OCTAVE SPECIALTY GROUP INC 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations ($ in thousands) The objectives of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are to provide users of our consolidated financial statements with the following: • A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results; • Context to the unaudited consolidated financial statements; and • Information that allows assessment of the likelihood that past performance is indicative of future performance. The following discussion should be read in conjunction with our consolidated financial statements in Part I, Item 1 and the matters described under Part II, Item 1A. Risk Factors in this Quarterly Report and under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025. Refer to Item 1. Business and Note 1. Background and Business Description in our Annual Report on Form 10-K for the year ended December 31, 2025, for a description of our business and our key strategies to achieve our primary goal to maximize shareholder value. 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, 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. Organization of Information MD&A includes the following sections: Page Strategies to Enhance Shareholder Value 28 Overview 29 Critical Accounting Estimates 30 Results of Operations 30 Liquidity and Capital Resources 35 Balance Sheet 37 Accounting Standards 39 U.S. Insurance Statutory Basis Financial Results 39 Non-GAAP Financial Measures 39 Strategies to Enhance Shareholder Value The Company's primary goal is to maximize long-term shareholder value through the execution of targeted strategies for its Insurance Distribution and Specialty Property and Casualty Insurance businesses. Insurance Distribution and Specialty Property and Casualty Insurance strategic priorities include: • 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. 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, 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. There can be no assurance that we will agree to acquire any business or assets, or that we can obtain the necessary financing or complete any acquisition in a timely manner or at all. Octave Specialty Group, Inc. 28 Second Quarter 2026 Form 10-Q Table of Contents OVERVIEW ($ 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 June 30, 2026 Three 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 $ 314,367 $ (7,700) $ 306,667 $ 249,912 $ — $ 249,912 Gross premiums written $ 94,702 $ 94,702 $ 96,247 $ — $ 96,247 Net premiums written $ 23,142 $ 23,142 $ 15,207 $ — $ 15,207 Total revenues $ 26,403 $ 58,418 $ 232 $ (2,058) $ 82,995 $ 21,390 $ 33,041 $ 526 $ — $ 54,957 Total expenses $ 25,159 $ 59,264 $ 11,988 $ (1,745) $ 94,666 $ 20,770 $ 43,214 $ 13,949 $ — $ 77,931 Pretax income (loss) $ 1,244 $ (846) $ (11,756) $ (313) $ (11,671) $ 620 $ (10,173) $ (13,423) $ — $ (22,974) EBITDA $ 1,244 $ 13,887 $ (11,451) $ (313) $ 3,367 $ 620 $ 4,698 $ (12,983) $ — $ (7,663) Adjusted EBITDA $ 1,757 $ 15,329 $ (7,664) $ (313) $ 9,109 $ 681 $ 4,580 $ (7,771) $ — $ (2,508) Net income (loss) attributable to shareholders $ 1,119 $ (3,711) $ (11,637) $ (200) $ (14,429) $ 428 $ (7,738) $ (13,240) $ — $ (20,548) EBITDA attributable to shareholders $ 1,244 $ 8,670 $ (11,451) $ (200) $ (1,737) $ 620 $ 2,513 $ (12,983) $ — $ (9,848) 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) Sale of AAC On September 29, 2025 the Company completed the sale of AAC. Refer to Note 3. 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, 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) to shareholders from discontinued operations after tax on the Consolidated Statements of Income (Loss). 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 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. 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 Octave Specialty Group, Inc. 29 Second Quarter 2026 Form 10-Q Table of Contents 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, 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. See Note 1. Background and Business Description - Redeemable Noncontrolling Interest for further information. CRITICAL ACCOUNTING ESTIMATES Octave's Unaudited Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which require the use of material estimates and assumptions. For a discussion of Octave's critical accounting policies and estimates, see “Critical Accounting Policies and Estimates” in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Octave's Annual Report on Form 10-K for the year ended December 31, 2025. Results of Operations Consolidated Results A summary of our financial results is shown below: 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 Net premiums written 23,142 15,207 55,591 33,212 Revenues: Net premiums earned $ 21,749 $ 16,203 $ 41,750 $ 31,881 Commissions (1) 49,728 30,322 117,906 67,093 Servicing and other fees 5,913 4,472 15,275 9,436 Program fees 3,293 3,497 6,937 7,149 Investment income 1,877 2,609 4,232 5,424 Other 435 (2,146) 1,065 (3,270) Total revenues 82,995 54,957 187,165 117,713 Expenses: 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 Intangible amortization and depreciation 12,264 9,741 24,478 18,917 Interest 2,774 5,570 4,864 11,024 Total expenses 94,666 77,931 202,180 155,794 Provision (benefit) for income taxes from continuing operations 485 (2,172) 4 (2,789) Net income (loss) from continuing operations (12,156) (20,802) (15,019) (35,292) Net income (loss) from discontinued operations, net of income taxes — (52,151) — (82,398) Net income (loss) (12,156) (72,953) (15,019) (117,690) Net (gain) loss attributable to noncontrolling interest (2,273) 254 (6,261) (1,400) Net income (loss) attributable to shareholders $ (14,429) $ (72,699) $ (21,280) $ (119,090) (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. 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. 30 Second Quarter 2026 Form 10-Q Table of Contents ◦ 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. Refer to Note 3. 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 and six months ended June 30, 2025. • 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 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 $3,293 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 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. These funds and certain other investments are reported in Other investments on the Consolidated Balance Sheets. For further information about investment funds held, refer to Note 4. Investments of the Notes to Consolidated Financial Statements included this Quarterly Report on Form 10-Q. 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. 31 Second Quarter 2026 Form 10-Q Table of Contents 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; policy; 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; (ii) foreign exchange gains (losses) from the ID segment; 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 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 $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 Non-compensation 17,159 17,759 33,270 33,402 Total G&A expenses $ 51,415 $ 40,540 $ 104,570 $ 79,071 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 $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. 32 Second Quarter 2026 Form 10-Q Table of Contents Results of Operations by Segment Insurance Distribution 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 Revenues: 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 Servicing and other fees 5,913 4,472 15,275 9,436 Investment income 399 340 707 716 Other revenue 320 (2,093) 998 (3,206) Expenses: General and administrative 34,401 20,940 68,105 39,489 EBITDA 13,887 4,698 44,704 16,781 Interest expense 2,774 5,570 4,864 11,024 Depreciation 350 — 645 109 Intangible amortization 11,609 9,301 23,256 18,064 Pretax income (loss) $ (846) $ (10,173) $ 15,939 $ (12,416) Octave's stockholders equity (2) $ 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 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. 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. 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. 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. Similar concentrations of production, revenue and earnings also occurs in the fourth quarter, driven by our non-A&H businesses, but generally to a lesser degree. 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. 33 Second Quarter 2026 Form 10-Q Table of Contents Specialty Property and Casualty Insurance 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 Net premiums written 23,142 15,207 55,591 33,212 Revenues: Net premiums earned $ 21,749 $ 16,203 $ 41,750 $ 31,881 Program fees 3,293 3,497 6,937 7,149 Investment income 1,298 1,748 2,947 3,590 Other 63 (58) 68 (59) Total 26,403 21,390 51,702 42,561 Expenses: 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 Total 25,159 20,770 58,740 40,439 Pretax income (loss) $ 1,244 $ 620 $ (7,038) $ 2,122 EBITDA 1,244 620 $ (7,038) $ 2,122 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) 100.6% 106.7% 124.1% 104.5% Octave's stockholders equity (6) $ 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. (3) Loss and LAE ratio is defined as losses and loss expenses incurred divided by net premiums earned. (4) Expense Ratio is defined as acquisition costs and general and administrative expenses, reduced by program fees divided by net premiums earned. (5) Combined ratio is defined as Loss and LAE ratio plus Expense Ratio. (6) Represents Octave stockholders equity in the Specialty Property and Casualty Insurance segment, including intercompany eliminations. The Specialty Property and Casualty Insurance segment has grown significantly since underwriting its first program in May 2021. Twenty-seven programs were authorized to issue policies as of 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. Accessing programs as a reinsurer provides Everspan the ability to diversify its risk profile (temporarily or long-term), efficiently manage its exposure limits and underwrite programs in a cost efficient manner, amongst other benefits. Everspan may participate as a reinsurer on up to 30% of a program, which is in line with its strategy to retain up to 30% per program. 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 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 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. The impact of inflation on ultimate loss reserves is difficult to estimate, particularly in light of recent disruptions to the judicial system, supply chains and labor markets. Going forward, we may not be able to offset the impact of inflation on our loss costs with sufficient price increases. The estimation of loss reserves may also be more difficult during extreme events, such as a pandemic, or during the persistence of volatile or uncertain economic conditions, due to, amongst other reasons, unexpected changes in behavior of judiciaries, claimants and policyholders, including fraudulent reporting of exposures and/or losses. Due to the inherent uncertainty underlying loss reserve estimates, the final resolution of the estimated liability for loss and loss adjustment expenses will likely be higher or lower than the related loss reserves at the reporting date. In addition, our estimate of losses and loss expenses may change. These additional liabilities or increases in estimates, or a range of either, could vary significantly from period to period. 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. 34 Second Quarter 2026 Form 10-Q Table of Contents 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 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. Corporate Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Revenues: Investment income $ 180 521 578 1,118 Other 52 5 (1) (5) Total 232 526 577 1,113 Expenses: 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 $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. 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 Holding Company Liquidity 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 $26,439 as of June 30, 2026; investment income; distributions, tax and expense-sharing payments from its operating subsidiaries; asset sales; and third-party capital (e.g. credit facilities). June 30, 2026 December 31, 2025 Cash and short-term investments $ 26,439 $ 49,471 Other investments (1) 21,642 25,124 Other net (liabilities) assets 166 1,889 Total $ 48,247 $ 76,484 (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. Everspan did not pay dividends to OSG in 2025 and is not expected to pay dividends in 2026. However, Everspan makes tax payments to OSG in accordance with a Tax Sharing Agreement. 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) 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, 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 Octave Specialty Group, Inc. 35 Second Quarter 2026 Form 10-Q Table of Contents 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 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-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. However, events, opportunities, acquisitions, the exercise of puts and calls, the need to refinance outstanding debt, share repurchases, warrant conversions or other circumstances could require OSG to seek additional capital (e.g. through loans or the issuance of debt, equity convertible, hybrid or equity securities). The Credit Facility entered into in connection with the 2025 acquisition of ArmadaCare and amended in connection with the 2026 acquisition of NCI includes covenants that restrict our ability to manage capital resources by requiring maintenance of certain financial ratios and restricting indebtedness, liens, mergers, sales of assets, investments, restricted payments (such as dividends), and affiliate transactions, among other restrictions. The Credit Facility also requires the prepayment of the borrowings thereunder with proceeds of certain asset sales, recovery events, issuances of indebtedness and indemnity payments. These requirements will impact our financial and operational flexibility while the Credit Facility remains in place. Operating Companies' Liquidity Insurance Sources of liquidity for Everspan are primarily funds generated from premiums, reinsurance recoveries, fees, investment income and maturities and sales of investments. Cash provided from these sources is used primarily for claim payments, loss expenses, acquisition costs, operating expenses, reinsurance payments and purchases of securities and other investments. Everspan manages its liquidity risk by projecting cash flows and maintaining specified levels of cash and short-term investments at all times. It is the opinion of the Company’s management that the insurance subsidiaries’ near term liquidity needs will be adequately met from the sources described above. Insurance Distribution 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, 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 $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. Six Months Ended June 30, 2026 2025 Cash provided by (used in): Operating activities $ (20,310) $ (10,463) Investing activities 48,015 18,030 Financing activities (16,396) (9,747) Foreign exchange impact on cash and cash equivalents (653) 475 Net cash flow $ 10,656 $ (1,705) Operating Activities for Continuing Operations 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 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. 36 Second Quarter 2026 Form 10-Q Table of Contents Financing Activities for Continuing Operations 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. See Note 1. 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; share repurchases; acquisitions of noncontrolling interest shares; other capital management activity and distributions to noncontrolling interests. Cash Flows from Discontinued Operations Cash flows pertaining to discontinued operations are reported separately on the Consolidated Statements of Cash Flows. The primary driver of the cash flows from discontinued operations was the continued runoff of the financial guarantee business, including the collection of premiums, interest income and subrogation, and the payment of claims, expenses and foreign taxes. Since the agreement to sell AAC, the operations were substantially separated and with the sale having been completed in September 2025, future reporting periods exclude any discontinued operations activity after September 30, 2025. BALANCE SHEET 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. Assets: Investment Portfolio Octave's investment portfolio is managed under established guidelines designed to meet the investment objectives of the Everspan Group and OSG. The ID businesses investments are limited to cash sweep products, treasuries, certificates of deposit and money market funds. Refer to "Description of the Business – Investments and Investment Policy" located in Part I. 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 Fixed maturity securities $ 133,990 $ — $ 151 $ 134,141 $ 122,142 $ — $ 153 $ 122,295 Short-term 19,061 37,341 26,111 82,513 71,286 35,812 39,344 146,442 Other investments 3,524 21,491 25,015 — — 24,971 24,971 Total investments $ 156,575 $ 37,341 $ 47,753 $ 241,669 $ 193,428 $ 35,812 $ 64,468 $ 293,708 Octave invests in various asset classes in its fixed maturity securities portfolio. Refer to Note 4. Investments of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for information about the composition of fixed maturity securities and other investments by asset class. Premium Receivables 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 $100,537 at June 30, 2026, from $86,549 at December 31, 2025. The increase is primarily due to growth in the ID segment. Reinsurance Recoverable on Paid and Unpaid Losses Octave has reinsurance in place pursuant to surplus share treaties and facultative agreements. As of June 30, 2026 and December 31, 2025, reinsurance recoverable on paid and unpaid losses were Octave Specialty Group, Inc. 37 Second Quarter 2026 Form 10-Q Table of Contents $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; (ii) is entitled to receive collateral from its reinsurance counterparties under certain reinsurance contracts; and (iii) has certain cancellation rights that can be exercised in the event of rating agency downgrades of a reinsurer (among other events and circumstances). 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 $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 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). Goodwill 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. Liabilities: Loss and Loss Adjustment Expense Reserves Loss and loss adjustment expense reserves are estimates of the ultimate liability for unpaid losses and loss expenses for claims that have been reported and 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 June 30, 2026 and December 31, 2025: June 30, 2026 December 31, 2025 Line Gross Net Gross Net Commercial auto $ 139,879 $ 19,029 $ 159,194 $ 23,062 Excess liability 148,594 21,721 116,610 16,897 General liability 65,246 13,724 63,596 12,572 Workers compensation 20,500 20,500 17,798 17,798 Non-standard personal auto 2,275 2,086 3,826 3,635 Professional liability 52,184 3,620 40,846 2,851 Multi-peril / business owners (BOP) 17,898 3,912 6,185 1,519 Surety 12,985 1,796 12,233 94 Unallocated loss adjustment expense reserves 16,165 4,971 14,869 5,551 Other (1) 23,317 225 24,833 289 Loss and Loss Expense Reserves $ 499,043 $ 91,584 $ 459,990 $ 84,268 (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. The process for determining the level of loss and loss adjustment reserves is subject to certain estimates and judgments. Refer to the "Critical Accounting Policies and Estimates" and “Results of Operations” sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations, in addition to Basis of Presentation and Significant Accounting Policies and Loss Reserves sections included in Note 2. Basis of Presentation and Significant Accounting Policies and Note 8. 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. Debt 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. Debt of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q for further information. Commission Payable Commission payables are commissions due to sub-producers for placing insurance contracts on behalf of the MGAs and amounts due to UK Syndicates that provide advanced commissions to fund short term liquidity needs for MGAs. 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 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. 38 Second Quarter 2026 Form 10-Q Table of Contents ACCOUNTING STANDARDS Please refer to Note 1. Business and Basis of Presentation to the Unaudited Consolidated Financial Statements included in Part I, Item 1 in this Form 10-Q for a discussion of the impact of recent accounting pronouncements and the potential impact on Octave's financial condition and results of operations. U.S. STATUTORY BASIS FINANCIAL RESULTS OSG's U.S. insurance subsidiaries prepare financial statements under accounting practices prescribed or permitted by its domiciliary state regulator (“SAP”) for determining and reporting the financial condition and results of operations of an insurance company. The National Association of Insurance Commissioners (“NAIC”) Accounting Practices and Procedures manual (“NAIC SAP”) is adopted as a component of prescribed practices by each domiciliary state. For further information, see "Everspan Indemnity Insurance Company," in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations," and Note 9. Insurance Regulatory Restrictions 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. Everspan Indemnity Insurance Company 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. The increase in commission costs was a function of growth and the underwriting of programs with broad sliding scale commission structures. On a US Statutory basis, commission costs are expensed immediately whereas for US GAAP, such costs are deferred and recognized over the life of the respective policies. Each of Everspan's insurance carriers are a direct or indirect wholly-owned subsidiary of EIIC and therefore are included in EIIC's statutory policyholder surplus. NON-GAAP FINANCIAL MEASURES 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. 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. We present non-GAAP supplemental financial information because we believe such information is of interest to the investment community, and that it provides greater transparency and enhanced visibility into the underlying drivers and performance of our businesses on a basis that may not be otherwise apparent on a GAAP basis. We view these non-GAAP financial measures as important indicators when assessing and evaluating our performance on a segmented and consolidated basis, and they are presented to improve the comparability of our results between periods by eliminating the impact of the items that may not be representative of our core operating performance. 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. The following paragraphs define each non-GAAP financial measure. A tabular reconciliation of the non-GAAP financial measure to the most comparable GAAP financial measure is also presented below. EBITDA — EBITDA is net income (loss) from continuing operations before interest expense, income taxes, depreciation and amortization of intangible assets. EBITDA Margin — EBITDA divided by total revenues. Adjusted EBITDA and Adjusted EBITDA Margin — We define Adjusted EBITDA as net income (loss) from continuing operations before interest expense, income taxes, depreciation, amortization of intangible assets, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, acquisition and integration related expenses, severance, and other exceptional or non-recurring items, including those related to capital raising. We believe that Adjusted EBITDA is an appropriate measure of operating performance because it eliminates the impact of income and expenses that may obfuscate business performance, and that the presentation of this measure enhances an investor's understanding of our financial performance. Octave Specialty Group, Inc. 39 Second Quarter 2026 Form 10-Q Table of Contents Three Months Ended June 30, 2026 Three Months Ended June 30, 2025 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) Adjustments: Add: Interest expense — 2,774 — — 2,774 — 5,570 — — 5,570 Add: Income tax expense (benefit) 125 479 (119) — 485 192 (2,181) (183) — (2,172) Add: Depreciation expense — 350 305 — 655 — — 440 — 440 Add: Intangible amortization expense — 11,609 — — 11,609 — 9,301 — — 9,301 EBITDA 1,244 13,887 (11,451) (313) 3,367 620 4,698 (12,983) — (7,663) Add: Impact of noncontrolling interests — (5,217) — 113 (5,104) — (2,185) — — (2,185) EBITDA attributable to shareholders 1,244 8,670 (11,451) (200) (1,737) 620 2,513 (12,983) — (9,848) 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) % Add: Acquisition and integration-related expenses — 451 688 — 1,139 — 375 399 — 774 Add: Equity-based compensation expense 372 991 2,650 — 4,013 61 67 1,895 — 2,023 Add: Severance and restructuring expense 141 — 449 — 590 — 31 2,918 — 2,949 Add: Other non-operating (income) losses — — — — — — (591) — — (591) Adjusted EBITDA $ 1,757 $ 15,329 $ (7,664) $ (313) $ 9,109 $ 681 $ 4,580 $ (7,771) $ — $ (2,508) Impact of noncontrolling interest — (5,537) — 113 (5,424) — (2,061) — — (2,061) Adjusted EBITDA to shareholders $ 1,757 $ 9,792 $ (7,664) $ (200) $ 3,685 $ 681 $ 2,519 $ (7,771) $ — $ (4,569) 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. 40 Second Quarter 2026 Form 10-Q Table of Contents Six Months Ended June 30, 2026 Six Months Ended June 30, 2025 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) Adjustments: Add: Interest expense — 4,864 — — 4,864 — 11,024 — — 11,024 Add: Income tax expense (benefit) (467) 111 360 — 4 270 (2,681) (378) — (2,789) Add: Depreciation expense — 645 577 — 1,222 — 109 744 — 853 Add: 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) Add: 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) % Add: Acquisition and integration-related expenses — 1,855 1,752 — 3,607 — 375 1,081 — 1,456 Add: Equity-based compensation expense 1,069 1,765 5,771 — 8,605 147 67 3,469 — 3,683 Add: Severance and restructuring expense 1,432 — 868 — 2,300 — 60 4,737 — 4,797 Add: 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. Organic Revenue Growth is the change in organic revenue period-to-period, with prior period results adjusted to (i) include commissions and fees that were excluded from organic revenue in the prior period and reached the twelve-month owned mark in the current period, and (ii) exclude commissions and fees related to divestitures from organic revenue. 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 June 30, 2026 2025 % Growth Total Insurance Distribution revenue & growth percentage (1) $ 58,418 $ 33,041 76.8 % Less: Acquired revenues (7,289) — Less: Profit commission and contingent commission income (5,620) (2,266) Less: Other conforming adjustments — (2,074) Less: impact of F.X. rates (445) 2,564 Total Organic Revenue & Growth Percentage $ 45,064 $ 31,265 44.1 % Octave Specialty Group, Inc. 41 Second Quarter 2026 Form 10-Q Table of Contents Six months ended June 30, 2026 2025 % Growth Total Insurance Distribution revenue & growth percentage (1) $ 136,944 $ 74,039 85.0 % Less: Acquired revenues (28,410) — Less: Profit commission and contingent commission income (11,808) (6,957) Less: Other conforming adjustments — (4,307) Less: 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 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 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, 2026 2025 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) Adjustments: Add: Acquisition and integration-related expenses — 451 688 — 1,139 — 375 399 — 774 Add: Intangible amortization expense — 11,609 — — 11,609 — 9,301 — — 9,301 Add: Equity-based compensation expense 372 991 2,650 — 4,013 61 67 1,895 — 2,023 Add: Severance and restructuring expense 141 — 449 — 590 — 31 2,918 — 2,949 Add: Other non-operating (income) losses — — — — — — (591) — — (591) 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) Adjusted net income (loss) before NCI 500 9,419 (6,718) (313) 2,888 474 (701) (8,013) — (8,240) Net (income) loss attributable to NCI — (4,814) — 113 (4,701) — (2,312) — — (2,312) Adjusted net income (loss) to shareholders 500 4,605 (6,718) (200) (1,813) 474 (3,013) (8,013) — (10,552) 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. 42 Second Quarter 2026 Form 10-Q Table of Contents Six Months Ended June 30, 2026 2025 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) Adjustments: Add: Acquisition and integration-related expenses — 1,855 1,752 — 3,607 — 375 1,081 — 1,456 Add: Intangible amortization expense — 23,256 — — 23,256 — 18,064 — — 18,064 Add: Equity-based compensation expense 1,069 1,765 5,771 — 8,605 147 67 3,469 — 3,683 Add: Severance and restructuring expense 1,432 — 868 — 2,300 — 60 4,737 — 4,797 Add: 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) % Item 3. Quantitative and Qualitative Disclosure About Market Risk 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.