialty (December 31, 2020-57.5%).

• (2) The remaining 49.0% is Bernard Partners,LLC'sinitial profit sharing percentage, and under the Associate Agreements, Bernard Partners, LLC has the right to earn-in up to 75% equity ownership percentage in the associates and to thereby share up to 75% of the profit of the associates based on achieving certain AUM and cash flow thresholds.

Attachments

• Original Link
• Original Document
• Permalink

Disclaimer

The Westaim Corporation published this content on 13 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 14 April 2022 13:20:09 UTC.