OCTAVE SPECIALTY GROUP INC (OSG)

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations ($ in thousands)

The objectives of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are to provide users of our consolidated financial statements with the following:

•A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results;

•Context to the unaudited consolidated financial statements; and

•Information that allows assessment of the likelihood that past performance is indicative of future performance.

The following discussion should be read in conjunction with our consolidated financial statements in Part I, Item 1 and the matters described under Part II, Item 1A. Risk Factors in this Quarterly Report and under Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025. Refer to Item 1. Business and Note 1. Background and Business Description in our Annual Report on Form 10-K for the year ended December 31, 2025, for a description of our business and our key strategies to achieve our primary goal to maximize shareholder value.

Unless otherwise noted, this Management's Discussion and Analysis of Financial Condition and Results of Operations relates solely to our continuing operations and does not include the operations of the Legacy Financial Guarantee business. See "Sale of AAC" below, Note 3. Discontinued Operations of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and "Sale of Ambac Assurance Corporation" in Note 5. Discontinued Operations of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2025, for additional information about the divestiture of the Legacy Financial Guarantee business.

Organization of Information

MD&A includes the following sections:

Strategies to Enhance Shareholder Value

The Company's primary goal is to maximize long-term shareholder value through the execution of targeted strategies for its Insurance Distribution and Specialty Property and Casualty Insurance businesses.

Insurance Distribution and Specialty Property and Casualty Insurance strategic priorities include:

•Growing and expanding our Insurance Distribution business based on deep domain knowledge in specialty and niche classes of risk which generate attractive margins at scale. We expect to achieve this by establishing new businesses “de-novo,” organic growth and diversification, and select acquisitions supported by a centralized technology-led shared services offering

•Growing our Specialty Property and Casualty Insurance business to generate underwriting profits from a diversified portfolio of commercial and personal liability risks accessed primarily through affiliated and non-affiliated program administrators. In addition, we may seek strategic relationships, partnerships or other transactions with unaffiliated parties in order to expand our capital base and/or product offerings, access reinsurance capacity and other business or operational advantages.

Octave continuously evaluates opportunities to acquire businesses and assets for its ID business, some of which may be material to our financial condition and operations and/or may involve raising capital to finance. There can be no assurance that we will agree to acquire any business or assets, or that we can obtain the necessary financing or complete any acquisition in a timely manner or at all.

Table of Contents

OVERVIEW

($ in thousands)

The Company's continuing operations include two segments, financial highlights of which are summarized below along with other recent developments.

Sale of AAC

On September 29, 2025 the Company completed the sale of AAC. Refer to Note 3. Discontinued Operations of the Notes to Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and Note 5. Discontinued Operations of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2025, for further details on the sale of AAC.

For all periods leading up to the sale, AAC's results of operations and OSG's loss on sale are reported within Net income (loss) to shareholders from discontinued operations after tax on the Consolidated Statements of Income (Loss).

Acquisition of ArmadaCorp

On October 31, 2025, the Company closed on the acquisition of ArmadaCorp for a purchase price of $250,000. The Company purchased all of the issued and outstanding limited liability company interests in ArmadaCorp from Sirius Re Holdings, Inc. and Sirius Acquisitions Holding Company, funded in part by $120,000 of loans obtained under new credit facilities. Refer to

Note 4. Business Combinations of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2025, for further details on the acquisition of ArmadaCorp.

ArmadaCorp includes an MGA/U that focuses on supplemental health and benefit products for C-suite executives and other key talent. ArmadaCorp creates and distributes supplemental benefit solutions and insurance products. ArmadaCorp's differentiated product offering in the A&H market provides both line of business and product diversification to the Company, while also increasing exposure to non-correlated A&H business lines. ArmadaCorp also provides clients with tools to navigate the healthcare system, including services that help match individuals with physicians suited to their personal needs, and maintains a provider of third-party administration services for insurance carriers that distribute the benefit products and handle claims.

Pivix

Effective September 1, 2025, OSG's wholly owned subsidiary, Octave Partners, LLC ("Octave Partners"), exercised its option to convert its $3,500 convertible note investment in Pivix Specialty

Table of Contents

Insurance Services ("Pivix"), an excess and surplus lines MGA/U, into common stock. As a result, Octave Par

[Excerpt truncated for page length; source filing is linked above.]

Item 7.     Management’s Discussion and Analysis of Financial Condition and Results of Operations ($ and £ in thousands)

The objectives of our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) are to provide users of our consolidated financial statements with the following:

•A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results;

•Context to the consolidated financial statements; and

•Information that allows assessment of the likelihood that past performance is indicative of future performance.

Unless otherwise noted, this Management's Discussion and Analysis of Financial Condition and Results of Operations relates solely to our continuing operations and does not include the operations of our Legacy Financial Guarantee business. See "Sale of AAC" below and Note 5. Discontinued Operations of the Notes to Consolidated Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K for additional information about the divestiture of the Legacy Financial Guarantee business in September 2025.

The following discussion should be read in conjunction with our consolidated financial statements in Item 8 of this Report and the matters described under Item 1A. Risk Factors in this Annual Report on Form 10-K for the year ended December 31, 2025. Refer to Part I, Item 1. Introduction - Description of the Business, for a description of our business and our key strategies to achieve our primary goal to maximize shareholder value.

Table of Contents,

Organization of Information

MD&A includes the following sections:

Strategies to Enhance Shareholder Value

The Company's primary goal is to maximize long-term shareholder value through the execution of targeted strategies for its Insurance Distribution and Specialty Property and Casualty Insurance businesses.

Insurance Distribution and Specialty Property and Casualty Insurance strategic priorities include:

•Growing and expanding our Insurance Distribution business based on deep domain knowledge in specialty and niche classes of risk which generate attractive margins at scale. This will be achieved through establishing new businesses “de-novo,” organic growth and diversification, and select acquisitions supported by a centralized technology-led shared services offering;

•Growing our Specialty Property and Casualty Insurance business to generate underwriting profits from a diversified portfolio of commercial and personal liability risks accessed primarily through affiliated and non-affiliated program administrators. In addition, we may seek strategic relationships and/or partnerships with unaffiliated parties in order to expand our product offerings, access to reinsurance capacity and other business or operational advantages.

OVERVIEW

($ in thousands)

The Company's continuing operations include two segments, financial highlights of which are summarized below along with other recent developments.

Sale of AAC

On September 29, 2025, the Company completed the sale of AAC pursuant to the June 4, 2024 stock purchase agreement (the "Purchase Agreement") with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., pursuant to which OSG sold all of the issued and outstanding shares of common stock of AAC, a wholly-owned subsidiary of OSG, to Buyer for

$420,000 in cash (the "Sale"). The Buyer also made an additional payment to OSG in an amount of $4,300. In the Sale, Buyer acquired complete common equity ownership of AAC and all of its wholly owned subsidiaries, including Ambac Assurance UK Limited. In connection with and pursuant to the Purchase Agreement, OSG issued to Buyer a warrant exercisable for 5,092,707 shares of common stock, par value $0.01, of OSG. Refer to Note 5. Discontinued Operations of the Notes to the

Table of Contents,

Consolidated Financial Statements under Part II, Item 8 in this Annual Report on Form 10-K for further details on the sale of AAC.

For all periods leading up to the Sale, AAC's results of operations and OSG's loss on sale are reported within Net income (loss) from discontinued operations before tax on the Consolidated Statement of Comprehensive Income (Loss). See Note 5. Discontinued Operations of the Notes to the Consolidated Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K for additional information.

Acquisition of ArmadaCorp

On October 31, 2025, the Company closed on the acquisition of ArmadaCorp for a purchase price of $250,000. The Company purchased all of the issued and outstanding limited liability company interests in ArmadaCorp from Sirius Re Holdings, Inc. and Sirius Acquisitions Holding Company, funded in part by $120,000 of loans obtained under new credit facilities. Refer to Note 4. Business Combination in Part II, Item 8 in this Annual Report on Form 10-K for further details on the acquisition of ArmadaCorp.

ArmadaCorp includes an MGA/U that focuses on supplemental health and benefit products for C-suite executives and other key talent. ArmadaCorp creates and distributes supplemental benefit solutions and insurance products. ArmadaCorp's differentiated product offering in the A&H market provides both line of business and product diversification to the Company, while also increasing exposure to non-correlated A&H business lines. ArmadaCorp also provides clients with tools to navigate the healthcare system, including services that help match individuals with physicians suited to their personal needs, and maintains a provider of third-party administration services for insurance carriers that distribute the benefit products and handle claims.

Pivix

Effective September 1, 2025, OSG's wholly owned subsidiary, Octave Partners, LLC exercised its option to convert its $3,500 convertible note investment in Pivix, an excess and surplus lines MGA/U, into common stock. As a result, Octave Partners now owns approximately 74% of Pivix, when combined with its previous 17% minority equity interest, and includes Pivix in its consolidated financial statements.

Sale of Consolidated National Insurance Company

On January 12, 2024, Everspan Insurance Company entered into a Stock Purchase Agreement with Hagerty Insurance Holdings, Inc., to sell its ownership interests in Consolidated National Insurance Company ("CNIC"), which was one of Everspan's admitted carriers. The closing of this transaction occurred on September 1, 2024, resulting in a gain of approximately $7,504. The sale of CNIC has not had any adverse impact on the group's operations or growth prospects.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES ($ in thousands)

Octave's Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in

the U.S. ("GAAP"). This section highlights accounting estimates management views as critical because they are most important to the portrayal of the Company's financial condition; and require management to make difficult and subjective judgments regarding matters that are inherently uncertain and subject to change. These estimates are evaluated on an ongoing basis considering historical developments, political events, market conditions, industry trends and other information. There can be no assurance that actual results will conform to estimates and that reported results of operations will not be materially adversely affected by the need to make future accounting adjustments to reflect changes in these estimates from time to time.

Management has identified the following critical accounting policies and estimates: (i) valuation of specialty property and casualty losses and loss adjustment expense reserves, (ii) business combinations including identification and valuation of intangible assets, and (iii) goodwill and intangible asset impairment analysis. Management has discussed each of these critical accounting policies and estimates with the Audit Committee, including the reasons why they are considered critical and how current and anticipated future events impact those determinations. Additional information about these policies can be found in Note 2. Basis of Presentation and Significant Accounting Policies to the Consolidated Financial Statements included in Part II, Item 8 in this Form 10-K.

SPECIALTY PROPERTY AND CASUALTY LOSSES AND LOSS EXPENSE RESERVES

The specialty property and casualty insurance segment consists of Everspan-affiliated carriers. Loss and loss adjustment expense reserves represent management's estimate of the ultimate liability for unpaid losses and loss expenses for claims that have been reported and incurred but not yet reported ("IBNR") as of the balance sheet date.

Loss and loss adjustment expense reserves by line of business were as follows as of December 31, 2025 and 2024:

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]