The Westaim Corporation Reports 2011 Third Quarter Results

TORONTO, Nov. 11, 2011 /CNW/ - The Westaim Corporation ("Westaim") today announced it recorded net income of $11.3 million or $0.02 per share for the quarter ended September 30, 2011, compared to net income of $21.8 million or $0.03 per share for the quarter ended September 30, 2010.  For the nine months ended September 30, 2011, Westaim recorded net income of $23.5 million or $0.04 per share, compared to net income of $50.8 million or $0.11 per share for the nine months ended September 30, 2010, which included a net gain on the purchase of JEVCO Insurance Company ("Jevco"), a wholly-owned subsidiary, of $22.1 million. Income from continuing operations, before income taxes, was $5.0 million higher in the third quarter of 2011 when compared to the same quarter in 2010.  Net income for the three months and nine months ended September 30, 2010 included a deferred income tax recovery of $15.3 million resulting from an internal corporate reorganization.  At September 30, 2011, Westaim's consolidated shareholders' equity was $406.1 million or $0.63 per share, increased from $377.3 million or $0.59 per share at December 31, 2010.

Westaim's acquisition of Jevco closed on March 29, 2010.  As a result, Westaim consolidated the results of Jevco beginning in the second quarter of 2010.  Jevco is a leading Canadian specialty insurer offering products through two divisions.  The Personal Lines Division provides insurance in the non-standard automobile, standard automobile, motorcycle and recreational vehicles product lines.  The Commercial Lines Division offers property and liability, niche commercial automobile and surety product lines.

In the third quarter of 2011, direct premiums written were $88.3 million and net premiums written were $83.4 million, compared to $83.6 million in direct premiums written and $77.2 million in net premiums written in the same quarter of 2010.  In the three months ended September 30, 2011, net premiums earned were $93.2 million, producing a Combined Ratio of 95.1%.  In the comparable quarter in 2010, net premiums earned were $88.5 million, producing a Combined Ratio of 97.6%. For the nine months ended September 30, 2011, direct premiums written were $278.5 million, net premiums written were $265.8 million, net premiums earned were $252.1 million, producing a Combined Ratio of 96.2%.

Total assets of Westaim at September 30, 2011 were $1.31 billion, compared to $1.27 billion at December 31, 2010.  At September 30, 2011, the Company's investment portfolio of $1.03 billion was invested predominantly in corporate and government bonds. During the third quarter, the Company invested approximately 10% of its investment portfolio in Canadian dividend paying common equities with the intention of generating an attractive yield. For the third quarter of 2011, net investment income and net realized investment gains, including foreign exchange gain, of $13.8 million were included in net income; and net unrealized investment gains, net of income taxes, of $2.2 million were included in other comprehensive income.  In the comparable period in 2010, net investment income and net realized investment gains, net of foreign exchange loss, of $12.0 million were included in net income; and net unrealized investment gains, net of income taxes, of $4.9 million were included in other comprehensive income.

"We are pleased with Jevco's operating results in the third quarter, which were in line with our expectations.  In particular, the performance of our non-standard automobile business continued to show progress quarter over quarter and we remain cautiously optimistic for the balance of the year. The investment portfolio also performed well in the quarter, generating a solid return, helping to increase the book value per share to $0.63 at quarter end.  Jevco has proven to be a sound and profitable investment and we remain committed to growing the business, organically as well as through partnerships and acquisitions," said Cameron MacDonald, Chief Executive Officer of Westaim.

At September 30, 2011, Jevco had an MCT ratio of 308% and a B++ credit rating from A.M. Best.

Westaim is a financial holding company focused on the property and casualty insurance industry. Westaim's common shares are listed on The Toronto Stock Exchange under the trading symbol WED.

Certain portions of this press release as well as other public statements by Westaim contain forward-looking statements. Such forward-looking statements include but are not limited to statements concerning JEVCO's business and the industry in which it operates; investment strategies and expected rates of return; and strategic alternatives to maximize value for shareholder. 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. Westaim's actual results could differ materially from those anticipated by forward-looking statements for various reasons generally beyond our control, including but not limited to: (i) changes in market conditions or deterioration in underlying investments; (ii) general economic, market, financing, regulatory and industry developments and conditions; (iii) the risks relating to JEVCO's business; and (iv) other risk factors set forth in Westaim's Annual Report, Quarterly Reports or Annual Information Form. 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.