Observations on current partners' and market's appetite for providing more capacity.

Capacity remains attractive and supportive for Octave's portfolios due to strong underlying results. The company continues to broaden and diversify its capacity partners. “we see capacity being attractive and got to our portfolios on platforms and so we expect that we'll continue to see a strong capacity support”

Assessment of whether the P&C market is near a rate floor and observations on market softening.

Management believes it's still early in the softening cycle for large property lines, expecting continued rate declines into 2027 without significant cat events. Octave's portfolio, focused on SME and non-CAT, experiences more muted price impacts. “I expect we're still in the early, most of the early innings, assuming, you know, obviously things can change quickly if there are other large cat events and change the market standpoint. But at this point, we expect that they'll continue to soften as we move forward into the remainder of 26 into 27”

Observations on pricing, competition, and whether pricing is ahead of loss trends in Everspan's excess liability business.

Excess liability continues to see a positive rate environment, moderating but still generally ahead of loss costs. Everspan is also observing a broader range of higher-quality program opportunities. “Generally, we're still seeing a positive rate of rate environment in the Exoskeleton. It is moderating a bit in terms of as each quarter goes on, but still generally in line with and better than lost costs from that standpoint.”

OSG

Octave (OSG) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Aug 7, 2026

Source: earnings call transcript

Executive summary

Octave Q2 FY26 — Strong Insurance Distribution Growth and Operational Progress

Octave Group delivered a strong Q2 FY26, driven by robust growth in its insurance distribution segment, which saw significant revenue and EBITDA expansion. While the specialty P&C segment showed operational progress and improved profitability, the company revised its full-year Everspan EBITDA and adjusted EPS guidance downwards due to higher acquisition costs and updated estimates for various expenses. The firm continues to leverage its diversified portfolio and MGA model to navigate a softening P&C market, with strategic investments in AI and new leadership aimed at enhancing underwriting capabilities and future growth.

Highlights

Insurance distribution revenue grew 77% year-over-year to $58.4 million, including 44% organic growth.
Insurance distribution adjusted EBITDA increased nearly four-fold to $9.8 million, with margin expanding 12 percentage points to 26%.
Everspan's adjusted EBITDA was $1.8 million, nearly tripling year-over-year, with combined ratio improving to 100.6% from 106.7%.
Consolidated adjusted net loss to shareholders improved by $8.7 million to $1.8 million (4 cents per share).
Successfully launched proprietary AI-driven underwriting platform, reducing quote time from hours to approximately seven minutes.

Concerns

Everspan's adjusted EBITDA guidance revised down to $6 million from $7.5 million due to higher-than-expected acquisition costs.
Consolidated adjusted net income per share guidance revised down to $0.15-$0.20 from $0.50 per share.
P&C insurance markets continue to soften, with wholesale large property rates down 10-20% year-on-year.
Investment in De Novo MGAs suppressed insurance distribution EBITDA by $1.1 million in the quarter.

Guidance & targets

Category	Target	Timeline	Confidence
Insurance Distribution Organic Growth	25% plus high materiality	FY26	High
Insurance Distribution Adjusted EBITDA	$45 million high materiality	FY26	High
Everspan Adjusted EBITDA	$6 million medium materiality	FY26	Medium
Adjusted Net Income per Share	$0.15 to $0.20 high materiality	FY26	Medium
Everspan Premiums (Scale Target)	north of $500 million medium materiality	Long-term	High
Everspan Combined Ratio	sub-95 combined ratio medium materiality	Long-term	High
AI and Technology Investment Costs	low to mid single digit millions low materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Insurance Distribution Revenue growth driven by the October 2025 acquisition of ArmadaCare and organic growth across diverse MGAs. Adjusted EBITDA nearly quadrupled year-over-year, with margins expanding significantly. Net loss to shareholders decreased, and adjusted net income swung positive. Organic growth: 44%Adjusted EBITDA: $9.8MAdjusted EBITDA margin: 16.8%Net loss to shareholders: $3.7MAdjusted net income to shareholders: $4.6M	$58.4 million	77%	—	$9.8 million
Everspan (Specialty P&C) Operational progress and repositioning efforts led to improved loss and G&A expense ratios, contributing to a lower combined ratio and significantly higher pre-tax income and adjusted EBITDA. Higher acquisition costs partially offset improvements. Gross Premiums Written: $95MNet Premiums Written: $23M (up 52% YoY)Premiums Earned: $22M (up 34% YoY)Loss Ratio: 61.4% (640 bps improvement YoY)Active Programs Loss Ratio: 59%G&A Expense Ratio: 9.4% (down from 16% YoY)Combined Ratio: 100.6% (down from 106.7% YoY)Adjusted EBITDA: $1.8M (nearly triple YoY)	—	—	—	$1.2 million

Product announcements

Product	Type	Timeline	Details
Proprietary AI-driven underwriting platform	launch	Active in a number of US MGAs now, implementation across remaining applicable US MGAs in H2 FY26

Deals & partnerships

CyTora Collaboration to develop and launch a proprietary AI-driven underwriting platform.

The partnership resulted in an AI-driven underwriting platform that reduces submit-to-quote time from hours to approximately seven minutes. It is currently active in US MGAs writing management, financial, and professional liability programs, with full implementation across remaining applicable US MGAs expected in H2 FY26.

Risks & headwinds

Softening P&C insurance markets Current, expected to continue into 2027

Wholesale large property rates down 10-20% YoY.

Mitigation:Diversified portfolio strategy across A&H, specialty P&C, and select property lines; MGA model with experienced underwriting leaders; focus on SME and non-CAT segments where price impacts are more muted.

Higher-than-expected acquisition costs for new Everspan programs Near-term

Led to downward revision of Everspan adjusted EBITDA guidance to $6 million from $7.5 million for FY26.

Mitigation:Belief that these programs will produce more attractive long-term economics through lower and more stable loss ratios as scale builds, supporting a stronger and more durable earnings profile over time.

Investment in De Novo MGAs suppressing EBITDA Q2 FY26 and ongoing in early stages of MGA scaling

Suppressed Insurance Distribution EBITDA by $1.1 million in Q2 FY26, impacting EBITDA margin by 2 points.

Mitigation:These MGAs are expected to drive material EBITDA expansion as they scale through 2027 and beyond, with roughly half already delivering positive EBITDA.

What to watch in Q3 FY26

MGA EBITDA Contribution (Class of 2024/2025)

End of 2026 and into 2027

Current Roughly half of 2024/2025 MGAs are delivering EBITDA

Target More MGAs from the 2024/2025 class contributing meaningfully to EBITDA

Why it matters

These MGAs are expected to drive a significant percentage of the target $80 million EBITDA by 2028, making their scaling and profitability crucial for long-term growth.

Roughly half the MGA's of that class are delivering EBITDA at this point in time and we expect that more to start contributing and contributing more, much more meaningfully as we get through to the end of the year and into 27.

Find out whether OSG delivers this. Inve re-checks your case every morning.

Q&A highlights

Inquiring about the pipeline for new MGAs in 2026 and 2027, and how the company plans to sustain growth.

Management is focusing on scaling the large class of 2024/2025 MGAs, which are driving significant organic growth and EBITDA. They expect a modest number of new MGA launches in 2026 (1-2) and 2027 (2-4), while also leveraging an integrated operational platform and adding teams to existing MGAs for growth.

“Roughly close to 75% of our organic growth this quarter was delivered by MGA. the class of 24 and 25.”

asked by Maxwell Fritscher · answered by Claude LeBlanc

3 min read 6 chapters

Detailed narrative

Insurance Distribution Momentum

The Insurance Distribution segment achieved robust performance in Q2 FY26, with revenue growing 77% year-over-year to $58.4 million, including 44% organic growth. This was primarily driven by the October 2025 acquisition of ArmadaCare and successful De Novo MGA launches. Adjusted EBITDA for the segment nearly quadrupled to $9.8 million, resulting in an adjusted EBITDA margin of 26%, a significant expansion from 13% a year ago, reflecting strong execution and strategic investments.

Specialty P&C Repositioning and Leadership

The Specialty Property and Casualty segment, Everspan, continued its operational progress, delivering $1.8 million in adjusted EBITDA for the quarter, nearly tripling the prior year's results. The combined ratio improved to 100.6% from 106.7% in Q2 2025, driven by a 640 basis point improvement in the reported loss ratio to 61.4% and a decline in the G&A expense ratio to 9.4%.

To support continued growth and underwriting discipline, Octave announced the hiring of three new senior leaders at Everspan Group: David Kenyon (Head of Reinsurance), Bevan Grievesland (Chief Underwriting Officer), and Clay Stewart (Chief Operating Officer).

Market Environment and Diversified Portfolio Strategy

The broader U.S. and global P&C insurance markets are experiencing softening, particularly in wholesale large property where rates are down 10-20% year-on-year. However, casualty SME, certain commercial auto risks, and targeted specialty classes continue to show mid-single to double-digit rate progression.

Octave's diversified portfolio strategy, spanning A&H, specialty P&C, and select property lines, provides multiple sources of growth and reduces dependence on any single product class or market cycle, allowing for repositioning towards attractive market fundamentals.

MGA Growth Trajectory and Pipeline

Since the start of 2024, Octave has launched nine MGAs, representing 40% of its total MGA portfolio. These MGAs, particularly the 2024 and 2025 classes, are in the early stages of scaling and are expected to drive material EBITDA expansion, with roughly half already delivering positive EBITDA.

Approximately 75% of the current quarter's organic growth was delivered by these newer MGAs. The company is also enhancing its integrated operational platform to accelerate MGA launches and scaling, and is adding teams to existing MGA platforms as an alternative growth strategy.

AI and Data Strategy Implementation

Octave views AI as both a growth enabler and an efficiency tool. During Q2, the company collaborated with CyTora to develop and launch a proprietary AI-driven underwriting platform. This platform, currently active in several U.S. MGAs writing management, financial, and professional liability programs, has significantly reduced submit-to-quote time from several hours to approximately seven minutes.

Full implementation across remaining applicable U.S. MGAs is expected in the second half of 2026, with anticipated benefits including reduced manual effort, accelerated underwriting decisions, improved service levels, and quicker MGA market entry.

Expense Management and Profitability Improvement

The company demonstrated continued focus on expense management, with reported GAAP corporate expenses declining 14% year-over-year to $12 million in Q2 FY26. Adjusted corporate expenses also decreased to $7.9 million from $8.3 million in the prior comparable period. These efforts, combined with strong segment performance, contributed to a significant improvement in consolidated adjusted net loss to shareholders, which decreased by $8.7 million to $1.8 million (4 cents per share) compared to the prior year.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.