Greetings and welcome to Octave Specialty Group Inc. First Quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Karen Beyer, Head of Invest Relations. Please go ahead.

Thank you. Good morning and welcome to Okta's first quarter 2026 call to discuss financial results. Speaking today will be Claude LeBlanc, President and CEO, and David Trick, Chief Financial Officer. They will discuss the financial results of our business and the current market environment. And after prepared remarks, we'll take your questions. Also available for Q&A today will be executives from our insurance distribution segment. For those of you following along on the webcast during the prepared remarks, we will be highlighting some slides from the investor presentation which can be located on our website. Our call today includes forward-looking statements. The company cautions investors that any forward-looking statement involves risks and uncertainties and it is not a guarantee of future performance. Actual results may differ materially from those expressed or applied in the forward-looking statement due to a variety of factors. These factors are described under forward-looking statements in our earnings press release and in our most recent 10Q and 10K filed with the SEC. We do not undertake any obligation to update forward-looking statements. Also, in our prepared remarks or responses to questions, we may mention some non-GAAP natural measures. Reconciliation to those non-GAAP measures are included in our recent earnings press release, operating supplements, and other materials available in the Investor section on our website.

And now I would like to turn the- I'm pleased to report the net income to shareholders, net income, non-occurring costs, the favorable The notable movement in our results for the quarter is the acquisition of ArmadaCare in the fourth quarter of 2025 and organic growth of 40 years. ArmadaCare, while not included in our organic growth capacity of our business, insurance distribution adjusted EBITDA to an increase of nearly eight times. Our insurance distribution was driven by a number of factors for acquisition of ArmadaCare. Organic growth of lower interest rates for both a reduction of debt is worthy to note that after a couple of years of negative growth, the strong performance in the course of our A&H business drove our market to the result of these variability in our results. Our results for the course increased investment in De Novo MGAs, $1 million in the first $600,000, while not impacting our first quarter results, as well as additional the total cost of these NCI buy-ins were funded with cash and term loan facility. our insurance distribution they believe our bank modest required amortization as a result of losses and the current accounted for on a pro forma basis our combined ratio for the quarter was approximately 95 percent which is more in line with our for the first quarter of 2026 adjusted ebitda with expense reduction initiatives at corporate also began to take hold of nominal expense million last year the prior year compared for the expense acquisition and structuring expenses equity conversation we will now be conducting a question and answer session if you would like to ask a

question please press star one on your telephone keypad a confirmation tone will indicate your line is in the question queue you may press star two if you would like to remove your questions from the queue for participants using speaker equipment it may be necessary to pick up your handset before pressing the star keys one moment please while you call for questions the first question comes from the line of mark use with two securities please go ahead yeah thank you good morning morning mark on the presentation you uh show your 2026 guidance uh you point out it was initially uh presented in february was the q1 kind of relative to the guidance was it uh

consistent with your expectations seems like it was a quite quite a strong quarter do you feel like here ahead of where you started out at the beginning of the year or was this uh execution sort of according to plan a good question mark you know i think we feel q1 was a very strong quarter so i think i put it ahead of our plan certainly for uh our expectations on q1 and uh you know i think we see a lot of tailwind carrying through for the rest of the year as well on some of the programs that we launched in the last couple years in the uh just to be clear the The guidance is essentially unchanged, but you're off to a strong start. Is that the key point? That's correct, yeah.

We will consider adjusting guidance in the upcoming quarters.

Very good. Then what does the pipeline look like for startup NGAs? Is there going to be a 2026 class? How do we think about that?

Yeah, so what we indicated previously is that we were targeting more in a range of our initial expectations on startups for 26 in the range of one to two startups. Part of that is the significant number of launches that we undertook in the class of 24 and 25 that were actively pursuing growth and expansion. having said that we we have seen and continue to see a very uh deep and robust pipeline of opportunities that we're evaluating um our team is very selective and in terms of uh we'd like to move forward with but we we do expect uh i'll say at least one to two uh launches uh this year um could be a little bit more but i think we're trying to keep it in that range uh given the number of starts that we had in the last couple of years.

Understood. And then plans for buy-in for the remainder of the year, you spent the $44 million, looks like right at the end of Q1, so that'll have an impact on Q2. What is the outlook now for any additional buy-ins of the non-controlling interest through the balance of the year?

Yeah, for the rest of the year, Mark, there wouldn't be any additional buy-ins currently And then, any observations about the capacity?

You talked about how you're seeing some deceleration in rates that's still robust in some of these casualty lines, but maybe, broadly speaking, with property and some other lower hazard lines, maybe a little bit less buoyancy. How about in terms of capacity providers, your ability to secure sufficient capacity for the MGAs and the startup MGAs? Any observations there?

Yeah, I think we've seen just continued increases in opportunities with both existing and new capacity providers. You know, I think the reinsurance markets in particular, you know, we've seen improvements in terms, broadening of appetite and opportunity. I think we mentioned on our last call that, you know, we've increased our capacity, both in amount and duration of both aligned at third party capacity from 1.5 billion entering 2026 at over 2 billion. So we continue to see many opportunities. We do manage our business on a curated capacity model, and we'll continue to look to expand that as we progress through the year. But to date, the opportunities continue to come to us, and we're seeing broader, I'd say more diversified opportunities as we continue to expand our platform.

Thank you very much.

Thanks, Mark.

Thank you. Next question comes from the line of Ryan Tunis with Kent or Fitzgerald.

I guess first question kind of following along with the capacity discussion that you just had with Mark. The property, it looks like it's your second biggest line. You mentioned geographically diverse. I'm curious, though, just from a concentration standpoint, is it, do you have concentrated MGA, is it, like, where does the premium sit? Is it that you have MGAs that are largely property dedicated, or does the property premium tend to sit in places where, yeah, it's not solely just focused on property, if that question is.

That's a great question, Ryan. I'm going to pass that over to Paul Rayner, Senior Executive and Director at Octave Ventures, to respond to that.

Yeah, we're very pleased to. So Paul Rayner, Executive at Octave Ventures. Ryan, in response to your question, I mean, we have a number of different MGAs that play into the property market. And very much the model is each of our MGAs have their own specific pocket. So we have an MGA that is focused more on the large commercial DNF. we have one in the US more focused on middle market property we then have another focused on small commercial and then outside of that we have MGA's that will have various package policies which will include property and liability components on the whole if you look across our market our property focus we are relatively low cat compared to our peers particularly in the London marketplace and so I think that goes to a lot of codes comments around how whilst we are seeing rating changes that is somewhat more muted for us that are being led in our large commercial sector and becoming increasingly as we move through the ranks as we get to the smaller end of the specter. Does that respond to your question, Ryan?

Yeah, you did. I just wanted to push a little bit more on just the conversations, I guess, you're having with the capacity relative to a year ago. I mean, there's so much discussion about the property market. But, yeah, just what are the types of, you know, questions you're getting from capacity providers? Or is it just that they're just really focused on results that, I mean, they clearly have been good. But, I mean, it's just a little bit surprising to me that the capital wouldn't start being a little bit antsy given the competitive environment.

Should I continue, Claude?

Sure, Paul.

Yeah, sure. Sure. So we can continue to see technical rate adequacy in our property markets. You'll recall they've gone through a period of strong hardening. And whilst we are seeing rate reduction, we still see technical profitability within the rates. And that's very much the conversation with our capacity partners. I think the add-on comment on capacity and building from clothes comments is, You know, the capacity has been very loyal and strategic with our businesses. We've built good and deep relationships with them, and they're very bolted on to the fact that we seek to govern our businesses in a way that protects their interests. And so on the one hand, you know, they're very understanding, ask a lot of questions, but they come from a very knowledgeable place. And on the second part, we've got a lot of structures to access capacity, you know, through both our managed balance sheets, the syndicates included, which are all third-party capital as well as the traditional arrangements. And so we have a lot of different conversations, a lot of different questions, but they come from a knowledgeable perspective, and ultimately that we are risk-selecting through this cycle to deliver the returns that we represent to them.

I'm just shifting gears last one for Quad. Really just on Everspan and, you know, what the vision is for that from here, how it fits in with the overall business as it, you know, obviously continues to shrink as a percentage of the mix. We had a little more noise this corner. Just, I guess, update us on, you know, the strategic priority of that business at this moment in time.

Sure. So our views on Everspan have not changed in that it is a strategic, you know, business within our ecosystem. We do view, you know, the program business, which it manages, which is third party business primarily. We don't do a lot of business between Octave Ventures and Everspan. So again, I think we have to remember it is primarily a third party market business. But you know, that business continues to grow, it's provided us some opportunities on introductions to new MGAs, quite frankly, and new opportunities in the marketplace. place. We have done some selective programs that we've moved into Everspan. Again, they're selective to avoid competition in other third-party markets that Everspan competes in, but there are some good opportunities, and we have added a couple more into Everspan. So again, the strategic fit and nature of Everspan is still very valuable to us and remains so. I would say that you know we we have and continue to look for ways to have Everspan be more relevant and valuable to us and I think as we continue to grow and expand you know broadening of risk appetite scale risk limits and rating for example are all things that we're hoping to be able to find ways to to leverage Everspan in a greater way to the extent we can achieve that and we've been working and considering different ways to achieve that in order to allow Everspan to broaden its growth opportunities in the marketplace and increase its relevance to our core business as well. Again, it remains an important part of our business. We think we have it going in the right direction. We've made some changes. Having this litigation settlement behind So it's another important step, but I believe we're well positioned.

Thank you. Next question comes from the line of Tommy McJoint with KBW. Please go ahead.

Hey, good morning. A couple of questions on the insurance distribution segment. To start off, could you go into a bit more detail on how you see the quarterly seasonality of earnings this year following this very strong first quarter? In some sense, can we look at the quarterly seasonality of last year as a proxy, or has the recent acquisitions and growth in the A&H impacted that too much where we can't really look to the past to think about seasonality? Thanks.

Sure, Tommy, thanks. So, yeah, last year gave us a little bit of a roadmap to seasonality. We had some of the same dynamics last year in terms of the A&H business as we do this year. A little more pronounced given the inclusion of our MarlaCare, but, you know, first quarter is, you know, certainly going to continue to be our strongest quarter. Fourth quarter is probably the second strongest, and, you know, the second and third quarters are more in line with each other.

Okay, got it. And then, you know, we've seen the public broker multiples, you know, sink on concerns of brokers being disintermediated by AI. As part of your evaluation and underwriting of MGAs, what are you looking for to make sure that those MGAs, you know, aren't going to be disintermediated or at least face lower barriers to entry that drives up competition? What is your underwriting process of those MGAs look like?

Yes, so it's a good question. And, you know, we've been listening to what the brokers have been responding to the questions i think from our perspective we're not a broker uh we're not into a retailer wholesale broking uh and we are really more of a pure play mga platform you know i think the risk associated you know with ai on the you know in particular the mga um you know market i think is much more limited uh having said that i believe and we strongly believe and we've built this into our strategy that ai will be a core component uh of our growth uh strategy and and uh oversight of our business going forward and we've made you know significant strides uh as i mentioned earlier investments into ai uh you know i think we're approaching this from a position of strength given that um well we made some acquisitions uh you know our largest acquisition being be capital partners where most of our mgas have been launched uh initially are on a homogeneous this tech stack we've been actively moving our other mgas on to the same tech stack which we'll have completed that in the u.s marketplace by mid-year this year and and you know aggressively moving into a data architecture across all of our mgas globally being able to do that without legacy systems and uh desperate systems i think gives us a big advantage uh to implement that quickly so we we believe that we're going to start seeing the benefits of that in terms of efficiency a velocity of underwriting, you know, underwriting effectiveness, if you will, better risk selection as we progress through the year and into next year. I believe those are some of the key benefits that we see coming out of AI in the near term. But, you know, I don't see AI as an individual, you know, a component or business model, you know, disintermediating the MGA space in any way, especially in the commercial and more complex specialized risk components of the MGA sector. Thank you.

Ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to Karen Byer for closing comments.

Thank you, everyone, for joining us this morning. We'll be around for your calls today. Thanks, and have a great day.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.