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Item 7. Management’s Discussion and Analysis

2026-03-04 compared with 2025-03-06 · 413 added, 452 removed, 360 unchanged (71% of the section changed)

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See "Sale of AAC" below and Note 5.

Discontinued Operations of the Notes to Consolidated Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K for additional information about the divestiture of the Legacy Financial Guarantee business.

The following discussion should be read in conjunction with our consolidated financial statements in Item 8 of this Report and the matters described under Item 1A.

The following discussion should be read i n conjunction with our consolidated financial statements in Item 8 of this Report and the matters described under Item 1A.

Risk Factors in this Annual Report on Form 10-K for the year ended December 31, 2025.

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Introduction - Description of the Business, for a description of our business and our key strategies to achieve our primary goal to maximize shareholder value.

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

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Strategies to Enhance Shareholder Value 26

Critical Accounting P olicies and Estimates

Critical Accounting Policies and Estimates

Results of Operations

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Insurance Distribution and Specialty Property and Casualty Insurance strategic priorities include:

• Expanding our Insurance Distribution business based on deep domain knowledge in specialty and niche classes of risk which generate attractive margins at scale.

This will be achieved through acquisitions, strategic investments, establishing new businesses “de-novo,” and organic growth and diversification supported by a centralized technology led shared services offering

• Growing our Specialty Property and Casualty Insurance business to generate underwriting profits from a diversified portfolio of commercial and personal liability risks accessed primarily through program administrators.

• Growing and expanding our Insurance Distribution business based on deep domain knowledge in specialty and niche classes of risk which generate attractive margins at scale.

This will be achieved through establishing new businesses “de-novo,” organic growth and diversification, and select acquisitions supported by a centralized technology-led shared services offering;

In addition, we may seek strategic relationships and/or partnerships with unaffiliated parties in order to expand our product offerings, access to reinsurance capacity and other business or operational advantages.

($ in thousands)

The Company's continuing operations include two segments, financial highlights of which are summarized below along with other recent developments.

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Adjusted EBITDA 3,330 22,411 (80,670) (54,929) 5,136 19,901 (16,394) 8,643

Net income (loss) attributable to Ambac shareholders 10,471 (7,244) (62,509) (59,282) 334 5,815 (30,701) (24,551)

EBITDA attributable to Ambac shareholders 12,222 13,208 (62,396) (36,966) 383 9,381 (30,858) (21,093)

Adjusted EBITDA attributable to Ambac common stockholders 5,136 13,456 (16,397) 2,195 1,017 9,381 (18,380) (7,981)

On June 4, 2024, AFG entered into a stock purchase agreement with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., pursuant to which and subject to the conditions set forth therein, AFG will sell all of the issued and outstanding shares of common stock of AAC, a wholly-owned subsidiary of AFG, to Buyer for aggregate consideration of $420 in cash (the "AAC Sale").

The terms of the AAC Sale as contemplated by the stock purchase agreement provide that, at the closing of the AAC Sale (the “Closing”), Buyer will acquire complete common equity ownership of AAC and all of its wholly owned subsidiaries, including Ambac UK.

In connection with and pursuant to the stock purchase agreement, AFG has agreed to issue to Buyer a warrant exercisable for a number of shares of common stock, par value $0.01, of AFG representing

9.9% of the fully diluted shares of AFG’s common stock as of March 31, 2024, pro forma for the issuance of the warrant.

The warrant will have an exercise price per share of $18.50 with a six and a half-year term from the date of issuance and will be immediately exercisable.

Concurrent with the sale, AFG will purchase AAC's co-investment in the holding company established to purchase Beat, for an amount equal to AAC's $62,000 investment plus 7.5% per annum thereon.

Management has determined that the pending sale of AAC and its wholly-owned subsidiaries meets the criteria to be disclosed as discontinued operations beginning in the fourth quarter of 2024.

The loss on disposal recognized in the fourth quarter of 2024 was $570,145.

Net income (loss) attributable to Octave shareholders 2,956 (17,954) (83,406) (98,404) 10,471 (7,244) (62,509) (59,282)

EBITDA attributable to Octave shareholders 3,777 37,041 (33,789) 7,028 12,222 13,205 (62,393) (36,966)

Adjusted EBITDA attributable to shareholders 3,777 22,542 (33,789) (7,471) 5,136 13,453 (16,394) 2,195

On September 29, 2025, the Company completed the sale of AAC pursuant to the June 4, 2024 stock purchase agreement (the "Purchase Agreement") with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., pursuant to which OSG sold all of the issued and outstanding shares of common stock of AAC, a wholly-owned subsidiary of OSG, to Buyer for

$420,000 in cash (the "Sale").

The Buyer also made an additional payment to OSG in an amount of $4,300.

In the Sale, Buyer acquired complete common equity ownership of AAC and all of its wholly owned subsidiaries, including Ambac Assurance UK Limited.

In connection with and pursuant to the Purchase Agreement, OSG issued to Buyer a warrant exercisable for 5,092,707 shares of common stock, par value $0.01, of OSG.

Refer to Note 5.

Discontinued Operations for additional information about the sale of AAC.

Ambac Financial Group, Inc.

Discontinued Operations of the Notes to the

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Purchase of Beat Capital Partners

On June 4, 2024, AFG entered into a share purchase agreement (the “Beat Purchase Agreement”), by and among AFG, Cirrata V LLC, a Delaware limited liability company and an indirect wholly owned subsidiary of AFG (the “Purchaser”), certain sellers set forth therein (the “Sellers”) and Beat, pursuant to which the Purchaser purchased from the Sellers approximately 60% of the entire issued share capital of Beat, for total consideration, as of the closing date, of approximately $281,493, of which approximately $252,264 was paid in cash and the remainder of which was satisfied through the issuance of 2,216,023 shares of AFG common stock.

The acquisition closed with an effective date of July 31, 2024.

Beat’s management team and Bain Capital Credit LP (together, the “Rollover Shareholders”) each retained approximately 20% of Beat’s issued share capital immediately after closing.

Consolidated Financial Statements under Part II, Item 8 in this Annual Report on Form 10-K for further details on the sale of AAC.

For all periods leading up to the Sale, AAC's results of operations and OSG's loss on sale are reported within Net income (loss) from discontinued operations before tax on the Consolidated Statement of Comprehensive Income (Loss).

Discontinued Operations of the Notes to the Consolidated Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Acquisition of ArmadaCorp

On October 31, 2025, the Company closed on the acquisition of ArmadaCorp for a purchase price of $250,000.

The Company purchased all of the issued and outstanding limited liability company interests in ArmadaCorp from Sirius Re Holdings, Inc.

and Sirius Acquisitions Holding Company, funded in part by $120,000 of loans obtained under new credit facilities.

Refer to Note 4.

Business Combination for further details on the acquisition of Beat.

Business Combination in Part II, Item 8 in this Annual Report on Form 10-K for further details on the acquisition of ArmadaCorp.

ArmadaCorp includes an MGA/U that focuses on supplemental health and benefit products for C-suite executives and other key talent.

ArmadaCorp creates and distributes supplemental benefit solutions and insurance products.

ArmadaCorp's differentiated product offering in the A&H market provides both line of business and product diversification to the Company, while also increasing exposure to non-correlated A&H business lines.

ArmadaCorp also provides clients with tools to navigate the healthcare system, including services that help match individuals with physicians suited to their personal needs, and maintains a provider of third-party administration services for insurance carriers that distribute the benefit products and handle claims.

Effective September 1, 2025, OSG's wholly owned subsidiary, Octave Partners, LLC exercised its option to convert its $3,500 convertible note investment in Pivix, an excess and surplus lines MGA/U, into common stock.

As a result, Octave Partners now owns approximately 74% of Pivix, when combined with its previous 17% minority equity interest, and includes Pivix in its consolidated financial statements.

Sale of Consolidated National Insurance Company

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The closing of this transaction occurred on September 1, 2024, resulting in a gain of approximately $7,504.

The sale of CNIC will not have any adverse impact on the group's operations or growth prospects.

SEC Final Rules on Climate Related Information

On March 6, 2024, the U.S.

Securities and Exchange Commission (“SEC”) adopted The Enhancement and Standardization of Climate-Related Disclosures for Investors ("Final Rule") , which will require registrants to disclose extensive climate-related information in their Form 10-K annual reports and registration statements.

The Final Rule was scheduled to become effective May 28, 2024;

however, the SEC has voluntarily stayed the rule’s effective date pending judicial review of legal challenges.

The compliance dates for accelerated filers for annual reports or registration statements that include financial statements for the year ending December 31 are phased in from 2026 through 2031.

Depending on when the legal challenges are resolved, the compliance dates may be retained or delayed.

Ambac is reviewing the Final Rule and is currently assessing our related compliance obligations and other effects on our operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Ambac's Consolidated Financial Statements have been prepared in accordance with GAAP.

The sale of CNIC has not had any adverse impact on the group's operations or growth prospects.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES ($ in thousands)

Octave's Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in

This section highlights accounting estimates management views as critical because they are most important to the portrayal of the Company's financial condition;

and require management to make difficult and subjective judgments regarding matters that are inherently uncertain and subject to change.

These estimates are evaluated on an on-going basis considering historical developments, political events,

market conditions, industry trends and other information.

These estimates are evaluated on an ongoing basis considering historical developments, political events, market conditions, industry trends and other information.

There can be no assurance that actual results will conform to estimates and that reported results of operations will not be materially adversely affected by the need to make future accounting adjustments to reflect changes in these estimates from time to time.

Management has identified the following critical accounting policies and estimates:

(i) valuation of specialty property and casualty losses and loss adjustment expense reserves, (ii) valuation of financial guarantee loss and loss adjustment expense reserves, and (iii) business combinations including identification and valuation of intangible assets.

(i) valuation of specialty property and casualty losses and loss adjustment expense reserves, (ii) business combinations including identification and valuation of intangible assets, and (iii) goodwill and intangible asset impairment analysis.

Management has discussed each of these critical accounting policies and estimates with the Audit Committee, including the reasons why they are considered critical and how current and anticipated future events impact those determinations.

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Basis of Presentation and Significant Accounting Policies to the Consolidated Financial Statements included in Part II, Item 8 in this Form 10-K.

Valuation of Specialty Property and Casualty Losses and Loss Expense Reserves

The specialty property and casualty insurance segment consist of Everspan-affiliated carriers.

Loss and loss adjustment expense reserves represent management's estimate of the ultimate liability for unpaid losses and loss expenses for claims that have been reported and claims that have been incurred, but not yet reported ("IBNR") as of the balance sheet date.

Loss and loss adjustment expense reserves by line of business were as follows as of December 31, 2024 and December 31, 2023:

SPECIALTY PROPERTY AND CASUALTY LOSSES AND LOSS EXPENSE RESERVES

The specialty property and casualty insurance segment consists of Everspan-affiliated carriers.

Loss and loss adjustment expense reserves represent management's estimate of the ultimate liability for unpaid losses and loss expenses for claims that have been reported and incurred but not yet reported ("IBNR") as of the balance sheet date.

Loss and loss adjustment expense reserves by line of business were as follows as of December 31, 2025 and 2024:

2025 Gross Net

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Commercial auto $ 67,484 $ 91,710 $ 159,194 $ 10,404 $ 12,657 $ 23,061

Excess and General Liability 7,111 78,348 85,459 1,317 13,540 14,857

Excess liability 9,771 106,839 116,610 1,471 15,427 16,898

General liability 7,534 56,062 63,596 2,376 10,196 12,572

Workers compensation 9,569 8,229 17,798 9,569 8,229 17,798

Non-standard personal auto 2,259 1,567 3,826 2,231 1,404 3,635

Professional liability 6,753 34,094 40,847 467 2,383 2,850

Multi-peril / business owners (BOP) 707 5,478 6,185 241 1,278 1,519

Surety 1,128 11,106 12,234 — 94 94

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(2) Includes $ 23,530 and $0 total loss and loss expense reserves on a gross and net of reinsurance basis related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company, and Consolidated Specialty Insurance Company.

All legacy liabilities remain obligations of affiliates of the sellers through reinsurance and contractual indemnities.

Ambac Financial Group, Inc.

All legacy liabilities

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remain obligations of affiliates of the sellers through reinsurance and contractual indemnities.

2024 Gross Net

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(1) Unallocated loss adjustment expenses.

(2) Includes $43,751 and $0 total loss and loss expense reserves on a gross and net of reinsurance basis related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company, Consolidated National Insurance Company and Consolidated Specialty Insurance Company.

(2) Includes $35,146 and $0 total loss and loss expense reserves on a gross and net of reinsurance basis related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company, and Consolidated Specialty Insurance Company.

All legacy liabilities remain obligations of affiliates of the sellers through reinsurance and contractual indemnities.

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The loss ratio projection method develops an initial estimate of ultimate claims and claim adjustment expenses for an accident year by multiplying earned premium for the accident year by a projected loss ratio.

The projected loss ratio is determined by analyzing prior period experience, and adjusting for loss cost trends, rate level differences, mix of business changes and industry loss ratios and other known or observed factors influencing the accident year relative to prior accident years.

The projected loss ratio is determined by analyzing prior period experience, and adjusting for loss cost trends, rate level differences, a mix of business changes and industry loss ratios and other known or observed factors influencing the accident year relative to prior accident years.

The loss and loss adjustment expense reserves estimate may be based on a judgmental weighting of estimates produced from multiple estimation and analysis methods considered.

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These estimation and analysis methods are typically referred to as conventional actuarial methods.

• The paid loss development method assumes that the future change (positive or negative) in cumulative paid losses for a given cohort of claims will occur in a stable, predictable pattern from year-to-year, consistent with the pattern observed in past cohorts.

• The paid loss development method assumes that the future change (positive or negative) in cumulative paid losses for a given cohort of claims will occur in a stable, predictable

pattern from year-to-year, consistent with the pattern observed in past cohorts.

• The case incurred development method is the same as the paid loss development method but is based on cumulative case-incurred losses rather than paid losses.

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The actuarial results provide a range of estimated losses by program and line of business including a low, central and high estimate of losses and loss expenses.

Management typically selects the respective midpoint loss ratio between the actuarial determined central and high estimate for its active programs and lines of business for each respective accident year when recording loss and loss adjustment expense reserves.

Beginning December 31, 2024, management decided to set loss reserves for programs that are in runoff at the high end of the respective actuarial loss ranges, given these program can experience greater loss volatility than active programs.

At December 31, 2025, management selected the respective midpoint loss ratio between the actuarially determined central and high estimate for active and runoff programs and lines of business for each respective accident year when recording loss and loss adjustment expense reserves.

In the prior year, management selected the high end of the respective actuarial range for programs in runoff, but due to (i) increased claims and actuarial oversight, (ii) further run-off of these programs and (iii) further evaluation of Everspan's aggregate reserve position it was determined to record both active and runoff programs at the midpoint loss ratio between the actuarial central and high estimate.

Since the reserves are based on estimates, the ultimate liability may be more or less than such reserves.

Ambac's actuarial evaluation at December 31, 2024 provided a range of losses incurred.

Octave's actuarial evaluation at December 31, 2025, provided a range of losses incurred.

Losses at the low end of the range would be below our recorded gross and net loss expense reserves by approximately $49,900 and $12,500, respectively at December 31, 2025, and losses at the high end of the range would exceed our recorded gross and net loss and loss adjustment expense reserve by approximately $14,600 and $2,200, respectively, at December 31, 2025.

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• For the loss development pattern we considered the impact of the reported incurred losses developing faster or slower than expected in our projections.

For every 1.0% slower or faster the losses develop, we would expected our net indicated reserves to increase or decrease, respectively, by approximately 0.8%.

For every 1.0% slower or faster the losses develop, we would expect our net indicated reserves to increase or decrease, respectively, by a range of 0.8% to 1.2%.

If our reported loss development pattern was 5% slower, the net indicated reserves would be approximately 5% higher.

If our reported loss development pattern was 5% faster, the net indicated reserves would be approximately 4% lower.

• For the expected losses we utilize industry benchmark loss ratios and internal pricing loss ratios applied to earned premium.

For every 1.0% higher or lower the expected losses are, we would expected our net indicated reserves to

Ambac Financial Group, Inc.

If our reported loss development

Octave Specialty Group, Inc.

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increase or decrease by approximately 0.55%.

pattern was 5% faster, the net indicated reserves would be approximately 4.3% lower.

• For the expected losses we utilize industry benchmark loss ratios and internal pricing loss ratios applied to earned premium.

For every 1.0% higher or lower the expected losses are, we would expect our net indicated reserves to increase or decrease by approximately 0.6%.

If our expected losses were 5% higher, the net indicated reserves would be approximately 3.2% higher.

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See “Risk Factors” in Part I, Item 1A in this Annual Report on Form 10-K.

Valuation of Legacy Financial Guarantee Losses and Loss Expense Reserves (including Subrogation Recoverables)

The legacy financial guarantee ("LFG") business includes the activities of AAC and its wholly owned subsidiaries, including Ambac UK, and are reported as discontinued operations in the Consolidated Financial Statements.

Refer to Note 5.

Discontinued Operations to the Consolidated Financial Statements, included in Part II, Item 8 in this Annual Report on Form 10-K for a discussion of the pending sale of these entities to the Buyer.

As a result of the pending sale, the LFG loss and loss adjustment expense reserves and subrogation recoverable assets (collectively defined as "loss reserves") discussed in this section are reported within liabilities held-for-sale and assets-held-for sale, respectively, on the consolidated balance sheet.

A loss reserve is recorded on the balance sheet on a policy-by-policy basis at the present value ("PV") of expected net claim cash outflows or expected net recovery cash inflows, discounted at risk-free rates.

The estimate for future net cash flows considers the likelihood of all possible outcomes that may occur from missed principal and/or interest payments on the insured obligation.

This estimate also considers future recoveries related to contractual or subrogation-related cash flows.

The evaluation process for expected future net cash flows is subject to estimates and judgments regarding the probability of default by the issuer of the insured security, the probability of negotiation or settlement outcomes (which may include commutation, litigation and other settlements, and/or a refinancing), the probability of restructuring outcomes (which may include payment moratoriums, debt haircuts and/or subsequent recoveries) and the expected loss severity of credits for each insurance contract.

As the probability of default for an individual credit increases and/or the severity of loss given a default increases, our loss reserve for that insured obligation will also increase.

Political, economic, environmental, credit or other unforeseen events could have an adverse impact on default probabilities and loss severities.

The loss reserves for many transactions are derived from the issuer’s creditworthiness.

For public finance issuers, loss reserves will consider not only creditworthiness, but also political dynamics and economic status and prospects.

The loss reserves for transactions which have no direct issuer support, such as most structured finance exposures, including RMBS and student loan exposures, are derived from the default activity and the estimated loss given default of the underlying collateral supporting the transactions.

In addition, many transactions have a combination of issuer/entity and collateral support.

reserves reflect our assessment of the transaction’s overall structure, support and expected performance.

Loss reserve volatility will be a direct result of the credit performance of our insured portfolio, including the number, size, bond types and quality of credits included in our loss reserves;

our ability to execute workout strategies and commutations;

economic and market conditions;

and management's judgments with regards to the current performance and future developments within the insured portfolio.

The number and severity of credits included in our loss reserves depend to a large extent on transaction specific attributes, but will generally increase during periods of economic stress and decline during periods of economic prosperity.

Reinsurance contracts may mitigate future loss reserve volatility.

While Ambac currently has minimal exposure ceded to reinsurers on financial guarantee credits with loss reserves, the existing reinsurance contracts would reduce future volatility to the extent loss reserves are established on those risks ceded to reinsurers.

Loss reserve volatility will also be materially impacted by changes in interest rates from period to period.

The table below indicates the gross par outstanding and gross loss reserves (including loss expenses) related to policies in Ambac’s Financial Guarantee loss and loss adjustment expense reserves at December 31, 2024 and 2023:

December 31, 2024

Structured Finance $ 1,612,056 $ 424,073

Domestic Public Finance 834,370 58,688

138,199 (10,625)

Loss expenses — (8,932)

Totals $ 2,584,625 463,204

December 31, 2023

Structured Finance $ 1,859,786 496,541

Domestic Public Finance 834,123 66,381

1,144,195 (7,831)

Loss expenses — 3,549

Totals $ 3,838,104 558,640

Discontinued Operation to the Consolidated Financial Statements, included in Part II, Item 8 in this Annual Report on Form 10-K for a description of the cash flow and statistical methodologies used to develop loss reserves.

The majority of our large loss reserves utilize the cash flow method of reserving.

Various cash flow scenarios are developed to represent the range of possible outcomes and resultant future claim payments and timing.

Scenarios and probabilities of each are adjusted regularly to reflect changes in status, outlook and our analysis and views.

Significant judgment is used to develop the cash flow assumptions and related probabilities, and there can be no certainty that the scenarios or probabilities will not deviate materially from ultimate outcomes.

• In some cases, such as RMBS and student loans, cash flow projections include the modeling of a securitization's cash flows to determine the resources available to pay debt service on our insured obligations.

During 2023, Ambac revised the model it uses to project RMBS collateral losses

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considering the seasoning of our RMBS exposure and management’s view that the most relevant determinant of prospective collateral performance is borrower payment status (e.g., loan status being current, delinquent, foreclosure, REO, etc.).

Key assumptions impacting student loan cash flow models include projected loan defaults, recoveries and interest rates.

During 2023, we revised our approach to projecting future defaults to both reflect the student loan collateral's seasoning and generally stable performance.

• In other cases, such as many public finance exposures, we consider the issuer's overall ability and willingness to pay as it relates to the existing fiscal, economic, legal, restructuring and/or political framework relevant to a particular exposure or group of exposures.

We then develop multiple scenarios where issuer debt service is paid, missed and/or haircut with claims paid then factor in any projected recovery amount (and potential variability of the recovery amount) and the timing thereof.

There is no certainty our assumptions as to scenarios or probabilities will not be subject to material changes as developments occur.

• In estimating loss reserves, we may also incorporate scenarios which represent the potential outcome of remediation strategies.

Remediation scenarios could include (i) a potential refinancing of the transaction by the issuer;

(ii) the issuer’s ability to redeem outstanding securities at a discount, thereby increasing the structure’s ability to absorb future losses;

and (iii) our ability to terminate, restructure or commute the policy in whole or in part.

The remediation scenarios and the related probabilities of occurrence vary by policy depending on ongoing and expected discussions and negotiations with issuers and/or investors.

Variability of Expected Losses and Recoveries

Management believes loss reserves (present value of expected cash flows, net of recoveries) are adequate to cover future claim payments, but there can be no assurance that the ultimate liability will not be higher than such estimates.

While our LFG loss reserves reflect our judgment regarding issuers’ financial flexibility to adapt to adverse markets, they may not adequately capture sudden, unexpected or protracted uncertainty that adversely affects market conditions.

Accordingly, it is possible that our estimated loss reserves, gross of reinsurance, for financial guarantee insurance policies could be understated.

We have attempted to identify possible cash flows related to losses and recoveries using more stressful assumptions than the probability-weighted outcome recorded.

The possible net cash flows consider the highest stress scenario that was utilized in the development of our probability-weighted expected loss at December 31, 2024, and assumes an inability to execute any commutation transactions with issuers and/or investors.

Such stress scenarios are developed based on management’s view about all possible outcomes relating to losses and recoveries.

In arriving at such view, management makes considerable judgments about the possibility of various future events.

Although we do not believe it is possible to have stressed outcomes in all cases, it is possible that we could have stress case outcomes in some or even many cases.

Factors” in Part I, Item 1A in this Annual Report on Form 10-K for further discussion of the risks relating to future losses and recoveries that could result in more highly stressed outcomes.

The occurrence of these stressed outcomes individually or collectively would have a material adverse effect on our results of operations and financial condition and may result in materially adverse consequence for Ambac, including (without limitation) impairing the ability of AAC to honor its financial obligations, particularly its outstanding surplus note and preferred stock obligations;

the initiation of rehabilitation proceedings against AAC;

and a significant drop in the value of securities issued or insured by AAC.

The possible increase in loss reserves for which we have an estimate of expected loss at December 31, 2024, could be approximately $265,000.

BUSINESS COMBINATIONS

The acquired entities comprising the Insurance Distribution segment primarily represent business combinations that were accounted for under the acquisition method of accounting.

The acquisition method requires us to allocate the total consideration transferred for each acquisition to the assets acquired, liabilities assumed and noncontrolling ("NCI") interests based on their fair values as of the date of acquisition, including identifiable intangible assets.

The allocation of the consideration utilizes significant estimates in determining the fair values of net assets acquired, which primarily consist of customer relationship intangible assets, redeemable NCI interests and nonredeemable NCI interests.

The acquired entities comprising the ID segment primarily represent business combinations that were accounted for under the acquisition method of accounting.

The acquisition method requires us to allocate the total consideration transferred for each acquisition to the assets acquired, liabilities assumed and noncontrolling interests ("NCI") based on their fair values as of the date of acquisition, including identifiable intangible assets.

The allocation of the consideration utilizes significant estimates in determining the fair values of net assets acquired, which primarily consist of customer relationship intangible assets, but may include other finite-lived intangible assets including trade names or non-compete agreements.

Measurement of the purchase balance sheet also requires valuation of redeemable NCI interests and nonredeemable NCI interests when applicable.

The valuation method used to determine customer relationship intangible assets was the multi-period excess earnings method "(MPEEM"), which quantifies the residual (or excess) cash flows generated by the intangible asset and discounts those cash flows to their present value.

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As of December 31, 2025 and 2024, an aggregate of $463,785 and $333,562, respectively, of acquired intangible assets, net of accumulated amortization, was recorded on the Consolidated Balance Sheets, of which $ 446,835 and $ 323,720 , respectively, represented customer relationships.

The valuation method to determine the fair value of redeemable NCI interests and related put and call options was the Monte Carlo Simulation.

The valuation method used to determine the fair value of redeemable NCI interests and related put and call options was the Monte Carlo Simulation.

The significant fair value assumptions used in the simulation include the exercise thresholds, EBITDA forecasts, discount rate and long-term growth rate.

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The excess of purchase price over the fair value of assets acquired, liabilities assumed, and NCI interests (both redeemable and nonredeemable) is recorded as goodwill.

We may refine our estimates and make adjustments to the assets

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acquired and liabilities assumed over a measurement period, not to exceed one year from the date of acquisition.

Intangible asset impairment and useful life evaluation

We review acquired finite-lived intangible assets that are being amortized for impairment whenever events or changes in circumstance indicate that their carrying amount may not be recoverable.

Qualitative factors considered include any adverse developments in regulation, unfavorable market conditions, or the extent to which an asset will be utilized.

We do not believe there will be a material change in the estimates or assumptions used to calculate impairments or useful lives of amortizable intangible assets.

However, if actual results are not consistent with our estimates and assumptions, we may be exposed to an acceleration of amortization or impairment losses that could be material.

We may refine our estimates and make adjustments to the assets acquired and liabilities assumed over a measurement period, not to exceed one year from the date of acquisition.

GOODWILL AND INTANGIBLE IMPAIRMENT ANALYSIS

Goodwill impairment evaluation

We perform the impairment assessment of goodwill at the reporting unit level within our Insurance Distribution segment on an annual basis or more frequently if circumstances indicate a possible impairment.

We perform the impairment assessment of goodwill at the reporting unit level within our ID segment on an annual basis or more frequently if circumstances indicate a possible impairment.

We have determined that each of the entities acquired in the ID segment represent an individual reporting unit.

The impairment test may first consider qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

Examples of qualitative factors include, macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, entity-specific events, events affecting reporting units and sustained changes in our stock price.

If results of the qualitative assessment indicate a more likely than not determination or if we elect not to perform a qualitative assessment, a quantitative test is performed by comparing the estimated fair value using an income approach or market approach for each reporting unit with its estimated carrying value.

For the 2024 annual impairment evaluation, we performed a qualitative assessment for certain reporting units and for other reporting units we elected to bypass the qualitative evaluation and perform quantitative tests.

If results of the qualitative assessment indicate a more likely than not determination or if we elect not to perform a qualitative assessment, a quantitative test is performed by comparing the estimated fair value using a weighted average of an income approach and market approach for each reporting unit to its carrying value.

For the 2025 annual impairment evaluation, we elected to bypass the qualitative evaluation and perform quantitative tests on four reporting units containing $432,728 or 80% of the aggregate balance of goodwill as of December 31, 2025.

For the remainder of our goodwill balance, including related to ArmadaCorp at year end, we performed a qualitative assessment.

There was no goodwill impairment for any of the reporting units.

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The market approach uses valuation multiples and is dependent on subjective factors including the determination of industry market multiples and EBITDA forecasts.

These results are weighted to arrive at management's estimate of fair value for the reporting unit.

Weight applied to each approach is based on the judgments about the extent that they reasonably reflect the value of the particular reporting unit that would be considered by a market participant.

Additionally, to corroborate our estimated fair value, we perform a market capitalization reconciliation to determine if the implied control premium is reasonable.

If our assumptions or estimates in our fair value calculations change or if any of the above subjective factors vary from what was expected, this may impact our impairment analysis and result in a decline in fair value that may trigger future impairment charges.

For reporting units evaluated under the quantitative assessment, estimated fair values exceeded carrying values by between 1% and 19%.

Market and income approaches were weighted 50% each, except for Octave Ventures where we applied 80% weight to the income approach, considering that the selected public companies used in the market approach do not adequately represent Octave Ventures's business as an MGA incubator

Octave Specialty Group, Inc.

2025 Form 10-K

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under a Lloyds consortium structure.

Fair values are particularly sensitive to the discount rate used in the income approach and the multiple used in the market approach.

With no other changes to inputs or assumptions, a 1% increase in the discount rate would have produced an aggregate 11% reduction to the fair value of the tested reporting units.

With no other changes to inputs or assumptions, a 20% decrease in the market multiples used would have produced an aggregate 4% reduction to the fair value of the tested reporting units.

Changes to these or other assumptions or estimates in our fair value calculations or variances to any of the above subjective factors from what was expected, could impact our impairment analysis and result in a decline in fair value that may trigger future impairment charges.

Intangible asset impairment and useful life evaluation

We review acquired finite-lived intangible assets that are being amortized for impairment whenever events or changes in circumstance indicate that their carrying amount may not be recoverable.

Qualitative factors considered include any adverse developments in regulation, unfavorable market conditions, or the extent to which an asset will be utilized.

We do not believe there will be a material change in the estimates or assumptions used to calculate impairments or useful lives of amortizable intangible assets.

However, if actual results are not consistent with our estimates and assumptions, we may be exposed to an acceleration of amortization or impairment losses that could be material.

RESULTS OF OPERATIONS

The following discussion of results of operations for the years ended December 31, 2024, 2023 and 2022 should be read along with the financial statements included in this Annual Report on Form 10-K.

The following is a discussion and analysis of the Company’s financial condition and results of operations for the years ended December 31, 2025 and 2024, including year-to-year comparisons between 2025 and 2024.

Year-to-year comparisons between 2024 and 2023 have been omitted from this Form 10-K, but may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Net loss from continuing operations for the years ended December 31, 2025 and 2024, was $95,803 and $58,921, respectively.

The net loss variance in 2025 compared to 2024 was primarily driven by:

(i) higher costs related to acquisitions and integrations of $26,821, (ii) higher restructuring costs of $7,600, (iii) higher intangible amortization of $13,450 and (iv) interest expense on short-term debt of $9,379, partially offset by higher Everspan income, including the $7,500 gain on the sale of CNIC, and continuing growth of Insurance Distribution business.

The net loss variance in 2023 compared to 2022 was primarily driven by higher net investment income of $8,655 and growth of both the Specialty Property and Casualty Insurance and Insurance Distribution businesses flowing from higher net premiums earned of $38,042 from Everspan and higher commission income of $20,586 from Insurance Distribution.

(i) higher restructuring costs of $15,524, (ii) higher intangible amortization of $20,442, (iii) higher interest expense on short-term debt of $9,261, and (iv) lower foreign exchange gains of $6,717, partially offset by lower acquisition costs of $19,213, investment impairments of $3,416, gains on sale of subsidiaries of $7,504, and higher ID revenue due to acquisitions and continuing growth of the business.

A summary of our financial results is shown below:

Year Ended December 31, 2025 2024 2023

Commissions $ 143,381 $ 92,023 $ 51,281

Servicing and other fees 20,419 6,353 —

Net premiums earned $ 67,232 $ 99,005 $ 51,911

Commission income 92,023 51,281 30,695

Program fees 14,322 13,506 8,437

Net investment income 14,448 13,159 4,503

Net investment gains (losses), including impairments (497) 19 (62)

Net gains (losses) on derivative contracts 4,016 (279) 935

Investment income 10,647 14,448 13,159

(4,780) 10,480 (60)

Commissions 37,037 40,876 29,465

Losses and loss adjustment expenses 47,193 72,626 36,712

Policy acquisition costs 15,790 23,666 10,557

Commission expense 40,876 29,465 17,641

General and administrative expenses 129,166 66,985 56,278

Intangible amortization 17,602 4,152 2,921

Interest expense 9,379 — —

General and administrative 191,624 129,166 66,985

Intangible amortization and depreciation 41,952 19,947 5,230

Interest 18,640 9,379 —

Provision (benefit) for income taxes from continuing operations (5,211) (924) (989)

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(2,601) (361) (1,319)

gain on purchase of auction market preferred shares — — 1,131

Net income (loss) attributable to Ambac shareholders $ (556,449) $ 3,632 $ 522,380

Ambac Financial Group, Inc.

Net income (loss) attributable to shareholders $ (261,692) $ (556,449) $ 3,632

Octave's results for the year ended December 31, 2025 compared to the year ended December 31, 2024, were impacted by the following:

• Acquisitions within the ID segment have had a significant impact on the comparability of results between 2025 and 2024.

– Effective October 31, 2025, Octave acquired 100% of ArmadaCorp.

– Effective September 1, 2025, Octave exercised its option to convert its $3,500 convertible note investment in Pivix and now owns approximately 74%.

– Effective July 31, 2024, Octave acquired 60% of Octave Ventures.

• The sale of AAC on September 29, 2025.

AAC's results, including Octave's loss on the sale of AAC are reported within discontinued operations.

Refer to Note 1.

Background and Business Description and Note 5.

Discontinued Operations of the Notes to Consolidated Financial Statements in this Annual Report on Form 10-K for further details on the Sale and results for the years ended December 31, 2025 and 2024.

As a result of the Sale, Octave repaid all of the outstanding debt used to acquire Octave Ventures, amounting to $150,000, and purchased AAC's co-investment in Octave Ventures of $62,000.

Concurrent with the Sale, OSG entered into a number of transactions as discussed herein, including transactions intended to lower the long term run-rate of corporate operating expenses.

Octave Specialty Group, Inc.

2025 Form 10-K

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Ambac's results for the year ended December 31, 2024 compared to the year ended December 31, 2023, and for the year ended December 31, 2023 compared to the year ended December 31, 2022 were impacted by the following:

• Ambac's acquisitions within the Insurance Distribution segment have a significant impact on the comparability of results between 2024, 2023 and 2022.

Effective July 31, 2024, Ambac acquired 60% of Beat.

Effective August 1, 2023, Ambac acquired 80% of Riverton.

Effective November 1, 2022, Ambac acquired 85% of All Trans and 80% of Capacity Marine.

• In the fourth quarter of 2024, the pending sale of AAC was determined to qualify for discontinued operations presentation, resulting in a loss from disposal of $570,145 reported within loss from discontinued operations in 2024.

The income (loss) from discontinued operations were (497,167), 28,183 and 557,364 for the years ended December 31, 2024, 2023 and 2022.

Refer to Note 5.

Discontinued Operation for further details of these amounts.

The following describes the consolidated results of continuing operations of Ambac and its subsidiaries for 2024, 2023 and 2022.

The following describes the consolidated results of continuing operations of Octave and its subsidiaries for 2025 and 2024.

Gross Premiums Written.

Gross premiums written increased $109,484 for the year ended December 31, 2024, and $126,908 for the year ended December 31, 2023, compared to the comparable prior year periods, as shown below.

Gross premiums written decreased $(22,322) for the year ended December 31, 2025, and increased $109,484 for the year ended December 31, 2024, compared to the comparable prior year periods, as shown below.

Year Ended December 31, 2025 2024 2023

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$ 360,449 $ 382,771 $ 273,287

Growth is primarily driven by the number and size of active programs.

As of December 31, 2024, 2023, and 2022 we had 27, 23 and 14 programs across approximately ten lines of business, with a focus on the casualty sector and minimal property exposure.

Changes are primarily driven by the number and size of active programs.

As of December 31, 2025 and 2024 we had 25 and 27 programs, respectively, across approximately ten lines of business, with a focus on the casualty sector and minimal property exposure.

The decline in active programs from 2024 was a strategic decision to improve capital allocation and return on capital.

Net Premiums Written.

Net premiums written increased $8,858 for the year ended December 31, 2024 and $51,270 for the year ended December 31, 2023, compared to the comparable prior year periods, as shown below:

Net premiums written decreased $(14,784) for the year ended December 31, 2025, and increased $8,858 for the year ended December 31, 2024, compared to the comparable prior year periods, as shown below:

Year Ended December 31, 2025 2024 2023

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$ 73,898 $ 88,682 $ 79,824

Growth in net premiums written will typically track gross premiums written, but will also be impacted by the percentage of each program Everspan retains.

The decline in net premiums written will typically track gross premiums written but will also be impacted by the percentage of each program Everspan retains.

Everspan typically retains up to 30% of each program.

For the years ended December 31, 2025 and 2024, Everspan retained 20.5% and 23.2% of gross written premiums, respectively.

The increased retention rate in 2023 compared to 2022 was driven by Everspan's participation on two assumed reinsurance transactions which have an effective retention rate of 100%.

Everspan exited one of those programs in the fourth quarter of 2024, which contributed to the decline in retention rate in 2024 as compared to 2023.

The reduced retention rate in 2025 compared to 2024 was primarily driven by the managed non-renewal of certain programs.

Net Premiums Earned.

Net premiums earned for the year ended December 31, 2024, increased by $47,094 or 90.7% and for the year ended December 31, 2023, increased $38,042 or 274% compared to the respective priority years, as shown below.

Net premiums earned for the year ended December 31, 2025, decreased by $(31,773) or (32.1)% and increased by $47,094 or 90.7% for the year ended December 31, 2024, compared to the comparable prior year periods, as shown below.

Year Ended December 31, 2025 2024 2023

Net Premiums Earned $ 67,232 $ 99,005 $ 51,911

The increase in net premiums earned was driven by the growth in net premiums written.

The decrease in net premiums earned in 2025 compared to 2024 was driven by the changes in net premiums written and the managed non-renewal of certain programs.

Commission Income and Commission Expense.

The Insurance Distribution business earns commission income as a percentage of the premium it place with insurance, reinsurance and other capacity providers.

In some cases, the Insurance Distribution business will also earn profit commissions based on the underwriting performance of the business that it underwrites Profit commissions by their nature may be volatile whereas base commissions tend to be more steady.

The ID business earns commission income as a percentage of the premium it places with insurance, reinsurance and other capacity providers.

In some cases, the ID business will also earn profit commissions based on the underwriting performance of the business that it underwrites.

Profit commissions by their nature may be volatile whereas base commissions tend to be more steady.

Year Ended December 31, 2025 2024 2023

Gross Commissions $ 130,982 $ 82,992 $ 46,792

Profit commissions 12,400 9,031 4,489

Commission expense 37,037 40,876 29,465

Commission income was $130,982 and $82,992 for the years ended December 31, 2025 and 2024, respectively.

The increase was driven by organic growth in premiums placed as well as the acquisition of Beat in July 2024 and Riverton in August of 2023.

The increase was driven by organic growth in premiums placed as well as the acquisition of Octave Ventures in July 2024 and ArmadaCorp in October of 2025.

Commission expense will largely track changes in gross commission.

For the year ended December 31, 2024 and December 31, 2023 commission expense was $40,876 and $29,465 representing approximately 43% and 56% of commission income in each respective period.

The decrease in commission expense relative to commission income in 2024 relative to 2023 is primarily a result of the acquisition of Beat.

When third parties are paid commissions to obtain business, the majority of Beat's commission income is reported net of any distribution and commission expenses, due to the nature of its program agreements.

The majority of the Insurance Distribution Segment's other MGA/Us report their commission income gross of distribution and commission expenses.

Commission income was $51,281 compared to $30,695 for the years ended December 31, 2023 and 2022, respectively.

Growth was primarily driven by acquisitions during each of the periods including Riverton in August 2023 and All Trans and Capacity Marine in November 2022.

For the year ended December 31, 2023 commission expense was $29,465 compared to $17,641 for the year Ended December 31, 2022, representing approximately 57% of commission income in both periods.

Profit commissions were $12,400 and $9,031 for the years ended December 31, 2025 and 2024, respectively.

The increase in profit commissions was due to the acquisitions of Octave Ventures and ArmadaCorp, offset by contraction at Xchange.

For the December 31, 2025 and 2024 commission expense was $37,037 and $40,876, respectively, representing approximately 26% and 43% of commission income in each respective period.

The decrease in commission expense compared to commission income in 2025 relative to 2024 is primarily a result of the acquisition of Octave Ventures.

Because third parties are paid commissions to obtain business, the majority of Octave Ventures's commission income is reported net of any distribution and commission expenses, due to the nature of its program agreements.

The majority of the ID Segment's other MGA/Us report their commission income gross of distribution and commission expenses.

Program Fees.

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Program fees are charged as a percentage of premiums ceded to reinsurers as a component of total ceding commissions.

The growth is a function of higher premiums ceded to reinsurers;

driven by the growth in premiums written.

Ambac Financial Group, Inc.

2024 Form 10-K

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The growth is a function of premiums ceded to reinsurers;

driven by changes in direct premiums written.

Net Investment Income.

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Investments to the Consolidated Financial Statements, included in Part II, Item 8 in this Annual Report on Form 10-K.

Net investment income was $14,448, $13,159, and $4,503 for the years ended years ended December 31, 2024, 2023 and 2022, respectively.

Net investment income increased in 2024 compared to 2023 due to higher average yields and growth of the Everspan investment portfolio, partially offset by lower average net short term investment balances resulting from the acquisition of Beat, and lower returns on fund investments.

The increase in 2023 compared to 2022 resulted primarily from higher yields and a larger consolidated investment portfolio, following AFG's sale of intercompany debt obligations (which were eliminated in consolidation) in late 2022.

Net Investment Gains (Losses), including Impairments.

Net investment gains (losses) were $(497), $19, and $(62) during the years ended December 31, 2024, 2023 and 2022.

During 2024, the net loss included credit impairments of $(6,516) on certain minority investments in development stage companies held by AFG, offset by realized gains of $6,016 arising from the redemption and conversion of convertible notes.

Other gains (losses) related to sales in connection with routine portfolio management.

Net Gains (Losses) on Derivative Contracts.

Net gains (losses) on derivative contracts include results from FX forward contracts used to manage currency risk within the Insurance Distribution segment, as well as by AFG to protect against currency fluctuations leading up to the purchase of Beat.

Results also include changes in the fair value of warrants to purchase equity of certain development stage companies held by AFG.

Net derivatives gains in 2024 were driven by gains on AFG's FX forwards partially offset by fair value losses on owned warrants.

Results for 2023 and 2022 reflect fair value changes on the warrants.

There were no FX forward contracts in 2023 or 2022.

Net investment income was $10,647 and $14,448 for the years ended December 31, 2025 and 2024, respectively.

The decline is due to lower Corporate short-term yields and lower average investment balances resulting primarily from assets used for the acquisition of Octave Ventures, partially offset by the impact of higher average investment balances in the Insurance Distribution segment and at Everspan.

Octave Specialty Group, Inc.

2025 Form 10-K

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Servicing and Other Fees.

Servicing and Other Fees increased $14,066 for the year ended December 31, 2025.

Servicing and Other Fees include revenues earned for providing operational and administrative services to the Lloyd's syndicates managed by Octave Ventures, and its Managing Agency (Statera Managing Agency Limited).

This was previously managed by a third party managing agency and as of December 31, 2025 it is now managed by Statera Managing Agency Limited.

Other policy and brokerage fees are also included relating to the MGAs within Octave Ventures.

Servicing and other fees also include program administration (TPA), health connections, set-up and renewal fees related to ArmadaCorp.

Other Revenues .

Other revenues include (i) net investment gains (losses) on securities sold or called, net of investment impairment charges;

(ii) foreign exchange gains (losses) from the ID segment;

and (iii) net gains on derivative contracts, including FX forward contracts used to manage currency risk within the ID segment.

Other revenues for the years ended December 31, 2025 and 2024 , was $(4,780) compared to $10,480 in the prior year.

The decrease in Other revenue resulted primarily from higher foreign exchange losses from the ID segment, together with certain items impacting the 2024 results including gains on FX forward contracts used by Octave to mitigate currency risk leading up to the acquisition of Octave Ventures, a gain on Everspan's sale of one of its shell insurance companies and its licenses, and a realized gain on conversion of notes receivable to a preferred stock position at Corporate.

The decrease was partially offset by reduction in Corporate investment impairment charges.

Losses and Loss Adjustment Expenses (Benefit).

Losses and loss adjustment expenses increased $35,914 for the year ended December 31, 2024, compared to the prior year.

The increase was primarily due to the growth of the business.

Everspan's loss and LAE ratio was 73.4% and 70.7% for the years ended December 31, 2024 and 2023, respectively, inclusive of prior years adverse development of 4.7% and 0.3%, respectively.

The shift in the loss and LAE ratio was driven by commercial auto loss experience in the prior accident years and a higher selected loss ratio for programs in runoff.

In the fourth quarter of 2024 management decided to set loss reserves for programs that are runoff at the high end of the actuarial loss range, given these program can experience greater loss volatility than active programs.

This change to set runoff reserves at the high end of the range resulted in a 1 percentage point increase in

the loss and LAE ratio for the year ended December 31, 2024 compared to our prior reserving method.

Losses and loss adjustment expenses decreased $25,433 for the year ended December 31, 2025, compared to December 31, 2024.

The decrease was primarily due to the reduction in premium related to non-renewal of certain programs.

Everspan's loss and loss adjustment expense ("LAE") ratio was 70.2% and 73.4% for the years ended December 31, 2025 and 2024, respectively, inclusive of prior years' adverse development of 7.4% and 4.7%, respectively.

Excluding prior period development, Everspan's loss and LAE ratio were 62.8% and 68.6%, respectively.

The shift in the overall loss and LAE and the loss and LAE ratios, excluding prior period development, was primarily due to the managed non-renewal of certain programs.

Prior year adverse development was driven primarily by higher excess liability and commercial auto loss experience in the prior accident years for year ended December 31, 2025, whereas the year ended December 31, 2024, included higher commercial auto loss experience in the prior accident years and a higher selected loss ratio for programs in runoff.

Additionally, in 2024 management set loss reserves for programs that are runoff at the high end of the actuarial loss range, given these programs can experience greater loss volatility than active programs.

This change to set runoff reserves at the high end of the range resulted in a 1 percentage point increase in the loss and LAE ratio for the year ended December 31, 2024.

Everspan's loss and LAE ratio will vary based on changes in the lines of business underwritten and retained, loss reserving policy, loss development trends, inflation rates and other economic and industry specific factors.

The increase in the loss and LAE ratio for the year ended December 31, 2024, compared to December 31, 2023, was partially offset by a benefit to acquisition costs as a result of sliding scale commission arrangements with program partners.

The decrease in the loss and LAE ratio for the year ended December 31, 2025, compared to December 31, 2024, additionally had further improvement driven by benefits within acquisition costs as a result of sliding scale commission arrangements with program partners.

Certain Everspan programs were structured to include sliding scale commission arrangements within a loss ratio range.

These sliding scale arrangements help to partially mitigate net income volatility.

Such benefit reduced the Specialty Property and Casualty Insurance segments expense ratio by 0.8% and 3.2% for the years ended December 31, 2024 and 2023, respectively.

Loss and loss expenses incurred increased for the year ended December 31, 2023, relative to the year ended December 31, 2022, primarily due to the growth of the business.

Everspan's loss and LAE ratio was 70.7% and 65.4% for the years ended December 31, 2023 and 2022, respectively, inclusive of prior years adverse development of 0.3% and 0.2%, respectively.

The shift in the loss and LAE ratio was primarily driven by commercial auto loss experience in the current accident year and the addition of non-standard personal auto and workers compensation programs through assumed reinsurance.

The increase in the loss and LAE ratio for the year ended December 31, 2023, compared to the year ended December 31, 2022, was partially offset by a benefit to acquisition costs as a result of sliding scale commission arrangements with program partners.

Such benefit reduced the Specialty Property and Casualty Insurance segments expense ratio by 3.2% and 1.3% for the years ended December 31, 2023 and 2022, respectively.

Such benefit reduced the Specialty Property and Casualty Insurance segments expense ratio by 2.1% and 0.8% for the years ended December 31, 2025 and 2024.

Everspan's insurance risk is primarily concentrated via casualty insurance, primarily related to commercial auto, workers compensation, excess and general liability lines of business.

Everspan continuously monitors its diversification in lines of business and manages its concentration via MGA/U program oversight of policy limits and premium caps and via reinsurance to third parties.

Loss and loss adjustment expenses incurred may be adversely impacted by increasing economic and social inflation, particularly within the commercial auto business.

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The estimation of loss reserves may also be more difficult during extreme events, such as a pandemic, or during the persistence of volatile or uncertain economic conditions, due to, amongst other reasons, unexpected changes in behavior of judicial decisions, claimants and policyholders, including fraudulent reporting of exposures and/or losses.

Additionally, Everspan may be subject to disputes with policyholders regarding the scope and extent of coverage offered under Everspan's policies or may be subject to disputes which may lead to liabilities beyond those which are anticipated or reserved, including liabilities in excess of policy limits.

Due to the inherent uncertainty underlying loss reserve estimates, the final resolution of the estimated liability for loss and loss adjustment expenses will likely be higher or lower than the related loss reserves at the reporting date.

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The following table provides a summary of G&A expenses for the periods presented:

Ambac Financial Group, Inc.

2024 Form 10-K

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Year Ended December 31,

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The increase in 2025 compared to 2024 was primarily due to the following:

• Higher compensation costs of $15,878 primarily due to acquired MGAs in the Insurance Distribution segment partially offset by the favorable variance from the impact of performance factor adjustments on incentive compensation expense.

• Higher non-compensation costs of $46,303, driven primarily by higher acquisition related costs of $26,821, restructuring costs of $6,990 in anticipation of the sale of AAC, higher Insurance Distribution expenses of $7,707 driven mostly by the increased scale of the business, and and the write-down of certain capitalized software costs.

Growth in Specialty Property and Casualty Insurance also contributed to higher overall costs.

The increase in G&A expenses in 2023 compared to 2022 was primarily due to the following:

• Higher compensation costs associated with acquisitions and the growth of the Insurance Distribution and Specialty Property and Casualty Insurance businesses, and the adverse variance from the impact of performance factor adjustments on incentive compensation expense.

• Higher non-compensation expenses related to acquisitions in the Insurance Distribution segment.

Intangible Amortization.

Intangible amortization was $17,603, $4,152 and $2,921 for the years ended years ended December 31, 2024, 2023 and 2022;

all increases relate to acquisitions within the Insurance Distribution segment.

• Higher compensation costs of $45,501 were primarily due to (i) the acquisition of ArmadaCare as well we the launch of new (de-novo) MGAs such as Pivix (ii) the inclusion of a full year of Octave Ventures in 2025 compared to a partial year in 2024, and (iii) severance and accelerated

Octave Specialty Group, Inc.

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incentive compensation expenses incurred in relation to the sale of AAC.

• Higher non-compensation costs of $16,957, driven primarily by higher restructuring costs of $15,524 in relation to the sale of AAC, the inclusion of a full year of Octave Ventures in 2025 and the acquisition of ArmadaCorp in 2025, partially offset by decrease in Corporate costs associated with acquisitions of $17,906.

Intangible Amortization and Depreciation.

Intangible amortization and depreciation for the years ended December 31, 2025 and 2024 was $41,952 compared to $19,947 in the prior year.

The increases are due to intangible amortization for the year ended December 31, 2025, related to the ArmadaCorp and Octave Ventures acquisition.

Interest Expense.

Interest expense for the year ended December 31, 2024 was $9,379, related to the short-term debt used in funding the Beat acquisition.

No interest expense was incurred in the company's continuing operations for the year ended December 31, 2023 and 2022.

Interest expense for the years ended December 31, 2025 and 2024 was $18,640 and $9,379, respectively, due to higher average debt outstanding in 2025.

Octave borrowed under a credit facility to partially fund the Octave Ventures acquisition in the third quarter of 2024.

This debt was repaid on September 29, 2025.

Octave borrowed under a new credit facility, at a lower rate, on October 31, 2025, to partially fund the ArmadaCorp acquisition.

Provision for Income Taxes.

The provision for income taxes (benefit) from continuing operations for the years ended December 31, 2024, 2023 and 2022, was $(924), $(989) and $(462) , respectively.

At December 31, 2024, the Company had approximately $3,615,708 of U.S.

Federal net ordinary operating loss carryforwards, including approximately $1,663,087 at AFG.

The provision for income tax (benefit) for the years ended December 31, 2025 and 2024, was $(5,211) and $(924), respectively.

The tax benefit recognized in the current year includes current tax expense associated with Octave Ventures operations in the U.K.

offset by deferred tax benefits related to the recognition of deferred tax assets generated by Octave Ventures operations in the U.S.

and amortization of finite-lived intangible assets associated with Octave Ventures operations both in the U.K.

At December 31, 2025, the OSG had approximately $1,690,842 of U.S.

federal net ordinary operating loss carryforwards.

Results of Operations by Segment

Insurance Distribution

Year Ended December 31, 2025 2024 2023

Premiums placed $ 951,781 $ 493,372 $ 230,606

Commission income $ 143,381 $ 92,023 $ 51,281

Commission expense 37,037 40,876 29,465

Net commissions 106,344 51,147 21,816

Servicing and other fees 20,419 6,353 —

Net investment income 1,514 787 64

Other income (expense) (1,588) 73 200

General and administrative 89,771 38,707 10,598

EBITDA 36,918 19,653 11,483

Interest Expense 18,640 9,379 —

Depreciation 690 481 42

Intangible amortization 38,044 17,602 4,152

Pretax income (loss) $ (20,456) $ (7,809) $ 7,289

Octave's stockholders equity (1)

$ 757,850 $ 218,344 $ 102,473

(1) Represents the share of Octave stockholders equity for each subsidiary within the ID segment, including intercompany eliminations.

Octave's ID companies are compensated for their services primarily by commissions paid by insurance carriers for underwriting, structuring and/or administering polices and, in some cases, the managing of claims under an agency agreement.

Commission revenues are usually based on a percentage of the premiums placed.

In addition, we are eligible to receive profit sharing contingent commissions ("Profit Commissions") based on the underwriting results of certain programs underwritten by our MGA/Us.

These profit commissions may fluctuate from period to period resulting in some variability in revenue and earnings.

The ID segment placed premiums for were approximately $951,781 for the year ended December 31, 2025, up $458,409 or 93% as compared to the year ended December 31, 2024.

The increase was primarily driven by the inclusion of a full year of Octave Ventures, the acquisition of ArmadaCorp and organic growth.

The ID pretax loss for the year ended December 31, 2025 and 2024, was $(20,456) and $(7,809), respectively, up $(12,647) or 162%, compared to year ended December 31, 2024.

The increase was primarily driven by higher intangible amortization and interest expense related to acquisitions.

The ID EBITDA for the years ended December 31, 2025 and 2024 was $36,918 and $19,653, respectively, up $17,265 or 88%.

The increase was primarily driven by increase in commission income due to acquisitions and organic growth.

ID businesses may experience seasonal impacts on their revenues and net results.

For example, Employer Stop Loss business and other A&H lines produce the majority of their business in January and July, which results in revenue and earnings concentrations in the first and third quarters of each

Octave Specialty Group, Inc.

2025 Form 10-K

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calendar year.

Seasonal impacts on the ID segment, and therefore Octave's results, may increase or decrease and shift over time depending on the relative growth of certain classes of business as well as the impact of acquisitions.

G&A Expenses G&A expenses for the year ended December 31, 2025, were $89,771 compared to the year ended December 31, 2024, of $38,707 For the current year, compensation expense increased by $35,408 and non-compensation expenses increased by $15,656 primarily due to the addition of the operating expenses of ArmadaCorp and Octave Ventures, which were acquired in October 2025 and July 2024, respectively, and the consolidation of Pivix in September 2025.

Specialty Property and Casualty Insurance

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Net premiums earned $ 67,232 $ 99,005 $ 51,911

Net investment income 6,399 3,795 1,605

Net investment gains (losses), including impairments 1 (36) (46)

Investment income 6,811 6,400 3,795

Program fees 14,322 13,506 8,437

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Policy acquisition costs 15,790 23,666 10,557

General and administrative expenses 17,806 16,449 13,205

General and administrative 22,090 17,806 16,449

Net (gain) loss attributable to NCI interest — 2 (1)

Pretax income (loss) $ 3,330 $ 12,222 $ 383

EBITDA 3,330 $ 12,222 $ 383

Pretax income (loss) from continuing operations $ 12,222 $ 383 $ (6,346)

Retention Ratio (1)

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105.2 % 101.6 % 106.5 %

Ambac's stockholders equity (5)

Octave's stockholders equity (5)

$ 140,278 $ 133,266 $ 121,678

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(4) Combined ratio is defined as Loss and LAE ratio plus Expense Ratio.

(5) Represents Ambac stockholders equity in the Specialty Property and Casualty Insurance segment, including intercompany eliminations.

(5) Represents Octave stockholders equity in the Specialty Property and Casualty Insurance segment, including intercompany eliminations.

The Specialty Property and Casualty Insurance segment has grown significantly since underwriting its first program in May 2021.

Twenty-seven programs were authorized to issue policies as of December 31, 2024.

The growth in both the number and size of these programs has contributed to the increase in gross and net premiums written, net premiums earned, program fees, losses and loss adjustment expenses incurred and amortization of deferred acquisition costs.

Additionally, EBITDA and pre-tax income has increased since 2022 due to the growth of the business and, in 2024, due to the gain on sale of CNIC, resulting in a gain of approximately $7,500 The combined ratios have decreased since 2022 as Everspan has begun to gain scale, diversify its book of net insured business and benefit from sliding scale commissions that helped to partially moderate changes in the loss and LAE ratio.

Ambac Financial Group, Inc.

2024 Form 10-K

Table of Contents ,

G&A Expenses General and administrative costs increased for the year ended December 31, 2024, relative to the year ended December 31, 2023, primarily resulting from the growth in Everspan's staffing and operations.

The impact of growing operations was muted in 2023 compared to 2022 by costs incurred in 2022 in connection with the acquisition of additional shell insurance companies.

Insurance Distribution

Year Ended December 31, 2024 2023 2022

Premiums placed $ 493,372 $ 230,606 $ 135,467

Commission income $ 92,023 $ 51,281 $ 30,695

Commission expense 40,876 29,465 17,641

Net commissions 51,147 21,816 13,054

Net investment income 787 64 —

Net gains (losses) on derivatives 106 — —

Other income (expense) 6,320 200 715

General and administrative expenses 38,707 10,598 6,293

EBITDA 19,653 11,483 7,476

Depreciation 8 42 31

Intangible amortization 17,602 4,152 2,921

Pretax income (loss) $ (7,809) $ 7,289 $ 4,524

Ambac's stockholders equity (1)

$ 276,886 $ 105,377 $ 92,802

(1) Represents the share of Ambac stockholders equity for each subsidiary within the Insurance Distribution segment, including intercompany eliminations.

Ambac's Insurance Distribution companies are compensated for their services primarily by commissions paid by insurance carriers for underwriting, structuring and/or administering polices and, in some cases, the managing of claims under an agency agreement.

Commission revenues are usually based on a percentage of the premiums placed.

In addition, we are eligible to receive profit sharing contingent commissions on certain of its programs based on the underwriting results of the policies it places with the carrier, which may cause some variability in revenue and earnings.

The Insurance Distribution segment placed premiums for its carriers of approximately $493,372 for the year ended December 31, 2024, up $262,766 or 114% as compared to the year ended December 31, 2023.

The increase was primarily driven by acquisitions and organic growth.

Premiums placed were approximately $230,606 for the year ended December 31, 2023, up $95,139 or 70% compared to the year ended December 31, 2022.

The increase was primarily driven by acquisitions and organic growth.

The Insurance Distribution pretax loss for the year ended December 31, 2024, was ($7,810), down $15,098 or 207%, compared to year ended December 31, 2023.

The decrease was primarily driven by an increase in intangible amortization and interest expense related to acquisitions.

Pretax income for the year end December 31, 2023, was $7,288, up $2,765 or 61% compared to December 31, 2022.

The increase was primarily driven by an increase in commission income due to acquisitions and organic growth.

The Insurance Distribution EBITDA for the year ended December 31, 2024 was $19,653, up $8,170 or 71% compared to the year ended December 31, 2023.

The increase was primarily driven by increase in commission income due to acquisitions and organic growth.

The EBITDA for the year ended December 31, 2023, was $11,483, up $4,007 or 54% compared to the year ended December 31, 2022.

The increase was primarily driven by increase in commission income due to acquisitions and organic growth.

Insurance Distribution businesses may experience seasonal impacts on their revenues and operations.

For example, Employer Stop Loss business, our largest A&H line of business, has seasonality in January and July, which results in revenue and earnings concentrations in the first and third quarters each calendar year.

Seasonal impacts on the Insurance Distribution segment, and therefore Ambac's results, may increase or decrease over time depending on the relative growth of certain classes of business as well as acquisitions.

G&A Expenses General and administrative expenses for the year ended December 31, 2024, increased as compared to the year ended December 31, 2023, as a result of the addition of the operating expenses of Riverton and Beat, which were acquired in August 2023 and August 2024, respectively.

General and Administrative expenses for the year ended December 31, 2023, increased as compared to the year ended December 31, 2022, as a result of the addition of the operating expenses of All Trans and Capacity Marine which were both acquired in November 2022, and Riverton acquisition in August 2023.

Twenty-five programs were authorized to issue policies as of December 31, 2025, a decrease compared to twenty-seven as of December 31, 2024.

Program counts and premium production, including gross and net premiums written and net premiums earned declined in 2025 from 2024 primarily due to

managed non-renewals of certain programs to improve capital allocation and return on capital.

Partially offsetting this decline in premium production is lower losses and LAE and lower policy acquisition costs.

Additionally, EBITDA and pre-tax income has decreased as compared to year ended December 31, 2024.

This is primarily due to the gain on sale of CNIC recognized in 2024 of approximately $7,500.

The combined ratio increased in 2025 versus 2024 due to higher general and administrative expenses as Everspan continues to build out its staffing and operations combined with the impact of the lower net premiums earned base.

Lower premiums earned results in greater sensitivity to changes in losses and expenses.

G&A Expenses G&A costs increased for the year ended December 31, 2025, relative to the year ended December 31, 2024, primarily due to net growth in Everspan's staffing, outside services and expanded business operations.

Corporate consists of our holding company and shared services operations ("Corporate").

Corporate provides financial, technological and human resources to Ambac's two segments and is responsible for the function of AFG as a publicly traded company.

Corporate revenues totaled $10,259 and $9,080 and $3,737 for the years ended December 31, 2024, 2023 and 2022, respectively.

Corporate revenue is mostly generated from investment of AFG's liquid resources and investment results from its previously made strategic investments, including certain investments in MGA/Us and an insurtech fund.

Investment revenues comprised of net investment income and net investment gains (losses), including impairments were $6,764, $9,353 and $2,883 in 2024, 2023 and 2022, respectively.

The decline from 2023 to 2024 is attributable to the use of liquid resources for the acquisition of Beat.

The increase from 2022 to 2023 reflected higher short-term yields and investment of funds that were in intercompany investments for part of 2022.

Corporate also had net derivative gains in 2024 of $3,910 related to FX hedging of the purchase price of Beat.

The remainder of Corporate revenues in the periods were driven by derivative gains and losses on a warrant to purchase equity of a minority owned MGA/U.

As a result of the Company reporting the results of operations of AAC as discontinued operations, certain corporate costs charged to AAC have been reported in Net income from continuing operations and included in Corporate expenses for all years presented.

Corporate expenses were $74,516 for the year ended

Ambac Financial Group, Inc.

Corporate provides financial, technological and human resources to Octave's two segments and is responsible for the function of OSG as a publicly-traded company.

Corporate revenues totaled $(907) and $10,259 for the years ended December 31, 2025 and 2024, respectively.

Year Ended December 31, 2025 2024 2023

Investment income 2,323 7,261 9,298

Net derivative gains (losses) — 3,910 (279)

Other (3,230) (912) 61

Total revenue (907) 10,259 9,080

Investment income decreased for the year ended December 31, 2025, relative to year ended December 31, 2024, primarily due to lower average invested assets due to the use of funds for the (i) acquisition of Octave Ventures in the third quarter 2024, (ii) the acquisition of ArmadaCorp in the fourth quarter of 2025, and (iii) the repurchase of our stock in October 2025, as well as lower yields on short-term invested assets in 2025.

Both years included write-downs in the carrying value on investments in preferred securities that are carried at cost less impairment.

Corporate revenues in 2024 included net derivative gains related to FX hedging of the purchase price of Octave Ventures, together with realized gains from the conversion and early settlement of certain convertible notes, including make-whole payments, which are included in Other revenue.

Corporate expenses were $82,981 for the year ended December 31, 2025, up $8,465 from the year ended December 31, 2024.

Corporate expenses for the years ended December 31, 2025 and 2024 included compensation expenses of $33,841 and $25,791, respectively, and non-compensation expense of $49,140 and $48,725, respectively.

Compensation expense is higher mostly due to (i) impact of incentive costs for $5,079 related to compensation restructuring and (ii) severance costs of $4,878.

Non-compensation expenses were relatively flat but included increases of $6,481 from an early lease termination payment,

Octave Specialty Group, Inc.

2025 Form 10-K

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December 31, 2024, up $33,542 from the year ended December 31, 2023.

Corporate expenses for the year ended 2024 and 2023 included compensation expenses of $25,791 and $29,664 and non-compensation and depreciation expense of $48,725 and $11,310, respectively.

The increase in non-compensation corporate expenses from 2023 to 2024 mainly related to higher acquisition related costs of $26,821 including legal and advisory fees associated with the Beat acquisition, restructuring costs of $6,990 in anticipation of the sale of AAC, and the write-down of certain capitalized software costs.

Corporate expenses were $40,974 for the year ended 2023, up $3,353 for the year ended 2022.

The increase in Corporate expenses from 2022 to 2023 mainly related to compensation from growing the Cirrata businesses.

Corporate expenses for the year ended 2023 and 2022 included compensation expenses of $29,664 and $26,842 and non-compensation and depreciation expense of $11,310 and $10,779, respectively.

restructuring fees of $15,712 from the sale of AAC and disposal of software of $1,017, offset by decreases in acquisition costs of $18,282 and franchise tax expense of $1,323.

LIQUIDITY AND CAPITAL RESOURCES

Holding Company Liquidity

AFG is a holding company organized as a legal entity separate and distinct from its operating subsidiaries.

AFG’s liquidity is primarily dependent on its net assets, excluding the operating subsidiaries that it owns, totaling $119,214 as of December 31, 2024, and $146,583, as of December 31, 2023, and secondarily on investment income, distributions, tax and expense sharing payments from its operating subsidiaries and third party capital (e.g.

OSG is a holding company organized as a legal entity separate and distinct from its operating subsidiaries.

OSG’s liquidity is primarily dependent on its net assets, excluding the operating subsidiaries that it owns, totaling $76,484 and $119,214 as of December 31, 2025 and December 31, 2024, respectively, and secondarily on investment income, distributions, tax and expense-sharing payments and third-party capital (e.g.

from credit facilities and equity issuance).

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Total $ 76,484 $ 119,214

(1) Includes strategic debt and minority equity investments in insurance services businesses of $20,617 and $26,420 at December 31, 2024 and 2023, respectively.

The decrease in AFG net assets, excluding its equity investments in subsidiaries, during 2024 was driven by net cash outflows for the acquisition of Beat Capital Partners Limited ("Beat"), transaction costs associated with the sale of AAC, and other operating expenses, partially offset by interest income and distributions received from Insurance Distribution subsidiaries.

• Effective July 31, 2024, AFG closed the acquisition of a 60% controlling interest in Beat.

In connection with the acquisition, Cirrata incurred $150,000 of debt maturing in 364-days funded by a global bank (the "Credit Facility").

Repayment of debt under the Credit Facility is guaranteed by AFG.

AFG is required to repay this debt upon the closing of the sale of AAC or otherwise refinance such short-term debt with longer-term debt.

The Credit Facility includes covenants that restrict our ability to manage capital resources by limiting, among other actions, the issuance of debt or capital stock;

the creation of liens;

the disposition of assets;

engaging in transactions with affiliates;

making restricted payments, including dividends

and the purchase or redemption of capital stock;

and making acquisitions and other investments.

The Credit Facility also requires the prepayment of the borrowings thereunder with proceeds of certain debt or equity issuances and certain asset sales.

These requirements will impact our financial and operational flexibility while the Credit Facility remains in place.

(1) Includes minority equity investments in insurance services businesses of $17,517 and $20,618 at December 31, 2025 and December 31, 2024, respectively.

The decrease in OSG net assets, excluding its equity investments in subsidiaries, during the 2025 was driven primarily by net cash outflows from operating expenses, contributions to subsidiaries, open market stock repurchases, and the purchase of ArmadaCorp, partially offset by net proceeds from the sale of AAC, interest income, and distributions received from subsidiaries.

• OSG acquired ArmadaCorp for $250,000 which was funded by cash and $120,000 of loans from a global bank.

• OSG received $420,000 of proceeds from the sale of AAC, plus an additional $4,300, less applicable legal, advisory and other expenses incurred in connection with the Sale.

• In connection with the 2024 Octave Ventures acquisition, Octave Partners incurred $150,000 of debt funded by a global bank.

Upon the closing of the sale of AAC in 2025, OSG repaid the $150,000 loan.

• OSG's acquisition of Octave Ventures was partially funded by AAC's co-investment in the amount of $62,000.

Upon the close of the AAC sale in 2025, OSG purchased AAC's co-investment at a price resulting in a 7.5% rate of return per annum to AAC.

• OSG repurchased 3.4 million of its common shares for $29,942 under a share repurchase program.

Everspan's ability to make future dividend payments will mostly depend on its future profitability relative to its capital needs to support growth.

Everspan is not expected to pay dividends in the near term.

• Under an inter-company cost allocation agreement, AFG is reimbursed by its subsidiaries, including AAC through the date of its sale, for a portion of certain operating costs and expenses

• If AFG were to not sell AAC, its ability to receive dividends from AAC and the timing of any such potential dividends would depend on receipt of regulatory approval and the satisfaction of certain obligations senior to AFG's equity interest.

• Cirrata does not have any regulatory restrictions on its ability to make distributions.

AFG received distributions from Cirrata of $10,739 and $8,032 during the years ended December 31, 2024 and 2023.

Subject to the required approvals for the sale of AAC as described in Note 5.

Discontinued Operation, AFG will receive proceeds of $420,000.

From the proceeds, AFG, is required to purchase AAC's co-investment ($62,000 plus a 7.5% return from the date of funding) in Cirrata V LLC, the holding company established to acquire Beat, repay the Credit Facility ($150,000 plus any accrued and unpaid interest) and pay other transaction expenses.

AFG's principal uses of liquidity are:

(i) the payment of operating expenses, including interest on indebtedness and costs to explore opportunities to grow and diversify Ambac and (ii) making capital investments to acquire, grow and/or capitalize new and/or existing businesses;

such capital investments include investments in technology to support the efficient operation of our Specialty Property and Casualty Insurance and Insurance Distribution businesses.

• Funding puts, calls and other capital commitments could require payments from AFG, the magnitude of which may depend on the performance of the underlying businesses and other considerations, of approximatel y $358,000 through 2030.

• AFG may also provide short-term financial support, primarily in the form of loans, to its operating subsidiaries to support their operating requirements.

AFG supported the development of the Specialty Property and Casualty Insurance business, and its acquisitions, with cash contributions of $6,000 to the Everspan group of companies during the year ended December 31, 2023.

In the opinion of the Company’s management, the net assets of AFG are currently sufficient to meet AFG’s current liquidity

Ambac Financial Group, Inc.

Everspan did not pay dividends to OSG in 2025 and is not expected to pay dividends in 2026;

however, it does make tax payments to OSG in accordance with a Tax Sharing Agreement.

For the year ended December 31, 2025, Everspan paid $2,014 in tax payments to OSG.

Octave Partners does not have any regulatory restrictions on its ability to make distributions.

OSG received distributions from

Octave Partners of $15,363 and $10,739 during the years ended December 31, 2025 and 2024, respectively.

OSG's principal uses of liquidity are:

(i) the payment of G&A expenses, including costs to explore opportunities to grow and diversify Octave, (ii) making capital investments to acquire, grow and/or capitalize new and/or existing businesses, including through the acquisition of noncontrolling interests ("NCI") as a result of the exercise of outstanding puts and/or calls, and (iii) making investments in technology and other operational infrastructure to improve the operational effectiveness and efficiency of our business and to support its growth.

Funding puts, calls and other capital commitments would require payments from OSG, the magnitude of which will ultimately depend on the performance of the underlying businesses, whether or not the puts or calls are exercised, FX rates and other considerations.

OSG would expect the funding requirements for such obligations not to exceed approximately $50,000 in 2026, but such amount could be higher based on those considerations outlined above.

In 2026 OSG intends to fund potential NCI puts using additional debt.

OSG is seeking to fund future NCI puts and calls using internal funding, but may also seek additional debt or other funding sources.

OSG may satisfy certain put/call obligation using common equity for up to 35% of the amount of the exercise value.

The need for additional capital to fund future NCI puts and calls will depend on a number of considerations, including distribution levels from subsidiaries, the potential for additional acquisitions, other capital investment demands, and stock repurchases.

In addition, the value of the NCI puts and calls at the time of exercise will also have an impact on our need for additional funding.

OSG may also provide short-term financial support, primarily in the form of loans, to its operating subsidiaries to support their operating requirements.

In the opinion of the Company’s management the net assets and expected funding sources of OSG are currently sufficient to meet OSG’s current liquidity requirements.

However, events, opportunities, acquisitions, the exercise of puts and calls, the need to refinance outstanding debt, share repurchases or other circumstances could require OSG to seek additional capital (e.g.

through loans or the issuance of debt, equity, convertible or hybrid securities).

In connection with the ArmadaCorp acquisition on October 31, 2025, the Company borrowed $120,000 in the form of a five-year $100,000 term loan and a five-year $20,000 revolving credit facility (together, the "Credit Facilities").

The Credit Facilities include covenants that restrict our ability to manage capital resources by requiring maintenance of certain financial ratios and restricting indebtedness, liens, mergers, sales of assets, investments, restricted payments (such as dividends), and affiliate transactions, among other restrictions.

The Credit Facility also requires the prepayment of the borrowings thereunder with proceeds of certain asset sales, recovery events, issuances of indebtedness and indemnity payments.

These requirements will impact our financial and operational flexibility while the Credit Facility remains in place.

Debt to the Consolidated Financial Statements included in this Annual Report for further detail about the Credit Facilities.

Octave Specialty Group, Inc.

2025 Form 10-K

Table of Contents ,

requirements.

However, events, opportunities or circumstances could arise that may cause AFG to seek additional capital (e.g.

through the issuance of debt, equity or hybrid securities).

Operating Companies' Liquidity

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Insurance Distribution:

The liquidity requirements of our Insurance Distribution subsidiaries are met primarily by funds generated from commission (both base and profit commissions) and fees.

The liquidity requirements of our ID subsidiaries are met primarily by funds generated from commission (both base and profit commissions) and fees.

Base commissions and fees are generally received monthly, whereas profit commissions are received only if the business underwritten is profitable.

Cash provided from these sources is used primarily for commissions paid to sub-producers, operating expenses and distributions to AFG and other members.

Cash provided from these sources is used primarily for commissions paid to sub-producers, operating expenses and distributions to OSG and other members.

Cash Held at Banks

Octave maintains cash and investment accounts, including premium trust accounts, at depository institutions in amounts in excess of the limits insured by the FDIC and in countries other than the U.S.

Octave's cash balances held at banks were $68,440 as of December 31, 2025, including cash of Octave's insurance distribution subsidiaries held in regional banks of $33,263 as of December 31, 2025.

Consolidated Cash Flow Statement Discussion

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Operating Activities for Continuing Operations

Operating cash flows during the year ended December 31, 2024 were adversely impacted by transaction related costs for the acquisition of Beat and the sale of AAC, together with interest payments on Cirrata's short term borrowing.

Operating cash flows for the year ended December 31, 2023, were lower than 2022 primarily due to the receipt of accrued interest in connection with the sale of AAC surplus note investments during 2022, partially offset by growth in the Everspan and Cirrata businesses.

Operating cash flows during the year ended December 31, 2025 were adversely impacted by transaction-related costs for the acquisition of Octave Ventures and the sale of AAC, together with interest payments on Octave Partners's short-term borrowing.

Future operating cash flows will primarily be impacted by net premium collections, investment coupon receipts, fee and net commission revenues, operating expenses, net claim and loss expense payments and debt interest payments.

Investing Activities for Continuing Operations

Investing activities for the year ended December 31, 2024, included net cash used in the Beat acquisition of $243,776 and net cash proceeds from the sale of CNIC of $14,119.

Investing activities for the years ended December 31, 2023, and December 31, 2022 included net cash used in MGA/U acquisitions of $6,953 and $18,442, respectively.

Investing activities for the year ended December 31, 2025 included net cash used in the ArmadaCorp acquisition of $217,940 and net cash proceeds from the sale of AAC of $407,300.

Financing Activities for Continuing Operations

Financing activities for the year ended December 31, 2024, included borrowing of $147,000 under a short-term credit facility and receipt of a $62,000 co-investment from AAC (discontinued operation) to fund the acquisition of Beat and share repurchases of $11,698.

Concurrent with the AAC Sale, AFG will purchase AAC's co-investment for an amount equal to AAC's $62,000 investment plus 7.5% per annum thereon.

Financing activities for the years ended December 31, 2023, and December 31, 2022, included share repurchases of $4,510 and $14,217, respectively.

Financing activities for the year ended December 31, 2025 included net borrowings of $117,470 under five year credit facilities for the ArmadaCorp acquisition and concurrent with the AAC Sale, repayment $150,000 of short term borrowing, the repurchase of AAC's co-investment used to partially fund the purchase of Octave Ventures for $67,309 and share repurchases of $29,942.

Financing activities for the year ended December 31, 2024 included borrowing of $147,000 under a short-term credit facility, receipt of a $62,000 co-investment from AAC to fund the acquisition of Octave Ventures and share repurchases of $11,698.

Future financing cash flows will be primarily impacted by paydowns and maturities of debt;

share repurchases;

acquisitions of noncontrolling interest shares;

other capital management activity and distributions to noncontrolling interests.

Cash Flows from Discontinued Operations

Cash flows pertaining to discontinued operations are reported separately on the Consolidated Statements of Cash Flows.

The primary driver of the cash flows from discontinued operations was the continued run-off of the financial guarantee business.

Since the agreement to sell AAC, the operations have been substantially separated and the potential impacts on future liquidity to the continuing operations are expected to be insignificant.

The primary driver of the cash flows from discontinued operations was the continued runoff of the financial guarantee business, including the collection of premiums, interest income and subrogation, and the payment of claims, expenses and foreign taxes.

Since the agreement to sell AAC, the operations were substantially separated and with the Sale having been completed in September 2025, reporting periods after September 30, 2025 will exclude any discontinued operations activity.

BALANCE SHEET

Total assets decreased by approximately $369,942 from December 31, 2023, to $8,058,378 at December 31, 2024, (decrease of $1,249,256 related to discontinued operation, partially offset by an increase of $879,314 from continuing operations).

Total liabilities decreased by approximately $133,770 from December 31, 2023, to $6,862,857 as of December 31, 2024, (decrease of $654,181 relating to discontinued operation, partially offset by an increase of $520,411 from continuing operations).

Total assets decreased by approximately $5,835,061 from December 31, 2024 to $2,223,317 at December 31, 2025 (decrease of $6,267,200 related to discontinued operations, partially offset by an increase of $432,139 from continuing operations).

Total liabilities decreased by approximately $5,725,706 from December 31, 2024 to $1,137,151 as of December 31, 2025 (decrease of $5,887,685 relating to discontinued operations, partially offset by an increase of $161,979 from continuing operations).

As of December 31, 2025, total stockholders’ equity was $833,185, compared with total stockholders’ equity of $996,119 at December 31, 2024.

This decrease was primarily the result of the net loss attributable to common stockholders for the year ended December 31, 2024 of $556,449 and translation losses on the consolidation of AFG's foreign subsidiaries of $22,156, partially offset by increases to nonredeemable NCI of $149,095 due to the Beat acquisition, adjustments to the redemption value of redeemable NCI of $53,210 and the issuance of common stock for the Beat acquisition of $29,229.

Ambac Financial Group, Inc.

This decrease was primarily the result of the net loss attributable to common stockholders for the year ended December 31, 2025, of $261,692, decreases to Octave Ventures nonredeemable NCI of $44,023 , adjustments to the redemption value of redeemable NCI of $7,899, and cost of shares repurchased of $29,942.

The decrease was partially offset by translation gains of $176,166, including changes associated with Discontinued Operations of $158,505.

Octave Specialty Group, Inc.

2025 Form 10-K

Table of Contents ,

Discontinued Operation:

Discontinued Operations:

Assets and Liabilities Held-for-Sale.

Assets held-for-sale decreased to $6,267,200 at December 31, 2024, from $7,516,456 as December 31, 2023.

The decrease is primarily due to the recording of a valuation allowance for the loss on disposal of AAC of $570,145 and a decrease in VIE assets of $523,974.

Liabilities held-for-sale decreased to $5,887,685 at December 31, 2024, from $6,541,866 as December 31, 2023, primarily due to a decrease in VIE liabilities of $511,689.

VIE assets and liabilities decreased primarily due to paydowns and the impact of exchange rates on balances denominated in British Pound Sterling.

Assets held-for-sale decreased to $0 at December 31, 2025, from $6,267,200 at December 31, 2024.

The decrease results from the completion of the sale of AAC.

Liabilities held-for-sale decreased to $— at December 31, 2025 from $5,887,685 at December 31, 2024 due to the completion of the sale of AAC.

Refer to Note 5.

Discontinued Operations in this Annual Report on Form 10-K.

Continuing Operations:

The following discusses changes in assets, liabilities and stockholders' equity, excluding assets and liabilities held-for-sale related to the pending sale of AAC, as of December 31, 2024, compared to December 31, 2023.

Ambac's acquisition of a controlling interest in Beat had a significant impact on the comparability of the balance sheet between December 31, 2024 and December 31, 2023.

The following discusses changes in assets, liabilities and stockholders' equity as of December 31, 2025 compared to December 31, 2024.

Octave's acquisition of ArmadaCorp impacted the comparability of the balance sheet between December 31, 2025 and December 31, 2024.

Refer to Note 4.

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Investment Portfolio

Ambac's investment portfolio is managed under established guidelines designed to meet the investment objectives of Everspan and AFG.

Invested assets of the Cirrata companies consist solely of cash, short-term investments and other money market funds.

Octave's investment portfolio is managed under established guidelines designed to meet the investment objectives of the Everspan Group and OSG.

Everspan's fixed maturity and short-term investment portfolio had a weighted average credit rating of AA and AA- at December 31, 2025 and 2024, respectively.

The ID businesses investments are limited to cash sweep products, treasuries, certificates of deposit and money market funds.

Refer to "Description of the Business — Investments and Investment Policy" in this Annual Report on Form 10-K located in Part I.

Item 1, for further description of Ambac's investment policies and applicable regulations.

The following table summarizes the composition of Ambac’s investment portfolio, at carrying value at December 31, 2024 and 2023:

Item 1, for further description of Octave's investment policies and applicable regulations.

The following table summarizes the composition of Octave’s investment portfolio, at carrying value at December 31, 2025 and 2024:

December 31, 2025 December 31, 2024

Specialty Property & Casualty Insurance

Insurance Distribution Corporate & Other Consolidated Specialty Property & Casualty Insurance

Insurance Distribution Corporate & Other Consolidated

Insurance Distribution Corporate & Other Consolidated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consolidated

Fixed maturity securities $ 122,141 $ — $ 153 $ 122,294 $ 157,020 $ — $ — $ 157,020

2 unchanged sentences

Total investments $ 193,428 $ 35,812 $ 64,468 $ 293,708 $ 192,247 $ 27,612 $ 92,556 $ 312,915

Octave invests in various asset classes in its fixed maturity securities portfolio.

Refer to Note 6.

1 unchanged sentence

Item 8 for information about the composition of fixed maturity securities and other investments by asset class.

Ambac Financial Group, Inc.

2024 Form 10-K

Table of Contents ,

The following charts provide the ratings distribution of the fixed maturity investment portfolio based on fair value at December 31, 2024 and 2023.

Ratings represent the lower of ratings provided by S&P or Moody's when ratings are available from both agencies.

Premium Receivables.

Ambac's premium receivables increased to $57,222 at December 31, 2024, from $45,893 at December 31, 2023.

Octave's premium receivables increased to $75,085 at December 31, 2025, from $57,222 at December 31, 2024.

As further discussed in Note 8.

Insurance Contracts to the Consolidated Financial Statements, in this Annual Report Form 10-K located in Part II.

Item 8, the increase is primarily due to growth in the Specialty Property and Casualty Insurance Segment.

Insurance Contracts to the Consolidated Financial Statements, in this Annual Report on Form 10-K located in Part II.

Item 8, the increase is primarily due to growth in certain programs within the Specialty Property and Casualty Insurance Segment.

All premium receivables are in a payment currency of U.S.

Commission and Fees Receivable Octave's commission and fee receivables increased to $86,549 at December 31, 2025, from $55,377 at December 31, 2024.

The increase is primarily due to growth in the ID Segment, specifically at Octave Ventures as well as the inclusions of ArmadaCorp and Pivix.

Reinsurance Recoverable on Paid and Unpaid Losses.

Ambac has reinsurance in place pursuant to quota share, surplus share treaty and facultative agreements.

To minimize its exposure to losses from reinsurers, Ambac (i) monitors the financial condition of its reinsurers;

Octave has reinsurance in place pursuant to surplus share treaties and facultative agreements.

As of December 31, 2025 and December 31, 2024, reinsurance recoverable on paid and unpaid losses were $436,092 and $306,191, respectively, increasing due to continued production in the Specialty P&C Insurance Segment.

To minimize its exposure to losses from reinsurers, Octave (i) monitors the financial condition of its reinsurers;

(ii) is entitled to receive collateral from its reinsurance counterparties under certain reinsurance contracts;

and (iii) has certain cancellation rights that can be exercised in the event of rating agency downgrades of a reinsurer (among other events and circumstances).

For those reinsurance counterparties that do not currently post collateral, Ambac’s reinsurers are well capitalized, highly rated, authorized capacity providers.

Ambac benefited from letters of credit and collateral amounting to approximately $62,792 from its reinsurers at December 31, 2024.

As of December 31, 2024 and 2023, reinsurance recoverable on paid and unpaid losses were $306,191 and $164,997,

respectively, an increase driven from the growth of the Specialty Property and Casualty Insurance Segment.

and (iii) has certain cancellation rights that can be exercised in the event of rating agency downgrades of a reinsurer (among other events and

circumstances).

Those reinsurance counterparties that do not currently post collateral are well-capitalized, highly rated, authorized capacity providers.

Octave benefited from letters of credit and collateral amounting to approximately $88,732 from its reinsurers at December 31, 2025.

Additionally, while legacy liabilities from Specialty P&C acquisitions were fully ceded to certain reinsurers, Everspan also benefits from an unlimited, uncapped indemnity from the respective sellers to mitigate any residual risk to these reinsurers.

Intangible Assets, net of Accumulated Depreciation.

Intangible assets includes (i) intangible assets established as part of the acquisition of Xchange in 2020, All Trans and Capacity Marine in 2022, Riverton in 2023 and Beat in 2024;

and (ii) indefinite-lived intangible assets established as part of the acquisition of admitted carriers in both 2021 and 2022.

As of December 31, 2024 and 2023, net intangible assets totaled $344,775 and 61,403, respectively.

The increase is driven by intangibles established from the acquisition of Beat, partially offset by amortization and foreign currently translation.

As of December 31, 2024 and 2023, goodwill totaled $418,235 and $69,694 respectively.

The increase is primarily driven by the acquisition of Beat and goodwill of $357,316.

All of the goodwill was assigned to the Insurance Distribution segment.

Intangible assets primarily include (i) intangible assets established as part of acquisitions in the ID business of $463,790 at December 31, 2025 and (ii) indefinite-lived intangible assets in the Specialty P&C business as part of its acquisition of admitted shell carriers of $11,213 at December 31, 2025.

As of December 31, 2025 and December 31, 2024, intangible assets were $474,998 and $344,775, respectively.

The increase is driven by the ArmadaCorp acquisition of $146,000, Pivix consolidation of $667, and foreign exchange rates of $21,591 (appreciation of the British pound), partially offset by amortization of $38,044.

As of December 31, 2025 and December 31, 2024, goodwill totaled $540,345 and $418,234 respectively.

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increase is primarily driven by the acquisition of ArmadaCorp and foreign exchange rates (appreciation of the British pound).

All of the goodwill was assigned to the ID segment.

Loss and Loss Adjustment Expense Reserves.

Loss and loss adjustment expense reserves are estimates of the ultimate liability for unpaid losses and loss expenses for claims that have been reported and claims that have been incurred, but not yet reported as of the balance sheet date.

Loss and loss adjustment expense reserves by line of business were as follows as of December 31, 2024 and 2023

Loss and LAE reserves are estimates of the ultimate liability for unpaid losses and loss expenses for claims that have been reported and incurred but not yet reported as of the balance sheet date.

Loss and LAE reserves by line of business were as follows as of December 31, 2025 and 2024

2025 December 31,

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Commercial auto $ 159,194 $ 23,062 $ 158,472 $ 28,720

Excess and General Liability 85,459 14,857 22,865 3,925

Excess liability 116,610 16,897 50,248 6,571

General liability 63,596 12,572 35,211 8,286

Workers compensation 17,798 17,798 14,465 14,465

Non-standard personal auto 3,826 3,635 12,689 12,185

Professional liability 40,846 2,851 17,698 1,807

Surety 12,233 94 11,217 6

ULAE 12,238 6,578 6,085 4,527

Unallocated loss adjustment expense reserves 14,869 5,552 12,238 6,578

24,834 289 36,551 320

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All legacy liabilities remain obligations of affiliates of the sellers through reinsurance.

The process for determining the level of loss and loss adjustment expense reserves is subject to certain estimates and judgments.

The process for determining the level of loss and LAE reserves is subject to certain estimates and judgments.

Refer to the "Critical Accounting Policies and Estimates" and “Results of Operations” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations, in addition to Basis of Presentation and Significant Accounting Policies and Loss Reserves sections included in Note 2.

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Insurance Contracts, respectively, to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K, for further information on loss and loss adjustment expenses.

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Short-term Debt.

Ambac borrowed under a short-term credit facility to provide partial funding of the acquisition of Beat in 2024.

The carrying value of this short term debt is $150,000 as of December 31, 2024.

Ambac had no debt related to its continuing operations as of December 31, 2023.

Short and Long-term Debt.

Octave borrowed under a short-term credit facility to provide partial funding of the acquisition of Octave Ventures in 2024.

This $150,000 short-term debt facility was repaid from the proceeds of the sale of AAC.

In connection with the acquisition of ArmadaCorp on October 31, 2025, Octave Partners LLC and certain of its subsidiaries (including ArmadaCorp) entered into $120,000 of the Credit Facilities, which were fully drawn to pay part of the purchase price for ArmadaCorp.

Commission Payable .

Commission payables are commissions due to sub producers for placing insurance contracts on behalf of the MGAs and amounts due to UK Syndicates that provide advanced commissions to fund short-term liquidity needs for MGAs.

The commission payable at December 31, 2024 and December 31, 2023 was $71,431 and $6,932.

The increase is primarily due to higher advance commissions due from Syndicates.

Redeemable Noncontrolling Interest.

The increase during 2024 was the net result of the remeasurement of the redemption value of put options provided to minority owners (NCI interest holders) of Cirrata entities acquired as if the put was exercised on December 31, 2024 and new put options issued during the acquisition of Beat during 2024.

No put options are exercisable at December 31, 2024.

Commission payable at December 31, 2025 and

December 31, 2024 was $115,555 and $71,431, respectively.

The increase is primarily due to higher advance commissions due to Syndicates.

Redeemable Noncontrolling Interest (NCI):

The minority equity interests of Octave Ventures's majority-owned MGA/Us were classified within nonredeemable NCI at December 31, 2024.

During the three months ended March 31, 2025, Octave entered into put options on certain of these minority interests that are embedded in the underlying equity instruments.

As a result, the minority interests were reclassified from nonredeemable to redeemable and remeasured at fair value including the put options, increasing redeemable NCI by $42,180.

Other changes to redeemable NCI during the year ended December 31, 2025, relate primarily to the allocation of financial results to the minority interests, revaluation to redemption value where applicable, reclassification of certain interests to nonredeemable due to the expiration of related put options, the exercise of certain put options and the impact of foreign currency translation.

ACCOUNTING STANDARDS

Please refer to Note 2.

Basis of Presentation and Significant Accounting Policies to the Consolidated Financial Statements, included in Part II, Item 8 in this Annual Report Form 10-K for a discussion of the impact of recent accounting pronouncements on Ambac’s financial condition and results of operations.

STATUTORY BASIS FINANCIAL RESULTS

Basis of Presentation and Significant Accounting Policies to the Consolidated Financial Statements, included in Part II, Item 8 in this Annual Report Form 10-K for a discussion of the impact of recent accounting pronouncements on Octave’s financial condition and results of operations.

INSURANCE BASIS FINANCIAL RESULTS

insurance subsidiaries prepare financial statements under accounting practices prescribed or permitted by its domiciliary state regulator (“SAP”) for determining and reporting the financial condition and results of operations of an insurance company.

The National Association of Insurance Commissioners (“NAIC”) Accounting Practices and Procedures manual (“NAIC SAP”) is adopted as a component of prescribed practices by each domiciliary state.

The NAIC Accounting Practices and Procedures manual (“NAIC SAP”) is adopted as a component of prescribed practices by each domiciliary state.

For further information, see Note 9.

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Everspan Indemnity Insurance Company

Everspan Indemnity Insurance Company’s statutory policyholder surplus was $125,235 at December 31, 2024, as compared to $108,051 at December 31, 2023.

The significant changes to policyholder surplus for the year ended December 31, 2024, were net income at Everspan Indemnity Insurance Company, including its subsidiaries, of $13,516 during the year ended December 31, 2024, primarily driven by the gain on sale of Consolidated National Insurance Company and continued growth of Specialty Property and Casualty Insurance Segment.

Everspan Indemnity Insurance Company’s (EIIC) statutory policyholder surplus was $128,031 at December 31, 2025, as compared to $125,202 at December 31, 2024.

The increase in surplus was driven by net income at EIIC, including its subsidiaries, of $2,285 during the year ended December 31, 2025.

Each of Everspan's insurance carriers are a direct or indirect wholly-owned subsidiary of EIIC and therefore are included in EIIC's statutory policyholder surplus.

The significant differences between GAAP and SAP are that under SAP:

• Investment grade fixed maturity investments are stated at amortized cost and certain below investment grade fixed maturity investments are reported at the lower of amortized

cost or fair value.

• Investment grade fixed maturity investments are stated at amortized cost and certain below-investment-grade fixed maturity investments are reported at the lower of amortized cost or fair value.

Under GAAP, all fixed maturity investments are reported at fair value.

• Majority-owned subsidiaries are not consolidated;

rather, the equity basis of accounting is utilized and the carrying values of these investments are subject to admissibility tests.

The carrying values of Providence Washington Insurance Company, Greenwood Insurance Company, Consolidated National Insurance Company, and Consolidated Specialty Insurance Company include a goodwill component representing the acquisition cost in excess of the related entity's statutory surplus.

rather, the equity basis of accounting is utilized and the carrying

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values of these investments are subject to admissibility tests.

The carrying values of Providence Washington Insurance Company, Greenwood Insurance Company, and Consolidated Specialty Insurance Company include a goodwill component representing the acquisition cost in excess of the related entity's statutory surplus.

Goodwill is amortized over ten years under SAP.

Under GAAP, the initial acquisition of the companies were recorded as asset acquisitions, which required i) all net assets to initially be recorded at fair value and ii) the acquisition costs in excess of the fair value of net assets to be allocated to the bases of certain types of assets based on their relative fair values, if applicable.

Under GAAP, the initial acquisitions of the companies were recorded as asset acquisitions, which required i) all net assets to initially be recorded at fair value and ii) the acquisition costs in excess of the fair value of net assets to be allocated to the bases of certain types of assets based on their relative fair values, if applicable.

Acquired assets include intangible assets with indefinite lives.

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These non-GAAP financial measures are not substitutes for the Company’s GAAP reporting, should not be viewed in isolation and may differ from similar reporting provided by other companies, which may define non-GAAP measures differently.

Beginning December 31, 2024, Ambac replaced the non-GAAP measure Adjusted Net Income with new non-GAAP measures Adjusted Net Income and Adjusted Net Income Margin and added Adjusted EBITDA and Adjusted EBITDA Margin to

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better align with other participants in the Property & Casualty insurance industry, including insurance carriers and other peers in the insurance distribution business.

Beginning December 31, 2024, Octave replaced the non-GAAP measure Adjusted Net Income with new non-GAAP measures Adjusted Net Income and Adjusted Net Income Margin and added Adjusted EBITDA and Adjusted EBITDA Margin to better align with other participants in the Property & Casualty insurance industry, including insurance carriers and other peers in the insurance distribution business.

The following paragraphs define each non-GAAP financial measure.

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EBITDA — EBITDA is net income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization of intangible assets.

Adjusted EBITDA and Adjusted EBITDA Margin

We define Adjusted EBITDA as net income (loss) from continuing operations before interest expense, income taxes, depreciation, amortization of intangible assets, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, acquisition and integration related expenses, severance, and other exceptional or non-recurring items, including those related to raising capital.

Adjusted EBITDA and Adjusted EBITDA Margin — We define Adjusted EBITDA as net income (loss) from continuing operations before interest expense, income taxes, depreciation, amortization of intangible assets, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, acquisition and integration-related expenses, severance, and other exceptional or non-recurring items, including those related to raising capital.

We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of income and expenses that may obfuscate business performance, and that the presentation of this measure enhances an investor's understanding of our financial performance.

Octave Specialty Group, Inc.

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Year Ended December 31,

2025 2024 2023

Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated

Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total

Net income (loss) from continuing operations $ 2,956 $ (15,353) $ (83,406) $ (95,803) $ 10,469 $ (6,881) $ (62,509) $ (58,921) $ 335 $ 7,133 $ (30,701) $ (23,232)

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Intangible amortization — 38,044 — 38,044 — 17,602 — 17,602 — 4,152 — 4,152

$ 12,222 $ 19,653 $ (62,393) $ (30,518) $ 383 $ 11,483 $ (30,858) $ (18,991) $ (6,346) $ 7,476 $ (33,043) $ (31,913)

EBITDA 3,330 36,918 (80,670) (40,422) 12,222 19,653 (62,393) (30,518) 383 11,483 (30,858) (18,991)

Impact of noncontrolling interests — (14,507) — (14,507) — (6,448) — (6,448) — (2,102) — (2,102)

Ambac EBITDA 12,222 13,208 (62,396) (36,966) 383 9,381 (30,858) (21,093) (6,347) 6,013 (33,043) (33,377)

Net income margin 8.3 % (6.9) % (609.2) % (25.0) % 0.5 % 13.8 % (338.1) % (18.6) % (34.4) % 14.4 % (894.1) % (65.7) %

Net income margin to Ambac common stockholders 8.3 % (7.3) % (609.2) % (25.1) % 0.5 % 11.3 % (338.1) % (19.7) % (34.3) % 11.6 % (894.1) % (67.4) %

EBITDA margin 9.7 % 19.8 % (608.1) % (12.9) % 0.6 % 22.3 % (339.8) % (15.2) % (34.4) % 23.8 % (884.0) % (59.5) %

EBITDA margin to Ambac common stockholders 9.7 % 13.3 % (608.1) % (15.7) % 0.6 % 18.2 % (339.8) % (16.9) % (34.4) % 19.1 % (884.0) % (62.3) %

EBITDA attributable to shareholders 3,330 22,411 (80,670) (54,929) 12,222 13,205 (62,393) (36,966) 383 9,381 (30,858) (21,094)

Net income margin — — NM — — — NM — — — NM —

Net income margin attributable to shareholders — — NM — — — NM — — — NM —

EBITDA margin — — NM — — — NM — — — NM —

EBITDA margin attributable to shareholders — — NM — — — NM — — — NM —

Acquisition and integration related expenses — 375 9,106 9,481 — — 27,388 27,388 — — 567 567

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Adjusted EBITDA 3,777 37,041 (33,789) 7,028 5,136 19,901 (16,394) 8,643 1,017 11,483 (18,380) (5,879)

Adjusted EBITDA attributable to Ambac common stockholders 5,136 13,456 (16,397) 2,195 1,017 9,381 (18,380) (7,981) (5,658) 6,013 (22,361) (22,006)

Adjusted EBITDA Margin 4.1 % 20.1 % (159.8) % 3.7 % 1.6 % 22.3 % (202.4) % (4.7) % (30.6) % 23.8 % (598.2) % (38.3) %

Adjusted EBITDA Margin to Ambac common stockholders 4.1 % 13.6 % (159.8) % 0.9 % 1.6 % 18.2 % (202.4) % (6.4) % (30.6) % 19.1 % (598.2) % (41.0) %

Organic Revenue Growth (Insurance Distribution only)

Organic revenue is based on commissions and fees for the relevant period by excluding (i) the first twelve months of commissions and fees generated from acquisitions and (ii) commissions and fees from divestitures (iii) and other items such as contingent commissions, profit commissions and the impact of changes in foreign exchange rates.

Adjusted EBITDA attributable to shareholders $ 3,777 $ 22,542 $ (33,789) $ (7,471) $ 5,136 $ 13,453 $ (16,394) $ 2,195 $ 1,017 $ 9,381 $ (18,380) $ (7,981)

Adjusted EBITDA Margin 4.3 % 22.6 % NM 2.8 % 4.1 % 20.1 % NM 3.7 % 1.6 % 22.3 % NM (4.7) %

Adjusted EBITDA Margin attributable to shareholders 4.3 % 13.8 % NM (3.0) % 4.1 % 13.6 % NM 0.9 % 1.6 % 18.2 % NM (6.2) %

Organic Revenue Growth

(Insurance Distribution only)

Organic revenue is based on commissions and fees for the relevant period by excluding (i) the first twelve months of commissions and fees generated from acquisitions, (ii) commissions and fees from divestitures and (iii) other items such as contingent commissions, profit commissions and the impact of changes in foreign exchange rates.

Organic revenue growth is the change in organic revenue period-to-period, with prior period results adjusted to (i) include commissions and fees that were excluded from organic revenue in the prior period and reached the twelve-month owned mark in the current period and (ii) exclude commissions and fees related to divestitures from organic revenue.

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Organic revenue growth rate to Total revenue growth rate, the most directly comparable GAAP measure, for each of the periods indicated is as follows (in percentages):

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Acquired revenues (2)

(50,102) (1,200) (45,202) —

Profit commission and contingent commission income (11,898) (9,031) (4,273) (4,489)

Impact of F.X.

2,572 (183) — —

Total Organic Revenue & Growth Percentage $ 104,427 $ 88,822 17.6 % $ 49,761 $ 47,057 5.7 %

(1) Total Insurance Distribution revenue includes investment income.

Adjusted Net Income and Adjusted Net Income Margin

We define Adjusted net income as net income (loss) from continuing operations attributable to Ambac adjusted for amortization of intangible assets, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, acquisition and integration related expenses, severance and non-recurring income and loss items that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments.

(1) Total ID revenue includes investment income.

(2) Organic revenue growth includes a $1.2m reduction to 4Q24 revenue to adjust for a revenue recognition accounting policy adjustment made in 4Q24 in connection with the acquisition of Octave Ventures to recognize revenues that otherwise should have been recorded in 3Q24.

Octave Specialty Group, Inc.

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Adjusted Net Income and Adjusted Net Income Margin — We define Adjusted Net Income as net income (loss) from continuing operations attributable to Octave adjusted for amortization of intangible assets, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, acquisition and integration -related expenses, severance and non-recurring income and loss items that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments.

Per share amounts exclude any impact of revaluing non-controlling interests as otherwise reported under GAAP earnings per share.

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Net (income) loss attributable to NCI — (13,394) — (13,394) — (6,448) — (6,448) — (2,102) — (2,102)

Adjusted net income (loss) attributable to Ambac stockholders $ 3,383 $ 4,521 $ (16,510) $ (8,606) $ 969 $ 9,183 $ (18,223) $ (8,070) $ (5,657) $ 5,982 $ (22,740) $ (22,415)

Adjusted net income (loss) attributable to shareholders $ 3,345 $ 3,500 $ (34,575) $ (27,731) $ 3,383 $ 4,521 $ (16,510) $ (8,606) $ 969 $ 9,183 $ (18,223) $ (8,070)

(1) Other non-operating expense includes one-time add-backs related to gain on sale of CNIC, partially offset by losses related to minority interest strategy and write-down of certain capitalized software.

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Year Ended December 31,

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Net income (loss) margin 8.3 % (6.9) % (609.2) % (25.0) % 0.5 % 13.8 % (338.1) % (18.6) % (34.4) % 14.4 % (894.1) % (65.7) %

Adjusted Net income (loss) attributable to Ambac stockholders margin 2.7 % 4.6 % (160.9) % (3.6) % 1.5 % 17.8 % (200.7) % (6.5) % (30.6) % 19.0 % (608.3) % (41.8) %

Net income (loss) margin 3.3 % (9.4) % NM (38.1) % 8.3 % (6.9) % NM (25.0) % 0.5 % 13.8 % NM (18.6) %

Adjusted net income (loss) margin 3.8 % 14.0 % NM (3.3) % 2.7 % 11.1 % NM (0.9) % 1.5 % 21.9 % NM (4.8) %

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis