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What changed in OCTAVE SPECIALTY GROUP INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of OCTAVE SPECIALTY GROUP INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+488 added−598 removedSource: 10-K (2026-03-04) vs 10-K (2025-03-06)

Top changes in OCTAVE SPECIALTY GROUP INC's 2025 10-K

488 paragraphs added · 598 removed · 352 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

95 edited+24 added−14 removed39 unchanged
Biggest changeCirrata Companies: Ambac's MGA/U subsidiaries are not restricted from paying dividends or partner distributions (collectively "Distributions") to their owners or partners, including Cirrata, which is 100% owned by AFG. Ambac's established MGA/Us historically have paid Distributions equating to the majority of their individual EBITDA, subject to working capital, taxes and other capital needs, on a quarterly basis.
Biggest changeOctave does not have any plans to seek dividends from Everspan so that surplus may accumulate to support Everspan's growth. Insurance Distribution Companies: Octave's MGA/U subsidiaries are not restricted from paying dividends or partner distributions (collectively "Distributions") to their owners or partners, including Octave Partners, which is 100% owned by OSG.
As a result, Everspan does not have channel conflicts which would compete with programs partners in underwriting business. • Nimble Platform — A simplified organizational structure which allows Everspan to be efficient and quick in responding to the needs of program partners as well as finding customized solutions.
As a result, Everspan does not have channel conflicts which would compete with programs partners in underwriting business. • Nimble Platform — A simplified organizational structure allows Everspan to be efficient and quick in responding to the needs of program partners as well as in finding customized solutions.
Everspan conducts substantial due diligence on all program partners led by the Underwriting Risk Committee, which is chaired by Everspan’s Chief Underwriting Officer. As part of the diligence process, Everspan works closely with potential MGA/Us to design program underwriting guidelines, ongoing reporting and auditing requirements.
Everspan conducts substantial due diligence on all program partners led by the Underwriting Risk Committee, which is chaired by Everspan’s Chief Underwriting Officer. As part of the diligence process, Everspan works closely with potential MGA/Us to design program underwriting guidelines, and ongoing reporting and auditing requirements.
We make available through the investor relations section of our web site, annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S.
We make available through the investor relations section of our web site, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as well as proxy statements, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the U.S.
A fundamental part of risk assessment and risk management is not only understanding the risks the Company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. The Board of Directors periodically reviews the Company's business plan, factoring risk management into account.
A fundamental part of risk assessment and risk management is not only understanding the risks the Company faces and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for the Company. The Board of Directors periodically reviews the Company's business plan, taking risk management into account.
Everspan may also source programs as a reinsurer. Accessing programs as a reinsurer provides Everspan the ability to diversify its risk profile, efficiently manage its exposure limits and underwrite programs in a cost efficient manner, amongst other benefits.
Everspan may also source programs as a reinsurer. Accessing programs as a reinsurer provides Everspan with the ability to diversify its risk profile, efficiently manage its exposure limits and underwrite programs in a cost efficient manner, amongst other benefits.
Insurance Distribution and Specialty Property and Casualty Insurance strategic priorities include: • Expanding our Insurance Distribution business based on deep domain knowledge in specialty and niche classes of risk which generate attractive margins at scale.
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.
Everspan may retain up to 30% of risk on each direct program and will reinsure the remainder to reinsurers and other providers of risk capital. These reinsurers may be domestic and foreign reinsurers and institutional risk investors (capacity providers).
Everspan may retain up to 30% of risk on each direct program and will reinsure the remainder to reinsurers and other providers of risk capital. These may be domestic or foreign reinsurers and institutional risk investors (capacity providers).
While underwriting direct business produced by MGA/Us is Everspan's primary means of distribution, Everspan also1 selectively assumes reinsurance to further its goal of writing a diversified book of specialty P&C business while managing its exposure limits. For example, the Company would evaluate, and may write certain lines, including those with catastrophe risk or Workers’ Compensation on an assumed basis.
While underwriting direct business produced by MGA/Us is Everspan's primary means of distribution, Everspan also selectively assumes reinsurance to further its goal of writing a diversified book of specialty P&C business while managing its exposure limits. For example, the Company would evaluate, and may write certain lines, including those with catastrophe risk or workers’ compensation on an assumed basis.
While the Board of Directors has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibilities related to risk assessment and risk management, and management has responsibility for managing the risks to which the Company is exposed and reporting on such matters to the Board of Directors and applicable Board committees. • The Audit Committee oversees the management of risks associated with the integrity of Ambac’s financial statements and its compliance with legal and regulatory requirements.
While the Board of Directors has the ultimate oversight responsibility for the risk management process, various committees of the Board also have responsibilities related to risk assessment and risk management, and management has responsibility for managing the risks to which the Company is exposed and reporting on such matters to the Board of Directors and applicable Board committees. • The Audit Committee oversees the management of risks associated with the integrity of Octave’s financial statements and its compliance with legal and regulatory requirements.
The Audit Committee reviews with management, internal auditors and independent auditors Ambac's critical accounting policies, Ambac's system of internal controls over financial reporting and the quality and appropriateness of disclosure and content in the financial statements and other external financial communications. • The Compensation Committee oversees the management of risk primarily associated with our ability to attract, motivate and retain quality talent (particularly executive talent) and with setting financial incentives that do not motivate undue risk-taking. • The Governance and Nominating Committee oversees the management of risk primarily associated with Ambac’s ability to attract and retain quality directors, Ambac’s corporate governance programs and practices and our compliance therewith, including integration of ESG and sustainability policies, practices and goals into the Company's business strategy and decision making.
The Audit Committee reviews with management, internal auditors and independent auditors Octave's critical accounting policies, Octave's system of internal controls over financial reporting and the quality and appropriateness of disclosure and content of financial statements and other external financial communications. • The Compensation Committee oversees the management of risk primarily associated with our ability to attract, motivate and retain quality talent (particularly executive talent) and with setting financial incentives that do not motivate undue risk-taking. • The Governance and Nominating Committee oversees the management of risk primarily associated with Octave’s ability to attract and retain quality directors, Octave’s corporate governance programs and practices and our compliance therewith, including integration of ESG and sustainability policies, practices and goals into the Company's business strategy and decision making.
The following graph shows our reinsurance carriers' AM Best rating based on share of ceded premium for the year ended December 31, 2024: (1) NR represents reinsurance carriers not rated by AM Best. Generally, under the terms of reinsurance contracts with such carriers the reinsurer is required to post collateral to Everspan. See Note 8.
The following graph shows our reinsurance carriers' AM Best rating based on share of ceded premium for the year ended December 31, 2025: (1) NR represents reinsurance carriers not rated by AM Best. Generally, under the terms of reinsurance contracts with such carriers the reinsurer is required to post collateral to Everspan. See Note 8.
We believe that growing multi-year carrier relationships are evidence of the value created by our MGA/Us, a value which we believe should sustain through routine market cycles. • Strong distribution relationships — Distribution relationships provide value in several ways. First, carrier and capital partners are looking for both underwriting expertise and distribution access when working with MGA/Us.
We believe that growing multi-year carrier relationships are evidence of the value created by our MGA/Us, a value which we believe should endure through routine market cycles. • Strong distribution relationships — Distribution relationships provide value in several ways. First, carrier and capital partners are looking for both underwriting expertise and distribution access when working with MGA/Us.
Ambac management has established other management committees to assist in managing the risks throughout the enterprise. These committees will meet monthly or as needed on an ad hoc basis. • The Disclosure Committee's objective is to assist the CEO and CFO in their responsibilities to design, establish, maintain and evaluate the effectiveness of disclosure controls and procedures.
Octave management has established other management committees to assist in managing the risks throughout the enterprise. These committees will meet monthly or as needed on an ad hoc basis. • The Disclosure Committee's objective is to assist the CEO and CFO in their responsibilities to design, establish, maintain and evaluate the effectiveness of disclosure controls and procedures.
Investments are primarily managed by third party investment management firms overseen internally. All investments are made in accordance with the general objectives, policies, and guidelines for investments approved by the Board of Directors of the applicable subsidiary. These policies and guidelines include liquidity, credit quality, diversification and duration objectives and are periodically reviewed and revised as appropriate.
Investments are primarily managed by third party investment management firms which are overseen internally. All investments are made in accordance with the general objectives, policies, and guidelines for investments approved by the Board of Directors of the applicable subsidiary. These policies and guidelines may include liquidity, credit quality, diversification and duration objectives and are periodically reviewed and revised as appropriate.
Occasionally, our subsidiary boards may also include independent members that are not employees of Ambac or its subsidiaries. Many of our MGA/U subsidiaries also maintain Underwriting Committees to oversee the underwriting quality and risk management of such underwriting unit. These Underwriting Committees provide regular updates to their respective Boards of Directors.
Occasionally, our subsidiary boards may also include independent members that are not employees of Octave or its subsidiaries. Many of our MGA/U subsidiaries also maintain Underwriting Committees to oversee the underwriting quality and risk management of such underwriting unit. These Underwriting Committees provide regular updates to their respective Boards of Directors.
Members of the committee include the CEO, key members of Everspan management and other senior managers or advisors of Ambac. Additionally, a Reinsurance and Program Administrator Credit Risk sub-committee was established at the direction of the Underwriting Risk Committee to assist with the management of credit risk emanating from ceded reinsurance and program administrators. • Subsidiary Boards of Directors .
Members of the committee include the CEO, key members of Everspan management and other senior managers or advisors of Octave. Additionally, a Reinsurance and Program Administrator Credit Risk sub-committee was established at the direction of the Underwriting Risk Committee to assist with the management of credit risk emanating from ceded reinsurance and program administrators. • Subsidiary Boards of Directors .
The Governance and Nominating Committee also performs oversight of the business ethics and compliance program, and reviews compliance with Ambac’s Code of Business Conduct. • The Strategy Committee oversees the management of strategic plans and initiatives. The Board of Directors receives quarterly updates from Board committees and the Board provides guidance to individual committee activities, as appropriate.
The Governance and Nominating Committee also performs oversight of the business ethics and compliance program and reviews compliance with Octave’s Code of Business Conduct. • The Strategy Committee oversees the management of strategic plans and initiatives. The Board of Directors receives quarterly updates from Board committees and the Board provides guidance to individual committee activities, as appropriate.
The key contractual provisions include, but are not limited to, those relating to the scope of business reinsured, ceding commissions, required reports to reinsurers, dispute resolution, any required collateral, and Everspan's termination rights when, among other triggers, a reinsurer defaults (such as by failing to collateralize its obligations when required) or its financial strength falls below an agreed level.
The key contractual provisions include, but are not limited to, those relating to the scope of business reinsured, ceding commissions, required reports to reinsurers, dispute resolution, any required collateral, and Everspan's termination rights in circumstances where, among other triggers, a reinsurer defaults (such as by failing to collateralize its obligations when required) or its financial strength falls below an agreed level.
Additionally, the Governance and Nominating Committee oversees the processes for evaluation of the performance of the Board of Directors and its committees each year and considers risk management effectiveness as part of its evaluation. This committee also reviews succession plans for Ambac's executive officers, including the Chief Executive Officer.
Additionally, the Governance and Nominating Committee oversees the processes for evaluation of the performance of the Board of Directors and its committees each year and considers risk management effectiveness as part of its evaluation. This committee also reviews succession plans for Octave's executive officers, including the Chief Executive Officer.
The Insurance Distribution businesses, like other MGA/Us, program administrators and brokers, may be subject to licensing requirements and regulation by insurance regulators in various states and other applicable regulatory jurisdictions in which they conduct business.
The ID businesses, like other MGA/Us, program administrators and brokers, may be subject to licensing requirements and regulation by insurance regulators in various states and other applicable regulatory jurisdictions in which they conduct business.
Regulation of Change in Control Under applicable insurance law, any acquisition of control of AFG, or any other direct or indirect acquisition of control of its insurance carrier subsidiaries, requires the prior approval (or non-disapproval) of the domiciliary regulator of the acquired company (or, in the case of AFG, the domiciliary regulators of its insurance carrier subsidiaries).
Regulation of Change in Control Under applicable insurance law, any acquisition of control of OSG, or any other direct or indirect acquisition of control of its insurance carrier subsidiaries, requires the prior approval (or non-disapproval) of the domiciliary regulator of the acquired company (or, in the case of OSG, the domiciliary regulators of its insurance carrier subsidiaries).
Members of the Disclosure Committee include the CEO, CFO, Chief Accounting Officer, General Counsel, Chief Operating Officer, Head of Risk Management and senior managers from finance and legal. • The Everspan Underwriting Risk Committee's objective is to provide oversight of the active underwriting operations of Everspan, develop underwriting parameters, and assist the Boards of the Everspan companies in overseeing the integrity and effectiveness of Everspan’s underwriting risk management framework.
Members of the Disclosure Committee include the CEO, CFO, Chief Accounting Officer, General Counsel, Group Chief Operating Officer, who is also the Head of Risk Management, and senior managers from finance and legal. • The Everspan Underwriting Risk Committee's objective is to provide oversight of the active underwriting operations of Everspan, develop underwriting parameters, and assist the Boards of the Everspan companies in overseeing the integrity and effectiveness of Everspan’s underwriting risk management framework.
For purposes of this test, AFG believes that a holder of common stock having the right to cast 10% or more of the votes which may be cast by the holders of all shares of common stock of AFG would be presumably deemed to have control of AFG's insurance carrier subsidiaries within the meaning of applicable insurance laws and regulations, although insurance regulators may in their discretion deem control not to exist where, for example, control is disclaimed by a passive investor.
For purposes of this test, OSG believes that a holder of common stock having the right to cast 10% or more of the votes which may be cast by the holders of all shares of common stock of OSG would be presumably deemed to have control of OSG's insurance carrier subsidiaries within the meaning of applicable insurance laws and regulations, although insurance regulators may in their discretion deem control not to exist where, for example, control is disclaimed by a passive investor.
This flexibility lends itself to providing solutions for unique risks, which has driven meaningful growth within the E&S market over the last decade, exceeding the growth rate of the Admitted market.
This flexibility lends itself to the provision of solutions for unique risks, which has driven meaningful growth within the E&S market over the last decade, exceeding the growth rate of the Admitted market.
Insurance underwritten through Ambac's MGA/Us may utilize Everspan as an insurance carrier, but are not required to do so, depending on strategic and operational considerations.
Insurance underwritten through Octave's MGA/Us may utilize Everspan as an insurance carrier, but are not required to do so, depending on strategic and operational considerations.
In addition, the quality of distribution relationships helps in allowing our MGA/Us access to higher quality risks from the wholesale and retail agents which we believe over time will help produce better underwriting results. Competition: The MGA/U insurance sector is highly fragmented and competitive, and firms actively compete with Cirrata's businesses for customers and insurance carrier capacity.
In addition, the quality of distribution relationships helps provide our MGA/Us with access to higher quality risks from the wholesale and retail agents which we believe over time will help produce better underwriting results. Competition: The MGA/U insurance sector is highly fragmented and competitive, and firms actively compete with Octave's businesses for customers and insurance carrier capacity.
We believe this provides a competitive advantage to the more traditional competitors in the market. • Aligned Ownership — Everspan has a stable ownership structure which is equally focused on long-term value creation based on strong underwriting performance. This alignment of interest and strategic vision allows Everspan to leverage resources across Ambac and access capital for future initiatives.
We believe this provides a competitive advantage over the more traditional competitors in the market. • Aligned Ownership — Everspan has a stable ownership structure which is focused on long-term value creation based on strong underwriting performance. This alignment of interest and strategic vision allows Everspan to leverage resources across Octave and access capital for future initiatives.
Expenses at Cirrata include commissions the businesses pay to their independent agents/producers, compensation for their management and staff, general overhead and intangible asset amortization from acquisitions. Commission expenses are a variable cost as we pay a percentage of premiums written to the agents/producers.
Expenses at the ID companies include commissions the businesses pay to their independent agents/producers, compensation for their management and staff, general overhead and intangible asset amortization from acquisitions. Commission expenses are a variable cost as we pay a percentage of premiums written to the agents/producers.
INSURANCE REGULATORY MATTERS AND OTHER RESTRICTIONS Regulatory Matters Everspan Indemnity and its wholly owned subsidiary, Everspan Insurance Company ("Everspan Insurance") are domiciled in the state of Arizona and are therefore subject to the insurance laws and regulations of the State of Arizona and regulated by the Arizona Department of Insurance and Financial Institutions as domestic insurers.
INSURANCE REGULATORY MATTERS AND OTHER RESTRICTIONS Regulatory Matters Everspan Indemnity and its wholly owned subsidiary, Everspan Insurance Company ("Everspan Insurance"), and Everspan Insurance's wholly owned subsidiary, Consolidated Specialty Insurance Company are domiciled in the state of Arizona and are therefore subject to the insurance laws and regulations of the State of Arizona and regulated by the Arizona Department of Insurance and Financial Institutions as domestic insurers.
This will be achieved through acquisitions, strategic investments, establishing new businesses “de-novo,” and organic growth and diversification 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 program administrators.
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.
The targeted use of long-term equity incentive plan awards for key talent is an important element of Ambac’s long-term retention strategy.
The targeted use of long-term equity incentive plan awards for key talent is an important element of Octave’s long-term retention strategy.
Beat specializes in incubating de-novo MGA/ Us by partnering with leading underwriting teams and providing such teams with funding, infrastructure and risk capital through access to two managed Lloyd's syndicates.
Octave Ventures specializes in incubating de-novo MGA/Us by partnering with leading underwriting teams and providing such teams with funding, infrastructure and risk capital through access to two managed Lloyd's syndicates.
Competitive Strengths: • Strategic operator — Ambac is a strategic operator with MGA/Us and Programs at the center of our business.
Competitive Strengths: • Strategic operator — Octave is a strategic operator with MGA/Us and Programs at the center of our business.
Ambac’s succession planning has identified internal candidates that could fill executive management and senior management positions as the need arises. The Company continues to rely on compensation components (such as salary, long-term incentive plan awards, deferred cash awards and short-term incentive plan awards) to support employee retention and discourage excessive risk taking.
Octave’s succession planning has identified internal candidates that could fill executive management and senior management positions as the need arises. The Company continues to rely on compensation components (such as salary, long-term equity and cash incentive plans, and short-term incentive plan awards) to support employee retention and discourage excessive risk taking.
This underwriting focus also aides in achieving and maintaining support from reinsurance partners. • Risk Appetite — Everspan may retain up to 30% of the risk it underwrites.
This underwriting focus also aids in achieving and maintaining support from reinsurance partners. • Risk Appetite — Everspan generally may retain up to 30% of the risk it underwrites.
Beat and its UK domiciled entities are subject to the UK Companies Act 2006 as well as to insurance laws and regulations of the UK and other jurisdictions in which they operate.
Octave Ventures and its UK domiciled entities are subject to the UK Companies Act 2006 as well as to insurance laws and regulations of the UK and other jurisdictions in which they operate.
Additionally, some of the Beat subsidiaries, while not regulated entities, must act in line with the regulations of the Financial Conduct Authority and Prudential Regulation Authority as appointed representatives of regulated entities.
Additionally, some of the Octave Ventures subsidiaries, while not regulated entities, must act in line with the regulations of the Financial Conduct Authority and Prudential Regulation Authority as appointed representatives of regulated entities.
In addition to existing MGA/Us and acquisitions, de-novo MGA/U formations primarily through Beat, will be a core element of the Insurance Distribution segment's growth strategy. Cirrata's businesses are compensated for their services primarily by commissions paid by insurance carriers for underwriting, structuring and/or administering polices and, in some cases for managing claims under agency agreements.
In addition to existing MGA/Us and acquisitions, de-novo MGA/U formations, primarily through Octave Ventures, will be a core element of the ID segment's growth strategy. ID's businesses are compensated for their services primarily by commissions paid by insurance carriers for underwriting, structuring and/or administering polices and, in some cases for managing claims under agency agreements.
This allows for the MGA/U principals the confidence and freedom to focus building their business without distraction of either subsequent ownership change or de-emphasis of the sector. • Partnership model — Our partnership based model is built around having MGA/U principals maintain ownership or direct economic alignment to the performance of their respective business.
This provides MGA/U principals the confidence and freedom to focus on building their businesses without the distraction of either subsequent ownership change or de-emphasis of the sector. • Partnership model — Our partnership-based model is built around having MGA/U principals maintain ownership or direct economic alignment with the performance of their respective business.
Each of Ambac's subsidiaries has an Ambac management-led Board charged with overseeing the strategy, performance and operations of such subsidiary. These subsidiaries include Everspan as well as each of our MGA/Us. Many of these Boards are led by Executive Management of AFG and, in other instances, senior management from throughout the organization.
Each of Octave's subsidiaries has an Octave management-led Board charged with overseeing the strategy, performance and operations of such subsidiary. These subsidiaries include Everspan as well as each of our MGA/Us. Many of these Boards are led by Executive Management of OSG and, in other instances, senior management from throughout the organization.
At times is will be necessary to exit or discontinue certain programs when then risk profile or performance no longer meet our underwriting expectations or tolerances.
At times, it will be necessary to exit or discontinue certain programs when the risk profile or performance no longer meet our underwriting expectations or tolerances.
Everspan carriers have an A.M. Best rating of 'A-' (Excellent) which was affirmed on June 13, 2024. The Company reports these two business operations as segments; see Note 3. Segment Information for further information.
Everspan carriers have an A.M. Best rating of 'A-' (Excellent) which was affirmed on July 17, 2025. The Company reports these two business operations as segments; see Note 3. Segment Information for further information.
Ambac plans to grow its existing Insurance Distribution business using several strategies, including (i) organic growth, (ii) acquisitions and/or partnerships, and (iii) hiring experienced underwriting teams to incubate start-up ("de-novo") MGA/Us.
Octave plans to grow its existing ID business using several strategies, including (i) organic growth, (ii) hiring experienced underwriting teams to incubate start-up ("de-novo") MGA/Us, and (iii) select acquisitions and/or partnerships.
In 2023, Conning identified over 800 MGAs in the U.S. market with nearly 350 additional MGAs not counted in that group as their premium production falls below the 5% statutory filing threshold. We believe the growth in the MGA/U and program space is likely to continue as the industry continues its move towards increased specialization.
In 2024, Conning identified over 850 MGAs in the U.S. market with around 250 small MGAs not counted in that group as their premium production falls below the 5% statutory filing threshold. We believe the growth in the MGA/U and program space is likely to continue as the industry continues its move towards increased specialization.
(2) Other investments consist of equity interests in development stage insurance MGA's and pooled investment funds. Refer to Note 6. Investments of the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for further information about Other investments.
(2) Other investments consist of equity interests in development stage insurance MGA's and a limited partnership interest in a private equity fund. Refer to Note 6. Investments of the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K for further information about Other investments.
Beat's 15 majority-owned MGA/Us (Beat typically owns between 60% and 80% of each MGA/U) offer alternative risk binders, global direct and facultative property, directors and officers, credit, professional errors and omissions, energy, environmental and accident and health.
Octave Ventures's 15 majority-owned MGA/Us (Octave Ventures typically owns between 60% and 80% of each MGA/U) offer alternative risk binders, as well as global direct and facultative property, directors and officers, credit, professional errors and omissions, energy, environmental and accident and health coverage.
We believe this direct economic Ambac Financial Group, Inc. 6 2024 Form 10-K Table of Contents , connection is valuable in attracting both producing top-tier underwriting and attracting top underwriting talent who share an entrepreneurial mindset. • Aligned & managed capacity — By maintaining direct access to rated and licensed insurance capacity our Insurance Distribution can accelerate the time to launch new MGA/Us. • Shared services platform — One of the challenges new MGA/Us face while scaling their business is managing the increasing administrative burden.
We believe this direct economic connection is valuable in both producing top-tier underwriting and attracting top underwriting talent who share an entrepreneurial mindset. • Aligned & managed capacity — By maintaining direct access to rated and licensed insurance capacity our ID segment can accelerate the time to launch new MGA/Us. • Shared services platform — One of the challenges new MGA/Us face while scaling their business is managing the increasing administrative burden.
Our main competitors in this segment include other MGA/U aggregators (such as Amynta), wholesale brokers (such as Ryan Specialty) and insurance carriers that choose to write insurance without the assistance of MGA/Us. Given our competitive strengths we believe that we can compete effectively in this sector of the market.
Our main competitors in this segment include other MGA/U aggregators (such as Amynta), wholesale brokers (such as Ryan Specialty) and insurance carriers that choose to write insurance without the assistance of MGA/Us. Given our competitive strengths, we believe that we can compete effectively in this sector of the market. P&C Industry Overview We operate within the estimated $1 trillion U.S.
In order to assist the Board of Directors in overseeing Ambac’s risk management, Ambac uses enterprise risk management, a Ambac Financial Group, Inc. 7 2024 Form 10-K Table of Contents , company-wide process that involves the Board of Directors, management and other personnel in an integrated effort to identify, assess and manage a broad range of risks (e.g., credit, financial, legal, liquidity, market, model, operational, regulatory, reputational and strategic) that may affect the Company’s ability to execute on its corporate strategies and fulfill its business objectives.
In order to assist the Board of Directors in overseeing Octave’s risk management, Octave uses enterprise risk management, a company-wide process that involves the Board of Directors, management and other personnel in an integrated effort to identify, assess and manage a broad range of risks (e.g., credit, financial, legal, liquidity, market, model, fraud, operational, regulatory, reputational and strategic) that may affect the Company’s ability to execute on its corporate strategies and fulfill its business objectives.
Ambac continuously evaluates, and is currently evaluating, opportunities to acquire businesses and assets for its Insurance Distribution business, some of which may be material to our financial condition and operations and/or may involve raising capital to finance the acquisition. Key criteria for acquisitions and underwriting teams include a track record of profitability and a seasoned management team.
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. Key criteria for acquisitions and underwriting teams include a track record of profitability and a seasoned management team.
Our Insurance Distribution offers a range of shared services across IT, HR, and Finance which both provide economies of scale for these functions and allow for the principals to focus their efforts on building the franchise. • Deep specialty domain knowledge — Our Insurance Distribution businesses are anchored by a deep specialty domain knowledge in their respective classes of business.
Our ID platform offers a range of shared services across IT, HR, and Finance which both provides economies of scale for these functions and allows for the principals to focus their efforts on building their franchises. • Deep specialty domain knowledge — Our ID businesses are anchored by a deep specialty domain knowledge in their respective classes of business.
As of December 31, 2024, AFG (parent company only, excluding investments in subsidiaries) investment portfolio had an aggregate carrying value of approximately $92,556 thousand, including $64,439 thousand of short-term investments carried at fair value. The primary investment objective is to preserve capital for strategic uses while maximizing income. The investment portfolio is subject to internal investment guidelines.
As of December 31, 2025, OSG's (parent company only, excluding investments in subsidiaries) investment portfolio had an aggregate carrying value of approximately $64,468, including $39,344 of short-term investments carried at fair value. The primary investment objective is to preserve capital for strategic uses while maximizing income. The investment portfolio is subject to internal investment guidelines.
Insurance Distribution generated gross commission revenue and net commission revenue (commissions less commission expenses) during the years ended December 31, 2024 and 2023 as shown below.
ID generated gross commission revenue and net commission revenue (commissions less commission expenses) during the years ended December 31, 2025 and 2024 as shown below.
ENTERPRISE RISK MANAGEMENT The Company's policies and procedures relating to risk assessment and risk management are overseen by its Board of Directors. The Board of Directors takes an enterprise-wide approach to risk management oversight that is designed to support the Company's business plans at a level of risk considered by the Board to be reasonable.
The Board of Directors takes an enterprise-wide approach to risk management oversight that is designed to support the Company's business plans at a level of risk considered by the Board to be reasonable.
EMPLOYEES As of December 31, 2024, Ambac had 195 employees in the United States and 185 employees within the United Kingdom and Bermuda. Our 2024 voluntary turnover rate was approximately 6.5%. Ambac considers its employee relations to be satisfactory. Ambac’s focus has been on identifying and retaining key talent through individual development programs following skills assessments.
EMPLOYEES As of December 31, 2025, Octave had 275 employees in the United States and Bermuda and 208 employees within the United Kingdom. Our 2025 voluntary turnover rate was approximately 17%. Octave considers its employee relations to be satisfactory. Octave’s focus has been on identifying and retaining key talent through individual development programs following skills assessments.
Commission revenues experience seasonality during the year which can lead to concentrations of revenues and earning in certain quarters, including the first quarter of each year. Given recent acquisitions and potential de-novo launches, this seasonality may become more muted over time.
Commission revenues experience seasonality during the year which can lead to concentrations of revenues and earnings in certain quarters, including the first and fourth quarters of each year. Given recent acquisitions and potential de-novo launches, seasonality patterns may change over time.
Ambac Financial Group, Inc. 3 2024 Form 10-K Table of Contents , Everspan mitigates this credit risk by selecting well capitalized, highly rated, authorized capacity providers, or requiring that the capacity provider post collateral, typically in the form of letters of credit issued by or trust accounts in the custody of NAIC-qualified financial institutions, to secure the reinsured risks.
Everspan mitigates this credit risk by selecting well- capitalized, highly rated, authorized capacity providers, or requiring that the capacity provider post collateral, typically in the form of letters of credit issued by or trust accounts in the custody of National Association of Insurance Commissioners ("NAIC") qualified financial institutions, to secure the reinsured risks.
($ in thousands) December 31, 2024 2023 Gross commissions $ 143,305 $ 51,282 Net Commissions 51,147 21,816 Commission revenue and expense growth will be driven by the businesses' continued expansion and diversification of its products across regions, products, distribution partners and carriers.
($ in thousands) December 31, 2025 2024 Gross commissions $ 143,381 $ 92,023 Net Commissions 106,344 51,147 Commission revenue and expense growth will be driven by the businesses' continued expansion and diversification of its products across regions, product, distribution partners and carriers.
In the E&S market, there is increased flexibility in pricing, terms and conditions in response to evolving market dynamics, and E&S carriers can tailor insurance products to facilitate coverage that would not otherwise be attainable.
In the E&S market, there is increased flexibility in pricing, terms and conditions in response to evolving market dynamics, and Octave Specialty Group, Inc. 4 2025 Form 10-K Table of Contents , E&S carriers can tailor insurance products to facilitate coverage that would not otherwise be attainable.
Such guidelines set forth minimum credit rating requirements and credit risk concentration limits. As of December 31, 2024, the Insurance Distribution investment portfolio had an aggregate fair value of approximately $27,611 thousand, primarily consisting of money market funds.
Such guidelines set forth minimum credit rating requirements and credit risk concentration limits. As of December 31, 2025, the ID investment portfolio had an aggregate carrying value of approximately $35,812, primarily consisting of money market funds.
For the year ended December 31, 2024, Everspan generated $382,771 thousand of gross written premium, of which Everspan retained approximately 23.2%, including assumed written premiums. Everspan retained approximately 12.0% of its direct written premiums, with the balance primarily ceded to quota share reinsurers.
For the year ended December 31, 2025, Everspan generated $360,449 of gross written premium, of which Everspan retained approximately 20.5%, including assumed written premiums. Everspan retained approximately 12.9% of its direct written premiums, with the balance primarily ceded to quota share reinsurers.
The subsidiaries of Everspan Insurance are domiciled in various States and are therefore subject to the insurance laws and regulations of their respective domiciliary States and regulated by the insurance departments of those States as domestic insurers.
Everspan Insurance's remaining subsidiaries, Greenwood Insurance Company and Providence Washington Insurance Company, are domiciled in the state of Pennsylvania and the state of Rhode Island, respectively, and are therefore subject to the insurance laws and regulations of their respective domiciliary States and regulated by the insurance departments of those States as domestic insurers.
It also approves the Company's risk appetite statements, which articulate the Company's tolerance for certain risks and describes the general types of risk that the Company accepts, within certain parameters, or attempts to avoid.
It also approves the Company's risk appetite statements, which articulate the Company's tolerance for certain risks and describe the general types of risk that the Octave Specialty Group, Inc. 7 2025 Form 10-K Table of Contents , Company accepts, within certain parameters, or attempts to avoid.
Ambac Financial Group, Inc. 9 2024 Form 10-K Table of Contents , The following table provide certain information concerning the consolidated investments of Ambac: 2024 2023 Investment Category ($ in thousands) December 31, Carrying Value Weighted Average Yield (1) Carrying Value Weighted Average Yield (1) Corporate securities $ 89,192 3.3 % $ 87,991 3.3 % U.S. government obligations 40,995 3.3 % 38,522 2.8 % Municipal obligations 14,083 3.1 % 8,711 2.0 % Asset-backed securities 8,203 4.9 % — — % Residential mortgage-backed securities 2,446 5.0 % — — % Commercial mortgage-backed securities 2,101 5.8 % — — % Short-term investments 127,601 3.7 % 200,510 5.3 % Total fixed maturity-available-for-sale 284,621 3.5 % 335,734 4.4 % Other investments (2) 28,294 — % 18,317 — % Total $ 312,915 3.5 % $ 354,051 4.4 % (1) Yields are stated on a pre-tax basis, based on average amortized cost for both long and short term fixed-maturity investments.
The following table provide certain information concerning the consolidated investments of Octave: 2025 2024 Investment Category ($ in thousands) December 31, Carrying Value Weighted Average Yield (1) Carrying Value Weighted Average Yield (1) Corporate securities $ 66,573 3.4 % $ 89,192 3.3 % U.S. government obligations 35,424 3.6 % 40,995 3.3 % Municipal obligations 11,590 3.0 % 14,083 3.1 % Asset-backed securities 3,770 4.5 % 8,203 4.9 % Residential mortgage-backed securities 1,597 5.1 % 2,446 5.0 % Commercial mortgage-backed securities 3,341 5.3 % 2,101 5.8 % Short-term investments 146,442 2.8 % 127,601 3.7 % Total fixed maturity-available-for-sale 268,737 3.2 % 284,621 3.5 % Other investments (2) 24,971 — % 28,294 — % Total $ 293,708 2.9 % $ 312,915 3.5 % (1) Yields are stated on a pre-tax basis, based on average amortized cost for both long and short term fixed-maturity investments.
At December 31, 2024, Ambac's insurance distribution platform operates in the following lines of business: accident & health, specialty auto, other professional, marine & energy, niche specialty risks, property, reinsurance, professional director's & officers ("D&O") and other specialty lines. • Specialty Property & Casualty Insurance — Ambac's Specialty Property & Casualty Insurance program business currently includes five carriers (collectively, “Everspan”).
Octave's insurance distribution platform operates in the following lines of business: property, niche specialty risk, accident & health, miscellaneous specialty, reinsurance, surety, marine & energy, specialty auto, E&S commercial package, professional lines and Directors & Officers ("D&O"). • Specialty Property & Casualty Insurance — Octave's Specialty Property & Casualty Insurance program insurer business currently includes five carriers (collectively, “Everspan”).
In Ambac Financial Group, Inc. 4 2024 Form 10-K Table of Contents , 2024 approximately 190 submissions were evaluated and we agreed to contract 8 new programs including seven new MGA/Us and one MGA/U with an existing relationship, while renewing or extending eighteen programs with seventeen incumbent MGA/Us. Included in 2024 renewed programs is one executed via assumed reinsurance.
In 2025, approximately 106 submissions were evaluated and we agreed to contract 4 new programs including two new MGA/Us and two MGA/Us with an existing relationship, while renewing or extending twenty-one programs with seventeen incumbent MGA/Us. Included in 2025 renewed programs is one executed via assumed reinsurance.
Refer to Note 5. Discontinued Operation to the Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for further information about the sale of AAC.
Refer to Sale of Ambac Assurance Corporation in 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.
Item 1. Business INTRODUCTION Ambac Financial Group, Inc. ("AFG"), headquartered in New York City, is a financial services holding company incorporated in the State of Delaware on April 29, 1991. References to “Ambac,” the “Company,” “we,” “our,” and “us” are to AFG and its subsidiaries, as the context requires.
Item 1. Business INTRODUCTION Octave Specialty Group, Inc. ("OSG"), headquartered in New York City, is a financial services holding company incorporated in the State of Delaware on April 29, 1991 and was formerly known as Ambac Financial Group, Inc. ("AFG").
Ambac operates two principal businesses: • Insurance Distribution — Ambac's specialty property and casualty ("P&C") insurance distribution business includes Managing General Agents, Underwriters and other appointed and delegated underwriting businesses (collectively "MGAs" or "MGA/Us"), an insurance broker, and other distribution and underwriting businesses. Insurance Distribution includes Beat Capital Partners Limited, which was acquired on July 31, 2024.
Octave operates two principal businesses: • Insurance Distribution — Octave's specialty property and casualty ("P&C") insurance underwriting and distribution business, includes Managing General Agents and Underwriters (collectively "MGAs" or "MGA/Us"); an insurance broker; and other distribution, underwriting and related businesses.
We look for program partners that share our vision of underwriting performance and return expectations and consequently are selective about with whom we partner. As of December 31, 2024, we have 27 programs with 24 MGA/Us.
Business Acquisition and Program Partner Selection: With our focus on generating long-term underwriting profitability, we are selective in adding new program partners. We look for program partners that share our vision of underwriting performance and return expectations and consequently are selective with whom we partner with. As of December 31, 2025, we have 25 programs with 21 MGA/Us.
AFG, on a standalone basis, had $119 million in net assets (excluding its investment in subsidiaries) and net operating loss carry-forwards of $3.6 billion ($2.0 billion of which is allocated to AAC and will transfer with AAC in connection with its sale) at December 31, 2024. See Schedule II for more information on the holding company.
OSG, on a standalone basis, had $76 million in net assets (excluding its investment in subsidiaries) and net operating loss carry-forwards of $1.7 billion at December 31, 2025. See Schedule II for more information on the holding company.
Dividend Restrictions, Including Contractual Restrictions Everspan Companies: Everspan Indemnity, Everspan Insurance and its subsidiaries are subject to regulatory restrictions on their ability to pay dividends, and do not have sufficient earned surplus at this time to pay ordinary dividends under the insurance laws and regulations of their respective States of domicile.
Certain subsidiaries do not have sufficient earned surplus at this time to pay ordinary dividends under the insurance laws and regulations of their respective states of domicile. Currently, the only Everspan Insurance subsidiaries that have sufficient earned surplus to pay dividends are Greenwood Insurance Company and Providence Washington Insurance Company.
The following table sets forth gross written premiums (direct and assumed) by line of business for the years ended December 31, 2024 and 2023: ($ in thousands) Year Ended December 31, 2024 2023 Excess liability $ 95,827 $ 40,549 Commercial auto liability 78,238 121,946 General liability 77,767 27,143 Surety 34,794 26,267 Workers Compensation 28,294 19,512 Non-standard personal auto 20,186 20,080 Commercial auto physical damage 1,480 12,057 Other 46,185 5,733 Gross written premiums $ 382,771 $ 273,287 Everspan purchases reinsurance to manage its net retention on individual risks and overall exposure to losses, while providing it with the ability to offer policies with sufficient limits to meet producer and policyholder needs.
The following table sets forth gross written premiums (direct and assumed) by line of business for the years ended December 31, 2025 and 2024: ($ in thousands) Year Ended December 31, 2025 2024 Excess liability $ 123,727 $ 95,827 Commercial auto liability 64,404 78,238 Multi-Peril / Business Owners (BOP) 41,290 1,680 Professional Lines 35,888 41,534 General liability 30,196 77,767 Surety 29,875 34,794 Workers Compensation 28,057 28,294 Commercial auto physical damage 908 1,480 Non-standard auto 21 20,186 Other 6,082 2,970 Gross written premiums $ 360,449 $ 382,770 Everspan purchases reinsurance to manage its net retention on individual risks and overall exposure to losses, while providing Everspan with the ability to offer policies with sufficient limits Octave Specialty Group, Inc. 5 2025 Form 10-K Table of Contents , to meet producer and policyholder needs.
Securities and Exchange Commission. Our Investor Relations Department can be contacted at Ambac Financial Group, Inc., One World Trade Center, 41st Floor, New York, New York 10007, Attn: Investor Relations; telephone: 212-208-3222; email: ir@ambac.com.
Securities and Exchange Commission. Our Investor Relations Department can be contacted at Octave Specialty Group, Inc., 40 Wall Street, 55th Floor, New York, New York 10005, Attn: Investor Relations; telephone: 212-208-3277; email: ir@octavegroup.com.
Riverton offers professional liability insurance programs to licensed architects, engineers, construction managers and real estate professionals. Riverton's retail agency places professional liability for real estate agents with various markets. Beat Capital Partners Limited ("Beat") — Effective July 31, 2024, Ambac acquired approximately 60% controlling interest in Beat, a London-based insurance underwriting and MGA/U platform.
("Riverton") — Effective August 1, 2023, Octave acquired an 80% controlling interest in Riverton. Riverton offers professional liability insurance programs to licensed architects, engineers, construction managers and real estate professionals. Riverton's retail agency places professional liability for real estate agents with various markets.
DESCRIPTION OF THE BUSINESS P&C Industry Overview We operate within the $968 billion U.S. P&C insurance market with a particular focus on the commercial MGA/U program market both on an Admitted and Excess & Surplus Lines ("E&S") basis.
P&C insurance market with a particular focus on the commercial MGA/U program market, both on an Admitted and Excess & Surplus Lines ("E&S") basis. Admitted and E&S Insurance Insurance carriers sell commercial P&C products in the United States through one of two markets: the Admitted market or the E&S market.
All Trans is a full service managing general underwriter with delegated underwriting authority in commercial automobile insurance for specific "for-hire" auto classes; principally private school bus operators. In 2024, All Trans launched a new program primarily focussed on charter buses.
All Trans Risk Solutions, LLC ("All Trans") — Effective November 1, 2022, Octave acquired an 85% controlling interest in All Trans. All Trans is a full-service managing general underwriter with delegated underwriting authority in commercial automobile insurance for specific "for-hire" auto classes; principally private school bus operators.
Capacity Marine is a wholesale and retail brokerage and reinsurance intermediary specializing in more sophisticated marine and international risk in expsoures such as ports, terminals, and stevedores. Riverton Insurance Agency, Corp. ("Riverton") — Effective August 1, 2023, Ambac acquired an 80% controlling interest in Riverton.
Capacity Marine is a wholesale and retail brokerage and reinsurance intermediary specializing in more sophisticated marine and international risk expsoures such as ports, terminals, and stevedores. Under the terms of applicable agreements, the redeemable minority interest of 20% can be exercised beginning November 1, 2027. Riverton Insurance Agency, Corp.
Admitted and E&S Insurance Insurance carriers sell commercial P&C products in the United States through one of two markets: the Admitted market and the E&S market. The Admitted insurance market, which has highly regulated rates and policy forms, is more consistent in price and coverage.
The Admitted insurance market, which has highly regulated rates and policy forms, is more consistent in price and coverage.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe price of the shares may decline substantially in response to a number of events or circumstances, including but not limited to: • adverse developments in our financial condition or results of operations; • changes in the actual or perceived risk within our insured portfolio; • changes to regulatory status; • changes in investors’ or analysts’ valuation measures for our stock; • adverse changes in analysts’ recommendations regarding our stock; • market perceptions of our success, or lack thereof, in pursuing and implementing our Specialty Property and Casualty Insurance and Insurance Distribution businesses and our new business strategy more generally; • the impact or perceived impact of any acquisition, dispositions or other strategic transactions, including entry into a new line of business, on the value or long-term prospects of the Company; • failure to receive regulatory approval for the sale of our Legacy Financial Guarantee ("LFG") business, or failure to complete the sale of our LFG business for any other reason; • adverse developments in the industries and markets in which we operate, including the property and casualty insurance, underwriting and brokerage industries, or the fixed income and equity capital markets; • adverse market and/or economic conditions, such as those caused by a recession or inflation, which increase our risk of loss on insurance policies and depress the value and/or liquidity of our investments and other assets; • adverse developments in current or future litigations; and • results and actions of other participants in our industries.
Biggest changeThe price of the shares may decline substantially in response to a number of events or circumstances, including but not limited to: • adverse developments in our financial condition or results of operations; • changes to regulatory status; • changes in investors’ or analysts’ valuation measures for our stock; • adverse changes in analysts’ recommendations regarding our stock; • market perceptions of our success, or lack thereof, in building and managing our Specialty Property and Casualty Insurance and ID businesses and our business strategy and tactics more generally; • perceptions regarding management guidance or forecast and changes to such guidance or forecasts; • the impact or perceived impact of any acquisition, disposition or other strategic transaction, including entry into a new line of business or the value or long-term prospects of the Company; • adverse developments in the industries and markets in which we operate, including the property and casualty insurance, underwriting and brokerage industries, or the fixed income and equity capital markets; • adverse market and/or economic conditions, such as those caused by a recession or inflation, which increase our risk of loss on insurance policies and depress the value and/or liquidity of our investments and other assets; • adverse developments in current or future litigation; and • results and actions of other participants in our industries.
Quarterly and annual fluctuations in revenues based upon increases and decreases associated with the timing of new business, policy renewals and payments from insurance companies may adversely affect our financial condition, results of operations and cash flows. Variations in contingent commissions that results from the effects of insurance loss activity on portfolios may result in significant variations in revenues.
Quarterly and annual fluctuations in revenues based upon increases and decreases associated with the timing of new business, policy renewals and payments from insurance companies may adversely affect our financial condition, results of operations and cash flows. Variations in contingent commissions that result from the effects of insurance loss activity on portfolios may result in significant variations in revenues.
In addition to these officers, we rely on key staff with insurance, underwriting, business development, credit, risk management, structured finance, investment, accounting, finance, legal, technology and other technical and specialized skills. The market for qualified executives, senior managers and other employees has become very competitive.
In addition to these officers, we rely on key staff with insurance, underwriting, business development, credit, risk management, investment, accounting, finance, legal, technology and other technical and specialized skills. The market for qualified executives, senior managers and other employees has become very competitive.
As a result of inherent uncertainties in the estimates and judgments made to determine loss reserves, there can be no assurance that either actual losses will not exceed such reserves or that our reserves will not materially change over time as circumstances, events, our assumptions, or our models change.
As a result of inherent uncertainties in the estimates and judgments made to determine loss reserves, there can be no assurance that actual losses will not exceed such reserves or that our reserves will not materially change over time as circumstances, events, our assumptions, or our models change.
These policies and practices in the past have not insulated us from risks that were unforeseen and which had unanticipated loss severity, and such policies and practices may not do so in the future. There can be no assurance that these policies and practices will be adequate to avoid future losses.
These policies and practices in the past have not insulated us from risks that were unforeseen and/or which had unanticipated loss severity, and such policies and practices may not do so in the future. There can be no assurance that these policies and practices will be adequate to avoid future losses.
To implement our growth strategy, we must be able to meet our capital needs, expand our systems and our internal controls effectively, allocate our human resources optimally, identify and hire qualified employees and effectively integrate any acquisitions we make in our effort to achieve growth.
To implement our growth strategy, we must be able to meet our capital needs, expand and refine our systems and our internal controls effectively, allocate our human resources optimally, identify and hire qualified employees and effectively integrate any acquisitions we make in our effort to achieve growth.
Variations in commission income that results from the timing of policy renewals and the net effect of new and lost business production may have unexpected effects on our results of operations. Commission income can vary quarterly or annually due to the timing of policy renewals and the net effect of new and lost business production.
Variations in commission income that result from the timing of policy renewals and the net effect of new and lost business production may have unexpected effects on our results of operations. Commission income can vary quarterly or annually due to the timing of policy renewals and the net effect of new and lost business production.
If in our Specialty Property and Casualty Insurance business we are unable to accurately underwrite risks and charge competitive yet profitable rates to our clients and policyholders, our business, financial condition and results of operations may be adversely affected.
If, in our Specialty Property and Casualty Insurance business, we are unable to accurately underwrite risks and charge competitive yet profitable rates to our policyholders, our business, financial condition and results of operations may be adversely affected.
This risk may be exacerbated to the extent that Everspan has financial obligations to its reinsurers under reinsurance agreements that do not absolve Everspan of for credit risk or non-payment by the MGA/U program partner.
This risk may be exacerbated to the extent that Everspan has financial obligations to its reinsurers under reinsurance agreements that do not absolve Everspan of credit risk or non-payment by the MGA/U program partner.
Efforts to pursue certain business opportunities may be unsuccessful or require significant financial or other resources, which could have a negative impact on our growth plans, operating results and financial condition.
Efforts to pursue or develop certain business opportunities may be unsuccessful or require significant financial or other resources, which could have a negative impact on our growth plans, operating results and financial condition.
Also, the failure of an insurer with whom our MGA/Us and insurance brokerage operating subsidiaries place business could result in errors and omissions claims against it by its customers, which could adversely affect Ambac’s results of operations and financial condition. Claimants may seek large damage awards, and these claims may involve potentially significant legal costs and damages.
Also, the failure of an insurer with whom our MGA/Us and insurance brokerage operating subsidiaries place business could result in errors and omissions claims against it by its customers, which could adversely affect Octave’s results of operations and financial condition. Claimants may seek large damage awards, and these claims may involve potentially significant legal costs and damages.
If due to market, economic, technological, cultural, regulatory or other reasons Ambac is not able to fully realize expected synergies or its valuation of such synergies otherwise proves incorrect, we may not realize the full expected value of an acquisition, which in turn may lead to lower than expected profits, material adverse results from operations and/or a weakened financial condition.
If due to market, economic, technological, cultural, regulatory or other reasons Octave is not able to fully realize expected synergies or its valuation of such synergies otherwise proves incorrect, we may not realize the full expected value of an acquisition, which in turn may lead to lower than expected profits, material adverse results from operations and/or a weakened financial condition.
Profit commissions and contingent commissions related to certain of our P&C business lines may also be adversely impacted my catastrophic losses. Individually and/or collectively, these results may have a material adverse impact on our results of operations and financial condition. Further, we use internally developed and third-party vendor tools and models to assess exposure to losses, including catastrophic losses.
Profit commissions and contingent commissions related to certain of our P&C business lines may also be adversely impacted by catastrophic losses. Individually and/or collectively, these results may have a material adverse impact on our results of operations and financial condition. Further, we use internally developed and third-party vendor tools and models to assess exposure to losses, including catastrophic losses.
We could suffer material financial loss, reputational harm and/or a loss of business prospects if a business partner, agent or counterparty engages in negligent or fraudulent conduct, whether directly in our relationship with them or indirectly as a result of their conduct in other business relationships. Ambac may be adversely impacted by P&C industry market cycles.
We could suffer material financial loss, reputational harm and/or a loss of business prospects if a business partner, agent or counterparty engages in negligent or fraudulent conduct, whether directly in our relationship with them or indirectly as a result of their conduct in other business relationships. Octave may be adversely impacted by P&C industry market cycles.
Specialty Property and Casualty Insurance subsidiaries are highly regulated as insurance carriers in the States of their domicile and the jurisdictions in which they are licensed.
Our Specialty Property and Casualty Insurance subsidiaries are highly regulated as insurance carriers in the States of their domicile and the jurisdictions in which they are licensed.
Given that Ambac generates revenue from both insurance premiums and commissions that are based on insurance premiums, our revenues are affected by the cyclicality of the markets in which we operate. If we enter a soft market, absent mitigating factors, we may experience a reduction in revenues and profits.
Given that Octave generates revenue from both insurance premiums and commissions that are based on insurance premiums, our revenues are affected by the cyclicality of the markets in which we operate. If we enter a soft market, absent mitigating factors, we may experience a reduction in revenues and profits.
During periods of intense competition for premium, in particular, our Specialty Property and Casualty Insurance and Insurance Distribution businesses may be challenged to maintain competitiveness with other companies that may seek to write policies without the same regard for risk and profitability targeted by our Specialty Property and Casualty Insurance and Insurance Distribution businesses.
During periods of intense competition for premium, in particular, our Specialty Property and Casualty Insurance and ID businesses may be challenged to maintain competitiveness with other companies that may seek to write policies without the same regard for risk and profitability targeted by our Specialty Property and Casualty Insurance and ID businesses.
Changes in law or in the functioning of the healthcare market could significantly impair our Accident & Health insurance business and therefore negatively impact Ambac’s financial condition and results of operations. Adoption of a single payer healthcare system or a public health insurance option would likely adversely impact the entire healthcare industry.
Changes in law or in the functioning of the healthcare market could significantly impair our Accident & Health insurance business and therefore negatively impact Octave’s financial condition and results of operations. Adoption of a single payer healthcare system or a public health insurance option would likely adversely impact the entire healthcare industry.
Material adverse developments to our Accident & Health insurance business would have a negative impact on Ambac's financial condition and results of operations which could be material. Our Insurance Distribution businesses and their results of operations and financial condition may be adversely affected by conditions that result in reduced insurance capacity.
Material adverse developments to our Accident & Health insurance business would have a negative impact on Octave's financial condition and results of operations which could be material. Our Insurance Distribution businesses and their results of operations and financial condition may be adversely affected by conditions that result in reduced insurance capacity.
Our ability to grow Everspan will depend in part on the addition of new Program Partners, and our ability to effectively onboard such new Program Partners could have an adverse effect on our business, financial condition and results of operations. Our ability to grow Everspan will depend in part on the addition of new MGA/Us.
Our ability to grow Everspan will depend in part on the addition of new Program Partners, and our ability to effectively onboard such new Program Partners could have an adverse effect on our business, financial condition and results of operations. Our ability to grow Everspan will depend in part on the addition of new MGA/U partners.
If we are unable to compete effectively in the markets in which our Specialty Property and Casualty Insurance and Insurance Distribution businesses operate or expand into, our underwriting revenues may decline, as well as overall business results.
If we are unable to compete effectively in the markets in which our Specialty Property and Casualty Insurance and ID businesses operate or expand into, our underwriting revenues may decline, as well as overall business results.
Moreover, the impact of catastrophic events may not be adequately reflected in claims reserves and, accordingly, could adversely impact results. Catastrophic losses are caused by wind and hail, wildfires, tornadoes, hurricanes, tropical storms, earthquakes, severe freeze events, volcanic eruptions, terrorism, cyber attacks, civil unrest, and industrial accidents and other such events.
Moreover, the impact of catastrophic events may not be adequately reflected in claims reserves and, accordingly, could adversely impact results. Catastrophic losses are caused by wind and hail, wildfires, tornadoes, hurricanes, tropical storms, earthquakes, severe freeze events, volcanic eruptions, terrorism, cyber-attacks, civil unrest, and industrial accidents and other such natural and man-made events.
Although AFG's common stock is listed on the New York Stock Exchange ("NYSE"), there can be no assurance as to the liquidity of the trading market or the price at which such shares can be sold.
Although OSG's common stock is listed on the New York Stock Exchange ("NYSE"), there can be no assurance as to the liquidity of the trading market or the price at which such shares can be sold.
Any such outcomes could have a material adverse impact on the value of AFG's shares. A downgrade in the AM Best financial strength rating of Everspan may negatively affect our business. The financial strength of Everspan is evaluated by AM Best, which issues a "FSR", an important factor in establishing the competitive position of Everspan.
Any such outcomes could have a material adverse impact on the value of OSG's shares. A downgrade in the AM Best financial strength rating of Everspan may negatively affect our business. The financial strength of Everspan is evaluated by AM Best, which issues a Financial Strength Rating or "FSR," an important factor in establishing the competitive position of Everspan.
In general, the premiums for our Specialty Property and Casualty Insurance policies are established at the time a policy is issued and, therefore, before all of our underlying costs are known. Like other property and casualty insurance companies, Everspan relies on estimates and assumptions in setting its premium rates.
In general, the premiums for our Specialty Property and Casualty Insurance policies are established at the time a policy is issued and, therefore, before all of our underlying costs are known. Everspan relies on estimates and assumptions in setting its premium rates.
For example, capacity could be reduced by insurance companies failing or withdrawing from writing certain coverages that our Insurance Distribution businesses offer to their customers.
For example, capacity could be reduced by insurance companies failing or withdrawing from writing certain coverages that our ID businesses offer to their customers.
The price of AFG's shares may also be affected by the risks described below. Investments in AFG's common stock may be subject to a high degree of volatility.
The price of OSG's shares may also be affected by the risks described below. Investments in OSG's common stock may be subject to a high degree of volatility.
Should changes in Ambac’s circumstances or financial condition or in the political, economic and/or legal environment occur, there can be no assurance that all or any part of our strategy and/or initiatives will not be abandoned or amended to take account of such changes. Any such adjustment or abandonment may have a material adverse effect on our securities.
Should changes in Octave’s circumstances or financial condition or in the political, economic and/or legal environment occur, there can be no assurance that all or any part of our strategy and/or initiatives will not be abandoned or adjusted to take account of such changes. Any such adjustment or abandonment may have a material adverse effect on our securities.
While restrictive covenants in the Credit Facility may limit the amount of additional indebtedness the Company may incur, we may obtain waivers of those restrictions and incur additional indebtedness in the future.
While restrictive covenants in the Credit Facilities may limit the amount of additional indebtedness the Company may incur, we may obtain waivers of those restrictions and incur additional indebtedness in the future.
Should one or more of these capacity providers terminate its arrangements with our Insurance Distribution businesses or otherwise decrease the amount of capacity provided, we may lose significant commission revenues or lose significant business production while seeking other sources of capacity.
Should one or more of these capacity providers terminate its arrangements with our ID businesses or otherwise decrease the amount of capacity provided, we may lose significant commission revenues or lose significant business production while seeking other sources of capacity.
Ambac is planning to further develop and expand its Specialty Property and Casualty Insurance and Insurance Distribution businesses; however, such plans may not be realized, or if realized, may not create value and may negatively impact our financial results.
Octave is planning to further develop and expand its Specialty Property and Casualty Insurance and Insurance Distribution businesses; however, such plans may not be realized, or if realized, may not create value and may negatively impact our financial results. Octave is planning to further develop and expand its Specialty Property and Casualty Insurance and ID businesses.
Ambac’s assessment of acquisitions often includes an estimate of the value of revenue, expense and operating synergies that may be created from the acquisition.
Octave’s assessment of acquisitions often includes an estimate of the value of revenue, expense and operating synergies that may be created from the acquisition.
Our Insurance Distribution business results of operations depend on the capacity of insurance carriers (including Llyod’s of London), reinsurers and other capital providers to assume risk and provide coverage. Capacity among insurance carriers, reinsurers and other capital providers may diminish because of our performance or due to factors outside our control.
Our ID business results of operations depend on the capacity of insurance carriers (including Lloyd’s of London), reinsurers and other capital providers to assume risk and provide coverage. Capacity among insurance carriers, reinsurers and other capital providers may diminish because of our performance or due to factors outside our control.
We are subject to the risk of litigation and the outcome of proceedings we are or may become involved in could have a material adverse effect on our business, operations, financial position, profitability or cash flows.
We are subject to the risk of litigation and the outcome of proceedings we are or may become involved in could have a material adverse effect on our business, operations, financial position, profitability or cash flows. Please refer to Note 19.
Under some circumstances, the results of such disputes or suits may lead to liabilities beyond those which are anticipated or reserved, including extra-contractual liabilities or liabilities in excess of policy limits. Political developments may materially adversely affect our business.
Under some circumstances, the results of such disputes or suits may lead to liabilities beyond those which are anticipated or reserved, including liabilities in excess of policy limits. Regulatory developments may materially adversely affect our business.
We could realize losses from our cash and investment accounts if one of the financial institutions we use fail or is taken over by regulators We maintain cash and investment accounts, including premium trust accounts, at depository institutions in amounts in excess of the limits insured by the FDIC and in countries other than the U.S.
We could realize losses from our cash and investment accounts if one of the financial institutions we use fail or is taken over by regulators. We maintain cash and investment accounts, including premium trust accounts, at depository institutions in amounts in excess of the limits insured by the FDIC.
Our business depends on contractual and working relationships with insurance distribution partners, insurance carriers, reinsurers, policy holders and beneficiaries, third party administrators, and other agents and counterparties.
Our business depends on contractual and working relationships with insurance distribution partners, insurance carriers, reinsurers, policyholders and beneficiaries, third party administrators, and other agents and counterparties.
The Company will test intangible assets for impairment if certain events occur or circumstances change indicating that the carrying amount of the intangible asset may not be recoverable. Goodwill will be tested for impairment annually or whenever events occur or circumstances change that may indicate impairment.
The Company tests intangible assets for impairment if certain events occur or circumstances change indicating that the carrying amount of the intangible asset may not be recoverable. Goodwill is tested for impairment annually or whenever events occur or circumstances change that may indicate impairment.
A number of our MGA/Us have material relationships with Lloyd’s Syndicates 4242, and to a lesser extent Cadenza Re Limited, which are risk carriers that are serviced by Ambac group entities.
A number of our MGA/Us have material relationships with Lloyd’s Syndicate 4242, and to a lesser extent Cadenza Re Limited, which are risk carriers that are serviced by Octave group entities.
Ambac’s P&C businesses are subject to market cycles. Premium pricing in the commercial property and casualty insurance markets has been historically based on underwriting capacity of insurance carriers, general economic conditions, inflation, and other factors. In recent years, we have been in a “hard” market whereby carriers have been raising rates.
Octave’s businesses are subject to market cycles. Premium pricing in the commercial property and casualty insurance markets has been historically based on underwriting capacity of insurance carriers, general economic conditions, inflation, and other factors. In recent years, we have been in a “hard” market whereby carriers and capacity/capital providers have been raising rates.
During these times, it may be difficult for Everspan or our MGA/Us to grow or maintain premium volume without the unattractive options of lowering underwriting standards, sacrificing income, or both.
During these times, it may be difficult for Everspan or our MGA/Us to grow or maintain premium volume without lowering underwriting standards, sacrificing income, or both.
Because of these and other factors beyond our control, the Company may be unable to pay or discharge the principal or interest on the indebtedness incurred under the Credit Facility on economic terms or at all, which would materially impair the value of the Company.
Because of these and other factors beyond our control, the Company may be unable to pay or discharge the principal or interest on its indebtedness on economic terms or at all, which would materially impair the value of the Company.
In the latter case, Everspan would have to accept an increase in exposure to risk, reduce the amount of business written by it or seek alternatives in line with Everspan's risk limits, all of which could adversely affect our business, financial condition and results of operations.
In the latter case, Everspan would have to accept an increase in exposure to risk, reduce the amount of business written by it or seek alternatives in line with Everspan's risk limits, all of which could adversely affect our business, financial condition and results of operations. Our insurance carriers are subject to reinsurance counterparty credit risk.
Acquisitions have been an important contributor of growth in the Insurance Distribution business and we believe that additional acquisitions will be important to future growth, building further operational scale and diversifying our sources of revenue. Failure to successfully identify and complete acquisitions likely would result in us achieving slower growth and less operating scale.
Acquisitions have been an important contributor of growth in the ID business and we believe that additional acquisitions may be important to future growth, building further operational scale and diversifying our sources of revenue. Failure to successfully identify and complete acquisitions may result in us achieving slower growth and less operating scale.
In addition, our Specialty Property and Casualty Insurance and Insurance Distribution businesses face competition from a wide range of specialty insurance companies, underwriting agencies and intermediaries that are significantly larger than our Specialty Property and Casualty Insurance and Insurance Distribution businesses are and that have significantly larger financial, marketing, management and other resources.
In addition, our Specialty Property and Casualty Insurance and ID businesses face competition from a wide range of specialty insurance companies, underwriting agencies and intermediaries, as well as diversified financial services companies that are significantly larger than our Specialty Property and Casualty Insurance and ID businesses are and that have significantly larger financial, marketing, management and other resources.
It is not possible to predict the extent to which suits involving AFG or one or more other subsidiaries will be filed, and it is also not possible to predict the outcome of litigation. It is possible that there could be unfavorable outcomes in existing or future proceedings.
It is not possible to predict the extent to which litigation against OSG or one or more subsidiaries will be filed, and it is also not possible to predict the outcome of litigation. It is possible that there could be unfavorable outcomes in existing or future proceedings.
Furthermore, raising additional capital through the issuance of equity would depend on market and economic conditions, dilute the ownership of existing stockholders and potentially diminish the ability of the Company to access the capital markets in the future.
Furthermore, raising additional capital to pay down debt through the issuance of equity or other debt would depend on market and economic conditions, may dilute the ownership of existing stockholders and potentially diminish the ability of the Company to access the capital markets in the future.
In addition, regardless of monetary costs, these matters could have a material adverse effect on our reputation and cause harm to carrier, customer or employee relationships, or divert personnel and management resources. Acquiring new MGA/Us is core to our Insurance Distribution business strategy. Risks associated with such endeavors could adversely affect our growth and results of operations.
In addition, regardless of monetary costs, these matters could have a material adverse effect on our reputation and cause harm to carrier, customer or employee relationships, or divert personnel and management resources. We may acquire additional MGA/Us as part of our Insurance Distribution business strategy. Risks associated with such endeavors could adversely affect our growth and results of operations.
In addition, if the Company incurred indebtedness, its ability to make scheduled payments on, or refinance, any such indebtedness may depend on the ability of our subsidiaries to make distributions or pay dividends, which in turn will depend on their future operating performance and contractual, legal and regulatory restrictions on the payment of distributions or dividends to which they may be subject.
In addition, our ability to make scheduled payments on, or refinance, any such indebtedness may depend on the ability of our subsidiaries to make distributions or pay dividends, which in turn will depend on their future operating performance and applicable contractual, legal and regulatory restrictions on the payment of distributions or dividends.
Additionally, we are an acquisitive organization and the process of integrating the information systems of the businesses we acquire is complex and exposes us Ambac Financial Group, Inc. 18 2024 Form 10-K Table of Contents , to additional risk as we might not adequately identify weaknesses in the targets’ information systems, which could expose us to unexpected liabilities or make our own systems more vulnerable to attack.
Additionally, we are an acquisitive organization and the process of integrating the information systems of the businesses we acquire is complex and exposes us to additional risk as we might not adequately identify weaknesses in the targets’ information systems, which could expose us to unexpected liabilities or make our own systems more vulnerable to attack.
Everspan’s insurance carriers may be subject to counterparty credit risk associated with its MGA/U distribution partners. Everspan may be subject to the risk that its MGA/U program partners fail to meet their financial obligations to Everspan or policyholders as it relates to premiums payable, return premiums, sliding scale commissions and return commissions.
Everspan may be subject to the risk that its MGA/U program partners fail to meet their financial obligations to Everspan or policyholders as it relates to premiums payable, return premiums, sliding scale commissions and return commissions.
The marketing, underwriting, administration and servicing of policies in our Specialty Property and Casualty Insurance business have been contracted to the MGA/Us with which Everspan transacts. Any failure by the MGA/Us or TPAs to properly handle these functions could result in liability to us.
The marketing, underwriting, administration and servicing of policies in our Specialty Property and Casualty Insurance Octave Specialty Group, Inc. 13 2025 Form 10-K Table of Contents , business have been contracted to the MGA/Us with which Everspan transacts. Any failure by the MGA/Us or TPAs to properly handle these functions could result in liability to us.
We and our vendors and contractual counterparties rely on our information technology systems for many enterprise-critical functions and a prolonged failure or interruption of these systems for any reason could cause significant disruption to our operations and have a material adverse effect on our business, financial condition and operating results.
We and our vendors and contractual counterparties rely on our information technology systems for many enterprise-critical functions and a prolonged failure or interruption of these systems for any reason could cause significant disruption to our Octave Specialty Group, Inc. 18 2025 Form 10-K Table of Contents , operations and have a material adverse effect on our business, financial condition and operating results.
Our Ambac Financial Group, Inc. 13 2024 Form 10-K Table of Contents , owned MGA/Us and insurance brokerage subsidiaries are also required to maintain certain entity-level licenses in those jurisdictions and/or the international countries in which they operate, as well as licenses of individual officers or representatives that are essential to their ability to conduct business.
Our owned MGA/Us and insurance brokerage subsidiaries are also required to maintain certain entity-level licenses in those jurisdictions and/or the international countries in which they operate, as well as licenses of individual officers or representatives that are essential to their ability to conduct business.
However, no assurance can be given that we will effectively identify, review, monitor or manage all relevant risks. Nor can we provide assurance that our ERM framework will result in us accurately identifying all risks and adequately limiting our exposures based on our assessments.
We operate within an enterprise risk management (“ERM”) framework designed to assess and monitor risks. However, no assurance can be given that we will effectively identify, review, monitor or manage all relevant risks. Nor can we provide assurance that our ERM framework will result in us accurately identifying all risks and adequately limiting our exposures based on our assessments.
These include natural catastrophes and other disasters, such as hurricanes, earthquakes, windstorms, floods, wildfires, and severe winter weather. Catastrophes can also include man-made disasters, such as terrorist attacks and other destructive acts, war, political unrest, explosions, cyber-attacks, nuclear, biological, chemical or radiological events and infrastructure failures.
Everspan may be exposed to losses arising out of unpredictable catastrophic events. These include natural catastrophes and other disasters, such as hurricanes, earthquakes, windstorms, floods, wildfires, and severe winter weather. Catastrophes can also include man-made disasters, such as terrorist attacks and other destructive acts, war, political unrest, explosions, cyber-attacks, nuclear, biological, chemical or radiological events and infrastructure failures.
Such events could have a material adverse impact on the value of AFG's shares. Everspan is in the early stage of developing a portfolio of specialty insurance program business. Its business plan entails establishing programs with program administrators, managing general agents and managing general underwriters ("MGA/Us"), with claims handled by TPAs.
Such events could have a material adverse impact on the value of OSG's shares. Everspan is developing a portfolio of specialty insurance program business. Its business plan entails establishing programs with program administrators, MGA/Us, with claims handled by TPAs.
Other competitive concerns include the entrance of technology companies into the insurance distribution business and the Ambac Financial Group, Inc. 16 2024 Form 10-K Table of Contents , direct-to-consumer insurance carriers that do not utilize third party agents and brokers as production sources.
Other competitive concerns include the entrance of technology companies into the insurance distribution business and the direct-to-consumer insurance carriers that do not utilize third party agents and brokers as production sources.
The Credit Facility also requires the prepayment of the borrowings thereunder with proceeds of certain debt or equity issuances and certain asset sales, including the AAC Sale. These requirements will impact our financial and operational flexibility while the Credit Facility remains in place. The Company’s substantial indebtedness could have other significant consequences for our financial condition and operational flexibility.
The Credit Facilities also require the prepayment of the borrowings thereunder with proceeds of certain asset sales, recovery events, issuances of indebtedness and indemnity payments. These requirements will impact our financial and operational flexibility while the Credit Facilities remains in place. The Company’s substantial indebtedness could have other significant consequences for our financial condition and operational flexibility.
However, we have observed that in certain lines of business the rate of pricing increase has slowed or begun to decrease. If carriers lower premium rates more broadly this would be referred to as a “softening” or “soft” market.
However, in certain lines of business pricing has begun to decrease, while in others, the rate of pricing increase has begun to slow as competition has begun to increase. If carriers and capacity/capital providers lower premium rates more broadly this would be referred to as a “softening” or “soft” market.
Intangible asset and goodwill impairments are driven by a variety of factors, which could include, among other things, declining future cash flows of the acquired business as addressed in other risk factors related to the Insurance Distribution Business. Any intangible asset or goodwill impairment could adversely affect the Company's operating results and financial condition.
Intangible asset and goodwill impairments are driven by a variety of factors, which could include, among other things, declining future cash flows of the acquired business as addressed in other risk factors related to the ID Business.
While our Accident & Health insurance business has historically demonstrated an ability to adjust its products to major changes in the healthcare industry, such business would likely be adversely impacted by such a material change in the U.S. healthcare system particularly if private health insurance is eliminated, materially limited, or is rendered noncompetitive.
Our Accident & Health insurance business would likely be adversely impacted by such a material change in the U.S. healthcare system particularly if private health insurance is eliminated, materially limited, or is rendered noncompetitive.
These risks may be exacerbated to the extent that our insurance carrier subsidiaries' reinsurance recoverables are overly concentrated with one or a small subset of reinsurers.
These risks may be exacerbated to the extent that our insurance carrier subsidiaries' Octave Specialty Group, Inc. 14 2025 Form 10-K Table of Contents , reinsurance recoverables are overly concentrated with one or a small subset of reinsurers.
Further, we use internally developed and third-party vendor tools and models to assess exposure to losses, including catastrophic losses. The models assume various conditions and probability scenarios and may not accurately predict future losses or measure losses currently incurred. Limitations in these tools and models may adversely affect our results of operations and financial condition.
The models assume various conditions and probability scenarios and may not accurately predict future losses or measure losses currently incurred. Limitations in these tools and models may adversely affect our results of operations and financial condition.
If one or more of these institutions were to fail or be taken over by their respective regulators, our access to these funds could be limited and we could experience liquidity problems and potential financial losses.
If one or more of these institutions were to fail or be taken over by federal regulators, our access to these funds could be limited and we could experience liquidity problems and potential financial losses. Our risk management policies and practices may not adequately identify significant risks.
Our risk factors are organized in the following sections Page Risks Related to AFG Common Shares 10 Risk Related to Sale of AAC 11 Risk Related to the Company's Business 12 Risks Related to Capital, Liquidity and Credit Markets 19 Risks Related to Legacy Discontiued Operations 20 Risks Related to AFG Common Shares The price per share of AFG's common stock may be subject to a high degree of volatility, including significant price declines.
Octave Specialty Group, Inc. 10 2025 Form 10-K Table of Contents , Our risk factors are organized in the following sections Page Risks Related to Octave Common Shares 11 Risks Related to the Company's Business 11 Risks Related to Capital, Liquidity and Credit Markets 19 Risks Related to OSG Common Shares The price per share of OSG's common stock may be subject to a high degree of volatility, including significant price declines.
In the event that investments must be sold in order to pay claims, to pay debt obligations, to meet collateral posting requirements or to meet other liquidity needs, such investments would likely be sold at discounted prices. Additionally, increasing interest rates would have an adverse impact on the legacy financial guarantee insured portfolio.
In the event that investments must be sold in order to pay claims, to pay debt obligations, to meet collateral posting requirements or to meet other liquidity needs, such investments would likely be sold at discounted prices.
Due to, among other things, the inherent uncertainty of loss and changes in underwriting criteria by insurance companies, there will be a level of uncertainty related to the payment of profit-sharing contingent commissions. System security risks, data protection breaches and cyber-attacks could adversely affect our business and results of operations.
Due to, among other things, the inherent uncertainty of loss and changes in underwriting criteria by insurance companies, there will be a level of uncertainty related to the payment of profit-sharing contingent commissions.
Changes in prevailing interest rate levels and market conditions could adversely impact our business results and prospects. Increases in prevailing interest rate levels can adversely affect the value of our investment portfolio and, therefore, our financial strength.
These outcomes would reduce our underwriting profit to the extent these factors are not reflected in the rates we charge. Changes in prevailing interest rate levels and market conditions could adversely impact our business results and prospects. Increases in prevailing interest rate levels can adversely affect the value of our investment portfolio and, therefore, our financial strength.
Currently, it is not possible to fully predict the future prospects or other characteristics of such businesses. We may not be able to successfully identify opportunities, attract specialized underwriting and other talent, and operationalize new Insurance Distribution businesses in a timely or cost-efficient manner.
We may not be able to successfully identify opportunities, attract specialized underwriting and other talent, and operationalize new businesses in a timely or cost-efficient manner.
Our insurance carrier subsidiaries purchase reinsurance to transfer part of the risk they have underwritten to reinsurance companies in exchange for part of the premium they receive in connection with the risk.
Their reinsurers may not pay on losses in a timely fashion, or at all. Our insurance carrier subsidiaries purchase reinsurance to transfer part of the risk they have underwritten to reinsurance companies in exchange for part of the premium they receive in connection with the risk.
State legislatures and insurance departments place increasing burdens on insurance carriers and producers with respect to matters such as cybersecurity, data privacy, management of technology, corporate governance, environmental and social issues, and enterprise risk management. Such laws and regulations require substantial resources to ensure that the Company has appropriate and effective compliance programs in place.
State legislatures and insurance departments place increasing burdens on insurance carriers and producers with respect to matters such as cybersecurity, data privacy, artificial intelligence, management of technology, corporate governance, environmental and social issues, and enterprise risk management.
Pricing is a highly Ambac Financial Group, Inc. 14 2024 Form 10-K Table of Contents , complex exercise involving the acquisition and analysis of historical loss data and the projection of future trends, loss costs, expenses, and inflation trends, among other factors, for each of Everspan's products in multiple risk tiers and many different markets.
Pricing is a highly complex exercise involving the acquisition and analysis of historical loss data and the projection of future trends, loss costs, expenses, and inflation trends, among other factors, for each of Everspan's products in multiple risk tiers and many different markets. Everspan seeks to implement its pricing accurately in accordance with its assumptions.
The objective of establishing loss reserve estimates is not to, and our loss reserves do not, reflect the worst possible outcomes. While our reserving scenarios reflect a wide range of possible outcomes (on a probability weighted basis), reflecting the uncertainty regarding future developments and outcomes, our loss reserves may change materially based on future developments.
The objective of establishing loss reserve estimates is not to, and our loss reserves do not, reflect worst possible outcomes. While our reserving is estimated based on experience and using various actuarial methods and assumptions, our loss reserves may change materially based on future developments.
Such laws and regulations require substantial resources to ensure that the Company has appropriate and effective compliance programs in place.
Such laws and regulations require substantial resources to ensure that the Company has appropriate and Octave Specialty Group, Inc. 12 2025 Form 10-K Table of Contents , effective compliance programs in place.
Moreover, although we have incident response, disaster recovery and business continuity plans in place, we may not be able to adequately execute these plans in a timely fashion in the event of a disruption to our information technology and application systems.
In addition, we may be required to incur significant costs to mitigate the damage caused by any security breach, or to protect against future damage. Moreover, we may not be able to adequately execute our incident response, disaster recovery and business continuity plans in a timely fashion in the event of a disruption to our information technology and application systems.
We are exposed to foreign exchange risk, which may adversely affect our financial condition and results of operation. A significant portion of our Insurance Distribution business is operated out of the U.K where our functional currency is the British pound (“GBP”). However, the majority of our revenues are generated in U.S. dollars (“USD”).
A significant portion of our ID business is operated out of the U.K where our functional currency is the British pound (“GBP”). However, the majority of our revenues are generated in U.S. dollars (“USD”).
The insolvency of one or more of our insurance carrier subsidiaries' reinsurers, or their inability or unwillingness to make timely payments if and when required under the terms of Ambac Financial Group, Inc. 15 2024 Form 10-K Table of Contents , reinsurance contracts, could adversely affect our business, financial condition and results of operations.
The insolvency of one or more of our insurance carrier subsidiaries' reinsurers, or their inability or unwillingness to make timely payments if and when required under the terms of reinsurance contracts, could adversely affect our business, financial condition and results of operations. Everspan’s insurance carriers may be subject to counterparty credit risk associated with its MGA/U distribution partners.
A reduction in scale and/or appetite of these carriers whether in response to underwriting performance, regulatory considerations, availability of underwriting capital support, or otherwise may result in a loss of significant commission revenues. Furthermore, these carriers form the cornerstone capacity for some of our MGA/Us new launches and hence a deterioration in their activities will further inhibit new MGA/U launches.
A reduction in scale and/or appetite of these carriers, whether in response to underwriting performance, regulatory considerations, availability of underwriting capital support, or otherwise, may result in a loss of significant commission revenues.
Some of these competitors also have longer standing and better established market recognition than Ambac's group companies.
Octave Specialty Group, Inc. 15 2025 Form 10-K Table of Contents , Some of these competitors also have longer standing and better established market recognition than Octave's group companies.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRecent amendments to the NYDFS cybersecurity regulation impose additional security requirements and new governance obligations. The California Consumer Privacy Act, went into effect in January 2020, and provides additional privacy rights for California residents, and in November 2020, California further expanded privacy rights for California residents by enacting the California Privacy Rights Act, which became effective January 1, 2023.
Biggest changeIn the United States, portions of our business are subject to state laws that impose obligations with respect to personal information and grant consumers specific rights with respect to such information, For example, the California Consumer Privacy Act, went into effect in January 2020, and provides additional privacy rights for California residents, and in November 2020, California further expanded privacy rights for California residents by enacting the California Privacy Rights Act, which became effective January 1, 2023.
This approach includes regular evaluations of our information systems and infrastructure to identify vulnerabilities and potential weaknesses through the use of system monitoring tools, as well as monitoring industry trends, threat intelligence, and emerging risks to anticipate and proactively assess potential threats.
This approach includes regular evaluations of our information systems and infrastructure to identify vulnerabilities and potential weaknesses through the use of system monitoring tools, as well as monitoring of industry trends, threat intelligence, and emerging risks to anticipate and proactively assess potential threats.
We conduct mandatory annual employee cybersecurity training programs and frequent simulated phishing campaigns to enhance cybersecurity knowledge and practices across the organization. Ambac maintains an incident response plan that is updated regularly to respond to changes in the organization, risks and laws. Ambac also conducts an annual test to restore business critical systems and data from back-ups.
We conduct mandatory annual employee cybersecurity training programs and frequent simulated phishing campaigns to enhance cybersecurity knowledge and practices across the organization. Octave maintains an incident response plan that is updated regularly to respond to changes in the organization, risks and laws. Octave also conducts an annual test to restore business critical systems and data from back-ups.
Item 1C. Cybersecurity. The Company is exposed to diverse cybersecurity risks that have the potential to significantly impact our business operations, financial standing, and reputation. We seek to identify, assess, and manage these risks, with the aim of safeguarding our critical systems and information, and employ a documented process to respond in the event of a cybersecurity incident.
Item 1C. Cybersecurity. The Company is exposed to diverse cybersecurity risks that have the potential to significantly impact our business operations, financial standing, and reputation. We seek to identify, assess, and manage these risks, with the aim of safeguarding our critical systems and information and employing a documented process to respond in the event of a cybersecurity incident.
The regulation imposes a governance framework for cybersecurity program, risk based minimum standards for technology systems for data protection, monitoring and testing, third-party service provider reviews, security incident response and reporting to NYDFS of certain security incidents, annual certifications of regulatory compliance to NYDFS, and other requirements.
The regulation imposes a governance framework for cybersecurity programs, risk-based minimum standards for technology systems for data protection, monitoring and testing, third-party service provider reviews, security incident response and reporting to NYDFS of certain security incidents, annual certifications of regulatory compliance to NYDFS, and other requirements.
Several other states have enacted similar comprehensive privacy laws. We anticipate federal and state regulators to continue to enact legislation related to privacy and cybersecurity, which may require additional compliance investments and changes to policies, procedures and operations.
Several other states have enacted similar comprehensive privacy laws. We anticipate that federal and state regulators will continue to enact legislation related to privacy and cybersecurity, which may require additional compliance investments and changes to policies, procedures and operations.
To identify potential risks, Ambac or a third party vendor engaged by the Company also assesses the security measures of vendors and third-party service providers that have access to the Company’s information systems and sensitive data.
To identify potential risks, Octave or a third party vendor engaged by the Company also assesses the security measures of vendors and third-party service providers that have access to the Company’s information systems and sensitive data.
For example, the National Association of Insurance Commissioners (“NAIC”) adopted the NAIC Insurance Data Security Model Law (#668) (“NAIC Model Law”) that creates rules for insurers and other covered entities addressing data security and the investigation and notification of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information.
For example, the NAIC adopted the NAIC Insurance Data Security Model Law (#668) (“NAIC Model Law”) that creates rules for insurers and other covered entities addressing data security and the investigation and notification of cybersecurity events involving unauthorized access to, or the misuse of, certain nonpublic information.
Federal and state laws and regulations with respect to privacy, data protection and cybersecurity that require financial institutions, including insurance companies and agencies, to safeguard personal and other sensitive information, and may provide for notice of their practices relating to the collection, disclosure and processing of personal information, disclosure of cybersecurity risk management practices, reporting of cybersecurity incidents, and implementation of governance practices.
Octave and its subsidiaries are subject to various U.S. federal and state laws and regulations with respect to privacy, data protection and cybersecurity that require financial institutions, including insurance companies and agencies, to safeguard personal and other sensitive information, and may provide for notice of their practices relating to the collection, disclosure and processing of personal information, disclosure of cybersecurity risk management practices, reporting of cybersecurity incidents, and implementation of governance practices.
The CISO is a certified cybersecurity professional and technologist. He holds an active ISO/ANSI-accredited cybersecurity certification and has experience managing security programs across multiple industries, including financial services and insurance. Other credentials among Ambac’s IT staff include a Certified Information Systems Security Professional certification and a Masters Degree in cybersecurity risk and management.
The CISO is a certified cybersecurity professional and technologist. He holds an active ISO/ANSI-accredited cybersecurity certification and has experience managing security programs across multiple industries, including financial services and insurance.
The Company’s Chief Operating Officer and Chief Information Officer provide input and updates to the Enterprise Risk Committee (comprised of members of management) on cybersecurity preparedness and emerging risks.
The Company’s Chief Operating Officer and Chief Information Officer provide input and updates to the Enterprise Risk Committee (comprised of members of management) on cybersecurity preparedness and emerging risks. The Enterprise Risk Committee produces the relevant risk management information for executive and senior management and the Board of Directors, which receives ERM updates on a quarterly basis.
Removed
The Company’s technology staff and CISO conduct weekly meetings to review: (i) implementation of new security measures, (ii) results of existing technical system monitoring tools to identify any potential risk and propose remediation, as necessary; (iii) newly disclosed software patch updates to assess risks and set patch implementation priorities; and (iv) threat intelligence from various organizations, such as the Cybersecurity and Infrastructure Security Agency, to assess risks and suggest security measures, as necessary.
Added
The CISO conducts weekly meetings with the Chief Information Officer, and as necessary with the Enterprise Architecture Committee, to discuss the implementation of new cybersecurity measures. Identified cybersecurity risks and newly disclosed software patch updates are escalated, as appropriate, for further assessment and remediation in accordance with the Company’s vulnerability management procedures.
Removed
The Enterprise Risk Committee produces the relevant risk management information for executive and senior management and the Board Ambac Financial Group, Inc. 25 2024 Form 10-K Table of Contents , of Directors, which receives ERM updates on a quarterly basis.
Added
The CISO also receives ongoing cybersecurity threat intelligence from external sources, including government and industry organizations such as the Octave Specialty Group, Inc. 21 2025 Form 10-K Table of Contents , Cybersecurity and Infrastructure Security Agency, which is used to inform the Company’s cybersecurity risk assessment and mitigation efforts.
Removed
Ambac and its subsidiaries are subject to various U.S.
Added
Recent amendments to the NYDFS cybersecurity regulation impose additional security requirements and new governance obligations.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn the opinion of the Company’s management, the Company’s properties are adequate and suitable for its business as presently conducted and are adequately maintained.
Biggest changeIn the opinion of the Company’s management, the Company’s properties are adequate and suitable for its business as presently conducted and are adequately maintained. Octave Specialty Group, Inc. 22 2025 Form 10-K Table of Contents ,
Operations of each of our segments are carried out either in our executive office at One World Trade Center or in other leased offices under operating leases in Florida, New Jersey, New York, Indiana, North Carolina, Georgia, Bermuda and London England. The lease terms typically do not exceed ten years in length.
Operations of each of our segments are carried out either in our executive office at 40 Wall Street or in other leased offices under operating leases in Florida, New Jersey, New York, Indiana, North Carolina, Georgia, Maryland, Texas, Bermuda and England. The lease terms typically do not exceed ten years in length.
Item 2. Properties The executive office of Ambac is located at One World Trade Center, New York, New York 10007, and consists of 46,927 square feet of office space, under a sublease agreement that expires in January 2030.
Item 2. Properties The executive office of Octave is located at 40 Wall Street, New York, New York 10005, and consists of 9,767 square feet of office space, under a lease agreement that expires in April 2031.
Removed
Ambac continues to hold a lease at One State Street Plaza, New York that expires in December 2029 (25,871 square feet) that has been sublet through its expiration date.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn November 12, 2024, Ambac’s Board of Directors authorized a share repurchase program, under which Ambac may opportunistically repurchase up to $50,000 of the Company’s common shares at management’s discretion over the period ending on December 31, 2026.
Biggest change($ in thousands, except per share) Oct-2025 Nov-2025 Dec-2025 Fourth Quarter 2025 Shares Repurchased — 706,244 34,989 741,233 Average Price Paid Per Share $ — $ 9.46 $ 8.99 $ 9.44 Total Number of Shares Purchased as Part of Publicly Announced Plan 3,142,554 — — 3,142,554 Maximum Dollar Value That may Yet be Purchased Under the Plan $ 8,449 On November 12, 2024, Octave’s Board of Directors authorized a share repurchase program, under which Octave may opportunistically repurchase up to $50,000 of the Company’s common shares at management’s discretion over the period ending on December 31, 2026.
Dividends The Company did not pay cash dividends on its common stock during 2024 and 2023. Information concerning restrictions on the payment of dividends from Ambac's insurance subsidiaries is set forth in Item 1 above under the caption “Dividend Restrictions, Including Contractual Restrictions" and in Note 9.
Dividends The Company did not pay cash dividends on its common stock during 2025 and 2024. Information concerning restrictions on the payment of dividends from Octave's insurance subsidiaries is set forth in Item 1 above under the caption “Dividend Restrictions, Including Contractual Restrictions" and in Note 9.
The graph assumes $100 was invested on December 31, 2019, in our common stock at the closing price of $21.57 per share and at the closing price for the Russell 2000 Index and S&P Completion Index. It also assumes that dividends (if any) were reinvested on the date of payment without payment of any commissions.
The graph assumes $100 was invested on December 31, 2020, in our common stock at the closing price of $15.38 per share and at the closing price for the Russell 2000 Index and S&P Completion Index. It also assumes that dividends (if any) were reinvested on the date of payment without payment of any commissions.
Insurance Regulatory Restrictions to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K. Purchases of Equity Securities By the Issuer and Affiliated Purchasers When restricted stock unit awards issued by Ambac vest or settle, they become taxable compensation to employees.
Insurance Regulatory Restrictions to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K. Purchases of Equity Securities By the Issuer and Affiliated Purchasers When restricted and performance stock units issued by Octave settle, they become taxable compensation to employees.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ($ in thousands, except per share amounts) Market Information The Company 's common stock trades on the NYSE under the symbol “AMBC". Holders On March 4, 2025, there were 27 stockholders of record of AFG’s common stock.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ($ in thousands, except per share amounts) Market Information The Company 's common stock trades on the NYSE under the symbol “OSG". Holders On March 2, 2026, there were 20 stockholders of record of OSG’s common stock.
For certain awards, shares may be withheld to cover the employee's portion of withholding taxes. In the fourth quarter of 2024, Ambac purchased shares from employees that settled restricted stock units to meet employee tax withholdings.
For certain awards, shares may be withheld to cover the employee's portion of withholding taxes. In the fourth quarter of 2025, Octave purchased 741,233 shares from employees that settled restricted or performance stock units to meet employee tax withholdings. The following table includes information about the Company's purchases of its common shares during the fourth quarter of 2025.
($ in thousands, except per share) Year ended December 31, 2022 2023 2024 Shares repurchased 1,605,316 325,068 937,141 Total cost $ 14,217 $ 4,510 $ 11,698 Average purchase price per share $ 8.86 $ 13.88 $ 12.48 Unused authorization amount $ 38,302 Ambac Financial Group, Inc. 27 2024 Form 10-K Table of Contents , Stock Performance Graph The following graph compares the performance of an investment in our common stock from the close of business on December 31, 2019, through December 31, 2024, with the Russell 2000 Index and S&P Completion Index.
($ in thousands, except per share) December 31, 2024 2025 Shares repurchased 937,141 3,434,745 Total cost $ 11,678 $ 29,873 Average purchase price per share $ 12.46 $ 8.70 Unused authorization amount $ 8,449 Octave Specialty Group, Inc. 24 2025 Form 10-K Table of Contents , Stock Performance Graph The following graph compares the performance of an investment in our common stock from the close of business on December 31, 2020, through December 31, 2025, with the Russell 2000 Index and S&P Completion Index.
The performance shown in the graph represents past performance and should not be considered an indication of future performance. December 31, 2019 2020 2021 2022 2023 2024 Ambac Financial Group, Inc. $100 $71 $75 $81 $76 $59 Russell 2000 Index $100 $119 $135 $106 $122 $134 S&P Completion Index $100 $131 $146 $105 $130 $150
The performance shown in the graph represents past performance and should not be considered an indication of future performance. December 31, 2021 2022 2023 2024 2025 Octave Specialty Group, Inc. $104 $113 $107 $82 $51 Russell 2000 Index $114 $89 $103 $113 $128 S&P Completion Index $146 $105 $130 $150 $165
From November 1, 2024, through December 31, 2024, AFG repurchased 937,141 shares for $11,698.5 at an average purchase price of $12.48 per share. Shares purchased from employees to satisfy withholding taxes, as described above, do not count towards utilization under the Company's share repurchase program. The following table summarizes Ambac's share purchases during the fourth quarter of 2024.
Shares purchased from employees to satisfy withholding taxes, as described above, do not count towards utilization under the Company's share repurchase program. The following table shows shares repurchased by year under Octave's November 12, 2004 share repurchase program.
Removed
On March 29, 2022, our Board of Directors approved a share repurchase program authorizing up to $20,000 in share repurchases, with an expiration date of March 31, 2024. On May 5, 2022, the Board of Directors authorized an additional $15,000 share repurchase. This program expired on March 31, 2024.
Removed
($ in thousands) Oct-2024 Nov-2024 Dec-2024 Fourth Quarter 2024 Total Shares Purchased 887 — — 887 Average Price Paid Per Share $ 11.26 $ — $ — $ 11.26 Total Number of Shares Purchased as Part of Publicly Announced Plan — 585,000 352,141 937,141 Maximum Dollar Value That may Yet be Purchased Under the Plan $ — $ 42,713 $ 37,674 $ 37,674 When restricted stock unit awards issued by Ambac vest or settle, they become taxable compensation to employees.
Removed
For certain awards, shares may be withheld to cover the employee's portion of withholding taxes. In the fourth quarter of 2024, Ambac purchased shares from employees that settled restricted stock units to meet employee tax withholdings. The following table shows shares repurchased by year.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

126 edited+67 added−88 removed47 unchanged
Biggest changeYear Ended December 31, 2024 2023 2022 Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Net income (loss) from continuing operations $ 10,469 $ (6,881) $ (62,509) $ (58,921) $ 335 $ 7,133 $ (30,701) $ (23,232) $ (6,345) $ 4,524 $ (33,422) $ (35,244) Adjustments: Interest expense — 9,379 — 9,379 — — — — — — — — Income taxes 1,753 (928) (1,748) (924) 48 156 (1,193) (989) (1) — (462) (462) Depreciation — 481 1,864 2,345 — 42 1,036 1,078 — 31 841 872 Intangible amortization — 17,602 — 17,602 — 4,152 — 4,152 — 2,921 — 2,921 EBITDA (1) $ 12,222 $ 19,653 $ (62,393) $ (30,518) $ 383 $ 11,483 $ (30,858) $ (18,991) $ (6,346) $ 7,476 $ (33,043) $ (31,913) Add: Impact of noncontrolling interests — (6,448) — (6,448) — (2,102) — (2,102) — (1,463) — (1,463) Ambac EBITDA 12,222 13,208 (62,396) (36,966) 383 9,381 (30,858) (21,093) (6,347) 6,013 (33,043) (33,377) Net income margin 8.3 % (6.9) % (609.2) % (25.0) % 0.5 % 13.8 % (338.1) % (18.6) % (34.4) % 14.4 % (894.1) % (65.7) % Net income margin to Ambac common stockholders 8.3 % (7.3) % (609.2) % (25.1) % 0.5 % 11.3 % (338.1) % (19.7) % (34.3) % 11.6 % (894.1) % (67.4) % EBITDA margin 9.7 % 19.8 % (608.1) % (12.9) % 0.6 % 22.3 % (339.8) % (15.2) % (34.4) % 23.8 % (884.0) % (59.5) % EBITDA margin to Ambac common stockholders 9.7 % 13.3 % (608.1) % (15.7) % 0.6 % 18.2 % (339.8) % (16.9) % (34.4) % 19.1 % (884.0) % (62.3) % Add: Acquisition and integration related expenses — — 27,388 27,388 — — 567 567 — — 593 593 Add: Equity-based compensation expense 414 — 8,941 9,355 634 — 11,632 12,266 208 — 11,024 11,232 Add: Severance and restructuring expense — 248 7,352 7,600 — — — — 481 — — 481 Add: Other non-operating (income) losses (7,500) — 2,318 (5,182) — — 279 279 — — (935) (935) Adjusted EBITDA 5,136 19,904 (16,397) 8,643 1,017 11,483 (18,380) (5,879) (5,658) 7,476 (22,361) (20,543) Adjusted EBITDA attributable to Ambac common stockholders 5,136 13,456 (16,397) 2,195 1,017 9,381 (18,380) (7,981) (5,658) 6,013 (22,361) (22,006) Adjusted EBITDA Margin 4.1 % 20.1 % (159.8) % 3.7 % 1.6 % 22.3 % (202.4) % (4.7) % (30.6) % 23.8 % (598.2) % (38.3) % Adjusted EBITDA Margin to Ambac common stockholders 4.1 % 13.6 % (159.8) % 0.9 % 1.6 % 18.2 % (202.4) % (6.4) % (30.6) % 19.1 % (598.2) % (41.0) % Organic Revenue Growth (Insurance Distribution only) Organic revenue is based on commissions and fees for the relevant period by excluding (i) the first twelve months of commissions and fees generated from acquisitions and (ii) commissions and fees from divestitures (iii) and other items such as contingent commissions, profit commissions and the impact of changes in foreign exchange rates.
Biggest changeOctave Specialty Group, Inc. 39 2025 Form 10-K Table of Contents , Year Ended December 31, 2025 2024 2023 Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total Net income (loss) from continuing operations $ 2,956 $ (15,353) $ (83,406) $ (95,803) $ 10,469 $ (6,881) $ (62,509) $ (58,921) $ 335 $ 7,133 $ (30,701) $ (23,232) Adjustments: Interest expense — 18,640 — 18,640 — 9,379 — 9,379 — — — — Income taxes 374 (5,103) (482) (5,211) 1,753 (928) (1,748) (924) 48 156 (1,193) (989) Depreciation — 690 3,218 3,908 — 481 1,864 2,345 — 42 1,036 1,078 Intangible amortization — 38,044 — 38,044 — 17,602 — 17,602 — 4,152 — 4,152 EBITDA 3,330 36,918 (80,670) (40,422) 12,222 19,653 (62,393) (30,518) 383 11,483 (30,858) (18,991) Add: Impact of noncontrolling interests — (14,507) — (14,507) — (6,448) — (6,448) — (2,102) — (2,102) EBITDA attributable to shareholders 3,330 22,411 (80,670) (54,929) 12,222 13,205 (62,393) (36,966) 383 9,381 (30,858) (21,094) Net income margin — — NM — — — NM — — — NM — Net income margin attributable to shareholders — — NM — — — NM — — — NM — EBITDA margin — — NM — — — NM — — — NM — EBITDA margin attributable to shareholders — — NM — — — NM — — — NM — Add: Acquisition and integration related expenses — 375 9,106 9,481 — — 27,388 27,388 — — 567 567 Add: Equity-based compensation expense 447 368 11,494 12,309 414 — 8,941 9,355 634 — 11,632 12,266 Add: Severance and restructuring expense — 60 21,173 21,233 — 248 7,352 7,600 — — — — Add: Other non-operating (income) losses — (591) 5,108 4,517 (7,500) — 2,318 (5,182) — — 279 279 Adjusted EBITDA 3,777 37,041 (33,789) 7,028 5,136 19,901 (16,394) 8,643 1,017 11,483 (18,380) (5,879) Adjusted EBITDA attributable to shareholders $ 3,777 $ 22,542 $ (33,789) $ (7,471) $ 5,136 $ 13,453 $ (16,394) $ 2,195 $ 1,017 $ 9,381 $ (18,380) $ (7,981) Adjusted EBITDA Margin 4.3 % 22.6 % NM 2.8 % 4.1 % 20.1 % NM 3.7 % 1.6 % 22.3 % NM (4.7) % Adjusted EBITDA Margin attributable to shareholders 4.3 % 13.8 % NM (3.0) % 4.1 % 13.6 % NM 0.9 % 1.6 % 18.2 % NM (6.2) % Organic Revenue Growth (Insurance Distribution only) Organic revenue is based on commissions and fees for the relevant period by excluding (i) the first twelve months of commissions and fees generated from acquisitions, (ii) commissions and fees from divestitures and (iii) other items such as contingent commissions, profit commissions and the impact of changes in foreign exchange rates.
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 claims that have been incurred, but not yet reported ("IBNR") as of the balance sheet date.
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.
The acquisition method requires us to allocate the total consideration transferred for each acquisition to the assets acquired, liabilities assumed and noncontrolling ("NCI") interests based on their fair values as of the date of acquisition, including identifiable intangible assets.
The acquisition method requires us to allocate the total consideration transferred for each acquisition to the assets acquired, liabilities assumed and noncontrolling interests ("NCI") based on their fair values as of the date of acquisition, including identifiable intangible assets.
The valuation method to determine the fair value of redeemable NCI interests and related put and call options was the Monte Carlo Simulation. The significant fair value assumptions used in the simulation include the exercise thresholds, EBITDA forecasts, discount rate and long-term growth rate.
The valuation method used to determine the fair value of redeemable NCI interests and related put and call options was the Monte Carlo Simulation. The significant fair value assumptions used in the simulation include the exercise thresholds, EBITDA forecasts, discount rate and long-term growth rate.
Under GAAP, the initial acquisition of the companies were recorded as asset acquisitions, which required i) all net assets to initially be recorded at fair value and ii) the acquisition costs in excess of the fair value of net assets to be allocated to the bases of certain types of assets based on their relative fair values, if applicable.
Under GAAP, the initial acquisitions of the companies were recorded as asset acquisitions, which required i) all net assets to initially be recorded at fair value and ii) the acquisition costs in excess of the fair value of net assets to be allocated to the bases of certain types of assets based on their relative fair values, if applicable.
The projected loss ratio is determined by analyzing prior period experience, and adjusting for loss cost trends, rate level differences, mix of business changes and industry loss ratios and other known or observed factors influencing the accident year relative to prior accident years.
The projected loss ratio is determined by analyzing prior period experience, and adjusting for loss cost trends, rate level differences, a mix of business changes and industry loss ratios and other known or observed factors influencing the accident year relative to prior accident years.
The carrying values of Providence Washington Insurance Company, Greenwood Insurance Company, Consolidated National Insurance Company, and Consolidated Specialty Insurance Company include a goodwill component representing the acquisition cost in excess of the related entity's statutory surplus. Goodwill is amortized over ten years under SAP.
The carrying values of Providence Washington Insurance Company, Greenwood Insurance Company, and Consolidated Specialty Insurance Company include a goodwill component representing the acquisition cost in excess of the related entity's statutory surplus. Goodwill is amortized over ten years under SAP.
Insurance Distribution and Specialty Property and Casualty Insurance strategic priorities include: • Expanding our Insurance Distribution business based on deep domain knowledge in specialty and niche classes of risk which generate attractive margins at scale.
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.
To minimize its exposure to losses from reinsurers, Ambac (i) monitors the financial condition of its reinsurers; (ii) is entitled to receive collateral from its reinsurance counterparties under certain reinsurance contracts; and (iii) has certain cancellation rights that can be exercised in the event of rating agency downgrades of a reinsurer (among other events and circumstances).
To minimize its exposure to losses from reinsurers, Octave (i) monitors the financial condition of its reinsurers; (ii) is entitled to receive collateral from its reinsurance counterparties under certain reinsurance contracts; and (iii) has certain cancellation rights that can be exercised in the event of rating agency downgrades of a reinsurer (among other events and circumstances).
ACCOUNTING STANDARDS Please refer to Note 2. Basis of Presentation and Significant Accounting Policies to the Consolidated Financial Statements, included in Part II, Item 8 in this Annual Report Form 10-K for a discussion of the impact of recent accounting pronouncements on Ambac’s financial condition and results of operations. U.S.
ACCOUNTING STANDARDS Please refer to Note 2. Basis of Presentation and Significant Accounting Policies to the Consolidated Financial Statements, included in Part II, Item 8 in this Annual Report Form 10-K for a discussion of the impact of recent accounting pronouncements on Octave’s financial condition and results of operations. U.S.
Loss and loss adjustment expense reserves are estimates of the ultimate liability for unpaid losses and loss expenses for claims that have been reported and claims that have been incurred, but not yet reported as of the balance sheet date.
Liabilities: Loss and Loss Adjustment Expense Reserves. Loss and LAE reserves are estimates of the ultimate liability for unpaid losses and loss expenses for claims that have been reported and incurred but not yet reported as of the balance sheet date.
Basis of Presentation and Significant Accounting Policies to the Consolidated Financial Statements included in Part II, Item 8 in this Form 10-K. Valuation of Specialty Property and Casualty Losses and Loss Expense Reserves The specialty property and casualty insurance segment consist of Everspan-affiliated carriers.
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.
This will be achieved through acquisitions, strategic investments, establishing new businesses “de-novo,” and organic growth and diversification 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 program administrators.
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.
These estimates are evaluated on an on-going basis considering historical developments, political events, market conditions, industry trends and other information.
These estimates are evaluated on an ongoing basis considering historical developments, political events, market conditions, industry trends and other information.
If results of the qualitative assessment indicate a more likely than not determination or if we elect not to perform a qualitative assessment, a quantitative test is performed by comparing the estimated fair value using an income approach or market approach for each reporting unit with its estimated carrying value.
If results of the qualitative assessment indicate a more likely than not determination or if we elect not to perform a qualitative assessment, a quantitative test is performed by comparing the estimated fair value using a weighted average of an income approach and market approach for each reporting unit to its carrying value.
Ambac's Insurance Distribution companies are compensated for their services primarily by commissions paid by insurance carriers for underwriting, structuring and/or administering polices and, in some cases, the managing of claims under an agency agreement. Commission revenues are usually based on a percentage of the premiums placed.
Octave's ID companies are compensated for their services primarily by commissions paid by insurance carriers for underwriting, structuring and/or administering polices and, in some cases, the managing of claims under an agency agreement. Commission revenues are usually based on a percentage of the premiums placed.
LIQUIDITY AND CAPITAL RESOURCES Holding Company Liquidity AFG is a holding company organized as a legal entity separate and distinct from its operating subsidiaries.
LIQUIDITY AND CAPITAL RESOURCES Holding Company Liquidity OSG is a holding company organized as a legal entity separate and distinct from its operating subsidiaries.
All legacy liabilities remain obligations of affiliates of the sellers through reinsurance. The process for determining the level of loss and loss adjustment expense reserves is subject to certain estimates and judgments.
All legacy liabilities remain obligations of affiliates of the sellers through reinsurance. The process for determining the level of loss and LAE reserves is subject to certain estimates and judgments.
This change to set runoff reserves at the high end of the range resulted in a 1 percentage point increase in the loss and LAE ratio for the year ended December 31, 2024 compared to our prior reserving method.
This change to set runoff reserves at the high end of the range resulted in a 1 percentage point increase in the loss and LAE ratio for the year ended December 31, 2024.
(5) Represents Ambac stockholders equity in the Specialty Property and Casualty Insurance segment, including intercompany eliminations. The Specialty Property and Casualty Insurance segment has grown significantly since underwriting its first program in May 2021. Twenty-seven programs were authorized to issue policies as of December 31, 2024.
(5) Represents Octave stockholders equity in the Specialty Property and Casualty Insurance segment, including intercompany eliminations. The Specialty Property and Casualty Insurance segment has grown significantly since underwriting its first program in May 2021. Twenty-five programs were authorized to issue policies as of December 31, 2025, a decrease compared to twenty-seven as of December 31, 2024.
Commission payables are commissions due to sub producers for placing insurance contracts on behalf of the MGAs and amounts due to UK Syndicates that provide advanced commissions to fund short term liquidity needs for MGAs. The commission payable at December 31, 2024 and December 31, 2023 was $71,431 and $6,932.
Commission payables are commissions due to sub producers for placing insurance contracts on behalf of the MGAs and amounts due to UK Syndicates that provide advanced commissions to fund short-term liquidity needs for MGAs. Commission payable at December 31, 2025 and December 31, 2024 was $115,555 and $71,431, respectively.
Financing Activities for Continuing Operations Financing activities for the year ended December 31, 2024, included borrowing of $147,000 under a short-term credit facility and receipt of a $62,000 co-investment from AAC (discontinued operation) to fund the acquisition of Beat and share repurchases of $11,698.
Financing activities for the year ended December 31, 2024 included borrowing of $147,000 under a short-term credit facility, receipt of a $62,000 co-investment from AAC to fund the acquisition of Octave Ventures and share repurchases of $11,698.
Management has identified the following critical accounting policies and estimates: (i) valuation of specialty property and casualty losses and loss adjustment expense reserves, (ii) valuation of financial guarantee loss and loss adjustment expense reserves, and (iii) business combinations including identification and valuation of intangible assets.
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.
AFG’s liquidity is primarily dependent on its net assets, excluding the operating subsidiaries that it owns, totaling $119,214 as of December 31, 2024, and $146,583, as of December 31, 2023, and secondarily on investment income, distributions, tax and expense sharing payments from its operating subsidiaries and third party capital (e.g. from credit facilities and equity issuance).
OSG’s liquidity is primarily dependent on its net assets, excluding the operating subsidiaries that it owns, totaling $76,484 and $119,214 as of December 31, 2025 and December 31, 2024, respectively, and secondarily on investment income, distributions, tax and expense-sharing payments and third-party capital (e.g. from credit facilities and equity issuance).
For every 1.0% slower or faster the losses develop, we would expected our net indicated reserves to increase or decrease, respectively, by approximately 0.8%. If our reported loss development pattern was 5% slower, the net indicated reserves would be approximately 4% higher.
For every 1.0% slower or faster the losses develop, we would expect our net indicated reserves to increase or decrease, respectively, by a range of 0.8% to 1.2%. If our reported loss development pattern was 5% slower, the net indicated reserves would be approximately 5% higher.
Adjusted Net Income and Adjusted Net Income Margin We define Adjusted net income as net income (loss) from continuing operations attributable to Ambac adjusted for amortization of intangible assets, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, acquisition and integration related expenses, severance and non-recurring income and loss items that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments.
Octave Specialty Group, Inc. 40 2025 Form 10-K Table of Contents , Adjusted Net Income and Adjusted Net Income Margin — We define Adjusted Net Income as net income (loss) from continuing operations attributable to Octave adjusted for amortization of intangible assets, change in fair value of contingent consideration and certain items of income and expense, including share-based compensation expense, acquisition and integration -related expenses, severance and non-recurring income and loss items that, in the opinion of management, significantly affect the period-over-period assessment of operating results, and the related tax effect of those adjustments.
In the fourth quarter of 2024 management decided to set loss reserves for programs that are runoff at the high end of the actuarial loss range, given these program can experience greater loss volatility than active programs.
Additionally, in 2024 management set loss reserves for programs that are runoff at the high end of the actuarial loss range, given these programs can experience greater loss volatility than active programs.
Seasonal impacts on the Insurance Distribution segment, and therefore Ambac's results, may increase or decrease over time depending on the relative growth of certain classes of business as well as acquisitions.
Seasonal impacts on the ID segment, and therefore Octave's results, may increase or decrease and shift over time depending on the relative growth of certain classes of business as well as the impact of acquisitions.
Net premiums written increased $8,858 for the year ended December 31, 2024 and $51,270 for the year ended December 31, 2023, compared to the comparable prior year periods, as shown below: Year Ended December 31, 2024 2023 2022 Net Premiums Written $ 88,682 $ 79,824 $ 28,554 Growth in net premiums written will typically track gross premiums written, but will also be impacted by the percentage of each program Everspan retains.
Net premiums written decreased $(14,784) for the year ended December 31, 2025, and increased $8,858 for the year ended December 31, 2024, compared to the comparable prior year periods, as shown below: Year Ended December 31, 2025 2024 2023 Net Premiums Written $ 73,898 $ 88,682 $ 79,824 The decline in net premiums written will typically track gross premiums written but will also be impacted by the percentage of each program Everspan retains.
Ambac Financial Group, Inc. 28 2024 Form 10-K Table of Contents , Organization of Information MD&A includes the following sections: Page Strategies to Enhance Shareholder Value 29 Overview 29 Critical Accounting P olicies and Estimates 30 Results of Operations 34 Liquidity and Capital Resources 39 Balance Sheet 40 Accounting Standards 43 Non-GAAP Financial Measures 43 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.
Octave Specialty Group, Inc. 25 2025 Form 10-K Table of Contents , Organization of Information MD&A includes the following sections: Page Strategies to Enhance Shareholder Value 26 Overview 26 Critical Accounting Policies and Estimates 27 Results of Operations 30 Liquidity and Capital Resources 35 Balance Sheet 36 Accounting Standards 38 Non-GAAP Financial Measures 39 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.
Under the quantitative assessment, the determination of fair value includes assumptions, which are considered Level 3 inputs, that are subject to risk and uncertainty. We consider different valuation approaches in the quantitative assessment.
There was no goodwill impairment for any of the reporting units. Under the quantitative assessment, the determination of fair value includes assumptions, which are considered Level 3 inputs, that are subject to risk and uncertainty. We consider different valuation approaches in the quantitative assessment.
For those reinsurance counterparties that do not currently post collateral, Ambac’s reinsurers are well capitalized, highly rated, authorized capacity providers. Ambac benefited from letters of credit and collateral amounting to approximately $62,792 from its reinsurers at December 31, 2024.
Those reinsurance counterparties that do not currently post collateral are well-capitalized, highly rated, authorized capacity providers. Octave benefited from letters of credit and collateral amounting to approximately $88,732 from its reinsurers at December 31, 2025.
As of December 31, 2024 and 2023, an aggregate of $333,562 and $47,289, respectively, of acquired intangible assets, net of accumulated amortization, was recorded on the Consolidated Balance Sheets, of which $323,720 and $44,585, respectively, represented customer relationships.
As of December 31, 2025 and 2024, an aggregate of $463,785 and $333,562, respectively, of acquired intangible assets, net of accumulated amortization, was recorded on the Consolidated Balance Sheets, of which $446,835 and $323,720, respectively, represented customer relationships.
If our assumptions or estimates in our fair value calculations change or if any of the above subjective factors vary from what was expected, this may impact our impairment analysis and result in a decline in fair value that may trigger future impairment charges.
Changes to these or other assumptions or estimates in our fair value calculations or variances to any of the above subjective factors from what was expected, could impact our impairment analysis and result in a decline in fair value that may trigger future impairment charges.
Under GAAP, all fixed maturity investments are reported at fair value. • Majority owned subsidiaries are not consolidated; rather, the equity basis of accounting is utilized and the carrying values of these investments are subject to admissibility tests.
Under GAAP, all fixed maturity investments are reported at fair value. • Majority-owned subsidiaries are not consolidated; rather, the equity basis of accounting is utilized and the carrying Octave Specialty Group, Inc. 38 2025 Form 10-K Table of Contents , values of these investments are subject to admissibility tests.
Beginning December 31, 2024, Ambac replaced the non-GAAP measure Adjusted Net Income with new non-GAAP measures Adjusted Net Income and Adjusted Net Income Margin and added Adjusted EBITDA and Adjusted EBITDA Margin to Ambac Financial Group, Inc. 43 2024 Form 10-K Table of Contents , better align with other participants in the Property & Casualty insurance industry, including insurance carriers and other peers in the insurance distribution business.
Beginning December 31, 2024, Octave replaced the non-GAAP measure Adjusted Net Income with new non-GAAP measures Adjusted Net Income and Adjusted Net Income Margin and added Adjusted EBITDA and Adjusted EBITDA Margin to better align with other participants in the Property & Casualty insurance industry, including insurance carriers and other peers in the insurance distribution business.
The increase in the loss and LAE ratio for the year ended December 31, 2024, compared to December 31, 2023, was partially offset by a benefit to acquisition costs as a result of sliding scale commission arrangements with program partners. Certain Everspan programs were structured to include sliding scale commission arrangements within a loss ratio range.
The decrease in the loss and LAE ratio for the year ended December 31, 2025, compared to December 31, 2024, additionally had further improvement driven by benefits within acquisition costs as a result of sliding scale commission arrangements with program partners. Certain Everspan programs were structured to include sliding scale commission arrangements within a loss ratio range.
If our reported loss development pattern was 5% faster, the net indicated reserves would be approximately 4% lower. • For the expected losses we utilize industry benchmark loss ratios and internal pricing loss ratios applied to earned premium.
If our reported loss development Octave Specialty Group, Inc. 28 2025 Form 10-K Table of Contents , pattern was 5% faster, the net indicated reserves would be approximately 4.3% lower. • For the expected losses we utilize industry benchmark loss ratios and internal pricing loss ratios applied to earned premium.
Year Ended December 31, 2024 2023 2022 Cash provided by (used in): Operating activities $ 762 $ 36,948 $ 70,368 Investing activities (166,371) (26,679) (41,162) Financing activities 194,219 (10,986) (19,235) Net cash flow $ 28,610 $ (717) $ 9,971 Operating Activities for Continuing Operations Operating cash flows during the year ended December 31, 2024 were adversely impacted by transaction related costs for the acquisition of Beat and the sale of AAC, together with interest payments on Cirrata's short term borrowing.
Year Ended December 31, 2025 2024 2023 Cash provided by (used in): Operating activities $ (52,283) $ 762 $ 36,948 Investing activities 199,936 (166,371) (26,679) Financing activities (126,298) 194,219 (10,986) Net cash flow $ 21,355 $ 28,610 $ (717) Operating Activities for Continuing Operations Operating cash flows during the year ended December 31, 2025 were adversely impacted by transaction-related costs for the acquisition of Octave Ventures and the sale of AAC, together with interest payments on Octave Partners's short-term borrowing.
Management typically selects the respective midpoint loss ratio between the actuarial determined central and high estimate for its active programs and lines of business for each respective accident year when recording loss and loss adjustment expense reserves.
At December 31, 2025, management selected the respective midpoint loss ratio between the actuarially determined central and high estimate for active and runoff programs and lines of business for each respective accident year when recording loss and loss adjustment expense reserves.
Gross premiums written increased $109,484 for the year ended December 31, 2024, and $126,908 for the year ended December 31, 2023, compared to the comparable prior year periods, as shown below. Year Ended December 31, 2024 2023 2022 Gross Premiums Written $ 382,771 $ 273,287 $ 146,379 Growth is primarily driven by the number and size of active programs.
Gross premiums written decreased $(22,322) for the year ended December 31, 2025, and increased $109,484 for the year ended December 31, 2024, compared to the comparable prior year periods, as shown below. Year Ended December 31, 2025 2024 2023 Gross Premiums Written $ 360,449 $ 382,771 $ 273,287 Changes are primarily driven by the number and size of active programs.
(2) Includes $43,751 and $0 total loss and loss expense reserves on a gross and net of reinsurance basis related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company, Consolidated National Insurance Company and Consolidated Specialty Insurance Company. All legacy liabilities remain obligations of affiliates of the sellers through reinsurance and contractual indemnities.
(2) Includes $23,530 and $0 total loss and loss expense reserves on a gross and net of reinsurance basis related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company, and Consolidated Specialty Insurance Company.
STATUTORY BASIS FINANCIAL RESULTS AFG's U.S. insurance subsidiaries prepare financial statements under accounting practices prescribed or permitted by its domiciliary state regulator (“SAP”) for determining and reporting the financial condition and results of operations of an insurance company.
INSURANCE BASIS FINANCIAL RESULTS OSG's U.S. insurance subsidiaries prepare financial statements under accounting practices prescribed or permitted by its domiciliary state regulator (“SAP”) for determining and reporting the financial condition and results of operations of an insurance company. The NAIC Accounting Practices and Procedures manual (“NAIC SAP”) is adopted as a component of prescribed practices by each domiciliary state.
Year Ended December 31, 2024 2023 2022 Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Net income (loss) (Continuing Operations) $ 10,469 $ (6,881) $ (62,509) $ (58,921) $ 335 $ 7,133 $ (30,701) $ (23,232) $ (6,346) $ 4,524 $ (33,422) $ (35,244) Adjustments: Add: Acquisition and integration related expenses — — 27,388 27,388 — — 567 567 — — 593 593 Add: Intangible amortization — 17,602 — 17,602 — 4,152 — 4,152 — 2,921 — 2,921 Add: Equity-based compensation expense 414 — 8,941 9,355 634 — 11,632 12,266 208 — 11,024 11,232 Add: Severance and restructuring expense — 248 7,352 7,600 — — — — 481 — — 481 Add: Other non-operating income (losses) (1) (7,500) — 2,318 (5,182) — — 279 279 — — (935) (935) Adjusted net income (loss) before tax and NCI 3,383 10,969 (16,510) (2,158) 969 11,285 (18,223) (5,968) (5,657) 7,445 (22,740) (20,952) Income tax effects — — — — — — — — — — — — Adjusted net income (loss) before NCI 3,383 10,969 (16,510) (2,158) 969 11,285 (18,223) (5,968) (5,657) 7,445 (22,740) (20,952) Net (income) loss attributable to NCI — (6,448) — (6,448) — (2,102) — (2,102) — (1,463) — (1,463) Adjusted net income (loss) attributable to Ambac stockholders $ 3,383 $ 4,521 $ (16,510) $ (8,606) $ 969 $ 9,183 $ (18,223) $ (8,070) $ (5,657) $ 5,982 $ (22,740) $ (22,415) (1) Other non-operating expense includes one time add-backs related to gain on sale of CNIC, partially offset by losses related to minority interest strategy and write down of certain capitalized software. costs.
Year Ended December 31, 2025 2024 2023 Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Net income (loss) (Continuing Operations) $ 2,956 $ (15,353) $ (83,406) $ (95,802) $ 10,469 $ (6,881) $ (62,509) $ (58,921) $ 335 $ 7,133 $ (30,701) $ (23,232) Adjustments: Add: Acquisition and integration related expenses — 375 9,106 9,481 — — 27,388 27,388 — — 567 567 Add: Intangible amortization — 38,044 — 38,044 — 17,602 — 17,602 — 4,152 — 4,152 Add: Equity-based compensation expense 447 368 11,494 12,309 414 — 8,941 9,355 634 — 11,632 12,266 Add: Severance and restructuring expense — 60 23,065 23,125 — 248 7,352 7,600 — — — — Add: Other non-operating (income) losses (1) — (591) 5,108 4,517 (7,500) — 2,318 (5,182) — — 279 279 Adjusted net income (loss) before tax and NCI 3,403 22,903 (34,633) (8,328) 3,383 10,969 (16,510) (2,158) 969 11,285 (18,223) (5,968) Income tax effects (58) (6,009) 58 (6,009) — — — — — — — — Adjusted net income (loss) before NCI 3,345 16,894 (34,575) (14,337) 3,383 10,969 (16,510) (2,158) 969 11,285 (18,223) (5,968) Net (income) loss attributable to NCI — (13,394) — (13,394) — (6,448) — (6,448) — (2,102) — (2,102) Adjusted net income (loss) attributable to shareholders $ 3,345 $ 3,500 $ (34,575) $ (27,731) $ 3,383 $ 4,521 $ (16,510) $ (8,606) $ 969 $ 9,183 $ (18,223) $ (8,070) (1) Other non-operating expense includes one-time add-backs related to gain on sale of CNIC, partially offset by losses related to minority interest strategy and write-down of certain capitalized software. costs.
Loss and loss adjustment expense reserves by line of business were as follows as of December 31, 2024 and December 31, 2023: 2024 Gross Net Line Case IBNR Total Case IBNR Total Commercial Auto $ 66,092 $ 92,379 $ 158,471 $ 12,532 $ 16,188 $ 28,720 Excess and General Liability 7,111 78,348 85,459 1,317 13,540 14,857 Workers Compensation 6,640 7,825 14,465 6,640 7,825 14,465 Non-standard Personal Auto 10,393 2,296 12,689 10 2 12,000 Surety 1,176 10,041 11,217 — — — ULAE (1) — 12,238 12,238 — 6,578 6,578 Other (2) 8,639 45,884 54,523 111 2,066 2,177 Loss and Loss Expense Reserves $ 100,051 $ 249,011 $ 349,062 $ 30,600 $ 48,197 $ 78,797 (1) Unallocated loss adjustment expenses.
All legacy liabilities Octave Specialty Group, Inc. 27 2025 Form 10-K Table of Contents , remain obligations of affiliates of the sellers through reinsurance and contractual indemnities. 2024 Gross Net Line Case IBNR Total Case IBNR Total Commercial auto $ 66,092 $ 92,379 $ 158,471 $ 12,532 $ 16,188 $ 28,720 Excess and general liability 7,111 78,348 85,459 1,317 13,540 14,857 Workers compensation 6,640 7,825 14,465 6,640 7,825 14,465 Non-standard personal auto 10,393 2,296 12,689 10,241 1,943 12,185 Surety 1,176 10,041 11,217 — — — ULAE (1) — 12,238 12,238 — 6,578 6,578 Other (2) 8,639 45,884 54,523 111 2,066 2,177 Loss and Loss Expense Reserves $ 100,051 $ 249,011 $ 349,062 $ 30,831 $ 48,139 $ 78,981 (1) Unallocated loss adjustment expenses.
Losses at the low end of the range would be below our recorded gross and net loss expense reserves by approximately $33,400 and $6,900, respectively at December 31, 2024, and losses at the high end of the range would exceed our recorded gross and net loss and loss adjustment expense reserve by approximately $4,500 and $1,000, respectively at December 31, 2024.
Losses at the low end of the range would be below our recorded gross and net loss expense reserves by approximately $49,900 and $12,500, respectively at December 31, 2025, and losses at the high end of the range would exceed our recorded gross and net loss and loss adjustment expense reserve by approximately $14,600 and $2,200, respectively, at December 31, 2025.
Investments to the Consolidated Financial Statements in this Annual Report on Form 10-K located in Part II. Item 8 for information about the composition of fixed maturity securities and other investments by asset class.
Refer to Note 6. Investments to the Consolidated Financial Statements in this Annual Report on Form 10-K located in Part II. Item 8 for information about the composition of fixed maturity securities and other investments by asset class. Premium Receivables. Octave's premium receivables increased to $75,085 at December 31, 2025, from $57,222 at December 31, 2024.
Results of Operations by Segment Specialty Property and Casualty Insurance Year Ended December 31, 2024 2023 2022 Gross premiums written $ 382,771 $ 273,287 $ 146,379 Net premiums written 88,682 79,824 28,554 Revenues: Net premiums earned $ 99,005 $ 51,911 $ 13,869 Net investment income 6,399 3,795 1,605 Net investment gains (losses), including impairments 1 (36) (46) Program fees 13,506 8,437 3,095 Other income 7,409 (6) (58) Total 126,320 64,101 18,465 Expenses: Losses and loss adjustment expenses 72,626 36,712 9,071 Policy acquisition costs 23,666 10,557 2,535 General and administrative expenses 17,806 16,449 13,205 Net (gain) loss attributable to NCI interest 2 (1) 15 EBITDA 12,222 $ 383 $ (6,346) Pretax income (loss) from continuing operations $ 12,222 $ 383 $ (6,346) Retention Ratio (1) 23.2 % 29.2 % 19.5 % Loss and LAE Ratio (2) 73.4 % 70.7 % 65.4 % Expense Ratio (3) 28.2 % 35.8 % 91.2 % Combined Ratio (4) 101.6 % 106.5 % 156.6 % Ambac's stockholders equity (5) $ 133,266 $ 121,678 $ 112,363 (1) Retention ratio is defined as net premiums written divided by gross premiums written.
Specialty Property and Casualty Insurance Year Ended December 31, 2025 2024 2023 Gross premiums written $ 360,449 $ 382,771 $ 273,287 Net premiums written 73,898 88,682 79,824 Revenues: Net premiums earned $ 67,232 $ 99,005 $ 51,911 Investment income 6,811 6,400 3,795 Program fees 14,322 13,506 8,437 Other income 38 7,409 (42) Total 88,403 126,320 64,101 Expenses: Losses and loss adjustment expenses 47,193 72,626 36,712 Policy acquisition costs 15,790 23,666 10,557 General and administrative 22,090 17,806 16,449 Net (gain) loss attributable to NCI interest — 2 (1) Pretax income (loss) $ 3,330 $ 12,222 $ 383 EBITDA 3,330 $ 12,222 $ 383 Retention Ratio (1) 20.5 % 23.2 % 29.2 % Loss and LAE Ratio (2) 70.2 % 73.4 % 70.7 % Expense Ratio (3) 35.0 % 28.2 % 35.8 % Combined Ratio (4) 105.2 % 101.6 % 106.5 % Octave's stockholders equity (5) $ 140,278 $ 133,266 $ 121,678 (1) Retention ratio is defined as net premiums written divided by gross premiums written.
Insurance Contracts, respectively, to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K, for further information on loss and loss adjustment expenses. Ambac Financial Group, Inc. 42 2024 Form 10-K Table of Contents , Short-term Debt.
Insurance Contracts, respectively, to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K, for further information on loss and loss adjustment expenses. Short and Long-term Debt. Octave borrowed under a short-term credit facility to provide partial funding of the acquisition of Octave Ventures in 2024.
Goodwill impairment evaluation We perform the impairment assessment of goodwill at the reporting unit level within our Insurance Distribution segment on an annual basis or more frequently if circumstances indicate a possible impairment.
GOODWILL AND INTANGIBLE IMPAIRMENT ANALYSIS Goodwill impairment evaluation We perform the impairment assessment of goodwill at the reporting unit level within our ID segment on an annual basis or more frequently if circumstances indicate a possible impairment. We have determined that each of the entities acquired in the ID segment represent an individual reporting unit.
Net investment income consists of interest income, including the net effect of discount accretion and premium amortization, from fixed maturity securities classified as available-for-sale and net gains (losses) on pooled investment funds which are reported under the equity method. These funds and certain other investments are reported in Other investments on the Consolidated Balance Sheets.
The growth is a function of premiums ceded to reinsurers; driven by changes in direct premiums written. Net Investment Income. Net investment income consists of interest income, including the net effect of discount accretion and premium amortization, from fixed maturity securities classified as available-for-sale and net gains (losses) on pooled investment funds which are reported under the equity method.
Corporate Corporate consists of our holding company and shared services operations ("Corporate"). Corporate provides financial, technological and human resources to Ambac's two segments and is responsible for the function of AFG as a publicly traded company. Corporate revenues totaled $10,259 and $9,080 and $3,737 for the years ended December 31, 2024, 2023 and 2022, respectively.
Corporate provides financial, technological and human resources to Octave's two segments and is responsible for the function of OSG as a publicly-traded company. Corporate revenues totaled $(907) and $10,259 for the years ended December 31, 2025 and 2024, respectively.
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. 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.
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 b usiness in September 2025.
For every 1.0% higher or lower the expected losses are, we would expected our net indicated reserves to Ambac Financial Group, Inc. 31 2024 Form 10-K Table of Contents , increase or decrease by approximately 0.55%. If our expected losses were 5% higher, the net indicated reserves would be approximately 3% higher.
For every 1.0% higher or lower the expected losses are, we would expect our net indicated reserves to increase or decrease by approximately 0.6%. If our expected losses were 5% higher, the net indicated reserves would be approximately 3.2% higher. If our expected losses were 5% lower, the net indicated reserves would be approximately 3.2% lower.
Net premiums earned for the year ended December 31, 2024, increased by $47,094 or 90.7% and for the year ended December 31, 2023, increased $38,042 or 274% compared to the respective priority years, as shown below.
Net premiums earned for the year ended December 31, 2025, decreased by $(31,773) or (32.1)% and increased by $47,094 or 90.7% for the year ended December 31, 2024, compared to the comparable prior year periods, as shown below.
These sliding scale arrangements help to partially mitigate net income volatility. Such benefit reduced the Specialty Property and Casualty Insurance segments expense ratio by 0.8% and 3.2% for the years ended December 31, 2024 and 2023, respectively.
These sliding scale arrangements help to partially mitigate net income volatility. Such benefit reduced the Specialty Property and Casualty Insurance segments expense ratio by 2.1% and 0.8% for the years ended December 31, 2025 and 2024. Everspan's insurance risk is primarily concentrated via casualty insurance, primarily related to commercial auto, workers compensation, excess and general liability lines of business.
As of December 31, 2024, 2023, and 2022 we had 27, 23 and 14 programs across approximately ten lines of business, with a focus on the casualty sector and minimal property exposure. Net Premiums Written.
As of December 31, 2025 and 2024 we had 25 and 27 programs, respectively, across approximately ten lines of business, with a focus on the casualty sector and minimal property exposure. The decline in active programs from 2024 was a strategic decision to improve capital allocation and return on capital. Net Premiums Written.
December 31, 2024 2023 Cash and short-term investments $ 74,423 $ 96,563 Other investments (1) 28,117 32,392 Other net assets 16,674 17,628 Total $ 119,214 $ 146,583 (1) Includes strategic debt and minority equity investments in insurance services businesses of $20,617 and $26,420 at December 31, 2024 and 2023, respectively.
December 31, 2025 2024 Cash and short-term investments $ 49,471 $ 74,423 Other investments (1) 25,124 28,117 Other net assets 1,889 16,674 Total $ 76,484 $ 119,214 (1) Includes minority equity investments in insurance services businesses of $17,517 and $20,618 at December 31, 2025 and December 31, 2024, respectively.
Additionally, to corroborate our estimated fair value, we perform a market capitalization reconciliation to determine if the implied control premium is reasonable.
Additionally, to corroborate our estimated fair value, we perform a market capitalization reconciliation to determine if the implied control premium is reasonable. For reporting units evaluated under the quantitative assessment, estimated fair values exceeded carrying values by between 1% and 19%.
Ambac's premium receivables increased to $57,222 at December 31, 2024, from $45,893 at December 31, 2023. As further discussed in Note 8. Insurance Contracts to the Consolidated Financial Statements, in this Annual Report Form 10-K located in Part II. Item 8, the increase is primarily due to growth in the Specialty Property and Casualty Insurance Segment.
As further discussed in Note 8. Insurance Contracts to the Consolidated Financial Statements, in this Annual Report on Form 10-K located in Part II. Item 8, the increase is primarily due to growth in certain programs within the Specialty Property and Casualty Insurance Segment. All premium receivables are in a payment currency of U.S. Dollars.
In addition, we are eligible to receive profit sharing contingent commissions on certain of its programs based on the underwriting results of the policies it places with the carrier, which may cause some variability in revenue and earnings.
In addition, we are eligible to receive profit sharing contingent commissions ("Profit Commissions") based on the underwriting results of certain programs underwritten by our MGA/Us. These profit commissions may fluctuate from period to period resulting in some variability in revenue and earnings.
The shift in the loss and LAE ratio was driven by commercial auto loss experience in the prior accident years and a higher selected loss ratio for programs in runoff.
Prior year adverse development was driven primarily by higher excess liability and commercial auto loss experience in the prior accident years for year ended December 31, 2025, whereas the year ended December 31, 2024, included higher commercial auto loss experience in the prior accident years and a higher selected loss ratio for programs in runoff.
In some cases, the Insurance Distribution business will also earn profit commissions based on the underwriting performance of the business that it underwrites Profit commissions by their nature may be volatile whereas base commissions tend to be more steady. Commission income was $92,023 and $51,281 for the years ended December 31, 2024 and 2023, respectively.
The ID business earns commission income as a percentage of the premium it places with insurance, reinsurance and other capacity providers. In some cases, the ID business will also earn profit commissions based on the underwriting performance of the business that it underwrites. Profit commissions by their nature may be volatile whereas base commissions tend to be more steady.
For further information about investment funds held, refer to Note 6. Investments to the Consolidated Financial Statements, included in Part II, Item 8 in this Annual Report on Form 10-K. Net investment income was $14,448, $13,159, and $4,503 for the years ended years ended December 31, 2024, 2023 and 2022, respectively.
These funds and certain other investments are reported in Other investments on the Consolidated Balance Sheets. For further information about investment funds held, refer to Note 6. Investments to the Consolidated Financial Statements, included in Part II, Item 8 in this Annual Report on Form 10-K.
The excess of purchase price over the fair value of assets acquired, liabilities assumed, and NCI interests (both redeemable and nonredeemable) is recorded as goodwill.
The excess of purchase price over the fair value of assets acquired, liabilities assumed, and NCI interests (both redeemable and nonredeemable) is recorded as goodwill. We may refine our estimates and make adjustments to the assets acquired and liabilities assumed over a measurement period, not to exceed one year from the date of acquisition.
For example, Employer Stop Loss business, our largest A&H line of business, has seasonality in January and July, which results in revenue and earnings concentrations in the first and third quarters each calendar year.
For example, Employer Stop Loss business and other A&H lines produce the majority of their business in January and July, which results in revenue and earnings concentrations in the first and third quarters of each Octave Specialty Group, Inc. 33 2025 Form 10-K Table of Contents , calendar year.
Ambac Financial Group, Inc. 44 2024 Form 10-K Table of Contents , Organic revenue growth rate to Total revenue growth rate, the most directly comparable GAAP measure, for each of the periods indicated is as follows (in percentages): Year Ended December 31, Year Ended December 31, 2024 2023 % Growth 2023 2022 % Growth Total Insurance Distribution revenue (1) $ 99,236 $ 51,546 48.1 % $ 51,546 $ 31,410 64.1 % Less: Acquired revenues (45,202) — (16,446) — Less: Profit commission and contingent commission income (4,273) (4,489) (4,489) (3,745) Total Organic Revenue & Growth Percentage $ 49,761 $ 47,057 5.4 % $ 30,611 $ 27,665 10.6 % (1) Total Insurance Distribution revenue includes investment income.
Organic revenue growth rate to Total revenue growth rate, the most directly comparable GAAP measure, for each of the periods indicated is as follows (in percentages): Year Ended December 31, Year Ended December 31, 2025 2024 % Growth 2024 2023 % Growth Total Insurance Distribution revenue (1) $ 163,855 $ 99,236 65.1 % $ 99,236 $ 51,546 92.5 % Less: Acquired revenues (2) (50,102) (1,200) (45,202) — Less: Profit commission and contingent commission income (11,898) (9,031) (4,273) (4,489) Less: Impact of F.X. rates 2,572 (183) — — Total Organic Revenue & Growth Percentage $ 104,427 $ 88,822 17.6 % $ 49,761 $ 47,057 5.7 % (1) Total ID revenue includes investment income.
Insurance Distribution Year Ended December 31, 2024 2023 2022 Premiums placed $ 493,372 $ 230,606 $ 135,467 Commission income $ 92,023 $ 51,281 $ 30,695 Commission expense 40,876 29,465 17,641 Net commissions 51,147 21,816 13,054 Net investment income 787 64 — Net gains (losses) on derivatives 106 — — Other income (expense) 6,320 200 715 Expenses: General and administrative expenses 38,707 10,598 6,293 EBITDA 19,653 11,483 7,476 Depreciation 8 42 31 Intangible amortization 17,602 4,152 2,921 Pretax income (loss) $ (7,809) $ 7,289 $ 4,524 Ambac's stockholders equity (1) $ 276,886 $ 105,377 $ 92,802 (1) Represents the share of Ambac stockholders equity for each subsidiary within the Insurance Distribution segment, including intercompany eliminations.
Results of Operations by Segment Insurance Distribution Year Ended December 31, 2025 2024 2023 Premiums placed $ 951,781 $ 493,372 $ 230,606 Commission income $ 143,381 $ 92,023 $ 51,281 Commission expense 37,037 40,876 29,465 Net commissions 106,344 51,147 21,816 Servicing and other fees 20,419 6,353 — Net investment income 1,514 787 64 Other income (expense) (1,588) 73 200 Expenses: General and administrative 89,771 38,707 10,598 EBITDA 36,918 19,653 11,483 Interest Expense 18,640 9,379 — Depreciation 690 481 42 Intangible amortization 38,044 17,602 4,152 Pretax income (loss) $ (20,456) $ (7,809) $ 7,289 Octave's stockholders equity (1) $ 757,850 $ 218,344 $ 102,473 (1) Represents the share of Octave stockholders equity for each subsidiary within the ID segment, including intercompany eliminations.
If our expected losses were 5% lower, the net indicated reserves would be approximately 3% lower. Consequently, final outcomes may be greater or less than the estimates. The extent of the range and variability of loss and loss adjustment expense reserves could be further impacted by future changes in factors discussed above.
Consequently, final outcomes may be greater or less than the estimates. The extent of the range and variability of loss and loss adjustment expense reserves could be further impacted by future changes in factors discussed above. See “Risk Factors” in Part I, Item 1A in this Annual Report on Form 10-K.
The EBITDA for the year ended December 31, 2023, was $11,483, up $4,007 or 54% compared to the year ended December 31, 2022. The increase was primarily driven by increase in commission income due to acquisitions and organic growth. Insurance Distribution businesses may experience seasonal impacts on their revenues and operations.
The ID EBITDA for the years ended December 31, 2025 and 2024 was $36,918 and $19,653, respectively, up $17,265 or 88%. The increase was primarily driven by increase in commission income due to acquisitions and organic growth. ID businesses may experience seasonal impacts on their revenues and net results.
The allocation of the consideration utilizes significant estimates in determining the fair values of net assets acquired, which primarily consist of customer relationship intangible assets, redeemable NCI interests and nonredeemable NCI interests.
The allocation of the consideration utilizes significant estimates in determining the fair values of net assets acquired, which primarily consist of customer relationship intangible assets, but may include other finite-lived intangible assets including trade names or non-compete agreements. Measurement of the purchase balance sheet also requires valuation of redeemable NCI interests and nonredeemable NCI interests when applicable.
The increase was driven by organic growth in premiums placed as well as the acquisition of Beat in July 2024 and Riverton in August of 2023. Commission expense will largely track changes in gross commission.
The increase was driven by organic growth in premiums placed as well as the acquisition of Octave Ventures in July 2024 and ArmadaCorp in October of 2025. Commission expense will largely track changes in gross commission. Profit commissions were $12,400 and $9,031 for the years ended December 31, 2025 and 2024, respectively.
Ambac Financial Group, Inc. 45 2024 Form 10-K Table of Contents , Year Ended December 31, 2024 2023 2022 Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Net income (loss) margin 8.3 % (6.9) % (609.2) % (25.0) % 0.5 % 13.8 % (338.1) % (18.6) % (34.4) % 14.4 % (894.1) % (65.7) % Adjusted Net income (loss) attributable to Ambac stockholders margin 2.7 % 4.6 % (160.9) % (3.6) % 1.5 % 17.8 % (200.7) % (6.5) % (30.6) % 19.0 % (608.3) % (41.8) %
Year Ended December 31, 2025 2024 2023 Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Consoli-dated Net income (loss) margin 3.3 % (9.4) % NM (38.1) % 8.3 % (6.9) % NM (25.0) % 0.5 % 13.8 % NM (18.6) % Adjusted net income (loss) margin 3.8 % 14.0 % NM (3.3) % 2.7 % 11.1 % NM (0.9) % 1.5 % 21.9 % NM (4.8) %
Year Ended December 31, 2024 Year Ended December 31, 2023 Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total Premiums placed $ 493,372 $ 493,372 $ 230,606 $ 230,606 Gross premiums written $ 382,771 382,771 $ 273,287 273,287 Net premiums written 88,682 88,682 79,824 79,824 Total revenues 126,320 99,236 10,259 235,815 64,101 51,546 9,080 124,728 Total expenses 114,098 107,045 74,516 295,660 63,718 44,257 40,974 148,949 Pretax income (loss) 12,222 (7,809) (64,257) (59,845) 383 7,289 (31,894) (24,221) Net income (loss) 10,469 (6,881) (62,509) (58,921) 335 7,133 (30,701) (23,232) EBITDA 12,222 19,656 (62,396) (30,518) 383 11,483 (30,858) (18,991) Adjusted EBITDA 5,136 19,904 (16,397) 8,643 1,017 11,483 (18,380) (5,879) Net income (loss) attributable to Ambac shareholders 10,471 (7,244) (62,509) (59,282) 334 5,815 (30,701) (24,551) EBITDA attributable to Ambac shareholders 12,222 13,208 (62,396) (36,966) 383 9,381 (30,858) (21,093) Adjusted EBITDA attributable to Ambac common stockholders 5,136 13,456 (16,397) 2,195 1,017 9,381 (18,380) (7,981) Sale of AAC On June 4, 2024, AFG entered into a stock purchase agreement with American Acorn Corporation (the “Buyer”), a Delaware corporation owned by funds managed by Oaktree Capital Management, L.P., pursuant to which and subject to the conditions set forth therein, AFG will sell all of the issued and outstanding shares of common stock of AAC, a wholly-owned subsidiary of AFG, to Buyer for aggregate consideration of $420 in cash (the "AAC Sale").
Year Ended December 31, 2025 Year Ended December 31, 2024 Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total Specialty Property & Casualty Insurance Insurance Distribution Corporate & Other Total Premiums placed $ 951,781 $ 951,781 $ 493,372 $ 493,372 Gross premiums written $ 360,449 360,449 $ 382,771 382,771 Net premiums written 73,898 73,898 88,682 88,682 Total revenues 88,403 163,726 (907) 251,222 126,320 99,236 10,259 235,815 Total expenses 85,073 184,182 82,981 352,236 114,098 107,045 74,516 295,660 Pretax income (loss) 3,330 (20,456) (83,888) (101,014) 12,222 (7,809) (64,257) (59,845) Net income (loss) 2,956 (15,353) (83,406) (95,803) 10,469 (6,881) (62,509) (58,921) EBITDA 3,330 36,918 (80,670) (40,422) 12,222 19,653 (62,393) (30,518) Adjusted EBITDA 3,330 22,411 (80,670) (54,929) 5,136 19,901 (16,394) 8,643 Net income (loss) attributable to Octave shareholders 2,956 (17,954) (83,406) (98,404) 10,471 (7,244) (62,509) (59,282) EBITDA attributable to Octave shareholders 3,777 37,041 (33,789) 7,028 12,222 13,205 (62,393) (36,966) Adjusted EBITDA attributable to shareholders 3,777 22,542 (33,789) (7,471) 5,136 13,453 (16,394) 2,195 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").
Everspan typically retains up to 30% of each program. For the years ended December 31, 2024, 2023 and 2022, Everspan retained 23%, 29% and 17% of gross written premiums, respectively. The increased retention rate in 2023 compared to 2022 was driven by Everspan's participation on two assumed reinsurance transactions which have an effective retention rate of 100%.
Everspan typically retains up to 30% of each program. For the years ended December 31, 2025 and 2024, Everspan retained 20.5% and 23.2% of gross written premiums, respectively. The reduced retention rate in 2025 compared to 2024 was primarily driven by the managed non-renewal of certain programs. Net Premiums Earned.
When third parties are paid commissions to obtain business, the majority of Beat's commission income is reported net of any distribution and commission expenses, due to the nature of its program agreements. The majority of the Insurance Distribution Segment's other MGA/Us report their commission income gross of distribution and commission expenses.
The decrease in commission expense compared to commission income in 2025 relative to 2024 is primarily a result of the acquisition of Octave Ventures. Because third parties are paid commissions to obtain business, the majority of Octave Ventures's commission income is reported net of any distribution and commission expenses, due to the nature of its program agreements.
A summary of our financial results is shown below: Year Ended December 31, 2024 2023 2022 Revenues: Net premiums earned $ 99,005 $ 51,911 $ 13,869 Commission income 92,023 51,281 30,695 Program fees 13,506 8,437 3,095 Net investment income 14,448 13,159 4,503 Net investment gains (losses), including impairments (497) 19 (62) Net gains (losses) on derivative contracts 4,016 (279) 935 Other income 13,314 200 577 Expenses: Losses and loss adjustment expenses 72,626 36,712 9,071 Policy acquisition costs 23,666 10,557 2,535 Commission expense 40,876 29,465 17,641 General and administrative expenses 129,166 66,985 56,278 Intangible amortization 17,602 4,152 2,921 Interest expense 9,379 — — Provision (benefit) for income taxes from continuing operations (924) (989) (462) Net income (loss) from continuing operations (58,921) (23,232) (35,244) Net income (loss) from discontinued operations, net of income taxes (497,167) 28,183 557,364 Net income (loss) (556,088) 4,951 522,120 Less: net (gain) loss attributable to NCI (361) (1,319) (871) Plus: gain on purchase of auction market preferred shares — — 1,131 Net income (loss) attributable to Ambac shareholders $ (556,449) $ 3,632 $ 522,380 Ambac Financial Group, Inc. 34 2024 Form 10-K Table of Contents , Ambac's results for the year ended December 31, 2024 compared to the year ended December 31, 2023, and for the year ended December 31, 2023 compared to the year ended December 31, 2022 were impacted by the following: • Ambac's acquisitions within the Insurance Distribution segment have a significant impact on the comparability of results between 2024, 2023 and 2022.
A summary of our financial results is shown below: Year Ended December 31, 2025 2024 2023 Revenues: Commissions $ 143,381 $ 92,023 $ 51,281 Servicing and other fees 20,419 6,353 — Net premiums earned $ 67,232 $ 99,005 $ 51,911 Program fees 14,322 13,506 8,437 Investment income 10,647 14,448 13,159 Other (4,780) 10,480 (60) Expenses: Commissions 37,037 40,876 29,465 Losses and loss adjustment expenses 47,193 72,626 36,712 Policy acquisition costs 15,790 23,666 10,557 General and administrative 191,624 129,166 66,985 Intangible amortization and depreciation 41,952 19,947 5,230 Interest 18,640 9,379 — Provision (benefit) for income taxes from continuing operations (5,211) (924) (989) Net income (loss) from continuing operations (95,803) (58,921) (23,232) Net income (loss) from discontinued operations, net of income taxes (163,288) (497,167) 28,183 Net income (loss) (259,091) (556,088) 4,951 Less: net (gain) loss attributable to NCI (2,601) (361) (1,319) Net income (loss) attributable to shareholders $ (261,692) $ (556,449) $ 3,632 Octave's results for the year ended December 31, 2025 compared to the year ended December 31, 2024, were impacted by the following: • Acquisitions within the ID segment have had a significant impact on the comparability of results between 2025 and 2024. – Effective October 31, 2025, Octave acquired 100% of ArmadaCorp. – Effective September 1, 2025, Octave exercised its option to convert its $3,500 convertible note investment in Pivix and now owns approximately 74%. – Effective July 31, 2024, Octave acquired 60% of Octave Ventures. • The sale of AAC on September 29, 2025.
Total liabilities decreased by approximately $133,770 from December 31, 2023, to $6,862,857 as of December 31, 2024, (decrease of $654,181 relating to discontinued operation, partially offset by an increase of $520,411 from continuing operations). As of December 31, 2024, total stockholders’ equity was $1,054,661, compared with total stockholders’ equity of $1,414,614 at December 31, 2023.
Total liabilities decreased by approximately $5,725,706 from December 31, 2024 to $1,137,151 as of December 31, 2025 (decrease of $5,887,685 relating to discontinued operations, partially offset by an increase of $161,979 from continuing operations). As of December 31, 2025, total stockholders’ equity was $833,185, compared with total stockholders’ equity of $996,119 at December 31, 2024.
The Insurance Distribution segment placed premiums for its carriers of approximately $493,372 for the year ended December 31, 2024, up $262,766 or 114% as compared to the year ended December 31, 2023. The increase was primarily driven by acquisitions and organic growth.
The ID segment placed premiums for were approximately $951,781 for the year ended December 31, 2025, up $458,409 or 93% as compared to the year ended December 31, 2024. The increase was primarily driven by the inclusion of a full year of Octave Ventures, the acquisition of ArmadaCorp and organic growth.
BALANCE SHEET Total assets decreased by approximately $369,942 from December 31, 2023, to $8,058,378 at December 31, 2024, (decrease of $1,249,256 related to discontinued operation, partially offset by an increase of $879,314 from continuing operations).
BALANCE SHEET Total assets decreased by approximately $5,835,061 from December 31, 2024 to $2,223,317 at December 31, 2025 (decrease of $6,267,200 related to discontinued operations, partially offset by an increase of $432,139 from continuing operations).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor additional information about Ambac’s long-term debt obligations, Note 5. Discontinued Operation to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K. Ambac utilizes various systems, models and sensitivity scenarios to monitor and manage market risk. These models include estimates, made by management, which utilize current and historical market information.
Biggest changeOctave utilizes various systems, models and sensitivity scenarios to monitor and manage market risk. These models include estimates, made by management, which utilize current and historical market information. This market information is considered in management’s judgments about adverse sensitivity scenarios that are reasonably possible to occur in the near-term.
The selection of a 10% fair value stress is made only as an illustration of the hypothetical impact of adverse market movements on Ambac’s investments with equity value sensitivity. Actual market shocks could have materially different results.
The selection of a 10% fair value stress is made only as an illustration of the hypothetical impact of adverse market movements on Octave’s investments with equity value sensitivity. Actual market shocks could have materially different results.
Ambac’s investment portfolio includes a partnership interest in a private equity fund. The table below summarizes the decrease in fair value of Ambac’s pooled fund investment that would occur assuming an immediate and uniform 10% decline in NAV of the fund.
Octave’s investment portfolio includes a partnership interest in a private equity fund. The table below summarizes the decrease in fair value of Octave’s pooled fund investment that would occur assuming an immediate and uniform 10% decline in NAV of the fund.
Ambac’s investment portfolio includes securities denominated both in U.S. dollars and foreign currencies, which are sensitive to changes in interest rates and foreign currency exchange rates.
Octave’s investment portfolio includes securities denominated both in U.S. dollars and foreign currencies, which are sensitive to changes in interest rates and foreign currency exchange rates.
The following table summarizes the estimated change in fair value of our fixed maturity investment portfolio from a hypothetical immediate increase in interest rates of 100 basis points across the yield curve as of December 31, 2024 and 2023: December 31, 2024 2023 Fair value of fixed maturity and short-term investments $ 284,621 $ 335,735 Pre-tax impact of 100 basis point increase in interest rates Decrease in dollars $ (4,952) $ (3,558) As a percent of fair value 2 % 1 % Foreign Currency Risk.
The following table summarizes the estimated change in fair value of our fixed maturity investment portfolio from a hypothetical immediate increase in interest rates of 100 basis points across the yield curve as of December 31, 2025 and 2024: December 31, 2025 2024 Fair value of fixed maturity and short-term investments $ 268,737 $ 284,621 Pre-tax impact of 100 basis point increase in interest rates Decrease in dollars $ (4,143) $ (4,952) As a percent of fair value 2 % 2 % Foreign Currency Risk.
The following table summarizes the estimated decrease in fair value of these financial instruments assuming immediate 20% strengthening of the U.S. dollar relative to the British pounds sterling as of December 31, 2024 and 2023: Ambac Financial Group, Inc. 46 2024 Form 10-K Table of Contents , December 31, 2024 2023 Fair value of investments denominated in currencies other than the U.S. dollar $ 16,604 $ — Pre-tax loss from 20% strengthening of the U.S. dollar $ (3,321) $ — Fair value of FX forward contracts $ (317) $ — Pre-tax loss from 20% strengthening of the U.S. dollar $ (3,936) $ — Equity Sensitivity.
The following table summarizes the estimated decrease in fair value of these financial instruments assuming immediate 20% strengthening of the U.S. dollar relative to the British pounds sterling as of December 31, 2025 and 2024: December 31, 2025 2024 Fair value of investments denominated in currencies other than the U.S. dollar $ 18,750 $ 16,604 Pre-tax loss from 20% strengthening of the U.S. dollar $ (3,750) $ (3,321) Fair value of FX forward contracts $ (8) $ (317) Pre-tax loss from 20% strengthening of the U.S. dollar $ (4,800) $ (3,936) Equity Sensitivity.
Ambac's Insurance Distribution subsidiary, Beat Capital Partners Limited, has short-term investments denominated in British pounds sterling and is a party to foreign exchange forward contracts at December 31, 2024. These financial instruments would experience fair value losses if the U.S. dollar strengthened relative to the British pounds sterling.
Octave's ID subsidiary, Octave Ventures, has short-term investments denominated in British pounds sterling and is a party to foreign exchange forward contracts at December 31, 2025. These financial instruments would experience fair value losses if the U.S. dollar strengthened relative to the British pounds sterling.
Our fixed maturity investments are generally classified as available for sale, with the effect of market movements recognized immediately through Other comprehensive income, or through Net income when securities are sold or when an impairment charge is recorded. • Ambac also invests in limited partnerships and other alternative investments, primarily consisting of diversified pooled investment funds, which are reported as Other investments.
Our fixed maturity investments are generally classified as available-for-sale, with the effect of market movements recognized immediately through Other comprehensive income, or through Net income when securities are sold or when an impairment charge is recorded. • Octave invests in a limited partnership reported within Other investments.
Financial instruments for which fair value may be affected by changes in interest rates consist primarily of fixed maturity investment securities, long-term debt and interest rate derivatives. Increases to interest rates would result in declines in the fair value of our fixed maturity investment portfolio.
Financial instruments within Octave's continuing operations for which fair value may be affected by changes in interest rates consist primarily of fixed maturity investment securities. Increases to interest rates would result in declines in the fair value of our fixed maturity investment portfolio. Octave performs scenario testing to measure the potential for losses in volatile markets.
As discussed further below, the Company’s primary market risk exposures include those from changes in interest rates, foreign currency exchange rates and equity values of limited partnership and other alternative investments.
As discussed further below, the Company’s primary market risk exposures include those from changes in interest rates, foreign currency exchange rates and equity market values. • The primary market risks for fixed maturity and short-term investment securities are interest rate risk and foreign exchange rate risk.
December 31, 2024 2023 Fair value of investments in pooled funds $ 495,045 $ 456,981 Pre-tax impact of 10% decline in NAV of the funds $ (49,504) $ (45,698) Ambac Financial Group, Inc. 47 2024 Form 10-K Table of Contents ,
December 31, 2025 2024 Fair value of investments in pooled funds $ 7,454 $ 7,499 Pre-tax impact of 10% decline in NAV of the funds $ (745) $ (750) Octave Specialty Group, Inc. 42 2025 Form 10-K Table of Contents ,
These scenario tests include parallel and non-parallel shifts in the benchmark interest rate curve. We also monitor our interest rates exposure through periodic reviews of projected cash flows and durations of our asset and liability positions.
These scenario tests include parallel and non-parallel shifts in the benchmark interest rate curve.
This market information is considered in management’s judgments about adverse sensitivity scenarios that are reasonably possible to occur in the near-term. The impact of these scenarios do not consider the possible simultaneous movement in other market rates or prices, actions of management or other factors that could lessen or worsen actual results.
The impact of these scenarios does not consider the possibility of simultaneous movement in other market rates or prices, actions of management or other factors that could lessen or worsen actual results. For these reasons, the valuation results from these models could differ materially from amounts actually realized in the market. Market Risk Sensitivities Interest Rate Risk.
These funds are subject to equity value changes driven primarily by changes to their respective net asset value (“NAV”).
This fund is subject to equity value changes driven primarily by changes to their respective net Octave Specialty Group, Inc. 41 2025 Form 10-K Table of Contents , asset value (“NAV”). Octave’s share of the changes of the equity value of the fund is reported through Net income.
Removed
The nature and extent of the Company's exposures to these market risks vary significantly between AAC and its subsidiaries, which are presented as discontinued operations, and the continuing operations of the Company. • The primary market risks for fixed maturity and short-term investment securities are interest rate risk and foreign exchange rate risk.
Removed
Ambac’s share of the changes of the equity value of the funds is reported through Net income. • Although the long-term debt obligations of AAC and Ambac UK are reported at amortized cost and not adjusted for fair value changes, changes in interest rates could have a material impact on their fair value, though with no direct impact on our consolidated financial statements.
Removed
For these reasons, the valuation results from these models could differ materially from amounts actually realized in the market. Market Risk Sensitivities — Continuing Operations Interest Rate Risk. Financial instruments within Ambac's continuing operations for which fair value may be affected by changes in interest rates consist primarily of fixed maturity investment securities.
Removed
Increases to interest rates would result in declines in the fair value of our fixed maturity investment portfolio. Ambac performs scenario testing to measure the potential for losses in volatile markets. These scenario tests include parallel and non-parallel shifts in the benchmark interest rate curve.
Removed
The fair value sensitivity of Ambac's short-term debt is not material due to its floating rate coupon and maturity of July 31, 2025. For additional information about Ambac’s short-term debt see Note 12. Debt to the Consolidated Financial Statements included in Part II, Item 8 in this Annual Report on Form 10-K.
Removed
December 31, 2024 2023 Fair value of investments in pooled funds $ 7,499 $ 5,817 Pre-tax impact of 10% decline in NAV of the funds $ (750) $ (582) Market Risk Sensitivities — Discontinued Operations Interest Rate Risk.
Removed
Interest rate increases would also have a negative economic impact on expected future claim payments within the financial guarantee portfolio, primarily related to RMBS and student loan policies. Conversely, interest rate increases would generally lower the fair value of our long-term debt obligations. Ambac performs scenario testing to measure the potential for losses in volatile markets.
Removed
The following table summarizes the estimated change in fair value of our fixed maturity investment portfolio from a hypothetical immediate increase in interest rates of 100 basis points across the yield curve as of December 31, 2024 and 2023: December 31, 2024 2023 Fair value of fixed maturity investment (1) $ 1,436,817 $ 1,484,473 Pre-tax impact of 100 basis point increase in interest rates Decrease in dollars $ (50,461) $ (46,759) As a percent of fair value 3 % 3 % (1) Excludes investments in distressed Ambac-insured securities and securities held by VIEs consolidated as a result of Ambac’s financial guarantees.
Removed
The following table presents the impact on the fair value of our long-term debt obligations and interest rate derivatives of a hypothetical immediate decrease in interest rates of 100 basis points across the yield curve as of December 31, 2024 and 2023: December 31, 2024 2023 Fair value of long-term debt including accrued interest (1) $ (739,963) $ (697,183) Pre-tax impact of 100 basis point decrease in interest rates Increase in dollars $ (14,651) $ (24,037) As a percent of fair value 2 % 3 % Fair value of interest rate derivative net assets (liabilities) (1) $ (6,260) $ (9,593) Pre-tax impact of 100 basis point decrease in interest rates Pre-tax loss from change in fair value in dollars $ (3,053) $ (3,995) (1) Excludes long-term debt and derivative instruments of VIEs consolidated as a result of Ambac’s financial guarantees.
Removed
Foreign Currency Risk. Ambac has fixed maturity investments and investments in pooled funds denominated in currencies other than the U.S. dollar, primarily British pounds sterling and Euro. These financial instruments are primarily invested assets of Ambac UK and are held in consideration of non-U.S. dollar exposure in the financial guarantee insurance portfolio and operations of Ambac UK.
Removed
The adverse fair value impact of a stronger U.S. dollar relative to other currencies on investment holdings would be directionally offset by the economic benefits to non-U.S. dollar financial guarantees and other risk exposures.
Removed
The following table summarizes the estimated decrease in fair value of these financial instruments assuming immediate 20% strengthening of the U.S. dollar relative to the foreign currencies as of December 31, 2024 and 2023: December 31, 2024 2023 Fair value of investments denominated in currencies other than the U.S. dollar (1) $ 344,513 $ 463,336 Pre-tax impact of 20% strengthening of the U.S. dollar $ (68,903) $ (92,667) (1) Excludes investments in distressed Ambac-insured securities and securities held by VIEs consolidated as a result of Ambac’s financial guarantees.
Removed
Equity Sensitivity. Ambac’s investment portfolio includes equity and partnership interests in pooled funds with diverse asset holdings and strategies. The table below summarizes the decrease in fair value of Ambac’s pooled fund investments that would occur assuming an immediate and uniform 10% decline in NAV of the funds.
Removed
The selection of a 10% fair value stress is made only as an illustration of the hypothetical impact of adverse market movements on Ambac’s investments with equity value sensitivity. Actual market shocks could have materially different aggregate results and would likely not have a uniform impact on all funds given the diversity of the funds’ holdings and strategies.

Other OSG 10-K year-over-year comparisons