OCTAVE SPECIALTY GROUP INC

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:

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

$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:

(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.