The Westaim Corporation Reports 2019 First Quarter Results

Note: All dollar amounts in this press release are expressed in U.S.
dollars, except as otherwise noted.
The financial results are
reported under International Financial Reporting Standards, except as
otherwise noted.

TORONTO–(BUSINESS WIRE)–The Westaim Corporation (“Westaim” or the “Company”) (TSXV: WED) today
announced that it recorded a net profit of $10.1 million or $0.07 per
share on a diluted basis for the three months ended March 31, 2019,
compared to a net profit of $5.9 million or $0.04 per share on a diluted
basis for the three months ended March 31, 2018.

Book value per share was $2.49 (C$3.33) at March 31, 2019, compared to
$2.35 (C$3.03) at March 31, 2018.

Westaim’s principal investments consist of the Arena Group and HIIG,
through the HIIG Partnership. Westaim recorded net unrealized gains on
investments of $11.8 million (Arena Group: $3.6 million and HIIG
Partnership: $8.2 million) in the three months ended March 31, 2019 and
$4.4 million (Arena Group: $4.1 million and HIIG Partnership: $0.3
million) in the three months ended March 31, 2018.

At March 31, 2019, Westaim owned 100% of Arena Finance and Arena
Origination; and an approximate 58.5% interest in the HIIG Partnership,
which represented an approximate 43.9% indirect interest in HIIG. At
March 31, 2019, the fair values of the Company’s investments in Arena
Finance, Arena Origination and the HIIG Partnership were $166.2 million,
$36.0 million and $170.3 million, respectively.

At March 31, 2019, Westaim’s consolidated shareholders’ equity was
$355.6 million and the Company had 143,186,718 common shares (“Common
Shares”) outstanding.

The change in the derivative warrant had a favourable impact of $nil per
share and $0.1 per share for the three months ended March 31, 2019 and
2018, respectively.

“Westaim reported a solid start to 2019 as reflected in our first
quarter results with both Arena Group and HIIG achieving strong
performances. HIIG financial results reflect growth, investment
portfolio performance and operational profitability in an insurance
market that is experiencing improved pricing. Arena continues to achieve
solid investment performance and we would like to recognize and
congratulate the Arena Group for being nominated at the Eurekahedge
Global Hedge Fund Awards (multi-strategy category). In addition, if you
wanted to research the current state of the credit market, we recommend
reading the whitepaper released by Dan Zwirn, CEO and CIO at Arena in
conjunction with John Hopkins University Business School titled ‘This
Time Is Different, but It Will End the Same Way: Unrecognized
Secular Changes in the Bond Market since the 2008 Crisis That May
Precipitate the Next Crisis’. We look forward to seeing to you at
Westaim’s Annual General Meeting and Investor Day, May 30^th
(9:00 am).”

Westaim’s Annual and Special Meeting of Shareholders and Investor Day
will be held in Toronto on Thursday May 30, 2019 at 9:00 am (Eastern
time) at the Hockey Hall of Fame, 30 Yonge Street, Brookfield Place, Tim
Hortons Theatre, Lower Level.

Westaim’s unaudited consolidated financial statements and management’s
discussion and analysis for the three months ended March 31, 2019 and
2018 were filed on SEDAR at www.sedar.com
and will be posted to Westaim’s website at www.westaim.com.

Non-GAAP Financial Measures

Westaim uses both International Financial Reporting Standards (“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.
Book value per share is a non-GAAP measure. Readers are urged to review
Section 15 Non-GAAP Measures in Westaim’s Management’s Discussion
and Analysis in respect of its unaudited consolidated financial
statements for the three months ended March 31, 2019 and 2018 (the
“MD&A”) for additional disclosure regarding these measures. The
financial information relating to the Arena Group and HIIG contained in
the MD&A is unaudited and has been derived from the financial statements
of the related entities. Readers are cautioned that the HIIG financial
information and certain Arena Group financial information, including any
non-GAAP measures contained therein, has not been reconciled to IFRS and
so may not be comparable to the financial information of issuers that
present their financial information in accordance with IFRS.

About Westaim

Westaim 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 financial
services industry and grow shareholder value over the long term.
Westaim’s investments include significant interests in HIIG and the
Arena Group. HIIG, the HIIG Partnership, Arena, the Arena Group, Arena
Finance, Arena Origination and Arena Investors are defined in the notes
to Westaim’s unaudited consolidated financial statements for the three
months ended March 31, 2019 and 2018 and the MD&A. Westaim’s Common
Shares are listed on the TSX Venture Exchange under the trading symbol
WED.

¹ At March 31, 2019, an aggregate of 3,034,261 RSUs and
10,428,337 stock options were outstanding. Details regarding these RSUs
and options are disclosed in the Company’s public filings including its
quarterly and annual financial statements which are available under the
Company’s profile on SEDAR at www.sedar.com.
²
Non-GAAP measure. See Section 15, Non-GAAP Measures of the MD&A
for a reconciliation to the most comparable IFRS figures.
Period
end exchange rates: 1.33540 at March 31, 2019 and 1.28925 at March 31,
2018.

For more information, contact:
J. Cameron MacDonald, President and
Chief Executive Officer or
Robert T. Kittel, Chief Operating Officer
The
Westaim Corporation
[email protected]
(416)969-3333

Except for statements of historical fact contained herein, information
in this press release may constitute “forward-looking information”
within the meaning of Canadian securities laws. Other than statements of
historical fact, all statements that involve various known and unknown
risks, uncertainties and other factors are “forward-looking statements”.
There can be no assurance that such statements will prove accurate.
Results and future events could differ materially from those anticipated
in such statements. Readers of this press release are cautioned not to
place undue reliance on these “forward-looking statements”. Except as
otherwise required by applicable law, Westaim expressly disclaims any
intention or obligation to update publicly any forward-looking
information, whether as a result of new information, future events or
otherwise. The information provided herein does not constitute an offer
or solicitation regarding any investment products offered by Arena Group.

Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.

Contacts

The Westaim Corporation
[email protected]
(416)969-3333