OCTAVE SPECIALTY GROUP INC

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, servicing and related businesses. On October 31, 2025, the Company completed the acquisition of ArmadaCorp Capital, LLC and its subsidiaries (collectively, "ArmadaCare"), a leading specialty A&H MGA. Octave's insurance distribution platform operates in, amongst others, 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 August 14, 2026. On October 23, 2026, Octave announced that it entered into an agreement to sell Providence Washington Insurance Company ("PWIC"), which is one of Everspan's admitted shell insurance carriers. Closing of the sale is subject to customary closing conditions and required regulatory approvals. The sale is not expected to have an impact on Everspan's capabilities, while it is expected to reduce Everspan's overall operating costs and improve tangible book value by approximately $11 million.

The Company reports thesetwo 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 nine months ended September 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. 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.

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 $944 and $(3,791) for the nine months ended September 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 nine months ended September 30, 2026, Buyer exercised its 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 September 30, 2026, the outstanding warrant allows the holder to acquire 3,395,138 shares of OSG common stock at 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 a combination of both. OSG estimates the Black-Scholes value of the remaining warrant at $3.20 per warrant share as of mid-October 2026.

Noncontrolling Interests ("NCI")

Nonredeemable NCI

Nonredeemable NCI represents the NCI share in certain Octave Ventures' operating units that are minority owned by the units' respective management teams and have no associated put options. Nonredeemable NCI was $119,919 and $117,395 as of September 30, 2026 and December 31, 2025, respectively. As described under "Redeemable NCI" below, certain NCI shares were reclassified from nonredeemable to redeemable NCI. Conversely, when redeemable NCI shares are no longer redeemable, such as when put options expire unexercised, the shares are reclassified to nonredeemable NCI with no change in carrying value.

Redeemable NCI

During the nine months ended September 30, 2026, the minority owners of Octave Ventures exercised put options. During the nine months ended September 30, 2026 and 2025, certain Option Shares (as defined below) were also exercised. In addition, during

the nine months ended September 30, 2026, Octave purchased certain redeemable NCI shares from a minority interest owner of Capacity Marine Corporation ("CMC").

(1)Octave Ventures' majority interests in its underlying MGAs and other entities ranges from 51% to 100% at September 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 September 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 noncontrolling interests 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. During the nine months ended September 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 values resulting from revaluations were recorded against retained earnings and totaled $507 and $10,276 for the nine months ended September 30, 2026 and 2025, respectively. These adjustments are included in the numerator of the earnings per share calculation. Refer to Note 12. Net Income Per Share. During the nine months ended September 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. No put options expired during the three months ended September 30, 2026 and 2025.

During the nine months ended September 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 nine months ended September 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 nine months ended September 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.

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.

Below are rollforwards of redeemable NCI interest:

Immaterial Correction of Prior Period Error

The Company previously identified an immaterial prior period error for the three and nine months ended September 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 nine months ended September 30, 2025 is shown below.

Corrected Consolidated Statement of Comprehensive Income (Loss):

Corrected Consolidated Statements of Stockholders’ Equity:

Corrected Earnings (Loss) Per Share:

Corrected Rollforwards of Redeemable NCI:

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.

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 nine months ended September 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 intwo 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 September 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 $1,521 and $6,786 for the three and nine months ended September 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.

(1)Insurance Distribution commission income includes $3,270 of commissions from Specialty Property & Casualty Insurance. The elimination of these revenues is included in Eliminations.

(2)The Specialty Property & Casualty Insurance 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 September 30, 2025 are insignificant and are not presented separately.

(1)Insurance Distribution commission income includes $5,328 of commissions from Specialty Property & Casualty Insurance. The elimination of these revenues is included in Eliminations.

(2)The Specialty Property & Casualty Insurance 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 nine months ended September 30, 2025 are insignificant and are not presented separately.

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):

(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. The loss on sale for the three and nine months ended September 30, 2025 also included the reclassification of net unrealized gains (losses) on available-for-sale investment securities, cumulative foreign currency translation adjustments and cumulative credit risk changes of fair value option liabilities attributable to AAC and subsidiaries, totaling $(85,096), from Accumulated Other Comprehensive Income (Loss) ("AOCI") to Net income (loss) from discontinued operation at sale closing.

4. INVESTMENTS

Octave's invested assets are primarily comprised of (i) fixed maturity securities classified as available for sale, (ii) money market funds, (iii) an investment in a limited partnership and (iv) private preferred equity investments, which primarily include minority investments in MGAs. Money market funds are classified as equity securities and are reported within Short-term investments on the Consolidated Balance Sheets. 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 and short-term investments, as of September 30, 2026 and December 31, 2025, were as follows:

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

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 and short-term investments that did not have an allowance for credit losses under the Current Expected Credit Losses ("CECL") standard as of September 30, 2026 and December 31, 2025. This information is aggregated by investment category and by length of time the individual securities have been in a continuous unrealized loss position.

Management has determined that the securities in the above table do not have credit impairment as of September 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 September 30, 2026, included in the above table are spread across 290 different securities, including 84 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 September 30, 2026, are spread across 213 different securities, including 56 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 16.5% 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 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 September 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 September 30, 2026 and December 31, 2025 was $1,575 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:

Net investment income (loss) from Other investments primarily represents changes in the fair value of equity securities, including income from an investment in a 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):

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

Deposits with Regulators and Other Restrictions

Securities with a carrying value of $37,042 and $34,016, at September 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 $149 and $153, at September 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 $1,842 and $2,656, at September 30, 2026 and December 31, 2025, respectively, are included in invested assets.

Short-Term Investments

Short-term investments consisted of the following:

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 $7,913 and $7,454 as of September 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 $1,354 on this private equity fund at September 30, 2026.

Other investments also include private preferred equity investments with a carrying value of $16,618 and $17,517 as of September 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 $900 in impairments recorded on these investments in the three and nine months ended September 30, 2026. There were no impairments recorded on these investments in the three and nine months ended September 30, 2025.

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:

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 (“NAV”) per share of the investment or its equivalent. 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 September 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.

(1)Excluded from the fair value measurement categories in the table above are investment funds of $7,913 and $7,454 as of September 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 $16,618 and $17,517 as of September 30, 2026 and December 31, 2025, respectively, that do not have readily determinable fair values and have carrying amounts determined using the measurement alternative.

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 include 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 September 30, 2026 and December 31, 2025, Octave has foreign exchange ("FX") forward contracts. The fair value of FX forward contracts is determined using valuation models with observable market inputs.

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.

6. INSURANCE CONTRACTS

Premiums

The effects of reinsurance on premiums written and earned were as follows:

Premium Receivables, including Credit Impairments

Premium receivables at September 30, 2026 and December 31, 2025, were $92,036 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:

At September 30, 2026 and December 31, 2025, $8,727 and $6,781 of premiums were past due, respectively.

Loss and Loss Adjustment Expense Reserves

Below are loss and loss reserve expense rollforwards, net of subrogation recoverable and reinsurance:

(1)Total losses and loss adjustment expense (benefit) are net of $(155,601) and $(166,959) for ceded reinsurance for the nine months ended September 30, 2026 and 2025, respectively.

(2)Represents reinsurance recoverable on future loss and loss adjustment expenses. Additionally, the Balance Sheet line "Reinsurance recoverable on paid and unpaid losses" includes reinsurance recoverables of $101,601 and $85,687 as of September 30, 2026 and 2025, respectively, related to previously paid loss and loss adjustment expenses.

The unfavorable losses incurred development on prior accident years for the nine months ended September 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 nine months ended September 30, 2025, was primarily driven by increased commercial auto loss experience for programs in run-off and excess liability claims.

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 September 30, 2026:

(1)Other includes $19,297 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 $688,590 at September 30, 2026. Credit exposure existed at September 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 September 30, 2026, there were ceded reinsurance balances payable of $100,177 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 $87,102 from its reinsurers at September 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 September 30, 2026, our topten reinsurers represented 64.1% 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 ourten most significant reinsurers by amount of reinsurance recoverables as of September 30, 2026:

(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 September 30, 2026 and December 31, 2025, Everspan has uncollateralized credit exposure to reinsurers of $368,501 and $311,795, respectively, and has recorded an allowance for credit losses of less than a million at September 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 $19,297 and $23,530 at September 30, 2026 and December 31, 2025, respectively. All legacy liabilities remain with affiliates of sellers through reinsurance and contractual indemnities.

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 in the Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025:

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

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 September 30, 2026 and December 31, 2025, is summarized below:

8. GOODWILL AND INTANGIBLE ASSETS

The following table presents rollforwards of goodwill:

Intangible assets, less accumulated amortization, consisted of the following as of September 30, 2026 and December 31, 2025:

9. DEBT

2025 Credit Facility

In connection with the acquisition of ArmadaCare 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 $137,625 as of September 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 Policiesin 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:

Revenue of $6,980 and $4,855 for the three months ended September 30, 2026 and 2025, respectively, and $22,255 and $14,291 for the nine months ended September 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 $357 and $314, during the three months ended September 30, 2026 and 2025, respectively, and $4,175 and $2,870, during the nine months ended September 30, 2026 and 2025, respectively.

Receivables, Contract Assets and Liabilities

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

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 September 30, 2026 and 2025, that was included in the contract liability balance as of the beginning of each period was $136 and $133, respectively. Revenue recognized during the nine months ended September 30, 2026 and 2025, that was included in the contract liability balance as of the beginning of each period was $552 and $606, respectively.

11. COMPREHENSIVE INCOME (LOSS)

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

(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 were as follows:

12. NET INCOME PER SHARE

As of September 30, 2026,45,054,674 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 49,390 during the nine months ended September 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:

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 effects of changes in carrying value of redeemable NCI to the redemption amount under ASC 480 and remeasurement of NCI carrying value to fair value upon a reclassification of NCI shares to redeemable NCI. Adjustments to the carrying value of redeemable NCI 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:

The denominator of the basic earnings (loss) per share computation represents the daily weighted-average common shares outstanding ("WASO") 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:

(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.

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 were as follows:

Provision (Benefit) for Income Taxes

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

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, 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). This putative class action is brought on behalf of all persons who, between October 19, 2018 and February 12, 2019, held bonds issued by the Puerto Rico Sales Tax Financing Corporation (“COFINA”) and insured by defendants under financial guaranty insurance policies. Plaintiffs allege that defendants improperly used their role in the COFINA

restructuring to alter contracts with insured bondholders, resulting in such bondholders receiving less than they contracted for under the 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, declaratory judgment and a permanent injunction against violations of law. On February 13, 2026, the Court dismissed the claims against Ambac Financial Group, Ambac Assurance Corporation, MBIA Insurance Corporation, and National Public Finance Guarantee Corporation for lack of personal jurisdiction; and dismissed, without prejudice, claims against MBIA Inc. for failure to state a claim. On March 6, 2026, plaintiffs filed a second amended complaint asserting claims solely against MBIA Inc. MBIA Inc. moved to dismiss the second amended complaint or, in the alternative, to transfer the action to the Title III court. The motion has been fully briefed. If dismissed, Plaintiffs may seek to appeal the dismissal of their claims, including as against the Company.