Q2 2026 Octave Specialty Group Inc Earnings Call

August 7, 2026

Speaker #1: Ladies and gentlemen, good morning, and welcome to the Octave specialty group, second quarter 2026 earnings call. At this time, all participants are in a listen-only mode.

Operator: Ladies and gentlemen, good morning, and welcome to the Octave Specialty Group Second Quarter 2026 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Karen Beyer, Head of Investor Relations. Please go ahead.

Operator: Ladies and gentlemen, good morning, and welcome to the Octave Specialty Group Q2 2026 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Karen Beyer, Head of Investor Relations. Please go ahead.

Speaker #1: A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad.

Speaker #1: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Karen Beyer, Head of Investor Relations. Please go ahead.

Speaker #2: Thank you. Good morning and welcome to Octave's second quarter 2026 call to discuss financial results. Speaking today will be Claude LeBlanc, president and CEO, and David Trick, chief financial officer.

Karen Beyer: Thank you. Good morning and welcome to Octave's Q2 2026 call to discuss financial results. Speaking today will be Claude LeBlanc, President and CEO, and David Trick, Chief Financial Officer. They will discuss the financial results of our business and the current market environment. After prepared remarks, we'll take your questions. Also available for Q&A today will be executives from our insurance distribution segment. For those of you following along on the webcast during the prepared remarks, we will be highlighting some slides from the investor presentation, which can be located on the website. Our call today includes forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties. It is not a guarantee of future performance. Actual results may differ materially from those expressed or implied in the forward-looking statements due to a variety of factors.

Speaker #2: They will discuss the financial results of our business and the current market environment. After prepared remarks, we'll take your questions. Also available for Q&A today will be executives from our insurance distribution segment.

Speaker #2: For those of you falling along on the webcast during the prepared remarks, we will be highlighting some slides from the investor presentation. Which can be located on the website.

Speaker #2: Our call today includes forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties, and it is not a guarantee of future performance.

Speaker #2: Actual results may differ materially from those expressed or implied in the forward-looking statements. Due to a variety of factors, these factors are described under forward-looking statements in our earnings press release.

Karen Beyer: These factors are described under forward-looking statements in our earnings press release and in our most recent 10-Q and 10-K filed with the SEC. We do not undertake any obligation to update forward-looking statements. Also in our prepared remarks or responses to questions, we may mention some non-GAAP financial measures. Reconciliation to those non-GAAP measures are included in our recent earnings press release, operating supplement, and other materials available in the investor section on our website, octavegroup.com. Now we would like to turn the call over to Mr. Claude LeBlanc.

Speaker #2: And in our most recent 10Q and 10K, followed with the SEC. We do not undertake any obligation to update forward-looking statements. Also in our prepared remarks or responses to questions, we may mention some non-GAAP financial measures.

Speaker #2: Reconciliation to those non-GAAP measures are included in our recent earnings press release. Operating supplement and other materials available in the investor section on our website octavegroup.com.

Speaker #2: Now we would like to turn the call over to Mr. Claude LeBlanc.

Speaker #3: Thank you, Karen. And good morning, everyone. I am pleased to report that Octave Group delivered another strong quarter. Reflecting continued momentum across our platform and disciplined execution against our strategic priorities.

Claude LeBlanc: Thank you, Karen. Good morning, everyone. I am pleased to report that Octave Group delivered another strong quarter, reflecting continued momentum across our platform and disciplined execution against our strategic priorities. Our insurance distribution business continued to scale at an attractive pace, supported by strong organic growth and the benefits of recent strategic investments. At the same time, our specialty insurance segment showed continued operational progress and improving financial performance. Turning to our results for the quarter, our core insurance distribution business remains firmly on track with strong momentum demonstrated by revenue growth of 77% for the Q2, which included organic growth of 44% and the impact of the acquisition of ArmadaCare. Our Q2 insurance distributions adjusted EBITDA was $10 million, representing a near fourfold increase year-over-year, bringing our year-to-date adjusted EBITDA to $35 million.

Speaker #3: Our insurance distribution business continued to scale at an attractive pace supported by strong organic growth and the benefits of recent strategic investments. At the same time, our specialty insurance segment showed continued operational progress and improving financial performance.

Speaker #3: Turning to our results for the quarter. Our core insurance distribution business remains firmly on track with strong momentum demonstrated by revenue growth of 77% for the second quarter.

Speaker #3: Which included organic growth of 44% and the impact of the acquisition of our Medicare. Our second quarter insurance distributions adjusted EBITDA was $10 million, representing a near four-fold increase year over year.

Speaker #3: Bringing our year-to-date adjusted EBITDA to $35 million. This reflects an adjusted EBITDA margin of approximately 26%, which expanded over 12 percentage points from 13% a year ago.

Claude LeBlanc: This reflects an adjusted EBITDA margin of approximately 26%, which expanded over 12 percentage points from 13% a year ago. Based on the continued and accelerated growth of our insurance distribution segment, we are adjusting our 2026 guidance for our two key metrics, organic growth and adjusted EBITDA. David Trick will provide more details on all of our guidance adjustments later in the presentation. Included in these results is strong performance from our class of 2024 and 2025 MGAs, which continued their growth trajectory this quarter. We remain confident that these MGAs, which remain in the early stages of scaling, will drive material EBITDA expansion as they scale through 2028 and beyond. Our specialty P&C segment continued to benefit from the early actions we have taken to reposition the platform, delivering adjusted EBITDA of $1.8 million for the quarter.

Speaker #3: Based on the continued and accelerated growth of our insurance distribution segment, we are adjusting our 2026 guidance for our two key metrics: organic growth and adjusted—more details on all of our guidance adjustments later in the presentation.

Speaker #3: Included in these results is strong performance from our class of 2024 and 2025 MGAs, which continued their growth trajectory this quarter. We remain confident that these MGAs which remain in the early stages of scaling will drive material EBITDA expansion as they scale through 2028 and beyond.

Speaker #3: Our specialty property and casualty segment continued to benefit from the early actions we have taken to reposition the platform. Delivering adjusted EBITDA of 1.8 million for the quarter.

Speaker #3: We continue to strengthen the quality of Everspan's portfolio while positioning the company to generate increasingly attractive earnings as premium growth and underwriting improvements continue to compound.

Claude LeBlanc: We continue to strengthen the quality of Everspan's portfolio while positioning the company to generate increasingly attractive earnings as premium growth and underwriting improvements continue to compound. The business remains well-positioned to support both third-party programs and select Octave-sponsored opportunities while delivering sustainable long-term value for shareholders. In conjunction with this, we are investing in the leadership and specialized capabilities needed to support Everspan's growth. As announced earlier this week, we have hired three new senior leaders at Everspan Group. David Kenyon, Head of Reinsurance, who recently joined the company, and Bevan Greibesland, Chief Underwriting Officer, and Clay Stewart, Chief Operating Officer, who will be joining us shortly. David, Bevan, and Clay each bring deep expertise in their respective fields. Together, they will strengthen our ability to scale Everspan while maintaining our focus on underwriting discipline, strong partnerships, and operational excellence. Turning to the market environment.

Speaker #3: The business remains well-positioned to support both third-party programs and select Octave-sponsored opportunities, while delivering sustainable long-term value for shareholders. In conjunction with this, we are investing in their leadership and specialized capabilities needed to support Everspan's growth.

Speaker #3: As announced earlier this week, we have hired three new senior leaders at Everspan Group: David Kenyon, Head of Reinsurance, who recently joined the company, and Bevan Grebesland, Chief Underwriting Officer, and Clay Stewart, Chief Operating Officer, who will be joining us shortly.

Speaker #3: David, Bevan, and Clay each bring deep expertise in their respective fields. Together, they will strengthen our ability to scale Everspan while maintaining our focus on underwriting discipline strong partnerships and operational excellence.

Speaker #3: Turning to the market environment. Broadly, the US and global P&C insurance markets continue to soften. Property markets are being shaped by abundant capacity. The wholesale large property segment is leading the pullback with rates down 10 to 20 percent year on year.

Claude LeBlanc: Broadly, the US and global P&C insurance markets continue to soften. Property markets are being shaped by abundant capacity. The wholesale large property segment is leading the pullback, with rates down 10% to 20% year on year, while low cat exposed SME property markets are experiencing more muted softening. Notably, this is happening after years of increases, which gave rise to a strong technical price foundation. As a result, notwithstanding these rate reductions, price adequacy remains intact for our well-underwritten portfolios. The London market large casualty products are operating against a backdrop of robust competitive pressures, although they are demonstrating better rate resilience than large property lines. By contrast, casualty SME classes, including general liability and certain commercial auto risks, as well as targeted specialty classes, continue to show mid-single to double-digit rate progression and represent an attractive opportunity for expansion.

Speaker #3: While low CAT exposed SME property markets are experiencing more muted softening. Notably, this is happening after years of increases which gave rise to a strong technical price foundation.

Speaker #3: As a result, notwithstanding these rate reductions, price adequacy remains intact for our well-underwritten portfolios. The London market large casualty products are operating against a backdrop of robust competitive pressures, although they are demonstrating better rate resilience than large property lines.

Speaker #3: By contrast, casualty SME classes including general, liability, and certain commercial auto risks as well as targeted specialty classes continue to show mid-single to double-digit rate progression.

Speaker #3: And represent an attractive opportunity for expansion. A&H continues to benefit from constructive, positive rate trends and strong secular growth in certain markets. In this market environment, our portfolio strategy remains a key differentiator.

Claude LeBlanc: A&H continues to benefit from constructive positive rate trends and strong secular growth in certain markets. In this market environment, our portfolio strategy remains a key differentiator. We have intentionally built a diversified platform across A&H, specialty P&C, and select property lines, giving us multiple sources of growth and reducing our dependence on any single product class or market cycle. This diversification is especially important in the current environment where our A&H businesses continue to provide a growing earnings base that is largely uncorrelated with broader P&C pricing cycles. This breadth allows us to manage concentration risk, reposition where appropriate, and continue pursuing profitable growth in areas where market fundamentals remain attractive. Equally important, our MGA model is built around experienced underwriting leaders who have managed through prior market cycles.

Speaker #3: We have intentionally built a diversified platform across A&H, specialty P&C, and select property lines, giving us multiple sources of growth and reducing our dependence on any single product class or market cycle.

Speaker #3: This diversification is especially important in the current environment, where our A&H businesses continue to provide a growing earnings base that is largely uncorrelated with broader P&C pricing cycles.

Speaker #3: This breadth allows us to manage concentration risk, reposition where appropriate, and continue pursuing profitable growth in areas where market fundamentals remain attractive. Equally important are MGA model is built around experienced underwriting leaders who have managed through prior market cycles.

Speaker #3: Their expertise, combined with disciplined portfolio management and strong capacity relationships, enables us to responsibly deploy underwriting capital on behalf of our partners, while protecting margins and supporting sustained growth.

Claude LeBlanc: Their expertise, combined with disciplined portfolio management and strong capacity relationships, enables us to responsibly deploy underwriting capital on behalf of our partners while protecting margins and supporting sustained growth. Beyond our portfolio diversification and experienced underwriting leadership, our growth is supported by the profile of our portfolio companies and our portfolio bias towards areas where growth opportunity remains strong. Since the start of 2024, Octave has launched nine MGAs, representing 40% of our MGA portfolio. Following an MGA launch, there is an inherent strong growth trajectory, which typically continues for at least five years, and in many cases, well beyond that window. MGA launches typically break even and start to deliver positive EBITDA after 18 to 24 months. In contrast, our mature MGAs are driving growth through a deliberate, proactive strategy, expanding distribution, repositioning towards the strongest underwriting opportunities, and broadening capacity access within core products.

Speaker #3: Beyond our portfolio diversification, we have experienced underwriting leadership. Our growth is supported by the profile of our portfolio companies and our portfolio bias towards areas where growth opportunities remain strong.

Speaker #3: Since the start of 2024, Octave has launched nine MGAs, representing 40% of our MGA portfolio. Following an MGA launch, there is an inherently strong growth trajectory, which typically continues for at least five years, and in many cases, well beyond that window.

Speaker #3: MGA launches typically break even and start to deliver positive EBITDA after 18 to 24 months. In contrast, our mature MGAs are driving growth through a deliberate proactive strategy expanding distribution repositioning towards the strongest underwriting opportunities and broadening capacity access within core products.

Speaker #3: We are leveraging MGA and corporate leadership expertise alongside targeted talent recruitment to drive product growth. Bolt-on teams—a strategy we're executing across multiple platforms—provide an efficient, low-cost route to growth, rivaling smaller, new MGA launches.

Claude LeBlanc: We are leveraging MGA and corporate leadership expertise alongside targeted talent recruitment to drive product growth. Bolt-on teams, a strategy we're executing across multiple platforms, provides an efficient, low-cost route to growth, rivaling smaller new MGA launches. Taken together, the diversity of our portfolio, the profile of our MGAs, and the quality of our underwriting talent give Octave a differentiated ability to perform through market cycles. We believe this positions us well to deliver above-market organic growth today while preserving meaningful upside as market conditions evolve. Finally, a brief update on our AI and data strategy. We view AI as both a growth enabler and an efficiency tool. Applied thoughtfully, it strengthens our underwriting capabilities, improves speed and consistency across our enterprise, and helps our teams focus their time on high-value risk selection and client engagement.

Speaker #3: Taken together, the diversity of our portfolio, the profile of our MGAs, and the quality of our underwriting talent give Octave a differentiated ability to perform through market cycles.

Speaker #3: We believe this positions us well to deliver above-market organic growth today, while preserving meaningful upside as market conditions evolve. Finally, a brief update on our AI and data strategy.

Speaker #3: We view AI as both a growth enabler and an efficiency tool. Applied thoughtfully it strengthens our underwriting capabilities improves speed and consistency across our enterprise and helps our teams focus their time on high value risk selection and client engagement.

Speaker #3: During the second quarter, we collaborated with Cytora to develop and launch our proprietary AI-driven underwriting platform turning submissions into decision-ready risks allowing us to review opportunities faster and with greater underwriting quality.

Claude LeBlanc: During the second quarter, we collaborated with Cytora to develop and launch our proprietary AI-driven underwriting platform, turning submissions into decision-ready risks, allowing us to review opportunities faster and with greater underwriting quality. It is currently active in a number of our US MGAs that write management, financial, and professional liability programs. To date, the results are very encouraging. In one clear example of underwriting efficiency and acceleration, we have reduced submit-to-quote time from several hours to approximately seven minutes. Over time, we expect this capability to reduce manual effort, accelerate underwriting decisions, improve service levels, and bring additional MGAs to market more quickly. We expect to complete the implementation across our remaining applicable US MGAs in H2 of this year. I will now turn the call over to David to review our second quarter results. David?

Speaker #3: It is currently active in a number of our US MGAs that write management financial and professional liability programs. To date, the results are very encouraging.

Speaker #3: In one clear example of underwriting efficiency and acceleration, we have reduced submit to quote time from several hours to approximately seven minutes. Over time, we expect this capability to reduce manual effort, accelerate underwriting decisions, improve service levels, and bring additional MGAs to market more quickly.

Speaker #3: We expect to complete the implementation across our remaining applicable US MGAs in the second half of this year. I will now turn the call over to David to review our second quarter results.

Speaker #3: David?

Speaker #2: Thank you, Claude. Good morning, everyone. For the second quarter of 2026, Octave reported a net loss to shareholders of 14.4 million or 33 cents per share.

David Trick: Thank you, Claude, and good morning, everyone. For Q2 of 2026, Octave reported a net loss to shareholders of $14.4 million, or $0.33 per share, an improvement of over $6 million or $0.09 per share compared to the net loss to shareholders of $20.5 million or $0.42 per share reported in Q2 of 2025. Consolidated EBITDA and adjusted EBITDA to shareholders improved to -$1.7 million and +$3.7 million compared to -$9.8 million and -$4.6 million, respectively, in Q2 of 2025, representing an $8.1 million and $8.3 million improvement, respectively. The consolidated adjusted net loss to shareholders was $1.8 million or $0.04 per share compared to a loss of $10.6 million or $0.22 per share in Q2 of 2025, an improvement of $8.7 million or $0.18 per share.

Speaker #2: An improvement of over 6 million or 9 cents per share compared to the net loss to shareholders of 20.5 million or 42 cents per share reported in the second quarter of 2025.

Speaker #2: Consolidated EBITDA and adjusted EBITDA to shareholders improved to a negative 1.7 million and a positive 3.7 million compared to a negative 9.8 million and negative 4.6 million respectively in the second quarter of 2025.

Speaker #2: Representing an 8.1 million and 8.3 million improvement respectively. The consolidated adjusted net loss to shareholders was 1.8 million or 4 cents per share compared to a loss of 10.6 million or 22 cents per share in the second quarter of 2025.

Speaker #2: An improvement of 8.7 million or 18 cents per share. The results of the quarter led by insurance distribution also reflect improved results at Everspan as well as our corporate operations.

David Trick: The results for the quarter, led by insurance distribution, also reflect improved results at Everspan as well as our corporate operations. Total revenue for the insurance distribution segment grew 77% to $58.4 million in Q2 of 2026. Organic growth of 44% in the October 2025 acquisition of ArmadaCare were the drivers of the substantial increase in revenue. Organic growth was aided by the diversity of our business, including de novos launch over the last two years in certain specialty product lines, which more than offset some of the softness we experienced in certain markets, such as energy and D&F property. The insurance distribution segment's net loss to shareholders decreased to $3.7 million in the quarter, compared to a net loss of $7.7 million in the prior year quarter, an improvement of $4 million.

Speaker #2: Total revenue for the insurance distribution segment grew 77% to 58.4 million in the second quarter of 2026. Organic growth of 44% in the October 2025 acquisition of ArmadaCare with the drivers of the substantial increase in revenue.

Speaker #2: Organic growth was aided by the diversity of our business including DeNovo's launch over the last two years and certain specialty product lines which more than offset some of the softness we experienced in certain markets such as energy and DNF property.

Speaker #2: The insurance distribution segment's net loss to shareholders decreased to 3.7 million in the quarter compared to a net loss of 7.7 million in the prior year quarter and improvement of 4 million.

Speaker #2: Insurance distributions adjusted EBITDA to shareholders grew nearly fourfold to $9.8 million compared to $2.5 million in the prior year period, driving related margins to 16.8% from 7.6%, respectively.

David Trick: Insurance distribution's adjusted EBITDA to shareholders grew nearly fourfold to $9.8 million, compared to $2.5 million in the prior year period, driving related margins to 16.8% from 7.6% respectively. Adjusted net income to shareholders swung +$4.6 million, compared to a net loss of $3 million in Q2 of 2025. Our insurance distribution results for the quarter were driven by a number of factors, including the October 2025 acquisition of ArmadaCare, organic growth across our diverse group of MGAs, higher profit commissions reflecting continued underwriting discipline, the acquisition of an additional 10% of Octave Ventures at the end of Q1, and a near $3 million reduction in interest expense resulting from both a reduction of debt and lower financing costs.

Speaker #2: Adjusted net income to shareholders swung positive to $4.6 million, compared to a net loss of $3 million in the second quarter of 2025. Our insurance distribution results for the quarter were driven by a number of factors, including the October 2025 acquisition of ArmadaCare, organic growth across our diverse group of MGAs, higher profit commissions reflecting continued underwriting discipline, the acquisition of an additional 10% of Octave Ventures at the end of the first quarter, and a near $3 million reduction in interest expense resulting from both a reduction of debt and lower financing costs.

Speaker #2: Our results for the quarter also reflect our continued investment in DeNovo MGAs which suppressed EBITDA to shareholders by about 1.1 million in the quarter coming for about two points of EBITDA margin.

David Trick: Our results for the quarter also reflect our continued investment in de novo MGAs, which suppressed EBITDA to shareholders by about $1.1 million in the quarter, accounting for about two points of EBITDA margin. Turning to Everspan, gross and net premiums written and premiums earned in the quarter were $95 million, $23 million, and $22 million, down 2% and up 52% and 34% respectively. The actions we've been taking to reposition Everspan helped bring down our current quarter loss ratio to 61.4%, with our active programs running at about a 59% loss ratio. This represents a 640 basis point improvement in our reported loss ratio compared to Q2 2025. Our G&A expense ratio also declined year over year to 9.4% from 16%, driven by lower expenses and earned premium growth.

Speaker #2: Turning to Everspan, gross and net premiums written and premiums earned in the quarter were $95 million, $23 million, and $22 million—down 2%, and up 52% and 34%, respectively.

Speaker #2: The actions we've been taking to reposition Everspan have helped bring down our current quarter loss ratio to 61.4%, with our active programs running at about a 59% loss ratio.

Speaker #2: This represents a 640 basis point improvement in our reported loss ratio compared to the second quarter of 2025. Our G&A expense ratio also declined year over year to 9.4% from 16% driven by lower expenses and earned premium growth.

Speaker #2: Reduction in the loss in G&A expense ratios were partially offset by higher acquisition costs due to embedded sliding scales on certain programs that we believe will provide more stable underwriting results going forward.

David Trick: Reduction in the loss in G&A expense ratios were partially offset by higher acquisition costs due to embedded sliding scales on certain programs that we believe will provide more stable underwriting results going forward. Together, these results led to a reduction in the combined ratio to 100.6%, compared to 106.7% last year, above our long-term objectives, but progress towards our goal. For Q2 2026, Everspan produced pre-tax income of $1.2 million and adjusted EBITDA was $1.8 million, double and nearly triple, respectively, the results from the prior year period. Continued expense reduction and containment initiatives at corporate also contributed positively to our improved Q2 results. Reported GAAP corporate expenses declined from $14 million in Q2 2025 to $12 million this quarter, a 14% improvement. In addition, adjusted expenses declined to $7.9 million from $8.3 million in the prior year comparable period.

Speaker #2: Together, these results led to a reduction in the combined ratio to 100.6% compared to 106.7% last year above our long-term objectives but progress towards our goal.

Speaker #2: For the second quarter of 2026, Everspan produced pre-tax income of 1.2 million and adjusted EBITDA was 1.8 million. Double in nearly triple respectively the results from the prior year period.

Speaker #2: Continued expense reduction and containment initiatives at Corporate also contributed positively to our improved second quarter results. Reported GAAP Corporate expenses declined from $14 million in the second quarter of 2025 to $12 million this quarter, a 14% improvement.

Speaker #2: In addition, adjusted expenses declined to $7.9 million from $8.3 million in the prior year comparable period. The difference between reported expenses and adjusted expenses in the current quarter was mainly attributable to $1.1 million of acquisition, integration, severance, and restructuring expenses, and $2.7 million of equity compensation.

David Trick: The difference between reported expenses and adjusted expenses in the current quarter was mainly attributable to $1.1 million of acquisition, integration, severance, and restructuring expenses, and $2.7 million of equity compensation. We continue to evaluate all expenses in an effort to trend our adjusted expenses downward toward our longer-term goals. Turning to guidance, we are updating several key items that reflect the continued strength of our insurance distribution business and the ongoing evolution of our platform. Within our insurance distribution segment, we are raising guidance for both of our key operating metrics. We now expect organic growth of 25% plus, up from our prior expectation of 20% plus, and are increasing adjusted EBITDA guidance to $45 million from $40 million. These increases reflect the diversity and continued momentum of our distribution platform. At Everspan, we are revising our adjusted EBITDA guidance to $6 million from $7.5 million.

Speaker #2: We continued to evaluate all expenses in an effort to trend our adjusted expenses downward toward our longer-term goals. Turning to guidance, we are updating several key items that reflect the continued strength of our insurance distribution business and the ongoing evolution of our platform.

Speaker #2: Within our insurance distribution segment, we are raising guidance for both of our key operating metrics. We now expect organic growth of 25% plus up from our prior expectation of 20% plus and our increasing adjusted EBITDA guidance to 45 million from 40 million.

Speaker #2: These increases reflect the diversity and continued momentum of our distribution platform. At Everspan, we are revising our adjusted EBITDA guidance to 6 million from 7.5 million.

Speaker #2: This change is primarily driven by higher-than-expected acquisition costs associated with the mix of newer programs we are onboarding. While these costs impact near-term profitability, we believe these programs will produce more attractive long-term economics through lower and more stable loss ratios.

David Trick: This change is primarily driven by higher than expected acquisition costs associated with the mix of newer programs we are onboarding. While these costs impact near-term profitability, we believe these programs will produce more attractive long-term economics through lower and more stable loss ratios, supporting a stronger and more durable earnings profile over time, particularly as we build scale. $6 million of adjusted EBITDA would represent a 58% increase over 2025's adjusted EBITDA of $3.8 million. We are also updating our adjusted net income per share guidance to a range of $0.15 to $0.20 per share, compared with our prior expectation of $0.50 per share. This revision reflects updated estimates for interest expense, depreciation, taxes, and a more refined allocation of non-controlling interests across the business. Importantly, our outlook continues to represent a significant milestone for the company.

Speaker #2: Supporting a stronger and more durable earnings profile over time. Particularly as we build scale. 6 million of adjusted EBITDA would represent a 58% increase over 2025's adjusted EBITDA of 3.8 million.

Speaker #2: We are also updating our adjusted net income per share guidance to a range of 15 cents to 20 cents per share. Compared with our prior expectation of 50 cents per share.

Speaker #2: This revision reflects updated estimates for interest expense, depreciation, taxes, and a more refined allocation of non-controlling interest across the business. Importantly, our outlook continues to represent a significant milestone for the company.

Speaker #2: We expect 2026 to be the first year we generate positive adjusted net income per share excluding the legacy financial guarantee business. Since launching our P&C strategy in 2021.

David Trick: We expect 2026 to be the first year we generate positive adjusted net income per share, excluding the legacy financial guarantee business since launching our P&C strategy in 2021. At the midpoint of our revised guidance, this represents approximately a $0.76 per share improvement from a 2025 adjusted loss of $0.58 per share, driven by the continued growth and increasing earnings power of our insurance distribution platform. All other guidance remains unchanged. I will now turn the call back to Claude.

Speaker #2: At the midpoint of our revised guidance, this represents approximately a 76 cent per share improvement from a 2025 adjusted loss of 58 cents per share.

Speaker #2: Driven by the continued growth and increasing earnings power of our insurance distribution platform. All other guidance remains unchanged. I will now turn to call back to Claude.

Speaker #1: As we move into the second half of 2026, I am confident in the strength, scalability, and resilience of our business model. While the market environment remains dynamic, we are executing with discipline maintaining our focus on underwriting quality portfolio management and responsible growth.

Claude LeBlanc: As we move into H2 2026, I'm confident in the strength, scalability, and resilience of our business model. While the market environment remains dynamic, we are executing with discipline, maintaining our focus on underwriting quality, portfolio management, and responsible growth. These results reinforce our confidence in Octave Group's long-term opportunity. We believe the foundation we are building positions us well to deliver sustained, profitable growth and advance our vision of becoming a leading specialty insurance distribution company. Operator, I would now like to open the call to questions.

Speaker #1: These results reinforce our confidence in Octave Specialty Group's long-term opportunity. We believe the foundation we are building positions us well to deliver sustained, profitable growth and advance our vision of becoming a leading specialty insurance distribution company.

Speaker #1: Operator, I would now like to open the call to questions.

Speaker #3: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question will come from Maxwell Fritscher with Truist Securities.

Speaker #3: A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue.

Speaker #3: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. And our first question will come from Maxwell Fritcher with Truist Securities.

Speaker #2: Yeah, thank you. Good morning. I'm calling in for Mark Hughes. How would you characterize the pipeline for startup MGAs, and then how is the pipeline for the class of 2027 shaping up, if you have a line of sight there?

Maxwell Fritscher: Yeah, thank you. Good morning. I'm calling in for Mark Hughes. How would you characterize the pipeline for startup MGAs? How is the pipeline for the class of 2027 shaping up, if you have a line of sight there?

Speaker #4: Good morning, Max. Yeah. So, where we stand for '26, I think we indicated that we thought there would be a lower number of MGAs launched this year.

Claude LeBlanc: Good morning, Max. Yeah, where we stand for 2026, I think we indicated that we thought there would be a lower number of MGAs launched this year. We haven't launched any to date, although we still expect to, but we indicated one or two for 2026. This came off the large number that we launched in the class of 2024 and 2025, where we launched nine, representing roughly 40% of our total MGA portfolio. It was our expectation to keep that number lower this year as we focus on the large number of MGAs launched in that period. Roughly close to 75% of our organic growth this quarter was delivered by the class of 2024 and 2025. Those MGAs are just beginning at the early stages of scaling their platforms and really taking hold of the growth and also beginning to deliver EBITDA.

Speaker #4: We haven't launched any to date. Although we still expect to, but we indicated one or two for '26. This came off the large number that we launched in the class of '24 and '25.

Speaker #4: We will launch nine, representing roughly 40% of our total MGA portfolio. It was our expectation to keep that number lower this year as we focus on the large number of MGAs launched in that period.

Speaker #4: Roughly close to 75% of our organic growth this quarter was delivered by the class of '24 and '25, so those MGAs are just beginning at the early stages of scaling their platforms.

Speaker #4: And really taking hold of the growth, and also beginning to deliver EBITDA. Roughly half the MGAs of that class are delivering EBITDA at this point in time, and we expect more to start contributing, and contributing much more meaningfully as we get through to the end of the year and into '27.

Claude LeBlanc: Roughly half the MGAs of that class are delivering EBITDA at this point in time. We expect more to start contributing and contributing much more meaningfully as we get through to the end of the year and into 2027. Right now, as we look at the trajectory in terms of our target EBITDA, looking at 2028, that we put out of $80 million, a significant percentage of that will come out of the class of 2024, 2025. Coming back to your specific question on 2026 and 2027, we're still targeting a relatively modest number of MGAs in 2027. I think we're probably in the range of two to four in terms of launch. We do have a pipeline of startups that we continuously evaluate for launching. We're very selective, of course, in choosing the MGA portfolios that we're looking at.

Speaker #4: So right now, as we kind of look at the trajectory in terms of our target EBITDA looking at '28 that we put out of $80 million, a significant percentage of that will come out of the class of '24, '25.

Speaker #4: But coming back to your specific question on '26 and '27, we're still targeting a relatively modest number of MGAs in '27. I think we probably in a range of two to four in terms of launch.

Speaker #4: We do have a pipeline of startups that we continuously evaluate for launching. We're very selective of course in choosing the MGA portfolios that we're looking at.

Speaker #4: But we've also been refining our integrated operational platform, which we believe will enhance our ability to launch EMGAs even quicker than we had in the past and get them to scale sooner. This has also been a major initiative that we've been focused on in '26, and we've made tremendous progress in the last number of months.

Claude LeBlanc: We've also been refining our integrated operational platform that we believe will enhance our ability to launch MGAs even quicker than we had in the past and get them to scale sooner, which has also been a major initiative that we've been focused on in 2026 and have made tremendous progress in the last number of months. Again, the pipeline is deep, but the class of 2024, 2025, been a focus on those. As I mentioned in my prepared remarks, the fact that we're adding teams to those MGAs as well, not just those, but others that we acquired, has been an alternative way to grow and scale what I'll say the small to mid-size MGA launches. We're able to get them up and running much quicker by adding teams to existing MGA platforms.

Speaker #4: So again, the pipeline is deep, but we are the class of '24, '25, and I want to focus on those. And as I mentioned in my prepared remarks, the fact that we're adding teams to those MGAs as well—not just those, but others that we acquired—has been an alternative way to grow and scale what I'll say are the small to midsize MGA launches.

Speaker #4: We're able to get them up and running much quicker by adding teams to existing MGA platforms. And that has been a key source of growth also for this year as well.

Claude LeBlanc: That has been a key source of growth also for this year as well.

Speaker #2: Great. That's helpful. Thank you. And then in terms of capacity, what are your observations around your current partners and then the market in general's appetite around providing more capacity?

Maxwell Fritscher: Great. That's helpful. Thank you. In terms of capacity, what are your observations around your current partners and the market in general's appetite around providing more capacity?

Speaker #4: Maybe I'll let Naveen Anand who's with us this morning to answer that.

Claude LeBlanc: Maybe I'll let Naveen Anand, who's with us this morning, to answer that.

Speaker #5: Good morning, Max. So overall, I think from a capacity standpoint, it really goes out to underwriting results and our underwriting results and performance of Joe have been good.

Naveen Anand: Good morning, Max. Overall, I think from a capacity standpoint, it really goes out to underlying results, our underlying results and performance have generally been good. As a result, we see capacity being attractive and attractive to our portfolios and our platforms. We expect that we'll continue to see strong capacity support as we move forward into 2026. We're meeting in 2026 and certainly into 2027, across both our startup platforms today and supporting our venture businesses as well as our more established MGAs and our partners' portfolio.

Speaker #5: And as a result, we see capacity being attractive and attracted to our portfolios and our platforms. And so we expect that we'll continue to see strong capacity support as we move forward into 2026.

Speaker #5: We're meeting in '26 and certainly into '27 across both our startup platforms and supporting our venture businesses as well as our more established MGAs and our partners' portfolio.

Speaker #4: And I just said that we are continuing to broaden and diversify our capacity. Again, our model is a curated capacity model, and we continue to add capacity partners—most quarters, we're adding at least one or more.

Claude LeBlanc: I just add that we are continuing to broaden and diversify our capacity. Again, our model is a security capacity model, we continue to add capacity partners. Most quarters we're adding at least one or more. That's part of our strategy and something that we will continue to progress as we scale the platform.

Speaker #4: So that's part of our strategy and something that we will continue to progress as we scale the platform.

Speaker #2: Thank you. And then I guess, turning to rates—and I'll start with non-cat property—what sort of pricing are you getting there? And then, when you look at where we are in the cycle, do you think we're anywhere near a floor?

Maxwell Fritscher: Thank you. I guess turning to rates, I'll start with non-cat property. What sort of pricing are you getting there? When you look at where we are in the cycle, do you think we're anywhere near a floor? What are your observations on that market?

Speaker #2: What are your observations on that market?

Naveen Anand: Max, this is Naveen Anand again. Generally, we're seeing rate declines in the sort of 10% to 20% range, as Claude LeBlanc has mentioned, in that sort of property lines, both primarily in the large account property lines and more on the cat-exposed property lines. I expect we're still in the early innings, assuming, obviously things can change quickly if there are other large cat events, and things could change the market from that standpoint. At this point, we expect that they'll continue to soften as we move forward into the remainder of 2026 into 2027, particularly if the cat events don't happen from that standpoint.

Speaker #5: Max and Naveen again. Generally, we're seeing rate declines in the sort of 10 to 20 percent range as Claude has mentioned in that sort of property lines, both primarily in the large count properties lines and more on the cat exposed property lines.

Speaker #5: I expect we're still in the relatively early innings. Assuming obviously things can change quickly if there are other large cat events and things can change the market from that standpoint.

Speaker #5: But at this point, we expect that they'll continue to soften as we move forward into the remainder of '26 into '27, particularly if the cat events don't happen from that standpoint.

Speaker #4: Yeah. And as we mentioned, our portfolio is much more geared to the non-cat and non-large account, more the SME side of the business mix.

Claude LeBlanc: Yeah. As we mentioned, our portfolio is much more geared to the non-cat and non-large account, more of the SME side of the business mix. I think for us, when we look at the average, it's probably closer to five or 10 or the lower end of that range, just given the business mix that our portfolios are focused on. We still are having strong growth in some of our property MGAs, again, the ones that are focused on the E&S SME space. It is a mix for us, and I'd say more muted in terms of the price impacts. Although there are a few that, as Naveen Anand mentioned, have been in the flow of the larger account D&F markets that have had some impact that are more in line with market, but that is a small percentage of our portfolio.

Speaker #4: So I think for us, when we look at the average, it's probably closer to five or ten, or the lower end of that range, just given the business mix that our portfolios are focused on.

Speaker #4: And we are still having strong growth in some of our property MGAs, again, the ones that are focused on the E&S SME space. So, it is a mix for us.

Speaker #4: And I'd say that's more muted in terms of the price impacts. Although there are a few that, as Naveen mentioned, have been in the flow of the larger account, DNF markets that have had some impact that are more aligned with the market, but that is a small percentage of our portfolio.

Speaker #2: And at Everspan, I know excess liability is a decent part of the mix there. What are your observations pricing there? Is there any incremental competition you're seeing?

Maxwell Fritscher: At Everspan, I know excess liability is a decent part of the mix there. What are your observations pricing there? Is there any incremental competition you're seeing? If so, where do you see that coming from? Do you still think pricing is running ahead of loss trends?

Speaker #2: If so, where do you see that coming from? And do you still think pricing is running ahead of loss trends?

Speaker #5: Yeah. Max and Naveen again. Generally, we're still seeing a positive rate environment in excess liability. It is moderating a bit as each quarter goes on.

Naveen Anand: Max, this is Naveen again. Generally, we're still seeing positive rate environment in the excess liability. It is moderating a bit in terms of as each quarter goes on. Still generally in line with and better than loss costs from that standpoint. Obviously it's dependent on portfolio by portfolio on that basis. For the portfolio that we had and the targets that we had in Everspan, we're generally seeing positive rate environments for that excess liability portfolio despite preceding loss

Speaker #5: But still generally in line and better than loss costs from that standpoint. And obviously, it's dependent on portfolio by portfolio on that basis. But for the portfolio that we had and the targets that we had in Everspan, we're generally seeing positive rate environments for that excess liability portfolio at this point, exceeding loss costs.

Speaker #4: And I'd say another trend with Everspan is we are seeing a broadening of programs that we're seeing I think also some of the times where the market conditions that we're seeing again, certainly some casualty, but more specialty programs that are differentiated in the marketplace.

Claude LeBlanc: I'd say another trend in with Everspan is we are seeing a broadening of programs that we're seeing. I think also a sign of the times with the market conditions that we're seeing. Again, certainly some casualty, but more specialty programs that are differentiated in the marketplace. I think the selection and breadth of programs that we're seeing has improved. Also, the pipeline has improved overall. I think the Everspan platform, we do see some strong growth for the year. Again, we're not chasing growth, and we're being very selective there as well, but we are seeing a very much higher quality and deeper, and broader breadth of opportunities in the program space for Everspan.

Speaker #4: So, I think the selection and breadth of programs that we're seeing has improved, and also the pipeline has improved overall. So, I think the Everspan platform—we do see some strong growth for the year.

Speaker #4: Again, we're not chasing growth and we're being very selective there as well, but we are seeing a very much higher quality and deeper and broader breadth of opportunities in the program space for Everspan.

Speaker #2: And then, last one from me, and I'll hop back in the queue. But is there any associated investment or cost related to the rollout of the new AI tool to your remaining MGAs?

Maxwell Fritscher: Last one from me, and I'll hop back in the queue. Is there any associated investment or costs related to the rollout of the new AI tool to your remaining MGAs?

Speaker #4: Yeah. So we are, as I mentioned on the prior calls, the implementation, customization, and also the development of the AI tools that we have in our platform, we're in the low to mid single digit millions for the year targeted for that.

Claude LeBlanc: Yes. We are, as I mentioned on prior calls, the implementation, customization, and also the development of the AI tools that we have in our platform were in the $low to mid-single-digit millions for the year targeted for that. When you add the additional costs that we're encountering in connection with technology upgrades and also the implementation of technologies across the platforms to support that is an additional amount that is also in this $low to mid-single-digit millions. Those are going to be costs that are more one-time in nature. Again, I always say that there could be obviously additional initiatives that we'll be looking at next year, certainly. For this year, I think this will be one of the larger additions in terms of AI and technology that we have in our sort of forecast period.

Speaker #4: When you add the additional costs that we're encountering in connection with technology upgrades and also the implementation of technologies across the platforms to support that, that is an additional amount that is also in this low- to mid-single-digit millions.

Speaker #4: So those are going to be costs that are more one-time in nature. Again, I always say that there could be obviously additional initiatives that we'll be looking at next year, certainly.

Speaker #4: But for this year, I think this will be one of the larger additions in terms of AI and technology that we have in our sort of forecast period.

Speaker #4: And we'll see some of those costs begin to peel off early next year. And by mid next year, I think a meaningful percentage in the millions will be discontinued and we also expect to benefit from those investments obviously and there'll be significant cost benefits as well as revenue benefits that will be coming out of that that will far offset any of the implementation costs that we put in today.

Claude LeBlanc: We will see some of those costs begin to peel off early next year. By mid next year, I think a meaningful percentage in the $ millions will be discontinued. We also expect to benefit from those investments, obviously, and there'll be significant cost benefits as well as revenue benefits that will be coming out of that will far offset any of the implementation costs that we put in to date.

Speaker #2: Great. Thank you for taking my questions.

Maxwell Fritscher: Great. Thank you for taking my questions.

Speaker #4: Thanks, Max.

Claude LeBlanc: Thanks, Max.

Speaker #3: And again, that is *star one* to ask a question. We'll go next to Tommy McJoint with KBW.

Operator: Again, that is star one to ask a question. We'll go next to Tommy McJoynt with KBW.

Speaker #6: Hey, good morning. Thanks for taking our questions. The first one here with our Modicare and some of your other MGAs, the accident health is a major line of business for you guys.

Tommy McJoynt: Good morning. Thanks for taking our questions. The first one here, with ArmadaCare and some of your other MGAs, the accident health is a major line of business for you guys. Market commentary tends to generalize pricing and conditions, talking about the property and casualty buckets, but A&H does have some of its own drivers. Can you spend a minute just talk about the market conditions that you're seeing in A&H and as that relates to inputs to your future organic growth opportunity in that line? Thanks.

Speaker #6: Market commentary tends to generalize pricing and conditions, talking about the property and casualty buckets. But A&H does have some of its own drivers. So can you spend a minute and just talk about the market conditions that you're seeing in A&H and as that relates to inputs to your future organic growth opportunity in that line?

Speaker #6: Thanks.

Speaker #4: Sure.

Naveen Anand: Sure. Hi, Tommy. This is Naveen. A couple points. A&H is a pretty broad market segment, right? From our focus is, ArmadaCare is focused on the excess benefits in the benefits area, then our Exchange Benefits platform is primarily focused on the employer stop loss. We've got some other focus in other ancillary lines within A&H. For our key areas, we're seeing strong secular growth. There are strong sort of underlying trends that are driving both the ESL market and the benefits markets. Those growth trends will continue to support organic growth as we move forward. In addition to that, we're seeing positive rate environment in those sectors as well, generally in the double-digit range, low double-digit range, low teens to high single digits.

Speaker #5: Sure. Hi, Tommy. This is Naveen. A couple of points. A&H is a pretty broad market segment, right? And from our focus, our Modicare is focused on the excess benefits and benefits area, and then our exchange benefits platform is primarily focused on the employer stop loss. And then we've got some other focus in other ancillary lines within A&H.

Speaker #5: For our key areas, we're seeing strong cycle of growth. There are strong sort of underlying trends that are driving both the ESL market and the benefits markets.

Speaker #5: And those growth trends are both continue to support organic growth as we move forward. In addition to that, we're seeing positive rate environment in those sectors as well.

Speaker #5: Generally in the double digit range, low double digit range, low teens to high single digits. And again, that will continue to we expect that to continue as we move forward into 26 into 27 based on the sort of underlying trends within those segments.

Naveen Anand: Again, we expect that to continue as we move forward into 2026 into 2027 based on the sort of underlying trends within those segments. It's an important part of our portfolio. It's about a third of our portfolio today and an important contributor to our results and balance to some of the challenges in the broader P&C cycles.

Speaker #5: It's an important part of our portfolio. It's about a third of our portfolio today and an important contributor to our results. And balance to some of those challenges in the broader P&C cycles.

Speaker #6: Got it. Thanks for that color. And then switching over, the Everspan book continues to charge ahead toward its mid teens for ROE at scale.

Tommy McJoynt: Got it. Thanks for that color. Switching over, the Everspan book continues to charge ahead toward its mid-teens for ROE at scale. Can you just remind me what your definition of scale is in that business? Is there any chance that fronting economics could change for either better or worse over the coming years as you gain scale? Just lastly, does that ROE that you're targeting equate to a specific combined ratio relative to the 97% adjusted combined that you did in the H1 of the year?

Speaker #6: Hugh just reminded me what your definition of scale is in that business and is there any chance that fronting economics could change for either better or worse over the coming years as you gain scale?

Speaker #6: And then just lastly, does that ROE that you're targeting equate to a specific combined ratio relative to the 97% adjusted combined that you did in the first half of the year?

Speaker #4: Yeah. So in terms of scale, I think the way we had modeled out the growth of the platform, given the way that we've staffed and implemented systems and technologies to support a business that was always intended to be a hybrid platform, not a pure fronting platform, we do have a higher overhead cost associated with the business.

Claude LeBlanc: In terms of scale, I think the way we had, again, modeled out the growth of the platform, given the way that we've staffed and implemented systems and technologies to support a business that was always intended to be a hybrid platform, not a pure fronting platform, we do have a higher overhead cost associated with the business. Our target to scale was somewhere north of $500 million of premium, which we'll be approaching that this year, but not quite there. From there forward, I think we'll start seeing a lot less impact of that fixed cost drag on the combined ratio in earnings and EBITDA going forward. I think once we get past that, I think we still probably this year will have a few points of drag associated with scale, but again, that will begin to ameliorate next year.

Speaker #4: So our target to scale was somewhere north of 500 million a premium, which will be approaching that this year, but not quite there. So I think, and from there, forward, I think we'll start seeing a lot less impact of that fixed cost drag on the combined ratio in earnings and EBITDA going forward.

Speaker #4: But I think once we get past that, I think we still probably this year we'll have a few points of drag associated with scale, but again, that will begin to ameliorate next year I think this year we're targeting being in the mid force and premium.

Claude LeBlanc: I think this year we're targeting being in the mid-fours in premium.

Speaker #5: No, 410 is our target.

Naveen Anand: $410 is our guidance.

Speaker #4: 410, yeah. Or is that right? So 410 is where we're targeting. So again, I think we'll be in that range, possibly a little higher, but next year I would expect us to be closer to that 500 million scale number.

Claude LeBlanc: $410 is our guidance. $410 is what we're targeting. Again, I think we'll be in that range, possibly a little higher, but next year, I would expect us to be closer to that $500 million scale number. In terms of the second question, maybe I'll let David hit on the combined.

Speaker #4: In terms of the second question, let's David hit on the combined.

Speaker #5: Yeah, on the combined ratio, what we've said in the past is that we're looking at sub-95 combined ratio as a casualty focus business. You expect our loss ratios to be a little higher than businesses that have heavy property books and but more CAT exposed.

David Trick: Yeah, on the combined ratio, what we've said in the past is that we're looking at sub-95% combined ratio. As a casualty-focused business, you expect our loss ratios to be a little higher than businesses that have heavy property books but more cat-exposed. We've added some property exposure to the portfolio at this point, which we're certainly starting to see the benefit of in the loss ratio and expect to see that further in the remainder of the year. Say between 90% and 95% is what our target is, which both a function of getting those loss ratios down and more stable and, like Claude had mentioned, in terms of just continuing to scale the business from an expense ratio standpoint.

Speaker #5: We've added some property exposure to the portfolio at this point, which is certainly starting to see the benefit of in the loss ratio and expect to see that further in the remainder of the year.

Speaker #5: But say between 90 and 95 is what our target is, which both a function of getting those loss ratios down and more stable and with Claude had mentioned in terms of just continuing to scale the business from an expense ratio standpoint.

Speaker #6: Thanks. And then, just one last question to switch topics one more time. A lot of brokers and MGAs are benefiting from strong profit commissions or contingents.

Tommy McJoynt: Thanks. Just last question, just switch topics one more time. A lot of brokers and MGAs are benefiting from strong profit commissions or contingents. You guys had a nice uptick in H1 of the year. Was any of the change in guidance contemplating a higher level of profit commissions? Do you guys have line of sight to what you think that contingents could be in H2 of the year, either on an absolute $ basis or as a % of distribution revenue? Thanks.

Speaker #6: You guys had a nice uptick in the first half of the year. Was any of the change in guidance contemplating a higher level of profit commissions?

Speaker #6: And then, do you guys have line of sight to what you think contingents could be in the second half of the year, either on an absolute dollar basis or as a percentage of distribution revenue?

Speaker #6: Thanks.

Speaker #5: Yeah, the way we account for our profit commissions, we scale into our numbers that we're seeing. So we try to avoid a lot of volatility.

David Trick: The way we account for our profit commissions, we scale into our numbers that we're seeing. We try to avoid a lot of volatility. I think based on our calculations, we had expected in our original guidance included profit commissions close to the levels that we're seeing here today. We baked in a little bit additional profit commissions for one of our businesses, but I wouldn't say it was material. We think we'll have a good year on PCs, particularly for the lines of businesses that are driving it, which tend to have more stable loss ratios.

Speaker #5: So I think based on our calculations, we had expected in our original guidance included profit commissions close to the levels that we're seeing here today.

Speaker #5: We baked in a little bit additional profit commissions for one of our businesses, but I wouldn't say it was material. And so we think we'll have a good year on PCs particularly for the lines of businesses that are driving it, which tend to have more stable loss ratios.

Speaker #6: Thanks.

Tommy McJoynt: Thanks.

Speaker #3: And moving next to Mark Hughes with Truist Securities.

Operator: Moving next to Mark Hughes with Truist Securities.

Speaker #4: Yeah, thanks. Good morning. My flight hasn't left yet, so I thought I'd sneak one in. On the Everspan, you describe hiring some new executive talent.

Mark Hughes: Yeah, thanks. Good morning. My flight hasn't left yet, so I thought I'd sneak one in. On the Everspan, you described hiring some new executive talent. Sounds like your growth outlook for 2027 is pretty robust. I think you added a number of programs just this quarter. Could you talk about the quality control on that underwriting? That's obviously a point of risk for anyone with programs and new programs. What are you doing to give yourself confidence that the underwriting there is going to be high quality?

Speaker #4: Sounds like your growth outlook for 2027 is pretty robust. I think you added a number of programs just this quarter. Could you talk about the quality control on that underwriting?

Speaker #4: That's obviously a point of risk for anyone. With programs and new programs. How do we what are you doing to give yourself confidence that the underwriting there is going to be high quality?

Speaker #2: Yeah, so again, I think the talent we're bringing in, Bevin, who has deep experience and been a chief underwriting officer, and her breadth of experience was actually one of the things that attracted us to her and she's that experience will be coming.

Claude LeBlanc: Yeah. Again, I think the talent we're bringing in with Bevan, who has deep experience and been a chief underwriting officer, and her breadth of experience was actually one of the things that attracted us to her. That experience will be coming. She's replacing Darwin, who was in that role as chief underwriting officer and chief reinsurance officer. Darwin also has extensive years of experience. The broadening of the team, and the depth of the team, along with our claims team, which is also very important in terms of managing our loss ratios and in the underwriting, I think has really expanded dramatically over the last year. I think we feel very confident of the experience and breadth of the team.

Speaker #2: She's replacing Darwin, who was in that role as chief underwriting officer and chief reinsurance officer. Darwin also has extensive experience, years of experience. And the broadening of the team, and the depth of the team, along with our claims team, which is also very important, in terms of managing our loss ratios and in the underwriting, I think has really expanded dramatically.

Speaker #2: Over the last year, so I think we feel very confident of the experience and breadth of the team. And to the extent there are programs that come in that we require additional diligence, we also don't shy away from reaching out and bringing in additional resources and expertise to help us on the review and underwriting of the programs.

Claude LeBlanc: To the extent there are programs that come in that we require additional diligence, we also don't shy away from reaching out and bringing in additional resources and expertise to help us on the review and underwriting of the programs. I think our approach to the underwriting, again, we really are a gross line underwriter, so we really focus on the full program. Again, we're not a pure front platform. I think from our perspective, we were robust. I think we're now that much more robust, and the claims oversight that is done and managed throughout program monitoring and the audits that we do on programs after 90 days from commencement, and thereafter yearly, if not more, depending on the program, I think gives us confidence that our selections will be good, as well as our ongoing oversight and monitoring of exposures.

Speaker #2: I think our approach to the underwriting, again, we really are. A gross line underwriter, so we really focus on the full program. Again, we're not a fronting pure front platform.

Speaker #2: So I think from our perspective, we were robust. I think we're now that much more robust. And the claims oversight that is done and managed throughout a program monitoring and the audits that we do on programs after 90 days from commencement, and thereafter yearly, if not more, depending on the program, I think gives us confidence that our selections will be good as well as our ongoing oversight and monitoring of exposures.

Speaker #4: Okay, I appreciate that. Thank you.

Mark Hughes: Okay. Appreciate that. Thank you.

Speaker #2: Thanks, Mark.

Claude LeBlanc: Thanks, Mark.

Speaker #3: And that concludes our question and answer session. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

Operator: That concludes our question and answer session. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

Q2 2026 Octave Specialty Group Inc Earnings Call

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