OCTAVE SPECIALTY GROUP INC

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

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

As of March 31, 2026, total stockholders’ equity was $712,618, compared with total stockholders’ equity of $715,790 at December 31, 2025. The decrease was primarily the result of the net loss attributable to common stockholders for the three months ended March 31, 2026 of $6,851, partially offset with increase in additional paid-in capital resulting from the acquisition of noncontrolling interests from the exercise of puts.

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 further description of Octave's investment policies and applicable regulations.

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

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 $87,653 at March 31, 2026 from $75,085 at December 31, 2025. The increase is primarily due to growth in the Specialty P&C Insurance segment, including receivables related to the programs where Everspan participates as a reinsurer.

Commission and Fees Receivable

Octave's commission and fee receivables increased to $106,198 at March 31, 2026 from $86,549 at December 31, 2025. 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 March 31, 2026 and December 31, 2025, reinsurance recoverable on paid and unpaid losses were $469,859 and $436,092, respectively, increasing primarily due to growth in the Specialty P&C Insurance Segment. 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 $80,351 from its reinsurers at March 31, 2026. Additionally, while legacy liabilities from Specialty P&C acquisitions were fully ceded to certain reinsurers, Everspan also benefits from an unlimited, uncapped indemnity from the respective sellers to mitigate any residual risk to these reinsurers.

Intangible Assets, net of Accumulated Depreciation

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

As of March 31, 2026 and December 31, 2025, intangible assets were $458,380 and $474,998, respectively. The decrease is driven by foreign exchange rates (appreciation of the British pound), partially offset by amortization of $11,647.

Goodwill

As of March 31, 2026 and December 31, 2025, goodwill totaled $533,497 and $540,345 respectively. The decrease is primarily driven by foreign exchange rates (appreciation of the British pound). 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 March 31, 2026 and December 31, 2025:

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

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. Refer to Note 10. 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 March 31, 2026 and December 31, 2025, was $118,086 and $115,555, respectively. The increase is primarily due to higher advance commissions due to Syndicates.

Other Liabilities

Other liabilities at March 31, 2026 and December 31, 2025, was $158,458 and $102,771, respectively. The increase in Other liabilities is primarily due to consideration payable of $43,644 for the acquisition of redeemable NCI as a result of the exercise of put options by minority owners of Octave Ventures and of certain Option Shares in March 2026. The liability was settled in cash in April 2026.

Redeemable Noncontrolling Interest

The minority equity interests of Octave Ventures's majority-owned MGA/Us were classified within nonredeemable NCI at March 31, 2026. Changes to redeemable NCI during the three months ended March 31, 2026, relate primarily to the allocation of financial results to the minority interests, reclassification of certain interests to nonredeemable due to the expiration of related put options, the exercise of certain put options and the impact of foreign currency translation.