Octave Specialty Group (NYSE:OSG) used its fourth-quarter 2025 earnings call to outline the first full reporting period as a standalone specialty insurance platform and to provide 2026 guidance centered on organic growth, improving margins, and the integration of its ArmadaCare acquisition.
Management highlights standalone transition and growth drivers
President and CEO Claude LeBlanc said the fourth quarter marked the first full period in which the company operated as a standalone specialty insurance platform following a multi-year strategic transformation. He described Octave’s distribution platform—comprised of Octave Partners and Octave Ventures—as positioned for organic growth and margin expansion, supported by underwriting talent, aligned third-party capacity, and a scalable data and technology infrastructure.
LeBlanc highlighted several tailwinds he believes support growth in the coming years:
- Embedded growth from newer MGAs: Nine of Octave’s 22 MGAs were launched in 2024 and 2025, with more than 40% of the MGA portfolio in early growth stages. LeBlanc said these businesses are expected to contribute meaningfully to organic growth over the next two to four years as they scale.
- Diversification by geography and product: Nine MGAs are based in London and Bermuda and 13 are in the U.S. LeBlanc said Lloyd’s market MGAs tend to reach profitability faster and move more quickly through pricing cycles, while U.S. MGAs offer more rate stability. By line of business, he said approximately 28% of the portfolio is in specialty accident and health (A&H), with the remaining 72% in specialty P&C, split between casualty and non-cat exposed property.
- Aligned third-party capacity: LeBlanc said Octave expanded capacity through its Lloyd’s syndicates and curated partners, totaling more than $2 billion entering 2026, including Everspan.
- Minority interest buy-in rights: For certain MGAs, Octave has contractual ability to acquire minority interests over time, which LeBlanc characterized as a built-in driver of earnings growth as the underlying MGAs perform.
ArmadaCare acquisition and new MGA launch
LeBlanc said the fourth-quarter acquisition of ArmadaCare fits Octave’s goal of increasing shareholder value, enhancing product diversification, and deepening its position in A&H. He described ArmadaCare as generating recurring revenue streams with EBITDA margins of over 40% that are less correlated to the commercial P&C cycle. While the fourth-quarter results included only a two-month contribution, he said integration was progressing ahead of schedule and early performance was exceeding expectations.
With ArmadaCare added, LeBlanc said the company is pursuing revenue synergies across its broader A&H MGAs and expects A&H to account for roughly a quarter of the distribution business in 2026 across three platforms and seven lines of business.
LeBlanc also noted the fourth-quarter launch of 1889 Specialty, a management liability and professional lines MGA focused on the SME financial institutions market. He said the business is led by Blair Bartlett and is backed by A-plus rated capacity.
Technology and Everspan update
LeBlanc said Octave is working to unify operating infrastructure onto a single integrated data and technology architecture and is integrating AI-driven tools across its MGA platform to improve risk selection, pricing sophistication, and operational efficiency.
He highlighted the launch of “Hammurabi,” a proprietary AI platform built for medical stop-loss underwriting. LeBlanc said Hammurabi replaces labor-intensive processes with near-instant risk prediction and pricing accuracy and has helped drive record results in the company’s ESL business after several challenging years. He added that the company believes the platform can expand to other business lines over time.
On Everspan, LeBlanc said the company was satisfied with steps taken to reposition the book in 2024. After reserve strengthening in the first nine months of 2025, he said Everspan produced a fourth-quarter loss ratio, including the impact of sliding scale commissions, of 62.9% and is now positioned for “reasonable and controlled growth” in 2026, with a continued focus on casualty markets.
Fourth-quarter financial results: net loss, but adjusted EBITDA improved
Chief Financial Officer David Trick reported a fourth-quarter 2025 net loss to shareholders of $30 million, or $0.84 per share, compared with a net loss from continuing operations to shareholders of $22 million, or $0.56 per share, in the fourth quarter of 2024. Trick said the higher loss reflected costs tied to the ArmadaCare acquisition, the exit from the financial guarantee business and related expense reduction initiatives, and an impairment of a legacy strategy minority investment. He added that significantly lower interest expense and the two-month contribution from ArmadaCare partially offset those items.
Adjusted EBITDA from continuing operations attributable to stockholders increased to $1.4 million from $0.5 million a year earlier, driven by growth in insurance distribution and lower adjusted corporate expenses, partially offset by lower results at Everspan.
Total revenues increased 5% year over year to just under $47 million. Trick said results were impacted by lower profit commissions and FX gains, which together declined by about $4 million. He emphasized the reduction in profit commissions was not due to a systemic shift and that underwriting results remained in line with expectations.
In the insurance distribution segment, Trick said premium production grew 9% and commission revenue increased 13%, with organic revenue growth of just over 8% during the quarter. The segment’s net loss to shareholders improved to $1.4 million from a $6 million net loss in the prior-year quarter, aided by reduced interest expense and growth, including ArmadaCare’s two-month contribution. Adjusted EBITDA attributable to shareholders rose to just over $7 million from just over $5 million, a 33% increase.
Trick said investments in startup MGAs reduced total adjusted EBITDA by just under $3 million (about $1.5 million to shareholders). He noted six entities produced negative EBITDA in the quarter, but all but two are expected to reach break-even or profitability by the fourth quarter of 2026.
Insurance distribution adjusted EBITDA margin was 15% in the quarter, up from 12% a year earlier, and Trick said the company continues to target “mid-20s plus” margins longer term.
For Everspan, Trick reported fourth-quarter gross premium written of $80 million, net premium written of $23 million, and net earned premium of $18 million. Gross premium written increased 34%, and net earned premium was roughly flat year over year. The net loss and LAE ratio was 61.8% versus 51.9% a year earlier; however, including sliding scale commissions, the effective loss and LAE ratio was 62.9% compared with 66.8% in the fourth quarter of 2024. He said the combined ratio was 99.4%, below 100% for the first time in 2025, and the company expects it to remain below 100% in 2026.
Everspan posted pre-tax income of $1.3 million and adjusted EBITDA of $1.5 million, down from $2.6 million and $2.7 million, respectively, in the prior-year quarter, which Trick attributed primarily to a $1.8 million revenue decline and higher G&A.
Corporate G&A expenses were $25 million versus $14.6 million a year earlier. On an adjusted basis, corporate G&A was $7.5 million compared to $8.8 million. Trick said the gap between reported and adjusted expenses reflected acquisition and integration costs of about $7.8 million, impairment of a legacy minority investment of $3.1 million, and restructuring and expense reduction initiatives of $7.6 million. He reiterated that previously outlined expense reduction initiatives are estimated to generate about $17 million of reported expense savings versus pre-sale levels of the legacy financial guarantee business, with more than a $10 million impact on adjusted corporate EBITDA when complete.
2026 guidance and Q&A: buy-ins, seasonality, and pricing
LeBlanc provided 2026 guidance, calling for improved margins and operating leverage as newer MGAs scale and the company pursues synergies across platforms. Octave’s 2026 expectations include:
- Insurance distribution: organic revenue growth of at least 20% and adjusted EBITDA of approximately $40 million for full-year 2026.
- Specialty insurance (including Everspan): gross written premiums around $410 million and adjusted EBITDA of approximately $7.5 million for 2026.
- Corporate adjusted expenses: below $30 million for the year.
- Consolidated adjusted net income: around $0.50 per share for 2026.
In response to analyst questions, LeBlanc said Octave continues to see opportunities for de novo MGA startups, primarily in the U.S., but expects a slower pace than in 2024 and 2025, targeting roughly two to four launches per year while focusing on scaling existing launches.
On cash flow and non-controlling interest buy-ins, Trick said cash flow is improving and that buy-ins in 2026 are expected to be less than $50 million, funded by cash and “some marginal additional borrowing.” He said net investment income is expected to be flat to marginally higher in 2026, and equity-based compensation is expected to be down a few million dollars versus 2025.
Trick also addressed earnings seasonality, saying results remain heavily weighted to the first and fourth quarters, noting that some A&H businesses, including ArmadaCare, are weighted about 60% toward the first quarter.
On pricing, management said non-cat property is seeing roughly 5% to 10% rate reductions in some programs with stability in others; casualty trends were described as mixed, with excess casualty seeing double-digit increases. In A&H, LeBlanc said pricing is “close to double-digit,” around 10% to 12%, with significant growth also coming from volume, new products, and other growth initiatives.
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.
