Octave Specialty Group (NYSE:OSG) reported improved second-quarter results as growth in its Insurance Distribution segment and progress at its Everspan specialty insurance platform narrowed its net loss and lifted adjusted EBITDA.
For the second quarter of 2026, the company reported a net loss to shareholders of $14.4 million, or $0.33 per share, compared with a $20.5 million loss, or $0.42 per share, a year earlier. Consolidated adjusted EBITDA improved to positive $3.7 million from negative $4.6 million in the prior-year quarter. Adjusted net loss to shareholders narrowed to $1.8 million, or $0.04 per share, from $10.6 million, or $0.22 per share.
Insurance Distribution Revenue Rises 77%
Insurance Distribution revenue increased 77% year over year to $58.4 million. The growth included 44% organic growth and the contribution from Octave’s October 2025 acquisition of ArmadaCare.
Adjusted EBITDA attributable to shareholders in the segment nearly quadrupled to $9.8 million from $2.5 million a year earlier, while the adjusted EBITDA margin increased to 16.8% from 7.6%. Adjusted net income attributable to shareholders was $4.6 million, compared with a $3 million adjusted net loss in the second quarter of 2025.
Chief Financial Officer David Trick said results were supported by ArmadaCare, organic growth across the company’s managing general agents, higher profit commissions, the acquisition of an additional 10% stake in Octave Ventures, and nearly $3 million of lower interest expense. The company also continued investing in recently launched MGAs, which reduced Insurance Distribution EBITDA by about $1.1 million during the quarter.
LeBlanc said MGAs launched in 2024 and 2025 accounted for roughly 75% of organic growth during the quarter. About half of that group is now generating EBITDA, he said, with further contributions expected by the end of 2026 and into 2027.
Octave expects to launch one or two MGAs in 2026 after launching nine during 2024 and 2025. For 2027, management is targeting a relatively modest two to four launches, while also pursuing growth by adding teams to existing MGA platforms.
Everspan Shows Underwriting Improvement
At Everspan, Octave’s specialty property and casualty operation, gross premiums written were $95 million in the quarter, while net premiums written and premiums earned were $23 million and $22 million, respectively. Gross premiums written declined 2%, while net premiums written rose 52% and premiums earned increased 34%.
Everspan’s reported loss ratio improved 640 basis points from the prior-year period to 61.4%. Its active programs operated at about a 59% loss ratio, according to Trick. The general and administrative expense ratio declined to 9.4% from 16%, though higher acquisition costs partly offset the improvement because of sliding-scale arrangements in newer programs.
The combined ratio improved to 100.6% from 106.7% a year earlier. Everspan generated $1.2 million in pretax income and $1.8 million in adjusted EBITDA, compared with roughly half and one-third of those respective levels in the prior-year period.
Management said Everspan is targeting scale at more than $500 million in premium. The company’s current guidance calls for $410 million in premium this year, with LeBlanc saying it could be somewhat higher. Trick said the long-term target combined ratio is below 95%, with a range of 90% to 95% envisioned as the business gains scale and loss ratios stabilize.
Octave also announced senior leadership additions at Everspan, including David Kenyon as head of reinsurance. Bevan Greibesland is set to join as chief underwriting officer and Clay Stewart as chief operating officer.
Guidance Updated
The company raised its full-year Insurance Distribution outlook, now expecting:
- Organic growth of more than 25%, up from prior guidance of more than 20%.
- Adjusted EBITDA of $45 million, up from $40 million.
Octave reduced Everspan adjusted EBITDA guidance to $6 million from $7.5 million, citing higher-than-expected acquisition costs tied to the mix of new programs being onboarded. The company said those programs are expected to provide more attractive long-term economics through lower and more stable loss ratios.
The company also lowered adjusted net income per share guidance to a range of $0.15 to $0.20, from a prior expectation of $0.50. Trick attributed the revision to updated estimates for interest expense, depreciation, taxes and allocations of non-controlling interests. Octave said it expects 2026 to be its first year of positive adjusted net income per share, excluding its legacy financial guarantee business, since launching its P&C strategy in 2021.
Market Conditions and AI Investment
Management said the broader property and casualty insurance market continues to soften, particularly in wholesale large-property business, where rates were down 10% to 20% year over year. Octave said its exposure is more concentrated in small and midsize enterprise and non-catastrophe property business, where pricing pressure has been more muted.
The company said certain casualty small-business lines, targeted specialty classes and accident and health markets continue to provide growth opportunities. Naveen Anand, president of Octave Partners, said accident and health represents about one-third of the company’s portfolio and has seen high-single-digit to low-double-digit rate increases in its key markets.
Octave also said it launched an AI-driven underwriting platform developed with Cytora at several U.S. MGAs writing management, financial and professional liability programs. LeBlanc said the platform reduced submission-to-quote time in one example from several hours to about seven minutes. The company plans to extend the technology to its remaining applicable U.S. MGAs in the second half of 2026.
LeBlanc said spending on AI underwriting tools, implementation and customization is expected to be in the low- to mid-single-digit millions this year, with additional technology upgrades also adding low- to mid-single-digit millions in costs. He said a meaningful portion of those costs is expected to end by the middle of next year.
About Octave Specialty Group (NYSE:OSG)
Ambac Financial Group, Inc (NYSE:AMBC) is a specialized financial services holding company headquartered in New York City. Through its principal subsidiary, Ambac Assurance Corporation, the company provides financial guarantee insurance and surety bonds designed to enhance the credit quality of public finance and structured finance transactions. Ambac’s offerings are tailored to municipal issuers, financial institutions and corporate borrowers, supporting infrastructure projects, energy and transportation initiatives, as well as asset-backed securities.
Ambac’s core business activities center on credit enhancement and risk-transfer solutions.
