Octave Specialty Group - 10-Q quarterly report FY2026 Q2

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM						10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File Number:						1-10777


OCTAVE SPECIALTY GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware

13-3621676

(State of incorporation)

(I.R.S. employer identification no.)

40 Wall Street

New York

10005

(Address of principal executive offices)

(Zip code)


	(212)	658-7470
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock par value $0.01 per share

OSG

New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act): (Check one):

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of August 4, 2026, 45,051,486 shares of common stock, par value $0.01 per share, of the Registrant were outstanding.

OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS


Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995					1

Item Number		Page	Item Number		Page
PART I. FINANCIAL INFORMATION			PART I (CONTINUED)
1	Unaudited Consolidated Financial Statements of Octave Specialty Group, Inc. and Subsidiaries			U.S. Insurance Statutory Basis Financial Results	39
	Consolidated Balance Sheets (Unaudited)	2		Non-GAAP Financial Measures	39
	Consolidated Statements of Income (Loss) (Unaudited)	3	3	Quantitative and Qualitative Disclosures About Market Risk	43
	Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	4	4	Controls and Procedures	43
	Consolidated Statements of Stockholders' Equity (Unaudited)	5
	Consolidated Statements of Cash Flows (Unaudited)	6	PART II. OTHER INFORMATION
	Notes to Unaudited Consolidated Financial Statements	7	1	Legal Proceedings	43
2	Management's Discussion and Analysis of Financial Condition and Results of Operations	28	1A	Risk Factors	43
	Overview	29	2	Unregistered Sales of Equity Securities and Use of Proceeds	43
	Critical Accounting Policies and Estimates	30	3	Defaults Upon Senior Securities	44
	Results of Operations	30	5	Other Information	44
	Liquidity and Capital Resources	35	6	Exhibits	44
	Balance Sheet	37	SIGNATURES		45
	Accounting Standards	39


Ambac Financial Group, Inc.			i			Second Quarter 2026 Form 10-Q

Table of Contents

CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Management has included in Parts I and II of this Quarterly Report on Form 10-Q, statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “project,” “plan,” “believe,” “anticipate,” “intend,” “planned,” “potential” and similar expressions, or future or conditional verbs such as “will,” “should,” “would,” “could,” and “may,” or the negative of those expressions or verbs, identify forward-looking statements. We caution readers that these statements are not guarantees of future performance. Forward-looking statements are not historical facts, but instead represent only our beliefs regarding future events, which may by their nature be inherently uncertain and some of which may be outside our control. These statements may relate to plans and objectives with respect to the future, among other things, which may change. We are alerting you to the possibility that our actual results may differ, possibly materially, from the expected objectives or anticipated results that may be suggested, expressed or implied by these forward-looking statements. Important factors that could cause our results to differ, possibly materially, from those indicated in the forward-looking statements include, among others, those discussed under “Risk Factors.” in Part I, Item 1A of the 2025 Annual Report on Form 10-K and in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Any or all of management’s forward-looking statements, whether contained herein or in other publications, may prove to be incorrect and are based on management’s current belief or opinions. Octave Specialty Group’s (“OSG”) and its subsidiaries’ (collectively, “Octave” or the “Company”) actual results may differ materially from those expressed in, or implied by, these forward-looking statements, and there are no guarantees about the performance of Octave’s securities. Among events, risks, uncertainties or factors that could cause actual results to differ materially are: (1) the high degree of volatility in the price of OSG’s common stock; (2) uncertainty concerning the Company’s ability to achieve value for holders of its securities from the specialty property and casualty insurance business, the insurance distribution business, or related businesses; (3) greater than expected underwriting losses in the Company’s specialty property and casualty insurance business resulting in inadequacy of loss and loss expense reserves and the possibility that changes in reserves may result in further volatility of earnings or financial results; (4) credit risk throughout Octave’s business, including but not limited to issuers of securities in our investment portfolios, and exposures to reinsurers; (5) the Company’s level of indebtedness, including its ability to generate sufficient cash to service obligations, refinance existing debt, or obtain additional financing on acceptable terms, and the resulting impact on financial condition and operating flexibility; (6) dependence on third parties, including specialty insurance program partners, reinsurers, distribution relationships, and other service providers, and the risk of failures or disruptions in their performance; (7) inability to obtain reinsurance coverage on economic terms; (8) loss of key relationships for the production of business in our specialty property and casualty and insurance distribution businesses or the inability to secure such additional relationships to produce expected results; (9) the impact of catastrophic public health events, environmental or natural events, or political events, including as a result of global or regional conflicts; (10) restrictive covenants in agreements and instruments that impair Octave’s ability to pursue or achieve its business strategies; (11) regulatory risks, including disagreements with insurance regulators, changes in laws or regulations, and the Company’s ability to adapt to an evolving regulatory environment; (12) risks related to changes in the composition, valuation, or performance of the Company’s investment portfolio, including interest rate and foreign currency exchange rate fluctuations; (13) events or circumstances that result in the impairment of our intangible assets and/or goodwill that were recorded in connection with Octave’s acquisitions; (14) the risk of litigation,

regulatory inquiries, investigations, claims or proceedings, and the risk of adverse outcomes in connection therewith; (15) system security risks, data protection breaches and cyberattacks; (16) our inability to attract and retain qualified executives, senior managers and other employees, or the loss of such personnel; (17) greater competition for our specialty property and casualty insurance business and/or our insurance distribution business; (18) loss or lowering of the AM Best rating for our property and casualty insurance company subsidiaries; (19) disintermediation within the insurance industry or greater competition from technology-based insurance solutions or non-traditional insurance markets; (20) changes in law or in the functioning of the healthcare market that impair the business model of our accident and health managing general agents; (21) failure to successfully execute business expansion initiatives, integrate acquired businesses, or realize anticipated benefits from such efforts and significant obligations under put rights granted in completed acquisitions; and (22) other risks and uncertainties that have not been identified at this time.


Octave Specialty Group, Inc.			1			Second Quarter 2026 Form 10-Q

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements of Octave Specialty Group, Inc. and Subsidiaries

OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets


	June 30,		December 31,
(Dollars in thousands, except share data) (June 30, 2026 (Unaudited))	2026		2025
Assets:
Investments:
Fixed maturity securities - available-for-sale, at fair value (amortized cost of $136,793 and $123,414)	$	134,141	$	122,295
Short-term investments, at fair value (amortized cost of $82,513 and $146,434)	82,513		146,442

Other investments (includes $7,498 and $7,454 at fair value)	25,015		24,971
Total investments (net of allowance for credit losses of $0 and $0)	241,669		293,708
Cash and cash equivalents (including $52,308 and $40,754 of restricted cash)	79,096		68,440
Premium receivables (net of allowance for credit losses of $500 and $500)	94,635		75,085
Commission and fees receivable	100,537		86,549
Reinsurance recoverable on paid and unpaid losses (net of allowance for credit losses of $100 and $100)	495,653		436,092
Deferred ceded premium	148,236		146,365
Policy acquisition costs	16,423		9,732
Intangible assets, less accumulated amortization	447,448		474,998
Goodwill	534,304		540,345
Other assets (net of allowance for credit losses of $350 and $350)	122,856		92,003
Total assets	$	2,280,857	$	2,223,317
Liabilities and Stockholders’ Equity:
Liabilities:
Unearned premiums	$	202,890	$	187,178
Loss and loss adjustment expense reserves	499,043		459,990
Ceded premiums payable	93,346		80,561
Deferred program fees and reinsurance commissions	6,989		6,978
Commissions payable	128,231		115,555
Deferred taxes	58,855		65,217

Long-term debt	155,459		117,558
Accrued interest payable	27		1,343

Other liabilities	120,643		102,771

Total liabilities	1,265,483		1,137,151
Commitments and contingencies (See Note 14)
Redeemable noncontrolling interest	197,529		252,981
Stockholders’ equity:
Preferred stock, par value $0.01 per share; 20,000,000 shares authorized shares; issued and outstanding shares—none	—		—
Common stock, par value $0.01 per share; 130,000,000 shares authorized; issued shares: 48,876,882 and 48,876,882	489		489
Additional paid-in capital	379,561		369,860
Accumulated other comprehensive income	3,292		8,483
Retained earnings	348,474		370,431
Treasury stock, shares at cost: 3,859,121 and 3,871,598	(33,063)		(33,473)
Total Octave Specialty Group, Inc. stockholders’ equity	698,753		715,790
Nonredeemable noncontrolling interest	119,092		117,395
Total stockholders’ equity	817,845		833,185
Total liabilities, redeemable noncontrolling interest and stockholders’ equity	$	2,280,857	$	2,223,317

See accompanying Notes to Unaudited Consolidated Financial Statements


Octave Specialty Group, Inc.			2			Second Quarter 2026 Form 10-Q

Table of Contents

OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Loss) (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands, except share data)	2026		2025		2026		2025
Revenues:
Commissions	$	49,728	$	30,322	$	117,906	$	67,093
Servicing and other fees	5,913		4,472		15,275		9,436
Net premiums earned	21,749		16,203		41,750		31,881
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:
Commissions	8,508		7,403		22,513		17,768
Losses and loss adjustment expenses	13,346		10,978		33,025		21,474
Policy acquisition costs	6,359		3,699		12,730		7,540
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
Pretax income (loss) from continuing operations	(11,671)		(22,974)		(15,015)		(38,081)
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 tax (including loss on disposal of $52,960 and $67,456 for the three and six months ended June 30, 2025)	—		(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)
Net income (loss) attributable to shareholders
Continuing operations	$	(14,429)	$	(20,548)	(21,280)		(36,692)
Discontinued operations	—		(52,151)		—		(82,398)
Total	$	(14,429)	$	(72,699)	(21,280)		(119,090)

Net income (loss) from continuing operations per share attributable to shareholders
Basic	$	(0.33)	$	(0.42)	$	(0.47)	$	(0.99)
Diluted	$	(0.33)	$	(0.42)	$	(0.47)	$	(0.99)
Net income (loss) from discontinued operations per share attributable to shareholders
Basic	$	—	$	(1.08)	$	—	$	(1.73)
Diluted	$	—	$	(1.08)	$	—	$	(1.73)
Net income (loss) per share attributable to shareholders
Basic	$	(0.33)	$	(1.51)	$	(0.47)	$	(2.72)
Diluted	$	(0.33)	$	(1.51)	$	(0.47)	$	(2.72)
Weighted-average number of common shares outstanding:
Basic	45,390,612		48,116,503		45,347,014		47,738,050
Diluted	45,390,612		48,116,503		45,347,014		47,738,050

See accompanying Notes to Unaudited Consolidated Financial Statements


Octave Specialty Group, Inc.			3			Second Quarter 2026 Form 10-Q

Table of Contents

OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands, except share data)	2026		2025		2026		2025
Net income (loss)	$	(12,156)	$	(72,953)	$	(15,019)	$	(117,690)
Unrealized gains (losses) on securities, net of income tax provision (benefit) of $—, $503, $— and $1,148	(502)		(4,647)		(1,541)		13,959
Gains (losses) on foreign currency translation, net of income tax provision (benefit) of $—, $—, $— and $—	3,222		88,984		(9,368)		133,704
Credit risk changes of fair value option liabilities, net of income tax provision (benefit) of $—, $48, $— and $195	—		144		—		586
Total other comprehensive income (loss), net of income tax	2,720		84,481		(10,909)		148,249
Total comprehensive income (loss), net of income tax	(9,436)		11,528		(25,928)		30,559
Less: net (gain) loss attributable to noncontrolling interest	(2,273)		254		(6,261)		(1,400)
Less: (gain) loss on foreign currency translation attributable to noncontrolling interest	(652)		(21,083)		5,718		(31,444)
Total comprehensive income (loss) attributable to shareholders	$	(12,361)	$	(9,301)	$	(26,471)	$	(2,285)

See accompanying Notes to Unaudited Consolidated Financial Statements


Octave Specialty Group, Inc.			4			Second Quarter 2026 Form 10-Q

Table of Contents

OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (Unaudited)


Three months ended June 30, 2026 and 2025
	Stockholders' Equity																Mezzanine
			Octave Specialty Group, Inc.														Equity
(Dollars in thousands)	Total		Preferred Stock		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Common Stock Held in Treasury, at Cost		Non- redeemable NCI (1)		Redeemable NCI (1)
Balance at March 31, 2026	$	833,574	$	—	$	489	$	380,263	$	1,224	$	363,751	$	(33,109)	$	120,956	$	195,969
Total net income (loss)	(12,241)		—		—		—		—		(14,429)		—		2,188		85
Total other comprehensive income (loss)	2,349		—		—		—		2,068		—		—		281		371

Stock-based compensation	4,153		—		—		4,153		—		—		—		—		—
Cost of shares repurchased	—		—		—		—		—		—		—		—		—
Cost of shares (acquired) issued under equity plan	(65)		—		—		—		—		(111)		46		—		—
Changes to NCI	(5,070)		—		—		—		—		(737)		—		(4,333)		1,104
Purchase of warrants	(4,855)		—		—		(4,855)		—		—		—		—		—









Balance at June 30, 2026	$	817,845	$	—	$	489	$	379,561	$	3,292	$	348,474	$	(33,063)	$	119,092	$	197,529

Balance at March 31, 2025	$	966,004	$	—	$	489	$	333,356	$	(135,029)	$	623,306	$	(29,945)	$	173,827	$	245,461
Total net income (loss)	(71,953)		—		—		—		—		(72,699)		—		746		(1,000)
Total other comprehensive income (loss)	70,752		—		—		—		63,399		—		—		7,353		13,730

Stock-based compensation	2,437		—		—		2,437		—		—		—		—		—
Cost of shares repurchased	(179)		—		—				—		—		(179)		—		—
Cost of shares (acquired) issued under equity plan	—		—		—		—		—		—		—		—		—
Changes to NCI	(1,038)		—		—		12,146		—		220		—		(13,404)		(5,506)









Balance at June 30, 2025	$	966,023	$	—	$	489	$	347,939	$	(71,630)	$	550,827	$	(30,124)	$	168,522	$	252,685
(1) NCI = Noncontrolling interest
Six months ended June 30, 2026 and 2025
	Stockholders' Equity																Mezzanine
			Octave Specialty Group, Inc.														Equity
(Dollars in thousands)	Total		Preferred Stock		Common Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Common Stock Held in Treasury, at Cost		Non- redeemable NCI (1)		Redeemable NCI (1)
Balance at January 1, 2026	$	833,185	$	—	$	489	$	369,860	$	8,483	$	370,431	$	(33,473)	$	117,395	$	252,981
Total net income (loss)	(17,084)		—		—		—		—		(21,280)		—		4,196		2,065
Total other comprehensive income (loss)	(7,087)		—		—		—		(5,191)		—		—		(1,896)		(3,822)

Stock-based compensation	8,875		—		—		8,875		—		—		—		—		—
Cost of shares repurchased	—		—		—		—		—		—		—		—		—
Cost of shares (acquired) issued under equity plan	(337)		—		—		—		—		(747)		410		—		—
Changes to NCI	5,148		—		—		5,681		—		70		—		(603)		(53,695)


Purchase of warrants	(4,855)		—		—		(4,855)		—		—		—		—








Balance at June 30, 2026	$	817,845	$	—	$	489	$	379,561	$	3,292	$	348,474	$	(33,063)	$	119,092	$	197,529

Balance at January 1, 2025	$	996,119	$	—	$	489	$	331,007	$	(188,436)	$	683,643	$	(28,339)	$	197,755	$	199,402
Total net income (loss)	(116,949)		—		—		—		—		(119,090)		—		2,141		(741)
Total other comprehensive income (loss)	128,862		—		—		—		116,806		—		—		12,056		19,388

Stock-based compensation	4,786		—		—		4,786		—		—		—		—		—
Cost of shares repurchased	(3,301)												(3,301)
Cost of shares (acquired) issued under equity plan	(1,607)		—		—		—		—		(3,123)		1,516		—		—
Changes to NCI	(41,887)		—		—		12,146		—		(10,603)		—		(43,430)		34,636








Balance at June 30, 2025	$	966,023	$	—	$	489	$	347,939	$	(71,630)	$	550,827	$	(30,124)	$	168,522	$	252,685

See accompanying Notes to Unaudited Consolidated Financial Statements


Octave Specialty Group, Inc.			5			Second Quarter 2026 Form 10-Q

Table of Contents

OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended June 30,
(Dollars in thousands)	2026		2025
Cash flows from operating activities:
Net income (loss)	$	(15,019)	$	(117,690)

Net income (loss) from discontinued operations	—		(82,398)
Net income (loss) from continuing operations	(15,019)		(35,292)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Intangible amortization and depreciation	24,478		18,917


Share-based compensation	8,875		16,932
Deferred tax provision (benefit)	(5,028)		(5,565)


Unearned premiums, net	13,841		1,332
Reinsurance recoverable and loss and loss adjustment expense, net	(20,508)		(35,349)
Ceded premiums payable	12,785		37,555

Premium and commissions receivables	(33,962)		(32,231)
Commissions payable	13,057		25,444
Contract assets and contract liabilities, net	(15,398)		(7,572)



Corporate costs reallocated to continuing operations	—		5,265
Other, net	(3,431)		101
Net cash provided by (used in) operating activities from continuing operations	(20,310)		(10,463)
Cash flows from investing activities:
Proceeds from sales of bonds	40		—
Proceeds from matured bonds	25,214		21,816
Purchases of bonds	(38,567)		(22,747)

Purchases of other investments	(147)		(66)
Proceeds from short-term investments, net	63,928		24,966


Other, net	(2,453)		(5,939)
Net cash provided by (used in) investing activities from continuing operations	48,015		18,030
Cash flows from financing activities:
Proceeds from long-term debt	39,089		—
Payments for purchases of common stock held in treasury	—		(3,301)
Payments for long-term debt	(1,500)		—

Tax payments related to shares withheld for share-based compensation plans	(583)		(1,516)



Payments to purchase warrants	(4,855)		—
Distributions to noncontrolling interest holders	(4,520)		(894)
Acquisitions of noncontrolling interest shares	(44,027)		(4,036)
Net cash provided by (used in) financing activities from continuing operations	(16,396)		(9,747)

Effect of foreign exchange on cash and cash equivalents - continuing operations	(653)		1,288
Net cash provided by (used in) continuing operations	10,656		(892)
Cash, cash equivalents, and restricted cash at beginning of period - continuing operations	68,440		47,275
Cash, cash equivalents, and restricted cash at end of period - continuing operations	$	79,096	$	46,383
Net cash provided by (used in) operating activities from discontinued operations	—		34,851
Net cash provided by (used in) investing activities from discontinued operations	—		57,667
Net cash provided by (used in) financing activities from discontinued operations	—		(94,854)

Effect of foreign exchange on cash and cash equivalents - discontinued operations	—		475
Net cash provided by (used in) discontinued operations	—		(1,861)
Cash, cash equivalents, and restricted cash at beginning of period - discontinued operations	—		66,077

Cash, cash equivalents, and restricted cash at end of period - discontinued operations	$	—	$	64,216

Cash paid during the period for:
Interest on debt	$	5,868	$	12,361
Income taxes	$	3,713	$	2,689

See accompanying Notes to Unaudited Consolidated Financial Statements


Octave Specialty Group, Inc.			6			Second Quarter 2026 Form 10-Q

Table of Contents

OCTAVE SPECIALTY GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS




Note 1. Background and Business Description	8	Note 9. Debt	23
Note 2. Segment Information	12	Note 10. Revenues From Contracts with Customers	22
Note 3. Discontinued Operations	15	Note 11. Comprehensive Income (Loss)	24
Note 4. Investments	15	Note 12. Net Income Per Share	25
Note 5. Fair Value Measurements	18	Note 13. Income Taxes	26
Note 6. Insurance Contracts	20	Note 14. Commitments and Contingencies	26
Note 7. Derivative Instruments	22
Note 8. Goodwill and Intangible Assets	20


Octave Specialty Group, Inc.			7			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

1. BACKGROUND AND BUSINESS DESCRIPTION

Business

The following description provides an update of Note 1. Background and Business Description and Note 2. Basis of Presentation and Significant Accounting Policies in the Notes 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, and should be read in conjunction with the complete descriptions provided in the Form 10-K. Capitalized terms used, but not defined herein, and in the other footnotes to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q shall have the meanings ascribed thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Octave Specialty Group, Inc. (“OSG”), headquartered in New York City and Tampa, Florida, is a financial services holding company incorporated in the state of Delaware on April 29, 1991. References to “Octave,” "OSG", the “Company,” “we,” “our,” and “us” are to OSG and its subsidiaries, as the context requires. Octave operates two principal businesses:

•Insurance Distribution — Octave's specialty property and casualty ("P&C") and accident and health ("A&H") insurance underwriting and distribution business, includes Managing General Agents and Underwriters (collectively "MGAs" or "MGA/Us"); an insurance broker; and other distribution, underwriting and related businesses. On October 31, 2025, the Company completed the acquisition of ArmadaCorp Capital, LLC and its subsidiaries (collectively, "ArmadaCorp"), a leading specialty A&H MGA. Octave's insurance distribution platform operates in the following lines of business: property, niche specialty risk, accident & health, miscellaneous specialty, reinsurance, surety, marine & energy, specialty auto, Excess & Surplus ("E&S") commercial package, professional lines and Directors & Officers ("D&O") .

•Specialty Property & Casualty Insurance — Octave's Specialty Property & Casualty Insurance program insurer business currently includes five carriers (collectively, “Everspan”). Everspan carriers have an A.M. Best rating of 'A-' (Excellent), which was affirmed on July 17, 2025.

The Company reports these two business operations as segments; see Note 2. Segment Information for further information.

Basis of Presentation

The Company has disclosed its significant accounting policies in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

The accompanying unaudited consolidated financial statements have been prepared on the basis of U.S. generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the

information and disclosures required by GAAP for annual periods. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2025. The accompanying consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (U.S.), but in the opinion of management such financial statements include all adjustments necessary for the fair presentation of the Company’s consolidated financial position and results of operations. The results of operations for the three and six months ended June 30, 2026, may not be indicative of the results that may be expected for the year ending December 31, 2026, due to seasonality within the Insurance Distribution segment and other factors. The December 31, 2025, consolidated balance sheet included in this Quarterly Report on Form 10-Q was obtained from the audited financial statements as presented in Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions could change in the future as more information becomes available or actual amounts become determinable, which could affect the amounts reported and disclosed herein, at which point the recorded estimates are revised and reflected in operating results. Actual results could differ from those estimates.

Consolidation

The consolidated financial statements include the accounts of OSG and all other entities in which OSG (directly or through its subsidiaries) has a controlling financial interest. All significant intercompany balances have been eliminated. The usual condition for a controlling financial interest is ownership of a majority of the voting interests of an entity.

Discontinued Operations

On September 29, 2025, the Company completed the sale of its Legacy Financial Guarantee business, inclusive of Ambac Assurance Corporation ("AAC") and its wholly owned subsidiary Ambac Assurance UK Limited. The results of discontinued operations for all periods to the date of sale are reported separately as Net income (loss) from discontinued operations within the Consolidated Statements of Income (Loss) for the prior periods. Assets and liabilities of AAC prior to the date of sale are presented as Assets of discontinued operations and Liabilities of discontinued operations. AAC's cash flows for all periods to the date of sale are reflected as Net cash provided by (used in) discontinued operations within the Consolidated Statements of Cash Flows.

Refer to Sale of Ambac Assurance Corporation in Note 3. Discontinued Operations for further information.


Octave Specialty Group, Inc.			8			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

Foreign Currency

The impact of non-functional currency transactions and the remeasurement of non-functional currency assets and liabilities into the respective subsidiaries' functional currency (collectively "foreign currency transactions gains/(losses)") are $1,270 and $(4,821) for the six months ended June 30, 2026 and 2025, respectively. Foreign currency transaction gains/(losses) are primarily the result of Octave Ventures transactions in currencies (primarily the U.S. dollar) other than its functional currency (the British Pound Sterling).

Warrant Conversion

In connection with and pursuant to the Purchase Agreement related to the sale of Ambac Assurance Corporation, OSG issued to the buyer ("Buyer") a warrant exercisable for 5,092,707 shares of OSG common stock. During the three months ended June 30, 2026, Buyer exercised their right to convert one-third of the warrant representing 1,697,569 warrant shares at its Black-Scholes value of $4,855. OSG elected to settle the conversion in cash. Following the conversion and as of June 30, 2026, the outstanding warrant allows the holder to acquire 3,395,138 shares of OSG common stock as an exercise price of $18.50 per share. Buyer may convert half of the remaining warrant in any three-month period subsequent to September 30, 2026, through expiration on March 29, 2032, which may be settled, at OSG's election, in cash, in shares of OSG common stock or combination of both. OSG estimates the Black-Scholes value of the remaining warrant at $3.02 per warrant share as of July 2026.

Noncontrolling Interests ("NCI")

Nonredeemable NCI

The total Nonredeemable NCI as of June 30, 2026 and December 31, 2025, was $119,092 and $117,395, respectively, for the NCI share in certain Octave Ventures' operating units that are minority owned by the units' respective management teams that do not have associated put options. At the beginning of 2025, there were no put options associated with any of these minority interests, and as such, the aggregate amount was classified as nonredeemable NCI on the balance sheet. As further described under "Redeemable NCI" below, certain NCI shares were reclassified from nonredeemable to redeemable NCI. When redeemable NCI shares are no longer redeemable, such as when put options expire unexercised, the NCI shares are reclassified to nonredeemable NCI with no change in carrying value.

Redeemable NCI

During the six months ended June 30, 2026, the minority owners of Octave Ventures exercised put options. During the six months ended June 30, 2026 and 2025, certain Option Shares (as defined below) were also exercised. In addition, during the six months ended June 30, 2026, Octave purchased certain redeemable NCI shares from a minority interest owner of Capacity Marine Corporation ("CMC").


	Ownership Percentage
Company	June 30, 2026	December 31, 2025


Capacity Marine	87%	80%

Octave Ventures (1)	70%	60%

(1)Octave Ventures' majority interests in its underlying MGAs and other entities ranges from 51% to 100% at June 30, 2026, and 51% to 100% at December 31, 2025. Together with Octave's direct ownership in some underlying MGAs and other entities, Octave's interest ranges from 35% to 70% at June 30, 2026 and 30% to 60% at December 31, 2025, respectively, in Octave Ventures' underlying MGAs and other entities.

Under the terms of applicable agreements, Octave has call options to purchase the remaining NCI from the minority owners and the minority owners have put options to sell their interests to Octave. Because the exercise of the put options is outside of Octave's control, in accordance with the Distinguishing Liabilities from Equity Topic of the ASC, Octave reports redeemable NCI in the mezzanine section of its consolidated balance sheet. In addition, during the six months ended June 30, 2026 and 2025, Octave entered into put options with certain minority owners of the MGA/U operating entities that are majority owned by Octave Ventures. These put options are embedded in the associated NCI shares ("Option Shares"), resulting in remeasurement of the shares at fair value inclusive of the put options, and reclassification of the Option Shares from nonredeemable NCI to redeemable NCI. The changes in carrying value resulting from revaluations were recorded as offset to retained earnings, with corresponding impacts on earnings per share of $507 for the three and six months ended June 30, 2026, and $10,276 for the six months ended June 30, 2025. During the three months ended June 30, 2025, put options on certain Option Shares expired, resulting in reclassification of $3,259 of redeemable NCI to nonredeemable NCI. No put options expired during the three months ended June 30, 2026. During the six months ended June 30, 2026 and 2025, put options on certain Option Shares expired, resulting in reclassification of $3,841 and $5,136, respectively, of redeemable NCI to nonredeemable NCI.

During the six months ended June 30, 2026, Octave acquired redeemable NCI with a carrying value of $49,214 as a result of the exercise of put options by certain minority owners of Octave Ventures and of certain Option Shares. The aggregate consideration payable for these shares of $43,644 was settled in cash in April 2026. Additionally, during the six months ended June 30, 2026, Octave paid $383 to purchase certain redeemable NCI shares from a minority interest owner of CMC, resulting in a $494 decrease to redeemable NCI. Likewise, during the six months ended June 30, 2025, Octave paid $1,068 to purchase redeemable NCI shares with a carrying value of $1,815. The difference between consideration paid and carrying values of redeemable NCI is recorded as an adjustment to additional paid-in capital.

The acquisition date valuation method used to determine the fair value of redeemable NCI and related put and call options was a Monte Carlo Simulation. The significant fair value assumptions used in the simulation include the exercise thresholds, EBITDA forecasts, discount rate and long-term growth rates. The redeemable NCI is remeasured each period as the greater of:

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

ii.the redemption value of the put option under ASC 480.


Octave Specialty Group, Inc.			9			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

At each reporting period, the redeemable NCI balance increases or decreases due to activity related to net income and distributions. Management calculates the redemption value of the put options under ASC 480 on an annual basis using prior-year EBITDA and related adjustments as prescribed by the terms of the relevant redemption provisions, or when otherwise required based on the terms of the redemption provisions. Management evaluates the redemption value and would record adjustments other than annually upon a change in contractual terms.

Any increase or (decrease) in the carrying value of the redeemable NCI as a result of adjusting to the redemption value of the put option is recorded as an offset to retained earnings. The impact of such differences on earnings per share are presented in Note 12. Net Income Per Share.

Following is a rollforward of redeemable NCI interest for the periods presented.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Beginning balance	$	195,969	$	245,461	$	252,981	$	199,402
Net income attributable to redeemable NCI (ASC 810)	85		(999)		2,065		(741)
Gain (loss) on foreign currency translation attributable to redeemable NCI	371		13,730		(3,822)		19,388

Reclassification from nonredeemable NCI, including remeasurement at fair value	1,328		—		1,328		42,180
Reclassification to nonredeemable NCI	—		(3,259)		(3,841)		(5,136)
Put / call option exercise	—		(1,815)		(49,708)		(1,815)
Distributions	(454)		(211)		(897)		(919)
Adjustment to redemption value (ASC 480 )	230		(222)		(577)		326
Ending balance	$	197,529	$	252,685	$	197,529	$	252,685

Immaterial Correction of Prior Period Error

The Company previously identified an immaterial prior period error for the three and six months ended June 30, 2025, related to the redeemable NCI redemption value adjustment recorded under ASC 810-10. In accordance with the U.S. Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 99, “Materiality,” and ASC 250, Accounting Changes and Error Corrections, the Company assessed the impact of this error correction on its previously issued consolidated financial statements and concluded that the error is not material to any prior period. The immaterial error impacts the Consolidated Balance Sheet, Consolidated Statement of Comprehensive Income (Loss), Consolidated Statement of Stockholders' Equity and Earnings (Loss) Per Share.

The error was identified subsequent to the filing of the Company's Quarterly Reports on Form 10-Q for the three months ended March 31, 2025, June 30, 2025 and September 30, 2025, and before the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2025. The impact of the correction for the three and six months ended June 30, 2025 is shown below.

Corrected Consolidated Statement of Comprehensive Income (Loss):


	Three Months Ended June 30, 2025
	As Reported		Immaterial Correction		As Corrected
Gain on foreign currency translation, net of income tax provision	$	97,484	$	(8,500)	$	88,984
(Gain) loss on foreign currency translation attributable to noncontrolling interest	$	(21,575)	$	492	$	(21,083)
Total comprehensive income (loss) attributable to shareholders	$	(1,293)	$	(8,008)	$	(9,301)


	Six Months Ended June 30, 2025
	As Reported		Immaterial Correction		As Corrected
Gain on foreign currency translation, net of income tax provision	$	133,704	$	—	$	133,704
(Gain) loss on foreign currency translation attributable to noncontrolling interest	$	(25,827)	$	(5,617)	$	(31,444)
Total comprehensive income (loss) attributable to shareholders	$	3,332	$	(5,617)	$	(2,285)

Corrected Consolidated Statements of Stockholders’ Equity:


	Three Months Ended June 30, 2025
	As Reported		Immaterial Correction		As Corrected
Balance at March 31, 2025	$	1,026,048	$	(60,044)	$	966,004
Total net income (loss)	(71,953)		—		(71,953)
Total other comprehensive income (loss)	78,756		(8,004)		70,752

Stock-based compensation	2,437		—		2,437
Cost of shares repurchased	(179)		—		(179)
Cost of shares (acquired) issued under equity plan	—		—		—
Changes to noncontrolling interest	(6,748)		5,710		(1,038)
Balance at June 30, 2025	$	1,028,361	$	(62,338)	$	966,023


Octave Specialty Group, Inc.			10			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)


	Six Months Ended June 30, 2025
	As Reported		Immaterial Correction		As Corrected
Balance at January 1, 2025	$	1,054,661	$	(58,542)	$	996,119
Total net income (loss)	(116,949)		—		(116,949)
Total other comprehensive income (loss)	134,479		(5,617)		128,862

Stock-based compensation	4,786		—		4,786
Cost of shares repurchased	(3,301)		—		(3,301)
Cost of shares (acquired) issued under equity plan	(1,607)		—		(1,607)
Changes to noncontrolling interest	(43,708)		1,821		(41,887)
Balance at June 30, 2025	$	1,028,361	$	(62,338)	$	966,023

Corrected Earnings (Loss) Per Share:


	Three Months Ended June 30, 2025
	As Reported		Immaterial Correction		As Corrected
Net income (loss) from continuing operations per share attributable to stockholders
Basic	$	(0.45)	$	0.03	$	(0.42)
Diluted	$	(0.45)	$	0.03	$	(0.42)
Net income (loss) per share attributable to shareholders
Basic	$	(1.54)	$	0.03	$	(1.51)
Diluted	$	(1.54)	$	0.03	$	(1.51)


	Six Months Ended June 30, 2025
	As Reported		Immaterial Correction		As Corrected
Net income (loss) from continuing operations per share attributable to stockholders
Basic	$	(1.03)	$	0.04	$	(0.99)
Diluted	$	(1.03)	$	0.04	$	(0.99)
Net income (loss) per share attributable to shareholders
Basic	$	(2.75)	$	0.03	$	(2.72)
Diluted	$	(2.75)	$	0.03	$	(2.72)

Corrected Rollforwards of Redeemable NCI:


	Three Months Ended June 30, 2025
	As Reported		Immaterial Correction		As Corrected
Beginning balance	$	185,417	$	60,044	$	245,461
Net income attributable to redeemable NCI (ASC 810)	(999)		—		(999)
Gain (loss) on foreign currency translation attributable to redeemable NCI	9,973		3,757		13,730
Reclassification from nonredeemable NCI, including remeasurement at fair value	—		—		—
Reclassification to nonredeemable NCI	(3,259)		—		(3,259)
Put / call option exercise	(1,815)		—		(1,815)
Distributions	(211)		—		(211)
Adjustment to redemption value (ASC 480)	1,241		(1,463)		(222)
Ending balance	$	190,347	$	62,338	$	252,685


	Six Months Ended June 30, 2025
	As Reported		Immaterial Correction		As Corrected
Beginning balance	$	140,860	$	58,542	$	199,402
Net income attributable to redeemable NCI (ASC 810)	(741)		—		(741)
Gain (loss) on foreign currency translation attributable to redeemable NCI	13,770		5,618		19,388
Reclassification from nonredeemable NCI, including remeasurement at fair value	42,180		—		42,180
Reclassification to nonredeemable NCI	(5,136)		—		(5,136)
Put / call option exercise	(1,815)		—		(1,815)
Distributions	(919)		—		(919)
Adjustment to redemption value (ASC 480)	2,148		(1,822)		326
Ending balance	$	190,347	$	62,338	$	252,685

Reclassifications and Rounding

Reclassifications may have been made to prior years' amounts to conform to the current year's presentation. Certain amounts and tables in the consolidated financial statements and associated notes may not add due to rounding.


Octave Specialty Group, Inc.			11			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

Adopted Accounting Standards

Credit Losses for Accounts Receivable and Contract Assets

In July 2025, the FASB issued ASU 2025-05, Financial Instruments— Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in the ASU provide all entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions under Topic 606. The practical expedient allows entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset.

Octave has adopted the practical expedient allowed under this ASU for the measurement of expected credit losses on current accounts receivable and current contract assets arising from transactions under Topic 606 for interim and annual reporting periods beginning January 1, 2026. The standard did not have a material impact on Octave's financial statements.

There have been no other new accounting standards adopted during the six months ended June 30, 2026.

Future Application of Accounting Standards and Required Disclosures

Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Intangibles— Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal Use Software. This standard is intended to increase the operability of the accounting guidance for internal-use software development costs considering the evolution of software development methods. Amendments remove references to prescriptive and sequential project stages, requiring entities to start capitalizing costs when: (i) management has authorized and committed to funding the project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended.

The ASU is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. Octave has not determined if it will early adopt this ASU and is evaluating the ASU's potential impact on Octave's financial statements.

Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The enhanced disclosures requirements include the following:

•Disclose the amounts of certain expense categories included in each relevant expense caption. Those categories applicable to Octave include employee compensation, depreciation, and intangible asset amortization. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed above.

•Include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements.

•Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

•Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

The ASU is effective for annual periods beginning after December 15, 2026, and for interim reporting periods after December 15, 2027, with early adoption permitted. Octave has not determined if it will early adopt this ASU and is evaluating the potential impact on Octave's financial statements.

2. SEGMENT INFORMATION

The Company reports its results of continuing operations in two segments: Specialty Property and Casualty Insurance and Insurance Distribution ("ID"). These reportable segments offer distinct products and services as further described in Note 1. Background and Business Description. The operating entities within each segment are wholly or majority owned by separate intermediate holding companies: Everspan Holdings, LLC for Specialty Property and Casualty Insurance and Octave Partners LLC for ID. The Company's segments have separate management teams with incentive compensation structures based on segment level performance. Financial reporting for each segment is regularly provided to the Company's Chief Executive Officer, who is the chief operating decision maker ("CODM") for purposes of monitoring the businesses, assessing performance and allocating resources.

The following tables summarize the components of the Company’s total revenues and expenses and pretax income (loss) by reportable business segment for the periods presented as well as segment assets as of June 30, 2026 and 2025. Information provided below for “Corporate and Other” primarily relates to the operations of OSG, which include investment income on its investment portfolio and costs to maintain the operations of OSG, including public company reporting, capital management and business development costs for the acquisition and development of new business initiatives. As a result of the Company reporting the results of operations of AAC as discontinued operations, certain corporate costs charged to AAC totaling $2,502 and $5,265 for the three and six months ended June 30, 2025, respectively, were reported in Net income from continuing operations on the Consolidated Statements of Income (Loss) and included in Corporate and Other in the tables below.


Octave Specialty Group, Inc.			12			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)


	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 (3)		Total		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Eliminations (3)		Total
Revenues:
Net premiums earned	$	21,749							$	21,749	$	16,203							$	16,203
Commissions (1)			$	51,786			$	(2,058)	49,728				$	30,322			$	—	30,322
Servicing and other fees			5,913						5,913				4,472						4,472
Program fees	3,293								3,293		3,497								3,497
Investment income	1,298		399		$	180			1,877		1,748		340		$	521			2,609
Other	63		320		52				435		(58)		(2,093)		5				(2,146)
Total revenues from continuing operations	26,403		58,418		232		(2,058)		82,995		21,390		33,041		526		—		54,957
Less:
Losses and loss adjustment expenses	13,346								13,346		10,978								10,978
Policy acquisition costs (2)	6,482						(123)		6,359		3,699						—		3,699
Commissions			10,130				(1,622)		8,508				7,403				—		7,403
Intangible amortization and depreciation			11,959		305				12,264				9,301		440				9,741
Interest			2,774						2,774				5,570						5,570
Compensation expense	2,694		24,539		7,023				34,256		2,605		14,455		5,722				22,782
Non-compensation expense	2,636		9,862		4,661				17,159		3,488		6,485		7,787				17,759
Total expenses from continuing operations	25,159		59,264		11,988		(1,745)		94,666		20,770		43,214		13,949		—		77,931
Segment pretax income (loss)	1,244		(846)		(11,756)		(313)		(11,671)		620		(10,173)		(13,423)		—		(22,974)
Segment income tax expense (benefit)	125		479		(119)		—		485		192		(2,181)		(183)		—		(2,172)
Segment net income (loss)	1,119		(1,325)		(11,637)		(313)		(12,156)		428		(7,992)		(13,240)		—		(20,802)
Segment net (income) loss attributable to NCI			(2,386)				113		(2,273)				254				—		254
Net income (loss) attributable to shareholders	$	1,119	$	(3,711)	$	(11,637)	$	(200)	(14,429)		$	428	$	(7,738)	$	(13,240)	$	—	(20,548)

Reconciliation to consolidated net income (loss) attributable to shareholders
Discontinued operations									—										(52,151)
Net income (loss) attributable to shareholders									$	(14,429)									$	(72,699)

Reconciliation of segment assets to consolidated total assets
Total assets	$	955,681	$	1,274,440	$	56,259	$	(5,523)	$	2,280,857	$	847,647	$	975,843	$	62,041	$	—	$	1,885,531
Discontinued operations																			6,636,855
Total consolidated assets																			$	8,522,386

EBITDA Reconciliation
Segment net income (loss)	$	1,119	$	(1,325)	$	(11,637)	$	(313)	$	(12,156)	$	428	$	(7,992)	$	(13,240)	$	—	$	(20,802)
Adjustments:
Interest expense	—		2,774		—		—		2,774		—		5,570		—		—		5,570
Income tax expense (benefit)	125		479		(119)		—		485		192		(2,181)		(183)		—		(2,172)
Depreciation expense	—		350		305		—		655		—		—		440		—		440
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)
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)

(1) Insurance Distribution commission income includes $2,058 of commissions from Specialty Property and Insurance. The elimination of these revenues is included in Eliminations.

(2) The Specialty Property & Casualty Insurance Distribution segment's results reflect Policy acquisition costs as if the business is a stand-alone operation. The elimination of intersegment costs capitalized in accordance with this policy is included in Eliminations.

(3) Intersegment revenues and intersegment pretax income (loss) amounts for the three months ended June 30, 2025 are insignificant and are not presented separately.


Octave Specialty Group, Inc.			13			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)


	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 (3)		Total		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Eliminations (3)		Total
Revenues:
Net premiums earned	$	41,750							$	41,750	$	31,881							$	31,881
Commissions (1)			$	119,964			(2,058)		117,906				$	67,093			—		67,093
Servicing and other fees			15,275						15,275				9,436						9,436
Program fees	6,937								6,937		7,149								7,149
Investment income	2,947		707		$	578			4,232		3,590		716		$	1,118			5,424
Other	68		998		(1)				1,065		(59)		(3,206)		(5)				(3,270)
Total revenues from continuing operations	51,702		136,944		577		(2,058)		187,165		42,561		74,039		1,113		—		117,713
Less:
Losses and loss adjustment expenses	33,025								33,025		21,474								21,474
Policy acquisition costs (2)	12,853						(123)		12,730		7,540						—		7,540
Commissions			24,135				(1,622)		22,513				17,768				—		17,768
Intangible amortization and depreciation	—		23,901		577				24,478				18,173		745				18,917
Interest	—		4,864						4,864				11,024						11,024
Compensation expense	7,992		49,522		13,786				71,300		6,116		27,988		11,566				45,669
Non-compensation expense	4,870		18,583		9,817				33,270		5,309		11,502		16,590				33,402
Total expenses from continuing operations	58,740		121,005		24,180		(1,745)		202,180		40,439		86,455		28,901		—		155,794
Segment pretax income (loss)	(7,038)		15,939		(23,603)		(313)		(15,015)		2,122		(12,416)		(27,788)		—		(38,081)
Segment income tax expense (benefit)	(467)		111		360		—		4		270		(2,681)		(378)		—		(2,789)
Segment net income (loss)	(6,571)		15,828		(23,963)		(313)		(15,019)		1,852		(9,735)		(27,410)		—		(35,292)
Segment net (income) loss attributable to NCI			(6,374)				113		(6,261)				(1,400)				—		(1,400)
Net income (loss) attributable to shareholders	$	(6,571)	$	9,454	$	(23,963)	$	(200)	(21,280)		$	1,852	$	(11,135)	$	(27,410)	$	—	(36,692)

Reconciliation to consolidated net income (loss) attributable to shareholders
Discontinued operations									—										(82,398)
Net income (loss) attributable to shareholders									$	(21,280)									$	(119,090)

EBITDA Reconciliation
Segment net income (loss)	$	(6,571)	$	15,828	$	(23,963)	$	(313)	$	(15,019)	$	1,852	$	(9,735)	$	(27,410)	$	—	$	(35,292)
Adjustments:
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)

(1)Insurance Distribution commission income includes $2,058 of commissions from Specialty Property and Insurance. The elimination of these revenues is included in Eliminations.

(2)The Specialty Property & Casualty Insurance Distribution segment's results reflect Policy acquisition costs as if the business is a stand-alone operation. The elimination of intersegment costs capitalized in accordance with this policy is included in Eliminations.

(3)Intersegment revenues and intersegment pretax income (loss) amounts for the six months ended June 30, 2025 are insignificant and are not presented separately.


Octave Specialty Group, Inc.			14			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

3. DISCONTINUED OPERATIONS

Sale of Ambac Assurance Corporation ("AAC")

On September 29, 2025, the Company completed the sale of AAC. See Note 5. Discontinued Operations in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, for further information regarding the sale.

The following table summarizes the major line items constituting net income (loss) from discontinued operations as presented in the Consolidated Statements of Income (Loss) for the periods presented:


	Three Months Ended June 30, 2025		Six Months Ended June 30, 2025
Revenues:
Net premiums earned	$	5,199	$	9,962
Net investment income	36,107		56,807
Net investment gains (losses), including impairments	(12,514)		(18,468)
Net gains (losses) on derivative contracts	(8,834)		(9,367)


Other revenues	8,840		16,661
Total revenues	28,798		55,595
Expenses:
Loss and loss adjustment expenses (benefit)	(2,657)		8,078
Intangible amortization	5,362		11,188
General & administrative and other expenses	7,523		16,607
Interest expense	15,943		31,894

Total expenses	26,171		67,767
Pretax income (loss)	2,627		(12,172)
Provision for income taxes	1,818		2,770
Loss on disposal (1)	(52,960)		(67,456)
Net income (loss) from discontinued operations	$	(52,151)	$	(82,398)

(1) Loss on disposal reflects changes to the difference between the fair value of net consideration to be received and the carrying value of net assets held-for-sale, less expected closing costs.

4. INVESTMENTS

Octave's invested assets are primarily comprised of (i) fixed maturity securities classified as available for sale, (ii) an investment in a limited partnership and (iii) private preferred equity investments, which primarily include minority investments in MGAs. The investments in the limited partnership interest and private preferred equity investments are reported within Other investments on the Consolidated Balance Sheets. The limited partnership, which holds pooled investments, is reported using the equity method.

Fixed Maturity Securities and Short-Term Investments:

The amortized cost and estimated fair value of available-for-sale investments and short-term investments, as of June 30, 2026 and December 31, 2025, were as follows:


	June 30, 2026										December 31, 2025
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized				Estimated Fair Value		Amortized Cost		Allowance for Credit Losses	Gross Unrealized				Estimated Fair Value
					Gains		Losses							Gains		Losses
Fixed maturity securities:
Municipal obligations	$	10,256	$	—	$	36	$	201	$	10,091	$	11,697	—	$	121	$	228	$	11,590
Corporate obligations	75,283		—		176		2,255		73,204		67,881		—	634		1,942		66,573

U.S. government obligations	41,185		—		60		429		40,816		35,190		—	365		131		35,424

Residential mortgage-backed securities	2,452		—		—		24		2,428		1,604		—	—		7		1,597
Commercial mortgage-backed securities	4,869		—		20		41		4,848		3,307		—	42		8		3,341
Collateralized debt obligations	1,368		—		1		1		1,368		1,963		—	12		—		1,975
Other asset-backed securities	1,380		—		6		—		1,386		1,772		—	23		—		1,795
Total fixed maturity securities	136,793		—		299		2,951		134,141		123,414		—	1,197		2,316		122,295
Short-term investments	82,513		—		—		—		82,513		146,434		—	8		—		146,442





Total	$	219,306	$	—	$	299	$	2,951	$	216,654	$	269,848	—	$	1,205	$	2,316	$	268,737


Octave Specialty Group, Inc.			15			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

The amortized cost and estimated fair value of available-for-sale investments and short-term investments, by contractual maturity, as of June 30, 2026 and December 31, 2025, were as follows:


	June 30, 2026
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	97,346	$	97,257
Due after one year through five years	57,023		54,884
Due after five years through ten years	54,868		54,483
Due after ten years	—		—
	209,237		206,624
Residential mortgage-backed securities	2,452		2,428
Commercial mortgage-backed securities	4,869		4,848
Collateralized debt obligations	1,368		1,368
Other asset-backed securities	1,380		1,386
Total	$	219,306	$	216,654


	December 31, 2025
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	180,013	$	179,824
Due after one year through five years	32,409		31,588
Due after five years through ten years	47,801		47,619
Due after ten years	979		998
	261,202		260,029
Residential mortgage-backed securities	1,604		1,597
Commercial mortgage-backed securities	3,307		3,341
Collateralized debt obligations	1,963		1,975
Other asset-backed securities	1,772		1,795
Total	$	269,848	$	268,737

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

Unrealized Losses on Fixed Maturity Securities and Short-Term Investments

The following table shows gross unrealized losses and fair values of Octave's available-for-sale investments and short-term investments, which at June 30, 2026 and December 31, 2025, did not have an allowance for credit losses under the CECL standard. This information is aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at June 30, 2026 and December 31, 2025:


	June 30, 2026												December 31, 2025
	Less Than 12 Months				12 Months or More				Total				Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss

Fixed maturity securities:
Municipal obligations	$	1,194	$	14	$	4,575	$	187	$	5,769	$	201	$	535	$	16	$	5,820	$	212	$	6,355	$	228
Corporate obligations	25,390		299		24,024		1,956		49,414		2,255		1,807		10		30,751		1,932		32,558		1,942

U.S. government obligations	30,226		353		4,724		76		34,950		429		2,206		14		9,491		117		11,697		131

Residential mortgage-backed securities	1,070		11		1,357		13		2,427		24		—		—		1,596		7		1,596		7
Commercial mortgage-backed securities	2,515		41		—		—		2,515		41		763		8		—		—		763		8
Collateralized debt obligations	593		1		—		—		593		1		—		—		—		—		—		—
Other asset-backed securities	—		—		—		—		—		—		—		—		—		—		—		—
Total fixed maturity securities	60,988		719		34,680		2,232		95,668		2,951		5,311		48		47,658		2,268		52,969		2,316
Short-term investments	—		—		—		—		—		—		—		—		—		—		—		—





Total temporarily impaired securities	$	60,988	$	719	$	34,680	$	2,232	$	95,668	$	2,951	$	5,311	$	48	$	47,658	$	2,268	$	52,969	$	2,316

Management has determined that the securities in the above table do not have credit impairment as of June 30, 2026 and December 31, 2025, based upon (i) no actual or expected principal and interest payment defaults on these securities and (ii) analysis of the creditworthiness of the issuer.

Octave's assessment about whether a security is credit impaired reflects management’s current judgment regarding facts and circumstances specific to the security and other factors. If that judgment changes, Octave may record a charge for credit impairment in future periods.

The declines in fair value and resultant unrealized losses across asset classes as of June 30, 2026, included in the above table are spread across 186 different securities, including 100 securities that have been in a continuous unrealized loss position for 12 months or longer. The declines in fair value on these securities resulted primarily from the impact of increasing interest rates

since the securities were purchased. Management has determined that the securities with unrealized losses are not credit impaired. Additionally, management does not intend to sell and it is not more likely than not that the Company will be required to sell the securities with unrealized losses before recovery of their amortized cost basis. Further discussion of management's assessment with respect to security categories with larger unrealized loss balances is below.

Corporate obligations

The gross unrealized losses on corporate obligations as of June 30, 2026, are spread across 126 different securities, including 64 securities that have been in a continuous unrealized loss position for 12 months or longer. All of these securities are investment grade credit rated. The largest individual unrealized loss as a percentage of amortized cost is 11.8% on an A-rated security maturing in 2031. The decline in fair value on this and other securities with unrealized losses resulted primarily from an


Octave Specialty Group, Inc.			16			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

increase in interest rates since the securities were purchased, with the largest unrealized losses being on securities with longer maturities, making their fair values more sensitive to changes in interest rates. Management believes that the full and timely receipt of all principal and interest payment on corporate obligations with unrealized losses as of June 30, 2026, is probable.

Accrued interest receivable for available-for-sale investments, excluded from amortized cost above and included in Other assets on the Consolidated Balance Sheets, at June 30, 2026 and December 31, 2025 was $1,394 and $1,432, respectively. Accrued interest receivable is not measured for credit impairment and is written off by reversing interest income when the receivable becomes 90 days past due.

Investment Income (Loss)

Net investment income (loss) was comprised of the following for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Fixed maturity securities	$	1,280	$	1,470	$	2,491	$	2,870
Short-term investments	907		1,191		2,151		2,648
Loans	—		35		—		69
Other investments	(103)		—		(103)		—
Fixed maturity securities - trading	—		—		—		(79)
Investment expense	(207)		(87)		(307)		(84)

Total net investment income (loss)	$	1,877	$	2,609	$	4,232	$	5,424

Net investment income (loss) from Other investments primarily represents changes in the fair value of equity securities, including income from an investment limited partnership, and other equity interests accounted for under the equity method.

Net Investments Gains (Losses), including Impairments

Realized gains and losses on the sale of investments are determined on a first-in-first-out basis. The following table details amounts included in net investment gains (losses) and impairments included in Revenues, other, on the Consolidated Statements of Income (Loss) for the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Gross realized gains on securities	$	63	$	2	$	68	$	2
Gross realized losses on securities	—		—		(2)		(3)

Credit impairments	—		—		—		—

Net investment gains (losses), including impairments	$	63	$	2	$	66	$	(1)

Octave did not purchase any financial assets with credit deterioration for the three and six months ended June 30, 2026 and 2025.

Deposits with Regulators and Other Restrictions

Securities with a carrying value of $37,166 and $34,016, at June 30, 2026 and December 31, 2025, respectively, were deposited by Octave's insurance subsidiaries with governmental authorities or designated custodian banks as required by laws affecting insurance companies. Fixed maturity securities with a carrying value of $151 and $153, at June 30, 2026 and December 31, 2025, respectively, were deposited as security in connection with a letter of credit issued for a corporate office lease. Fiduciary funds held by Octave's insurance distribution subsidiaries, carried at $1,401 and $2,656, at June 30, 2026 and December 31, 2025, respectively, are included in invested assets.

Other Investments

Octave's investment portfolio includes a limited partnership interest in a private equity fund that seeks to generate long-term capital appreciation through investments in private equity, equity-related and other instruments. The fair value of Octave's investment in the fund was $7,498 and $7,454 as of June 30, 2026 and December 31, 2025, respectively, determined using net asset value ("NAV") as a practical expedient. Redemptions of this fund are not permitted. Octave's unfunded commitments total $1,501 on this private equity fund at June 30, 2026.

Other investments also include private preferred equity investments with a carrying value of $17,517 and $17,517 as of June 30, 2026 and December 31, 2025, respectively, that do not have readily determinable fair values and are carried at cost, less any impairments as permitted under the Investments — Equity Securities Topic of the ASC. There were no impairments recorded on these investments in the three and six months ended June 30, 2026 and 2025.


Octave Specialty Group, Inc.			17			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

5. FAIR VALUE MEASUREMENTS

The Fair Value Measurement Topic of the ASC establishes a framework for measuring fair value and disclosures about fair value measurements.

Fair Value Hierarchy

The Fair Value Measurement Topic of the ASC specifies a fair value hierarchy based on whether the inputs to valuation techniques used to measure fair value are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Company-based assumptions. The fair value hierarchy has three broad levels as follows:


l	Level 1	Quoted prices for identical instruments in active markets. Assets and liabilities classified as Level 1 include US Treasury and other foreign government obligations traded in highly liquid and transparent markets, and money market funds.

l	Level 2	Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Assets and liabilities classified as Level 2 generally include investments in fixed maturity securities and certain derivatives valued using only market observable data.

l	Level 3	Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. This hierarchy requires the use of observable market data when available. Financial instruments classified as Level 3 includes debt.

The Fair Value Measurement Topic of the ASC permits, as a practical expedient, the estimation of fair value of certain investments in funds using the net asset value per share of the investment or its equivalent (“NAV”). Investments in funds valued using NAV are not categorized as Level 1, 2 or 3 under the fair value hierarchy. The Investments — Equity Securities Topic of the ASC permits the measurement of certain equity securities without a readily determinable fair value at cost, less impairment, and adjusted to fair value when observable price changes in identical or similar investments from the same issuer occur (the "measurement alternative"). The fair values of investments measured under this measurement alternative are not included in the below disclosures of fair value of financial instruments.

The following table sets forth the carrying amount and fair value of Octave's financial assets and liabilities as of June 30, 2026 and December 31, 2025, including the level within the fair value hierarchy at which fair value measurements are categorized. As required by the Fair Value Measurement Topic of the ASC, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.


	June 30, 2026										December 31, 2025
	Carrying Amount		Total Fair Value		Fair Value Measurements Categorized as:						Carrying Amount		Total Fair Value		Fair Value Measurements Categorized as:
					Level 1		Level 2		Level 3						Level 1		Level 2		Level 3
Financial assets:
Fixed maturity securities:
Municipal obligations	$	10,091	$	10,091	$	—	$	10,091	$	—	$	11,590	$	11,590	$	—	$	11,590	$	—
Corporate obligations	73,204		73,204		—		73,204		—		66,573		66,573		—		66,573		—

U.S. government obligations	40,816		40,816		40,816		—		—		35,424		35,424		35,424		—		—

Residential mortgage-backed securities	2,428		2,428		—		2,428		—		1,597		1,597		—		1,597		—
Commercial mortgage-backed securities	4,848		4,848		—		4,848		—		3,341		3,341		—		3,341		—
Collateralized debt obligations	1,368		1,368		—		1,368		—		1,975		1,975		—		1,975		—
Other asset-backed securities	1,386		1,386		—		1,386		—		1,795		1,795		—		1,795		—



Short term investments	82,513		82,513		82,513		—		—		146,442		146,442		146,442		—		—
Other investments (1)	25,015		7,498		—		—		—		24,971		7,454		—		—		—
Cash, cash equivalents and restricted cash	79,096		79,096		79,096		—		—		68,440		68,440		68,440		—		—

Derivative assets:





FX forward contracts	63		63		—		63		—		—		—		—		—		—

Total financial assets	$	320,828	$	303,311	$	202,425	$	93,388	$	—	$	362,148	$	344,631	$	250,306	$	86,871	$	—
Financial liabilities:


Long term debt, including accrued interest	$	155,486	$	158,527	$	—	$	—	$	158,527	$	118,901	$	121,343	$	—	$	—	$	121,343
Derivative liabilities:




FX forward contracts	—		—		—		—		—		8		8		—		8		—


Total financial liabilities	$	155,486	$	158,527	$	—	$	—	$	158,527	$	118,909	$	121,351	$	—	$	8	$	121,343

(1)Excluded from the fair value measurement categories in the table above are investment funds of $7,498 and $7,454 as of June 30, 2026 and December 31, 2025, respectively, which are measured using NAV as a practical expedient. Also excluded from the fair value amounts in the table above are private preferred equity securities with a carrying value of $17,517 and $17,517 as of June 30, 2026 and December 31, 2025, respectively, that do not have readily determinable fair values and have carrying amounts determined using the measurement alternative.


Octave Specialty Group, Inc.			18			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

Determination of Fair Value

When available, Octave uses quoted active market prices specific to the financial instrument to determine fair value, and classifies such items within Level 1. The determination of fair value for financial instruments categorized in Level 2 or 3 involves judgment due to the complexity of factors contributing to the valuation. Third-party sources from which we obtain independent market quotes also use assumptions, judgments and estimates in determining financial instrument values and different third parties may use different methodologies or provide different values for financial instruments. In addition, the use of internal valuation models may require assumptions about hypothetical or inactive markets. As a result of these factors, the actual trade value of a financial instrument in the market, or exit value of a financial instrument position by Octave, may be significantly different from its recorded fair value.

Octave's financial instruments carried at fair value are mainly comprised of investments in fixed maturity securities, short-term investments, an investment in a limited partnership, and derivative instruments. Valuation of financial instruments is performed by Octave's finance group using methods approved by senior financial management with consultation from risk management and third-party portfolio managers as appropriate. Preliminary valuation results are discussed internally and with third-party portfolio managers as necessary quarterly to assess consistency with market transactions and trends as applicable. Market transactions such as trades or negotiated settlements of similar positions, if any, are reviewed to validate fair value model results. However, financial instruments valued using significant unobservable inputs have very little or no observable market activity. Methods and significant inputs and assumptions used to determine fair values across portfolios are reviewed quarterly by senior financial management. Other valuation control procedures specific to particular portfolios are described further below.

Fixed Maturity Securities:

The fair values of fixed maturity investment securities are based primarily on market prices received from independent pricing sources. Because many fixed maturity securities do not trade on a daily basis, pricing sources apply available market information through processes such as matrix pricing to calculate fair value. Such prices generally consider a variety of factors, including recent trades of the same and similar securities. In those cases, the items are classified within Level 2. For those fixed maturity investments where quotes were not available or cannot be reasonably corroborated, fair values are based on internal valuation models. Key inputs to the internal valuation models generally include maturity date, coupon and yield curves for asset-type and credit rating characteristics that closely match those characteristics of the specific investment securities being valued. Items valued using valuation models are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be significant inputs that are readily observable. Longer (shorter) expected maturities or higher (lower) yields used in the valuation model will, in isolation, result in decreases (increases) in fair value. Generally, lower credit ratings or longer expected maturities will be accompanied by higher yields used to value a security.

Octave performs various review and validation procedures to quoted and modeled prices for fixed maturity securities, including price variance analyses, missing and static price reviews, overall valuation analysis by portfolio managers and finance managers and reviews associated with our ongoing impairment analysis. Unusual prices identified through these procedures will be evaluated further against alternative third-party quotes (if available), internally modeled prices and/or other relevant data, and the pricing source values will be challenged as necessary. Price challenges generally result in the use of the pricing source’s quote as originally provided or as revised by the source following their internal diligence process. A price challenge may result in a determination by either the pricing source or Octave management that the pricing source cannot provide a reasonable value for a security or cannot adequately support a quote, in which case Octave would resort to using either other quotes or internal models. Results of price challenges are reviewed by portfolio managers and finance managers.

Other Investments:

Other investments includes an investment in a limited partnership, which holds pooled investment funds, that is carried under the equity method using NAV as a practical expedient as permitted under the Fair Value Measurement Topic of the ASC. Refer to Note 4. Investments for additional information about such investments in pooled funds that are reported at fair value using NAV as a practical expedient.

Derivative Instruments:

At June 30, 2026 and December 31, 2025, Octave has foreign exchange ("FX") forward contracts and holds warrants to purchase preferred stock of a development stage company. The fair value of FX forward contracts are determined using valuation models with observable market inputs. Fair value of the warrants are determined using a standard warrant valuation model with internally developed input assumptions.

Debt:

Debt consists of a Secured Overnight Financing Rate ("SOFR")-indexed borrowing. The fair value of debt approximates the principal amount outstanding including accrued interest.


Octave Specialty Group, Inc.			19			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

6. INSURANCE CONTRACTS

Premiums

The effect of reinsurance on premiums written and earned were as follows for the periods presented:


	Three Months Ended June 30,
	2026				2025
	Written		Earned		Written		Earned
Direct	$	92,200	$	82,782	$	89,849	$	79,600
Assumed	2,502		7,711		6,399		6,974
Ceded	71,560		68,744		81,041		70,371
Net premiums	$	23,142	$	21,749	$	15,207	$	16,203

	Six Months Ended June 30,
	2026				2025
	Written		Earned		Written		Earned
Direct	$	187,243	$	167,785	$	167,040	$	160,046
Assumed	11,175		14,920		16,123		14,503
Ceded	142,826		140,955		149,952		142,669
Net premiums	$	55,592	$	41,750	$	33,211	$	31,881

Premium Receivables, including Credit Impairments

Premium receivables at June 30, 2026 and December 31, 2025, were $94,635 and $75,085, respectively. Management evaluates premium receivables for expected credit losses ("credit impairment") in accordance with the CECL standard, which is further described in Note 2. Basis of Presentation and Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Below are rollforwards of the premium receivable allowance for credit losses for the periods presented.



Six Months Ended June 30,	2026		2025
Beginning balance	$	500	$	142
Current period provision	—		58
Write-offs of the allowance	—		—
Recoveries of previously written-off amounts	—		—
Ending balance	$	500	$	200

At June 30, 2026 and December 31, 2025, $8,260 and $6,781, respectively, of premiums were past due.

Loss and Loss Adjustment Expense Reserves

Below are the loss and loss reserve expense rollforwards, net of subrogation recoverable and reinsurance, for the periods presented:


Six Months Ended June 30,	2026		2025
Beginning gross loss and loss adjustment expense reserves	$	459,990	$	349,062
Reinsurance recoverable	375,722		270,081
Beginning balance of net loss and loss adjustment expense reserves	84,268		78,981
Losses and loss expenses:
Current year	23,949		21,144
Prior years	9,076		330
Total (1)	33,025		21,474
Loss and loss adjustment expenses paid (recovered):
Current year	2,249		2,745
Prior years	23,460		19,155
Total	25,709		21,900

Ending net loss and loss adjustment expense reserves	91,584		78,555
Reinsurance recoverable (2)	407,459		305,414
Ending gross loss and loss adjustment expense reserves	$	499,043	$	383,969

(1)Total losses and loss adjustment expense (benefit) is net of $(95,878) and $(89,957) for the six months ended June 30, 2026 and 2025, respectively, related to ceded reinsurance.

(2)Represents reinsurance recoverable on future loss and loss adjustment expense. Additionally, the Balance Sheet line "Reinsurance recoverable on paid and unpaid losses" includes reinsurance recoverables of $88,194 and $71,031 as of June 30, 2026 and 2025, respectively, related to previously paid loss and loss adjustment expense.

The unfavorable losses incurred development on prior accident years for the six months ended June 30, 2026, was primarily driven by $2,125 of net losses and $5,787 of LAE (legal expenses) from the settlement during the three months ended March 31, 2026, of a potential litigation matter related to an insurance claim, whereas the unfavorable losses incurred development for prior accident years for the six months ended June 30, 2025, was primarily driven by excess liability claims.


Octave Specialty Group, Inc.			20			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

Specialty Property & Casualty Loss Reserves

Claims Development

The following is a summary of loss and loss adjustment expense reserves, including certain components, for the Company’s major product lines by reporting segment at June 30, 2026.


June 30, 2026	Net Loss and Loss Adjustment Expense Reserves		Reinsurance Recoverables on Unpaid Losses (1)		Loss and Loss Adjustment Reserves (1)
Commercial auto	$	19,029	$	120,850	$	139,879
Excess liability	21,721		126,873		148,594
General liability	13,724		51,522		65,246
Workers compensation	20,500		—		20,500
Non-standard personal auto	2,086		189		2,275
Professional liability	3,620		48,564		52,184
Multi-peril / business owners (BOP)	3,912		13,986		17,898
Surety	1,796		11,189		12,985
Unallocated loss adjustment expense reserves	4,971		11,194		16,165
Other	225		23,093		23,317
Total	$	91,584	$	407,459	$	499,043

(1)Other includes $21,229 related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company, and Consolidated Specialty Insurance Company. All legacy liabilities remain obligations of affiliates of the sellers through reinsurance and contractual indemnities.

Reinsurance Recoverables, Including Credit Impairments

Everspan’s reinsurance assets, including deferred ceded premiums and reinsurance recoverables on losses, amounted to $643,889 at June 30, 2026. Credit exposure existed at June 30, 2026, with respect to reinsurance recoverables to the extent that any reinsurer may not be able to reimburse Everspan under the terms of these reinsurance arrangements. At June 30, 2026, there were ceded reinsurance balances payable of $93,346 offsetting this credit exposure. Contractually ceded reinsurance payables can only be offset against amounts owed from the same reinsurer in the event that such reinsurer is unable to meet its obligations to reimburse Everspan.

To minimize its credit exposure to losses from reinsurer insolvencies, Everspan (i) is entitled to receive collateral from its reinsurance counterparties in certain reinsurance contracts and (ii) has certain cancellation rights that can be exercised by Everspan in the event of rating agency downgrades of a reinsurer (among other events and circumstances). Everspan held letters of

credit and collateral amounting to $82,174 from its reinsurers at June 30, 2026. For those reinsurance counterparties that do not currently post collateral, Everspan's reinsurers are well capitalized, highly rated, authorized capacity providers. Additionally, while legacy liabilities from the Providence Washington Insurance Company ("PWIC") acquisition and the admitted carriers previously acquired by Everspan on January 3, 2022, (Greenwood Insurance Company and Consolidated Specialty Insurance Company), were fully ceded to certain reinsurers, Everspan also benefits from an unlimited, uncapped indemnity from Enstar Holdings (US) and 21st Century Premier Insurance Company to mitigate any residual risk to these reinsurers.

At June 30, 2026, our top six reinsurers represented 53.0% of our total reinsurance recoverables on paid and unpaid losses. These reinsurance recoverables were primarily from reinsurers with applicable ratings of A or better. The following table sets forth our six most significant reinsurers by amount of reinsurance recoverables as of June 30, 2026.


Reinsurers	Rating (1)			Reinsurance Recoverable (2)				Unsecured Recoverable (3)
General Reinsurance Company	A++			$	123,107			$	98,528
Munich Reinsurance Company	A+			71,226				64,278
QBE Insurance Corporation	A			18,208				18,208
Everest Reinsurance Company	A+			17,636				18,098
Lloyds Syndicate 566	A+			16,296				—
Transatlantic Reinsurance Company	A++			16,055				13,312
All other reinsurers				233,125				130,426
Total recoverables		$	495,653			$	342,850

(1)Represents financial strength ratings from AM Best.

(2)Represents reinsurance recoverables on paid and unpaid losses. Unsecured amounts from QBE Insurance Corporation are also supported by an unlimited, uncapped indemnity from Enstar Holdings (US).

(3)Reinsurance recoverables reduced by ceded premiums payables due to reinsurers, letters of credit, and collateral posted for the benefit of Everspan.

As of June 30, 2026 and December 31, 2025, Everspan has uncollateralized credit exposure to reinsurers of $342,850 and $311,795, respectively, and has recorded an allowance for credit losses of less than a million at June 30, 2026 and December 31, 2025. The uncollateralized credit exposure to reinsurers includes legacy liabilities obtained from the acquisitions of PWIC and the other admitted carriers acquired by Everspan on January 3, 2022, of $21,229 and $23,530 at June 30, 2026 and December 31, 2025, respectively. All legacy liabilities remain with affiliates of sellers through reinsurance and contractual indemnities.


Octave Specialty Group, Inc.			21			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

7. DERIVATIVE INSTRUMENTS

The following table summarizes the gross fair values of individual derivative instruments and the impact of legal rights of offset as reported within Other assets and Other liabilities in the Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025.


	June 30, 2026										December 31, 2025
	Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet		Gross Amount of Collateral Received / Pledged not Offset in the Consolidated Balance Sheet		Net Amount		Gross Amounts of Recognized Assets / Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheet		Gross Amount of Collateral Received / Pledged not Offset in the Consolidated Balance Sheet		Net Amount
Other assets:



FX forwards	63		—		63		—		63		—		—		—		—		—


Total derivative assets	$	63	$	—	$	63	$	—	$	63	$	—	$	—	$	—	$	—	$	—
Other liabilities:


FX forwards	—		—		—		—		—		8		—		8		—		8


Total derivative liabilities	$	—	$	—	$	—	$	—	$	—	$	8	$	—	$	8	$	—	$	8

The following table summarizes the location and amount of gains and losses of derivative contracts in the Consolidated Statements of Income (Loss) for the periods presented.


	Location of Gain (Loss) Recognized in Consolidated Statements of Income (Loss)
		Three Months Ended June 30,				Six Months Ended June 30,
		2026		2025		2026		2025
Derivatives:
FX forwards	Revenues, other	$	298	$	680	$	(220)	$	1,107

Total derivatives		$	298	$	680	$	(220)	$	1,107

Octave Ventures utilizes FX forward contracts to partially hedge its foreign currency exposure. Octave Ventures' functional currency is the British Pound, but a significant portion of its revenues are generated in currencies other than the British Pound, particularly the US Dollar. Octave Ventures, therefore, typically enters into forward contracts to partially hedge its exposure to fluctuations in exchange rates relative to the British Pound.

Information about FX forward contracts as of June 30, 2026 and December 31, 2025, is summarized below:


Derivative Type	Weighted-Average Remaining Term (years)	Face Amount (Buy)	Face Amount (Sell)	Fair Value Asset (Liability)
June 30, 2026
FX Forwards-Buy GBP/Sell USD	1.06	29,155	38,700	32

FX Forwards-Buy GBP/Sell CAD	0.39	767	1,600	31
December 31, 2025
FX Forwards-Buy GBP/Sell USD	1.39	17,876	24,000	(6)

FX Forwards-Buy GBP/Sell CAD	0.73	1,530	2,800	(2)


Octave Specialty Group, Inc.			22			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

8. GOODWILL AND INTANGIBLE ASSETS

Below are rollforwards of the Company's goodwill.


	June 30, 2026		December 31, 2025
Beginning balance	$	540,345	$	418,234
Business acquisitions	—		95,357
Foreign exchange	(6,041)		26,754

Ending balance	$	534,304	$	540,345

Intangible assets consisted of the following as of June 30, 2026 and December 31, 2025.


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
June 30, 2026
Finite-lived intangible assets:
Customer relationships	$	504,076	$	83,853	$	420,223
Non-compete agreements	1,350		1,350		—
Trade names	19,244		3,232		16,012
Total finite-lived intangible assets	524,670		88,435		436,235
Indefinite-lived intangible assets:
Insurance licenses	11,213		—		11,213
Total intangible assets	535,883		88,435		447,448

December 31, 2025
Finite-lived intangible assets:
Customer relationships	$	509,197	$	62,362	$	446,835
Non-compete agreements	1,350		1,350		—
Trade names	19,383		2,433		16,950
Total finite-lived intangible assets	529,930		66,145		463,785
Indefinite-lived intangible assets:
Insurance licenses	11,213		—		11,213
Total intangible assets	541,143		66,145		474,998

9. DEBT

2025 Credit Facility

In connection with the acquisition of ArmadaCorp Capital, LLC on October 31, 2025, Octave Partners LLC and certain of its subsidiaries entered into a credit agreement providing for a $100,000 term loan and a $20,000 revolving credit facility (together, the "2025 Credit Facility"), both maturing October 31, 2030. Refer to Note 12. Debt in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, for a full description of the terms and conditions of the 2025 Credit Facility.

On April 1, 2026, the Company entered into the First Amendment to the 2025 Credit Facility, which provided an additional term loan of $40,000, constituting the same class, type and tranche as the existing term loan, with the same maturity date, and is fully fungible therewith. Following the additional borrowing and scheduled principal repayments on the term loan, the total principal amount outstanding on the term loan was $138,500 as of June 30, 2026. Proceeds from the additional term loan were used to help fund the acquisition of redeemable NCI in April 2026, (refer to Note 1. Background and Business Description for

additional details regarding the acquisition of redeemable NCI). In connection with the First Amendment, the Company pledged its ownership interests in the capital stock of Everspan Holdings, LLC as additional collateral.

10. REVENUES FROM CONTRACTS WITH CUSTOMERS

As further described in the Revenue Recognition section of Note 2. Basis of Presentation and Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, the ID businesses have contracts that are subject to the Revenue from Contracts with Customers Topic of the ASC ("ASC 606").

The following table presents ID commission income disaggregated by policy type for the periods presented.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Accident & Health	$	13,878	$	5,118	$	45,946	$	13,269
Specialty Auto	3,106		2,618		9,036		7,735
Other Professional	4,334		3,657		7,861		6,885
Marine & Energy	1,170		1,622		2,815		3,470
Niche Specialty Risks	3,902		3,533		7,596		7,561
Property	9,477		8,129		16,258		13,306
Reinsurance	1,080		3,821		2,656		7,936
Environmental	1,839		1,238		3,932		2,798
Professional D&O	3,500		1,403		5,280		2,929
Surety	5,411		(917)		9,979		1,219
Misc. Specialty	2,031		100		6,547		(15)
Total	$	49,728	$	30,322	$	117,906	$	67,093

Revenue of $5,913 and $4,472 for the three months ended June 30, 2026 and 2025, respectively, and $15,275 and $9,436 for the six months ended June 30, 2026 and 2025, respectively, was recognized in accordance with ASC 606 and reported in Servicing and other fees on the Consolidated Statements of Income (Loss).

The amount of revenue recognized related to performance obligations satisfied in a previous period, inclusive of changes due to estimates, was $878 and $576, during the three months ended June 30, 2026 and 2025, respectively, and $3,818 and $2,557, during the six months ended June 30, 2026 and 2025, respectively.

Receivables, Contract Assets and Liabilities

The balances of receivables, contract assets and contract liabilities with customers as of June 30, 2026 and December 31, 2025 were as follows:


	June 30, 2026		December 31, 2025
Receivables	$	100,537	$	86,609
Contract assets	48,324		31,757
Contract liabilities	4,124		2,954


Octave Specialty Group, Inc.			23			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

Contract assets and Contract liabilities are reported in Other assets and Other liabilities, respectively, on the Consolidated Balance Sheets.

Insurance Distribution

Contract assets represent estimated future consideration related to base commissions and profit-sharing commissions that were recognized as revenue upon the placement of the policy, but are not yet billable or collectable. The Company does not have the right to bill or collect payment on (i) base commissions until the related premiums from policyholders are due nor (ii) profit-sharing commissions until after the contract year is completed.

Contract liabilities include estimated future sub-producer commissions recognized as expense upon placement of the

policy, but not yet due. Contract liabilities also include payments received in advance of performance under the contract before the transfer of a service to the customer, primarily related to claims servicing performed under certain MGA contracts, which typically occurs between 17 and 20 months from contract inception. Revenue recognized during the three months ended June 30, 2026 and 2025, that was included in the contract liability balance as of the beginning of each period was $181 and $291, respectively. Revenue recognized during the six months ended June 30, 2026 and 2025, that was included in the contract liability balance as of the beginning of each period was $415 and $473, respectively.

11. COMPREHENSIVE INCOME (LOSS)

The following tables detail the changes in the balances of each component of Accumulated other comprehensive income (loss) ("AOCI") for the periods presented.


	Three Months Ended June 30, 2026						Three Months Ended June 30, 2025
	Unrealized Gains (Losses) on Available-for-Sale Securities (1)		Gain (Loss) on Foreign Currency Translation (1)		Credit Risk Changes of Fair Value Option Liabilities (1) (2)		Total		Unrealized Gains (Losses) on Available- for-Sale Securities (1)		Gain (Loss) on Foreign Currency Translation (1)		Credit Risk Changes of Fair Value Option Liabilities (1) (2)		Total
Beginning balance	$	(2,530)	$	3,754	$	—	$	1,224	$	(2,530)	$	(131,832)	$	(667)	$	(135,029)


Other comprehensive income (loss) before reclassifications	(564)		2,570		—		2,006		(13,845)		67,901		—		54,056
Amounts reclassified from AOCI	62		—		—		62		9,199		—		144		9,343


Net current period other comprehensive income (loss)	(502)		2,570		—		2,068		(4,646)		67,901		144		63,399
Ending balance	$	(3,032)	$	6,324	$	—	$	3,292	$	(7,176)	$	(63,931)	$	(523)	$	(71,630)

	Six Months Ended June 30, 2026						Six Months Ended June 30, 2025
	Unrealized Gains (Losses) on Available- for-Sale Securities (1)		Gain (Loss) on Foreign Currency Translation (1)		Credit Risk Changes of Fair Value Option Liabilities (1) (2)		Total		Unrealized Gains (Losses) on Available- for-Sale Securities (1)		Gain (Loss) on Foreign Currency Translation (1)		Credit Risk Changes of Fair Value Option Liabilities (1) (2)		Total
Beginning balance	$	(1,492)	$	9,975	$	—	$	8,483	$	(21,136)	$	(166,191)	$	(1,109)	$	(188,436)


Other comprehensive income before reclassifications	(1,605)		(3,651)		—		(5,256)		303		102,260		—		102,563
Amounts reclassified from AOCI	65		—		—		65		13,657		—		586		14,243


Net current period other comprehensive income	(1,540)		(3,651)		—		(5,191)		13,960		102,260		586		116,806
Ending balance	$	(3,032)	$	6,324	$	—	$	3,292	$	(7,176)	$	(63,931)	$	(523)	$	(71,630)

(1)All amounts are net of tax and NCI. Amounts in parentheses indicate reductions to AOCI.

(2)Represents the changes in fair value attributable to instrument-specific credit risk of liabilities for which the fair value option is elected.

Reclassifications out of AOCI and into earnings for the periods presented were as follows.


Details about AOCI Components	Amount Reclassified from AOCI								Affected Line Item in the Consolidated Statements of Income (Loss)
	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Unrealized gains (losses) on available-for-sale securities
	$	62	$	12,513	$	65	$	18,470	Revenues, other
	—		(3,314)		—		(4,813)		Provision for income taxes

	$	62	$	9,199	$	65	$	13,657	Net of tax and noncontrolling interest










Credit risk changes of fair value option liabilities
	$	—	$	192	$	—	$	781	Credit risk changes of fair value option liabilities
	—		(48)		—		(195)		Provision for income taxes

	$	—	$	144	$	—	$	586	Net of tax and noncontrolling interest
Total reclassifications for the period	$	62	$	9,343	$	65	$	14,243	Net of tax and noncontrolling interest


Octave Specialty Group, Inc.			24			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

12. NET INCOME PER SHARE

As of June 30, 2026, 45,017,761 shares of OSG's common stock (par value $0.01) and a warrant entitling the holder to acquire up to 3,395,138 shares of common stock at an exercise price of $18.50 per share were issued and outstanding. The warrant allows the holder to convert the warrant at its Black-Scholes value, which may be settled at OSG's election in shares of OSG common stock or cash, or combination of both. Common shares outstanding increased by 12,477 during the six months ended June 30, 2026, due to shares issued in connection with employee stock compensation.

Share Repurchases

On November 12, 2024, Octave's Board of Directors authorized a share repurchase program, under which Octave may opportunistically repurchase up to $50,000 of the Company’s common shares at management’s discretion over the period ending on December 31, 2026.

The following table shows shares repurchased by year.


($ in thousands, except per share)	Year Ended December 31,						YTD 2026
	2024		2025
Shares repurchased	937,141		3,434,745				0
Total cost	$	11,678	$	29,942			$	—
Average purchase price per share	$	12.48	$	8.72			$	—
Unused authorization amount					$	8,449

Earnings Per Share Calculation

The numerator of the basic and diluted earnings per share computation represents net income (loss) attributable to common stockholders adjusted by the retained earnings impacts of the adjustment to noncontrolling interest redemption value under ASC 480, or amendments resulting in revaluation to fair value and reclassification of NCI shares to redeemable NCI. Adjustments to the carrying value of redeemable noncontrolling interest are further described in the Redeemable NCI section of Note 1. Background and Business Description.

The following table provides a reconciliation of net income (loss) attributable to common stockholders to the numerator in the basic and diluted earnings (loss) per share calculation, together with the resulting earnings (loss) per share ("EPS") amounts for the periods presented.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Net income (loss) attributable to common stockholders	$	(14,429)	$	(72,699)	$	(21,280)	(119,090)

Fair value and redemption value adjustment for NCI (ASC 480)	(737)		220		70		(10,603)
Numerator of basic and diluted EPS	$	(15,166)	$	(72,479)	$	(21,210)	(129,693)
Per share:
Basic	$	(0.33)	$	(1.51)	$	(0.47)	$	(2.72)
Diluted	$	(0.33)	$	(1.51)	$	(0.47)	$	(2.72)

The denominator of the basic earnings (loss) per share computation represents the daily weighted-average common shares ("WASO") outstanding plus vested restricted stock units and performance stock units (together, "Basic Weighted-Average Shares Outstanding"). The denominator of diluted earnings (loss) per share adjusts the basic WASO for all potential dilutive common shares outstanding during the period. All potential dilutive common shares outstanding consider common stock deliverable pursuant to warrants, employee options, unvested restricted stock units and unvested performance stock units granted under existing compensation plans.

In determining diluted net income (loss) per share, whether net income from continuing operations is positive or negative controls whether dilutive shares are included in the determination. For all periods presented, net income from continuing operations was negative, a net loss. Accordingly, since including dilutive shares would dilute the loss from continuing operations, no dilutive shares are included in any of the per share calculations.

The following table provides a reconciliation of the weighted-average shares used for basic net income (loss) per share to the weighted-average diluted shares used for diluted net income (loss) per share for the periods presented.


	Three Months Ended June 30,		Six Months Ended June 30,
	2026	2025	2026	2025
Basic WASO denominator	45,390,612	48,116,503	45,347,014	47,738,050
Effect of potential dilutive shares :
Options	—	—	—	—
Warrants	—	—	—	—
Restricted stock units	—	—	—	—
Performance stock units (1)	—	—	—	—
Diluted WASO denominator	45,390,612	48,116,503	45,347,014	47,738,050
Anti-dilutive shares excluded from the above reconciliation:

Warrants (2)	4,066,704	—	4,576,871	—
Options (2)	1,134,500		1,134,500
Restricted stock units	347,554	359,550	585,556	210,483
Performance stock units (1)	232,275	109,914	235,977	—

(1) Performance stock units are reflected based on the performance metrics through the balance sheet date. Vesting of these units is contingent upon meeting certain performance metrics. Although a portion of these performance metrics have been achieved as of the respective period end, it is possible that awards may no longer meet the metric at the end of the performance period.

(2) Options require the OSG's stock price to exceed certain market price hurdles to vest, none of which have been met. Warrants have an exercise price above the market price of OSG stock during the period. Amounts shown reflect the maximum number of shares issuable upon exercise, weighted for the time outstanding during the periods.


Octave Specialty Group, Inc.			25			Second Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

13. INCOME TAXES

OSG files a consolidated U.S. federal income tax return with its 80% or more owned domestic subsidiaries ("Consolidated Tax Subsidiaries"). Octave Ventures' U.S. subsidiaries file separate U.S. federal income tax returns as they are not directly owned by Octave for tax purposes. OSG and its Consolidated Tax Subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions.

In accordance with the Income Tax Topic of the ASC, a valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some, or all, of the deferred tax asset will not be realized. As a result of the risks and uncertainties associated with future operating results, management believes it is more likely than not that the Company will not generate sufficient U.S. federal, state and/or local taxable income to recover its deferred tax operating assets and therefore maintains a full valuation allowance on OSG's U.S. net deferred tax assets.

Consolidated Pretax Income (Loss)

U.S. and foreign components of pretax income (loss) from continuing operations for the periods presented were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
U.S.	$	(17,762)	$	(14,424)	$	(24,703)	$	(25,577)
Foreign	6,091		(8,550)		9,688		(12,504)
Total	$	(11,671)	$	(22,974)	$	(15,015)	$	(38,081)

Provision (Benefit) for Income Taxes

The components of the provision (benefit) for income taxes from continuing operations for the periods presented were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Current taxes

U.S. state and local	$	—	$	—	$	—	$	—
Foreign	2,423		1,622		5,032		2,776
Total Current taxes	2,423		1,622		5,032		2,776
Deferred taxes
U.S. federal and state	(559)		(1,111)		(337)		(2,153)
Foreign	(1,379)		(2,683)		(4,691)		(3,412)
Total Deferred taxes	(1,938)		(3,794)		(5,028)		(5,565)
Provision (benefit) for income taxes	$	485	$	(2,172)	$	4	$	(2,789)

14. COMMITMENTS AND CONTINGENCIES

The Company periodically receives various regulatory inquiries and requests for information with respect to investigations and inquiries that such regulators are conducting. The Company has complied with all such inquiries and requests for information.

The Company is involved from time to time in various routine legal proceedings, including proceedings related to litigation with present or former employees. Although such litigation is routine

and incidental to the conduct of its business, such litigation can potentially result in large monetary awards when a civil jury is allowed to determine compensatory and/or punitive damages.

Everspan may be subject to disputes with policyholders or other third parties regarding the scope and extent of coverage offered under Everspan's policies, including disputes relating to Everspan’s course of conduct in the handling of claims and settling or failing to settle claims (which can lead to bad faith and other forms of extra-contractual liability); be required to defend claimants in suits against its policyholders for covered liability claims; or enter into commercial disputes with its reinsurers, MGA/Us or third party claims administrators regarding their respective contractual obligations and rights. Under some circumstances, the results of such disputes or suits may lead to liabilities beyond those which are anticipated or reserved, including liabilities in excess of applicable policy limits.

Everspan may, from time to time, be threatened with litigation in connection with the handling of claims, through third-party administrators, or other matters. Adjudication of any such claims against Everspan could require extensive litigation unless settled or dismissed based on available legal defenses. Damages claimed against Everspan could be material and the outcome of such cases could have an adverse impact on our results of operations and financial condition.

In the ordinary course of their businesses, certain of Octave's subsidiaries assert claims in legal proceedings against third parties to recover losses already paid and/or mitigate future losses. The amounts recovered and/or losses avoided which may result from these proceedings is uncertain, although recoveries and/or losses avoided in any one or more of these proceedings during any quarter or fiscal year could be material to Octave's results of operations in that quarter or fiscal year.

From time to time, Octave is subject to allegations concerning its corporate governance, including the manner in which it exercises control and oversight of its subsidiaries, that may lead to litigation, including derivative litigation. While the monetary impacts of addressing such allegations outside of litigation may not be material, these charges may distract management and the Board of Directors from their principal focus on Octave's business, strategy and objectives.

It is not reasonably possible to predict whether suits in addition to those described below will be filed or whether additional inquiries or requests for information will be made, and it is also not possible to predict the outcome of litigation, inquiries or requests for information. It is possible that there could be unfavorable outcomes in these or other proceedings. Legal accruals for litigation against the Company with losses that are probable and reasonably estimable are not material to the operating results or financial position of the Company. For the litigation matters the Company is defending that do not meet the “probable and reasonably estimable” accrual threshold and where no loss estimates have been provided below, management is unable to make a meaningful estimate of the amount or range of loss that could result from unfavorable outcomes. Under some circumstances, adverse results in any such proceedings could be material to our business, operations, financial position,


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Notes to Unaudited Consolidated Financial Statements

Octave Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

profitability or cash flows. The Company believes that it has substantial defenses to the claims described below and, to the extent that these actions proceed, the Company intends to defend itself vigorously; however, the Company is not able to predict the outcomes of these actions.

Current Litigation

Dwight Jereczek and Stanley Elliott, individually and on behalf of all others similarly situated v. MBIA Inc., Ambac Financial Group, Inc., Ambac Assurance Corporation, MBIA Insurance Corporation, and National Public Finance Guarantee Corporation (United States District Court for the District of Connecticut, filed on February 12, 2025) (the "COFINA Case"). This putative class action complaint is brought by alleged former holders of bonds issued by the Puerto Rico Sales Tax Financing Corporation (“COFINA”) allegedly insured by defendants under financial guaranty insurance policies. On behalf of themselves and all persons and entities that owned such bonds between October 19, 2018, and February 12, 2019, plaintiffs allege that, in connection with the restructuring of COFINA under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act, defendants orchestrated a scheme to improperly use their role in the Title III process to alter contracts with insured COFINA bondholders, resulting in such bondholders receiving less than what they contracted for under the financial guaranty insurance policies. Plaintiffs assert claims for breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and bad faith refusal to pay first-party benefits under an insurance contract. Plaintiffs seek an unspecified amount of damages with interest thereon, disgorgement of profits, a declaratory judgment of plaintiffs’ rights and defendants’ responsibilities, and a permanent injunction against violations of law. On November 14, 2025, the Court found that Defendants were entitled to a stay of discovery. On February 13, 2026, the Court entered an order dismissing Plaintiffs' claims against Ambac Financial Group, Ambac Assurance Corporation, MBIA Insurance Corporation, and National Public Finance Guarantee Corporation for lack of personal jurisdiction; and dismissing, without prejudice, claims against MBIA Inc. for failure to state a claim. On March 6, 2026, plaintiffs filed a second amended complaint in the District of Connecticut, asserting claims solely against MBIA Inc. On April 20, 2026, MBIA Inc. moved to dismiss the second amended complaint or, in the alternative, to transfer the action to the Title III court. Plaintiffs may seek to refile their claims against the Company, Ambac Assurance Corporation, and other dismissed defendants in an appropriate forum.


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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.


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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


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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.


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◦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.

The increase was primarily 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. The 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 income decreased $732 and $1,192 for the three and six months ended June 30, 2026, respectively, compared to


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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

The 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.

The 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.


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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%, respectively, 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 higher 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.


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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


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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 capitalize 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 efficiency of our business and to support growth, and (v) share repurchases and warrant conversions. Funding puts, calls and other capital commitments require payments from OSG, the magnitude of which will ultimately depend on the performance of the underlying businesses, whether or not the puts or calls are exercised, FX rates and other considerations, 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


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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.


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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


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$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

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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.


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	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)		%


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	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	%


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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)		%


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	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.

Item 4. Controls and Procedures

In connection with the preparation of this second quarter Form 10-Q, an evaluation was carried out by Octave's management, with the participation of Octave's Chief Executive Officer and Chief Financial Officer, of the effectiveness of Octave's disclosure controls and procedures (as defined in rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this Quarterly Report on Form 10-Q. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Based on their evaluation, Octave's Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2026, Octave's disclosure controls and procedures were effective.

There were no changes in our internal control over financial reporting during the six three months of 2026 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Please refer to Note 14. Commitments and Contingencies of the Unaudited Consolidated Financial Statements located in Part I, Item 1 in this Form 10-Q and Note 19: Commitments and

Contingencies in Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, for a discussion on legal proceedings against Octave and its subsidiaries.

Item 1A. Risk Factors

You should carefully consider the risk factors set forth in the “Risk Factors” section, Item 1A to Part I in our Annual Report on Form 10-K for the year ended December 31, 2025, which is hereby incorporated by reference. These important factors may cause our actual results to differ materially from those indicated by our forward-looking statements, including those contained in this report. Please also see the section entitled “Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995” in this quarterly report on Form 10-Q. There have been no material changes to the risk factors we have disclosed in the “Risk Factors” section of our aforementioned Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sales of Equity Securities — No matters require disclosure.

(b) Purchases of Equity Securities By the Issuer and Affiliated Purchasers

On November 12, 2024, Octave's Board of Directors authorized a share repurchase program, under which Octave was authorized to opportunistically repurchase up to $50,000 of the Company’s common shares at management’s discretion over the period ending on December 31, 2026. Additionally, when restricted stock unit awards issued under Octave's Long Term Incentive Plan vest or settle, they become taxable compensation to


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employees. Shares withheld to cover the employee's portion of withholding taxes and are included in shares purchased.

The following table includes information about the Company's purchases of its common shares during the second quarter of 2026.


	Apr-2026		May-2026		Jun-2026		Second Quarter 2026
Total Shares Purchased	—		2,350		—		2,350
Average Price Paid Per Share	$	—	$	4.38	$	—	$	4.38
Total Number of Shares Purchased as Part of Publicly Announced Plan	—		—		—		—
Maximum Dollar Value That may Yet be Purchased Under the Plan							$	8,449

The following table shows open market shares repurchased by year under Octave's November 12, 2024 share repurchase program.


($ in thousands, except per share)	Year Ended December 31,						YTD 2026
	2024		2025
Shares repurchased	937,141		3,434,745				0
Total cost	$	11,678	$	29,942			$	—
Average purchase price per share	$	12.48	$	8.72			$	—
Unused authorization amount					$	8,449

Item 3. Defaults Upon Senior Securities — No matters require disclosure.

Item 5. Other Information — In the last fiscal quarter, none of our directors or executive officers adopted, terminated, or modified any Rule 10b5-1 trading arrangement, or any non-Rule 10b5-1 trading arrangement.

No other matters require disclosure.

Item 6. Exhibits


Exhibit Number						Description
Other exhibits, filed or furnished, as indicated:
3.1						Amended and Restated Certificate of Incorporation of Ambac Financial Group, Inc., filed with the Secretary of the State of Delaware on June 7, 2024.
3.2						Certificate of Amendment of Certificate of Incorporation of Octave Specialty Group, Inc. filed with the Secretary of the State of Delaware on November 10, 2025.
31.1+						Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended.
31.2+						Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) Promulgated under the Securities Exchange Act of 1934, as amended.
32.1++						Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document - the instance document does not appear in the interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.
104						Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags or embedded within the Inline XBRL document

						+ Filed herewith. ++ Furnished herewith.


Octave Specialty Group, Inc.			44			Second Quarter 2026 Form 10-Q

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		OCTAVE SPECIALTY GROUP, INC.

Dated:	August 6, 2026	By:	/s/ DAVID TRICK
		Name:	David Trick
		Title:	Chief Financial Officer and Treasurer (Duly Authorized Officer and Principal Financial Officer)


Octave Specialty Group, Inc.			45			Second Quarter 2026 Form 10-Q

Octave Specialty Group - 10-Q quarterly report FY2026 Q2

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