Octave Specialty Group — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated total revenue for the three months ended September 30, 2026, was $85.3 million, a 28% increase from $66.6 million in the prior-year period; for the nine months ended September 30, 2026, revenue was $272.5 million, a 48% increase from $184.3 million.
• Consolidated net loss attributable to shareholders for the third quarter was $(13.8) million, compared to $(112.6) million in the prior-year period; for the nine months, the loss was $(35.1) million compared to $(231.7) million.
• Adjusted EBITDA to shareholders for the third quarter was $3.3 million, compared to $(2.9) million in the prior-year period; for the nine months, it was $27.1 million compared to $(8.7) million.
• Consolidated total expenses for the third quarter were $98.7 million, flat compared to $98.7 million in the prior-year period; for the nine months, expenses were $300.9 million, an 18% increase from $254.5 million.
• Pretax loss from continuing operations for the third quarter was $(13.4) million, compared to $(32.1) million in the prior-year period; for the nine months, it was $(28.4) million compared to $(70.2) million.
• Stockholders' equity attributable to common shareholders was $684 million ($15.19 per share) as of September 30, 2026, down from $699 million ($15.52 per share) as of June 30, 2026.
• Long-term debt was $154.8 million as of September 30, 2026, compared to $155.5 million as of June 30, 2026.

Guidance and Future Outlook:

• Management expects market softening to continue into 2027.
• Management believes the operating model is built to perform through market cycles and is well-positioned to deliver sustained, profitable growth toward long-term goals.

Business Segments and Product Lines:

• Insurance Distribution Segment:
  • Total revenue grew 35% to $58.4 million in the third quarter (from $43.2 million), driven by 23% organic growth and the acquisition of ArmadaCare.
  • Net loss to shareholders was $(4.2) million, an improvement from $(5.4) million in the prior-year period.
  • Adjusted EBITDA to shareholders was $8.3 million, up from $6.0 million.
  • Premiums placed totaled $293.4 million, a 20% increase year-over-year.
• Specialty P&C Insurance Segment (Everspan):
  • Gross premiums written were $98.8 million (up 2%), and net premiums written were $25.6 million (up 44%).
  • Net income was $1.3 million, compared to a net loss of $(0.1) million in the prior-year period.
  • Adjusted EBITDA to shareholders was $2.2 million, compared to less than $0.1 million.
  • The combined ratio improved to 100.6% from 112.9% in the prior-year period.
• Corporate:
  • Corporate net loss to shareholders improved to $(10.8) million from $(26.3) million in the prior-year period.
  • OSG on a standalone basis had net assets of $45 million as of September 30, 2026, including $24 million in cash and liquid securities.

Market and Competitive Landscape:

• The P&C market has become more competitive as the year progressed.
• Insurance Distribution organic revenue growth of 23% was well ahead of the broader industry.
• Everspan's results reflect the repositioning of its growing programs business.

Risks and Challenges:

• The P&C market is becoming more competitive.
• Management anticipates continued market softening into 2027.

Management Commentary and Tone:

• Claude LeBlanc, President and CEO, described the third quarter as "solid," citing continued growth in Insurance Distribution and progress at Everspan despite market headwinds.
• Management highlighted the strength of the "purposely diversified portfolio strategy" and the "strong embedded value of our scaling MGA incubator."
• LeBlanc noted that the acquisition of ArmadaCare contributed to revenue growth.

Other Key Points:

• Subsequent to the quarter end, Everspan entered into an agreement to sell its redundant admitted shell company, Providence Washington Insurance Company, to simplify its operating structure and strengthen its capital base.
• The decline in stockholders' equity from June to September 2026 was primarily due to a total comprehensive loss of $(18) million, partially offset by a $4 million increase in additional paid-in capital related to share-based compensation.
• Weighted-average diluted shares outstanding decreased 6% to 45.4 million in the third quarter of 2026 from 48.1 million in the prior-year period.