OSG earnings call transcript, November 9, 2026

...continues to gain momentum and strengthen our underlying fundamentals as our platform scales. Before commenting further on our segments, I want to start with a market backdrop. ...provide some context for how we are managing the business today and how we are positioning Octave for 2027. Through 2026, abundant capacity has made the P&C market more competitive. Global commercial rates declined for the 9th consecutive... ...driven by, one, the depth of capacity from strong earnings, two, new entrants, including foreign carriers and ILS capital, and three, the significant movement of capital into the E&S market. Broadly, the rate dynamics... ...and the U.S. and global P&C insurance markets continue to soften. Property has continued to absorb most of the pressure as rates fell roughly 10% again in the third quarter. ...fall... ...falling low to mid-teams declines at mid-year, led by the wholesale turning to the London markets. For the large cash due market, competition remains robust. But rates have held up better than in large property. Our alternative classes, meanwhile, are exhibiting a low correlation to the broader P&C markets, with rates holding firm.

This remains one area we continue to view with caution. Years of compounding rate reductions have coincided with elevated loss experience. That combination is not sustainable, and we are encouraged that the market is beginning to change. We need to recognize it, and we are managing our exposures here accordingly. Casualty SME classes, including general liability and select specialty classes, continue to achieve rate increases ranging from mid-single. to double digits, and we see them as attractive opportunities for growth. As we consider the broader market trends, it is important to remember that current rate decreases follow several years of meaningful rate increases, so most classes are softening from a position of strength. Rate adequacy across most of our classes remains strong, and the portfolios we manage remain attractive for our capacity part. Furthermore, our diversification across property, casualty, specialty, and accident and health means no single pricing cycle defines our results, and A&H falls a different side. Which I'll come back to shortly. As we continue to scale our business, we remain focused on specialist niches where expertise matters most and where pricing remains adequate. And in many cases, strengthening. Turning to our insurance distribution segment, we believe our continued strong organic growth at over 35% year-to-date reflects diversification and the success of our rapidly scaling MGA portfolio.

Our expanding portfolio, led by the Class of 2024 and 2025 MGAs, are more than offsetting the market headwinds. In addition to driving growth in established lines, future organic growth will be supported by one, bolt-on team launches as an alternative to startup MGAs, and two, the launching of adjacent products in our existing platforms. For example, in recent weeks we announced through three new programs. Year-to-date we have launched seven product adjacencies in the US, leveraging existing infrastructure, distribution relationships, and underwriting talent. Another key area of growth is our A&H business, which makes up about a third of our portfolio and provides a buffer against current market headwinds. Our A&H businesses are growing through new revenue opportunities supported by expanded relationships, while at the same time maintaining strong retention and favorable pricing. Across our A&H businesses, we are seeing an increase in premiums together with solid organic growth, including for our most recent acquisition, ArmadaCare. Pricing in A&H continues to be a tailwind with double-digit rate increases due to surging healthcare costs. A&H provides us a growing earnings base that is largely uncorrelated with P&C pricing and adds further diversification to our results, and we expect this trend will continue. We are also seeing encouraging early momentum heading into the January 1

renewals, the most important renewal season for A&H. We continue to see a strong pipeline of startup MGA opportunities, particularly in the U.S., but also in Europe. A high-capacity partnership model, broad distribution, and a technology-enabled operating platform positions us well to attract top talent. At the same time, we remain highly selective, partnering only with... ...teams with strong track records that we believe can build durable businesses over the years. As we look forward, our 2027 capacity is largely lined up, and we expect to be oversubscribed, driven in large part by our track record. ...of profitable and less volatile, turning to our specialty P&C segment. Everspan's results this quarter reflect our continued focus on disciplined underwriting, program oversight, and proactive portfolio. We've also begun to diversify Everspan's routine risk portfolio, selectively expanding into package and non-CAT property business to complement our existing casualty book and create a more balanced underwriting portfolio over time. We believe the diversification of the book, combined with... the continued scaling of the business will position us well for profitable growth at an attractive combined ratio. Since the quarter end, we announced that Everspan entered into an agreement to sell its wholly known subsidiary, Providence, Washington... This transaction is expected to close by early next year and will simplify Everspan's operating structure, making it more efficient while further strengthening its rating agency capital and tangible book...

The announcement does not change Everspan's strategy, underwriting capabilities, or commitment to its trading partners. During the quarter, Everspan continues to support our insurance distribution business... ...through the writing of two programs. Finally, an update on our operations, technology, and AI. Starting with operations, as you may remember during the fourth quarter last year... ...we implemented a new target operating model at Corporate that materially reduced our run rate costs for 2026. We are actively exploring initiatives for further savings in 2027 as we continue the global integration of our business and plan to implement... ...the initial phase of a target operating model for our international operations later in the year. During the third quarter, the market experienced another round of concern around AI disintermediating... ...insurance distribution. Our view has not changed. The majority of lines we underwrite are complex specialty risks. And in that environment, we believe AI makes MGA's more productive, not less relevant. Over time, we believe it can be a competitive differentiator across specialty insurance. We continue to execute on the data, AI, and technology initiatives we laid out earlier in the year, and all of our... ...USMGAs are now on their target technology platforms, with the rollout of our AI-driven intake across our USMGAs largely complete. We are already seeing significant benefits in a form of accelerated...

...emission vetting, leading to increased underwriting velocity, which will further improve our operating leverage in the future. The same diversification that carries us through the cycle also shapes how we... ...build technology. Our enterprise underwriting platform is designed to use AI to create proprietary, bespoke tools around each MGA's niche and expertise, all on one platform and one set of data, giving us consistent oversight... ...while maintaining what makes each MGA uniquely competitive. This model will help our teams to choose the right risks, grow where the returns are strong, and step back where pricing no longer makes sense. Reinforce... the discipline that supports stable capacity and durable fee income. I will now turn the call over to David to review our third quarter results in more detail. David?

Revenue growth was fueled by the October 2025 acquisition of Armada and organically by MGAs launched in 2024 and 2025, as well as our ESG. SEL and A&E lines, which have been growing well after a few years of weakness. That growth more than made up for pockets of softness, such as energy, for example. Our top line growth carried through to the bottom. Insurance distributions net loss to shareholders narrowed to $4.2 million from $5.4 million in the prior year quarter, an improvement of $1.2 million, or 22%. Insurance. Adjusted net income to shareholders was $4 million compared with an adjusted net loss of $0.8 million in the third quarter of 2025, an improvement of $4.8 million. Insurance distribution adjusted EBITDA to shareholders rose nearly 40% to $8.3 million compared with $6 million a year ago, and the related margin grew to 14.2% up from 13.9% in the prior year quarter. You're to date adjusted EBITDA to shareholders reached 43 million. We now expect to exceed our $45 million insurance distribution adjusted EBITDA guidance for the year. Beyond organic growth and the Armada care contribution. Other factors driving the year over year improvement included an increase in profit commissions reflecting the underwriting performance of our portfolio. A higher ownership position. of 10% in Octave ventures and a $3.5 million reduction in interest expense resulting from lower debt balances and financing rates. These results are after our continued investment in.

DeNovo MGAs which reduced EBITDA to shareholders by approximately 1.2 million this quarter or roughly 2.1 points of margin. We expect these businesses to move from a drag to an EBITDA contributor. As they hit scale in the coming quarters. Finally, a note for those updating fourth quarter models. Because the ArmadaCare acquisition closed on October 31st, 2025. Fourth quarter is when ArmadaCare will begin impacting our organic growth calculation. October 2026 will be the last month counted as acquired revenue. November and December 2026. Which now have prior year comparisons will be included in organic growth. At Everspan, gross premiums written were $99 million in the third quarter, up 2% from a year ago. Premium is written, and net premium is 4%, and gross premiums written year-to-date totaled $297 million. Given some of the continued- business mix shift and the timing of certain new program launchers, a full-year gross premiums written may come in slightly under our $410 million guidance. Casualty remains the core of Everspan's book. But we have begun to selectively add specialty and non-catastrophe property programs to diversify the mix over time. As these programs build, we expect them to support premium growth and contribute to more consistency.

Everspan's combined ratio for the quarter was 100.6%, a significant improvement from 112.9% in the third quarter of 2025, driven by a lower loss ratio this quarter. Everspan's loss ratio was 57.1% in the third quarter, compared to 84.5% a year ago. Proforma for sliding scales, the loss ratios were 56.6%. 8% and 77.6% respectively. Last year's third quarter included 23 points, 16 points net of sliding scale impact of adverse prior year development from commercial order programs and runoff. And excess liability on an accident year basis, our loss ratio improved 680 basis points from the third quarter of 2025 to 54.5% this quarter reflecting the. Repositioning of our portfolio towards new programs with lower expected loss ratios. Everspan's expense ratio was 43.5% in the third quarter up from 28.4. a year ago. Excluding the sliding scale impact in both periods, our expense ratio was 43.8% in the third quarter compared to 35.3% a year ago. Reflecting higher acquisition costs associated with the growing mix of high retention programs and higher general administrative expenses. G&A costs this quarter included half a million dollars of legal costs associated with the pending sale of PEWIC and an additional half a million dollars of expenses due to timing differences, which together added to about four points of expense and combined ratios. On a pro form of basis, which we reconcile in our earnings presentation, the year-to-date combined ratio was 96.7%, a sequential improvement from 97.1% in the second quarter, and a further step

towards our longer-term objective. In the third quarter, Everspan produced pre-tax income of $1.4 million and adjusted EBITDA of $2.2 million. Both of these metrics are improved from break-even results in the prior year quarter. Year-to-date, adjusted EBITDA was $5.6 million, more than double the first nine months of 2025. We're pleased with the progress so far this year, and we believe Everspan is well-positioned to meet- or beat our full-year adjusted EBITDA guidance of $6 million. Lastly, as Claude mentioned, Everspan agreed to sell its wholly-owned subsidiary, PEWIC. When the transaction closes, we expect to book consolidated net gain on the sale of close to $4 million. An increase to Everspan's tangible book value of approximately $11 million. Because PEWIC wrote, little business and its needs will be covered by our other Everspan carriers, the sale will release capital and eliminate the regulatory and administrative. Of maintaining a separate entity, reflecting our focus on streamlining our operations, resources, and regards to corporate, the actions we have been taking to reduce costs continue to impact results. Corporate expenses were $10 million. In the third quarter, down from $27 million a year ago, while adjusted corporate, third quarter 2025, GAAP reported expenses. Included significant costs associated with the repositioning of the company in connection with the sale of the legacy business and costs associated with the purchase of Ramada.

Year-to-date, adjusted corporate expenses were $22.5 million, down roughly 20% from 2020. $22.4 million in the first nine months of 2025. That keeps us well positioned relative to our full year outlook of approximately $29.5 million. Turning to our outlook, we remain on track for 2026 to be the first year we expect to deliver positive adjusted net income per share, in line with or better than our guidance. Since launching our... PNC strategy in 2021, that is a meaningful milestone reflecting the growing earnings power of the insurance distribution platform. Overall, we're pleased with our progress this year and confident in how we're... ...positioned heading into 2027, including from a leverage standpoint. At September 30th, our net leverage ratio, calculated in compliance with the terms of our credit facilities, fell below three times. We believe this... ...provides us with greater flexibility for strategic initiatives, including the buy-in of minority interests, alongside other transactions such as non-core asset sales. With that, I will now turn the call back to Claude.

While we are not updating our 2026 guidance, given the progress we've made through the first nine months of the year across all of our metrics, as David explained, we are well positioned to meet or exceed our key guidance metrics for the year. With our capacity for 2027 largely in place and our AI underwriting platform providing support across our USMGAs, we believe insurance distribution is poised to maintain sector-leading growth. The progress and growth of our two operating segments combined with the expected corporate cost savings through integration and technology solutions gives us continued confidence in achieving our target consolidated adjusted shareholders of 80 million in 2028. As we approach the end of 2026, I am encouraged by the progress we have made and increasingly confident in Okta's trajectory. Our results demonstrate that we are executing against our strategy, strengthening our competitive position, and building a business with fundamental value we believe is not yet fully reflected in our market valuation. Looking ahead

our priorities remain clear, execute with discipline, capitalize on the strengths of our platform, and deliver sustained profitable growth. Operator, I would not like to open the call for questions.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Thank you. And our first question is from the line of Mark Hughes with Truist Securities. Please receive their questions.

The next question is in the line of Tommy Majoint with KBW.