Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures . Octave’s disclosure controls and procedures are designed to ensure that information required to be disclosed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, including without limitation that information required to be disclosed by Octave in its SEC filings is accumulated and communicated to management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) as appropriate to allow for timely decisions regarding required disclosure.
Octave’s Disclosure Committee assists the CEO and CFO in their responsibilities to design, establish, maintain and evaluate the effectiveness of disclosure controls and procedures. The Disclosure Committee is responsible for, among other things, the oversight, maintenance and implementation of the disclosure controls and procedures, subject to the supervision and oversight of the CEO and CFO. Octave’s management, with the participation of its CEO and CFO, has evaluated the effectiveness of Octave’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of December 31, 2025 and, the CEO and CFO have concluded that at that date Octave’s disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Report on Internal Control Over Financial Reporting . Management of Octave is responsible for establishing and maintaining adequate internal control over financial reporting. Octave’s internal control over financial reporting is a process designed under the supervision of the CEO and CFO and overseen by Octave’s Board of Directors to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Octave’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles. Octave’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of Octave; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of Octave; and (iii) provide reasonable assurance regarding the prevention or timely detection and remediation of unauthorized acquisition, use or disposition of Octave’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Octave management conducted an assessment of the effectiveness of Octave’s internal control over financial reporting based on the criteria established in the Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Octave management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives.
Under guidelines established by the SEC, companies are permitted to exclude certain acquisitions from their first assessment of internal control over financial reporting following the date of acquisition. Based on those guidelines, management’s assessment of the effectiveness of Octave Specialty Group Inc.’s internal control over financial reporting at December 31, 2025 excluded certain processes of ArmadaCorp. Limited which were not integrated into the Company’s existing internal control over financial reporting environment at December 31, 2025. The excluded ArmadaCorp processes represented approximately 2% of the Company's total assets and approximately 2% of the Company’s total revenues, respectively.
Based on its evaluations, Octave's management has concluded that, as of December 31, 2025, our internal control over financial reporting was effective based on the criteria articulated in the 2013 Internal Control - Integrated Framework, excluding the above noted processes of ArmadaCorp. The effectiveness of our internal control over financial reporting as of December 31, 2025 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report, which expressed an unqualified opinion on the effectiveness of Octave’s internal control over financial reporting.
Changes in Internal Control Over Financial Reporting . Octave expects to complete the assessment of the design of ArmadaCorp internal controls over financial reporting by October 31, 2026. There were no changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of 2025 that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Management has formally incorporated Octave Ventures into Octave's program for internal control over financial reporting effective August 1, 2025. Accordingly, Octave Ventures is included in the scope of management's control assessments beginning with the third quarter of 2025.
The Company completed the sale of AAC on September 29, 2025 (refer to Sale of AAC in the Overview section of Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations). Subsequent to the Sale, AAC continued to perform certain services for the Company under a transition support agreement between the parties. These services included certain accounting and information technology activities that supported the preparation of the Company's
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Unaudited Consolidated Financial Statements included in Part 1 of this Form 10-Q.
Effective January 1, 2025, Octave Specialty Group, Inc. changed the general ledger and consolidation system and certain related processes used for a substantial portion of its continuing operations. Additional entities comprising OSG's continuing operations will be converting onto the new general ledger system in 2025 and 2026. As part of its implementation, the Company evaluated the impact of this new system on its internal control over financial reporting and made changes to controls and procedures where necessary.
Item 9B. Other Information
In the last fiscal quarter, none of our directors or executive officers adopted , terminated , or modified any contract, instruction or written plan for the purchase or sale of company securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) and/or any non-Rule 10b5-1 trading arrangement. No other matters require disclosure.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
Information relating to OSG’s executive officers and directors, including its audit committee and audit committee financial experts, will be in OSG’s definitive Proxy Statement for its 2026 Annual Meeting of Stockholders which will be filed within 120 days of the end of our fiscal year ended December 31, 2025 (the “2026 Proxy Statement”) and is incorporated herein by reference.
Octave has a Code of Business Conduct and Ethics which promotes management’s commitment to integrity and expresses Octave’s standards for ethical behavior by providing guidelines for handling business situations appropriately. This code can be found on Octave’s website at www.octavegroup.com on the “Sustainability” page under "Governance Documents." Octave will disclose on its website any amendment to, or waiver from, a provision of its Code of Business Conduct and Ethics that applies to its Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer. Octave’s corporate governance guidelines and the charters for the committees of the Board of Directors are also available on our website under the “Governance Documents” page. The reference to our website address does not constitute inclusion or incorporation by reference of the information contained on our website in this Annual Report on Form 10-K or other filings with the SEC and the information contained on our website is not part of this document.
Item 11. Executive Compensation
Information relating to Octave’s executive officer and director compensation will be in the 2026 Proxy Statement and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information relating to security ownership of certain beneficial owners of OSG’s common stock and information relating to the security ownership of OSG’s management, as well as information related to equity compensation plans, will be in the 2026 Proxy Statement and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Information relating to Octave with respect to certain relationships and related transactions and director independence will be in the 2026 Proxy Statement and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
Information relating to principal accountant fees and services will be in the 2026 Proxy Statement and is incorporated herein by reference.
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) Documents filed as a part of this report:
1. Financial Statements
The consolidated financial statements included in Part II, Item 8 above are filed as part of this Annual Report on Form 10-K.
2. Financial Statement Schedules
The financial statement schedules filed herein, which are the only schedules required to be filed, are as follows:
Page
Schedule I — Summary of Investments Other Than Investments in Related Parties
99
Schedule II — Condensed Financial Information of Registrant (Parent Company Only)
100
Schedule III — Supplementary Insurance Information
105
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Incorporated by Reference
Exhibit Description Form Filing Date Exhibit Number Filed Herewith
(2) Plan of Acquisition/Reorganization:
2.1 Second Modified Fifth Amended Plan of Reorganization of Ambac Financial Group, Inc., effective as of May 1, 2013
10-K 03/03/14 99.3
(3) Articles of Incorporation and bylaws:
3.1 Amended and Restated Certificate of Incorporation of Octave Specialty Group, Inc.
8-K 11/10/25 3.1
3.2 Amended and Restated By-Laws of Octave Specialty Group, Inc.
8-K 11/10/25 3.2
(4) Instruments defining the rights of security holders, including indentures:
4.1 Description of Capital Stock
8-A
05/01/13
4.2 Specimen form of common stock certificate
8-A 05/01/13 4.1
4.3 Warrant Agreement, by and between Ambac Financial Group, Inc. and American Acorn Holdings, LLC, dated as of September 29, 2025.
8-K 09/29/25 4.1
(10) Material contracts and management compensation plans and arrangements:
10.1 Ambac Financial Group, Inc.'s Long-Term Incentive Compensation Plan
10-Q 08/11/14 10.1
10.2 Form of Restricted Stock Unit Award Agreement for directors
X
10.3 Closing Agreement between Ambac Financial, Group, Inc. and Commissioner of Internal Revenue, dated April 30, 2013
8-K 05/03/13 10.2
10.4 Lease, dated as of March 1, 2011, by and between One State Street, LLC and Ambac Assurance Corporation
10-K 03/16/11 10.34
10.5 Ambac Financial Group, Inc. Severance Pay Plan (Applicable to termination on or after December 16, 2021)
10-K 02/24/22 10.10
10.6 Lease Modification dated as of September 8, 2015 to the Lease dated as of March 1, 2011, by and between One State Street, LLC and Ambac Assurance Corporation
10-K 02/29/16 10.27
10.7 SUBLEASE dated as of January 30, 2019, between Advance Magazine Publishers Inc. (D/B/A CONDE NAST), and Ambac Assurance Group Corporation
10-K 03/02/20 10.45
10.8 2020 Incentive Compensation Plan
Def 14A 04/15/20 Ex. B
10.9 Purchase Agreement, by and among, Ambac Assurance Corporation, Ambac Financial Group, Inc. and certain funds or accounts affiliated with or managed by CVC Credit Partners, LLC, CVC Credit Partners Investment Management Limited and EJF Capital LLC, dated as of January 19, 2021
8-K 01/25/21 1.01
10.10 Executive Stock Deferral Plan dated June 24, 2021
8-K 06/30/21 10.1
10.11 Employment Agreement dated as of October 5, 2023, by and among Ambac Financial Group, Inc., Ambac Assurance Corporation and Daniel McGinnis
10-Q 11/07/23 10.2
10.12 Form of 2023 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick and Ksenak.
10-Q 05/09/23 10.1
10.13 Form of 2023 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. Barranco, Eisman, McGinnis and Ms. Smith.
10-Q 05/09/23 10.2
10.14 Form of 2023 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick and Ksenak.
10-Q 05/09/23 10.3
10.15 Form of 2023 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. Barranco, Eisman, McGinnis and Ms. Smith.
10-Q 05/09/23 10.4
10.16 Stipulation and Order - Office of the Commissioner of Insurance of the State of Wisconsin, in the Matter of Ambac Assurance Corporation effective as of February 22, 2024
10-K 02/27/24 10.38
10.17 2024 Incentive Compensation Plan
Def 14A 04/26/24 Appendix A
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Incorporated by Reference
Exhibit Description Form Filing Date Exhibit Number Filed Herewith
10.18 Form of 2024 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick, Ksenak, McGinnis and Ms. Smith.
10-Q 05/06/24 10.1
10.19 Form of 2024 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. Barranco and Eisman.
10-Q 05/06/24 10.2
10.20 Form of 2024 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick, Ksenak, McGinnis and Ms. Smith.
10-Q 05/06/24 10.3
10.21 Form of 2024 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. Barranco and Eisman.
10-Q 05/06/24 10.4
10.22 Stock Purchase Agreement, by and between Ambac Financial Group, Inc. and American Acorn Corporation, dated as of June 4, 2024.
8-K 06/05/24 2.2
10.23 Shareholders’ Agreement by and among Ambac Financial Group, Inc., Cirrata V LLC, Beat Capital Partners Limited and the sellers set forth therein, dated as of August 1, 2024 .
8-K 08/02/24 10.1
10.24 Credit Agreement, by and between Ambac Financial Group, Cirrata V LLC, Cirrata Group, LLC, Cirrata V UK Ltd and UBS AG, dated as of August 1, 2024.
8-K 08/02/24 10.2
10.25 Share Purchase Agreement, by and among Ambac Financial Group, Inc., Cirrata V LLC, Beat Capital Partners Limited and the sellers set forth therein, dated as of June 4, 2024.
8-K 06/05/24 2.2
10.26 Form of Investor Rights Agreement to be entered into at the closing of the sale of Ambac Assurance Corporation to funds managed by Oaktree Capital Management, L.P.
8-K 06/05/24 10.2
10.27 Form of Shareholders’ Agreement by and among Ambac Financial Group, Inc., Cirrata V LLC, Beat Capital Partners Limited and the sellers set forth therein.
8-K 06/05/24 10.4
10.28 Commitment Letter dated June 4, 2024, by UBS AG, Stamford Branch and UBS Securities LLC to Cirrata V LLC.
8-K 06/05/24 10.5
10.29 First Amendment to the Stock Purchase Agreement, by and between Ambac Financial Group, Inc. and American Acorn Corporation, dated as of July 3, 2025.
8-K 07/07/25 2.1
10.30 Letter Agreement, by and between Ambac Financial Group, Inc. and American Acorn Corporation, dated as of July 3, 2025.*
8-K 07/07/25 10.1
10.31 First Amendment dated as of June 10, 2025 to the Credit Agreement, by and between Ambac Financial Group, Cirrata V LLC, Cirrata Group, LLC, Cirrata V UK Ltd and UBS AG, dated as of August 1, 2024.
10-Q 08/07/25 10.3
10.32 Form of 2025 Performance Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick, Ksenak, McGinnis and Ms. Smith.
10-Q 08/07/25 10.4
10.33 Form of 2025 Restricted Stock Unit Award Agreement between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick, Ksenak, McGinnis and Ms. Smith.
10-Q 08/07/25 10.5
10.34 Investor Rights Agreement, by and between Ambac Financial Group, Inc. and American Acorn Holdings, LLC, dated as of September 29, 2025.
8-K 09/29/25 10.1
10.35 Membership Interest Purchase Agreement, dated September 29, 2025, by and among Sirius Acquisitions Holding Company, Cirrata VI, LLC, Sirius Re Holdings, Inc., and Ambac Financial Group, Inc.
8-K 09/29/25 10.1
10.36 Commitment Letter, dated as of September 29, 2025, by and among Cirrata Group LLC, Cirrata V LLC, Cirrata V UK Limited, Cirrata VI, LLC, Truist Bank and Truist Securities, Inc.
8-K 09/29/25 10.2
10.37 Employment Agreement dated as of September 29, 2025 by and among Octave Specialty Group, Inc. (formerly known as Ambac Financial Group, Inc. and Claude LeBlanc.
8-K 09/29/25 10.1
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Incorporated by Reference
Exhibit Description Form Filing Date Exhibit Number Filed Herewith
10.38 Employment Agreement dated as of September 29, 2025 by and among Octave Specialty Group, Inc. (formerly known as Ambac Financial Group, Inc.) and David Trick
8-K 09/29/25 10.2
10.39 Employment Agreement dated as of September 29, 2025 by and among Octave Specialty Group, Inc. (formerly known as Ambac Financial Group, Inc. and R. Sharon Smith
8-K 09/29/25 10.3
10.40 Form of Restricted Stock Unit Agreement for Special RSU Award between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick and Ms. Smith
8-K 09/29/25 10.4
10.41 Form of Performance Stock Option Agreement for Special Performance-Based Stock Option Award between Ambac Financial Group, Inc. and Messrs. LeBlanc, Trick and Ms. Smith
8-K 09/29/25 10.5
10.42 Amendment No. 1 to 2024 Incentive Compensation Plan, dated as of September 26, 2025
8-K 09/29/25 10.6
10.43 Credit Agreement, dated as of October 31, 2025, by and among Cirrata Group LLC, Cirrata V LLC, Cirrata V UK Limited, Cirrata VI, LLC, ArmadaCorp Capital, LLC, ArmadaCare, LLC, Armada Administrators LLC, the several banks and other financial institutions and lenders from time to time party thereto, and Truist Bank*
8-K 11/03/25 10.1
10.44 Employment Agreement dated as of August 1 1 , 2025, by and among Ambac Financial Group, Inc. and Lawrence Metz
X
(19) Insider Trading Policy
19.1 Octave Insider Trading Policy
10-K X
(97) Recoupment Policy
97.1 Octave Specialty Group, Inc. - Recoupment Policy
10-K 02/27/24 97.1
Other exhibits, filed or furnished, as indicated:
21.1 List of Subsidiaries of Octave Specialty Group, Inc.
X
23.1 Consent of Independent Registered Public Accounting Firm
X
24.1 Power of Attorney for directors of Octave Specialty Group, Inc.
X
31.1 Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended
X
31.2 Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended
X
32.1++ Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
101.INS XBRL Instance Document.
101.SCH XBRL Taxonomy Extension Schema Document.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB XBRL Taxonomy Extension Label Linkbase Document.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
++ Furnished herewith.
* Certain schedules and other similar attachments to such agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish a copy of such omitted documents to the SEC upon request.
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SCHEDULE I
OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES
Summary of Investments
Other Than Investments in Related Parties
December 31, 2025
Type of Investment
($ in thousands) Cost Estimated
Fair Value
Amount at Which
Shown in the
Balance Sheet
Municipal obligations $ 11,697 $ 11,590 $ 11,590
Corporate obligations 67,881 66,573 66,573
U.S. government obligations 35,190 35,424 35,424
Residential mortgage-backed securities 1,604 1,597 1,597
Commercial mortgage-backed securities 3,307 3,341 3,341
Collateralized debt obligations 1,963 1,975 1,975
Other asset-backed securities 1,772 1,795 1,795
Short-term 146,434 146,442 146,442
Other (1)
— 7,454 24,971
Total $ 269,848 $ 276,191 $ 293,708
(1) Excluded from the estimated fair value amount are equity securities with a carrying value of $ 17,517 as of December 31, 2025, that do not have readily determinable fair values and are carried on the balance sheet at cost, less impairment, and adjusted to fair value when observable price changes in identical or similar investments from the same issuer occur, as permitted under the Investments — Equity Securities Topic of the ASC.
See the Report of Independent Registered Public Accounting Firm.
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SCHEDULE II
OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES
Condensed Financial Information
of Registrant (Parent Company Only)
Condensed Balance Sheets
($ in thousands, except share data) December 31, 2025 2024
Assets:
Fixed maturity securities, at fair value (amortized cost of $ 151 and $ 0 )
$ 153 $ —
Short-term investments, at fair value (amortized cost of $ 39,344 and $ 64,439 )
39,344 64,439
Other investments 24,971 28,117
Total investments (net of allowance for credit losses of $ 0 and $ 0 )
64,468 92,556
Cash and cash equivalents 10,127 9,981
Investment in subsidiaries 645,507 679,150
Deferred tax asset 1,497 1,497
Other assets 8,750 21,476
Total assets $ 730,349 $ 804,660
Liabilities and Stockholders' Equity:
Liabilities:
Accounts payable and other liabilities
14,559 6,296
Total liabilities 14,559 6,296
Stockholders’ equity:
Preferred stock, par value $ 0.01 per share; 20,000,000 shares authorized shares; issued and outstanding shares— none
— —
Common stock, par value $ 0.01 per share; 130,000,000 shares authorized; issued shares: 48,876,882 and 48,875,167
489 489
Additional paid-in capital 369,860 331,007
Accumulated other comprehensive income (loss) 8,483 ( 188,436 )
Retained earnings 370,431 683,643
Treasury stock, shares at cost: 3,871,598 and 2,368,194
( 33,473 ) ( 28,339 )
Total Octave Specialty Group, Inc. stockholders’ equity 715,790 798,364
Total liabilities and stockholders’ equity $ 730,349 $ 804,660
The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the following notes.
See the Report of Independent Registered Public Accounting Firm.
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SCHEDULE II
OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES
Condensed Financial Information
of Registrant (Parent Company Only)
Condensed Statement of Comprehensive Income
($ in thousands) Year Ended December 31, 2025 2024 2023
Revenues:
Investment income $ 2,333 $ 7,262 $ 9,298
Other income ( 142 ) ( 415 ) 6
Net gains on derivative contracts — 3,910 ( 348 )
Net investment gains (losses), including impairments ( 3,088 ) ( 498 ) 55
Total revenues ( 897 ) 10,259 9,011
Expenses:
General and administrative expenses 82,970 41,519 21,597
Total expenses 82,970 41,519 21,597
Income (loss) before income taxes and net income (loss) of subsidiaries ( 83,867 ) ( 31,260 ) ( 12,586 )
Federal income tax provision (benefit) ( 483 ) ( 1,748 ) ( 1,193 )
Income (loss) before net income (loss) of subsidiaries ( 83,384 ) ( 29,512 ) ( 11,393 )
Net income (loss) of subsidiaries ( 15,020 ) ( 29,770 ) ( 13,158 )
Net income (loss) from continuing operations
( 98,404 ) ( 59,282 ) ( 24,551 )
Net income (loss) from discontinued operations ( 163,288 ) ( 497,167 ) 28,183
Net income (loss) $ ( 261,692 ) $ ( 556,449 ) $ 3,632
Other comprehensive income (loss), after tax:
Net income (loss) $ ( 261,692 ) $ ( 556,449 ) $ 3,632
Unrealized gains (losses) on securities, net of income tax provision (benefit) of $ 0 , $ 1,295 and $ 2,095
19,643 ( 939 ) 51,184
Gains (losses) on foreign currency translation, net of income tax provision (benefit) of $ 0 , $ 0 and $ 0
176,167 ( 22,156 ) 40,132
Credit risk changes of fair value option liabilities, net of income tax provision (benefit) of $ 0 , $( 118 ) and $ 177
1,108 ( 356 ) ( 88 )
Changes to postretirement benefit, net of income tax provision (benefit) of $ 0 , $ 0 and $ 0
— ( 4,939 ) 1,569
Total other comprehensive income (loss) 196,918 ( 28,390 ) 92,797
Total comprehensive income (loss) attributable to Octave Specialty Group, Inc. $ ( 64,774 ) $ ( 584,839 ) $ 96,429
The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the following notes.
See the Report of Independent Registered Public Accounting Firm.
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SCHEDULE II
OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES
Condensed Financial Information
of Registrant (Parent Company Only)
Condensed Statement of Stockholders' Equity
($ in thousands) Total Preferred
Stock
Common
Stock
Additional Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Retained
Earnings
Common
Stock Held
in Treasury,
at Cost
Balance at January 1, 2023 $ 1,252,331 $ — $ 467 $ 274,486 $ ( 252,843 ) $ 1,245,491 $ ( 15,270 )
Total comprehensive income (loss) 96,430 92,797 3,633
Stock-based compensation 17,275 17,275
Cost of shares (acquired) issued under equity plan ( 4,665 ) ( 7,872 ) 3,207
Cost of shares repurchased ( 4,510 ) ( 4,510 )
Changes to NCI 4,797 — — — — 4,797 —
Balance at December 31, 2023 1,361,658 — 467 291,761 ( 160,046 ) 1,246,048 ( 16,573 )
Total Comprehensive net income (loss) ( 584,839 ) — ( 28,390 ) ( 556,449 ) —
Stock-based compensation 8,995 8,995
Cost of shares (acquired) issued under equity plan ( 701 ) ( 634 ) ( 67 )
Cost of shares repurchased ( 11,699 ) ( 11,699 )
Changes to NCI ( 4,278 ) 1,044 ( 5,322 )
Issuance of common stock 29,229 22 29,207 — —
Balance at December 31, 2024 798,364 — 489 331,007 ( 188,436 ) 683,642 ( 28,339 )
Total comprehensive income (loss) ( 64,773 ) 196,919 ( 261,692 )
Stock-based compensation 9,707 9,707
Cost of shares (acquired) issued under equity plan ( 8,535 ) ( 33,343 ) 24,808
Cost of shares repurchased ( 29,942 ) ( 29,942 )
Changes to NCI ( 6,031 ) 12,146 ( 18,177 ) —
Issuance of warrants in connection with sale of AAC 17,000 — — 17,000 — — —
Balance at December 31, 2025 $ 715,790 $ — $ 489 $ 369,860 $ 8,483 $ 370,431 $ ( 33,473 )
The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the following notes.
See the Report of Independent Registered Public Accounting Firm.
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SCHEDULE II
OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES
Condensed Financial Information
of Registrant (Parent Company Only)
Condensed Statements of Cash Flow
($ in thousands) Year Ended December 31, 2025 2024 2023
Cash flows from operating activities:
Net income (loss) $ ( 261,692 ) $ ( 556,449 ) $ 3,632
Loss from discontinued operations 163,288 497,167 —
Net income (loss) from continuing operations $ (98,404) $ (59,282) $ 3,632
Adjustments to reconcile net income loss to net cash used in operating activities:
Equity in undistributed net (income) loss of subsidiaries 15,020 29,770 ( 15,027 )
Increase (decrease) in current income taxes payable 1,613 ( 1,970 ) ( 1,674 )
Share-based compensation 9,707 8,361 9,404
(Increase) decrease in other assets and liabilities 26,256 7,817 ( 4,660 )
Distributions received from majority owned subsidiaries 15,343 10,739 8,032
Other, net ( 128 ) 2,312 2,337
Net cash provided by (used in) operating activities ( 30,593 ) ( 2,253 ) 2,044
Cash flows from investing activities:
Proceeds from sales and matured bonds 1,305 5,000 —
Purchases of bonds ( 1,446 ) — ( 795 )
Change in short-term investments 25,095 91,249 19,676
Change in other investments 3,146 ( 1,749 ) ( 2,715 )
Proceeds from sale, net of cash transferred 407,300 — —
Other, net ( 7,115 ) — —
Net cash provided by (used in) investing activities 428,285 94,500 16,166
Cash flows from financing activities:
Capital contribution to subsidiaries ( 384,604 ) ( 70,817 ) ( 16,050 )
Cost of shares acquired ( 29,942 ) ( 11,699 ) ( 4,510 )
Issuance of warrants 17,000 — —
Net cash (used in) financing activities ( 397,546 ) ( 82,516 ) ( 20,560 )
Net cash flow 146 9,731 ( 2,350 )
Cash at beginning of period 9,981 250 2,600
Cash at end of period $ 10,127 $ 9,981 $ 250
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes $ — $ — $ —
Non-cash financing activity:
Octave common stock issued as partial consideration to acquire Octave Ventures $ — $ 29,229 $ —
The condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto and the following notes.
See the Report of Independent Registered Public Accounting Firm.
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SCHEDULE II
OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES
Condensed Financial Information
of Registrant (Parent Company Only)
Notes to Condensed Financial Information
(Dollar Amounts in Thousands)
The condensed financial information of Octave Specialty Group, Inc. (“OSG” or the “Registrant”) as of December 31, 2025 and 2024, and for the three years in the period ended December 31, 2025, should be read in conjunction with the consolidated financial statements of Octave Specialty Group, Inc. and Subsidiaries and the notes thereto included in this Annual Report on Form 10-K for the year ended December 31, 2025. Investments in subsidiaries are accounted for using the equity method of accounting.
OSG, headquartered in New York City, is an insurance holding company incorporated in the state of Delaware on April 29, 1991.
Income Taxes
OSG files a consolidated U.S. federal income tax return with its 80% or greater owned U.S. subsidiaries. Beat'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 subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions. As of December 31, 2025, the Company has $ 1,690,842 of NOLs, which if not utilized will begin expiring in 2030, and $ 118,910 of NOLs that carryforward indefinitely.
Sale of AAC
On September 29, 2025, the Company completed the sale of AAC pursuant to the June 4, 2024, stock purchase agreement (the "Purchase Agreement") with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., pursuant to which OSG sold all of the issued and outstanding shares of common stock of AAC, a wholly-owned subsidiary of OSG, to Buyer for $ 420,000 in cash (the "Sale"). The Buyer also made an additional payment to OSG in an amount of $ 4,300 . In the Sale, Buyer acquired complete common equity ownership of AAC and all of its wholly owned subsidiaries, including Ambac Assurance UK Limited. In connection with and pursuant to the Purchase Agreement, OSG issued to Buyer a warrant exercisable for 5,092,707 shares of common stock, par value $ 0.01 , of OSG. Refer to Note 5. Discontinued Operations of the Notes to the Consolidated Financial Statements under Part II, Item 8 in this Annual Report on Form 10-K for further details on the sale of AAC.
For all periods leading up to the Sale, AAC's results of operations and OSG's loss on sale are reported within Net income (loss) from discontinued operations before tax on the Consolidated Statement of Comprehensive Income (Loss). See Note 5. Discontinued Operations of the Notes to the Consolidated Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K for additional information.
Acquisition of ArmadaCorp
On October 31, 2025, the Company closed on the acquisition of ArmadaCorp for a purchase price of $ 250,000 . The Company purchased all of the issued and outstanding limited liability company interests in ArmadaCorp from Sirius Re Holdings, Inc. and Sirius Acquisitions Holding Company, funded in part by $ 120,000 of loans obtained under new credit facilities. Refer to Note 4. Business Combination in Part II, Item 8 in this Annual Report on Form 10-K for further details on the acquisition of ArmadaCorp.
ArmadaCorp includes an MGA/U that focuses on supplemental health and benefit products for C-suite executives and other key talent. ArmadaCorp creates and distributes supplemental benefit solutions and insurance products. ArmadaCorp's differentiated product offering in the A&H market provides both line of business and product diversification to the Company, while also increasing exposure to non-correlated A&H business lines. ArmadaCorp also provides clients with tools to navigate the healthcare system, including services that help match individuals with physicians suited to their personal needs, and maintains a provider of third-party administration services for insurance carriers that distribute the benefit products and handle claims.
Pivix
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 now has an approximately 74 % controlling stake in Pivix when combined with its previous 17 % minority equity interest and includes Pivix in its consolidated financial statements.
Immaterial Correction of Prior Period Error
As disclosed in Note 2. Basis of Presentation, 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. In Schedule II, Condensed Financial Information of Registrant (Parent Company Only) Condensed Balance Sheet, the investment in subsidiaries balance and retained earnings as of December 31, 2024 were corrected by $ 58,542 to reflect the correction to redeemable non controlling interest, which impacted Total assets and Total liabilities and stockholders equity.
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SCHEDULE III
OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES
Supplementary Insurance Information
(Dollar Amounts in Thousands)
Segment Deferred Acquisition Costs Loss and Loss Adjustment Expense Reserves Unearned Premium Earned Premiums Net Investment Income Loss and Loss Adjustment Expenses (Benefit) Amortization of Deferred Amortization Costs Other Operating Expenses Net Written Premiums
2025
Specialty Property and Casualty Insurance $ 9,732 $ 459,990 $ 187,178 $ 67,232 $ 6,811 $ 47,193 $ 15,790 $ 22,090 $ 73,898
2024
Specialty Property and Casualty Insurance $ 8,572 $ 349,062 $ 182,446 $ 99,005 $ 6,400 $ 72,626 $ 23,666 $ 17,802 $ 88,682
2023
Specialty Property and Casualty Insurance $ 10,960 $ 197,089 $ 154,878 $ 51,911 $ 3,795 $ 36,712 $ 10,557 $ 16,449 $ 79,824
See the Report of Independent Registered Public Accounting Firm.
Item 16. Form 10-K Summary . — None
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
OCTAVE SPECIALTY GROUP, INC.
Dated: March 4, 2026 By: /S/ DAVID TRICK
David Trick
Executive Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/S/ JEFFREY S. STEIN* Chairman of the Board and Director March 4, 2026
Jeffrey S. Stein
/S/ CLAUDE LEBLANC President, Chief Executive Officer and Director March 4, 2026
Claude LeBlanc (Principal Executive Officer)
/S/ DAVID TRICK Executive Vice President and Chief Financial Officer March 4, 2026
David Trick (Principal Financial Officer)
/S/ CRISTINA AHN Chief Accounting Officer March 4, 2026
Cristina Ahn (Principal Accounting Officer)
/S/ IAN D. HAFT* Director March 4, 2026
Ian D. Haft
/S/ LISA G. IGLESIAS* Director March 4, 2026
Lisa G. Iglesias
/S/ JOAN LAMM-TENNANT* Director March 4, 2026
Joan Lamm-Tennant
/S/ KRISTI A. MATUS* Director March 4, 2026
Kristi A. Matus
/S/ MICHAEL D. PRICE* Director March 4, 2026
Michael D. Price
/S/ LAWRENCE F. METZ Attorney-in-fact March 4, 2026
*By: Lawrence F. Metz
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