What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-03-04 compared with 2025-03-06 · 1042 added, 1035 removed, 1440 unchanged (59% of the section changed)

Financial Statements and Supplementary Data

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Account Firm KPMG LLP , New York, NY , PCAOB ID 185 49

Reports of Independent Registered Public Accounting Firm KPMG LLP , New York, NY , PCAOB ID 185 44

Consolidated Financial Statements

10 unchanged sentences

Business Combination 64

Comprehensive Income 88

Discontinued Operation 68

Comprehensive Income (Loss) 84

Discontinued Operations 65

Net Income Per Share 84

7 unchanged sentences

Derivative Instruments 81

Quarterly Information (Unaudited) 97

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

2 unchanged sentences

To the Stockholders and Board of Directors

Ambac Financial Group, Inc.:

Octave Specialty Group, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Ambac Financial Group, Inc.

We have audited Octave Specialty Group, Inc.

and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

1 unchanged sentence

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of total comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement schedules I, II and III (collectively, the consolidated financial statements), and our report dated March 4, 2026 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Beat Capital Partners Limited during 2024, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2024, Beat Capital Partners Limited’s internal control over financial reporting associated with total assets of 1% and total revenues of 17% included in the consolidated financial statements of the Company as of and for the year ended December 31, 2024.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Beat Capital Partners Limited.

The Company acquired ArmadaCorp Capital, LLC during 2025, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, ArmadaCorp Capital, LLC's internal control over financial reporting associated with total assets of 2% and total revenues of 2% included in the consolidated financial statements of the Company as of and for the year ended December 31, 2025.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of ArmadaCorp Capital, LLC.

Basis for Opinion

18 unchanged sentences

March 4, 2026

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

2 unchanged sentences

To the Stockholders and Board of Directors

Ambac Financial Group, Inc.:

Octave Specialty Group, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Ambac Financial Group, Inc.

We have audited the accompanying consolidated balance sheets of Octave Specialty Group, Inc.

and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of total comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes and financial statement schedules I, II and III (collectively, the consolidated financial statements).

14 unchanged sentences

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be

communicated to the audit committee and that:

The critical audit matters communicated below are matters arising from the current period audit of the consolidated

financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

15 unchanged sentences

• for certain programs, assessing the position in the range and the year-over-year movements of the Company’s recorded reserves within the independent range of reserves.

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

Table of Contents ,

Valuation of customer relationship intangibles for the Beat reporting unit

As discussed in Note 4 to the consolidated financial statements, on July 31, 2024, the Company completed the acquisition of 60% of Beat Capital Partners (Beat) for a purchase price of $281,278 thousand.

The acquisition was accounted for as a business combination using the acquisition method of accounting, which required the Company to allocate the total consideration transferred to the assets acquired, liabilities assumed, and noncontrolling interests based on their fair values at the date of acquisition.

Valuation of customer relationship intangibles for the ArmadaCorp Capital, LLC reporting unit

As discussed in Note 4 to the consolidated financial statements, on October 31, 2025, the Company completed the acquisition of of ArmadaCorp Capital, LLC for a purchase price of $250,000 thousand.

The acquisition was accounted for as a business combination using the acquisition method of accounting, which required the Company to allocate the total consideration transferred to the assets acquired and liabilities assumed based on their fair values at the date of acquisition.

As part of the transaction, the Company acquired a customer relationships intangible asset with an acquisition date fair value of $138,000 thousand, which was valued using the multi-period excess earnings method.

3 unchanged sentences

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition date valuation process.

This included a control over the development of the discount rate used to value the customer relationships i ntangible asset.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s discount rate assumption used for the customer relationships intangible asset by independently developing a range of discount rates based on publicly available market data for comparable entities and comparing that range to the Company’s discount rate.

Estimate of loss and loss adjustment expense reserves and subrogation recoverable

As described in Note 5 to the consolidated financial statements, the Company estimates financial guarantee loss and loss adjustment expense reserves and subrogation recoverable (loss reserves) on a policy-by-policy basis based upon the present value of expected net claim cash outflows or expected net recovery cash inflows, discounted at risk-free rates.

Expected net claim cash outflows represent the present value of expected claim cash outflows, less the present value of expected recovery cash inflows.

For such policies, a loss and loss adjustment expense reserves liability is recorded for the present value of expected net claim cash outflows in excess of the related unearned premium revenue.

Expected net recovery cash inflows represent the present value of expected recovery cash inflows, less the present value of expected claim cash outflows.

For such policies, a subrogation recoverable asset is recorded.

As of December 31, 2024, the Company recorded loss and loss adjustment expense reserves of $577,167 thousand and subrogation recoverable of $113,962 thousand within Liabilities held-for-sale and Assets held-for-sale, respectively.

We identified the evaluation of loss adjustment reserves as a critical audit matter.

The evaluation encompassed the

assessment of the loss reserves methodologies, including those methods used to estimate the following assumptions:

(1) credit worthiness of the issuer of the insured security, (2) the likelihood of possible outcomes regarding the probability of default by the issuer of the insured security, (3) the expected loss severity for each insurance policy, and (4) the probability of remediation, settlement and restructuring outcomes.

The evaluation of the methods and the impact of these assumptions required specialized skills and subjective and complex auditor judgment due to a high level of estimation uncertainty.

This included a control over the development of the discount rate assumption used to value the customer relationships intangible asset.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s discount rate assumption used for the valuation of the customer relationships intangible asset by independently developing a range of discount rates based on publicly available market data for comparable entities and comparing that range to the Company’s discount rate.

Fair Value of the Octave Ventures reporting unit

As discussed in Notes 2 and 11 to the consolidated financial statements, the Company’s consolidated goodwill balance as of December 31, 2025 was $540,345 thousand, a portion of which relates to the Octave Ventures reporting unit.

Goodwill impairment tests are performed annually, as of October 1 of each year, or more frequently, if circumstances indicate possible impairment.

The quantitative evaluation compares the estimated fair value using a combination of an income approach and market approach.

The income approach uses discounted cash flows which are dependent on subjective factors including the timing of future cash flows, the underlying margin projection assumptions, future growth rates, and the discount rate.

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

We identified the evaluation of fair value for the Octave Ventures reporting unit used to assess goodwill for impairment as a critical audit matter.

Subjective and challenging auditor judgment and professionals with specialized skills and knowledge were required to evaluate the discount rate assumption used in the income approach to determine the fair

value of Octave Ventures reporting unit due to the degree of measurement uncertainty associated with this assumption.

The following are the primary procedures we performed to address this critical audit matter.

With the assistance of credit risk and valuation professionals with specialized industry knowledge and experience, we evaluated the design and tested the operating effectiveness of certain internal controls related to the Company's estimation of loss reserves.

This included controls related to the determination of the assumptions and the sources of data and the analysis of the loss reserves.

We involved credit risk professionals with specialized skills and knowledge, who assisted in assessing the individual issuer ratings and credit classifications for certain policies by evaluating the financial performance of the issuer of the insured security and underlying collateral.

We also involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating the methods used to estimate loss reserves for compliance with U.S.

generally accepted accounting principles,

• evaluating, for certain policies, the assumptions, including:

the likelihood of possible outcomes regarding the probability of default by the issuer of the insured security;

the expected loss severity for each insurance policy;

and, the probability of remediation, settlement and restructuring outcomes, and the sources of data and assumptions used in the calculation of loss reserves by comparing to the Company’s internal experience and related historical and industry trends.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s goodwill impairment assessment process for the Octave Ventures reporting unit.

This included a control over the development of the discount rate assumption used in the fair value estimate.

We involved valuation professionals with specialized skills and knowledge, who assisted in:

• Assessing the reasonableness of the Company’s discount rate, including the company-specific risk premium, by comparing it to an independently developed discount rate using publicly available market data

• Comparing the Octave Ventures reporting unit fair value estimate to an independently developed range of fair value estimates developed using the Company’s significant assumptions and our independently developed discount rate.

We have served as the Company’s auditor since 1985.

1 unchanged sentence

March 4, 2026

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

Table of Contents ,

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

14 unchanged sentences

Deferred ceded premium 146,365 148,300

Deferred acquisition costs 8,572 10,960

Policy acquisition costs 9,732 8,572

Intangible assets, less accumulated amortization 474,998 344,775

1 unchanged sentence

Other assets 92,003 92,317

Assets held-for-sale 6,267,200 7,516,456

Assets of discontinued operations — 6,267,200

Total assets $ 2,223,317 $ 8,058,378

7 unchanged sentences

Short-term debt — 150,000

Long-term debt 117,558 —

Accrued interest payable 1,343 2,560

Other liabilities 102,771 89,036

Liabilities held-for-sale 5,887,685 6,541,866

Liabilities of discontinued operations — 5,887,685

Total liabilities 1,137,151 6,862,857

15 unchanged sentences

( 33,473 ) ( 28,339 )

Total Ambac Financial Group, Inc.

Total Octave Specialty Group, Inc.

stockholders’ equity 715,790 798,364

3 unchanged sentences

See accompanying Notes to Consolidated Financial Statements

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

Table of Contents ,

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollars in thousands, except share data) 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

Other revenue 13,314 200 577

Total revenues and other income 235,815 124,728 53,612

Investment income 10,647 14,448 13,159

Other ( 4,780 ) 10,480 ( 60 )

Total revenues 251,222 235,815 124,728

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

Depreciation expense 2,345 1,078 872

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 —

Total expenses 352,236 295,660 148,949

2 unchanged sentences

Net income (loss) from continuing operations ( 95,803 ) ( 58,921 ) ( 23,232 )

Net income (loss) from discontinued operations, net of tax (including loss on disposal of $ 570,145 in 2024)

Net income (loss) from discontinued operations, net of tax (including loss on disposal of $ 117,468 in 2025 and $ 570,145 in 2024)

( 163,288 ) ( 497,167 ) 28,183

1 unchanged sentence

Net (gain) loss attributable to noncontrolling interest ( 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

Net income (loss) attributable to Ambac shareholders

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

Net income (loss) attributable to shareholders

Continuing operations $ ( 98,404 ) $ ( 59,282 ) $ ( 24,551 )

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(gain) loss on foreign currency translation attributable to noncontrolling interest ( 25,200 ) 3,074 —

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

Total comprehensive income (loss) attributable to Ambac shareholders $ ( 581,765 ) $ 96,429 $ 211,926

Net income (loss) from continuing operations per share attributable to Ambac shareholders

Total comprehensive income (loss) attributable to shareholders $ ( 64,774 ) $ ( 581,765 ) $ 96,429

Net income (loss) from continuing operations per share attributable to stockholders

Basic $ ( 2.47 ) $ ( 1.37 ) $ ( 0.43 )

Diluted $ ( 2.47 ) $ ( 1.37 ) $ ( 0.43 )

Net income (loss) from discontinued operations per share attributable to Ambac shareholders

Net income (loss) from discontinued operations per share attributable to stockholders

Basic $ ( 3.46 ) $ ( 10.58 ) $ 0.62

Diluted $ ( 3.46 ) $ ( 10.58 ) $ 0.62

Net income (loss) per share attributable to Ambac shareholders

Net income (loss) per share attributable to stockholders

Basic $ ( 5.93 ) $ ( 11.96 ) $ 0.18

4 unchanged sentences

See accompanying Notes to Consolidated Financial Statements

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

Table of Contents ,

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity

Ambac Financial Group, Inc.

Years Ended December 31, 2023, 2024 and 2025

Stockholders' Equity Mezzanine

Octave Specialty Group, Inc.

($ in thousands) Total Preferred Stock Common Stock Additional Paid-in

1 unchanged sentence

Comprehensive

Income (Loss) Retained Earnings Common Stock Held in Treasury, at Cost Nonredeemable Noncontrolling

Income (Loss) Retained Earnings Common Stock Held in Treasury, at Cost Non-redeemable NCI (1)

Balance at December 31, 2022 $ 1,305,250 $ — $ 467 $ 274,486 $ ( 252,843 ) $ 1,245,491 $ ( 15,270 ) $ 52,919 $ 19,983

Total comprehensive income (loss) 210,794 ( 310,454 ) 521,248

Net income (loss) 3,634 3,632 2 1,317

Total other comprehensive income (loss) 92,797 92,797

Stock-based compensation 17,275 17,275

1 unchanged sentence

Cost of shares repurchased ( 4,510 ) ( 4,510 )

Changes to NCI 2,504 2,504

Sale or NCI in subsidiary 2,173 172 2,001

Issuance of common stock 2 2

Purchase of Ambac Assurance auction market preferred shares ( 7,919 ) 1,131 ( 9,050 )

Changes to noncontrolling interest 4,834 4,797 37 ( 6,671 )

Purchase of All Trans and Capacity Marine 2,450

Balance at December 31, 2023 $ 1,414,615 $ — $ 467 $ 291,761 $ ( 160,046 ) $ 1,246,048 $ ( 16,573 ) $ 52,958 $ 17,079

Total comprehensive income (loss) 96,428 92,796 3,632

Net income (loss) ( 554,806 ) ( 556,449 ) 1,643 ( 1,282 )

Total other comprehensive income (loss) ( 28,390 ) ( 28,390 ) — — ( 4,805 )

Stock-based compensation 8,995 8,995

1 unchanged sentence

Cost of shares repurchased ( 11,699 ) ( 11,699 )

Changes to NCI 4,836 4,797 39

Changes to noncontrolling interest ( 9,225 ) ( 5,322 ) ( 3,903 ) 2,941

Purchase of Octave Ventures 149,095 149,095 185,469

Acquisition of noncontrolling interest in subsidiary ( 994 ) 1,044 ( 2,038 )

Issuance of common stock in connection with purchase of Octave Ventures 29,229 22 29,207

Balance at December 31, 2024 $ 996,119 $ — $ 489 $ 331,007 $ ( 188,436 ) $ 683,643 $ ( 28,339 ) $ 197,755 $ 199,402

Total comprehensive income (loss) ( 584,839 ) ( 28,390 ) ( 556,449 )

Net income (loss) ( 257,084 ) ( 261,692 ) 4,608 ( 2,007 )

Total other comprehensive income (loss) 206,892 196,919 9,973 15,227

Stock-based compensation 9,707 9,707

1 unchanged sentence

Cost of shares repurchased ( 29,942 ) ( 29,942 )

Changes to NCI 49,966 1,044 53,220 ( 4,298 )

Issuance of common stock 29,229 22 29,207

Fair value of nonredeemable NCI in Beat Capital Partners at acquisition 149,095 149,095

Changes to noncontrolling interest ( 50,054 ) 12,146 ( 18,177 ) ( 44,023 ) 39,000

Purchase of Pivix 1,359

Issuance of warrants in connection with sale of AAC 17,000 17,000

Impact of sale of discontinued operations ( 50,918 ) ( 50,918 )

Balance at December 31, 2025 $ 833,185 $ — $ 489 $ 369,860 $ 8,483 $ 370,431 $ ( 33,473 ) $ 117,395 $ 252,981

(1) NCI = Noncontrolling interest

See accompanying Notes to Consolidated Financial Statements

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

Table of Contents ,

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

6 unchanged sentences

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation 2,345 1,078 872

Amortization of bond premium and discount ( 296 ) 9 ( 6,742 )

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

Share-based compensation 9,707 9,356 12,266

2 unchanged sentences

Ceded premiums payable 27,559 23,337 9,721

Premium receivables ( 11,329 ) ( 30,225 ) ( 13,478 )

Accrued interest payable 2,560 — —

Amortization of intangible assets 17,602 4,152 2,921

Net investment gains (losses), including impairments 497 ( 19 ) 13,710

Premium and commissions receivables ( 49,578 ) ( 11,329 ) ( 30,225 )

Commissions payable 30,743 ( 3,160 ) —

Corporate costs reallocated to continuing operations 6,786 14,919 19,367

9 unchanged sentences

Acquisitions, net of cash acquired ( 217,940 ) ( 243,776 ) ( 6,953 )

Proceeds from sale of subsidiary, net of cash transferred 14,119 — —

Proceeds from sale of subsidiary 407,300 14,119 —

Other, net ( 10,053 ) ( 3,750 ) ( 4,854 )

1 unchanged sentence

Cash flows from financing activities:

Proceeds from long-term debt 117,470 — —

Proceeds from short-term debt — 147,000 —

1 unchanged sentence

Payments for purchases of common stock held in treasury ( 29,942 ) ( 11,698 ) ( 4,510 )

Payments for extinguishment of short-term debt ( 150,000 ) — —

Tax payments related to shares withheld for share-based compensation plans ( 5,307 ) ( 692 ) ( 4,585 )

Issuance of warrants 17,000 — —

Distributions to noncontrolling interest holders ( 4,174 ) ( 2,391 ) ( 1,891 )

Acquisitions of noncontrolling interest shares ( 71,345 ) — —

Net cash provided by (used in) financing activities from continuing operations ( 126,298 ) 194,219 ( 10,986 )

Net cash provided by (used in) continuing operations 21,355 28,610 ( 717 )

Effect of foreign exchange on cash and cash equivalents - continuing operations 1,460 ( 558 ) —

5 unchanged sentences

Net cash provided by (used in) financing activities from discontinued operations ( 143,144 ) ( 214,606 ) ( 411,947 )

Net cash provided by (used in) discontinued operations ( 1,704 ) ( 188,981 ) 213,299

Effect of foreign exchange on cash and cash equivalents - discontinued operations — ( 126 ) 529

2 unchanged sentences

Cash, cash equivalents, and restricted cash at end of period - discontinued operations $ — $ 66,076 $ 255,183

Cash paid during the period for:

Interest on debt $ 19,775 $ 3,821 $ —

Non-cash investing and financing activities:

Octave common stock issued as partial consideration to acquire Octave Ventures — 29,229 —

See accompanying Notes to Consolidated Financial Statements

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

2 unchanged sentences

BACKGROUND AND BUSINESS DESCRIPTION

Ambac Financial Group, Inc.

(“AFG”), headquartered in New York City, is a financial services holding company incorporated in the state of Delaware on April 29, 1991.

References to “Ambac,” the “Company,” “we,” “our,” and “us” are to AFG and its subsidiaries, as the context requires.

Ambac's business operations include:

• Insurance Distribution — Ambac's specialty property and casualty ("P&C") insurance distribution business includes Managing General Agents and Underwriters (collectively "MGAs" or "MGA/Us"), an insurance broker, and other distribution and underwriting businesses.

Insurance Distribution includes Beat Capital Partners Limited ("Beat", which was acquired on July 31, 2024).

At December 31, 2024, Ambac's insurance distribution platform operates in the following lines of business:

accident & health, specialty auto, other professional, marine & energy, niche specialty risks, property, reinsurance, professional D&O and other specialty lines.

• Specialty Property and Casualty Insurance — Ambac's Specialty Property and Casualty Insurance program business includes four admitted carriers and an excess and surplus lines (“E&S” or “nonadmitted”) insurer (collectively, “Everspan”).

Octave Specialty Group, Inc.

(“OSG”), headquartered in New York City, is a financial services holding company incorporated in the state of Delaware on April 29, 1991.

OSG is formerly known as Ambac Financial Group, Inc.

In the fourth quarter of 2025 AFG changed its name to OSG in connection with the sale of its legacy financial guarantee business to reflect the Company's position as a P&C only business.

References to "Octave," "OSG," the “Company,” “we,” “our,” and “us” are to OSG and its subsidiaries, as the context requires.

Octave operates two principal businesses:

• Insurance Distribution — Octave's specialty property and casualty ("P&C") insurance underwriting and distribution business, includes Managing General Agents and Underwriters (collectively "MGAs" or "MGA/Us");

an insurance broker;

and other distribution, underwriting and related businesses.

On October 31, 2025, the Company completed the acquisition of ArmadaCorp Capital, LLC and its subsidiaries (collectively, "ArmadaCorp"), a leading specialty accident and health MGA.

Octave's insurance distribution platform operates in the following lines of business:

property, niche specialty risk, accident & health, miscellaneous specialty, reinsurance, surety, marine & energy, specialty auto, E&S commercial package, professional lines and Directors & Officers ("D&O").

• Specialty Property & Casualty Insurance — Octave's Specialty Property & Casualty Insurance program insurer business currently includes five carriers (collectively, “Everspan”).

Everspan carriers have an A.M.

Best rating of 'A-' (Excellent) which was affirmed on June 13, 2024.

Best rating of 'A-' (Excellent) which was affirmed on July 17, 2025.

The Company reports these two business operations as segments;

Segment Information for further information.

Ambac's financial guarantee business, which is being reported as a discontinued operation due to its pending sale, includes the activities of Ambac Assurance Corporation ("AAC") and its wholly owned subsidiaries, including Ambac Assurance UK Limited (“Ambac UK”) and Ambac Financial Services LLC ("AFS").

Both AAC and Ambac UK have financial guarantee insurance portfolios that have been in runoff since 2008.

AFS provided interest rate derivatives to financial guarantee customers and used derivatives to hedge interest rate risk in AAC's insurance and investment portfolios.

Discontinued Operation for information related to the pending sale of AAC.

Octave's financial guarantee business, which is being reported as a discontinued operations due to its sale in 2025, includes the activities of Ambac Assurance Corporation ("AAC") and its wholly owned subsidiaries, including Ambac Assurance UK Limited (“Ambac UK”) and Ambac Financial Services LLC ("AFS").

Discontinued Operations for information related to the sale of AAC.

Limitations on Voting and Transfer of Common Stock

AFG’s Amended and Restated Certificate of Incorporation limits voting and transfer rights of stockholders in significant ways.

Article IV contains voting restrictions applicable to any person owning at least 10 % of AFG's common stock so that such person (including any group consisting of such person and any other person with whom such person or any affiliate or associate of such person has any agreement, contract, arrangement or understanding with respect to acquiring, voting, holding or disposing of AFG’s common stock) shall not be entitled to cast votes in excess of one vote less than 10 % of the votes entitled to be cast by all common stock holders, except as

otherwise approved by the insurance commissioners of the states of domicile of the insurance companies controlled by AFG.

Article XII contains substantial restrictions on the ability to transfer AFG’s common stock.

In order to preserve certain tax benefits, subject to limited exceptions, any attempted transfer of common stock shall be prohibited and void to the extent that, as a result of such transfer (or any series of transfers of which such transfer is a part), either (i) any person or group of persons shall become a holder of 5 % or more of AFG’s common stock or (ii) the percentage stock ownership interest in AFG of any holder of 5 % or more of AFG’s common stock shall be increased (a “Prohibited Transfer”).

These restrictions shall not apply to an attempted transfer if the transferor or the transferee obtains the written approval of AFG’s Board of Directors to such transfer.

A purported transferee of a Prohibited Transfer shall not be recognized as a stockholder of AFG for any purpose whatsoever in respect of the securities which are the subject of the Prohibited Transfer (the “Excess Securities”).

Until the Excess Securities are acquired by another person in a transfer that is not a Prohibited Transfer, the purported transferee of a Prohibited Transfer shall not be entitled with respect to such Excess Securities to any rights of stockholders of AFG, including, without limitation, the right to vote such Excess Securities and to receive dividends or distributions, whether liquidating or otherwise, in respect thereof, if any.

OSG’s Amended and Restated Certificate of Incorporation limits voting and transfer rights of stockholders in significant ways.

Article IV contains voting restrictions applicable to any person owning at least 10 % of OSG's common stock so that such person (including any group consisting of such person and any other person with whom such person or any affiliate or associate of such person has any agreement, contract, arrangement or understanding with respect to acquiring, voting, holding or disposing of OSG’s common stock) shall not be entitled to cast votes in excess of one vote less than 10 % of the

votes entitled to be cast by all common stock holders, except as otherwise approved by the insurance commissioners of the states of domicile of the insurance companies controlled by OSG.

Article XII contains substantial restrictions on the ability to transfer OSG’s common stock.

In order to preserve certain tax benefits, subject to limited exceptions, any attempted transfer of common stock shall be prohibited and void to the extent that, as a result of such transfer (or any series of transfers of which such transfer is a part), either (i) any person or group of persons shall become a holder of 5 % or more of OSG’s common stock or (ii) the percentage stock ownership interest in OSG of any holder of 5 % or more of OSG’s common stock shall be increased (a “Prohibited Transfer”).

These restrictions shall not apply to an attempted transfer if the transferor or the transferee obtains the written approval of OSG’s Board of Directors prior to such transfer.

A purported transferee of a Prohibited Transfer shall not be recognized as a stockholder of OSG for any purpose whatsoever in respect of the securities which are the subject of the Prohibited Transfer (the “Excess Securities”).

Until the Excess Securities are acquired by another person in a transfer that is not a Prohibited Transfer, the purported transferee of a Prohibited Transfer shall not be entitled with respect to such Excess Securities to any rights of stockholders of OSG, including, without limitation, the right to vote such Excess Securities and to receive dividends or distributions, whether liquidating or otherwise, in respect thereof, if any.

Once the Excess Securities have been acquired in a transfer that is not a Prohibited Transfer, the securities shall cease to be Excess Securities.

If the Board determines that a transfer of securities constitutes a Prohibited Transfer then, upon written demand by AFG, the purported transferee shall transfer or cause to be transferred any certificate or other evidence of ownership of the Excess Securities within the purported transferee’s possession or control, together with any distributions paid by AFG with respect to such Excess Securities, to an agent designated by AFG.

If the Board determines that a transfer of securities constitutes a Prohibited Transfer then, upon written demand by OSG, the purported transferee shall transfer or cause to be transferred any certificate or other evidence of ownership of the Excess Securities within the purported transferee’s possession or control, together with any distributions paid by OSG with respect to such Excess Securities, to an agent designated by OSG.

Such agent shall thereafter sell such Excess Securities and the proceeds of such sale shall be distributed as set forth in the Amended and Restated Certificate of Incorporation.

If the purported transferee of a Prohibited Transfer has resold the Excess Securities before receiving such demand, such person shall be deemed to have sold the Excess Securities for AFG’s agent and shall be required to transfer to such agent the proceeds of such sale, which shall be distributed as set forth in the Amended and Restated Certificate of Incorporation.

If the purported transferee of a Prohibited Transfer has resold the Excess Securities before receiving such demand, such person shall be deemed to have sold the Excess Securities for OSG’s agent and shall be required to transfer to such agent the proceeds of such sale, which shall be distributed as set forth in the Amended and Restated Certificate of Incorporation.

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Ambac’s consolidated financial statements have been prepared on the basis of U.S.

Octave’s consolidated financial statements have been prepared on the basis of U.S.

generally accepted accounting principles (“GAAP”).

1 unchanged sentence

There can be no assurance that actual results will conform to such estimates and any future changes in estimates could be material to the financial statements.

Consolidation

The consolidated financial statements include the accounts of AFG and all other entities in which AFG (directly or through its

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

subsidiaries) has a controlling financial interest.

Consolidation

The consolidated financial statements include the accounts of OSG and all other entities in which OSG (directly or through its subsidiaries) has a controlling financial interest.

All significant intercompany balances have been eliminated.

The usual condition for a controlling financial interest is ownership of a majority of the voting interests of an entity.

AFG Unconsolidated Financial Information

Financial information of AFG is presented in Schedule II in this Annual Report on Form 10-K as of December 31, 2024 and 2023 and for the years ended December 31, 2024, 2023 and 2022.

OSG Unconsolidated Financial Information

Financial information of OSG is presented in Schedule II in this Annual Report on Form 10-K as of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023.

Investments in subsidiaries are accounted for using the equity method of accounting in Schedule II.

Held for Sale and Discontinued Operations

The Company has separately classified the assets and liabilities of AAC as held for sale as a result of AAC's pending sale and meeting specified accounting criteria.

Assets and liabilities held for sale are presented separately within the Consolidated Balance Sheets with any adjustments necessary to measure the disposal group at the lower of its carrying value or fair value less costs to sell.

The stockholders' equity section of the Consolidated Balance Sheet continues to be reported on an aggregate basis;

equity components (including nonredeemable NCI) solely attributable to AAC are not presented separately.

The Company reports the results of operations of AAC as discontinued operations since the pending sale also represents a strategic shift that will have a major effect on the Company's operations and financial results.

The results of discontinued operations are reported separately as Net income (loss) from discontinued operations within the Consolidated Statements of Total Comprehensive Income for the current and prior periods.

AAC cash flows are reflected as Net cash provided by (used in) discontinued operations within the Consolidated Statements of Cash Flows for each period presented.

Discontinued Operations

On September 29, 2025, the Company completed the sale of its Legacy Financial Guarantee business, inclusive of Ambac Assurance Corporation ("AAC") and its wholly owned subsidiary Ambac Assurance UK Limited.

The results of discontinued operations for all periods to the date of sale are reported separately as Net income (loss) from discontinued operations within the Consolidated Statements of Total Comprehensive Income for the current and prior periods.

Assets and liabilities of AAC are presented on the Consolidated Balance Sheet as of December 31, 2024, under Assets of discontinued operations and Liabilities of discontinued operations.

AAC's cash flows for all periods to the date of sale are reflected as Net cash provided by (used in) discontinued operations within the Consolidated Statements of Cash Flows.

Refer to Sale of Ambac Assurance Corporation in Note 5.

Discontinued Operations for further 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.

Credit Facilities

Proceeds from the sale of AAC were used, in part, by the Company to repay the $ 150,000 credit facility that was used to partially finance the acquisition of Octave Specialty Limited ("Octave Ventures") .

In connection with the acquisition of ArmadaCorp on October 31, 2025, Octave Partners LLC and certain of its subsidiaries (including ArmadaCorp) entered into a credit facility providing for a $ 100,000 term loan and a $ 20,000 revolving credit facility.

The term loan and revolving loans were fully drawn to pay part of the purchase price for ArmadaCorp.

Refer to Note 12.

Discontinued Operation for further information.

Debt for further information regarding these credit facilities.

Pivix Conversion

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

As a result, Octave Partners has a 74 % controlling stake in Pivix when combined with its previous 17 % minority equity interest and includes Pivix in its consolidated financial statements.

Measurement of Credit Losses on Financial Instruments (CECL)

Ambac measures credit losses on financial assets that are not accounted for at fair value through net income in accordance with the Current Expected Credit Loss standard or "CECL".

Octave measures credit losses on financial assets that are not accounted for at fair value through net income in accordance with the Current Expected Credit Loss standard or "CECL".

The credit loss impairment evaluation process for available-for-sale debt securities is discussed in the Investments sub-section below.

3 unchanged sentences

Expected lifetime credit losses for amortized cost assets are recorded as an allowance for credit losses, with subsequent increases or decreases in the allowance reflected in net income each period.

The credit loss impairment evaluation process for amortized cost assets are addressed in the applicable subsections below.

The credit loss impairment evaluation process for amortized cost assets is addressed in the applicable subsections below.

The total allowance for credit losses for amortized cost assets recorded under CECL related to continuing operations was $ 950 at December 31, 2025.

The Investments - Debt Securities Topic of the ASC requires that all debt instruments be classified in Ambac’s Consolidated Balance Sheets according to their purpose and, depending on that classification, be carried at either cost or fair market value.

Ambac’s debt investment portfolio is accounted for on a trade-date basis and consists primarily of investments in fixed maturity securities are either classified as available-for-sale or trading as defined by the Investments - Debt Securities Topic of the ASC.

The Investments — Debt Securities Topic of the ASC requires that all debt instruments be classified in Octave’s Consolidated Balance Sheets according to their purpose and, depending on that classification, be carried at either cost or fair market value.

Octave’s debt investment portfolio is accounted for on a trade-date basis and consists primarily of investments in fixed maturity securities that are either classified as available-for-sale or trading as defined by the Investments - Debt Securities Topic of the ASC.

Available-for-sale debt securities are reported in the financial statements at fair value with unrealized gains and losses, net of deferred taxes, reflected in Accumulated Other Comprehensive Income (Loss) in Stockholders’ Equity and computed using amortized cost as the basis.

2 unchanged sentences

For other fixed maturity securities, such as corporate and municipal bonds, discounts are amortized or accreted over the remaining term of the securities and premiums are amortized to the earliest call date.

Short-term investments consist of investments in money market funds and fixed maturity investments having maturities of less than one year and greater than three months when purchased.

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Short-term investments consist of investments in money market funds, fixed maturity investments having maturities of less than one year and greater than three months when purchased, cash sweep products, and certificates of deposit.

Other investments primarily consist of:

• Equity interests in pooled investment funds which are accounted for in accordance with the Investments - Equity Securities Topic of the ASC and reported as Other investments on the Consolidated Balance Sheet with income reported through Net investment income on the Statement of Total Comprehensive Income (Loss).

Equity interests in such funds consist of limited partner interests and are reported using the equity method.

• Preferred equity investments that do not have readily determinable fair values and are carried at cost, less any impairments as permitted under the Investments — Equity Securities Topic of the ASC.

• Equity interests in limited partnership which are accounted for in accordance with the Investments — Equity Securities Topic of the ASC and reported as Other investments on the Consolidated Balance Sheet with income reported through Net investment income on the Statement of Total Comprehensive Income (Loss).

Equity interests in limited partnership are reported using the equity method.

• Preferred equity investments that do not have readily determinable fair values are carried at cost, less any impairments as permitted under the Investments — Equity Securities Topic of the ASC.

Fair value is based primarily on quotes obtained from independent market sources.

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Refer to Note 7.

Fair Value Measurements for further description of the

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

methodologies used to determine the fair value of investments, including model inputs and assumptions where applicable.

Ambac has a formal impairment review process for fixed maturity available-for-sale securities in its investment portfolio.

Ambac conducts a review each quarter to identify and evaluate investments that have indications of impairment in accordance with the Investments - Debt Securities Topic of the ASC.

Fair Value Measurements for further description of the methodologies used to determine the fair value of investments, including model inputs and assumptions where applicable.

Octave has a formal impairment review process for fixed maturity available-for-sale securities in its investment portfolio.

Octave conducts a review each quarter to identify and evaluate investments that have indications of impairment in accordance with the Investments — Debt Securities Topic of the ASC.

If management either:

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and (iv) whether scheduled interest payments are past due.

The recognition of credit impairment losses for available-for-sale debt securities are recorded as an allowance for credit losses with an offsetting charge to net income.

The recognition of credit impairment losses for available-for-sale debt securities are recorded as an allowance for credit losses with an offsetting

charge to net income.

Improvements to estimated credit losses for available-for-sale debt securities are recognized immediately in net income.

2 unchanged sentences

The risks and uncertainties include changes in general economic conditions, the issuer’s or guarantor’s financial condition and/or future prospects, the impact of regulatory actions on the investment portfolio, the performance of the underlying collateral, the effects of changes in interest rates or credit spreads and the expected recovery period.

Ambac has made certain accounting policy elections related to accrued interest receivable ("AIR") for available-for-sale investments under CECL.

Octave has made certain accounting policy elections related to accrued interest receivable ("AIR") for available-for-sale investments under CECL.

Elections include:

11 unchanged sentences

On risk attaching, assumed written premiums are recorded at the inception of the policy and can be received on an upfront or installment basis.

On loss occurring, assumed written premium includes the transfer of unearned premiums for inforce policies at the effective date of the respective reinsurance agreements and ongoing premium written activity of policies inforce during the respective contract period.

On loss-occurring, assumed written premium includes the transfer of unearned premiums for in-force policies at the effective date of the respective reinsurance agreements and ongoing premium written activity of policies inforce during the respective contract period.

At end of the contract period, the remaining unearned premiums of inforce policies are returned to the carrier.

4 unchanged sentences

Premium receivables represent balances currently due and amounts not yet due from policyholders, insurance carriers, managing general agents or producers issuing insurance policies on Everspan's behalf.

Premium receivables are reported net of an allowance for expected credit losses.

Premium receivables are reported net of

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

an allowance for expected credit losses.

The allowance is based upon Everspan's ongoing review of amounts outstanding, including delinquencies and write-offs, and other relevant factors.

2 unchanged sentences

The Company has used derivative contracts to hedge foreign exchange or other economic risks in connection with certain strategic investments.

None of Ambac’s derivative contracts were designated as hedges under the Derivatives and Hedging Topic of the ASC.

None of Octave’s derivative contracts were designated as hedges under the Derivatives and Hedging Topic of the ASC.

All derivatives are recorded on the Consolidated Balance Sheets at fair value and are included in Other assets and Other liabilities, as appropriate.

Refer to Note 10.

Derivative Instruments for further discussion of the Company’s use of derivative instruments and their impact of the consolidated financial statements.

Derivative Instruments for further discussion of the Company’s use of derivative instruments and their impact on the consolidated financial statements.

Refer to Note 7.

2 unchanged sentences

The Specialty Property and Casualty Program business defers acquisition costs incurred that are related directly to the successful acquisition of new or renewal insurance contracts, including commissions paid to managing general agents for direct business and paid to insurance carriers when acquired via assumed reinsurance.

Ceding commissions received from

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

reinsurers represent a recovery of related acquisition costs.

Ceding commissions received from reinsurers represent a recovery of related acquisition costs.

Deferred acquisition costs, net of ceding commissions, are amortized over the related policy period, generally one year, and recognized in amortization of deferred acquisition costs on the Statement of Total Comprehensive Income (Loss).

1 unchanged sentence

A legal right of offset exists for (i) premiums received and commissions paid to managing general agents on direct business, (ii) premiums received and ceding commission paid on assumed business and (iii) premiums paid and ceding commissions received on ceded business.

Goodwill is attributable to acquisitions in the Insurance Distribution segment and represents the acquisition cost in excess of the fair value of net assets acquired, including identifiable intangible assets.

Goodwill is attributable to acquisitions in the ID segment and represents the acquisition cost in excess of the fair value of net assets acquired, including identifiable intangible assets.

Goodwill is assigned at acquisition to the applicable reporting unit of the acquired entity giving rise to the goodwill.

2 unchanged sentences

The annual test of goodwill impairment is as of October 1st of each year.

The impairment test for each reporting unit 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.

The impairment test for each reporting unit 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, then a quantitative impairment evaluation is performed as described below.

The quantitative evaluation compares the estimated fair value using an income approach or market approach for each reporting unit with its respective carrying value (including goodwill and identifiable intangible assets).

The quantitative evaluation compares the estimated fair value using a combination of an income approach and market approach for each reporting unit with its respective carrying value (including goodwill and identifiable intangible assets).

4 unchanged sentences

Finite-lived intangibles

Ambac acquired identifiable intangible assets attributable to the Insurance Distribution segment.

Octave acquired identifiable intangible assets attributable to the ID segment.

The intangible assets primarily relate to distribution relationships, non-compete agreements and trade names, all of which have finite lives and are amortized over their estimated useful lives using the straight-line method.

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There have been no accumulated impairment losses since these finite-lived intangible assets were established.

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Indefinite-lived intangibles

Ambac acquired identifiable intangible assets attributable to its acquisitions of licensed insurance carriers in both 2021 and 2022, which were accounted for as asset acquisitions (Specialty Property and Casualty Insurance segment).

Octave acquired identifiable intangible assets attributable to its acquisitions of licensed insurance carriers in both 2021 and 2022, which were accounted for as asset acquisitions (Specialty Property and Casualty Insurance segment).

The intangible assets relate to insurance licenses which have indefinite lives and therefore are not amortized.

1 unchanged sentence

The Company tests indefinite-lived acquired intangible assets for impairment annually or more frequently if circumstances indicate a possible impairment.

Ambac tests indefinite-lived intangibles for impairment as of October 1st of each year.

Octave tests indefinite-lived intangibles for impairment as of October 1st of each year.

If, after assessing qualitative factors, management believes it is more likely than not that the intangible assets are impaired, a quantitative impairment evaluation is performed.

6 unchanged sentences

Cash and cash equivalents principally consist of demand deposits with financial institutions and highly liquid fixed maturity investments having maturities of three months or less when purchased.

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Restricted Cash including Fiduciary Funds

Cash that we do not have the right to use for general purposes is recorded as restricted cash in our consolidated balance sheets.

Restricted cash includes fiduciary cash held by Ambac's insurance distribution subsidiaries as described below.

Restricted cash includes fiduciary cash held by Octave's insurance distribution subsidiaries as described below.

As an intermediary, we hold funds, generally in a fiduciary capacity, for the account of third parties, typically as the result of premiums received from retail brokers or insureds that are in transit to insurers and claims due that are in transit from insurers.

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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 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 other known or observed factors influencing the accident year relative to prior accident years.

The following estimation and analysis methods are principally used by the Company’s actuaries to estimate the ultimate cost of claims and claim adjustment expenses.

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

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

• 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.

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

In this context, in the fourth quarter of 2024, management determined for runoff programs that it would

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

select the high end of its actuarial estimate as it's loss selection pick given the greater volatility that runoff programs may experience.

Reinsurance Recoverable

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This credit risk is generally mitigated by either selecting well-capitalized, highly rated authorized capacity providers or requiring that the capacity provider post collateral to secure the reinsured risks, which in some instances, exceeds the related reinsurance recoverable.

Amounts recoverable from reinsurers are estimated in a manner consistent with the associated loss and loss adjustment expense reserves.

Amounts recoverable from reinsurers are estimated in a manner consistent with the associated loss and loss adjustment expense

The Company reports reinsurance recoverables net of an allowance for amounts that are estimated to be uncollectible.

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The key factors in assessing credit impairment for reinsurance recoverables are independent rating agency credit ratings and loss severities.

Management utilizes a probability of default/loss given default ("PD/LGD") approach, which is applied to the net

unsecured reinsurance recoverable amount.

Management utilizes a probability of default/loss given default ("PD/LGD") approach, which is applied to the net unsecured reinsurance recoverable amount.

Refer to Note 8.

Insurance Contracts for credit impairment disclosures.

Short-term Debt

Short-term debt is carried at par value less unamortized discount.

Accrued interest and discount accretion on short-term debt is reported as Interest expense on the Consolidated Statements of Total Comprehensive Income (Loss).

Short and Long-term Debt

Short and long-term debt are carried at par value less unamortized discount.

Accrued interest and discount accretion on short and long-term debt is reported as Interest expense on the Consolidated Statements of Total Comprehensive Income (Loss).

Noncontrolling Interests ("NCI")

Nonredeemable NCI interests

Nonredeemable NCI of $ 146,837 includes the aggregate NCI share in certain operating units which are minority owned by the units' respective management teams.

As of December 31, 2024, there are no put or call options associated with these minority interests and as such, the aggregate amount is classified as nonredeemable NCI on the balance sheet.

Nonredeemable NCI

For Octave Ventures, the Nonredeemable NCI of $ 117,395 and $ 146,837 as of December 31, 2025 and 2024, includes the NCI share in certain operating units which are minority owned by the units' respective management teams that do not have associated put options.

As of December 31, 2024, there were no put options associated with any of these minority interests and as such, the aggregate amount was classified as nonredeemable NCI on the balance sheet.

During the year ended December 31, 2025, certain NCI shares were reclassified between nonredeemable and redeemable NCI as further described under "Redeemable NCI" below.

The acquisition date valuation method to determine the fair value of nonredeemable NCI was the discounted cash flow approach.

The significant fair value assumptions used in the model include estimated long term revenue and expense forecasts and the discount rate.

At December 31, 2024 and 2023, AAC had 4,596 shares of issued and outstanding Auction Market Preferred Shares ("AMPS") with a liquidation preference of $ 114,900 relative to Ambac common shareholders (reported as nonredeemable noncontrolling interest of $ 50,918 on Ambac's balance sheet).

Discontinued Operation for further discussion of the AMPS.

The significant fair value assumptions used in the model included estimated long term revenue and expense forecasts and the discount rate.

When redeemable NCI shares are no longer redeemable, such as when

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

put options expire unused, the NCI shares are reclassified to nonredeemable NCI with no change in carrying value.

During the year ended December 31, 2025, Octave paid $ 2,967 to purchase certain nonredeemable shares from minority interest owners, resulting in a $ 14,362 decrease to Nonredeemable noncontrolling interest.

The difference between the consideration paid and carrying value of the nonredeemable NCI is recorded as an adjustment to additional paid-in capital.

Redeemable noncontrolling interests

The Xchange, All Trans, Capacity Marine, Riverton and Beat acquisitions resulted in the ownership percentages of the acquired entities by Ambac as shown in the following table

The Xchange, All Trans, Capacity Marine, Riverton, Octave Ventures, and Pivix acquisitions resulted in the ownership percentages of the acquired entities by Octave as shown in the following table

Company Ownership Percentage

2 unchanged sentences

Riverton 80 %

(1) Beat's majority interests in its underlying MGAs ranges from 60 % to 100 % at December 31, 2024, resulting in Ambac's interest ranging from 36 % to 60 % % in each underlying MGA/U.

Under the terms of all the acquisition agreements, Ambac has call options to purchase the remaining interest from the minority owners (i.e., noncontrolling interests) and the minority owners have put options to sell their remaining interests to Ambac.

Because the exercise of the put options are outside the control of Ambac, in accordance with the Distinguishing Liabilities from Equity Topic of the ASC, Ambac reports redeemable NCI in the mezzanine section of its consolidated balance sheets.

Octave Ventures (1)

(1) Octave Ventures's majority interests in its underlying MGAs ranges from 60 % to 100 % at December 31, 2025, resulting in Octave's interest ranging from 36 % to 60 % in each underlying MGA/U.

Under the terms of applicable agreements, Octave has call options to purchase the remaining interests from the minority owners (i.e., noncontrolling interests) and the minority owners have put options to sell their interests to Octave, which certain put obligations can be settled in equity and up to a maximum of 35 % of the redemption value.

Because the exercise of the put options are outside the control of Octave, in accordance with the Distinguishing Liabilities from Equity Topic of the ASC, Octave reports redeemable NCI in the mezzanine section of its consolidated balance sheet.

In addition, during the three months ended March 31, 2025, Octave entered into put options with certain minority owners of the MGA/U operating entities that are majority owned by Octave Ventures.

These put options are embedded in the associated NCI shares ("Option Shares"), resulting in remeasurement of the shares at fair value inclusive of the put options and reclassification of the Option Shares from nonredeemable NCI to redeemable NCI.

The change in carrying value resulting from revaluation of $ 10,276 is recorded as an offset to retained earnings, with a corresponding impact on earnings per share for the year ended December 31, 2025.

During the year ended December 31, 2025, Octave paid $ 1,068 as a result of exercise of put options on the Option Shares, acquiring redeemable NCI with a carrying value of $ 1,815 .

The difference between the consideration paid and carrying value of the redeemable NCI is recorded as an adjustment to additional paid-in capital.

During the three months ended December 31, 2025, there was no activity related the exercise of the put options on the Option Shares.

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

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

The significant fair value assumptions

used in the simulation include the exercise thresholds, EBITDA forecasts, discount rate and long-term growth rates.

The redeemable NCI is remeasured each period as the greater of:

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

the carrying value under ASC 810, which attributes a portion of consolidated net income (loss) to the redeemable NCI, and

the redemption value of the put option under ASC 480 as if it were exercisable at the end of the reporting period.

Management calculates the redemption value of the put options under ASC 480 on an annual basis.

At each reporting period, the redeemable noncontrolling interest increases or decreases due to activity related to net income and distributions.

The Company remeasures such interests to redemption value when required based on the terms of the redemption provisions.

Where redemption value is determined using prior‑year EBITDA or associated calculations, management evaluates the redemption value and records adjustments only when contractual terms change.

Any increase (decrease) in the carrying amount of the redeemable NCI as a result of adjusting to the redemption value of the put option is recorded as an offset to retained earnings.

4 unchanged sentences

Beginning balance $ 199,402 $ 17,079

Fair value of redeemable NCI at acquisition date 185,469 2,450

Net income attributable to redeemable NCI (ASC 810) ( 1,282 ) 1,318

Net income (loss) attributable to redeemable noncontrolling interest (ASC 810) ( 2,007 ) ( 1,282 )

Gain (loss) on foreign currency translation attributable to redeemable NCI 15,227 ( 4,805 )

Fair value of acquired redeemable noncontrolling interest at acquisition date 1,359 185,469

Reclassification from nonredeemable noncontrolling interest including remeasurement at fair value 42,180 —

Reclassification to nonredeemable noncontrolling interest ( 5,136 ) —

Put / call option exercise ( 1,815 ) —

Distributions ( 4,128 ) ( 2,391 )

Adjustment to redemption value (ASC 480) 7,899 5,332

Foreign exchange ( 4,805 ) —

Ending Balance $ 252,981 $ 199,402

The following table outlines the aggregate amounts of redeemable NCI according to the next earliest year in which a NCI put option becomes exercisable over the next five years as of December 31, 2025 :

2026 $ 69,387

Total $ 252,981

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Per ASC 480, the redeemable NCI is to be recorded as the greater of the carrying value or redemption value, therefore, the options in any issue year could be exercised at a lower amount.

Revenue Recognition

Revenues for the Insurance Distribution business operations are recognized in accordance with the Revenue from Contracts with Customers Topic of the ASC.

Revenues for the ID business operations are recognized in accordance with the Revenue from Contracts with Customers Topic of the ASC.

The following steps are applied to recognize revenue:

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Incentive compensation has two components:

short term incentive compensation (consisting of an annual cash bonus) and long term incentive plan awards (consisting of deferred cash and awards of restricted and performance stock units).

short-term incentive compensation (consisting of an annual cash bonus) and long-term incentive plan awards (consisting of deferred cash and stock-based awards described further below).

Annual decisions with regard to incentive compensation are generally made in the first quarter of each year and are based on the prior year's performance for the Company, the employee and the employee's business unit.

In 2024, the Ambac 2020 Incentive Compensation Plan (the “2020 Incentive Plan”) was superseded by the 2024 Incentive Compensation Plan ("2024 Incentive Plan").

Both plans allow for the granting of stock options, restricted stock, stock appreciation rights, restricted and performance units and other awards to employees, directors and consultants that are valued or determined by reference to Ambac's common stock.

Under these plans, Ambac has issued both cash and equity awards to US employees and consultants.

In connection with the adoption of the 2024 Incentive Plan, all shares reserved but unissued under the 2020 Incentive Plan were transferred to the the 2024 Incentive Plan in addition to any shares underlying outstanding awards under the 2020 Incentive Plan as of June 5, 2024, that subsequently terminate by expiration or forfeiture, cancellation, or otherwise are not issued.

Under the 2020 and 2024 Incentive Compensation Plans.

Ambac recognizes compensation costs for all equity classified awards granted at fair value, which is measured on the grant date, and records forfeitures for unvested shares only when they occur.

Ambac Financial Group, Inc.

In 2024, the Octave 2020 Incentive Compensation Plan (the “2020 Incentive Plan”) was superseded by the 2024 Incentive Compensation Plan ("2024 Incentive Plan").

Under these plans, Octave has issued both cash and equity awards to US and UK employees and consultants.

In connection with the adoption of the 2024 Incentive Plan, all shares reserved but unissued under the 2020 Incentive Plan were transferred to the 2024 Incentive Plan in addition to any shares underlying outstanding awards under the 2020 Incentive Plan as of June 5, 2024, that subsequently terminate by expiration or forfeiture, cancellation, or otherwise are not issued.

Under the 2020 and 2024 Incentive Compensation Plans Octave recognizes compensation costs for all equity classified awards granted at fair value, which is measured on the grant date, and records forfeitures for unvested shares only when they occur.

For awards that only include service and performance conditions, the fair value is the market price of Octave stock on the grant date.

For awards that also contain a market condition, including a total shareholder return ("TSR") modifier or achievement of Octave common stock price hurdles, the fair value is estimated using a Monte Carlo simulation.

The types of equity awards granted to employees are as follows:

• Restricted stock units — only require future service and accordingly the respective fair value is recognized as compensation expense over the relevant service period.

• Performance stock units — require both future service and achieving specified performance targets to vest.

Performance stock unit grants also include a market condition TSR modifier that will cause the total payout at the end the performance period to increase or decrease depending on Octave's stock performance relative to a peer group.

Compensation costs for all performance stock units are only recognized when the achievement of the

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

For awards that only include service and performance conditions, the fair value is the market price of Ambac stock on the grant date.

For awards that also contain a market condition, specifically a total shareholder return ("TSR") modifier, the fair value is estimated using a Monte Carlo simulation.

The types of equity awards granted to employees are as follows:

• Restricted stock units — only require future service and accordingly the respective fair value is recognized as compensation expense over the relevant service period.

• Performance stock units — require both future service and achieving specified performance targets to vest.

Performance stock unit grants also include a market condition TSR modifier that will cause the total payout at the end the performance period to increase or decrease depending on Ambac's stock performance relative to a peer group.

Compensation costs for all performance stock units are only recognized when the achievement of the performance conditions are considered probable.

performance conditions are considered probable.

Once deemed probable, such compensation costs are recognized as compensation expense over the relevant service period.

1 unchanged sentence

Changes in the estimated or actual outcome of a performance condition are recognized by reflecting a retrospective adjustment to compensation cost in the current period.

• Performance stock options ("PSOs") — require both future service and achieving specified market price targets to vest.

The PSOs vest upon the achievement of an explicit one-year service period from grant and OSG stock reaching specified market price targets.

Compensation costs for PSOs are initially recognized over the period from grant date to the end of the derived service period estimated from the Monte Carlo valuation process.

If market conditions are achieved prior to the derived service period, the remaining compensation expense is recognized immediately.

Operating Leases

A contract contains a lease if it conveys the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

Ambac's evaluation of whether certain contracts contain leases requires judgment regarding what party controls the asset and whether the asset is physically distinct.

Ambac is the lessee in leases which are classified as operating leases.

Ambac recognizes a single lease cost, calculated so that the cost is allocated generally on a straight-line basis over the lease term within operating expenses in the Consolidated Statements of Total Comprehensive Income (Loss).

Octave's evaluation of whether certain contracts contain leases requires judgment regarding what party controls the asset and whether the asset is physically distinct.

Octave is the lessee in leases which are classified as operating leases.

Octave recognizes a single lease cost, calculated so that the cost is allocated generally on a straight-line basis over the lease term within operating expenses in the Consolidated Statements of Total Comprehensive Income (Loss).

The lease term commences on the earlier of the date when we become legally obligated for the rent payments or the date on which we take possession of the property.

For such operating leases, Ambac recognizes a right-of-use ("ROU") asset and a lease liability, initially measured at the present value of the lease payments.

The discount rate used to initially measure the ROU assets and lease liabilities reflects the estimated secured borrowing rate of the applicable Ambac subsidiary, which considers the rate of existing or recent debt obligations of the entity.

For such operating leases, Octave recognizes a right-of-use ("ROU") asset and a lease liability, initially measured at the present value of the lease payments.

The discount rate used to initially measure the ROU assets and lease liabilities reflects the estimated secured borrowing rate of the applicable Octave subsidiary, which considers the rate of existing or recent debt obligations of the entity.

All cash payments are classified within operating activities in the statement of cash flows.

For contracts where Ambac is the lessee, we have elected the short-term lease recognition exemption for all leases that qualify.

For contracts where Octave is the lessee, we have elected the short-term lease recognition exemption for all leases that qualify.

For those leases that qualify for that exemption, we will not recognize ROU assets or lease liabilities.

For all contracts where Ambac is the lessee and lessor we have also elected the

practical expedient to not separate lease and non-lease components.

For all contracts where Octave is the lessee and lessor, we have also elected the practical expedient to not separate lease and non-lease components.

Depreciation and Amortization of Fixed Assets

Depreciation of furniture and fixtures, certain information technology development costs and electronic data processing equipment is charged over the estimated useful lives of the respective assets, ranging from three to five years, using the straight-line method.

straight-line method.

Amortization of leasehold improvements is charged over the remaining term of the respective operating lease using the straight-line method.

4 unchanged sentences

dollars in accordance with the Foreign Currency Matters Topic of the ASC.

The functional currencies of Ambac's subsidiaries are the local currencies of the country where the respective subsidiaries are based, which are also the primary operating environments in which the subsidiaries operate.

The functional currencies of Octave's subsidiaries are the local currencies of the country where the respective subsidiaries are based, which are also the primary operating environments in which the subsidiaries operate.

Foreign currency translation:

Functional currency assets and liabilities of Ambac’s foreign subsidiaries are translated into U.S.

Functional currency assets and liabilities of Octave’s foreign subsidiaries are translated into U.S.

dollars using exchange rates in effect at the balance sheet dates and the related translation adjustments, net of deferred taxes, are included as a component of Accumulated Other Comprehensive Income (Loss) in Stockholders' Equity.

2 unchanged sentences

The impact of non-functional currency transactions and the remeasurement of non-functional currency assets and liabilities into the respective subsidiaries' functional currency (collectively "foreign currency transactions gains/(losses)") are $( 3,864 ), $ 101 and $ 0 for the years ended December 31, 2025, 2024 and 2023, respectively.

Foreign currency transactions gains/(losses) are primarily the result of Beat's transactions in currencies (primarily the U.S.

Foreign currency transaction gains/(losses) are primarily the result of Octave Ventures transactions in currencies (primarily the U.S.

dollar) other than its functional currency (the British Pound Sterling).

6 unchanged sentences

Commitments and Contingencies for additional information about our legal contingencies and related accounting evaluation.

Ambac Financial Group, Inc.

Octave files a consolidated U.S.

federal income tax return with its subsidiaries, except for Octave Ventures which files a separate tax return.

Octave and its subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions.

Current tax assets and liabilities are recognized for taxes refundable or payable for the current year.

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

Ambac files a consolidated U.S.

Federal income tax return with its subsidiaries, except for Beat which files a separate tax return.

Ambac and its subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions.

Current tax assets and liabilities are recognized for taxes refundable or payable for the current year.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

2 unchanged sentences

The Income Taxes Topic of the ASC requires that companies assess whether valuation allowances should be established against their deferred tax assets based on management's assessment and consideration of all available evidence using a ‘more likely than not' standard.

In making such judgments,

significant weight is given to evidence that can be objectively verified.

In making such judgments, significant weight is given to evidence that can be objectively verified.

The level of deferred tax asset recognition is influenced by management’s assessment of future profitability, which depends on the existence of sufficient taxable income within the carry forward periods available under the tax law.

3 unchanged sentences

All potentially dilutive common shares outstanding consider common stock deliverable pursuant to warrants, unvested restricted stock units and performance stock units granted under existing compensation plans.

Supplemental Disclosure of Cash Flow Information

Immaterial Correction of Prior Period Error

The Company identified an immaterial prior period error in the Consolidated Stockholders’ Equity statement related to the redeemable non-controlling interest associated with the redemption value adjustment recorded under ASC 810-10.

The Company assessed the materiality of this change in presentation on the prior period consolidated financial statements in accordance with SEC Staff Accounting Bulletin No.

99, “Materiality,” (ASC Topic 250, Accounting Changes and Error Corrections).

Based on this assessment, the Company concluded that this error correction in its Consolidated Balance Sheet, Stockholders Equity and Earnings Per share are not material to any previously presented consolidated financial statements.

The corrections had no impact any previously presented interim or annual consolidated financial statements.

Accordingly, the Company corrected the previously reported immaterial errors for the years ended December 31, 2024, in this Annual Report on Form 10-K.

A summary of the immaterial corrections to the Company’s previously reported audited consolidated financial statements follows.

Corrected Consolidated Balance Sheet:

Year Ended December 31, 2024

Cash paid during the period for:

Income taxes $ 526 $ 381 $ 347

Interest on debt 3,821 — —

Non-cash investing and financing activities:

Ambac common stock issued as partial consideration to acquire Beat 29,229 — —

December 31, 2024 2023 2022

Reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets to the Consolidated Statements of Cash Flow:

Cash and cash equivalents $ 29,606 $ 7,342 $ 6,329

Restricted cash 17,669 11,881 13,612

Total cash, cash equivalents, and restricted cash shown on the Consolidated Statements of Cash Flows 47,275 19,223 19,941

Immaterial Correction

Redeemable noncontrolling interest $ 140,860 $ 58,542 $ 199,402

Retained earnings 742,185 ( 58,542 ) 683,643

Total liabilities, redeemable noncontrolling interest and stockholders' equity $ 8,058,378 $ — $ 8,058,378

Corrected Consolidated Statement of Stockholders’ Equity:

Year Ended December 31, 2024

As Reported Immaterial Correction As Corrected

Retained earnings 742,185 ( 58,542 ) 683,643

Corrected Earnings Per Share:

Year Ended December 31, 2024

As Reported Immaterial Correction As Corrected

Net income (loss) from continuing operations per share attributable to stockholders

Basic $ ( 0.13 ) $ ( 1.24 ) $ ( 1.37 )

Diluted $ ( 0.13 ) $ ( 1.24 ) $ ( 1.37 )

Net income (loss) per share attributable to shareholders

Basic $ ( 10.71 ) $ ( 1.25 ) $ ( 11.96 )

Diluted $ ( 10.71 ) $ ( 1.25 ) $ ( 11.96 )

Basis of Presentation and Significant Accounting Policies

Corrected rollforward of redeemable NCI:

Year Ended December 31, 2024

As Reported Immaterial Correction As Corrected

Beginning balance $ 17,079 $ — $ 17,079

Fair value of redeemable NCI at acquisition date 185,469 — 185,469

Net income attributable to redeemable NCI (ASC 810) ( 1,282 ) — ( 1,282 )

Distributions ( 2,391 ) — ( 2,391 )

Adjustment to redemption value (ASC 480) ( 53,210 ) 58,542 5,332

Foreign exchange ( 4,805 ) — ( 4,805 )

Ending balance $ 140,860 $ 58,542 $ 199,402

Reclassifications and Rounding

Reclassifications have been made to prior years' amounts to conform to the current year's presentation.

This includes reclassifying held-for-sale assets and liabilities of Ambac's financial guarantee business which is being reported as a discontinued operation.

This includes reclassifying held-for-sale assets and liabilities of Octave's financial guarantee business which is being reported as a discontinued operation.

Certain amounts and tables in the consolidated financial statements and associated notes may not add due to rounding.

Adopted Accounting Standards

The Company adopted the following accounting standard in 2024:

Segment Reporting:

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) - Improvement to Reportable Segment Disclosures .

The ASU requires disclosure of the following:

• Significant segment expenses regularly provided to the chief operating decision maker (CODM) and included within the reported measure(s) of a segment’s profit or loss.

• The amount and composition of "other segment items".

This amount reconciles segment revenue, less significant expenses, to the reported measure(s) of a segment’s profit or loss.

• The CODM's title and position.

• How the CODM uses the reported measure(s) of a segment’s profit or loss to assess segment performance and decide how to allocate resources.

• All segment profit or loss and assets disclosures currently required annually by Topic 280, as well as those introduced by the ASU, to also be disclosed in interim periods.

The ASU also permits a public entity to report multiple measures of a segment’s profit or loss as long as:

i) all the reported measures of a segment’s profit or loss are used by the

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

CODM for purposes of assessing performance and allocating resources;

and ii) the measure closest to GAAP is also provided.

The ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

Ambac adopted this ASU for the annual reporting period ending December 31, 2024.

Segment Information for the required disclosures.

Future Application of Accounting Standards

Adopted Accounting Standards

Income Taxes:

1 unchanged sentence

The enhancements in the ASU include the following:

• Within the rate reconciliation table, disclosure of additional categories of information about federal, state and foreign income taxes and providing more details about the reconciling items in some categories if the items meet a quantitative threshold.

• Annual disclosure of income taxes paid (net of refunds received) disaggregated by federal (national), state and foreign taxes and disaggregation of the information by jurisdiction based on a quantitative threshold.

• Within the rate reconciliation table, disclosure of additional categories of information about federal, state, and foreign income taxes and provision of more details about reconciling items in some categories if the items meet a quantitative threshold.

• Annual disclosure of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and further disaggregated by jurisdiction based on a quantitative threshold.

• Other disclosures include:

i) income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and ii) income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.

The ASU is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

adopt this ASU on January 1, 2025 and do not expect it to have a consequential impact on Ambac's financial statements.

(i) income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign amounts and (ii) income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.

Octave has adopted this ASU prospectively for the annual reporting period ending December 31, 2025.

There have been no other new accounting standards adopted during the year ended December 31, 2025.

Future Application of Accounting Standards and Required Disclosures

Credit Losses for Accounts Receivable and Contract Assets:

In July 2025, the FASB issued ASU 2025-05, Financial Instruments— Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

The amendments in the ASU provide all entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions under Topic 606.

The practical expedient allows entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset.

The ASU is effective for interim and annual periods beginning after December 15, 2025.

The standard is not expected to have a material impact on Octave's financial statements.

Goodwill and Other — Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Intangibles— Goodwill and Other— Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal Use Software.

This standard is intended to increase the operability of the accounting guidance for internal-use software development costs considering the evolution of software development methods.

Amendments remove references to prescriptive and sequential project stages, requiring entities to start capitalizing costs when:

(i) management has authorized and committed to funding the project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended.

The ASU is effective for interim and annual periods beginning after December 15, 2027 with early adoption permitted.

Octave has not determined if it will early adopt this ASU and is evaluating its impact on Octave's financial statements.

Expense Disaggregation Disclosures:

2 unchanged sentences

• Disclose the amounts of certain expense categories included in each relevant expense caption.

Those categories applicable to Ambac include employee compensation, depreciation, and intangible asset amortization.

Those categories applicable to Octave include employee compensation, depreciation, and intangible asset amortization.

A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed above.

3 unchanged sentences

The ASU is effective for annual periods beginning after December 15, 2026 and for interim reporting periods after December 15, 2027 with early adoption permitted.

Ambac has not determined if it will early adopt this ASU and is evaluating the impact on Ambac's financial statements.

Octave has not determined if it will early adopt this ASU and is evaluating the impact on Octave's financial statements.

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

SEGMENT INFORMATION

The Company reports its results of continuing operations in two segments:

Specialty Property and Casualty Insurance and Insurance Distribution.

Specialty Property and Casualty Insurance and ID.

These reportable segments offer distinct products and services as further described in Note 1.

1 unchanged sentence

The operating entities within each segment are wholly or majority owned by separate intermediate holding companies:

Everspan Holdings, LLC for Specialty Property and Casualty Insurance and Cirrata Group, LLC for Insurance Distribution.

Everspan Holdings, LLC for Specialty Property and Casualty Insurance and Octave Partners LLC for ID.

The Company's segments have separate management teams with incentive compensation structures based on segment level performance.

1 unchanged sentence

The following tables summarize the components of the Company’s total revenues and expenses and pretax income (loss) by reportable business segment.

Information provided below for “Corporate and Other” primarily relates to the operations of AFG, which will include investment income on its investment portfolio and costs to maintain the operations of AFG, including public company reporting, capital management and business development costs for the acquisition and development of new business initiatives.

Information provided below for “Corporate and Other” primarily relates to the operations of OSG, which will include investment income on its investment portfolio and costs to maintain the operations of OSG, including public company reporting, capital management and business development costs for the acquisition and development of new business initiatives.

As a result of the Company reporting the results of operations of AAC as discontinued operations, certain corporate costs charged to AAC totaling $ 6,786 , $ 14,919 , and $ 19,367 for the years ended December 31, 2025, 2024 and 2023, respectively, have been reported in Net income from continuing operations on the Consolidated Statements of Total Comprehensive Income and included in Corporate and Other in the tables below.

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

4 unchanged sentences

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

Commissions $ 143,381 143,381 $ 92,023 $ 92,023

Servicing and other fees 20,419 20,419 6,353 6,353

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

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

Program fees 14,322 14,322 13,506 13,506

Net investment income, net investment gains (losses), including impairments 6,400 787 $ 6,764 13,951 3,759 64 $ 9,353 13,176

Net gains (losses) on derivative contracts — 106 3,910 4,016 — — ( 279 ) ( 279 )

Other income (expense) 7,409 6,320 ( 415 ) 13,314 ( 6 ) 200 6 200

Investment income 6,811 1,514 $ 2,323 10,647 6,400 787 $ 7,261 14,448

Other 38 ( 1,588 ) ( 3,230 ) ( 4,780 ) 7,409 73 2,998 10,480

Total revenues from Continuing Operations (1)

88,403 163,726 ( 907 ) 251,222 126,320 99,236 10,259 235,815

Loss and loss adjustment expenses (benefit) 72,626 72,626 36,712 36,712

Commissions 37,037 37,037 40,876 40,876

Loss and loss adjustment expenses 47,193 47,193 72,626 72,626

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

Commission expenses 40,876 40,876 29,465 29,465

Depreciation expense — 481 1,864 2,345 — 42 1,036 1,078

Intangible amortization 17,602 17,602 4,152 4,152

Intangible amortization and depreciation 38,734 3,218 41,952 18,083 1,864 19,947

Interest expense 18,640 18,640 9,379 9,379

6 unchanged sentences

Segment net (income) loss attributable to NCI — ( 2,601 ) ( 2,601 ) 2 ( 363 ) ( 361 )

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

Reconciliation to consolidated net income (loss) attributable to Ambac stockholders

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

Reconciliation to consolidated net income (loss) attributable to shareholders

Discontinued operations ( 163,288 ) ( 497,167 )

Net income (loss) attributable to Ambac stockholders $ ( 556,449 ) $ 3,632

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

Reconciliation of segment assets to consolidated total assets

10 unchanged sentences

Impact of noncontrolling interests ( 14,507 ) ( 14,507 ) ( 6,448 ) ( 6,448 )

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

EBITDA attributable to shareholders $ 3,330 $ 22,411 $ ( 80,670 ) $ ( 54,929 ) $ 12,222 $ 13,205 $ ( 62,393 ) $ ( 36,966 )

(1) Inter-segment revenues and inter-segment pre-tax income (loss) amounts are insignificant and are not presented separately.

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

4 unchanged sentences

Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total

Commissions $ 51,281 51,281

Net premiums earned $ 51,911 $ 51,911

Commission income $ 30,695 30,695

Program fees 8,437 8,437

Net investment income, net investment gains (losses), including impairments 1,559 — $ 2,883 4,442

Net gains (losses) on derivative contracts 935 935

Other income (expense) ( 58 ) 715 ( 81 ) 576

Investment income 3,795 64 $ 9,298 13,159

Other ( 42 ) 200 ( 218 ) ( 60 )

Total revenues from continuing operations 64,101 51,546 9,080 124,728

Loss and loss adjustment expenses (benefit) 9,071 9,071

Loss and loss adjustment expenses 36,712 36,712

Policy acquisition costs 10,557 10,557

Commission expenses 17,641 17,641

Depreciation expense — 31 841 872

Intangible amortization 2,921 2,921

Commissions 29,465 29,465

Intangible amortization and depreciation 4,194 1,036 5,230

Interest expense — — —

7 unchanged sentences

Segment net (income) loss attributable to NCI ( 1 ) ( 1,318 ) ( 1,319 )

Segment net income (loss) attributable to Ambac shareholders $ ( 6,330 ) $ 3,638 $ ( 33,422 ) $ ( 36,115 )

Reconciliation to consolidated net income (loss) attributable to Ambac stockholders

Net income (loss) attributable to shareholders $ 334 $ 5,815 $ ( 30,701 ) $ ( 24,551 )

Reconciliation to consolidated net income (loss) attributable to shareholders

Discontinued operations 28,183

gain on purchase of auction market preferred shares 1,131

Net income (loss) attributable to Ambac stockholders $ 522,380

Net income (loss) attributable to shareholders $ 3,632

Reconciliation of segment assets to consolidated total assets

9 unchanged sentences

Impact of noncontrolling interests ( 2,102 ) ( 2,102 )

Ambac EBITDA $ ( 6,347 ) $ 6,013 $ ( 33,043 ) $ ( 33,377 )

EBITDA attributable to shareholders $ 383 $ 9,381 $ ( 30,858 ) $ ( 21,093 )

(1) Inter-segment revenues and inter-segment pre-tax income (loss) amounts are insignificant and are not presented separately.

5 unchanged sentences

United Kingdom 78,901 23,210 —

Total revenues and other income $ 235,815 $ 124,728 $ 53,612

Total revenues $ 251,222 $ 235,815 $ 124,728

BUSINESS COMBINATION

On July 31, 2024, Ambac completed the acquisition of 60 % of Beat for a purchase price of $ 281,278 of which approximately $ 252,048 was paid in cash and the remainder was satisfied through the issuance of 2,216,023 shares of Company Common Stock to certain Sellers (the "Beat Transaction").

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.

Many of Beat's operating units are minority owned by their respective management teams and accordingly, Ambac's economic interests in those units is less than 60 % despite our ownership of 60 % of Beat.

AFG funded the cash portion of the consideration with a combination of available cash, approximately $ 62,000 of funding from AAC in the form of an investment in Cirrata V LLC, and $ 147,000 from new indebtedness (the "Credit Facility") that was issued in the third quarter of 2024.

Debt for the terms of the Credit Facility.

AFG issued the common stock free and clear of any liens or restrictions (other than those arising under state and federal securities laws of the United States) and bearing a restrictive legend.

The common stock has not been registered under the Securities Act in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act.

At the closing of the Beat Transaction, AFG entered into a Shareholders’ Agreement by and among AFG, the Purchaser, the Rollover Shareholders and Beat (the “Shareholders’ Agreement”).

The Shareholders’ Agreement provides for, among other things, the granting of (i) put options to each Rollover Shareholder to require the Purchaser to purchase from such Rollover Shareholder, the Relevant Shares (as defined in the Shareholders’ Agreement), and (ii) call options to the Purchaser to purchase from each Rollover Shareholder, the Relevant Shares.

On October 31, 2025, Octave Specialty Group, (the “Company”) completed its previously announced acquisition of ArmadaCorp Capital, LLC (“ArmadaCorp) pursuant to the Membership Interest Purchase Agreement dated October 31, 2025, for total consideration of approximately $ 250,000 in cash, financed in part with borrowings of $ 120,000 made concurrent with the acquisition (the “Transaction”).

The acquisition was accounted for as a business combination using the acquisition method of accounting.

The Company has finalized its fair value estimates of the acquired assets, assumed liabilities and NCI as of December 31, 2024, and no subsequent adjustments will be made within the permitted measurement period as defined by ASC 805.

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

The following table summarizes the consideration transferred to acquire Beat and the estimated fair values of the identified assets acquired and liabilities assumed at the acquisition date, as well as the fair value of the NCI, at the acquisition date:

The Company has finalized its fair value estimates of the acquired asset and assumed liabilities as of December 31, 2025 and no subsequent adjustments will be made within the permitted measurement period as defined by ASC 805.

The following table summarizes the consideration transferred for this acquisition and the estimated fair values of the identified assets acquired and liabilities assumed at the acquisition date:

Fair value of consideration transferred:

Cash $ 252,048

Common shares 29,229

Total consideration $ 281,278

Recognized amounts of assets acquired, liabilities assumed and NCI:

incentive payments ( 6,491 )

Net cash consideration $ 243,509

Recognized amounts of assets acquired and liabilities assumed:

Cash and equivalents

Short-term investments 28,919

Commission receivables and contract assets 47,696

Other assets 10,972

Accounts receivable

Intangible assets

Goodwill 357,317

Advanced commissions ( 49,299 )

Premium payable

Deferred tax liability ( 74,300 )

Other liabilities

Redeemable NCI ( 185,469 )

Nonredeemable NCI ( 149,095 )

Total $ 281,278

Goodwill was recorded to reflect the excess purchase consideration over net assets acquired and primarily consists of the future economic benefits that we expect to receive as a result of the acquisition, driven by the value of Beat's potential future distribution and carrier relationships, and synergies with other Ambac business operations.

All of the $ 357,317 of goodwill was assigned to the Insurance Distribution segment.

The goodwill is not deductible for tax purposes.

The fair value of the redeemable non-controlling interest of $ 185,469 on the acquisition date was estimated based on the non-controlling interest’s respective share of Beat's enterprise value, adjusted for the value of Ambac's call option to purchase, and the minority owners' put option to sell to Ambac, respectively, the remaining 40 % membership interest in Beat.

Please refer to the Redeemable Noncontrolling Interest section of Note 2.

Basis of Presentation and Significant Accounting Policies, for further information regarding the terms of the call and put option, as well as the redeemable NCI balance sheet classification.

The fair value of the nonredeemable NCI of $ 149,095 represents the aggregate NCI share in certain Beat operating units which are minority owned by the units' respective management teams.

At December 31, 2024, there are no put or call options associated with these minority interests and as such, the aggregate amount is classified as nonredeemable NCI on the balance sheet.

Incentive payments represent amounts netted against the purchase prince to fund short-term and long-term incentive compensation and retention payments to the management of ArmadaCare.

Goodwill was recorded to reflect the excess purchase consideration over net assets acquired and primarily consists of the future economic benefits that we expect to receive as a result of the acquisition, driven by the value of potential future distribution and carrier relationships and synergies with other Octave business operations.

All of the $ 94,044 of goodwill was assigned to the ID segment.

The goodwill is deductible for tax purposes over 15 years.

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed were based on management’s estimates and assumptions at the time of the acquisitions.

The following table sets forth the estimated fair values of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition:

Useful Life in Years

Customer relationships

Trademarks 8,226 10.0

Total $ 311,557

The customer relationships intangible represents existing relationships Beat maintains with a variety of brokers and distributors across its product lines.

$ 138,000 15.0

The customer relationships intangible represents existing relationships ArmadaCorp maintains with a variety of existing distributors and customers across its product.

It excludes the value of potential future distribution relationships that may be developed, which is included in goodwill.

The trade name intangible represents the rights to the Beat Capital Partners brand name which is well known in the marketplace in which Beat competes.

The overall weighted average useful life of the identified amortizable intangible assets acquired is 5.1 years.

The acquired business contributed revenues of $ 40,343 and net income of $ 4,551 to Ambac for the period from August 1, 2024, to December 31, 2024.

The following unaudited pro forma summary presents consolidated information of Ambac as if the business combination had occurred on January 1, 2023.

The trade name intangible represents the rights to the Armada trade name which is well known in the marketplace in which ArmadaCorp operates.

The overall weighted average useful life of the identified amortizable intangible assets acquired is 7.9 years for ArmadaCorp.

The acquired business contributed revenues of $ 4,998 and net income of $ 378 to Octave for the period from November 1, 2025, to December 31, 2025.

The following unaudited pro forma summary presents consolidated information of Octave as if the business combination had occurred on January 1, 2024.

Year Ended December 31,

1 unchanged sentence

Revenues $ 292,022 $ 274,816

Net income (loss) from continuing operations $ ( 51,782 ) $ ( 93,021 )

Ambac did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and net income.

These pro forma amounts have been calculated after applying Ambac's accounting policies and adjusting the results of Beat to reflect amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2023, with the consequential tax effects.

In 2024, Ambac incurred $ 27,388 of acquisition-related costs.

These expenses are included in general and administrative expense on Ambac's consolidated statement of comprehensive income (loss) for the year ended December 31, 2024.

In the table above, these expenses are reflected in the pro forma net income for the year ended December 31, 2023.

DISCONTINUED OPERATION

Net (loss) from continuing operations $ ( 50,687 ) $ ( 75,809 )

Octave did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and net income.

These pro forma amounts have been calculated after applying Octave's accounting policies and adjusting the results of the acquired company to reflect amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2024 with the consequential tax effects.

In 2025 and 2024, Octave incurred $ 7,796 and $ 27,388 of acquisition-related costs.

These expenses are included in general and administrative expense on Octave's consolidated statement of comprehensive income (loss) for the years ended December 31, 2025 and 2024.

In the table above, these expenses are reflected in the pro forma net income for the years ended December 31, 2025 and 2024.

DISCONTINUED OPERATIONS

Sale of Ambac Assurance Corporation ("AAC")

On June 4, 2024, AFG entered into a 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 and subject to the conditions set forth therein, AFG will sell all of the issued and outstanding shares of common stock of AAC owned by AFG to the Buyer for aggregate consideration of $ 420,000 in cash, and will issue to the Buyer a warrant to

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

purchase AFG common stock as further described below (the "AAC Sale").

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

The Purchase Agreement required AFG to seek the affirmative vote in favor of the AAC Sale by the holders of a majority of the issued and outstanding shares of AFG common stock entitled to vote thereon (the “Stockholder Approval”).

On October 16, 2024, Stockholder Approval was obtained at a special meeting of stockholders duly convened for that purpose.

The Purchase Agreement contains certain customary termination rights for each of AFG and Buyer, including (i) by mutual written agreement;

(ii) if the AAC Sale has not been consummated on or before April 4, 2025 (the “End Date”), subject to extension by 90 days in certain circumstances;

(iii) if the other party is in breach of the Purchase Agreement in a manner that would result in a failure of an applicable closing condition and such breach cannot be cured or, if curable, has not been cured within 60 days after written notice to the other party of such breach;

or (iv) if any applicable law makes the consummation of the Closing illegal or otherwise prohibited, or any judgment, order or decree of any governmental authority enjoins Buyer and AFG from consummating the Closing.

AFG would pay the Buyer an amount equal to $ 22,000 (the “Termination Fee”) if all of the following occur:

(i) the Purchase Agreement is terminated as a result of (a) not closing the AAC Sale and other transactions contemplated by the Purchase Agreement by the End Date, as it may be extended, or (b) an AFG breach of representations or covenants that would cause certain closing conditions not to be satisfied;

(ii) AFG has received an alternative acquisition proposal prior to a valid termination of the Purchase Agreement;

and (iii) within 12 months after termination of the Purchase Agreement, AFG enters into a definitive agreement for an alternative acquisition.

AFG would also pay Buyer the Termination Fee if the Purchase Agreement is terminated for (x) AFG's breach of certain covenants that would cause closing conditions not to be satisfied, or (y) AFG changing its recommendation to the Company’s stockholders regarding the sale.

In addition to the Termination Fee, AFG would pay Buyer up to $ 6,000 as a reimbursement of Buyer’s reasonably documented out-of-pocket fees and expenses incurred in connection with the AAC Sale and other transactions contemplated by the Purchase Agreement if (i) the Purchase Agreement is terminated as a result of not closing the AAC Sale and other transactions by the End Date and the Termination Fee is also payable;

(ii) the Purchase Agreement is terminated as a result of AFG changing its recommendation to the AFG stockholders regarding the AAC Sale;

or (iii) there is an AFG breach of representations or covenants that would cause certain closing conditions not to be satisfied.

The Closing is subject to customary closing conditions, including the receipt of specified regulatory approvals.

In connection with and pursuant to the Purchase Agreement, AFG has agreed to issue to the 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 6.5 year term from the date of issuance and will be immediately exercisable.

Payment of the exercise price may be settled, at AFG’s option, by way of a cash exercise or by net share settlement.

Also pursuant to the Purchase Agreement, concurrent with the AAC 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.

While management, the Board and AFG's stockholders have approved the AAC Sale, the AAC Sale is also subject to approval by our regulators in both the US and UK.

Buyer received approval from the U.K.

Prudential Regulation Authority ("PRA") for the change in control of Ambac UK on October 24, 2024 (which remains effective only if the AAC Sale is completed by April 30, 2025, which deadline may be extended by the PRA on upon Buyer's request).

Approval from the Wisconsin Office of the Commissioner of Insurance ("OCI") remains outstanding.

Management believes the OCI approval of the sale of AAC is ordinary and customary and it is probable that the deal will close in the first half of 2025.

The AAC Sale will have a major effect on AFG's operations and financial results and, as of December 31, 2024, meets the held-for-sale reporting requirements.

Accordingly, AAC's assets and liabilities that will be transferred in the AAC Sale are classified as held-for-sale, and its results and cash flows presented as discontinued operations.

At December 31, 2024, the carrying value of AAC's net assets held-for-sale is $ 962,637 , before the valuation allowance for the expected loss on disposal, inclusive of the accrued value of AAC's co-investment with AFG described above, and net of the carrying value of AAC's Auction Market Preferred Shares ("AMPS").

• At December 31, 2024 and 2023, AAC had 4,596 shares of issued and outstanding AMPS with a liquidation preference of $ 114,900 relative to Ambac common shareholders (reported as nonredeemable noncontrolling interest of $ 50,918 on Ambac's balance sheet).

In 2022, AAC purchased 905 shares of AMPS for $7,919.

The difference between this amount paid to AMPS holders and the carrying amount was reflected as an increase to Net income attributable to common shareholders for approximately $ 1,131 .

The auction occurs every 28 days and the dividend rate has continuously been reset at the maximum, equal to the Reference Rate plus 200 basis points.

Beginning July 1, 2023, the Reference Rate for the AMPS is one-month CME Term SOFR plus 0.11448 percent.

Prior to July 1, 2023, the Reference Rate was one-month LIBOR.

• Under the terms of the AMPS, dividends may not be paid on the common stock of AAC unless all accrued and unpaid dividends on the AMPS for the then current dividend period have been paid, provided, that dividends on the common stock may be made at all times for the purpose of, and only in such amounts as are necessary for, enabling AFG (i) to service its indebtedness for borrowed money as such payments become due or (ii) to pay its operating

Ambac Financial Group, Inc.

On September 29, 2025, pursuant to the stock purchase agreement dated as of June 4, 2024, as amended by the First Amendment thereto dated as of July 3, 2025, (the "Purchase Agreement") and the Letter Agreements dated July 3, 2025, and September 22, 2025 with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., OSG sold all of the issued and outstanding shares of common stock of AAC, a wholly-owned subsidiary of OSG, to the Buyer for $ 420,000 in cash (the "Sale").

The Buyer acquired complete ownership of the common stock 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.

The warrant has an exercise price per share of $ 18.50 and expires March 29, 2032.

Under the terms of the Letter Agreement dated July 3, 2025 between the parties to the Purchase Agreement, the Buyer may convert the warrant at a value equal to its Black-Sholes value, over specified time periods, with the conversion value delivered in shares of OSG common stock or cash at OSG's election.

In addition, the Buyer made an incremental payment to OSG totaling $ 4,300 to resolve other agreed upon matters.

OSG recorded an expected loss on sale in the Statement of Comprehensive Income (Loss) for the year ended December 31, 2024 of $( 570,145 ), equal to the difference between the sale proceeds (net of the value of the warrants to be issued) and the carrying value of AAC's net assets held-for-sale, less expected closing costs.

OSG recorded adjustments to the loss on sale of AAC equal to $( 117,468 ) for the year ended December 31, 2025, reflecting remeasurement of net assets held-for-sale, changes in fair value of the warrant issued to Buyer, other agreed upon payments, and re-estimation of closing costs during the periods leading up to the final Sale closing.

The loss on sale for the year ended December 31, 2025, included the reclassification of net unrealized gains (losses) on available-for-sale investment securities, cumulative foreign currency translation adjustments and cumulative credit risk changes of fair value option liabilities attributable to AAC and subsidiaries, totaling $( 85,096 ), from Accumulated Other Comprehensive Income (Loss) ("AOCI") to Net income (loss) from discontinued operations at Sale closing.

The components of the loss on sale, reflected in the valuation allowance on net assets of discontinued operations as of

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

If dividends are paid on the common stock as provided in the prior sentence, dividends on the AMPS become cumulative until the date that all accumulated and unpaid dividends have been paid on the AMPS.

AAC has not paid dividends on its AMPS since 2010.

The expected loss on sale reported in the Statement of Comprehensive Income (Loss) for the year ended December 31, 2024 of $( 570,145 ) is equal to the difference between the sale proceeds (net of the value of the Warrants to be issued) and the carrying value of AAC's net assets held-for-sale, less expected closing costs.

The carrying value of held-for-sale assets and liabilities, and consequently the expected loss on disposal, are subject to variability through the closing date of the AAC Sale.

Changes to the carrying value of held-for-sale assets and liabilities could arise from changes in estimates of financial guarantee losses and loss adjustment expense reserves, including subrogation recoverable;

changes in the valuation of invested assets and other financial instruments carried at fair value;

adverse or favorable litigation outcomes;

and other operating results of AAC and its subsidiaries, including consolidated variable interest entities (“VIEs”).

Additionally, at closing, net income will be impacted by reclassification from Accumulated Other Comprehensive Income (Loss) of net unrealized gains (losses) on available-for-sale investment securities, cumulative foreign currency translation adjustments and cumulative credit risk changes of fair value option liabilities attributable to AAC and subsidiaries, which at December 31, 2024, amounted to $( 175,278 ).

The components of anticipated loss on sale included within Net income (loss) from discontinued operations before tax on the Consolidated Statement of Comprehensive Income (Loss) for the year ended December 31, 2024, are summarized below:

December 31, 2024 and at Sale closing on September 29, 2025, are summarized below:

Sale Closing on September 29, 2025 December 31,

Fair value of net consideration to be received $ 407,300 $ 399,727

estimated closing costs 7,098 7,235

400,202 392,492

Carrying amount of net assets held-for-sale 1,002,719 962,637

Reclassification of AOCI $ ( 85,096 )

Loss on disposal $ ( 687,613 ) $ ( 570,145 )

The following table summarizes the major classes of assets and liabilities held-for-sale on the Consolidated Balance Sheets after elimination of intercompany balances:

The following table summarizes the major classes of assets and liabilities of discontinued operations on the Consolidated Balance Sheet at December 31, 2024 after elimination of intercompany balances:

Total investments $ 2,226,505

6 unchanged sentences

Other assets, net 49,396

VIE assets (including restricted cash of $ 57,754 and $ 246,031 )

3,904,259 4,394,402

VIE assets (including restricted cash of $ 57,754 )

Valuation allowance on assets held-for-sale ( 570,145 )

8 unchanged sentences

The following table summarizes the major line items constituting net income (loss) from discontinued operations reconciled to net income (loss) from discontinued operations presented in the Consolidated Statement of Comprehensive Income (Loss):

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Year ended December 31,

4 unchanged sentences

Net gains (losses) on derivative contracts 302 3,958 ( 699 )

Net realized gain on extinguishment of debt — — 81,272

Litigation recoveries — — 125,869

Other revenues 18,016 31,096 14,533

5 unchanged sentences

Total expenses 156,192 105,819 107,747

Pretax income 91,463 36,577 560,278

Pretax income (loss) ( 35,142 ) 91,463 36,577

Provision for income taxes 10,678 18,485 8,394

1 unchanged sentence

Net income (loss) from discontinued operations $ ( 163,288 ) $ ( 497,167 ) $ 28,183

Gain on purchase of AMPS — $ — 1,131

Net income (loss) attributable to Ambac common shareholders $ ( 497,167 ) $ 28,183 $ 558,495

Significant Accounting Policies

The held-for-sale assets and liabilities and results of operations are subject to certain additional significant accounting policies to those described in Note 2.

The held-for-sale assets and liabilities and results of operations were subject to certain additional significant accounting policies to those described in Note 2.

Basis of Presentation and Significant Accounting Policies .

2 unchanged sentences

The Fair Value Measurement Topic of the ASC specifies a fair value hierarchy based on whether the inputs to valuation techniques used to measure fair value are observable or unobservable.

Measurement of fair value of assets held-for-sale is based on information from the purchase agreement and other unobservable information and is considered by management to be a Level 3 valuation under the Fair Value Measurement Topic of the ASC.

Equity interests in pooled investment funds which are accounted for in accordance with the Investments - Equity Securities Topic of the ASC include equity interests in the form of common stock or in-substance common stock are classified as trading securities and reported at fair value with changes in fair value reported through income.

Measurement of fair value of assets held-for-sale was based on information from the purchase agreement and other unobservable information and was considered by management to be a Level 3 valuation under the Fair Value Measurement Topic of the ASC.

Equity interests in pooled investment funds which are accounted for in accordance with the Investments - Equity Securities Topic of the ASC include equity interests in the form of common stock or in-substance common stock which are classified as trading securities and reported at fair value with changes in fair value reported through income.

Investments in fixed maturity securities classified at trading are reported within Assets held-for-sale at fair value with unrealized gains and losses reported through income.

Consolidation of Variable Interest Entities:

The consolidated financial statements include the accounts of VIEs for which AAC or Ambac UK is deemed the primary beneficiary in accordance with the Consolidation Topic of the ASC.

The consolidated financial statements include the accounts of VIEs for which AAC or Ambac UK was deemed the primary beneficiary in accordance with the Consolidation Topic of the ASC.

A VIE is an entity:

a) that lacks enough equity investment at risk to permit the entity to finance its activities without additional subordinated financial support from other parties;

or b) where the group of equity holders does not have:

(1) the power, through voting rights or similar rights, to direct the activities of an entity that most significantly impact the entity’s economic performance;

(2) the obligation to absorb the entity’s expected losses;

or (3) the right to receive the entity’s expected residual returns.

The determination of whether a variable interest holder is the primary beneficiary involves performing a qualitative analysis of the VIE that includes, among other factors, its capital structure, contractual terms including the rights of each variable interest holder, the activities of the VIE, whether the variable interest holder has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, whether the variable interest holder has the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, related party relationships and the design of the VIE.

An entity that is deemed the primary beneficiary of a VIE is required to consolidate the VIE.

We determined that AAC or Ambac UK generally have the obligation to absorb a LFG VIE's expected losses given that they have issued financial guarantees supporting certain liabilities (and in some cases certain assets).

Ambac consolidates certain LFG VIEs in cases where we also have the power to direct the activities that most significantly impact the VIE’s economic performance.

A VIE is generally deconsolidated in the period that AAC or Ambac UK no longer has such control rights.

The impact of consolidating such LFG VIEs on Ambac’s balance sheet is the elimination of transactions between the consolidated LFG VIEs and AAC or Ambac UK and the inclusion of the LFG VIE’s third party assets and liabilities.

For a financial guarantee insurance policy issued to a consolidated VIE, Ambac does not reflect the financial guarantee insurance policy in accordance with the related insurance accounting rules under the Financial Services — Insurance Topic of the ASC.

Consequently, upon consolidation, Ambac eliminates the insurance assets and liabilities associated with the policy from the Consolidated Balance Sheets, including premium receivables, unearned premiums, loss and loss expense reserves, and insurance intangible assets.

For investment securities owned by AAC or Ambac UK that are debt instruments issued by the VIE, the associated debt and investment balances are eliminated upon consolidation.

Generally, Ambac has elected the fair value option for consolidated LFG VIE financial assets and financial liabilities, except in cases where AAC or Ambac UK was involved in the

Ambac Financial Group, Inc.

(a) that lacks enough equity investment at risk to permit the entity to finance its activities

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

design of the VIE and was granted control rights at its inception or when the financial liabilities are primarily supported by non-financial assets.

The election to use the fair value option is made on an instrument by instrument basis.

In cases where the fair value option has not been elected, the LFG VIE's invested assets are fixed maturity securities and are classified as either available-for-sale or trading as defined by the Investments - Debt Securities Topic of the ASC.

When the fair value option is elected for LFG VIE long-term debt, changes in the fair value of the long-term debt is reported in income on the Consolidated Statements of Total Comprehensive Income (Loss), except for the portion of the total change in fair value of financial liabilities caused by changes in the instrument-specific credit risk which is presented separately in Other comprehensive income (loss).

In cases where the fair value option has not been elected, the LFG VIEs' long-term debt is carried at par less unamortized discount, with interest expense reported in income on the Consolidated Statements of Total Comprehensive Income (Loss).

Consolidated VIE assets and liabilities are presented in VIE assets and VIE liabilities in the above table.

Results of consolidated VIEs are included in other revenues above.

without additional subordinated financial support from other parties;

or (b) where the group of equity holders does not have:

(1) the power, through voting rights or similar rights, to direct the activities of an entity that most significantly impact the entity’s economic performance;

(2) the obligation to absorb the entity’s expected losses;

or (3) the right to receive the entity’s expected residual returns.

The determination of whether a variable interest holder was the primary beneficiary involved performing a qualitative analysis of the VIE that includes, among other factors, its capital structure, contractual terms including the rights of each variable interest holder, the activities of the VIE, whether the variable interest holder had the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, whether the variable interest holder had the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE, related party relationships and the design of the VIE.

An entity that was deemed the primary beneficiary of a VIE was required to consolidate the VIE.

We determined that AAC or Ambac UK generally had the obligation to absorb a Legacy Financial Guarantee ("LFG") VIE's expected losses given that they had issued financial guarantees supporting certain liabilities (and in some cases certain assets).

AAC consolidated certain LFG VIEs in cases where we also have the power to direct the activities that most significantly impact the VIE’s economic performance.

A VIE was generally deconsolidated in the period that AAC or Ambac UK no longer had such control rights.

The impact of consolidating such LFG VIEs on Octave’s balance sheet was the elimination of transactions between the consolidated LFG VIEs and AAC or Ambac UK and the inclusion of the LFG VIE’s third party assets and liabilities.

For a financial guarantee insurance policy issued to a consolidated VIE, Octave did not reflect the financial guarantee insurance policy in accordance with the related insurance accounting rules under the Financial Services — Insurance Topic of the ASC.

Consequently, upon consolidation, Octave eliminated the insurance assets and liabilities associated with the policy from the Consolidated Balance Sheets, including premium receivables, unearned premiums, loss and loss expense reserves, and insurance intangible assets.

For investment securities owned by AAC or Ambac UK that were debt instruments issued by the VIE, the associated debt and investment balances were eliminated upon consolidation.

Generally, AAC had elected the fair value option for consolidated LFG VIE financial assets and financial liabilities, except in cases where AAC or Ambac UK was involved in the design of the VIE and was granted control rights at its inception or when the financial liabilities are primarily supported by non-financial assets.

The election to use the fair value option was made on an instrument by instrument basis.

In cases where the fair value option had not been elected, the LFG VIE's invested assets were fixed maturity securities and were classified as either available-for-sale or trading as defined by the Investments - Debt Securities Topic of the ASC.

When the fair value option was elected for LFG VIE long-term debt, changes in the fair value of the long-term debt was reported in income on the Consolidated Statements of Total Comprehensive Income (Loss), except for the portion of the total change in fair value of financial liabilities caused by changes in the instrument-specific credit risk which was presented separately in Other comprehensive income (loss).

In cases where the fair value option was not elected, the LFG VIEs' long-term debt was carried at par less unamortized discount, with interest expense reported in income on the Consolidated Statements of Total Comprehensive Income (Loss).

Consolidated VIE assets and liabilities were presented in VIE assets and VIE liabilities in the above table.

Results of consolidated VIEs were included in other revenues above.

Financial Guarantee Insurance Intangible:

Upon Ambac's emergence from bankruptcy in 2013, an insurance intangible asset was recorded which represented the difference between the fair value and aggregate carrying value of the financial guarantee insurance and reinsurance assets and liabilities.

Upon Octave's emergence from bankruptcy in 2013, an insurance intangible asset was recorded which represented the difference between the fair value and aggregate carrying value of the financial guarantee insurance and reinsurance assets and liabilities.

The carrying values of financial guarantee insurance and reinsurance contracts continue to be reported and measured in accordance with their existing accounting policies.

Pursuant to the Financial Services-Insurance Topic of the ASC, the insurance intangible is to be measured on a basis consistent with the related financial guarantee insurance and reinsurance contracts.

Pursuant to the Financial Services-Insurance Topic of the ASC, the insurance intangible was to be measured on a basis consistent with the related financial guarantee insurance and reinsurance contracts.

The initial insurance intangible asset was assigned to groups of insurance and reinsurance contracts with similar characteristics and has been amortized using a level-yield method based on par exposure of the related groups.

Legacy Financial Guarantee Loss and Loss Adjustment Expenses:

The loss and loss adjustment expense reserve (“loss reserve”) policy relates only to Ambac’s non-derivative financial guarantee insurance business for insurance policies issued to beneficiaries, including VIEs, for which we do not consolidate the VIE.

Losses and loss expenses are based upon estimates of the ultimate aggregate losses inherent in the insured portfolio as of the reporting date.

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

The loss and loss adjustment expense reserve (“loss reserve”) policy related only to Octave’s non-derivative financial guarantee insurance business for insurance policies issued to beneficiaries, including VIEs, for which we do not consolidate the VIE.

Losses and loss expenses were based upon estimates of the ultimate aggregate losses inherent in the insured portfolio as of the reporting date.

A loss reserve was recorded on the balance sheet on a policy-by-policy basis based upon 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 consider 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 remediation strategies and other contractual or subrogation-related cash flows.

▪ Net claim cash outflow policies represent contracts where the PV of expected cash outflows are greater than the PV of expected recovery cash inflows.

For such policies, a “loss and loss adjustment expense reserves” liability is recorded for the excess of the PV of expected net claim cash outflows over the unearned premium revenue.

▪ Net recovery cash inflow policies represent contracts where the PV of expected recovery cash inflows are greater than the PV of expected claim cash outflows.

For such policies, a “Subrogation recoverable” asset is recorded.

The evaluation process for determining expected losses is subject to certain judgments based on our assumptions regarding the probability of default by the issuer of the insured security, probability of settlement outcomes (which may include commutation settlements, refinancing and/or other settlement outcomes) and expected severity of credits for each insurance contract.

Ambac’s loss reserves are based on management’s ongoing review of the financial guarantee credit portfolio.

Active surveillance of the insured portfolio enables Ambac’s Risk Management Group ("RMG") to track credit migration of insured obligations from period to period and update internal classifications and credit ratings for each transaction.

This estimate also considered future recoveries related to remediation strategies and other contractual or subrogation-related cash flows.

▪ Net claim cash outflow policies represented contracts where the PV of expected cash outflows are greater than the PV of expected recovery cash inflows.

For such policies, a “loss and loss adjustment expense reserves” liability was recorded for the excess of the PV of expected net claim cash outflows over the unearned premium revenue.

▪ Net recovery cash inflow policies represented contracts where the PV of expected recovery cash inflows were

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

greater than the PV of expected claim cash outflows.

For such policies, a “Subrogation recoverable” asset was recorded.

The evaluation process for determining expected losses was subject to certain judgments based on our assumptions regarding the probability of default by the issuer of the insured security, probability of settlement outcomes (which may include commutation settlements, refinancing and/or other settlement outcomes) and expected severity of credits for each insurance contract.

Octave’s loss reserves are based on management’s ongoing review of the financial guarantee credit portfolio.

Active surveillance of the insured portfolio enables Octave’s Risk Management Group ("RMG") to track credit migration of insured obligations from period to period and update internal classifications and credit ratings for each transaction.

Non-adversely classified credits are assigned a Class I rating while adversely classified credits are assigned a rating ranging from Class IA (" Potential Problem with Risks to be Dimensioned") through Class V ( “Fully Reserved”) .

The criteria for an exposure to be assigned an adversely classified credit rating includes the deterioration of an issuer’s financial condition, underperformance of the underlying collateral (for collateral dependent transactions such as mortgage-backed or student loan securitizations), poor performance by the servicer of the underlying collateral and other adverse economic events or trends.

The servicer of the underlying collateral of an insured securitization transaction is a consideration in assessing credit quality because the servicer’s performance can directly impact the performance of the related issue.

All credits are assigned risk classifications by RMG using established guidelines

The population of credits evaluated in Ambac’s loss reserve process are:

(i) all adversely classified credits and ii) non-adversely classified credits which had an internal Ambac rating downgrade since the transaction’s inception.

The servicer of the underlying collateral of an insured securitization transaction was a consideration in assessing credit quality because the servicer’s performance can directly impact the performance of the related issue.

All credits were assigned risk classifications by RMG using established guidelines.

The population of credits evaluated in Octave’s loss reserve process were:

(i) all adversely classified credits and (ii) non-adversely classified credits which had an internal Octave rating downgrade since the transaction’s inception.

One of two approaches is then utilized to estimate losses to ultimately determine if a loss reserve should be established.

▪ The first approach is a statistical expected loss approach, which considers the likelihood of all possible outcomes.

The “base case” statistical expected loss is the product of:

▪ The first approach was a statistical expected loss approach, which considers the likelihood of all possible outcomes.

The “base case” statistical expected loss was the product of:

(i) the par outstanding on the credit;

2 unchanged sentences

and (iv) a discount factor.

The loss severities and default information are based on rating agency information, are specific to each bond type and are established and approved by senior RMG officers.

For certain credit exposures, Ambac’s additional monitoring, loss remediation efforts and probabilities of

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

potential settlement outcomes may provide information relevant to adjust this estimate of “base case” statistical expected losses.

The loss severities and default information were based on rating agency information, were specific to each bond type and were established and approved by senior RMG officers.

For certain credit exposures, Octave’s additional monitoring, loss remediation efforts and probabilities of potential settlement outcomes may provide information relevant to adjust this estimate of “base case” statistical expected losses.

RMG may accept the “base case” statistical expected loss as the best estimate of expected loss or assign multiple probability weighted scenarios to determine an adjusted statistical expected loss that better reflects management’s view of a given transaction’s expected losses, as well as the potential for additional remediation activities (e.g., commutations).

▪ The second approach entails the use of cash-flow based models to estimate expected losses (future claims, net of potential recoveries, expected to be paid to the holder of the insured financial obligation).

Ambac’s RMG group will consider the likelihood of all possible outcomes and develop appropriate cash flow scenarios.

Octave’s RMG group will consider the likelihood of all possible outcomes and develop appropriate cash flow scenarios.

This approach can include the utilization of internal or third party models and tools to project future losses and resultant claim payment estimates.

3 unchanged sentences

Rather, we consider the issuers’ overall ability and willingness to pay, including the fiscal, economic, legal and political framework to develop projected future claim payment estimates.

In this approach, a probability-weighted expected loss estimate is developed based on assigning probabilities to multiple claim payment scenarios and applying an appropriate discount factor.

Additionally, we consider the issuer’s ability to refinance an insured issue, Ambac’s ability to execute a potential settlement (i.e., commutation) of the insurance policy, including the impact on future installment premiums, and/or other restructuring possibilities in our scenarios.

In this approach, a probability-weighted expected loss estimate was developed based on assigning probabilities to multiple claim payment scenarios and applying an appropriate discount factor.

Additionally, we consider the issuer’s ability to refinance an insured issue, Octave’s ability to execute a potential settlement (i.e., commutation) of the insurance policy, including the impact on future installment premiums, and/or other restructuring possibilities in our scenarios.

The commutation scenarios and the related probabilities of occurrence vary by transaction, depending on our view of the likelihood of negotiating such a transaction with issuers and/or investors.

The discount factor applied to the statistical expected loss approach is based on a risk-free discount rate corresponding to the remaining expected weighted-average life of the exposure and the exposure currency.

For the cash flow scenario approach, discount factors are applied based on a risk-free discount rate term structure and correspond to the date of each respective cash flow payment or recovery and the exposure currency.

Discount factors are updated for the current risk-free rate each reporting period.

Ambac establishes loss expense reserves based on our estimate of expected net cash outflows for loss expenses, such as legal and consulting costs.

The discount factor applied to the statistical expected loss approach was based on a risk-free discount rate corresponding to the remaining expected weighted-average life of the exposure and the exposure currency.

For the cash flow scenario approach, discount factors were applied based on a risk-free discount rate term structure and correspond to the date of each respective cash flow payment or recovery and the exposure currency.

Discount factors were updated for the current risk-free rate each reporting period.

Octave establishes loss expense reserves based on our estimate of expected net cash outflows for loss expenses, such as legal and consulting costs.

Long-term Debt

Long-term debt issued is carried at par value less unamortized discount.

Accrued interest and discount accretion on long-term

debt is reported through income on the Consolidated Statements of Total Comprehensive Income (Loss).

To the extent Ambac repurchases or redeems its long-term debt, such repurchases or redemptions may be settled for an amount different than the carrying value of the obligation.

Any difference between the payment and carrying value of the obligation is reported in income on the Consolidated Statements of Total Comprehensive Income (Loss).

For surplus note repurchases, the pro-rata purchase price related to principal and accrued interest is reported as a financing and operating activity, respectively, on the Statement of Cash Flows.

AAC's 5.1 % surplus notes have an outstanding par value of $ 519,235 and carrying value of $ 503,139 at December 31, 2024 and had an original maturity of June 7, 2020.

Surplus note principal and interest payments require the approval of OCI.

Since the issuance of the surplus notes in 2010, OCI has declined to approve regular payments of interest on surplus notes, although the OCI has permitted two exceptional payments.

As a result, the scheduled payment date for interest, and the scheduled maturity date for payment of principal of the surplus notes are extended until OCI grants approval to make the payment.

Interest will accrue, compounded on each anniversary of the original scheduled payment date or scheduled maturity date, on any unpaid principal or interest through the actual date of payment, at 5.1 % per annum.

Holders of surplus notes have no rights to enforce the payment of the principal of, or interest on, surplus notes in the absence of OCI approval to pay such amount.

The interest on the outstanding surplus notes were accrued for and AAC is accruing interest on the interest amounts following each scheduled payment date.

As required by the terms of surplus notes, AAC will continue to seek OCI’s approval to make payments of principal and interest on its surplus notes.

OCI’s approval may be granted or denied in OCI’s sole discretion.

Ambac can provide no assurance as to when or if surplus note principal and interest payments will be made.

If OCI does not approve payments on or the acquisition of surplus notes over time, the ongoing accretion of interest on the notes may impair AAC's ability to extinguish the notes in full.

Surplus notes are subordinated in right of payment to policyholder and other claims.

Ambac UK debt, issued in connection with the commutation of an exposure on June 18, 2019, has a par value of $ 40,600 and a carrying value of $ 18,079 at December 31, 2024.

The Ambac UK debt has a legal maturity of May 2, 2036.

Interest on the Ambac UK debt is at an annual rate of 0.00 %.

The Ambac UK debt was recorded at its fair value at the date of issuance with the discount amortizing at an effective interest rate of 7.4 %.

NOL & Investment Interest Carryforward

As of December 31, 2024, AAC has (i) $ 1,952,621 of NOLs, which if not utilized will begin expiring in 2030, and will fully expire in 2045, and (ii) $ 110,494 of interest expense tax deduction carryover, which has an indefinite carryforward period but is limited in any particular year based on certain provisions.

AAC has maintained a full valuation allowance since 2010.

Ambac Financial Group, Inc.

Long-term debt issued was carried at par value less unamortized discount.

Accrued interest and discount accretion on long-term debt was reported through income on the Consolidated Statements of Total Comprehensive Income (Loss).

To the extent Octave repurchases or redeems its long-term debt, such repurchases or redemptions may be settled for an amount different than the carrying value of the obligation.

Any difference between the payment and carrying value of the obligation was reported in income on the Consolidated Statements of Total Comprehensive Income (Loss).

For surplus note repurchases, the pro-rata purchase price related to principal

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

Ambac’s invested assets are primarily comprised of (i) fixed maturity securities classified as either available-for-sale, (ii) interests in pooled investment funds which are reported within Other investments on the Consolidated Balance Sheets and (iii) preferred equity investments which are reported within Other investments on the Consolidated Balance Sheets.

and accrued interest was reported as a financing and operating activity, respectively, on the Statement of Cash Flows.

On September 29, 2025, the Company completed the sale of AAC, and accordingly, the Company no longer had surplus notes outstanding as they are obligations of AAC.

Ambac UK debt, issued in connection with the commutation of an exposure on June 18, 2019, had a par value of $ 40,600 and a carrying value of $ 18,079 at December 31, 2024.

The Ambac UK debt had a legal maturity of May 2, 2036.

Interest on the Ambac UK debt was at an annual rate of 0.0 %.

debt was recorded at its fair value at the date of issuance with the discount amortizing at an effective interest rate of 7.4 %.

NOL & Investment Interest Carryforward

As of December 31, 2024, AAC had (i) $ 1,952,621 of NOLs, which if not utilized will begin expiring in 2030, and will fully expire in 2045, and (ii) $ 110,494 of interest expense tax deduction carryover, which had an indefinite carryforward period but was limited in any particular year based on certain provisions.

AAC had maintained a full valuation allowance since 2010.

Octave’s invested assets are primarily comprised of (i) fixed maturity securities classified as either available-for-sale, (ii) investment in limited partnership which is reported within Other investments on the Consolidated Balance Sheets and (iii) preferred equity investments which are reported within Other investments on the Consolidated Balance Sheets.

Interests in pooled investment funds are limited partner interests and are reported using the equity method.

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December 31, 2025 December 31, 2024

Cost Allowance for Credit Losses Gross

Losses Estimated

Cost Allowance for Credit Losses Gross Unrealized Estimated

Fair Value Amortized

Cost Allowance for Credit Losses Gross

Losses Estimated

Cost Allowance for Credit Losses Gross Unrealized Estimated

Gains Losses Gains Losses

Fixed maturity securities:

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Unrealized Losses on Fixed Maturity Securities

The following table shows gross unrealized losses and fair values of Ambac’s available-for-sale investments, which at December 31, 2024, did not have an allowance for credit losses under the CECL standard.

The following table shows gross unrealized losses and fair values of Octave’s available-for-sale investments, which at December 31, 2025, did not have an allowance for credit losses under the CECL standard.

This information is aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at December 31, 2025 and 2024:

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

15 unchanged sentences

Other asset-backed securities — — — — — — 1,428 2 — — 1,428 2

51,012 792 68,012 4,559 119,024 5,351 19,713 103 87,006 6,491 106,719 6,594

Short-term — — — — — — 619 — — — 619 —

Total temporarily impaired securities 5,311 48 47,658 2,268 52,969 2,316 $ 51,012 $ 792 $ 68,012 $ 4,559 $ 119,024 $ 5,351

Management has determined that the securities in the above table do not have credit impairment as of December 31, 2025 and 2024 based upon (i) no actual or expected principal and interest payment defaults on these securities and (ii) analysis of the creditworthiness of the issuer.

Ambac’s assessment about whether a security is credit impaired reflects management’s current judgment regarding facts and circumstances specific to the security and other factors.

If that judgment changes, Ambac may record a charge for credit impairment in future periods.

Octave’s assessment about whether a security is credit impaired reflects management’s current judgment regarding facts and circumstances specific to the security and other factors.

If that judgment changes, Octave may record a charge for credit impairment in future periods.

The declines in fair value and resultant unrealized losses across asset classes as of December 31, 2025 included in the above table resulted primarily from the impact of increasing interest rates since the securities were purchased.

3 unchanged sentences

The gross unrealized losses on corporate obligations as of December 31, 2025, resulted primarily from an increase in interest rates since the securities were purchased.

Unrealized losses of $ 3,905 related to 145 investment grade securities with an average unrealized loss equal to 5 % of amortized cost at December 31, 2024.

Securities that have below investment grade credit ratings or are unrated comprise $ 0 of the gross unrealized loss at December 31, 2024.

Management believes that the full and timely receipt of all principal and interest payment on corporate obligations with unrealized losses as of December 31, 2025, is probable.

6 unchanged sentences

Securities available-for-sale and short-term 10,916 14,563 12,687

Fixed maturity securities - trading — — —

Other investments ( 269 ) ( 115 ) 472

Total net investment income (loss) $ 10,647 $ 14,448 $ 13,159

Net i nvestment income (loss) from Other investments primarily represents changes in fair value on equity securities including certain pooled investment funds, and income from investment limited partnerships and other equity interests accounted for under the equity method.

Net i nvestment income (loss) from Other investments primarily represents changes in fair value on equity securities including

income from investment limited partnership and other equity interests accounted for under the equity method.

Net Investments Gains (Losses), including Impairments

The following table details amounts included in net investment gains (losses) and impairments included in earnings for the affected periods:

The following table details amounts included in net investment gains (losses) and impairments included in earnings for the affected periods and are included in Revenues, other on the Statements of Total Comprehensive Income (Loss):

Year Ended December 31, 2025 2024 2023

1 unchanged sentence

Gross realized losses on securities ( 3 ) ( 47 ) ( 38 )

Foreign exchange (losses) gains — — —

Credit impairments ( 3,100 ) ( 6,517 ) —

Intent to sell impairments — — —

Net investment gains (losses), including impairments $ ( 2,577 ) $ ( 496 ) $ 19

Ambac had an allowance for credit losses $ 0 and $ 0 at December 31, 2024 and 2023, respectively.

Ambac did not purchase any financial assets with credit deterioration for the years ended December 31, 2024 and 2023.

Ambac Financial Group, Inc.

Octave had an allowance for credit losses $ 0 and $ 0 at December 31, 2025 and 2024, respectively.

Octave did not purchase any financial assets with credit deterioration for the years ended December 31, 2025 and 2024.

Deposits with Regulators and Other Restrictions

Securities carried at $ 34,016 and $ 22,861 at December 31, 2025 and 2024, respectively, were deposited by Octave's insurance subsidiaries with governmental authorities or designated custodian banks as required by laws affecting insurance companies.

Investments in fixed maturity securities of OSG carried at $ 153 as of December 31, 2025, were deposited as security in connection with a letter of credit issued for a corporate office lease.

Fiduciary funds held by Octave's insurance distribution subsidiaries, carried at $ 2,656 and $ 2,845 at December 31, 2025 and 2024, respectively, are included in invested assets.

Other Investments

Octave's investment portfolio includes a limited partnership interest in a private equity fund which seeks to generate long-term capital appreciation through investments in private equity, equity-related and other instruments.

The fair value of Octave's investment in the fund was $ 7,454 and $ 7,499 as of December 31, 2025 and 2024, determined using net asset value ("NAV") as a practical expedient.

Redemptions may be made quarterly with 90 days notice subject to withdrawal limitations

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

Deposits with Regulators and Other Restrictions

Securities carried at $ 22,861 and $ 20,748 at December 31, 2024 and 2023, respectively, were deposited by Ambac's insurance subsidiaries with governmental authorities or designated custodian banks as required by laws affecting insurance companies.

Invested assets of AAC carried at $ 800 and reported within assets held-for-sale on Ambac's consolidated balance sheet as of December 31, 2024, were deposited as security in connection with a letter of credit issued for a corporate office lease.

The lease will be transferred to Ambac in connection with the AAC sale.

Fiduciary funds held by Ambac's insurance distribution subsidiaries, carried at $ 2,845 and $ 1,769 at December 31, 2024 and 2023, respectively, are included in invested assets.

Other Investments

Ambac's investment portfolio includes a limited partnership interest in a private equity fund which seeks to generate long-term capital appreciation through investments in private equity, equity-related and other instruments.

The fair value of Ambac's investment in the fund was $ 7,499 and $ 5,817 as of December

31, 2024 and 2023, determined using net asset value ("NAV") as a practical expedient.

Redemptions may be made quarterly with 90 days notice subject to withdrawal limitations and/or redemption fees which vary with the timing and notification of withdrawal provided by the investor.

Ambac's unfunded commitments total $ 1,724 on this private equity fund at December 31, 2024.

Other investments also include preferred equity investments with a carrying value of $ 20,618 and $ 12,500 as of December 31, 2024 and 2023, respectively, that do not have readily determinable fair values and are carried at cost, less any impairments as permitted under the Investments — Equity Securities Topic of the ASC.

Impairments of $6,516, $0, and $0 were recorded on these investments in the years ended December 31, 2024, 2023 and 2022, respectively.

There were no adjustments to fair value to reflect observable price changes in identical or similar investments from the same issuer during the years ended December 31, 2024, 2023 and 2022.

and/or redemption fees which vary with the timing and notification of withdrawal provided by the investor.

Octave's unfunded commitments total $ 1,501 on this private equity fund at December 31, 2025.

Other investments also include preferred equity investments with a carrying value of $ 17,517 and $ 20,618 as of

December 31, 2025 and 2024, respectively, that do not have readily determinable fair values and are carried at cost, less any impairments as permitted under the Investments — Equity Securities Topic of the ASC.

There were $( 3,100 ), $( 6,517 ), and $ 0 impairments recorded on these investments in the years ended December 31, 2025, 2024 and 2023, respectively.

FAIR VALUE MEASUREMENTS

17 unchanged sentences

The fair values of investments measured under this measurement alternative are not included in the below disclosures of fair value of financial instruments.

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

The following table sets forth the carrying amount and fair value of Ambac’s financial assets and liabilities as of December 31, 2024 and 2023, including the level within the fair value hierarchy at which fair value measurements are categorized.

The following table sets forth the carrying amount and fair value of Octave’s financial assets and liabilities as of December 31, 2025 and 2024, including the level within the fair value hierarchy at which fair value measurements are categorized.

As required by the Fair Value Measurement Topic of the ASC, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

15 unchanged sentences

Other asset-backed securities 1,795 1,795 — 1,795 — 5,061 5,061 — 5,061 —

Fixed maturity securities, pledged as collateral:

Short term investments 146,442 146,442 146,442 — — 127,601 127,601 127,601 — —

3 unchanged sentences

Other assets-Loans — — — — — 3,434 3,434 — — 3,434

Other assets - Derivatives:

Warrants — — — — — 656 656 — — 656

Total financial assets $ 362,148 $ 344,631 $ 250,306 $ 86,871 $ — $ 363,624 $ 342,829 $ 215,871 $ 116,025 $ 3,434

1 unchanged sentence

Short-term debt, including accrued interest $ — $ — $ — $ — $ — $ 152,560 $ 152,560 $ — $ — $ 152,560

Other liabilities - Derivatives:

Long term debt, including accrued interest 118,901 121,343 — — 121,343 — — — — —

Derivative liabilities:

FX forward contracts 8 8 — 8 — 317 317 — 317 —

1 unchanged sentence

(1) Excluded from the fair value measurement categories in the table above are investment funds of $ 7,454 and $ 7,499 as of December 31, 2025 and 2024, respectively, which are measured using NAV as a practical expedient.

Also excluded from the fair value measurements in the table above are equity securities with a carrying value of $ 20,618 and $ 12,500 as of December 31, 2024 and 2023, respectively, that do not have readily determinable fair values and have carrying amounts determined using the measurement alternative, and an equity method investment of $ 177 as of December 31, 2024.

Also excluded from the fair value measurements in the table above are equity securities with a carrying value of $ 17,517 and $ 20,618 as of December 31, 2025 and 2024, respectively, that do not have readily determinable fair values and have carrying amounts determined using the measurement alternative.

Determination of Fair Value

When available, Ambac uses quoted active market prices specific to the financial instrument to determine fair value and classifies such items within Level 1.

When available, Octave uses quoted active market prices specific to the financial instrument to determine fair value and classifies such items within Level 1.

The determination of fair value for financial instruments categorized in Level 2 or 3 involves judgment due to the complexity of factors contributing to the valuation.

1 unchanged sentence

In addition, the use of internal valuation models may require assumptions about hypothetical or inactive markets.

As a result of these factors, the actual trade value of a financial instrument in the market, or exit value of a financial instrument position by Ambac, may be significantly different from its recorded fair value.

Ambac’s financial instruments carried at fair value are mainly comprised of investments in fixed maturity securities, equity interests in pooled investment funds, and derivative instruments.

Valuation of financial instruments is performed by Ambac’s finance group using methods approved by senior financial management with consultation from risk management and third-party portfolio managers as appropriate.

Preliminary valuation results are discussed internally and with third-party portfolio managers as necessary quarterly to assess consistency with market transactions and trends as applicable.

transactions such as trades or negotiated settlements of similar positions, if any, are reviewed to validate fair value model results.

As a result of these factors, the actual trade value of a financial instrument in the market, or exit value of a financial instrument position by Octave, may be significantly different from its recorded fair value.

Octave’s financial instruments carried at fair value are mainly comprised of investments in fixed maturity securities, equity interests in pooled investment funds, and derivative instruments.

Valuation of financial instruments is performed by Octave’s finance group using methods approved by senior financial management with consultation from risk management and third-party portfolio managers as appropriate.

Preliminary valuation results are discussed internally and with third-party portfolio managers as necessary quarterly to assess consistency with

market transactions and trends as applicable.

Market transactions such as trades or negotiated settlements of similar positions, if any, are reviewed to validate fair value model results.

However, financial instruments valued using significant unobservable inputs have very little or no observable market activity.

2 unchanged sentences

Fixed Maturity Securities

The fair values of fixed maturity investment securities are based primarily on market prices received independent pricing sources.

The fair values of fixed maturity investment securities are based primarily on market prices received from independent pricing sources.

Because many fixed maturity securities do not trade on a daily basis, pricing sources apply available market information through processes such as matrix pricing to calculate fair value.

3 unchanged sentences

Key inputs to the internal valuation models generally include maturity date, coupon and yield curves for asset-type and credit rating characteristics that closely match those characteristics of the specific investment securities being valued.

Items valued using valuation models are classified according to the lowest level input or value driver that is significant to the valuation.

Thus, an item may be classified in

Ambac Financial Group, Inc.

Items valued using valuation models are classified

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

Level 3 even though there may be significant inputs that are readily observable.

according to the lowest level input or value driver that is significant to the valuation.

Thus, an item may be classified in Level 3 even though there may be significant inputs that are readily observable.

Longer (shorter) expected maturities or higher (lower) yields used in the valuation model will, in isolation, result in decreases (increases) in fair value.

Generally, lower credit ratings or longer expected maturities will be accompanied by higher yields used to value a security.

Ambac performs various review and validation procedures to quoted and modeled prices for fixed maturity securities, including price variance analyses, missing and static price reviews, overall valuation analysis by portfolio managers and finance managers and reviews associated with our ongoing impairment analysis.

Octave performs various review and validation procedures to quoted and modeled prices for fixed maturity securities, including price variance analyses, missing and static price reviews, overall valuation analysis by portfolio managers and finance managers and reviews associated with our ongoing impairment analysis.

Unusual prices identified through these procedures will be evaluated further against alternative third-party quotes (if available), internally modeled prices and/or other relevant data, and the pricing source values will be challenged as necessary.

Price challenges generally result in the use of the pricing source’s quote as originally provided or as revised by the source following their internal diligence process.

A price challenge may result in a determination by either the pricing source or Ambac management that the pricing source cannot provide a reasonable value for a security or cannot adequately support a quote, in which case Ambac would resort to using either other quotes or internal models.

A price challenge may result in a determination by either the pricing source or Octave management that the pricing source cannot provide a reasonable value for a security or cannot adequately support a quote, in which case Octave would resort to using either other quotes or internal models.

Results of price challenges are reviewed by portfolio managers and finance managers.

Information about the valuation inputs for fixed maturity securities classified as Level 3 is included below:

Corporate obligations:

This includes certain investments in convertible debt securities.

The fair value classified as Level 3 was $ 0 and $ 13,920 at December 31, 2024 and 2023, respectively.

Fair value was calculated by discounting cash flows to average maturity of 0.75 years and a yield of 9.4 % at December 31, 2023.

Yields used are consistent with the security type and rating.

Other Investments

Other investments primarily relate to investments in pooled investment funds.

The fair value of pooled investment funds is

determined using dealer quotes or alternative pricing sources when such investments have readily determinable fair values.

When fair value is not readily determinable, pooled investment funds are valued using NAV as a practical expedient as permitted under the Fair Value Measurement Topic of the ASC.

Other investments includes investments in pooled investment funds carried under the equity method valued using NAV as a practical expedient as permitted under the Fair Value Measurement Topic of the ASC.

Refer to Note 6.

1 unchanged sentence

Derivative Instruments

As of December 31, 2024, Ambac has foreign currency forward contracts and holds warrants to purchase preferred stock of a development stage company.

As of December 31, 2025, Octave has foreign currency forward contracts and holds warrants to purchase preferred stock of a development stage company.

The fair value of foreign currency forwards are determined using valuation models with observable market inputs.

Fair value of the warrants are determined using a standard warrant valuation model with internally developed input assumptions.

Short-term Debt

Short-term debt consists of SOFR indexed borrowing used for the partial funding of the Beat acquisition and is classified as Level 3.

Both the long-term and short-term debt as of December 31, 2025 and 2024 consists of SOFR indexed borrowing under credit facilities and are classified as Level 3.

Other Financial Assets

2 unchanged sentences

The following tables present the changes in the Level 3 fair value category for the periods presented in 2025, 2024 and 2023.

Ambac classifies financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model.

Octave classifies financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model.

In addition to these unobservable inputs, the valuation models for Level 3 financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly.

1 unchanged sentence

Level-3 Financial Assets and Liabilities Accounted for at Fair Value

Year ended December 31, 2024 Investments Derivatives Total

Balance, beginning of period $ 13,920 $ 656 $ 14,576

Total gains/(losses) realized and unrealized:

Included in earnings 6,016 ( 656 ) 5,360

Included in other comprehensive income 125 — 125

Purchases — — —

Issuances — — —

Settlements ( 20,061 ) — ( 20,061 )

Balance, end of period $ — $ — $ —

The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date $ — $ ( 656 ) $ ( 656 )

The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date $ — $ — $ —

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Level-3 Financial Assets and Liabilities Accounted for at Fair Value

Year Ended December 31, 2023 Investments Derivatives Total

Balance, beginning of period $ 12,341 $ 935 $ 13,276

Total gains/(losses) realized and unrealized:

Included in earnings — ( 279 ) ( 279 )

Included in other comprehensive income 784 784

Purchases 795 795

Issuances — —

Settlements — —

Balance, end of period $ 13,920 $ 656 $ 14,576

Level-3 Financial Assets and Liabilities Accounted for at Fair Value

Year Ended December 31, 2022 Investments Derivatives Total

Year Ended December 31, 2025 December 31, 2024 December 31, 2023

Investments Derivatives Total Investments Derivatives Total Investments Derivatives Total

Balance, beginning of period $ — $ — $ — $ 13,920 $ 656 $ 14,576 $ 12,341 $ 935 $ 13,276

4 unchanged sentences

Issuances — — — — — — — —

Sales — — — — — — — —

Settlements — — — ( 20,061 ) ( 20,061 ) — — —

6 unchanged sentences

There were no transfers of financial instruments into or out of Level 3 in the periods disclosed.

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Gains and losses (realized and unrealized) relating to Level 3 assets and liabilities included in earnings for the affected periods are reported as follows:

10 unchanged sentences

Changes in unrealized gains (losses) relating to financial instruments still held at the reporting date — ( 278 )

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

INSURANCE CONTRACTS

14 unchanged sentences

Beginning balance $ 142 $ 69 $ —

Current period provision (benefit) 73 69 —

Current period provision 358 73 69

Write-offs of the allowance — — —

1 unchanged sentence

Ending balance $ 500 $ 142 $ 69

At December 31, 2024 and 2023, $ 5,690 and $ 510 of premiums were past due.

At December 31, 2025 and 2024, $ 6,781 and $ 5,690 of premiums, respectively, were past due.

Loss and Loss Adjustment Expense Reserves

19 unchanged sentences

Additionally, the Balance Sheet line "Reinsurance recoverable on paid and unpaid losses" includes reinsurance recoverables of $ 60,470 , $ 36,210 and $ 8,765 as of December 31, 2025, 2024 and 2023, respectively, related to previously paid loss and loss adjustment expenses.

Prior accident years losses incurred development for the year ended December 31, 2025, was primarily driven by commercial auto loss experience, primarily related to programs currently in runoff, and excess liability claims activity.

Commercial auto prior accident year loss experience primarily relates to 2022 and 2023 accident years, whereas excess liability loss experience primarily relates to claims activity in the 2024 accident year.

Prior accident years losses incurred development for the year end December 31, 2024, was primarily driven by commercial auto loss experience 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.

In the fourth quarter of 2024 management decided to set loss reserves for programs that were in runoff at

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

the high end of the actuarial loss range, given these program can experience greater loss volatility than active programs.

Specialty Property & Casualty Loss Reserves

Claims Development

The following is a summary of loss and loss adjustment expense reserves, including certain components, for the Company’s major product lines by reporting segment at December 31, 2024.

Net Loss and Loss Adjustment Expense Reserves Reinsurance Recoverables on Unpaid Losses (1)

Loss and Loss Adjustment Reserves (1)

The following is a summary of loss and loss adjustment expense reserves, including certain components, for the Company’s major product lines by reporting segment at December 31, 2025 and 2024.

December 31, 2025 December 31, 2024

Net Claims and Claim Adjustment Expense Reserves Reinsurance Recoverables on Unpaid Losses Loss and Loss Adjustment Reserves Net Claims and Claim Adjustment Expense Reserves Reinsurance Recoverables on Unpaid Losses Loss and Loss Adjustment Reserves

Commercial auto $ 23,062 $ 136,132 $ 159,194 $ 28,720 $ 129,752 $ 158,472

Excess and general liability 14,857 70,602 85,459

Excess liability 16,897 99,713 116,610 6,571 43,677 50,248

General liability 12,572 51,024 63,596 8,286 26,925 35,211

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

Non-standard personal auto 3,635 191 3,826 12,185 504 12,689

Professional liability 2,851 37,996 40,846 1,807 15,891 17,698

Multi-peril / business owners (BOP) 1,519 4,666 6,185 43 230 273

Surety 94 12,140 12,233 6 11,211 11,217

Unallocated loss adjustment expense reserves 5,552 9,317 14,869 6,578 5,660 12,238

Other 2,176 63,563 65,739

289 24,544 24,834 320 36,231 36,551

Total $ 84,268 $ 375,722 $ 459,991 $ 78,981 $ 270,081 $ 349,062

(1) Other includes $ 35,146 related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company, and Consolidated Specialty Insurance Company.

(1) Other includes $ 23,530 and $ 35,146 at December 31, 2025 and 2024, respectively, r elated 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.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

The claim development tables that follow present, by accident year, incurred and cumulative paid claims and allocated claim adjustment expense on a historical basis.

10 unchanged sentences

2024 15,217 14,851 4,027 3,243

2025 4,783 2,972 1,564

Total $ 56,024

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

5 unchanged sentences

2023 3,914 10,984 17,056

2024 3,554 7,885

Total $ 32,962 $ 23,062 $ —

4 unchanged sentences

11.4 % 19.6 % 19.0 % 30.8 % 27.4 %

Excess and General Liability

Excess Liability

Incurred Claims and Allocated LAE, Net of Reinsurance

5 unchanged sentences

2024 $ 5,285 7,373 4,106 95

2025 10,519 10,098 41

Total $ 19,400

Ambac Financial Group, Inc.

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

Accident Year Year ended December 31, Liability for Loss and Loss Adjustment Expenses, Net of Reinsurance

2021 2022 2023 2024 2025 2021 - Before

Unaudited 2025 2021

2021 $ — $ — $ — $ — $ —

2022 — 1 104 104

2023 6 258 158

2024 101 2,079

Total $ 2,503 $ 16,897 $ —

Total net liability $ 16,897

Average Annual Percentage Payout of Incurred Claims by Age,

Net of Reinsurance

Years 1 2 3 4 5

0.7 % 11.6 % 20.6 % — % — %

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

General Liability

Incurred Claims and Allocated LAE, Net of Reinsurance

Accident Year Year ended December 31, IBNR Reserves at December 31, 2025 Cumulative Number of Reported Claims

2021 2022 2023 2024 2025

2021 $ — $ — $ — $ — $ — — —

2022 223 217 425 374 109 4

2023 2,019 1,328 1,784 886 26

2024 $ 6,915 6,955 5,205 194

2025 5,311 3,996 45

Total $ 14,423

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

3 unchanged sentences

2021 $ — $ — $ — $ — $ —

2022 — 1 265 266

2023 24 57 791

Total $ 1,852 $ 12,572 $ —

12 unchanged sentences

2024 16,486 15,146 5,150 4,889

2025 $ 16,752 404 4,252

Total $ 39,260

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Cumulative Paid Claims and Allocated Claim Adjustment Expenses, Net of Reinsurance

4 unchanged sentences

2023 807 3,938 6,230

2024 4,139 10,692

Total $ 21,463 $ 17,798 $ —

4 unchanged sentences

21.8 % 42.9 % 31.1 % — % — %

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Incurred Claims and Allocated LAE, Net of Reinsurance

5 unchanged sentences

2024 23,475 24,292 1,513 57,524

2025 3,652 1,595 2,307

Total $ 33,829

5 unchanged sentences

2023 966 4,342 5,522

2024 10,802 19,489

Total $ 25,441 $ 8,388 $ —

5 unchanged sentences

(1) Other includes non-standard personal auto, professional liability, business owners products, travel and surety

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Methodology for Determining Cumulative Number of Reported Claims

6 unchanged sentences

The Company cautions against using the summarized claim count information provided in this disclosure in attempting to project ultimate loss payouts by product line.

generally finds claim count data to be useful only on a more granular basis than the aggregated basis disclosed in the claim development tables above, as the risks, average values and other dynamics of the claim process can vary materially by the cause of loss and coverage within product line.

The Company generally finds claim count data to be useful only on a more granular basis than the aggregated basis disclosed in the claim development tables above, as the risks, average values and other dynamics of the claim process can vary materially by the cause of loss and coverage within product line.

Reinsurance Recoverables, Including Credit Impairments:

3 unchanged sentences

Contractually ceded reinsurance payables can only be offset against amounts owed from the same reinsurer in the event that such reinsurer is unable to meet its obligations to reimburse Everspan.

To minimize its credit exposure to losses from reinsurer insolvencies, Everspan (i) is entitled to receive collateral from its reinsurance counterparties in certain reinsurance contracts

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

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

To minimize its credit exposure to losses from reinsurer insolvencies, Everspan (i) is entitled to receive collateral from its reinsurance counterparties in certain reinsurance contracts and (ii) has certain cancellation rights that can be exercised by Everspan in the event of rating agency downgrades of a reinsurer (among other events and circumstances).

Everspan held letters of credit and collateral amounting to $ 88,732 from its reinsurers at December 31, 2025.

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

Additionally, while legacy liabilities from the Providence Washington Insurance Company acquisition and the admitted carriers acquired by Everspan on January 3, 2022 (Greenwood Insurance Company, and Consolidated Specialty Insurance Company), were fully ceded to certain reinsurers, Everspan also benefits from an unlimited, uncapped indemnity from Enstar Holdings (US) and 21st Century Premier Insurance Company, respectively, to mitigate any residual risk to these reinsurers.

Additionally, while legacy liabilities from the Providence Washington Insurance Company acquisition and the admitted carriers acquired by Everspan on January 3, 2022, (Greenwood Insurance Company and Consolidated Specialty Insurance Company), were fully ceded to certain reinsurers,

Everspan also benefits from an unlimited, uncapped indemnity from Enstar Holdings (US) and 21st Century Premier Insurance Company to mitigate any residual risk to these reinsurers.

For 2025, our top five reinsurers represented 54 % our total reinsurance recoverables on paid and unpaid losses.

These reinsurance recoverables were primarily from reinsurers with applicable ratings of A or better.

The following table sets forth our five most significant reinsurers by amount of reinsurance recoverable as of December 31, 2024.

Reinsurers Type of Insurance

General Reinsurance Company Specialty P&C A++ $ 135,706 $ 117,537

QBE Insurance Corporation Specialty P&C A 31,502 31,502

Munich Reinsurance Company Specialty P&C A+ 20,052 16,653

The Cincinnati Insurance Company Specialty P&C A+ 15,663 14,933

Everest Reinsurance Company Specialty P&C A+ 8,641 7,356

The following table sets forth our five most significant reinsurers by amount of reinsurance recoverables as of December 31, 2025.

Reinsurers Rating

General Reinsurance Company A++ $ 124,602 $ 100,165

Munich Reinsurance Company A+ 57,036 55,196

QBE Insurance Corporation A 19,791 19,791

Everest Reinsurance Company A+ 17,524 17,932

Swiss Reinsurance America Corporation A+ 15,507 14,657

All other reinsurers

201,632 104,054

6 unchanged sentences

Everspan has uncollateralized credit exposure to reinsurers of $ 311,795 and $ 232,310 and has recorded an allowance for credit losses of $ 100 and $ 100 at December 31, 2025 and 2024, respectively.

The uncollateralized credit exposure to reinsurers includes legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company and the admitted carriers acquired by Everspan on January 3, 2022, of $ 35,146 and $ 43,688 at December 31, 2024 and December 31, 2023, respectively.

The uncollateralized credit exposure to reinsurers includes legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company and the admitted carriers acquired by Everspan on January 3, 2022, of $ 23,530 and $ 35,146 at December 31, 2025 and 2024, respectively.

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

2 unchanged sentences

The other subsidiaries of Everspan Insurance, Providence Washington Insurance Company and Greenwood Insurance Company (together with Everspan Insurance, the "Everspan Admitted Carriers") are domiciled in Rhode Island and Pennsylvania, respectively, and are therefore subject to the insurance laws and regulations of their respective States of domicile (together with Arizona Insurance Laws, the “State Insurance Laws”) and regulated by the insurance departments of those States as domestic insurers.

In addition, the Everspan Admitted Carriers are subject to the insurance laws and regulations of the other jurisdictions in which they are licensed and operate as foreign insurers.

I nsurance laws and regulations applicable to insurers vary by jurisdiction, but the insurance laws and regulations applicable to our insurance carriers generally require them to maintain minimum standards of business conduct and solvency;

In addition, the Everspan

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Admitted Carriers are subject to the insurance laws and regulations of the other jurisdictions in which they are licensed and operate as foreign insurers.

Insurance laws and regulations applicable to insurers vary by jurisdiction, but the insurance laws and regulations applicable to our insurance carriers generally require them to maintain minimum standards of business conduct and solvency;

to meet certain financial tests;

6 unchanged sentences

Additionally, the accounts and operations of Everspan Indemnity and the Everspan Admitted Carriers are subject to individual periodic comprehensive financial examinations by their domestic regulators, and may be examined collectively by the lead regulator of the affiliated insurance company group.

Everspan Indemnity is a domestic surplus lines insurer and is eligible to write property and casualty insurance as an excess

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

and surplus lines insurance in all states by virtue of the U.S.

Everspan Indemnity is a domestic surplus lines insurer and is eligible to write property and casualty insurance as an excess and surplus lines insurance in all states by virtue of the U.S.

Nonadmitted and Reinsurance Reform Act of 2010.

2 unchanged sentences

Everspan Indemnity and the Everspan Admitted Carriers (collectively, "Everspan") are subject to risk-based capital requirements.

All of Ambac's insurance subsidiaries are in compliance with the minimum capital and surplus levels required under the State Insurance Laws required to transact all business written to date.

Our Insurance Distribution businesses, like some other managing general agents, brokerages and program administrators, may be subject to licensing requirements and regulation by insurance regulators in various regulatory jurisdictions in which they conduct business.

All of Octave's insurance subsidiaries are in compliance with the minimum capital and surplus levels required under the State Insurance Laws required to transact all business written to date.

Our ID businesses, like some other managing general agents, brokerages and program administrators, may be subject to

licensing requirements and regulation by insurance regulators in various regulatory jurisdictions in which they conduct business.

The financial statements Everspan are prepared on the basis of accounting practices prescribed or permitted by the State Insurance Laws and the actions of regulatory authorities thereunder.

7 unchanged sentences

State Insurance Regulators prescribe rules that determine if Everspan may declare dividends.

In addition, Everspan is

subject to certain restrictions in their respective articles of incorporation with regards to the payment of dividends.

In addition, Everspan is subject to certain restrictions in their respective articles of incorporation with regards to the payment of dividends.

Board action authorizing a distribution by an insurance company must generally be reported to the applicable domiciliary regulator prior to payment.

2 unchanged sentences

Furthermore, certain subsidiaries of Everspan Insurance were restricted from paying dividends to Everspan Insurance until January 1, 2025.

Currently, Everspan Insurance’s subsidiaries, other than Greenwood Insurance Company, do not have sufficient surplus to pay dividends.

Ambac's MGA/U subsidiaries are not restricted from paying dividends or partner distributions (collectively "Distributions") to their owners or partners, including Cirrata, which is 100 % owned by AFG.

Ambac's established MGA/Us historically have paid Distributions equating to the majority of their individual EBITDA, subject to working capital, taxes and other capital needs, on a quarterly basis.

Newly formed de-novo MGA/Us are not expected to make regular distributions to their partners until they become profitable and generate free cash flow on a steady and/or predictable basis.

United Kingdom

Beat's UK subsidiaries are subject to certain restrictions in their articles of association and shareholder agreements with regards to the payment of dividends.

The Board of Beat and each subsidiary can approve the payment of a dividend (subject to repayment of any funding agreements).

Beat and its UK subsidiaries historically have paid Distributions equating to the majority of their distributable reserves, being principally profit after taxation.

Beat’s Bermuda subsidiary is subject to certain restrictions in their articles of association and shareholder agreements with regards to the payment of dividends.

The Board of the Bermuda subsidiary can approve the payment of a dividend (subject to repayment of any funding agreement).

The Board of the Bermuda subsidiary historically has paid Distributions equating to the majority of their distributable reserves, being principally profit after taxation.

Ambac Financial Group, Inc.

Currently, Everspan Insurance’s subsidiaries, other than Greenwood Insurance Company and Providence Washington Insurance Company, do not have sufficient surplus to pay dividends.

Octave's MGA/U subsidiaries are not restricted from paying dividends or partner distributions (collectively "Distributions") to their owners or partners, including Octave Partners, which is 100 % owned by OSG.

Octave's established MGA/Us historically have paid Distributions equating to the majority of their individual EBITDA, subject to working capital, taxes and other capital needs, on a quarterly basis.

Newly formed de-novo MGA/Us are not expected to make regular distributions to their

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

partners until they become profitable and generate free cash flow on a steady and/or predictable basis.

United Kingdom

Octave Ventures's UK subsidiaries are subject to certain restrictions in their articles of association and shareholder agreements with regards to the payment of dividends.

The Board of Octave Ventures and each subsidiary can approve the payment of a dividend (subject to repayment of any funding agreements).

Octave Ventures and its UK subsidiaries historically have paid Distributions equating to the majority of their distributable reserves, being principally profit after taxation.

Octave Venture’s Bermuda subsidiary is subject to certain restrictions in their articles of association and shareholder agreements with regards to the payment of dividends.

The Board of the Bermuda subsidiary can approve the payment of a dividend (subject to repayment of any funding agreement).

The Board of the Bermuda subsidiary historically has paid Distributions equating to the majority of their distributable reserves, being principally profit after taxation.

DERIVATIVE INSTRUMENTS

20 unchanged sentences

Other liabilities:

FX forward $ 317 $ — $ 317 $ — $ 317 $ — $ — $ — $ — $ —

FX forwards $ 8 $ — $ 8 $ — $ 8 $ 317 $ — $ 317 $ — $ 317

Total derivative liabilities $ 8 $ — $ 8 $ — $ 8 $ 317 $ — $ 317 $ — $ 317

5 unchanged sentences

2025 2024 2023

Warrants Net gains (losses) on derivative contracts $ ( 656 ) $ ( 279 ) $ 935

FX forwards Net gains (losses) on derivative contracts 4,672 — —

Derivative type:

Warrants Other revenue $ — $ ( 656 ) $ ( 279 )

FX forwards Other revenue 1,019 4,672 —

Total derivatives $ 1,019 $ 4,016 $ ( 279 )

Other Derivatives:

At December 31, 2024 and 2023, Ambac holds warrants to purchase equity shares of a development stage company.

During 2024, Ambac entered into US dollar/British pound sterling foreign exchange (FX) forward contracts to protect against currency fluctuations related to the purchase of Beat.

Ambac's FX forward position was closed concurrent with the Beat purchase closed and the contracts matured October 4, 2024.

In addition, Beat utilizes foreign exchange forward contracts to partially hedge its foreign currency exposure.

Beat’s functional currency is the British Pound, but a significant portion of its revenues are generated in currencies other then the British Pound, particularly the US Dollar.

Beat, therefore, typically enters into forward contracts to partially hedge its exposure to fluctuations in exchange rates relative to the British Pound.

In connection with our acquisition of Beat and the growth profile of its business, we will be re-evaluating our exposure to foreign currency exchange rates and related hedging strategy.

Ambac had no FX forward contacts as of December 31, 2023.

Information about FX forward contracts as of December 31, 2024, is summarized below.

Octave Ventures utilizes foreign exchange forward contracts to partially hedge its foreign currency exposure.

Octave Ventures’s functional currency is the British Pound, but a significant portion of its revenues are generated in currencies other than the British Pound, particularly the US Dollar.

Octave Ventures, therefore, typically enters into forward contracts to partially hedge its exposure to fluctuations in exchange rates relative to the British Pound.

OSG used FX forward contracts to mitigate British Pound to US Dollar exchange risk leading up to its purchase of Octave Ventures in August 2024.

Octave also holds warrants to purchase equity shares of a development stage company and was party to foreign exchange (FX) forward contracts in 2024.

Information about FX forward contracts as of December 31, 2025 and December 31, 2024, is summarized below:

Derivative Type Weighted

(Sell) Fair Value

December 31, 2025

FX Forwards-Buy GBP/Sell USD 1.39 17,876 24,000 ( 6 )

FX Forwards-Buy GBP/Sell CAD 0.73 1,530 2,800 ( 2 )

December 31, 2024

FX Forwards-Buy GBP/Sell USD 0.61 15,720 20,000 ( 317 )

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

GOODWILL AND INTANGIBLE ASSETS

6 unchanged sentences

Ending balance $ 540,345 $ 418,234

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Intangible asset and accumulated amortization are included in the Consolidated Balance Sheets, as shown below.

25 unchanged sentences

$ 38,044 $ 17,602 $ 4,152

(1) The weighted-average amortization period 5.0 years.

(1) The weighted-average amortization period is 4.7 years.

The estimated future amortization expense for finite-lived intangible assets is as follows:

2 unchanged sentences

Thereafter 242,359

In the third quarter of 2024, Ambac funded a portion of the acquisition of Beat with a $ 150,000 Credit Facility.

The debt incurred under the Credit Facility matures on July 31, 2025.

Obligations under the Credit Facility are guaranteed by AFG and are secured on a first-priority basis by (i) a pledge by AFG of all of the capital stock of Everspan Holdings, LLC, a

Delaware limited liability company and wholly owned subsidiary of the Company and (ii) a pledge by the Purchaser of all of the capital stock of Beat held by Purchaser.

Borrowing under the Credit Facility bears interest at three-month SOFR plus a margin initially equal to 4.50 %, increasing to 5.50 % on November 1, 2024, 6.50 % on February 1, 2025, and 7.50 % on May 1, 2025.

A duration fee equal to 1 % of the then outstanding Credit Facility shall be due on each of February 1, 2025 and May 1, 2025, to the extent the borrowing under the Credit Facility is not repaid earlier.

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;

2025 Credit Facility

In connection with the acquisition of ArmadaCorp on October 31, 2025, Octave Partners LLC (f.k.a.

Cirrata Group LLC) and certain of its subsidiaries (including ArmadaCorp) entered into a credit facility providing for a $ 100,000 term loan and a $ 20,000 revolving credit facility (the "2025 Credit Facility").

The term loan and revolving loans were fully drawn as SOFR loans to pay part of the purchase price for ArmadaCorp.

The term loan will amortize in equal quarterly installments beginning March 31, 2026, in an aggregate amount equal to 2.5 % per annum of the original principal amount, with the remaining principal balance due October 31, 2030.

Unless earlier terminated, the revolver matures October 31, 2030.

Optional prepayments are permitted without premium or penalty.

Mandatory prepayments will be due with net cash proceeds from certain asset sales, recovery events (such as insurance recoveries), issuances of indebtedness and indemnity payments.

As of December 31, 2025, outstanding borrowings under the term loan were $ 100,000 and under the revolving credit facility were $ 20,000 .

Borrowings under the Credit Facility bear interest at a rate per annum equal to 3-month term SOFR plus an applicable margin of 2.25 % to 2.75 %.

The applicable margin adjusts automatically at the end of each fiscal quarter based on the borrowers’ reported Consolidated Total Net Leverage Ratio for the most recently ended fiscal quarter.

The Company's applicable margin in effect as of December 31, 2025, was 2.75 %.

Debt issuance costs incurred in connection with the 2025 Credit Facility of $ 2,530 are being amortized to interest expense over the contractual term of the facility and are presented as a reduction to the carrying amount of the borrowings reported within Long-term debt on the Consolidated Balance Sheets.

The 2025 Credit Facility includes customary representations and warranties and covenants applicable to the ID businesses, including (without limitation) maintenance of certain financial ratios and limitations on indebtedness, liens, mergers, sales of assets, investments, restricted payments (such as dividends), and affiliate transactions.

Pursuant to a separate guaranty and pledge agreement, OSG guarantees the payment and performance of all obligations under the credit agreement and other loan documents and pledges its ownership interest in Octave Partners LLC as collateral.

OSG makes customary representations and warranties and covenants and agrees to always maintain minimum cash liquidity of $ 10,000 .

Pursuant to a separate guaranty and security agreement, the borrowers and other wholly-owned subsidiaries of Octave Partners LLC guarantee the payment and performance of all obligations under the credit

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

agreement and other loan documents and grant security interests in substantially all of the assets of the borrowers and such other subsidiaries, including their respective ownership interests in their subsidiaries, as collateral.

These requirements will impact our financial and operational flexibility while the 2025 Credit Facility remains in place.

2024 Credit Facility

In the third quarter of 2024, OSG funded a portion of the acquisition of Octave Ventures (f.k.a.

Beat) with a $ 150,000 credit facility (the "2024 Credit Facility").

On June 10, 2025, OSG entered into an amendment (the "Amendment") to the $ 150,000 2024 Credit Facility.

Pursuant to the Amendment, the maturity date for amounts owed with respect to the loans made under the 2024 Credit Facility was extended from July 31, 2025 to the earlier of (a) December 31, 2025 and (b) the date that is the three-month anniversary of the termination of the Stock Purchase Agreement, dated June 4, 2024, between OSG and American Acorn Corporation.

Borrowing under the Credit Facility as amended bears interest at 3-month term SOFR plus a margin initially equal to 4.50 %, increasing to 5.50 % on November 1, 2024, 6.50 % on February 1, 2025, and 7.50 % on May 1, 2025.

A duration fee equal to 1.00 % of the then outstanding Credit Facility was due on each of February 1, 2025, and May 1, 2025, to the extent the borrowing under the Credit Facility is not repaid earlier.

OSG paid an extension fee in an amount equal to 1.00 % of the aggregate principal amount of loans outstanding under the Credit Agreement on June 10, 2025.

The 2024 Credit Facility was repaid in full on September 29, 2025 with a portion of the proceeds from the sale of AAC.

Obligations under the 2024 Credit Facility as amended were guaranteed by OSG and were secured on a first-priority basis by (i) a pledge by OSG of all of the capital stock of Everspan Holdings, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company and (ii) a pledge by the Purchaser of all of the capital stock of Octave Ventures held by Purchaser.

The 2024 Credit Facility as amended included financial and other covenants that restricted 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, including the sale of AAC.

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

transactions with affiliates;

restricted payments, including dividends and the purchase or redemption of capital stock;

and acquisitions and other investments.

REVENUES FROM CONTRACTS WITH CUSTOMERS

As further described in the Revenue Recognition section of Note 2.

Basis of Presentation and Significant Accounting Policies , the Insurance Distribution businesses have contracts that are subject to the Revenue from Contracts with Customers Topic of the ASC ("ASC 606").

The following table presents Insurance Distribution commission income recognized disaggregated by policy type for the years ended December 31, 2024, 2023 and 2022:

Basis of Presentation and Significant Accounting Policies, the ID businesses have contracts that are subject to the Revenue from Contracts with Customers Topic of the ASC ("ASC 606").

The following table presents ID commission income recognized disaggregated by policy type for the years ended December 31, 2025, 2024 and 2023:

Year ended December 31, 2025 2024 2023

Accident & Health $ 29,640 $ 30,123 $ 32,836

Property 22,565 5,116 —

Specialty Auto 17,370 17,851 11,929

Reinsurance 15,713 1,641 147

Other Professional 13,294 10,076 3,097

Marine & Energy 2,829 2,909 158

Niche Specialty Risks 13,263 5,268 —

Property 5,116 — —

Reinsurance 1,641 147 —

Surety 10,307 2,948 —

Professional D&O 6,995 1,422 —

Specialty 5,406 1,696 363

Marine & Energy 4,577 2,829 2,909

Environmental 4,251 13,053 —

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

For the years ended December 31, 2024, 2023 and 2022, income of $ 6,320 , $ 200 and $ 715 , respectively, was recognized in accordance with ASC 606 and reported in other revenue on the Consolidated Statement of Comprehensive Income.

For the years ended December 31, 2025, 2024 and 2023, income of $ 20,419 , $ 6,353 and $ 0 , respectively, was recognized in accordance with ASC 606 and reported as Servicing and other fees on the Consolidated Statement of Comprehensive Income.

During the years ended December 31, 2025, 2024 and 2023, the amount of revenue recognized related to performance obligations satisfied in a previous period, inclusive of changes due to estimates was approximately $ 2,984 , $ 5,325 and $ 5,241 , respectively.

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Receivables, Contract Assets and Liabilities

4 unchanged sentences

Contract liabilities 2,954 2,705

Contract assets and Contract liabilities is reported in Other Assets and Other Liabilities on the Balance Sheet

Insurance Distribution

Contract assets represent estimated future consideration related to base commissions and profit-sharing commissions that were recognized as revenue upon the placement of the policy, but are not yet billable or collectable.

The Company does not have the right to bill or collect payment on i) base commissions until the

related premiums from policyholders have been collected nor ii) profit-sharing commissions until after the contract year is completed.

The Company does not have the right to bill or collect payment on (i) base commissions until the related premiums from policyholders have been collected nor (ii) profit-sharing commissions until after the contract year is completed.

Contract liabilities represent advance consideration received from customers related to Employer stop loss base commissions that will be recognized over time as claims servicing is performed, which typically occurs between 17 and 20 months from contract inception.

During the years ended December 31, 2025, 2024 and 2023, the Company recognized revenue that was included in the contract liability balance as of the beginning of the period of $ 679 , $ 479 and $ 583 , respectively.

COMPREHENSIVE INCOME

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

COMPREHENSIVE INCOME (LOSS)

The following tables detail the changes in the balances of each component of accumulated other comprehensive income for the affected periods:

17 unchanged sentences

Details about Accumulated Other

Comprehensive Income Components Amount Reclassified from Accumulated

Comprehensive Income Components

Amount Reclassified from Accumulated

Other Comprehensive Income Affected Line Item in the

3 unchanged sentences

Unrealized Gains (Losses) on Available-for-Sale Securities (1)

$ ( 3,919 ) $ 22,489 Net realized investment gains (losses)

$ 15,193 $ ( 3,919 ) Other income

( 3,851 ) ( 603 ) Provision for income taxes

$ ( 4,522 ) $ 20,561 Net of tax and NCI

( 14,957 ) — Net loss on discontinued operations

$ ( 3,615 ) $ ( 4,522 ) Net of tax and noncontrolling interest

Amortization of Postretirement Benefit

Prior service cost $ ( 210 ) $ ( 963 ) Other income

Actuarial gains (losses) ( 67 ) ( 519 ) Other income

Curtailment gain ( 4,662 ) — Other income

Prior service cost

$ — $ ( 210 ) Other income

Actuarial gains (losses)

— ( 67 ) Other income

Curtailment gain

— ( 4,662 ) Other income

— ( 4,939 ) Total before tax

— — Provision for income taxes

$ ( 4,939 ) $ ( 1,482 ) Net of tax and NCI

$ — $ ( 4,939 ) Net of tax and noncontrolling interest

Gain (loss) on foreign currency translation

$ 99,354 $ — Net loss on discontinued operations

$ 99,354 $ — Net of tax and noncontrolling interest

Credit Risk Changes of Fair Value Option Liabilities

1 unchanged sentence

( 179 ) 118 Provision for income taxes

( 356 ) ( 88 ) Net of tax and NCI

Total reclassifications for the period $ ( 9,817 ) $ 18,991 Net of tax and NCI

(1) Net unrealized investment gains (losses) on available for sale securities are included in Ambac's Consolidated Statements of Comprehensive Income as a component of Accumulated Other Comprehensive Income.

Changes in these amounts include reclassification adjustments to exclude from "Other

Ambac Financial Group, Inc.

698 — Net loss on discontinued operations

1,109 ( 356 ) Net of tax and noncontrolling interest

Total reclassifications for the period

$ 96,848 $ ( 9,817 ) Net of tax and noncontrolling interest

(1) Net unrealized investment gains (losses) on available-for-sale securities are included in Octave's Consolidated Statements of Comprehensive Income as a component of Accumulated Other Comprehensive Income.

Changes in these amounts include reclassification adjustments to exclude from "Other comprehensive income (loss)" those items that are included as part of "Net income" for a period that has been part of "Other comprehensive income (loss)" in earlier periods.

NET INCOME PER SHARE

As of December 31, 2025, 45,005,284 shares of OSG's common stock (par value $ 0.01 ) and a warrant entitling the holder to acquire up to 5,092,707 shares of common stock at an exercise price of $ 18.50 per share were issued and outstanding.

warrant was issued September 29, 2025, and allows the holder to convert the warrant at its Black-Sholes value, settleable in shares of OSG common stock or cash at OSG's election.

Common shares outstanding decreased by 1,501,689 during the year ended December 31, 2025, primarily due to share repurchases partially offset by shares issued in connection with employee stock compensation.

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

comprehensive income (loss)" those items that are included as part of "Net income" for a period that has been part of "Other comprehensive income (loss)" in earlier periods.

NET INCOME PER SHARE

As of December 31, 2024, 46,506,973 shares of AFG's common stock (par value $ 0.01 ) were issued and outstanding.

Common shares outstanding increased by 1,311,603 , during the year ended December 31, 2024, primarily due to the issuance of shares in the Beat acquisition, offset by share repurchases.

Share Repurchases

On March 29, 2022, AFG's Board of Directors approved a share repurchase program authorizing up to $ 20,000 in share repurchases.

On May 5, 2022, the Board of Directors authorized an additional $ 15,000 in share repurchase.

This program expired on March 31, 2024.

On November 12, 2024, Ambac’s Board of Directors authorized a share repurchase program, under which Ambac may opportunistically repurchase up to $ 50,000 of the Company’s common shares at management’s discretion over the period ending on December 31, 2026.

On November 12, 2024, Octave’s Board of Directors authorized a share repurchase program, under which Octave may opportunistically repurchase up to $ 50,000 of the Company’s common shares at management’s discretion over the period ending on December 31, 2026.

The following table shows shares repurchased by year.

($ in thousands, except per share)

($ in thousands,

except per share)

Year Ended December 31,

2022 2023 2024 2025

Shares repurchased 1,605,316 325,068 937,141 3,434,745

3 unchanged sentences

Earnings Per Share Calculation

The numerator of the basic and diluted earnings per share computation represents net income (loss) attributable to common stockholders adjusted by the retained earnings impact of the adjustment to redemption value of redeemable NCI under ASC 480.

The redemption value adjustment is further described in the Redeemable NCI section of Note 2.

The numerator of the basic and diluted earnings per share computation represents net income (loss) attributable to common stockholders adjusted by the retained earnings impacts of the noncontrolling adjustment to redemption value under ASC 480 or amendments resulting in revaluation to fair value and reclassification of NCI shares to redeemable NCI.

Adjustments to the carrying value of redeemable noncontrolling interest are further described in the Redeemable NCI section of Note 2.

Basis of Presentation and Significant Accounting Policies .

1 unchanged sentence

Year ended December 31, 2025 2024 2023

Net income (loss) attributable to Ambac common stockholders

Net income (loss) attributable to Octave common stockholders

$ ( 98,404 ) $ ( 59,282 ) $ ( 24,551 )

3 unchanged sentences

Diluted $ ( 2.47 ) $ ( 1.37 ) $ ( 0.43 )

The denominator of the basic earnings per share computation represents the weighted average common shares outstanding plus vested restricted stock units (together, "Basic Weighted Average Shares Outstanding").

The denominator of the basic earnings per share computation represents the daily weighted average common shares outstanding plus vested restricted stock units and performance stock units (together, "Basic Weighted Average Shares Outstanding").

The denominator of diluted earnings per share adjusts the basic weighted average shares outstanding for all potential dilutive common shares outstanding during the period.

All potential dilutive common shares outstanding consider common stock deliverable pursuant to warrants, unvested restricted stock units and performance stock units granted under existing compensation plans.

In determining diluted net income (loss) per share, whether net income from continuing operations is positive or negative controls whether dilutive shares are included in the determination.

For all periods presented, net income from continuing operations is negative, a net loss.

All potential dilutive common shares outstanding consider common stock deliverable pursuant to warrants, employee options, unvested restricted stock units and unvested performance stock units granted under existing compensation plans.

In determining diluted net income (loss) per share, whether net income from continuing operations is positive or negative

controls whether dilutive shares are included in the determination.

For all periods presented, net income from continuing operations was negative, a net loss.

Accordingly, since including dilutive shares would dilute the loss from continuing operations, no dilutive shares are included in any of the per share calculations.

8 unchanged sentences

Anti-dilutive shares excluded from the above reconciliation

Warrants — — 4,877,617

1,311,546 — —

Restricted stock units 164,101 479,781 550,255

3 unchanged sentences

Vesting of these units is contingent upon meeting certain performance metrics.

Although a portion of these performance metrics have been achieved as of the respective period end, it is possible that awards may no longer meet the metric at the end of the performance period.

AFG files a consolidated U.S.

Although a portion of these performance metrics have been achieved as of the respective period end, it is possible that awards may no longe r meet the metric at the end of the performance period.

(2) Options require the OSG's stock price to exceed certain market price hurdles to vest, none of which have been met.

Warrants have an exercise price above the market price of OSG stock during the year.

Amounts shown reflect the maximum number of shares issuable upon exercise, weighted for the time outstanding during the periods.

OSG files a consolidated U.S.

federal income tax return with its 80% or more owned domestic subsidiaries ("Consolidated Tax Subsidiaries").

Beat's US subsidiaries file separate U.S.

Federal income tax returns as they are not directly owned by AFG for tax purposes.

AFG and its Consolidated Tax Subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions.

The following are the major jurisdictions in which Ambac and its subsidiaries, including it foreign subsidiaries, operate and the earliest tax years subject to examination:

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Octave Ventures's US subsidiaries file separate U.S.

federal income tax returns as they are not directly owned by OSG for tax purposes.

OSG and its Consolidated Tax Subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions.

The following are the major jurisdictions in which Octave and its subsidiaries, including its foreign subsidiaries, operate and the earliest tax years subject to examination:

Jurisdiction Tax Year

3 unchanged sentences

United Kingdom 2021

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Consolidated Pretax Income (Loss)

12 unchanged sentences

Deferred taxes

Domestic — ( 1,420 ) ( 9 )

federal ( 2,464 ) ( 633 ) ( 1,509 )

state and local ( 37 ) — —

Foreign ( 7,813 ) ( 2,489 ) —

13 unchanged sentences

The tax provisions for continuing operations in the accompanying Consolidated Statements of Total Comprehensive Income (Loss) reflect effective tax rates differing from prevailing federal corporate income tax rates.

The following is a reconciliation of these differences:

As allowed by ASU 2023-09, Improvements to Income Tax Disclosures , Management has elected to apply the enhanced disclosure requirements of the ASU prospectively.

This results in non-comparable rate reconciliation disclosures between the current and prior years.

Below is a reconciliation of these differences for the year ended December 31, 2025, followed by a reconciliation of these differences for the years ended December 31, 2024 and 2023 :

Year Ended December 31, 2025

Tax on income (loss) at statutory rate $ ( 12,567 ) 21 % $ ( 5,086 ) 21 % $ ( 7,498 ) 21 %

Tax on income from continuing operations at statutory rate

$ ( 21,213 ) 21.0 %

Changes in expected tax resulting from:

State only DTA and tax rate change 4,554 ( 8 ) % — — % ( 1,003 ) 3 %

Nondeductible executive compensation 2,939 ( 2.9 ) %

Other ( 811 ) 0.8 %

Cross-border tax laws 1,286 ( 1.3 ) %

Changes in valuation allowance ( 31,790 ) 31.5 %

Outside basis differences 41,712 ( 41.3 ) %

Adjust DTA related to intangibles 1,497 ( 1.5 ) %

Other ( 440 ) 0.4 %

Domestic state income taxes, net of federal 261 ( 0.3 ) %

Foreign jurisdictions

United Kingdom

Foreign tax effects ( 1,228 ) 1.2 %

Change in valuation allowance 4,322 ( 4.3 ) %

Other ( 1,746 ) 1.7 %

Tax expense on income from continuing operations

$ ( 5,211 ) 5.2 %

For the year ended December 31, 2025, activity in California, Florida, Illinois, New Jersey, New York state, New York City and New Jersey account for the majority of the amounts in the Domestic state income taxes, net of federal tax effect category.

Year Ended December 31, 2024 2023

Tax on income/(loss) at statutory rate $ ( 12,567 ) 21.0 % $ ( 5,086 ) 21.0 %

State DTA tax rate change 4,554 ( 7.6 ) % — — %

Tax-exempt interest ( 4 ) — % ( 5 ) — %

1 unchanged sentence

State income taxes 79 ( 0.1 ) % 411 ( 1.7 ) %

Outside tax basis difference 105,630 ( 177 ) % — — % — — %

Outside basis differences (1)

21,076 ( 35.2 ) % — — %

Acquisition costs 2,017 ( 3.4 ) % 1,497 ( 6.2 ) %

Valuation allowance ( 101,598 ) 170 % 1,602 ( 7 ) % 8,379 ( 24 ) %

Other, net 178 — % 592 ( 2 ) % ( 693 ) 2 %

Tax expense on income (loss) $ ( 924 ) 2 % $ ( 989 ) 1 % $ ( 462 ) ( 2 ) %

Unrecognized Tax Positions

The Company had no material unrecognized tax positions at December 31, 2024 and 2023.

Ambac Financial Group, Inc.

Changes in valuation allowance (1)

( 17,044 ) 28.5 % 1,602 ( 6.6 ) %

Other 178 ( 0.3 ) % 592 ( 2.4 ) %

Tax expense on income from continuing operations

$ ( 924 ) 1.5 % $ ( 989 ) 4.1 %

(1) These amounts have been revised from the amounts previously disclosed to accurately reflect the outside basis difference in the subsidiary held for sale.

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

Unrecognized Tax Positions

The Company had no material unrecognized tax positions at December 31, 2025 and 2024.

Deferred Income Taxes

3 unchanged sentences

Amortizable intangible $ 69,929 $ 71,414

Outside basis difference 105,630 —

Deferred acquisition costs 1,871 9,474

Investments — 3,568

Other 787 139

Total deferred tax liabilities 71,800 85,243

Deferred tax assets:

Net operating loss carryforward 349,931 341,886

Federal net operating loss carryforward 356,575 349,931

Outside basis difference (1)

Unearned premium reserves 1,714 9,138

1 unchanged sentence

State capital loss carryforward 12,813 —

State capital loss carryforward 256,665 3,096

Compensation 189 1,423

Investments 1,721 —

Foreign net operating loss carryforward 4,322 —

Other 1,262 429

1 unchanged sentence

Valuation allowance (1)

630,078 367,055

Total deferred tax assets 6,583 15,108

Net deferred tax liability $ 65,217 $ 70,135

The Company has adopted an accounting policy to classify the inside tax basis differences deferred tax assets and liabilities (i.e., inside basis differences) associated with the disposition of shares of a subsidiary as assets or liabilities held for sale on the Consolidated Balance Sheets.

For the years ended December 31, 2024, and 2023, the Company has included net deferred tax liabilities of $ 20,382 and $ 19,138 , respectively, in liabilities held for sale.

(1) These amounts have been revised from the amounts previously disclosed to accurately reflect the outside basis difference in the subsidiary held for sale.

The Company has adopted an accounting policy to classify the inside tax basis differences in deferred tax assets and liabilities (i.e., inside basis differences) associated with the disposition of shares of a subsidiary as assets or liabilities held for sale on the Consolidated Balance Sheets.

For the year ended December 31, 2024, the Company has included net deferred tax liabilities of $ 20,382 in liabilities held for sale.

In accordance with the Income Tax Topic of the ASC, a valuation allowance is recognized if, based on the weight of available evidence, it is more-likely-than-not that some, or all, of the deferred tax asset will not be realized.

As a result of the risks and uncertainties associated with future operating results, management believes it is more likely than not that the Company will not generate sufficient U.S.

federal, state and/or local taxable income to recover the deferred tax operating assets and therefore maintains a full valuation allowance on AFG's U.S.

federal, state and/or local taxable income to recover the deferred tax operating assets and therefore maintains a full valuation allowance on OSG's U.S.

net deferred tax assets.

The remaining net deferred tax liability of $ 70,135 is attributable to the amortizing intangible related to the acquisition of Beat and is classified in Deferred Taxes on the Consolidated Balance Sheet.

NOL & Investment Interest Carryforward

As of December 31, 2024, the Company has $ 1,663,087 of US NOLs if not utilized will begin expiring in 2030.

The remaining net deferred tax liability of $ 65,217 is attributable to the amortizing intangible related to the acquisition of Octave Ventures and is classified in Deferred Taxes on the Consolidated Balance Sheet.

Income Taxes Paid, net of Refunds

Income taxes paid, net of refunds, exceeds 5% of total income taxes paid, net of refunds, in the following jurisdictions:

Year Ended December 31, 2025 2024 2023

Texas $ 24 $ 18 $ —

United Kingdom 5,528 508 —

Total $ 5,552 $ 526 $ —

Loss Carryforwards

As of December 31, 2025, the Company has $ 1,690,842 of U.S.

net operating loss carryforwards ("NOLs") that, if not utilized, will begin expiring in 2030.

Of the total NOLs $ 118,910 carry forward indefinitely.

The Company has state net operating loss carryforwards of $ 231,347 that begin expiring in 2042.

The Company also has $ 3,910,514 of state capital loss carryforwards apportioned to various state jurisdictions primarily resulting from the sale of AAC in 2025.

These carryforwards are only available to offset capital gains recognized on state tax returns and, if not utilized, will begin expire in 2026, but the majority will expire in 2030.

The Company also has $ 17,286 of foreign (UK) net operating losses that carry forward indefinitely.

Tax Legislative Developments

On July 4, 2025, President Trump signed into law the 2025 Budget Reconciliation Act ("the Act").

The Act made permanent many of the favorable business tax provisions included in the 2017 Tax Cuts & Jobs Acts ("TCJA"), in addition to several new business tax provisions, the majority of which go into effect for tax years ending after December 31, 2024.

This legislation did not have a significant impact on the Company's current operations or financial condition for the year ended December 31, 2025.

EMPLOYMENT BENEFIT PLANS

Incentive Compensation - Stock Units and Cash

Employees, directors and consultants of Ambac are eligible to participate in Ambac’s 2024 Incentive Plan, which is the successor plan to the Ambac’s 2020 Incentive Plan and 2013 Incentive Plan, subject to the discretion of the Compensation Committee of Ambac’s Board of Directors.

There are 4,350,000 1,475,000 and 4,000,000 shares of Ambac's common stock authorized for awards under the 2024 Plan, 2020 Plan and 2013 Plan, respectively.

Incentive Compensation — Stock Units, Stock Options and Cash

Employees, directors and consultants of Octave are eligible to participate in Octave’s 2024 Incentive Plan, which is the successor plan to Octave’s 2020 Incentive Plan and 2013 Incentive Plan, subject to the discretion of the Compensation Committee of Octave’s Board of Directors.

There are 4,350,000 , 1,475,000 and 4,000,000 shares of Octave's common stock authorized for awards under the 2024 Plan, 2020 Plan and 2013 Plan, respectively.

Awards may also be made under the 2024 Plan with respect to the shares that remained available for grant under the 2020 Plan.

In addition, shares subject to outstanding awards granted under the 2020 Plan that subsequently terminate by expiration or forfeiture, cancellation, or otherwise without the issuance of such shares become available for awards under the 2024 Plan.

On June 24, 2021, the Compensation Committee of Ambac's Board of Directors adopted the Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

On June 24, 2021, the Compensation Committee of Octave's Board of Directors adopted the Octave Specialty Group, Inc.

Executive Stock Deferral Plan (the “Stock Deferral Plan”).

Under the Stock Deferral Plan, certain executives of AFG and its subsidiaries who are designated by the compensation committee as eligible to participate in the Stock Deferral Plan may elect to defer the settlement of all or a portion of the RSU and PSU (as defined below) awards that are granted to the executives to a future date(s) selected by the executive.

Deferred awards under the Stock Deferral Plan (and any related dividend equivalents) will continue to be paid in shares of common stock of AFG, which will be issued under the relevant incentive compensation plan pursuant to which the underlying award was first granted, provided that any dividend equivalents credited on a participant’s deferred awards in respect of cash dividends paid by AFG will be paid to the participant in cash.

The sale of AAC will trigger a change in control provision under the Stock Deferral Plan and immediately prior to closing all deferred shares will be settled in stock.

At the discretion of the Compensation Committee of the Board of Directors, RSU and PSU awards may be settled in cash based on the closing price of AFG's common stock on the last business day prior to the settlement date.

Under the Stock Deferral Plan, certain executives of OSG and its subsidiaries who are designated by the compensation committee as eligible to participate in the Stock Deferral Plan may elect to defer the settlement of all or a portion of the RSU and PSU (as defined below) awards that are granted to the executives to a future date(s) selected by the executive.

Deferred awards under the Stock Deferral Plan (and any related dividend equivalents) will continue to be paid in shares of common stock of OSG, which will be issued under the relevant incentive compensation plan pursuant to which the underlying award was first granted, provided that any dividend equivalents credited on a participant’s deferred awards in respect of cash dividends paid by OSG will be paid to the participant in cash.

The sale of AAC triggered a change in control provision under the Stock Deferral Plan and immediately prior to closing all deferred shares were settled in stock.

The Stock Deferral Plan is not funded, and deferred awards under the Stock Deferral Plan are not segregated from the Company’s general assets.

The amount of stock-based compensation expense and corresponding after-tax expense from continuing operations are as follows.

At the discretion of the Compensation Committee of the Board of Directors, RSU and PSU awards may be settled in cash based on the closing price of OSG's common stock on the last business day prior to the settlement date.

The amount of stock-based compensation expense arising from awards under the Incentive Plans and corresponding after-tax expense continuing operations are as follows:

Year Ended December 31,

2 unchanged sentences

Performance awards 3,581 6,212 8,804

Performance stock options

Total stock-based compensation

1 unchanged sentence

Total stock-based compensation (after-tax) (1)

$ 10,676 $ 9,356 $ 12,266

(1) Excludes stock-based compensation expense of $ 36 related to stock options issued by a majority owned subsidiary to buy shares of the subsidiary's stock.

Refer to "Other Incentive Plans" below.

Restricted Stock Units (“RSUs”)

RSUs can be awarded to certain employees for a portion of their STIP compensation, LTIP compensation, sign-on and special awards for exceptional performance or promotion.

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

also be awarded to consultants as part of the consideration for their services.

RSUs can be awarded to certain employees for a portion of their STIP compensation, Long-Term Incentive Plan ("LTIP") compensation, sign-on and special awards for exceptional performance or promotion.

RSUs can also be awarded to consultants as part of the consideration for their services.

The LTIP, sign-on, consultant and special awards generally vest in equal installments over, or cliff-vest at the end of, a two to three year period.

Such vesting is expressly conditioned upon continued service with Ambac through the applicable vesting date, although vesting may be accelerated in certain circumstances under the awards, including for terminations due to death, disability, eligible retirement, or involuntary termination by Ambac other than for cause.

Such vesting is expressly conditioned upon continued service with Octave through the applicable vesting date, although vesting may be accelerated in certain circumstances under the awards, including for terminations due to death, disability, eligible retirement, or involuntary termination by Octave other than for cause.

As part of our director compensation program, RSUs are granted quarterly and vest one year from the grant date.

These RSUs will not settle until the respective director’s termination from the Board of Directors or, if earlier, upon a change in control.

These RSUs will

not settle until the respective director’s termination from the Board of Directors or, if earlier, upon a change in control.

All RSUs provide for accelerated vesting upon a change in control, death or disability or involuntary removal other than for cause (not including removal pursuant to a shareholder vote at a regularly scheduled annual meeting of shareholders).

The sale of AAC will meet the requirements for a change in control and immediately prior to closing any unvested shares will vest and settle along with all previously deferred shares.

Upon termination (other than for cause), the unvested RSUs shall partially vest as of the date of such termination in an amount equal to the number of then outstanding unvested RSUs multiplied by a fraction, the numerator of which shall be the number of calendar days which have lapsed since the grant date and the denominator of which shall be the number of calendar days from the grant date until the next regularly scheduled quarterly grant date pursuant to Ambac’s director compensation program.

The sale of AAC met the requirements for a change in control and immediately prior to closing, unvested shares vested and settled along with all previously deferred shares.

As of December 31, 2025, 1,096,153 RSUs remained outstanding, of which (i) 1,090,076 units required future service as a condition to the delivery of the underlying shares of common stock and (ii) 6,077 units do not require future service and are deferred for future settlement.

9 unchanged sentences

Outstanding at end of period 1,096,153 $ 7.10

(1) When restricted stock unit awards issued by Ambac become taxable compensation to employees, shares may be withheld to cover the employee’s withholding taxes.

For the year ended December 31, 2024, Ambac withheld 19,335 shares from employees that settled restricted stock units to meet the required tax withholdings.

Ambac’s closing share price on the grant date was used to estimate the fair value of the service condition based RSU on the

(1) When restricted stock unit awards issued by Octave become taxable compensation to employees, shares may be withheld to cover the employee’s withholding taxes.

For the year ended December 31, 2025, Octave withheld 226,045 shares from employees that settled restricted stock units to meet the required tax withholdings.

Octave’s closing share price on the grant date was used to estimate the fair value of service condition based RSUs on the grant date.

The weighted average grant date fair value per share of RSUs granted during 2025, 2024 and 2023 was $ 8.34 , $ 15.72 and $ 12.48 , respectively.

As of December 31, 2024, there was $ 3,687 of total unrecognized compensation costs related to unvested RSUs granted of which $ 494 will be transferred to the buyer upon close of AAC sale.

As of December 31, 2025, there was $ 7,395 of total unrecognized compensation costs related to unvested RSUs granted.

These costs are expected to be recognized over a weighted average period of 1.5 years.

The fair value for RSUs vested and delivered during the year ended December 31, 2025, 2024 and 2023 was $ 4,309 , $ 1,654 and $ 4,646 , respectively.

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Performance Stock Awards ("PSUs")

PSUs are awarded to certain employees for a portion of their LTIP compensation and vest after 3 years from grant date.

The actual number of shares payable at settlement is subject to performance metrics relative to the companies and segments of Ambac.

PSUs are awarded to certain employees for a portion of their LTIP compensation and generally vest after 3 years from grant date.

The actual number of shares payable at settlement is subject to performance metrics relative to the companies and segments of Octave.

Actual payout can range from 0 % to 240 % of the number of units granted.

Under currently outstanding award agreements, performance will be evaluated as follows:

• In regards to Xchange, for the 2022 PSU awards, and Cirrata for the 2023 and 2024 PSU awards, (i) cumulative earnings before interest, taxes, depreciation and amortization over the vesting period and (ii) for Cirrata 2023 and 2024 PSU awards, the aggregate of all premiums placed by Cirrata with any insurance carrier over the vesting period.

• In regards to ID business for the 2023 and 2024 PSU awards, (i) cumulative earnings before interest, taxes, depreciation and amortization over the vesting period and (ii) the aggregate of all premiums placed by Octave Partners LLC with any insurance carrier over the vesting period.

For the 2025 PSU awards, (i) compounded annual growth rate of cumulative earnings before interest, taxes, depreciation and amortization attributed to Octave shareholders over the vesting period and (ii) Compounded annual growth rate of organic revenues, excluding profit commissions over the vesting period.

• In regards to Everspan:

(i) for the 2022, 2023 and 2024 PSU awards, cumulative earnings before interest, taxes, depreciation and amortization over the vesting period and (ii) for the 2023 and 2024 PSU award, cumulative direct or assumed premiums written (including any from Cirrata) and fronting fees over the vesting period.

(i) for the 2023 and 2024 PSU awards, cumulative earnings before interest, taxes, depreciation and amortization over the vesting period and (ii) cumulative direct or assumed premiums written (including any from Octave Partners) and fronting fees over the vesting period.

• In regards to AAC:

reductions in watch list and adversely classified credits, which is intended to reward participants for de-risking the financial guarantee insured portfolio.

• Relative Total Shareholder Return will cause the payout at the end of the performance period to be increased or decreased 20 % for PSU awards granted 2022, 2023 and 2024, if AFG's stock performance compared to a peer group is at or above the 75 th percentile or at or below the 25 th percentile, respectively .

for the 2023 award, reductions in watch list and adversely classified credits, which is intended to reward participants for de-risking the financial guarantee insured portfolio.

• Relative Total Shareholder Return ("rTSR") will cause the payout at the end of the performance period to be increased or decreased 20 % for PSU awards granted 2023, 2024 and 2025, if OSG's stock performance compared to a peer group is at or above the 75 th percentile or at or below the 25 th percentile, respectively .

Pursuant to the LTIP award agreements, if (i) a termination occurred prior to the last day of the performance period by reason of disability, an involuntary termination by the Company other than for “cause,” or "retirement," the recipient would be entitled to receive the PSU award at the end of the relevant performance period based on the satisfaction of the performance conditions related to such award at the end of the performance period, and (ii) a termination occurred prior to the last day of the performance period by reason of death, the beneficiaries of the recipient would be entitled to receive the number of PSUs that the recipient would have been entitled to receive at a 100 % overall payout multiple regardless of the outcome of any of the performance conditions.

The current performance awards shall be settled within 75 days after the end of the performance period, including those with partial or accelerated vesting,

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

subject to any deferrals made pursuant to the Stock Deferral Plan.

The current performance awards shall be settled within 75 days after the end of the performance period, including those with partial or accelerated vesting, subject to any deferrals made pursuant to the Stock Deferral Plan.

A summary of PSU activity for 2025 is as follows:

11 unchanged sentences

(2) Reflects the number of performance shares attributable to the performance goals attained over the completed performance period and for which service conditions have been met.

When performance stock unit awards issued by Ambac become taxable compensation to employees, shares may be withheld to cover the employee’s withholding taxes.

For the year ended December 31, 2024, Ambac withheld 24,431 of shares from employees that settled performance based restricted stock units to meet the required tax withholdings.

(3) Represents the number of additional shares issued for awards granted in 2021 as a result of actual performance during the performance period.

When performance stock unit awards issued by Octave become taxable compensation to employees, shares may be withheld to cover the employee’s withholding taxes.

For the year ended December 31, 2025, Octave withheld 638,388 of shares from employees that settled performance based restricted stock units to meet the required tax withholdings.

(3) Represents the number of additional shares issued for awards granted in 2022 and partially for awards in 2023 as a result of actual performance during the performance period.

The fair value of PSUs awards are based on the grant date OSG stock price adjusted for the rTSR performance metric using a Monte Carlo simulation of stock performance relative to the peer group over the 3-year performance period.

The weighted average grant date fair value per share of PSUs granted during 2025, 2024 and 2023 was $ 8.02 , $ 15.94 and $ 17.72 , respectively.

As of December 31, 2024, there was $ 5,509 of total unrecognized compensation costs related to the PSU portion of unvested performance awards of which $724 will be transferred to the buyer upon close of AAC sale.

As of December 31, 2025, there was $ 3,175 of total unrecognized compensation costs related to the PSU portion of unvested performance awards.

These costs are expected to be recognized over a weighted average period of 1.6 years.

The fair value for PSUs vested and delivered during the year ended December 31, 2025, 2024 and 2023 was $ 5,546 , $ 2,663 and $ 7,665 , respectively.

Performance Stock Options ("PSOs")

PSOs were issued in 2025 to certain executive officers of Octave.

PSOs vest upon the achievement of an explicit one-year service period from grant and OSG stock reaching specified market price hurdles.

The market price vesting requirement is based on the Company's achievement of the price hurdles related to the shares of Octave common stock, during the 5.0 year period following the grant date as follows:

(i) 40 % shall vest on the date on which the sustained stock price first exceeds $ 18.00 per share;

(ii) 20 % shall vest on the date on which the sustained stock price first exceeds $ 21.50 per share;

(iii) 20 % shall vest on the date on which the sustained stock price first exceeds $ 25.00 per share;

and (iv) 20 % shall vest on the date on which the sustained stock price first exceeds $ 30.00 per share.

Compensation costs for PSOs are initially recognized over the period from grant date to the end of the derived service period for each price hurdle tranche estimated from valuation process which range from 2.3 to 3.2 years.

The PSOs expire 10.0 years from the date of grant.

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

The fair value of the PSOs was based on a Monte Carlo simulation of stock performance over the 5-year performance period from date of grant.

For each iteration that market condition is met, the option is valued at that time using a Black-Scholes model.

Inputs and assumptions to the valuation model include the grant date stock price of $ 8.97 , exercise price of $ 8.97 , OSG stock price volatility of 46.9 %, risk free rate of 3.7 %, and cost of equity 11.8 %.

The volatility and risk free rate are both commensurate with the 5-year market performance period.

Additionally, a discount for lack of marketability of 10.7 % was applied to the modeled value.

A summary of PSO activity for 2025 is as follows:

Shares Weighted

Outstanding at beginning of period — $ —

Granted 1,134,500 8.97

Exercised — —

Forfeited or expired — —

Outstanding at end of period 1,134,500 $ 8.97

None of the PSOs outstanding are vested or exercisable as of December 31, 2025.

The weighted average grant date fair value per share of the options granted in 2025 was $ 2.93 .

As of as of December 31, 2025, there was $ 3,025 of total unrecognized compensation cost related to non-vested PSOs which is expected to be recognized over a weighted average period of 2.4 years.

Other Incentive Plans

Certain of Octave's majority owned Insurance Distribution subsidiaries have incentive plans that include employee incentive stock options to acquire shares of the subsidiary and management units that allow employee holders to participate in profits of their subsidiary over established targets.

Stock-based compensation expense arising from subsidiary stock options was $ 36 , $ 0 and $ 0 in 2025, 2024 and 2023, respectively.

Profit sharing management units are recognized as cash compensation over the applicable vesting period based on expected payouts.

Compensation expense arising from profit sharing units was $ 331 , $ 0 and $ 0 in 2025, 2024 and 2023, respectively.

Postemployment Benefits

Ambac provides discretionary severance benefits.

Octave provides discretionary severance benefits.

Severance benefits from continuing operations, were $ 5,046 , $ 416 and $ 0 for the years ended December 31, 2025, 2024 and 2023, respectively.

Defined Contribution Plans

As a result of the acquisitions of All Trans and Capacity Marine effective November 1, 2022, and Beat effective July 31, 2024, Ambac has multiple savings incentive plans.

As a result of the acquisitions of All Trans and Capacity Marine effective November 1, 2022, Riverton effective August 1 2023, Octave Ventures effective July 31, 2024, and ArmadaCorp effective October 31, 2025, Octave has multiple savings incentive plans.

Substantially all US employees are covered by one of these plans.

The Plan sponsored by AFG includes employer matching contributions equal to 100 % of the employees’ contributions, up to 3 % of such participants’ compensation, as defined in the plan, plus 50 % of contributions up to an additional 2 % of compensation, subject to limits set by the Internal Revenue Code.

The Plan sponsored by OSG includes employer matching contributions equal to 100 % of the employees’ contributions, up to 3 % of such participants’ compensation, as defined in the plan, plus 50 % of contributions up to an additional 2 % of compensation, subject to limits set by

the Internal Revenue Code.

Xchange and Riverton employees moved to this plan from a previous plan (Xchange during 2022 and Riverton during 2023).

Employees of All Trans and Capacity Marine are included in a multiple employer plan that has discretionary contributions for which none were

made during Ambac's ownership of these entities.

The plan for US employees of Beat includes employer matching contributions equal to 100 % of the employees’ contributions, up to 5% of such participants’ compensation.

UK employees of Beat have a defined contribution pension plan where employer contributes 10% of participants’ compensation of which the assets are held separately from those of the group in an independently administrated fund.

The total cost of all the were $ 1,945 , $ 676 and $ 379 for the years December 31, 2024, 2023 and 2022, respectively.

Ambac is the lessee and lessor under certain lease agreements further described below.

Employees of All Trans and Capacity Marine are included in a multiple employer plan that has discretionary contributions for which none were made during Octave's ownership of these entities.

The plan for US employees of Octave Ventures includes employer matching contributions equal to 100 % of the employees’ contributions, up to 5 % of such participants’ compensation.

UK employees of Octave Ventures have a defined contribution pension plan where Octave Ventures contributes 10 % of participants’ compensation and the assets are held separately from those of the group in an independently administrated fund.

The plan for employees of ArmadaCorp includes employer matching contributions equal to 100 % of the employees’ contributions, up to 6 % of such participants’ compensation, subject to limits set by the Internal Revenue Code.

The plan for employees of Pivix includes employer matching contributions equal to 100 % of the employees’ contributions, up to 4 % of such participants’ compensation, as defined in the plan, plus 50 % of contributions up to an additional 2 % of compensation, subject to limits set by the Internal Revenue Code.

The total cost of all the contribution plans were $ 824 , $ 1,945 and $ 676 for the years December 31, 2025, 2024 and 2023, respectively.

Octave is the lessee under certain lease agreements further described below.

Lessee information

Ambac is the lessee in operating leases for corporate offices.

Octave is the lessee in operating leases for corporate offices.

Leases in effect at December 31, 2025, have remaining lease terms ranging from under 2 years to 8 years.

Certain of these leases include early termination provisions which Ambac does not include in the determination of its lease liabilities and right-of-use assets unless exercise is considered reasonably certain.

Certain of these leases include early termination provisions which Octave does not include in the determination of its lease liabilities and right-of-use assets unless exercise is considered reasonably certain.

Lease costs are included in operating expenses on the Consolidated Statement of Total Comprehensive Income (Loss).

6 unchanged sentences

Total lease cost $ 9,897 $ 3,598 $ 3,236

Ambac is required to make variable lease payments under certain leases which primarily relates to variable costs of the lessor, such as taxes, insurance, maintenance and electricity.

Octave is required to make variable lease payments under certain leases which primarily relates to variable costs of the lessor, such as taxes, insurance, maintenance and electricity.

During 2025, Octave terminated an operating lease for office space and incurred a termination payment of $ 6,481 , which is included within operating lease cost.

Additionally, costs related to a separate operating lease for office space was transferred to AAC prior to completion of sale, lease cost prior to transfer are included within table above.

Octave Specialty Group, Inc.

2025 Form 10-K

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Supplemental information related to leases is as follows:

11 unchanged sentences

Operating leases 6.3 % 7.8 %

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

Operating lease right of use assets and operating lease liabilities are included in Other assets and Other liabilities, respectively, on the consolidated balance sheet.

5 unchanged sentences

Total $ 9,854

Lessor information

Ambac is the lessor in one operating sublease of corporate office space which has a remaining term of 5.0 years.

There are no extension or termination provisions.

Future undiscounted lease payments to be received are as follows:

As of December 31, 2024 Operating

Total lease receipts 6,421

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

Although such litigation is routine and incidental to the conduct of its business, such litigation can potentially result in large monetary awards when a civil jury is allowed to determine compensatory and/or punitive damages.

Everspan may be subject to disputes with policyholders regarding the scope and extent of coverage offered under Everspan's policies;

be required to defend claimants in suits against its policyholders for covered liability claims;

or enter into commercial disputes with its reinsurers, MGA/Us or third party claims administrators or other parties regarding their respective contractual obligations and rights.

Under some circumstances, the results of such disputes or suits may lead to liabilities beyond those which are anticipated or reserved.

In the ordinary course of their businesses, certain of Ambac’s subsidiaries assert claims in legal proceedings against third parties to recover losses already paid and/or mitigate future losses.

The amounts recovered and/or losses avoided which may result from these proceedings is uncertain, although recoveries and/or losses avoided in any one or more of these proceedings during any quarter or fiscal year could be material to Ambac’s results of operations in that quarter or fiscal year.

From time to time, Ambac is subject to allegations concerning its corporate governance, including the manner in which it exercises control and oversight of its subsidiaries, that may lead to litigation, including derivative litigation.

While the monetary impacts of addressing such allegations outside of litigation may not be material, these charges may distract management and the Board of Directors from their principal focus on Ambac's business, strategy and objectives.

Everspan may be subject to disputes with policyholders or other third parties regarding the scope and extent of coverage offered under Everspan's policies, including disputes relating to Everspan’s course of conduct in the handling of claims and settling or failing to settle claims (which can lead to bad faith and other forms of extra-contractual liability);

be required to defend claimants in suits against its policyholders for covered

liability claims;

or enter into commercial disputes with its reinsurers, MGA/Us or third party claims administrators regarding their respective contractual obligations and rights.

Under some circumstances, the results of such disputes or suits may lead to liabilities beyond those which are anticipated or reserved, including liabilities in excess of applicable policy limits.

Everspan has been, and may from time to time in the future be, threatened with allegations of acting in bad faith in connection with the handling of claims through third-party administrators.

Adjudication of any such claims against Everspan could require extensive litigation unless settled or dismissed based on available legal defenses.

Damages claimed against Everspan could be material and the outcome of such cases could have an adverse impact on our results of operations and financial condition.

In the ordinary course of their businesses, certain of Octave’s subsidiaries assert claims in legal proceedings against third parties to recover losses already paid and/or mitigate future losses.

The amounts recovered and/or losses avoided which may result from these proceedings is uncertain, although recoveries and/or losses avoided in any one or more of these proceedings during any quarter or fiscal year could be material to Octave’s results of operations in that quarter or fiscal year.

From time to time, Octave is subject to allegations concerning its corporate governance, including the manner in which it exercises control and oversight of its subsidiaries, that may lead to litigation, including derivative litigation.

It is not reasonably possible to predict whether suits in addition to those described below will be filed or whether additional inquiries or requests for information will be made, and it is also not possible to predict the outcome of litigation, inquiries or requests for information.

5 unchanged sentences

however, the Company is not able to predict the outcomes of these actions.

Litigation against Ambac Financial Group, Inc.

Dwight Jereczek and Stanley Elliott, individually and on behalf of all others similarly situated v.

MBIA Inc., Ambac Financial Group, Inc., Ambac Assurance Corporation, MBIA Insurance Corporation, and National Public Finance Guarantee Corporation (United States District Court for the District of Connecticut, filed on February 12, 2025) (the "COFINA Case").

This putative class action complaint is brought by alleged former holders of bonds issued by the Puerto Rico Sales Tax Financing Corporation (“COFINA”) allegedly insured by defendants under financial guaranty insurance policies.

On behalf of themselves and all persons and entities that owned such bonds between October 19, 2018, and February 12, 2019, plaintiffs allege that, in connection with the restructuring of COFINA under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act, defendants orchestrated a scheme to improperly use their role in the Title III process to alter contracts with insured COFINA bondholders, resulting in such bondholders receiving less than what they contracted for under the financial guaranty insurance policies.

Plaintiffs assert claims for breach of contract, unjust enrichment,

Ambac Financial Group, Inc.

Octave Specialty Group, Inc.

2025 Form 10-K

AMBAC FINANCIAL GROUP, INC.

OCTAVE SPECIALTY GROUP, INC.

AND SUBSIDIARIES

1 unchanged sentence

(Dollar Amounts in Thousands, Except Share Amounts)

and bad faith refusal to pay first-party benefits under an insurance contract.

Litigation against Octave Specialty Group, Inc.

Dwight Jereczek and Stanley Elliott, individually and on behalf of all others similarly situated v.

Plaintiffs assert claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and bad faith refusal to pay first-party benefits under an insurance contract.

Plaintiffs seek an unspecified amount of damages with interest thereon, disgorgement of profits, a declaratory judgment of plaintiffs’ rights and defendants’ responsibilities, and a permanent injunction against violations of law.

As of the date of this report, no summons has been issued or served on Ambac.

On November 14, 2025, the Court found that Defendants were entitled to a stay of discovery.

On February 13, 2026, the Court entered an order dismissing Plaintiffs' claims against Ambac Financial Group, Ambac Assurance Corporation, MBIA Insurance Corporation, and National public Finance Guarantee Corporation for lack of personal jurisdiction;

Plaintiffs' claims against MBIA Inc.

were dismissed for failure to state a claim, with leave to file a second amended complaint on or about March 6, 2026.

Litigation in Legacy Financial Guarantee Business

AAC is involved in litigation as described below as well as the COFINA Case described above.

These actual and potential cases may continue after the AAC Sale is completed.

Following completion of the AAC Sale, the Company will no longer have any exposure to the following matters, except with respect to the COFINA Case described above for so long as AFG remains a defendant in the case.

Current Litigation

Monterey Bay Military Housing, LLC, et al.

Ambac Assurance Corporation, et al.

(United States District Court, Southern District of New York, Case No.

1:19-cv-09193-PGG, transferred on October 4, 2019 from the United States District Court, Northern District of California, San Jose Division, Case No.

17-cv-04992-BLF, filed August 28, 2017).

Plaintiffs, the corporate developers of various military housing projects, filed an amended complaint on October 27, 2017 against AAC, a former employee of AAC, and certain unaffiliated persons and entities, asserting claims for (i) violation of 18 U.S.C §§ 1962(c) and 1962(d) (civil Racketeer Influenced and Corrupt Organizations Act (“RICO”) and conspiracy to commit civil RICO), (ii) breach of fiduciary duty, (iii) aiding and abetting breach of fiduciary duty, (iv) fraudulent misrepresentation, (v) fraudulent concealment and (vi) conspiracy to commit fraud.

The claims relate to bonds and debt certificates (insured by AAC) that were issued to finance the renovation and construction of housing at certain military bases.

Plaintiffs allege that defendants secretly conspired to overcharge plaintiffs for the financing of the projects and directed the excess profits to themselves.

Plaintiffs allege defendants generated these excess profits by supposedly charging inflated interest rates, manipulating “shadow ratings,” charging unnecessary fees, and hiding evidence of their alleged wrongdoing.

Plaintiffs seek, among other things, compensatory damages, disgorgement of profits and fees, punitive damages, trebled damages and attorneys’ fees.

AAC and the other defendants filed motions to dismiss the amended complaint on November 13, 2017.

On July 17, 2018, the court granted AAC’s and the other defendants’ motion to dismiss the first amended complaint without prejudice.

On December 17, 2018, Plaintiffs filed a second amended complaint.

On February 15, 2019, AAC and the other defendants filed a motion to dismiss the second amended complaint.

On September 26, 2019, the court issued a decision denying defendants’ motion to dismiss and sua sponte reconsidering its previous denial of defendants’ motion to transfer venue to the Southern District of New York (“SDNY”).

On October 10, 2019, after the case was transferred to the SDNY, the defendants filed motions to vacate or reconsider the decision by the Northern District of California on the defendants’ motion to dismiss.

On March 31, 2021, the court granted defendants’ motions for reconsideration and, upon

reconsideration, dismissed the claims against AAC and its former employee for breach of fiduciary duty and for aiding and abetting breach of AAC’s or its former employee’s fiduciary duty;

dismissed two plaintiffs’ RICO claims against AAC and its former employee;

and in all other respects denied defendants’ motions.

Defendants served answers to the second amended complaint on April 21, 2021, asserting several affirmative defenses, including a defense for unclean hands focused on the plaintiffs’ failure to maintain the project properties and falsification of maintenance records.

On May 24, 2021, plaintiffs moved to strike defendants’ unclean hands defenses.

On September 14, 2021, Magistrate Judge Sarah L.

Cave, to whom plaintiffs’ motion to strike was referred for a Report and Recommendation, issued an opinion and order denying plaintiffs’ motion.

On April 6, 2022, certain co-defendants filed a motion to sever the plaintiffs’ claims and to dismiss all claims except for claims asserted by the Monterey Bay plaintiffs.

On January 26, 2024, the court granted the parties leave to file motions for summary judgment;

opening briefs were due March 22, 2024, while oppositions are due May 31, 2024 and replies on July 12, 2024.

On February 29, 2024, the court denied co-defendants’ motion to sever plaintiffs’ claims.

On March 22, 2024, defendants served opening motions for summary judgment against plaintiffs’ claims in their entirety on multiple grounds, and plaintiffs served cross-motions for summary judgment on defendants’ unclean hands defenses.

The parties’ summary judgment motions were fully briefed as of July 12, 2024 and are currently awaiting a decision from the Court.

On December 11, 2024, the Court denied Plaintiffs’ motion for oral argument on Defendants’ motions for summary judgment, stating that it would “notify the parties if it concludes that oral argument concerning the motions for summary judgment would be productive.”

In re National Collegiate Student Loan Trusts Litigation (Delaware Court of Chancery, Consolidated C.A.

12111, filed November 1, 2019).

On November 1, 2019, AAC became aware of a new declaratory judgment action filed by certain residual equity interest holders (“NC Owners” or “Plaintiffs”) in fourteen National Collegiate Student Loan Trusts (the “Trusts”) against Wilmington Trust Company, the Owner Trustee for the Trusts;

Bank National Association, the Indenture Trustee;

GSS Data Services, Inc., the Administrator;

Through this action, Plaintiffs seek a number of judicial determinations.

On January 21, 2020, the presiding Vice Chancellor entered an order consolidating the action with previously filed litigation relating to the Trusts.

On February 13, 2020, AAC, the Owner Trustee, the Indenture Trustee, and other parties filed declaratory judgment counterclaims.

Several parties, including Plaintiffs and AAC, filed motions for judgment on the pleadings in support of their requested judicial determinations.

On August 27, 2020, the Vice Chancellor issued an opinion addressing all of the pending motions for judgment on the pleadings, which granted certain of the parties’ requested judicial determinations and denied others.

He deferred judgment on still other declarations pending further factual development.

The Vice Chancellor entered a series of stays to facilitate good-faith settlement discussions, the most recent of which was entered on May 2, 2023, and stayed the matter through May 5, 2023.

On February 21, 2025, the Administrator filed a status report stating

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

that certain parties continue to negotiate a resolution to some of the pending claims.

Ambac Assurance Corporation v.

Bank of New York Mellon (United States District Court, Southern District of New York, No.

1:17-cv-03804, filed May 2, 2017).

On May 2, 2017, AAC filed a complaint in New York State Supreme Court, New York County, against the trustee for the COFINA bonds, Bank of New York Mellon (“BNY”), alleging breach of fiduciary, contractual, and other duties for failing to adequately and appropriately protect the holders of certain AAC-insured senior COFINA bonds.

On May 19, 2017, BNY filed a notice of removal of this action from New York state court to the United States District Court for the Southern District of New York.

On May 30, 2017, the United States District Court for the District of Puerto Rico entered an order in an adversary proceeding brought by BNY (No.

1:17-ap-00133) staying this litigation pending further order of the court.

The COFINA Plan became effective on February 12, 2019, and, pursuant to the District Court’s confirmation order, this litigation was permitted to continue, with AAC’s claims against BNYM being limited to those for gross negligence, willful misconduct and intentional fraud.

On November 17, 2021, the District Court denied as moot BNY's motion to transfer venue to the District of Puerto Rico and continued the stay of the action.

On July 6, 2022, the District Court granted AAC’s motion to lift the stay and for leave to file a Second Amended Complaint (“SAC”).

AAC filed its SAC on July 10, 2022, and on July 25, 2022, BNY moved to dismiss the SAC.

On September 23, 2022, Ambac filed its opposition to BNY’s motion to dismiss, and on October 24, 2022, BNY filed its reply in support of its motion to dismiss.

On September 12, 2024, the District Court entered an Order to Show Cause concerning the proper venue for the case, stating that it planned to transfer the case to the United States District Court for the District of Puerto Rico.

After AAC and BNY filed a Joint Response to the Order to Show Cause on September 19, 2024, stating that they did not object to the transfer, the case was transferred to the District Court for the District of Puerto Rico on September 20, 2024.

On September 24, 2024, the District Court granted BNY’s motion to dismiss in its entirety.

On October 23, 2024, AAC filed a Notice of Appeal appealing the case to the United States Court of Appeals for the First Circuit.

On December 9, 2024, AAC and BNY filed a joint stipulation to voluntarily dismiss the appeal with prejudice and, following such filing, the District Court entered its judgment ordering such dismissal.

Potential Litigation

AAC’s estimates of projected losses for RMBS transactions consider, among other things, the RMBS transactions’ payment waterfall structure, including the application of interest and principal payments and recoveries, and depend in part on our interpretations of contracts and other bases of our legal rights.

From time to time, bond trustees and other transaction participants have employed different contractual interpretations and have commenced, or threatened to commence, litigation to resolve these differences.

From time to time AAC is also subject to allegations that it has failed to fulfill a contractual obligation or duty in respect of securities that it has issued.

It is not possible to predict whether additional disputes will arise, nor the outcomes of any potential litigation.

It is possible that there could be unfavorable outcomes in these or other disputes or proceedings and that our interpretations may prove to be incorrect, which could lead to changes to our estimate of loss reserves.

In the ordinary course of its businesses, AAC asserts claims in legal proceedings against third parties to recover losses already paid and/or mitigate future losses.

Ambac Financial Group, Inc.

2024 Form 10-K

AMBAC FINANCIAL GROUP, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Dollar Amounts in Thousands, Except Share Amounts)

QUARTERLY INFORMATION (Unaudited)

Our unaudited quarterly results of operations for the year ended December 31, 2024 and 2023 are being included because of our held for sale treatment in the fourth quarter of 2024 resulting in reporting discontinued operations and are summarized in the table below.

2024 Quarters 2023 Quarters

($ in thousands) First Second Third Fourth First Second Third Fourth

Gross premiums written $ 96,422 $ 111,206 $ 115,154 $ 59,988 $ 51,823 $ 53,229 $ 77,499 $ 90,736

Net premiums written 26,247 32,289 32,754 ( 2,608 ) 9,187 9,120 24,768 36,750

Net premiums earned 25,579 27,054 27,441 18,931 6,995 7,785 12,187 24,945

Commission income 17,729 13,221 23,064 38,009 14,486 10,032 14,572 12,191

Program fees 2,567 3,328 3,622 3,989 1,485 2,076 2,415 2,461

Net investment income 3,640 3,763 3,488 3,557 2,881 3,027 3,663 3,588

Net investment gains (losses), including impairments — 4,535 ( 577 ) ( 4,455 ) 38 ( 20 ) — 1

Net gains (losses) on derivative contracts ( 48 ) ( 438 ) 6,545 ( 2,043 ) ( 175 ) ( 146 ) ( 27 ) 69

Other revenue (loss) 83 ( 426 ) 6,422 7,235 37 101 ( 5 ) 67

Losses and loss expenses (benefit) 19,355 23,024 20,421 9,826 4,659 5,739 9,509 16,805

Policy acquisition costs 4,424 5,399 5,993 7,850 1,399 1,351 1,956 5,851

Commission expense 9,822 7,888 9,499 13,667 7,597 6,021 8,455 7,392

General & administrative expense, including depreciation expense 18,050 28,336 44,681 40,444 11,839 17,117 17,914 21,193

Intangible amortization 1,139 1,139 6,423 8,901 967 966 1,079 1,139

Interest expense — — 3,745 5,634 — — — —

Net income (loss) from continuing operations ( 3,369 ) ( 14,719 ) ( 19,890 ) ( 20,943 ) ( 813 ) ( 8,725 ) ( 4,595 ) ( 9,099 )

Net income (loss) from continuing operations attributable to Ambac shareholders (4,070) (14,932) (18,117) (22,163) (1,482) (8,835) (5,026) (9,208)

Net income (loss) from discontinued operations net of tax (including loss on disposal of $570,145 in 2024) 24,140 14,182 ( 9,387 ) ( 526,102 ) ( 35,876 ) ( 9,300 ) 66,190 7,169

Net income (loss) attributable to Ambac shareholders $ 20,070 $ ( 750 ) $ ( 27,504 ) $ ( 548,265 ) $ ( 33,417 ) $ ( 13,132 ) $ 65,869 $ ( 15,688 )

Net income (loss) from continuing operations per share attributable to Ambac shareholders

Basic $ ( 0.09 ) $ ( 0.33 ) $ ( 0.43 ) $ 0.70 $ ( 0.03 ) $ ( 0.20 ) $ ( 0.11 ) $ ( 0.10 )

Diluted $ ( 0.09 ) $ ( 0.33 ) $ ( 0.43 ) $ 0.70 $ ( 0.03 ) $ ( 0.20 ) $ ( 0.11 ) $ ( 0.10 )

Net income (loss) from discontinued operations per share attributable to Ambac shareholders

Basic $ 0.53 $ 0.31 $ ( 0.20 ) $ ( 10.93 ) $ ( 0.70 ) $ ( 0.09 ) $ 1.55 $ ( 0.14 )

Diluted $ 0.53 $ 0.31 $ ( 0.20 ) $ ( 10.93 ) $ ( 0.70 ) $ ( 0.09 ) $ 1.55 $ ( 0.14 )

Net income (loss) per share attributable to Ambac shareholders

Basic 0.44 ( 0.02 ) ( 0.63 ) ( 10.23 ) ( 0.73 ) ( 0.29 ) 1.44 ( 0.24 )

Diluted 0.44 ( 0.02 ) ( 0.63 ) ( 10.23 ) ( 0.73 ) ( 0.29 ) 1.44 ( 0.24 )

Net income (loss) attributable to Ambac shareholders $ 20,070 $ ( 750 ) $ ( 27,504 ) $ ( 548,265 ) $ ( 33,417 ) $ ( 13,132 ) $ 65,869 $ ( 15,688 )

Adjustment for Redeemable NCI 53 ( 184 ) ( 2,402 ) 55,762 212 ( 294 ) 19 4,855

Numerator of basic and diluted EPS $ 20,123 $ ( 934 ) $ ( 29,906 ) $ ( 492,503 ) $ ( 33,205 ) $ ( 13,426 ) $ 65,888 $ ( 10,833 )

Ambac Financial Group, Inc.

AAC is involved in litigation as described in Note 19.

Commitments and Contingencies to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and Note 13.

Commitments and Contingencies to the Unaudited Consolidated Financial Statements in the Company's Report on Form 10-Q for the quarterly period ended June 30, 2025.

Following completion of the AAC sale, AFG no longer has any exposure to such matters other than the COFINA Case, in which AFG is a named defendant.

Octave Specialty Group, Inc.

2025 Form 10-K

1 unchanged sentence

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What changed 10-K

Item 8. Financial Statements and Supplementary Data