What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-06 · 314 added, 182 removed, 351 unchanged (59% of the section changed)

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Unless otherwise noted, this Management's Discussion and Analysis of Financial Condition and Results of Operations relates solely to our continuing operations and does not include the operations of the Legacy Financial Guarantee business.

See "Sale of AAC" below and "Sale of Ambac Assurance Corporation" in Note 5.

See "Sale of AAC" below, Note 3.

Discontinued Operations of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and "Sale of Ambac Assurance Corporation" in Note 5.

Discontinued Operations of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2025, for additional information about the divestiture of the Legacy Financial Guarantee business.

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

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

We expect to achieve this by establishing new businesses “de-novo,” organic growth and diversification, and select acquisitions supported by a centralized technology-led shared services offering

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

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

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

Octave continuously evaluates opportunities to acquire businesses and assets for its ID business, some of which may be material to our financial condition and operations and/or may involve raising capital to finance.

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Octave Specialty Group, Inc.

First Quarter 2026 Form 10-Q

Second Quarter 2026 Form 10-Q

($ in thousands)

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

Three Months Ended March 31, 2026 Three Months Ended March 31, 2025

Three Months Ended June 30, 2026 Three Months Ended June 30, 2025

Reportable Segments Reportable Segments

Specialty Property & Casualty Insurance Insurance

Distribution Corporate & Other Consolidated Specialty Property & Casualty Insurance Insurance

Distribution Corporate & Other Consolidated

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

Distribution Corporate & Other Eliminations Total

Premiums placed $ 314,367 $ (7,700) $ 306,667 $ 249,912 $ — $ 249,912

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Adjusted EBITDA attributable to shareholders $ 1,757 $ 9,792 $ (7,664) $ (200) $ 3,685 $ 681 $ 2,519 $ (7,771) $ — $ (4,569)

Six Months Ended June 30, 2026 Six Months Ended June 30, 2025

Reportable Segments Reportable Segments

Specialty Property & Casualty Insurance Insurance

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

Distribution Corporate & Other Eliminations Total

Premiums placed $ 741,200 $ (7,700) $ 733,500 $ 483,098 $ — $ 483,098

Gross premiums written $ 198,418 $ 198,418 $ 183,162 $ — $ 183,162

Net premiums written $ 55,591 $ 55,591 $ 33,212 $ — $ 33,212

Total revenues $ 51,702 $ 136,944 $ 577 $ (2,058) $ 187,165 $ 42,561 $ 74,039 $ 1,113 $ — $ 117,713

Total expenses $ 58,740 $ 121,005 $ 24,180 $ (1,745) $ 202,180 $ 40,439 $ 86,455 $ 28,901 $ — $ 155,794

Pretax income (loss) $ (7,038) $ 15,939 $ (23,603) $ (313) $ (15,015) $ 2,122 $ (12,416) $ (27,788) $ — $ (38,081)

EBITDA $ (7,038) $ 44,704 $ (23,026) $ (313) $ 14,327 $ 2,122 $ 16,781 $ (27,044) $ — $ (8,140)

Adjusted EBITDA $ 3,375 $ 48,324 $ (14,553) $ (313) $ 36,833 $ 2,270 $ 16,692 $ (17,759) $ — $ 1,205

Net income (loss) attributable to shareholders $ (6,571) $ 9,454 $ (23,963) $ (200) $ (21,280) $ 1,852 $ (11,135) $ (27,410) $ — $ (36,692)

EBITDA attributable to shareholders $ (7,038) $ 32,137 $ (23,026) $ (200) $ 1,873 $ 2,122 $ 9,576 $ (27,044) $ — $ (15,345)

Adjusted EBITDA attributable to stockholders $ 3,375 $ 35,132 $ (14,553) $ (200) $ 23,754 $ 2,270 $ 9,611 $ (17,759) $ — $ (5,876)

On September 29, 2025 the Company completed the sale of AAC.

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Discontinued Operations of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2025, 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).

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) to shareholders from discontinued operations after tax on the Consolidated Statements of Income (Loss).

Acquisition of ArmadaCorp

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

Refer to Note 4.

Business Combinations of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2025, for further details on the acquisition of ArmadaCorp.

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

Effective September 1, 2025, OSG's wholly owned subsidiary, Octave Partners, LLC ("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.

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

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

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.

Acquisitions of Additional Ownership of ID Subsidiaries

During the first quarter of 2026 certain holders exercised their put options.

During the first quarter of 2026, the minority owners of Octave Ventures exercised their option to put a portion of their remaining interest, representing 10% of Octave Ventures, to OSG.

As a result, OSG acquired an additional 10% of Octave Ventures increasing its to 70% as of March 31, 2026.

In addition, select minority owners of certain MGAs underlying Octave Ventures exercised their put options with respect to a portion of their ownership interests and OSG acquired an additional stake in Capacity Marine Corporation.

These transactions had no impact on our first quarter results of operations and were reflected in our results of operations beginning with the second quarter of 2026.

Background and Business Description - Redeemable Noncontrolling Interest for further information.

SEC Final Rules on Climate Related Information

On March 6, 2024, the SEC adopted The Enhancement and Standardization of Climate-Related Disclosures for Investors ("Final Rule") , which will require registrants to disclose extensive climate-related information in their Form 10-K annual reports and registration statements.

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

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

In March 2025, the SEC ended its defense of the Final Rule, and in September 2025, the Eighth Circuit ordered that the litigation would be held in abeyance until such time that the SEC reconsiders or renews its defense of the Final Rule.

Octave Specialty Group, Inc.

First Quarter 2026 Form 10-Q

CRITICAL ACCOUNTING ESTIMATES

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A summary of our financial results is shown below:

Three Months Ended March 31, 2026 2025

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Gross premiums written $ 94,702 $ 96,247 $ 198,418 $ 183,162

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Commissions (1)

49,728 30,322 117,906 67,093

Servicing and other fees 5,913 4,472 15,275 9,436

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Other 435 (2,146) 1,065 (3,270)

Total revenues 82,995 54,957 187,165 117,713

Losses and loss adjustment expenses 13,346 10,978 33,025 21,474

Policy acquisition costs (1)

6,359 3,699 12,730 7,540

Commissions (1)

8,508 7,403 22,513 17,768

General and administrative 51,415 40,540 104,570 79,071

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Net income (loss) attributable to shareholders $ (14,429) $ (72,699) $ (21,280) $ (119,090)

Octave's results for the three months ended March 31, 2026 compared to the three months ended March 31, 2025, were impacted by the following:

• Acquisitions within the ID segment have had a significant impact on the comparability of results between 2026 and 2025.

(1) Excludes $2,058 of commission income, $123 of policy acquisition costs and $1,622 of commission expense related to intersegment activities, which are eliminated for consolidation, for the three and six months ended June 30, 2026.

Refer to Note 2.

Segment Information for additional information.

Octave's results for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025, were materially impacted by the following:

• Transactions within the ID segment

◦ Effective October 31, 2025, Octave acquired 100% of ArmadaCare.

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

• On September 29, 2025, Octave completed the sale of AAC.

In connection with the acquisition, Octave borrowed $120,000 under a new bank funded credit facility.

On April 1, 2026, Octave borrowed an additional $40,000 under the credit facility in connection with the acquisition of an additional 10% of Octave Ventures.

Refer to Note 9.

Debt of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further detail on these credit facility borrowings.

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

◦ Effective September 1, 2025, Octave exercised its option to convert its $3,500 convertible note investment in a start-up MGA, resulting in an approximate 74% ownership interest and inclusion of the MGA in consolidated results.

◦ Effective March 31, 2026, the minority owners of Octave Ventures exercised their option to put a portion of their remaining interest, representing 10% of Octave Ventures, to OSG.

• The sale of AAC

◦ On September 29, 2025, Octave completed the sale of its legacy financial guarantee business.

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

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Discontinued Operations of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and Note 5.

Discontinued Operations of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2025, and for further details on the sale and results for the three months ended March 31, 2025.

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

• Repayment of Debt

◦ On September 29, 2025, Octave repaid all of the outstanding debt used to acquire its original 60% interest in Octave Ventures, amounting to $150,000, using the proceeds from the sale of AAC.

Concurrent with the sale, OSG entered into a number of transactions as discussed in the Annual Report on Form 10-K for the year ended December 31, 2025, including transactions intended to lower the long term run-rate of corporate operating expenses.

The following describes the consolidated results of continuing operations of Octave and its subsidiaries for the three months ended March 31, 2026 and 2025.

Gross Premiums Written Gross premiums written increased $16,801 for the three months ended March 31, 2026 compared to the same period in the prior year.

The increase is primarily driven by growth in new and existing programs partially offset by the non-renewal of certain programs.

Net Premiums Written Net premiums written increased $14,445 for the three months ended March 31, 2026 compared to the same period in the prior year.

The increase is primarily driven by growth in new and existing programs, including certain programs with a high retention ratio partially offset by the non-renewal of certain programs.

Net Premiums Earned Net premiums earned increased $4,323 for the three months ended March 31, 2026 compared to the same period in the prior year.

The increase is primarily driven by growth in new and existing programs, including certain programs with a high retention ratio partially offset by the non-renewal of certain programs.

Commission Income and Commission Expense Commission increased $31,407 for the three months ended March 31, 2026 as compared to the same period in the prior year.

The increase was primarily due to organic growth in premiums placed as well as the acquisition of ArmadaCare in October of 2025.

Commission income included profit commissions (based on underwriting performance) of $6,188 for the three months ended March 31, 2026, and $4,691 for the three months ended March 31, 2025.

The increase for the three months ended March 31, 2026, was primarily driven by increase at Octave Ventures and Xchange Benefits.

Commission expense increased $3,640 for the three months ended March 31, 2026 as compared to the same period of the prior year.

Commission expense represented approximately 22% and 32% of commission income for the three months ended March 31, 2026 and 2025, respectively.

The decrease in commission expense relative to commission income in 2026

Octave Specialty Group, Inc.

First Quarter 2026 Form 10-Q

relative to 2025 is related to the Armada acquisition as majority of their business is produced internally and lower external broker commisison model as well as change in gross to net reporting at Octave Ventures.

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

The following describes the consolidated results of continuing operations of Octave and its subsidiaries for the three and six months ended June 30, 2026 and 2025.

Gross Premiums Written Gross premiums written decreased $1,545 and increased $15,256 for the three and six months ended June 30, 2026, respectively, compared to the same periods of the prior year.

The decrease for the three months ended June 30, 2026, related mostly to the shift in business mix and timing of premiums written compared to the three months ended June 30, 2025.

The increase for the six months ended June 30, 2026, is primarily driven by growth in new and existing programs, partially offset by a reduction in participation of an assumed reinsurance transaction and the shift in the business mix.

Net Premiums Written Net premiums written increased $7,935 and $22,379 for the three and six months ended June 30, 2026, respectively, compared to the same periods of the prior year.

The increase is primarily driven by growth in new and existing programs, including certain programs with high retention ratios partially offset by a reduction in the participation rate on an assumed reinsurance program and the shift in the business mix.

Net Premiums Earned Net premiums earned increased $5,546 and $9,869 for the three and six months ended June 30, 2026, respectively, compared to the same periods of the prior year.

The increase is primarily driven by growth in new and existing programs, including certain programs with a high retention ratio partially offset by the shift in the business mix.

Commission Income and Commission Expense Commission income increased $19,406 and $50,813 for the three and six months ended June 30, 2026, respectively, as compared to the same period in the prior year.

Th e increase was p rimarily due to strong ID organic growth as well as the acquisition of ArmadaCare in October of 2025.

Commission income included profit commissions (based on underwriting performance) of $5,620 and $2,266 for the three months ended June 30, 2026 and 2025, respectively, and $11,808 and $6,957 for the six months ended June 30, 2026 and 2025, respectively.

Commission expense increased $1,105 and $4,745 for the three and six months ended June 30, 2026, respectively, as compared to the same periods of the prior year.

Th e lower commission expense relative to commission income in 2026 relative to 2025 is related primarily to the ArmadaCare acquisition partially offset by a change in gross-to-net reporting for one MGA.

ArmadaCare produces a majority of their business internally and has a lower external broker commission model.

The majority of Octave Ventures' commission income is reported net of any distribution and commission expenses, due to the nature of its program agreements.

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

Program Fees Program fee revenues were $3,644 and $3,652 for the three months ended March 31, 2026 and 2025, respectively.

Program Fees Program fee revenues were $3,293 and $3,497 for the three months ended June 30, 2026 and 2025, respectively, and $6,937 and $7,149 for the six months ended June 30, 2026 and 2025, respectively.

Program fee revenues represent the recognition of ceding commissions in excess of direct acquisition costs received from reinsurers and minimum fees received from MGA/Us until related programs reach certain levels of premium ceded.

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

Program fees for three months ended March 31, 2026 are flat versus the three months ended March 31, 2025, due to growth in existing programs offset by impact of a shift to retained from fronted for certain programs.

Program fees for three and six months ended June 30, 2026 are slightly lower versus the three and six months ended June 30, 2025, due to the shift in net retention levels partially offset by growth in certain programs.

Net Investment Income Net investment income consists of interest income, including the net effect of discount accretion and premium amortization, from fixed maturity securities classified as available-for-sale and net gains (losses) on pooled investment funds that are reported under the equity method.

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Investments of the Notes to Consolidated Financial Statements included this Quarterly Report on Form 10-Q.

Net investment income decreased $460 for the three months ended March 31, 2026 compared to the same period in the prior year due primarily to lower Corporate short-term investment yields and balances following the acquisition of ArmadaCare and lower average Everspan asset balances.

Servicing and Other Fees Servicing and other fees increased $4,398 for the three months ended March 31, 2026.

Servicing and other fees include revenues earned for providing operational and administrative services to the Lloyd's syndicates managed by Octave Ventures as well as program administration, health connections, set-up and renewal fees related to ArmadaCare and Pivix.

Net investment inco me decreased $732 and $1,192 for the three and six months ended June 30, 2026, respectively, compared to

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

the same periods of the prior year due primarily to lower Corporate short-term investment yields and balances following the acquisition of ArmadaCare and lower average Everspan asset balances.

Servicing and Other Fees Servicing and other fees increased $1,441 and $5,839 for the three and six months ended June 30, 2026, respectively, compared to the same periods of the prior year.

Servicing and other fees include revenues earned for providing operational and administrative services to our Lloyd's syndicates, managed by Statera, our Lloyd's Managing Agent;

program administration;

and set-up and renewal fees.

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

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

Other revenues for the three months ended March 31, 2026, of $630 and for the three months ended March 31, 2025, of $(1,124) were driven primarily by by foreign exchange gains and (losses) on non-functional currency operations of Octave Ventures, net of the offsetting effects of FX forward contracts.

Other revenues for the three months ended June 30, 2026 and 2025, of $435 and $(2,146), respectively, were driven primarily by foreign exchange gains (losses) on non-functional currency operations of Octave Ventures, net of the offsetting effects of FX forward contracts.

Other revenues for the six months ended June 30, 2026 and 2025, of $1,065 and $(3,270), respectively, were driven primarily by foreign exchange gains and (losses) on non-functional currency operations of Octave Ventures, net of the offsetting effects of FX forward contracts.

Losses and Loss Adjustment Expenses (Benefit)

Loss and loss adjustment expenses incurred increased $9,183 for the three months ended March 31, 2026 compared to the same period in the prior year.

The higher loss and loss adjustment expenses is due to the growth in existing and addition of new programs and prior period development primarily related to (i) $2,125 of net losses and $5,787 of LAE (legal expenses) from the settlement of a potential litigation matter related to an insurance claim, and (ii) slight reserve strengthening on an excess liability program and claim fees.

General and Administrative Expenses (G&A) The following table provides a summary of G&A expenses for the three months ended March 31, 2026 and 2025:

Three Months Ended March 31, 2026 2025

Loss and loss adjustment expenses incurred increased $2,368 and $11,551 for the three and six months ended June 30, 2026, compared to the same periods of the prior year.

The higher loss and loss adjustment expenses for the three months ended June 30, 2026, is primarily due to the growth in our P&C program business.

The higher loss and loss adjustment expenses for the six months ended June 30, 2026, is due to the growth in our P&C program business and prior period development primarily related to (i) $2,125 of net losses and $5,787 of LAE (legal expenses) from the first quarter 2026 settlement of a potential litigation matter related to an insurance claim, and (ii) slight reserve strengthening on an excess liability program and claim fees.

General and Administrative Expenses (G&A) The following table provides a summary of G&A expenses for the periods presented.

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Compensation $ 34,256 $ 22,782 $ 71,300 $ 45,669

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Total G&A expenses $ 51,415 $ 40,540 $ 104,570 $ 79,071

The increase of $14,157 in compensation expenses during the three months ended March 31, 2026, was driven primarily by higher compensation costs due to (i) the acquisitions of ArmadaCare and Pivix, (ii) changes in performance factors and timing of grants in 2025, (iii) expansion of Octave Venture's managing agency, and (iv) acceleration of RSUs & PSUs of terminated employees, and severance.

The increase of $467 in non-compensation G&A expenses for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, was driven primarily by integration expenses related to the ArmadaCare and Pivix acquisitions and costs associated with the build-out of the Octave Ventures managing agency, partially offset by a reduction in Corporate segment initiatives.

Th e increase of $11,474 and 25,631 in compensation expenses during the three and six months ended June 30, 2026, respectively, was driven primarily by higher compensation costs due to (i) the acquisition of ArmadaCare and launch of new business, (ii) changes in performance factors and timing of long-

term incentive grants in 2025, (iii) the launch of our Lloyd's managing agency, and (iv) severance and related costs.

Th e decrease of $600 and $132 in non-compensation G&A expenses for the three and six months ended June 30, 2026, respectively, was driven primarily by lower premium related taxes and prior year costs associated with the sale of AAC, partially offset by the acquisition of ArmadaCare, launch of new business, and higher expenses related to data, AI and related systems.

Intangible Amortization and Depreciation.

The increase in intangible amortization and depreciation of $3,038 for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, was primarily due to the ArmadaCare acquisition.

Interest Expense The decrease in interest expense of $3,364 for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, was due to a lower loan balance, reduced interest rate, and prior year includes duration fees.

Provision for Income Taxes The provision (benefit) for income taxes primarily relates to international operations and was $(481) for the three months ended March 31, 2026 compared to $(617) for the three months ended March 31, 2025.

The tax benefit recognized in the current year includes current tax expense associated with Octave Ventures UK operations, partially offset by deferred tax benefit related to the recognition of deferred tax assets generated by Octave Ventures US and amortization of finite-lived intangible assets associated with Octave Ventures UK and US operations.

The increase in intangible amortization and depreciation of $2,523 and $5,561 for the three and six months ended June 30, 2026, respectively, as compared to the same periods of the prior year, was primarily due to the ArmadaCare acquisition.

Interest Expense The decrease in interest expense of $2,796 and $6,160 for the three and six months ended June 30, 2026, respectively, as compared to the same periods of the prior year, was due primarily to a lower loan balance and a reduced interest rate.

Prior year interest expense also includes duration fees and extension fees.

Provision (Benefit) for Income Taxes The provision (benefit) for income taxes primarily relates to international operations and was $485 for the three months ended June 30, 2026, compared to $(2,172) for the three months ended June 30, 2025.

The provision (benefit) for income taxes was $4 for the six months ended June 30, 2026 compared to $(2,789) for the six months ended June 30, 2025.

The tax benefit recognized in the current year includes current tax expense associated with our UK operations, partially offset by the deferred tax benefits related to the recognition of UK deferred tax assets and amortization of finite-lived intangible assets.

Octave Specialty Group, Inc.

First Quarter 2026 Form 10-Q

Second Quarter 2026 Form 10-Q

Results of Operations by Segment

Insurance Distribution

Three Months Ended March 31, 2026 2025

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Premiums placed (1)

$ 314,367 $ 249,912 $ 741,200 $ 483,098

Commission income (1)

$ 51,786 $ 30,322 $ 119,964 $ 67,093

Commission expense (1)

10,130 7,403 24,135 17,768

Net commissions 41,656 22,919 95,829 49,325

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$ 515,855 $ 245,240

(1) Includes $7,700 premiums placed, as well as $2,058 of commission income and $1,622 of commission expense related to intersegment activities for the three and six months ended June 30, 2026.

Refer to Note 2.

Segment Information for additional information.

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

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

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

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

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

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

Higher premiums placed were driven by the acquisition of ArmadaCare and organic growth.

For the three months ended March 31, 2026, the increase in premiums placed and changes to the mix of business written led to the growth in commission income and commission expense of 85% and (35.1)%, respectively.

The increase in G&A expenses of $15,154 for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, was primarily due to the acquisition of ArmadaCare, launch of Pivix as well as increase in staffing for the build out of new businesses at Octave Ventures.

ID pretax income for the three months ended March 31, 2026, was $16,785 compared to a loss of $(2,243) for the three months ended March 31, 2025.

The higher pretax income for the three months ended March 31, 2026, compared to the prior year period mostly related to higher Net Commissions and Fees related to the ArmadaCare acquisition and organic growth as well as lower interest expense, partially offset by higher intangible amortization.

The ID EBITDA for the three months ended March 31, 2026, was $30,817 compared to $12,083 for the three months ended March

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

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

For the three months ended June 30, 2026, the increase in premiums placed was driven by the acquisition of ArmadaCare and organic growth.

The growth in premiums written, as well as the mix of business written, drove an increase in commission income and commission expense of 71% and 37%, respectively.

For the six months ended June 30, 2026, commission income and commission expense increased 79% and 36%, re spectively, driven by the same factors as those driving the increase for the three months ended June 30, 2026.

Excluding profit commissions, commission expense was approximately 21% and 26% of commission income for the three months ended June 30, 2026 and 2025, respectively, and

22% and 29% for the six months ended June 30, 2026 and 2025, respectively.

The increase in G&A expenses of $13,461 and $28,616 for the three and six months ended June 30, 2026, respectively, was primarily due to the acquisition of ArmadaCare, the launch of new MGAs and the Managing Agency business and organic staff increases.

ID pretax income (loss) for the three months ended June 30, 2026, was $(846) compared to a loss of $(10,173) for the three months ended June 30, 2025.

ID pretax income for the six months ended June 30, 2026, was $15,939 compared to a loss of $(12,416) for the six months ended June 30, 2025.

The higher pretax income for the three and six months ended June 30, 2026, mostly related to high er net commissions and fees related to the ArmadaCare acquisition and organic growth as well as lower interest expense, offset partially by higher G&A expenses and intangible amortization.

The ID EBITDA increase of $9,189 and $27,923 during the three and six months ended June 30, 2026, respectively, was primarily driven by an increase in commission income due to the Armada acquisition and organic growth.

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

For example, our A&H businesses collectively produce the majority of their business in the first quarter of each year resulting in revenue and earnings concentrations in the first quarter.

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Seasonal impacts on the ID segment, and therefore Octave's results, may increase or decrease and shift over time depending on the relative growth of certain classes of business, impact of acquisitions, impact of de-novo MGAs and market conditions.

In addition, while our ID business has experienced strong organic growth in 2026, it is important to note that nominal and organic growth rates will fluctuate from period to period due to a number of factors related to our specific businesses as well as macro and industry conditions, including but not limited to the timing and size of new program launches, renewals, market pricing cycles, shifts in capacity availability and risk appetite, and changes in insured exposures..

Furthermore, not all of our ID businesses may grow simultaneously.

For example, during the second quarter of 2026 while our ID business produced strong nominal and organic growth rates, certain of our MGAs, such as our property focused MGAs, reduced their underwriting activity resulting in lower commission revenues period over period.

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

Specialty Property and Casualty Insurance

Three Months Ended March 31, 2026 2025

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Gross premiums written $ 94,702 $ 96,247 $ 198,418 $ 183,162

3 unchanged sentences

Investment income 1,298 1,748 2,947 3,590

Other 63 (58) 68 (59)

Total 26,403 21,390 51,702 42,561

Losses and loss adjustment expenses

13,346 10,978 33,025 21,474

Policy acquisition costs (1)

6,482 3,699 12,853 7,540

General and administrative 5,330 6,093 12,862 11,425

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Retention Ratio (2)

24.4% 15.8% 28.0% 18.1%

Loss and LAE Ratio (3)

61.4% 67.8% 79.1% 67.4%

Expense Ratio (4)

39.2% 38.9% 45.0% 37.1%

Combined Ratio (5)

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$ 133,999 $ 140,919

(1) Includes $123 of policy acquisition costs related to intersegment activity for the three and six months ended June 30, 2026.

Refer to Note 2.

Segment Information for additional information.

(2) Retention ratio is defined as net premiums written divided by gross premiums written.

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

Twenty-four programs were authorized to issue policies as of March 31, 2026, including Everspan participating in certain programs as a reinsurer.

In 2026, Everspan's continues to see its production levels build with growth in new and existing programs.

This growth has resulted in an increase in gross and net premiums written, net premiums earned, losses and loss

Octave Specialty Group, Inc.

First Quarter 2026 Form 10-Q

expenses incurred, policy acquisition costs and a shift in Everspan's retention ratio in the three months ended March 31, 2026 compared to the three months ended March 31, 2025.

Although losses and loss expenses have increased, the shift in Everspan's net portfolio mix has led to an improved loss ratio on active programs.

Twenty-seven programs were authorized to issue policies as of June 30, 2026, including Everspan participating in certain programs as a reinsurer.

Everspan continued to build its production levels in 2026 with growth in new and existing programs.

Additionally, Everspan's business mix shifted resulting lower loss ratios and a higher net retention ratio.

This growth and business mix shift has resulted in an increase in net premiums written, net premiums earned, losses and loss expenses incurred, policy acquisition costs in the three and six months ended June 30, 2026, compared to the same periods of the prior year.

Gross premiums decreased in the three months ended June 30, 2026 and increased in the six months ended June 30, 2026.

The decrease in the three months ended June 30, 2026, is primarily due to the timing differences related to premium production for one

significant program and a reduction in participation percentage of an assumed reinsurance program whereas the increase in the six months ended June 30, 2026 is due to growth in new and existing programs.

Although losses and loss expenses have increased, the shift in Everspan's net business mix has led to an improved loss ratio on active programs.

Consistent with its strategy to generate sustainable and profitable, long-term specialty property and casualty program insurance business with a focus on diverse classes of risks, Everspan may source select programs as a reinsurer.

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Participation as a reinsurer will affect the retention ratio as Everspan's portion of assumed premiums is reflected fully in both Gross and Net premiums written.

The change in the Loss and LAE ratio during the three months ended March 31, 2026, was driven by $2,125 of net losses and $5,787 of LAE (legal expenses) from the settlement of a potential litigation matter related to an insurance claim, partially offset by a shirt in business mix.

The three months ended March 31, 2026, contained prior years loss strengthening equating to 44.5% of which 39.6% relates this settlement.

The change in the Loss and LAE ratio during the three months ended June 30, 2026, was driven by a shift in business mix.

The change in the Loss and LAE ratio during the six months ended June 30, 2026, was driven by $2,125 of net losses and $5,787 of LAE (legal expenses) from the settlement of a potential litigation matter related to an insurance claim, partially offset by a shift in business mix.

The six months ended June 30, 2026, contained prior years loss strengthening equating to 21.7% of which 19.0% relates this settlement.

The remaining amount primarily relates to an excess liability claim and ULAE.

The three months ended March 31, 2025, contained minimal prior years loss strengthening equating to 1.1%.

The three and six months ended June 30, 2025, contained minimal prior years loss strengthening equating to 1.0% and 1.0%, respectively, driven primarily by excess liability loss experience.

Loss and loss adjustment expenses incurred, and Everspan's associated Loss and LAE ratio, may be adversely impacted by economic and social inflation.

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These additional liabilities or increases in estimates, or a range of either, could vary significantly from period to period.

In addition to the increase in the Loss and LAE ratio for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, there was a charge to acquisition costs resulting from sliding scale commission arrangements with program partners.

Such charge increased the Specialty Property and Casualty Insurance segment's expense ratio by 1.4% and —% for the three months ended March 31, 2026 and 2025, respectively.

For the three and six months ended June 30, 2026, compared to the same prior year periods, acquisition costs were affected by sliding scale commission arrangements with program partners.

Sliding scale commissions increased the Specialty Property and Casualty Insurance segment's expense ratio by 1.0% and 1.2% during the three and six months ended June 30, 2026, respectively.

During the three and six months ended June 30, 2025, there was a benefit from sliding scale commission

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

arrangements with program partners resulting in a decrease to acquisition costs that reduced the expense ratio by 2.6% and 1.3%, respectively.

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

These sliding scale arrangements help mitigate losses, protect underwriting results and limit earnings volatility.

The increase in G&A expenses of $2,201 for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, was primarily due to severance and accelerated incentive compensation in addition to higher premium taxes driven by increased premiums written.

The decrease in G&A expenses of $763 for the three months ended June 30, 2026 was primarily due to a decrease in premium taxes.

The increase of $1,437 for the six months ended June 30, 2026 was primarily due to severance and related costs;

partially offset by a premium tax true-up in the prior year.

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Investment income $ 180 521 578 1,118

Other 52 5 (1) (5)

Total 232 526 577 1,113

Depreciation expense 305 440 577 745

General and administrative 11,684 13,509 23,603 28,157

Total 11,988 13,949 24,180 28,901

Pretax income (loss) $ (11,756) (13,423) (23,603) (27,788)

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

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

Corporate revenues totaled $345 and $587 for the three months ended March 31, 2026 and 2025, respectively.

Corporate revenues totaled $232 and $526 for the three months ended June 30, 2026 and 2025, respectively, and $577 and $1,113 for the six months ended June 30, 2026 and 2025, respectively.

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

Investment revenues comprised of net investment income and net investment gains (losses), including impairments, were $398 and $597 for the three months ended March 31, 2026 and 2025, respectively.

The decline is primarily due to lower average invested assets due to the use of funds for the acquisition of ArmadaCare and share repurchases in the fourth quarter of 2025, as well as lower yields on short-term invested assets in 2026.

Corporate expenses were $11,919 and $14,650 for the three months ended March 31, 2026 and 2025 respectively.

The decrease is mainly due to cost reduction initiatives, including lower premise expenses following the corporate office re-location, and reduced acquisition-related costs.

The decline in revenue for both periods is primarily due to lower average invested assets as a result of the use of funds for the acquisition of ArmadaCare and share repurchases in the fourth quarter of 2025, as well as lower yields on short-term invested assets in 2026.

The decrease in G&A expenses of $1,825 for the three months ended June 30, 2026, and $4,554 for the six months ended June 30, 2026, were mainly due to cost reduction initiatives, including lower premise expenses following our NY corporate office re-location and reduced acquisition-related costs.

LIQUIDITY AND CAPITAL RESOURCES

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

OSG's liquidity is dependent on its portfolio of cash and short-term investments totaling $39,155 as of March 31, 2026;

OSG's liquidity is dependent on its portfolio of cash and short-term investments totaling $26,439 as of June 30, 2026;

investment income;

distributions, tax and expense-sharing payments from its operating subsidiaries;

sales of other assets;

and potential third-party capital (e.g.

and third-party capital (e.g.

credit facilities).

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Total $ 48,247 $ 76,484

(1) Includes minority investments in insurance services businesses of $17,517 and $17,517 at March 31, 2026 and December 31, 2025, respectively.

The decrease in OSG's stand alone net assets, excluding its equity investments in subsidiaries, during the first three months of 2026 was driven primarily by net cash outflows from operating expenses, contributions to subsidiaries related to the acquisition of noncontrolling interests and share repurchases related to the settlement of taxes on equity compensation, partially offset by interest income and distributions received from subsidiaries.

Octave Specialty Group, Inc.

First Quarter 2026 Form 10-Q

(1) Includes minority investments in insurance services businesses of $17,517 and $17,517 at June 30, 2026 and December 31, 2025, respectively.

The decrease in OSG's stand-alone net assets, excluding its equity investments in subsidiaries and other non-current assets, during the first six months of 2026 was driven primarily by net cash outflows from operating expenses and the acquisition of a portion of the outstanding equity warrant as a result of the holder's conversion of those warrants at their Black-Scholes value, partially offset by distributions received from its Insurance Distribution subsidiaries.

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

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However, Everspan makes tax payments to OSG in accordance with a Tax Sharing Agreement.

Octave Partners (i.e.

business units within the Insurance Distribution segment) does not have any regulatory restrictions on its ability to make distributions.

Our Insurance Distribution segment subsidiaries pay dividends either monthly, quarterly or annually, depending on the timing of their cash flows (which can be impact by seasonality), working capital requirements, and any other cash flow commitments.

The operating entities comprising the Insurance Distribution segment do not have any regulatory restrictions on their ability to make distributions.

Our Insurance Distribution segment subsidiaries pay dividends either monthly, quarterly or annually, depending on the timing of their cash flows (which can be impacted by seasonality), working capital requirements, and any other cash flow commitments.

OSG's principal uses of liquidity are:

(i) the payment of G&A expenses, including costs to explore opportunities to grow and diversify Octave, (ii) making capital investments to acquire, grow and/or capitali ze new and/or existing businesses, including through the acquisition of noncontrolling interests as a result of the exercise of outstanding puts and/or calls, (iii) potential capital contributions to subsidiaries to supplement debt service requirements, (iv) making investments in technology and other operational infrastructure to improve the operational effectiveness and e fficiency of our business and to support its growth, and (v) share repurchases and warrant conversions.

F unding puts, calls and other capital commitments could require payments from OSG, the magnitude of which will ultimately depend on the performa nce of the underlying businesses, whether or not the puts or calls are exercised, FX rates and other considerations, including whether OSG opts to settle put/call exercises or warrant conversions in its own common shares or cash.

Between March 31, 2026 and April 9, 2026, OSG paid $43,869 (including stamp duty) to acquire noncontrolling interests primarily as a result of the exercise of puts.

(i) the payment of G&A expenses, including costs to explore opportunities to grow and diversify Octave, (ii) making capital investments to acquire, grow and/or capitali ze new and/or existing businesses, including through the acquisition of noncontrolling interests as a result of the exercise of outstanding puts and/or calls, (iii) capital contributions to subsidiaries for debt service requirements, (iv) making investments in technology and other operational infrastructure to improve the operational effectiveness and e fficiency of our business and to support growth, and (v) share repurchases and warrant conversions.

F unding puts, calls and other capital commitments require payments from OSG, the magnitude of which will ultimately depend on the performa nce of the underlying businesses, whether or not the puts or calls are exercised, FX rates and other considerations, including whether OSG opts to settle a portion of the put/call exercises or warrant conversions in its own common shares or cash.

During the six months ended June 30, 2026, OSG paid $43,869 (including stamp duty) to acquire noncontrolling interests primarily as a result of the exercise of puts on Octave Ventures shares.

OSG funded these purchases with a combination of cash and incremental Octave Partners debt (refer to Note 9.

Debt for details regarding the increase to the Credit Facility).

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

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

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

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

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

The need for additional capital to fund future NCI puts and

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

calls will depend on a number of considerations, including distribution levels from subsidiaries, the potential for additional acquisitions, operating expenses, other capital investment demands, stock repurchases and warrant conversions.

The value of the noncontrolling interests puts and calls at the time of exercise will also have an impact on our need for additional funding.

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

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

In connection with and pursuant to the Purchase Agreement related to the sale of Ambac Assurance Corporation, OSG issued to the 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.

Effective after March 31, 2026,

and during the six months ended September 30, 2026, the warrant holder may convert up to one-third or approximately 1,697,569 of the warrants at the Black-Sholes value.

Subsequent to September 30, 2026, an additional third of the warrants may be converted in any three-month period.

OSG estimates the Black-Scholes value of the warrants at $2.50 per warrant share as of April 2026.

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-Scholes value, over specified time periods, with the conversion value delivered in shares of OSG common stock or cash at OSG's election.

On May 6, 2026, the Buyer converted one-third of the warrant or 1,697,569 warrant shares in exchange for a cash payment of $4,855.

Following the conversion, the warrant is exercisable for 3,395,138 shares of OSG common stock.

Subsequent to September 30, 2026, an additional third of the original warrant may be converted in any three-month period.

OSG estimates the Black-Scholes value of the warrants at $3.02 per warrant share as of mid-July 2026.

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

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

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

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

Base commissions and fees are generally received monthly, whereas profit commissions, received only if the business underwritten is profitable above certain levels, are generally received annually, Cash provided from these sources is used primarily for commissions paid to sub-producers, operating expenses, capital expenditures and distributions to OSG and other members.

Cash Held at Banks

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

Octave's cash balances held at banks were $93,537

Octave Specialty Group, Inc.

First Quarter 2026 Form 10-Q

as of March 31, 2026, including cash of Octave's insurance distribution subsidiaries held in regional banks of $22,352 as of March 31, 2026.

Octave's cash balances held at banks were $79,096 as of June 30, 2026, including cash of Octave's insurance distribution subsidiaries held in regional banks of $20,608 as of June 30, 2026.

Consolidated Cash Flow Statement Discussion

The following table summarizes the net cash flows for continuing operations for the periods presented.

Three Months Ended March 31, 2026 2025

Six Months Ended June 30, 2026 2025

Cash provided by (used in):

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Operating Activities for Continuing Operations

Operating cash flows for the three months ended March 31, 2026, were adversely impacted from the settlement of a potential litigation matter related to an insurance claim and interest payments on long-term debt, partially offset by cash collections from both the specialty P&C and insurance distribution businesses.

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

Operating cash flows for the six months ended June 30, 2026, were adversely impacted from Everspan's settlement of a potential litigation matter related to an insurance claim, the timing of Everspan loss and reinsurance payments, G&A expenses paid and interest on long-term debt, partially offset by cash collections from both the specialty P&C and insurance distribution businesses.

Operating cash flows for the six months ended June 30, 2025, were adversely impacted by G&A expenses paid and interest on short-term borrowing, an increase in reinsurance recoverable, partially offset by cash collections from both the specialty P&C and insurance distribution businesses.

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

Investing Activities for Continuing Operations

Investing activities for the three months ended March 31, 2026, were primarily driven by changes in short-term investments.

Investing activities for the six months ended June 30, 2026 and 2025, were primarily driven by changes in short-term investments, partially offset by net purchases of bonds.

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

Financing Activities for Continuing Operations

Financing activities for the three months ended March 31, 2026, included tax payments related to shares withheld for share-based compensation plans, distributions to noncontrolling interest holders, and repayment of long-term debt.

Financing activities for the six months ended June 30, 2026, primarily included acquisitions of noncontrolling interests and the settlement of warrants in cash, partially offset by proceeds from the issuance of long-term debt.

Background and Business Description - Warrant Conversion and Redeemable Noncontrolling Interest and Note 9.

Debt of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information.

Financing activities for the six months ended June 30, 2025, included purchases of common stock of $3,301 and acquisitions of noncontrolling interests.

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

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BALANCE SHEET

Total assets increased by $43,709 from December 31, 2025 to $2,267,026 at March 31, 2026, primarily due to increase in reinsurance recoverables resulting from growth in the specialty P&C business, together with increase in commission receivable from insurance distribution business.

Total liabilities increased by approximately $100,332 from December 31, 2025 to $1,237,483 as of March 31, 2026, primarily due the payable to acquire noncontrolling interests from the exercise of puts and an increase in loss and loss adjustment expense reserve and ceded premium payables from the specialty P&C businesses.

As of March 31, 2026, total stockholders’ equity was $712,618, compared with total stockholders’ equity of $715,790 at December 31, 2025.

The decrease was primarily the result of the net loss attributable to common stockholders for the three months ended March 31, 2026 of $6,851, partially offset with increase in additional paid-in capital resulting from the acquisition of noncontrolling interests from the exercise of puts.

Total assets increased by $57,540 from December 31, 2025, to $2,280,857 at June 30, 2026, primarily due to an increase in reinsurance recoverables resulting from growth in the specialty P&C business, together with an increase in commissions receivable and contract assets from the insurance distribution business, partially offset by a decrease in total investments.

Total liabilities increased by $128,332 from December 31, 2025, to $1,265,483 as of June 30, 2026, primarily due to an increase in loss and loss adjustment expense reserves and ceded premiums payable from the specialty P&C businesses, additional term loan borrowing to acquire noncontrolling interests from the exercise of puts, and an increase in commissions payable and fiduciary liabilities at the insurance distribution business.

Redeemable noncontrolling interest decreased by $55,452 from December 31, 2025, to $197,529 as of June 30, 2026, primarily due to the acquisition of shares by Octave, reclassification of shares to nonredeemable upon expiration of put options, and the impact of currency translation.

As of June 30, 2026, total stockholders’ equity was $698,753, compared with total stockholders’ equity of $715,790 at December 31, 2025.

The decrease was primarily the result of the net loss attributable to common stockholders for the six months ended June 30, 2026, of $21,280, partially offset with an increase in additional paid-in capital resulting from the acquisition of noncontrolling interests from the exercise of puts.

Investment Portfolio

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Refer to "Description of the Business – Investments and Investment Policy" located in Part I.

Item 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, for further description of Octave's investment policies and applicable regulations.

The following table summarizes the composition of Octave's investment portfolio, at carrying value at March 31, 2026 and December 31, 2025:

March 31, 2026 December 31, 2025

Item 1 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, for a further description of Octave's investment policies and applicable regulations.

The following table summarizes the composition of Octave's investment portfolio, at carrying value at June 30, 2026 and December 31, 2025:

June 30, 2026 December 31, 2025

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

3 unchanged sentences

Total investments $ 156,575 $ 37,341 $ 47,753 $ 241,669 $ 193,428 $ 35,812 $ 64,468 $ 293,708

Octave Specialty Group, Inc.

First Quarter 2026 Form 10-Q

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

2 unchanged sentences

Premium Receivables

Octave's premium receivables increased to $87,653 at March 31, 2026 from $75,085 at December 31, 2025.

Octave's premium receivables increased to $94,635 at June 30, 2026, from $75,085 at December 31, 2025.

The increase is primarily due to growth in the Specialty P&C Insurance segment, including receivables related to the programs where Everspan participates as a reinsurer.

Commission and Fees Receivable

Octave's commission and fee receivables increased to $106,198 at March 31, 2026 from $86,549 at December 31, 2025.

Octave's commission and fee receivables increased to $100,537 at June 30, 2026, from $86,549 at December 31, 2025.

The increase is primarily due to growth in the ID segment.

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

As of March 31, 2026 and December 31, 2025, reinsurance recoverable on paid and unpaid losses were $469,859 and $436,092, respectively, increasing primarily due to growth in the Specialty P&C Insurance Segment.

As of June 30, 2026 and December 31, 2025, reinsurance recoverable on paid and unpaid losses were

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

$495,653 and $436,092, respectively, increasing primarily due to growth in the Specialty P&C Insurance Segment.

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

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

Octave benefited from letters of credit and collateral amounting to approximately $80,351 from its reinsurers at March 31, 2026.

Octave benefited from letters of credit and collateral amounting to approximately $82,174 from its reinsurers at June 30, 2026.

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

Intangible Assets, net of Accumulated Depreciation

At March 31, 2026, intangible assets primarily include (i) intangible assets established as part of acquisitions in the ID business of $447,167 and (ii) indefinite-lived intangible assets in the Specialty P&C business as part of its acquisitions of $11,213.

As of March 31, 2026 and December 31, 2025, intangible assets were $458,380 and $474,998, respectively.

The decrease is driven by foreign exchange rates (appreciation of the British pound), partially offset by amortization of $11,647.

As of March 31, 2026 and December 31, 2025, goodwill totaled $533,497 and $540,345 respectively.

The decrease is primarily driven by foreign exchange rates (appreciation of the British pound).

At June 30, 2026, intangible assets primarily include (i) intangible assets established as part of acquisitions in the ID business of $436,235 and (ii) indefinite-lived intangible assets in the Specialty P&C business as part of its acquisitions of $11,213.

As of June 30, 2026 and December 31, 2025, intangible assets were $447,448 and $474,998, respectively.

The decrease is driven by amortization of $23,256 and foreign exchange rates (depreciation of the British pound).

As of June 30, 2026 and December 31, 2025, goodwill totaled $534,304 and $540,345 respectively.

The decrease is primarily driven by foreign exchange rates (depreciation of the British pound).

All of the goodwill was assigned to the ID segment.

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

Loss and loss adjustment expense reserves by line of business were as follows as of March 31, 2026 and December 31, 2025:

Loss and loss adjustment expense reserves by line of business were as follows as of June 30, 2026 and December 31, 2025:

2026 December 31,

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Loss and Loss Expense Reserves $ 499,043 $ 91,584 $ 459,990 $ 84,268

(1) Includes $21,273 and $0 loss and loss expense reserves on a gross and net of reinsurance basis, respectively, at March 31, 2026, and $23,530 and $0 loss and loss expense reserves on a gross and net of reinsurance basis, respectively, at December 31, 2025, related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company and Consolidated Specialty Insurance Company.

(1) Includes $21,229 and $0 loss and loss expense reserves on a gross and net of reinsurance basis, respectively, at June 30, 2026, and $23,530 and $0 loss and loss expense reserves on a gross and net of reinsurance basis, respectively, at December 31, 2025, related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company and Consolidated Specialty Insurance Company.

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

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Insurance Contracts, respectively, to the Consolidated Financial Statements included in Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, for further information on loss and loss adjustment expenses.

Octave's debt increased to $155,459 at June 30, 2026, from $117,558 at December 31, 2025.

In connection with the acquisition of ArmadaCare on October 31, 2025, Octave Partners LLC and certain of its subsidiaries (including ArmadaCare) entered into the 2025 Credit Facility to pay part of the purchase price for ArmadaCare.

On April 1, 2026, the Company entered into the First Amendment to the 2025 Credit Facility, with proceeds from additional borrowing of $40,000 used to help fund the acquisition of redeemable NCI.

Refer to Note 9.

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

Commission payable at March 31, 2026 and December 31, 2025, was $118,086 and $115,555, respectively.

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

Other Liabilities

Octave Specialty Group, Inc.

First Quarter 2026 Form 10-Q

Other liabilities at March 31, 2026 and December 31, 2025, was $158,458 and $102,771, respectively.

The increase in Other liabilities is primarily due to consideration payable of $43,644 for the acquisition of redeemable NCI as a result of the exercise of put options by minority owners of Octave Ventures and of certain Option Shares in March 2026.

The liability was settled in cash in April 2026.

Commission payable at June 30, 2026 and December 31, 2025, was $128,231 and $115,555, respectively.

The increase is primarily due to growth in the business and higher advance commissions due to Syndicates.

Redeemable Noncontrolling Interest

The minority equity interests of Octave Ventures's majority-owned MGA/Us were classified within nonredeemable NCI at March 31, 2026.

Changes to redeemable NCI during the three months ended March 31, 2026, relate primarily to the allocation of financial results to the minority interests, reclassification of certain interests to nonredeemable due to the expiration of related put options, the exercise of certain put options and the impact of foreign currency translation.

The decrease to redeemable NCI during the six months ended June 30, 2026, related primarily to the exercise of put options whereby Octave Ventures' minority shareholders sold approximately 10% the equity interest in Octave Ventures to Octave.

Additionally, redeemable NCI decreased due to other acquisitions of redeemable NCI shares by Octave, the impact of foreign currency translation, distributions, and reclassification of certain interests to nonredeemable due to the expiration of related put options;

partially offset by the allocation of financial results to the minority interests and reclassification of certain minority interests from nonredeemable to redeemable as Octave entered into put options that are embedded in the underlying equity instruments.

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

ACCOUNTING STANDARDS

8 unchanged sentences

Everspan Indemnity Insurance Company

Everspan Indemnity Insurance Company’s (EIIC) statutory policyholder surplus was $113,775 at March 31, 2026, as compared to $128,031 at December 31, 2025.

The decrease in surplus was driven by a net loss at Everspan Indemnity Insurance Company, including its subsidiaries, of $14,406 during the three months ended March 31, 2026.

Everspan Indemnity Insurance Company’s (EIIC) statutory policyholder surplus was $114,110 at June 30, 2026, as compared to $128,031 at December 31, 2025.

The decrease in surplus was driven by a net loss at Everspan Indemnity Insurance Company, including its subsidiaries, of $13,576 during the six months ended June 30, 2026.

The net loss was driven by loss and loss expenses incurred and an increase in commission costs.

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In addition to reporting the Company’s quarterly financial results in accordance with GAAP, the Company is reporting non-GAAP financial measures:

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, Organic Revenue Growth Rate (Insurance Distribution segment only), Adjusted Net Income and Adjusted Net Income Margin.

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin, Organic Revenue Growth Rate (Insurance

Distribution segment only), Adjusted Net Income and Adjusted Net Income Margin.

These amounts are derived from our consolidated financial information, but are not presented in our consolidated financial results because they are not calculated in accordance with GAAP.

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

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

The following paragraphs define each non-GAAP financial measure.

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Octave Specialty Group, Inc.

First Quarter 2026 Form 10-Q

Three Months Ended March 31, 2026 Three Months Ended March 31, 2025

Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total

Second Quarter 2026 Form 10-Q

Three Months Ended June 30, 2026 Three Months Ended June 30, 2025

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

Net income (loss) (Continuing Operations) $ 1,119 $ (1,325) $ (11,637) $ (313) $ (12,156) $ 428 $ (7,992) $ (13,240) $ — $ (20,802)

6 unchanged sentences

EBITDA attributable to shareholders 1,244 8,670 (11,451) (200) (1,737) 620 2,513 (12,983) — (9,848)

Net income margin (30.4) % 21.8 % NM (2.7) % 6.7 % (4.3) % NM (23.1) %

Net income margin to shareholders (30.4) % 16.8 % NM (6.6) % 6.7 % (8.3) % NM (25.7) %

EBITDA margin (32.7) % 39.2 % NM 10.5 % 7.1 % 29.5 % NM (0.8) %

EBITDA margin to shareholders (32.7) % 29.9 % NM 3.5 % 7.1 % 17.3 % NM (8.7) %

Net income margin 4.2 % (2.3) % NM NM (14.6) % 2.0 % (24.2) % NM NM (37.9) %

Net income margin to shareholders 4.2 % (6.4) % NM NM (17.4) % 2.0 % (23.4) % NM NM (37.4) %

EBITDA margin 4.7 % 23.8 % NM NM 4.1 % 2.9 % 14.2 % NM NM (13.9) %

EBITDA margin to shareholders 4.7 % 14.8 % NM NM (2.1) % 2.9 % 7.6 % NM NM (17.9) %

Acquisition and integration-related expenses — 451 688 — 1,139 — 375 399 — 774

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Adjusted EBITDA to shareholders $ 1,757 $ 9,792 $ (7,664) $ (200) $ 3,685 $ 681 $ 2,519 $ (7,771) $ — $ (4,569)

Adjusted EBITDA per diluted share — % — % — % — % 3.0 % 26.0 % (21.0) % 8.0 %

Adjusted EBITDA shareholders per diluted share 4.0 % 56.0 % (15.0) % 44.0 % 3.0 % 15.0 % (21.0) % (3.0) %

Adjusted EBITDA margin 6.4 % 42.0 % NM 26.6 % 7.5 % 29.5 % NM 5.9 %

Adjusted EBITDA margin to shareholders 6.4 % 32.3 % NM 19.3 % 7.5 % 17.3 % NM (2.1) %

Adjusted EBITDA to shareholders per diluted share $ 0.04 $ 0.22 $ (0.17) $ — $ 0.08 $ 0.01 $ 0.05 $ (0.16) $ — $ (0.09)

Adjusted EBITDA margin 6.7 % 26.2 % NM NM 11.0 % 3.2 % 13.9 % NM NM (4.6) %

Adjusted EBITDA margin to shareholders 6.7 % 16.8 % NM NM 4.4 % 3.2 % 7.6 % NM NM (8.3) %

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

Six Months Ended June 30, 2026 Six Months Ended June 30, 2025

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

Net income (loss) (Continuing Operations) $ (6,571) $ 15,828 $ (23,963) $ (313) $ (15,019) $ 1,852 $ (9,735) $ (27,410) $ — $ (35,292)

Interest expense — 4,864 — — 4,864 — 11,024 — — 11,024

Income tax expense (benefit) (467) 111 360 — 4 270 (2,681) (378) — (2,789)

Depreciation expense — 645 577 — 1,222 — 109 744 — 853

Intangible amortization expense — 23,256 — — 23,256 — 18,064 — — 18,064

EBITDA (7,038) 44,704 (23,026) (313) 14,327 2,122 16,781 (27,044) — (8,140)

Impact of noncontrolling interests — (12,567) — 113 (12,454) — (7,205) — (7,205)

EBITDA attributable to shareholders (7,038) 32,137 (23,026) (200) 1,873 2,122 9,576 (27,044) — (15,345)

Net income margin (12.7) % 11.6 % NM NM (8.0) % 4.4 % (13.1) % NM NM (30.0) %

Net income margin to shareholders (12.7) % 6.9 % NM NM (11.4) % 4.4 % (15.0) % NM NM (31.2) %

EBITDA margin (13.6) % 32.6 % NM NM 7.7 % 5.0 % 22.7 % NM NM (6.9) %

EBITDA margin to shareholders (13.6) % 23.5 % NM NM 1.0 % 5.0 % 12.9 % NM NM (13.0) %

Acquisition and integration-related expenses — 1,855 1,752 — 3,607 — 375 1,081 — 1,456

Equity-based compensation expense 1,069 1,765 5,771 — 8,605 147 67 3,469 — 3,683

Severance and restructuring expense 1,432 — 868 — 2,300 — 60 4,737 — 4,797

Other non-operating (income) losses 7,912 — 82 — 7,994 — (591) — — (591)

Adjusted EBITDA $ 3,375 $ 48,324 $ (14,553) $ (313) $ 36,833 $ 2,270 $ 16,692 $ (17,759) $ — $ 1,205

Impact of noncontrolling interest — (13,192) — 113 (13,079) — (7,081) — — (7,081)

Adjusted EBITDA to shareholders $ 3,375 $ 35,132 $ (14,553) $ (200) $ 23,754 $ 2,270 $ 9,611 $ (17,759) $ — $ (5,876)

Adjusted EBITDA to shareholders per diluted share $ 0.07 $ 0.77 $ (0.32) $ — $ 0.52 $ 0.04 $ 0.20 $ (0.37) $ — $ (0.12)

Adjusted EBITDA margin 6.5 % 35.3 % NM NM 19.7 % 5.3 % 22.5 % NM NM 1.0 %

Adjusted EBITDA margin to shareholders 6.5 % 25.7 % NM NM 12.7 % 5.3 % 13.0 % NM NM (5.0) %

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

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

Three Months Ended March 31, 2026 2025 % Growth

Three Months Ended June 30, 2026 2025 % Growth

Total Insurance Distribution revenue & growth percentage (1)

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Total Organic Revenue & Growth Percentage $ 45,064 $ 31,265 44.1 %

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

Six months ended June 30, 2026 2025 % Growth

Total Insurance Distribution revenue & growth percentage (1)

$ 136,944 $ 74,039 85.0 %

Acquired revenues (28,410) —

Profit commission and contingent commission income (11,808) (6,957)

Other conforming adjustments

impact of F.X.

rates (1,722) 3,710

Total Organic Revenue & Growth Percentage $ 95,004 $ 66,485 42.9 %

(1) Total Insurance Distribution revenue includes investment income.

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

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

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

We believe that

Octave Specialty Group, Inc.

First Quarter 2026 Form 10-Q

adjusted net income is an appropriate measure of operating performance because it eliminates the impact of income and expenses that may obfuscate business performance.

Three Months Ended March 31,

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

We believe that Adjusted Net Income is an appropriate measure of operating performance because it eliminates the impact of income and expenses that may obfuscate business performance.

Three Months Ended June 30,

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

Net income (loss) (Continuing Operations) $ 1,119 $ (1,325) $ (11,637) $ (313) $ (12,156) $ 428 $ (7,992) $ (13,240) $ — $ (20,802)

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Other non-operating (income) losses — — — — — — (591) — — (591)

Adjusted net income (loss) before tax and NCI 2,210 30,978 (7,640) 25,548 1,511 7,049 (10,097) (1,537)

Adjusted net income (loss) before tax adjustments and NCI 1,632 11,726 (7,850) (313) 5,195 489 1,191 (8,028) — (6,348)

Income tax effects (1,132) (2,307) 1,132 — (2,307) (15) (1,892) 15 — (1,892)

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Adjusted net income (loss) to shareholders 500 4,605 (6,718) (200) (1,813) 474 (3,013) (8,013) — (10,552)

Three Months Ended March 31,

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

Net income (loss) margin (30.4) % 21.8 % NM (2.7) % 6.7 % (4.3) % NM (23.1) %

Adjusted Net income (loss) attributable to stockholders margin 4.6 % 28.1 % NM 15.9 % 7.1 % 6.2 % NM (9.6) %

Net income (loss) margin 4.2 % (2.3) % NM NM (14.6) % 2.0 % (24.2) % NM NM (37.9) %

Adjusted Net income (loss) attributable to stockholders margin 1.9 % 7.9 % NM NM (2.2) % 2.2 % (9.1) % NM NM (19.2) %

Octave Specialty Group, Inc.

Second Quarter 2026 Form 10-Q

Six Months Ended June 30,

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

Net income (loss) (Continuing Operations) $ (6,571) $ 15,828 $ (23,963) $ (313) $ (15,019) $ 1,852 $ (9,735) $ (27,410) $ — $ (35,292)

Acquisition and integration-related expenses — 1,855 1,752 — 3,607 — 375 1,081 — 1,456

Intangible amortization expense — 23,256 — — 23,256 — 18,064 — — 18,064

Equity-based compensation expense 1,069 1,765 5,771 — 8,605 147 67 3,469 — 3,683

Severance and restructuring expense 1,432 — 868 — 2,300 — 60 4,737 — 4,797

Other non-operating (income) losses 7,912 — 82 — 7,994 — (591) — — (591)

Adjusted net income (loss) before tax adjustments and NCI 3,842 42,704 (15,490) (313) 30,743 2,000 8,240 (18,123) — (7,883)

Income tax effects (2,187) (4,536) 2,187 — (4,536) (15) (1,892) 15 — (1,892)

Adjusted net income (loss) before NCI 1,655 38,168 (13,303) (313) 26,207 1,985 6,348 (18,108) — (9,775)

Net (income) loss attributable to noncontrolling interest — (11,518) — 113 (11,405) — (6,812) — — (6,812)

Adjusted net income (loss) attributable to shareholders $ 1,655 $ 26,650 $ (13,303) $ (200) $ 14,802 $ 1,985 $ (464) $ (18,108) $ — $ (16,587)

Net income (loss) margin (12.7) % 11.6 % NM NM (8.0) % 4.4 % (13.1) % NM NM (30.0) %

Adjusted Net income (loss) attributable to stockholders margin 3.2 % 19.5 % NM NM 7.9 % 4.7 % (0.6) % NM NM (14.1) %

Quantitative and Qualitative Disclosure About Market Risk

As of March 31, 2026, there are no material changes in the market risks that the Company is exposed to compared to December 31, 2025.

As of June 30, 2026, there are no material changes in the market risks that the Company is exposed to compared to December 31, 2025.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis