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The following tables present the changes in the Level 3 fair value category for the periods presented in 2026 and 2025. Octave classifies financial instruments in Level 3 of the fair value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to these unobservable inputs, the valuation models for Level 3 financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly. Thus, the gains and losses presented below include changes in the fair value related to both observable and unobservable inputs.

Level 3 - Financial Assets and Liabilities Accounted for at Fair Value

Investments

Derivatives

Total

Three Months Ended March 31, 2026:

Balance, beginning of period

—

Total gains/(losses) realized and unrealized:

Included in earnings

—

Included in other comprehensive income

—

Purchases

—

Settlements

—

Balance, end of period

—

The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date

—

The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date

—

Three Months Ended March 31, 2025:

Balance, beginning of period

—

Total gains/(losses) realized and unrealized:

Included in earnings

—

Included in other comprehensive income

—

Purchases

—

Settlements

—

Balance, end of period

—

The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date

—

The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date

—

Level 3 - Financial Assets and Liabilities Accounted for at Fair Value

Investments

Derivatives

Total

Three Months Ended March 31, 2026:

Balance, beginning of period

—

Total gains/(losses) realized and unrealized:

Included in earnings

—

Included in other comprehensive income

—

Settlements

—

Balance, end of period

—

The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date

—

The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date

—

Three Months Ended March 31, 2025:

Balance, beginning of period

—

Total gains/(losses) realized and unrealized:

Included in earnings

—

Included in other comprehensive income

—

Settlements

—

Balance, end of period

—

The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date

—

The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date

—

————————————————————————————————————————————————————————————————————————————nono

Gains and losses (realized and unrealized) relating to Level 3 assets and liabilities included in earnings for the three months ended March 31, 2026 and 2025 are reported as follows:

Three Months Ended March 31, 2026

Three Months Ended March 31, 2025

Net
Investment
Income

Net Gains
(Losses) on
Derivative
Contracts

Other
Income or
(Expense)

Net
Investment
Income

Net Gains
(Losses) on
Derivative
Contracts

Other
Income or
(Expense)

Total gains (losses) included in earnings for the period

—

Changes in unrealized gains (losses) relating to financial instruments still held at the reporting date

—

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM						10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended ~~September~~March 3031, ~~2025~~2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Commission File Number:						1-10777

~~AMBAC~~OCTAVE ~~FINANCIAL~~SPECIALTY GROUP, INC.

(Exact name of Registrant as specified in its charter)

Delaware

13-3621676

(State of incorporation)

(I.R.S. employer identification no.)

One World Trade Center

New York

10007

40 Wall Street

New York

10005

(Address of principal executive offices)

(Zip code)


	(212)	658-7470
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common stock par value $0.01 per share

~~AMBC~~OSG

New York Stock Exchange

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act): (Check one):

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of ~~November~~May 74, ~~2025~~2026, 4345,~~812~~013,~~035~~592 shares of common stock, par value $0.01 per share, of the Registrant were outstanding.

~~AMBAC~~OCTAVE ~~FINANCIAL~~SPECIALTY GROUP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

Cautionary Statement Pursuant to the Private Securities Litigation Reform Act of 1995					1
Item Number		Page	Item Number		Page
PART I. FINANCIAL INFORMATION			PART I (CONTINUED)
1	Unaudited Consolidated Financial Statements of ~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries			U.S. Insurance Statutory Basis Financial Results	4236
	Consolidated Balance Sheets (Unaudited)	2		Non-GAAP Financial Measures	4236
	Consolidated Statements of Total Comprehensive Income (Loss) (Unaudited)	3	3	Quantitative and Qualitative Disclosures About Market Risk	45
	Consolidated Statements of Income (Loss) (Unaudited)	3	3	Quantitative and Qualitative Disclosures About Market Risk	38
	Consolidated Statements of Stockholders' Equity (Unaudited)	5	4	Controls and Procedures	45
	Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	4	4	Controls and Procedures	38
	Consolidated Statements of Cash Flows (Unaudited)	7
	Consolidated Statements of Stockholders' Equity (Unaudited)	5
	Notes to Unaudited Consolidated Financial Statements	8	PART II. OTHER INFORMATION
	Consolidated Statements of Cash Flows (Unaudited)	6	PART II. OTHER INFORMATION
2	Management's Discussion and Analysis of Financial Condition and Results of Operations	31	1	Legal Proceedings	45
	Notes to Unaudited Consolidated Financial Statements	7	1	Legal Proceedings	38
	Overview	32	1A	Risk Factors	46
2	Management's Discussion and Analysis of Financial Condition and Results of Operations	27	1A	Risk Factors	38
	Critical Accounting Policies and Estimates	33	2	Unregistered Sales of Equity Securities and Use of Proceeds	55
	Overview	28	2	Unregistered Sales of Equity Securities and Use of Proceeds	39
	Results of Operations	33	3	Defaults Upon Senior Securities	56
	Critical Accounting Policies and Estimates	29	3	Defaults Upon Senior Securities	39
	Liquidity and Capital Resources	37	5	Other Information	56
	Results of Operations	29	5	Other Information	40
	Balance Sheet	39	6	Exhibits	56
	Liquidity and Capital Resources	32	6	Exhibits	39
	Accounting Standards	42	SIGNATURES		56
	Balance Sheet	34	SIGNATURES		40
	Accounting Standards	36

Ambac Financial Group, Inc. i ~~Third~~First Quarter ~~2025~~2026 Form 10-Q

Table of Contents

CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Management has included in Parts I and II of this Quarterly Report on Form 10-Q, statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “project,” “plan,” “believe,” “anticipate,” “intend,” “planned,” “potential” and similar expressions, or future or conditional verbs such as “will,” “should,” “would,” “could,” and “may,” or the negative of those expressions or verbs, identify forward-looking statements. We caution readers that these statements are not guarantees of future performance. Forward-looking statements are not historical facts, but instead represent only our beliefs regarding future events, which may by their nature be inherently uncertain and some of which may be outside our control. These statements may relate to plans and objectives with respect to the future, among other things, which may change. We are alerting you to the possibility that our actual results may differ, possibly materially, from the expected objectives or anticipated results that may be suggested, expressed or implied by these forward-looking statements. Important factors that could cause our results to differ, possibly materially, from those indicated in the forward-looking statements include, among others, those discussed under “Risk Factors.” in Part I, Item 1A of the ~~2023~~2025 Annual Report on Form 10-K and in Part II, Item 1A of this ~~quarterly~~Quarterly Report on Form 10-Q.

Any or all of management’s forward-looking statements, ~~here~~whether contained herein or in other publications, may ~~turn~~prove ~~out~~ to be incorrect and are based on management’s current belief or opinions. ~~Ambac~~Octave ~~Financial~~Specialty Group’s (“~~AFG~~OSG”) and its subsidiaries’ (collectively, “~~Ambac~~Octave” or the “Company”) actual results may ~~vary~~differ materially from those expressed in, or implied by, these forward-looking statements, and there are no guarantees about the performance of ~~Ambac~~Octave’s securities. Among events, risks, uncertainties or factors that could cause actual results to differ materially are: (1) the high degree of volatility in the price of ~~AFG~~OSG’s common stock; (2) uncertainty concerning the Company’s ability to achieve value for holders of its securities from the specialty property and casualty insurance business, the insurance distribution business, or related businesses; (3) greater than expected underwriting losses in the Company’s specialty property and casualty insurance business resulting in inadequacy of loss and loss expense reserves and the possibility that changes in reserves may result in further volatility of earnings or financial results; (4) credit risk throughout ~~Ambac~~Octave’s business, including but not limited to issuers of securities in our investment portfolios, and exposures to reinsurers; (5) ~~our inability to achieve investment objectives; (6)~~ the Company’s ~~inability~~level toof ~~generate~~indebtedness, ~~the~~including ~~significant~~its ~~amount~~ability ofto ~~cash~~generate ~~needed~~sufficient cash to service ~~its~~obligations, ~~debt~~refinance ~~and~~existing ~~financial obligations~~debt, ~~and~~or ~~its~~obtain ~~inability~~additional tofinancing ~~refinance~~on ~~its~~acceptable ~~indebtedness;~~terms, ~~(7)~~and the ~~Company’s~~resulting ~~indebtedness~~impact ~~could~~on ~~adversely affect the Company’s~~ financial condition and operating flexibility; (86) ~~Ambac~~dependence ~~may~~on ~~not~~third beparties, ~~able~~including tospecialty ~~obtain~~insurance ~~financing~~program partners, ~~refinance~~reinsurers, ~~its~~distribution ~~outstanding indebtedness~~relationships, orand ~~raise~~other ~~capital~~service onproviders, ~~acceptable terms or at all due to its outstanding indebtedness~~ and ~~financial~~the ~~condition; (9)~~risk ~~failure~~ of ~~specialty~~failures ~~insurance~~or ~~program~~disruptions ~~partners~~in totheir ~~properly market, underwrite or administer policies~~performance; (107) inability to obtain reinsurance coverage on economic terms; (118) loss of key relationships for the production of business in our specialty property and casualty and insurance distribution businesses or the inability to secure such additional relationships to produce expected results; (129) the impact of catastrophic public health events, environmental or natural events, or ~~global~~political orevents, ~~regional~~including ~~conflicts;~~as ~~(13)~~a ~~the~~result ~~risk~~of ~~that~~global ~~Ambac’s risk management policies and practices do not anticipate certain risks and/~~or ~~the~~regional ~~magnitude of potential for loss~~conflicts; (1410) restrictive covenants in agreements and instruments that impair ~~Ambac~~Octave’s ability to pursue or achieve its business strategies; (1511) regulatory risks, including disagreements with insurance regulators, changes in laws or ~~disputes~~regulations, ~~with~~and ~~Ambac'~~the Company’s ~~insurance~~ability ~~regulators~~to adapt to an evolving regulatory environment; (1612) risks ~~attendant~~related to ~~the~~changes ~~change~~ in the composition, ofvaluation, ~~securities~~or inperformance ~~Ambac~~of the Company’s investment portfolio;, ~~(17)~~including ~~adverse~~interest ~~impacts~~rate ~~from~~and ~~changes~~foreign incurrency ~~prevailing~~exchange ~~interest~~rate ~~rates~~fluctuations; (1813) events or circumstances that result in the impairment of our intangible assets and/or goodwill that were recorded in connection with Octave’s acquisitions; (14) the risk of litigation,

~~and/or goodwill that was recorded in connection with Ambac’s acquisitions; (19) the risk of litigation,~~ regulatory inquiries, investigations, claims or proceedings, and the risk of adverse outcomes in connection therewith; (2015) ~~the Company’s ability to adapt to the rapid pace of regulatory change; (21) actions of stakeholders whose interests are not aligned with broader interests of Ambac's stockholders; (22)~~ system security risks, data protection breaches and ~~cyber attacks~~cyberattacks; (2316) ~~failures in services or products provided by third parties; (24) political developments that disrupt the economies where the Company has insured exposures; (25)~~ our inability to attract and retain qualified executives, senior managers and other employees, or the loss of such personnel; (2617) ~~fluctuations in foreign currency exchange rates; (27) failure to realize our business expansion plans or failure of such plans to create value; (28)~~ greater competition for our specialty property and casualty insurance business and/or our insurance distribution business; (2918) loss or lowering of the AM Best rating for our property and casualty insurance company subsidiaries; (3019) disintermediation within the insurance industry or greater competition from technology-based insurance solutions or non-traditional insurance markets; (3120) changes in law or in the functioning of the healthcare market that impair the business model of our accident and health managing general ~~underwriter~~agents; (3221) ~~difficulties~~failure into ~~integrating~~successfully execute business expansion initiatives, integrate acquired businesses, ~~into~~or ~~our~~realize ~~business~~anticipated benefits from such efforts and significant obligations under put rights granted in completed acquisitions; and (3322) other risks and uncertainties that have not been identified at this time.

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. 1 ~~Third~~First Quarter ~~2025~~2026 Form 10-Q

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements of ~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

~~AMBAC~~OCTAVE ~~FINANCIAL~~SPECIALTY GROUP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

	September 30,		December 31,
	March 31,		December 31,
(Dollars in thousands, except share data) (September 30, 2025 (Unaudited))	2025		2024
(Dollars in thousands, except share data) (March 31, 2026 (Unaudited))	2026		2025
Assets:
Investments:
Fixed maturity securities - available-for-sale, at fair value (amortized cost of $132,617 and $162,124)	$	131,101	$	157,020
Fixed maturity securities - available-for-sale, at fair value (amortized cost of $139,242 and $123,414)	$	137,092	$	122,295
Short-term investments, at fair value (amortized cost of $295,815 and $127,588)	295,825		127,601
Short-term investments, at fair value (amortized cost of $92,295 and $146,434)	92,295		146,442
Other investments (includes $7,684 and $7,499 at fair value)	28,302		28,294
Other investments (includes $7,454 and $7,454 at fair value)	24,971		24,971
Total investments (net of allowance for credit losses of $0 and $0)	~~455~~254,~~228~~358		~~312~~293,~~915~~708
Cash and cash equivalents (including $24,247 and $17,669 of restricted cash)	51,767		47,275
Cash and cash equivalents (including $46,634 and $40,754 of restricted cash)	93,537		68,440
Premium receivables (net of allowance for credit losses of $200 and $142)	74,760		57,222
Premium receivables (net of allowance for credit losses of $500 and $500)	87,653		75,085
Commission and fees receivable	75106,~~480~~198		5586,~~377~~549
Reinsurance recoverable on paid and unpaid losses (net of allowance for credit losses of $100 and $100)	~~440~~469,~~462~~859		~~306~~436,~~191~~092
Deferred ceded premium	~~160~~145,~~906~~420		~~148~~146,~~300~~365
Policy acquisition costs	916,~~284~~451		89,~~572~~732
Intangible assets, less accumulated amortization	~~339~~458,~~197~~380		~~344~~474,~~775~~998
Goodwill	~~445~~533,~~382~~497		~~418~~540,~~234~~345
Other assets (net of allowance for credit losses of $238 and $238)	95,424		92,317
Other assets (net of allowance for credit losses of $350 and $350)	101,673		92,003
Assets of discontinued operations	—		6,267,200
Total assets	2,267,026		2,223,317
Total assets	2,147,890		8,058,378
Liabilities and Stockholders’ Equity:
Liabilities:
Unearned premiums	$	~~197~~198,~~133~~681	$	~~182~~187,~~446~~178
Loss and loss adjustment expense reserves	~~437~~487,~~539~~261		~~349~~459,~~062~~990
Ceded premiums payable	8789,~~635~~148		5380,~~002~~561
Deferred program fees and reinsurance commissions	76,~~754~~929		76,~~500~~978
Commissions payable	~~109~~118,~~317~~086		71115,~~431~~555
Deferred taxes	6860,~~865~~553		7065,~~135~~217
Short-term debt	—		~~150,000~~—
Accrued interest payable	—		2,560
Long-term debt	117,062		117,558
Other liabilities	92,226		89,036
Accrued interest payable	1,305		1,343
Liabilities of discontinued operations	—		5,887,685
Other liabilities	158,458		102,771
Total liabilities	1,~~000~~237,~~469~~483		61,~~862~~137,~~857~~151
Commitments and contingencies (See Note 13)
Commitments and contingencies (See Note 14)
Redeemable noncontrolling interest	~~188~~195,~~247~~969		~~140~~252,~~860~~981
Stockholders’ equity:
Preferred stock, par value $0.01 per share; 20,000,000 shares authorized shares; issued and outstanding shares—none	—		—
Common stock, par value $0.01 per share; 130,000,000 shares authorized; issued shares: 48,876,882 and 48,875,167	489		489
Common stock, par value $0.01 per share; 130,000,000 shares authorized; issued shares: 48,876,882 and 48,876,882	489		489
Additional paid-in capital	~~367~~380,~~077~~263		~~331~~369,~~007~~860
Accumulated other comprehensive income (loss)	11,780		(188,436)
Accumulated other comprehensive income	1,224		8,483
Retained earnings	~~491~~363,~~733~~751		~~742~~370,~~185~~431
Treasury stock, shares at cost: 2,175,418 and 2,368,194	(27,695)		(28,339)
Treasury stock, shares at cost: 3,863,290 and 3,871,598	(33,109)		(33,473)
Total Ambac Financial Group, Inc. stockholders’ equity	843,384		856,906
Total Octave Specialty Group, Inc. stockholders’ equity	712,618		715,790
Nonredeemable noncontrolling interest	~~115~~120,~~790~~956		~~197~~117,~~755~~395
Total stockholders’ equity	~~959~~833,~~174~~574		1833,~~054,661~~185
Total liabilities, redeemable noncontrolling interest and stockholders’ equity	$	2,~~147~~267,~~890~~026	$	82,~~058~~223,~~378~~317

See accompanying Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. 2 ~~Third~~First Quarter ~~2025~~2026 Form 10-Q

Table of Contents

~~AMBAC~~-OCTAVE ~~FINANCIAL~~SPECIALTY GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Loss) (Unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(Dollars in thousands, except share data)

~~2025~~2026

~~2024~~2025

~~2025~~

~~2024~~

Revenues:

Commissions

3668,~~059~~178

2336,~~064~~771

~~103,152~~

~~54,014~~

Servicing and other fees

49,~~855~~362

24,~~266~~964

~~14,291~~

~~2,266~~

Net premiums earned

1720,~~027~~001

2715,~~441~~678

~~48,908~~

~~80,074~~

Program fees

3,~~590~~644

3,~~622~~652

~~10,739~~

~~9,517~~

Investment income

2,~~666~~355

32,~~488~~815

~~8,090~~

~~10,891~~

Other

~~2,408~~630

10(1,124)

~~(862)~~

~~13,831~~

Total revenues

66104,~~606~~170

7062,~~005~~756

~~184,319~~

~~170,593~~

Expenses:

Commissions

1114,~~167~~005

910,~~499~~365

~~28,935~~

~~27,209~~

Losses and loss adjustment expenses

1419,~~386~~679

2010,~~421~~496

~~35,860~~

~~62,800~~

Policy acquisition costs

36,~~491~~371

53,~~993~~841

~~11,031~~

~~15,816~~

General and administrative

53,~~710~~155

4438,~~000~~531

~~132,781~~

~~89,436~~

Intangible amortization and depreciation

912,~~746~~214

79,~~104~~176

~~28,663~~

~~10,332~~

Interest

62,~~185~~090

35,~~745~~454

~~17,209~~

~~3,745~~

Total expenses

98107,~~685~~514

9077,~~762~~863

~~254,479~~

~~209,338~~

Pretax income (loss) from continuing operations

(323,~~079~~344)

(2015,~~757~~107)

~~(70,160)~~

~~(38,745)~~

Provision (benefit) for income taxes from continuing operations

(~~1,241~~481)

(~~867~~617)

~~(4,030)~~

~~(767)~~

Net income (loss) from continuing operations

(302,~~838~~863)

(1914,~~890~~490)

~~(66,130)~~

~~(37,978)~~

Net income (loss) from discontinued operations, net of tax (including loss on disposal of $50,012 and $117,468 for the three and nine months ended September 30, 2025)

(80,890)

(9,386)

(163,288)

28,936

Net income (loss) from discontinued operations, net of tax (including loss on disposal of $14,497 for the three months ended March 31, 2025)

—

(30,247)

Net income (loss)

(~~111~~2,~~728~~863)

(2944,~~276~~737)

~~(229,418)~~

~~(9,042)~~

Net (gain) loss attributable to noncontrolling interest

(~~892~~3,988)

(1,~~773~~654)

~~(2,292)~~

~~859~~

Net income (loss) attributable to shareholders

(~~112~~6,~~620~~851)

(2746,~~503~~391)

~~(231,710)~~

~~(8,183)~~

Net income (loss) attributable to shareholders

Continuing operations

(316,~~730~~851)

(1816,~~117~~144)

~~(68,422)~~

~~(37,119)~~

Discontinued operations

~~(80,890)~~—

(930,~~386~~247)

~~(163,288)~~

~~28,936~~

Total

(~~112~~6,~~620~~851)

(2746,~~503~~391)

~~(231,710)~~

~~(8,183)~~

Net income (loss) from continuing operations per share attributable to shareholders

Net income (loss) from continuing operations per share attributable to stockholders

Basic

(0.6713)

(0.4357)

~~(1.70)~~

~~(0.85)~~

Diluted

(0.6713)

(0.4357)

~~(1.70)~~

~~(0.85)~~

Net income (loss) from discontinued operations per share attributable to shareholders

Net income (loss) from discontinued operations per share attributable to stockholders

Basic

~~(1.68)~~—

(0.2064)

~~(3.41)~~

~~0.62~~

Diluted

~~(1.68)~~—

(0.2064)

~~(3.41)~~

~~0.62~~

Net income (loss) per share attributable to shareholders

Net income (loss) per share attributable to stockholders

Basic

(20.3513)

(01.6321)

~~(5.11)~~

~~(0.23)~~

Diluted

(20.3513)

(01.6321)

~~(5.11)~~

~~(0.23)~~

Weighted average number of common shares outstanding:

Weighted-average number of common shares outstanding:

Basic

4845,~~106~~302,~~069~~933

47,~~688~~313,~~986~~012

~~47,862,071~~

~~46,580,518~~

Diluted

4845,~~106~~302,~~069~~933

47,~~688~~313,~~986~~012

~~47,862,071~~

~~46,580,518~~

See accompanying Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. 3 ~~Third~~First Quarter ~~2025~~2026 Form 10-Q

Table of Contents

~~AMBAC~~OCTAVE ~~FINANCIAL~~SPECIALTY GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
(Dollars in thousands, except share data)	~~2025~~2026		~~2024~~2025		~~2025~~		~~2024~~
Net income (loss)	$	(~~111~~2,~~728~~863)	$	(2944,~~276~~737)	$	~~(229,418)~~	$	~~(9,042)~~
Unrealized gains (losses) on securities, net of income tax provision (benefit) of $36, $2,888, $1,184, and $3,302	5,289		36,779		19,248		33,632
Unrealized gains (losses) on securities, net of income tax provision (benefit) of $0 and $645	(1,039)		18,606
Gains (losses) on foreign currency translation, net of income tax provision (benefit) of $0, $0, $0, and $0	66,139		57,315		199,843		50,813
Gains (losses) on foreign currency translation, net of income tax provision (benefit) of $0 and $0	(12,590)		44,720
Credit risk changes of fair value option liabilities, net of income tax provision (benefit) of $(15), $47, $180, and $(71)	522		142		1,108		(214)
Credit risk changes of fair value option liabilities, net of income tax provision (benefit) of $0 and $147	—		442
Changes to postretirement benefit, net of income tax provision (benefit) of $0, $0, $0, and $0	—		—		—		(4,939)
Total other comprehensive income (loss), net of income tax	(13,629)		63,768
Total other comprehensive income (loss), net of income tax	71,950		94,236		220,199		79,292
Total comprehensive income (loss), net of income tax	(16,492)		19,031
Total comprehensive income (loss), net of income tax	(39,778)		64,960		(9,219)		70,251
Less: net (gain) loss attributable to noncontrolling interest	(3,988)		(1,654)
Less: net (gain) loss attributable to noncontrolling interest	(892)		1,773		(2,292)		859
Less: (gain) loss on foreign currency translation attributable to noncontrolling interest	6,370		(10,361)
Less: (gain) loss on foreign currency translation attributable to noncontrolling interest	5,843		(4,770)		(19,984)		(4,770)
Total comprehensive income (loss) attributable to shareholders	$	(14,110)	$	7,016
Total comprehensive income (loss) attributable to shareholders	$	(34,827)	$	61,963	$	(31,495)	$	66,340

See accompanying Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. 4 ~~Third~~First Quarter ~~2025~~2026 Form 10-Q

Table of Contents

~~AMBAC~~OCTAVE ~~FINANCIAL~~SPECIALTY GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders’ Equity (Unaudited)

Three months ended September 30, 2025 and 2024
Three months ended March 31, 2026 and 2025
	Stockholders' Equity																Mezzanine
			Ambac Financial Group, Inc.														Equity
			Octave Specialty Group, Inc.														Equity
(Dollars in thousands)	Total		PreferredStock		CommonStock		Additional Paid-inCapital		AccumulatedOtherComprehensiveIncome		RetainedEarnings		CommonStock Heldin Treasury,at Cost		Non-redeemableNCI (1)		Redeemable NCI (1)
Balance at June 30, 2025	$	1,028,361	$	—	$	489	$	347,939	$	(66,013)	$	607,548	$	(30,124)	$	168,522	$	190,347
Balance at December 31, 2025	$	833,185	$	—	$	489	$	369,860	$	8,483	$	370,431	$	(33,473)	$	117,395	$	252,981
Net income (loss)	(111,457)		—		—		—		—		(112,620)		—		1,163		(271)
Total net income (loss)	(4,843)		—		—		—		—		(6,851)		—		2,008		1,980
Total other comprehensive income (loss)	75(9,~~409~~436)		—		—		—		77(7,~~793~~259)		—		—		(2,~~384~~177)		(34,~~457~~193)
Stock-based compensation	24,~~138~~722		—		—		24,~~138~~722		—		—		—		—		—
Cost of shares repurchased	—		—		—		—		—		—		—		—		—
Cost of shares (acquired) issued under equity plan	(~~197~~272)		—		—		—		—		(~~2,626~~636)		~~2,429~~364		—		—
Changes to noncontrolling interest	(110,~~162)~~218		—		—		—5,681		—		~~(569)~~807		—		~~(593)~~3,730		1(54,~~628~~799)
Issuance of warrants in connection with sale of AAC	17,000						17,000
Balance at March 31, 2026	$	833,574	$	—	$	489	$	380,263	$	1,224	$	363,751	$	(33,109)	$	120,956	$	195,969
Impact of sale of discontinued operation	(50,918)														(50,918)		—
Balance at December 31, 2024	$	996,119	$	—	$	489	$	331,007	$	(188,436)	$	683,643	$	(28,339)	$	197,755	$	199,402
Balance at September 30, 2025	$	959,174	$	—	$	489	$	367,077	$	11,780	$	491,733	$	(27,695)	$	115,790	$	188,247
Total net income (loss)	(44,995)		—		—		—		—		(46,391)		—		1,396		258
Balance at June 30, 2024	$	1,418,991	$	—	$	467	$	294,624	$	(174,990)	$	1,264,633	$	(16,661)	$	50,918	$	17,079
Total other comprehensive income (loss)	58,110		—		—		—		53,407		—		—		4,703		5,658
Net income (loss)	(27,503)		—		—		—		—		(27,503)		—		—		(1,773)
Stock-based compensation	2,349		—		—		2,349		—		—		—		—		—
Total other comprehensive income (loss)	94,236		—		—		—		94,236		—		—		—		7,189
Cost of shares repurchased	(3,122)		—		—				—		—		(3,122)		—		—
Stock-based compensation	3,693		—		—		3,693		—		—		—		—		—
Cost of shares (acquired) issued under equity plan	(1,605)		—		—		—		—		(3,121)		1,516		—		—
Cost of shares (acquired) issued under equity plan	2		—		—				—		2
Changes to noncontrolling interest	(40,852)		—		—		—		—		(10,825)		—		(30,027)		40,143
Changes to noncontrolling interest	3,577		—		—		—		—		(2,403)		—		5,980		1,773
Balance at March 31, 2025	$	966,004	$	—	$	489	$	333,356	$	(135,029)	$	623,306	$	(29,945)	$	173,827	$	245,461
Fair value of nonredeemable noncontrolling interest in Beat Capital Partners at acquisition	147,809														147,809		179,428
Issuance of common stock	29,229		—		22		29,207		—		—
Balance at September 30, 2024	$	1,670,034	$	—	$	489	$	327,524	$	(80,754)	$	1,234,729	$	(16,661)	$	204,707	$	203,696
(1) NCI = Noncontrolling interest

Ambac Financial Group, Inc. 5 Third Quarter 2025 Form 10-Q

Table of Contents

Nine months ended September 30, 2025 and 2024
	Stockholders' Equity																Mezzanine
			Ambac Financial Group, Inc.														Equity
(Dollars in thousands)	Total		PreferredStock		CommonStock		Additional Paid-inCapital		AccumulatedOtherComprehensiveIncome		RetainedEarnings		CommonStock Heldin Treasury,at Cost		Non-redeemableNCI (1)		Redeemable NCI (1)
Balance at January 1, 2025	$	1,054,661	$	—	$	489	$	331,007	$	(188,436)	$	742,185	$	(28,339)	$	197,755	$	140,860
Net income (loss)	(228,406)		—		—		—		—		(231,710)		—		3,304		(1,012)
Total other comprehensive income (loss)	209,888		—		—		—		200,216		—		—		9,672		10,313
Stock-based compensation	6,924		—		—		6,924		—		—		—		—		—
Cost of shares repurchased	(3,301)		—		—		—		—		—		(3,301)		—		—
Cost of shares (acquired) issued under equity plan	(1,805)		—		—		—		—		(5,750)		3,945		—		—
Changes to noncontrolling interest	(44,869)		—		—		12,146		—		(12,992)		—		(44,023)		38,086
Issuance of warrants in connection with sale of AAC	17,000						17,000
Impact of sale of discontinued operation	(50,918)						—				—				(50,918)		—
Balance at September 30, 2025	$	959,174	$	—	$	489	$	367,077	$	11,780	$	491,733	$	(27,695)	$	115,790	$	188,247
Balance at January 1, 2024	$	1,414,615	$	—	$	467	$	291,761	$	(160,046)	$	1,246,048	$	(16,573)	$	52,958	$	17,079
Net income (loss)	(8,185)		—		—		—		—		(8,183)		—		(2)		(857)
Total other comprehensive income (loss)	79,292		—		—		—		79,292		—		—		—		7,189
Stock-based compensation	5,512		—		—		5,512		—		—		—		—		—
Cost of shares (acquired) issued under equity plan	(682)		—		—		—		—		(594)		(88)		—		—
Changes to noncontrolling interest	3,438		—		—		—		—		(2,542)		—		5,980		857
Purchase of Beat Capital Partners	147,809														147,809		179,428
Issuance of common stock	29,229				22		29,207
Acquisition of noncontrolling interest in subsidiary	(994)		—		—		1,044		—		—		—		(2,038)		—
Balance at September 30, 2024	$	1,670,034	$	—	$	489	$	327,524	$	(80,754)	$	1,234,729	$	(16,661)	$	204,707	$	203,696

(1) NCI = Noncontrolling interest

See accompanying Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. 65 ~~Third~~First Quarter ~~2025~~2026 Form 10-Q

Table of Contents

~~AMBAC~~OCTAVE ~~FINANCIAL~~SPECIALTY GROUP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
(Dollars in thousands)	~~2025~~2026		~~2024~~2025
Cash flows from operating activities:
Net income (loss)	$	(~~229~~2,~~418~~863)	$	(944,~~042~~737)
Net income (loss) from discontinued operations	~~(163,288)~~—		28(30,~~936~~247)
Net income (loss) from continuing operations	(662,~~130~~863)		(3714,~~978~~490)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Intangible amortization and depreciation	2812,~~663~~214		109,~~332~~176
Share-based compensation	64,~~924~~722		52,~~512~~349
Unearned premiums, net	2,081		11,215
Deferred income taxes	(4,664)		(393)
Losses and loss expenses, net	(45,794)		7,115
Unearned premiums, net	12,448		2,327
Ceded premiums payable	34,633		78,175
Losses and loss expenses, net	(6,496)		(20,876)
Premium and commissions receivables	(37,961)		(68,442)
Ceded premiums payable	8,587		28,356
Commissions payable	37,886		67,287
Premium and commissions receivables	(32,204)		(18,813)
Corporate costs reallocated to continuing operations	6,786		11,258
Commissions payable	2,531		9,586
Other, net	(18,705)		(8,080)
Corporate costs reallocated to continuing operations	—		2,763
Net cash provided by (used in) operating activities from continuing operations	(51,617)		76,394
Other, net	(4,354)		(12,597)
Net cash provided by (used in) operating activities from continuing operations	(10,079)		(12,612)
Cash flows from investing activities:
Proceeds from sales of bonds	26,061		26,906
Proceeds from matured bonds	11,492		8,488
Proceeds from matured bonds	28,602		17,206
Purchases of bonds	(27,258)		(10,990)
Purchases of bonds	(24,475)		(40,037)
Change in short-term investments	54,169		25,972
Purchases of other investments	(66)		(16,607)
Other, net	(695)		(2,131)
Change in short-term investments	(168,161)		40,147
Net cash provided by (used in) investing activities from continuing operations	37,708		21,339
Acquisitions, net of cash acquired	589		(276,857)
Proceeds from sale of subsidiary	407,300		14,119
Other, net	(4,479)		(10,550)
Net cash provided by (used in) investing activities from continuing operations	265,371		(245,673)
Cash flows from financing activities:
Proceeds from short-term debt	—		147,200
Payments for purchases of common stock held in treasury	—		(3,122)
Issuance of equity interest in subsidiary	—		62,000
Payments for long-term debt	(625)		—
Payments for purchases of common stock held in treasury	(3,301)		—
Tax payments related to shares withheld for share-based compensation plans	(572)		(1,606)
Payments for extinguishment of short-term debt	(150,000)		—
Distributions to noncontrolling interest holders	(553)		(708)
Tax payments related to shares withheld for share-based compensation plans	(1,689)		(692)
Acquisitions of noncontrolling interest shares	(383)		—
Issuance of warrants	17,000		—
Net cash provided by (used in) financing activities from continuing operations	(2,133)		(5,436)
Distributions to noncontrolling interest holders	(1,391)		(1,676)
Effect of foreign exchange on cash and cash equivalents - continuing operations	(399)		1,094
Acquisitions of noncontrolling interest shares	(71,345)		—
Net cash provided by (used in) continuing operations	25,097		4,385
Net cash provided by (used in) financing activities from continuing operations	(210,726)		206,832
Cash, cash equivalents, and restricted cash at beginning of period - continuing operations	68,440		47,275
Effect of foreign exchange on cash and cash equivalents - continuing operations	1,464		—
Cash, cash equivalents, and restricted cash at end of period - continuing operations	93,537		51,660
Net cash provided by (used in) continuing operations	4,492		37,553
Net cash provided by (used in) operating activities from discontinued operations	—		43,904
Cash, cash equivalents, and restricted cash at beginning of period - continuing operations	47,275		19,223
Net cash provided by (used in) investing activities from discontinued operations	—		13,150
Cash, cash equivalents, and restricted cash at end of period - continuing operations	51,767		56,776
Net cash provided by (used in) financing activities from discontinued operations	—		(48,369)
Net cash provided by (used in) operating activities from discontinued operations	71,728		13,842
Effect of foreign exchange on cash and cash equivalents - discontinued operations	—		225
Net cash provided by (used in) investing activities from discontinued operations	69,712		(78,757)
Net cash provided by (used in) discontinued operations	—		8,910
Net cash provided by (used in) financing activities from discontinued operations	(143,144)		(130,758)
Cash, cash equivalents, and restricted cash at beginning of period - discontinued operations	—		66,077
Net cash provided by (used in) discontinued operations	(1,704)		(195,673)
Cash, cash equivalents, and restricted cash at end of period - discontinued operations	$	—	$	74,987
Effect of foreign exchange on cash and cash equivalents - discontinued operations	—		425
Cash paid during the period for:
Cash, cash equivalents, and restricted cash at beginning of period - discontinued operations	66,077		255,183
Interest on debt	$	1,999	$	3,819
Cash disposed of related to sale of discontinued operations	$	(64,373)	$	—
Income taxes	$	1,483	$	1,885
Cash, cash equivalents, and restricted cash at end of period - discontinued operations	$	—	$	59,935
Non-cash investing and financing activities:
Noncontrolling interests acquired in connection with put / call option exercises	$	43,644	$	—

See accompanying Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. 76 ~~Third~~First Quarter ~~2025~~2026 Form 10-Q

Table of Contents

~~AMBAC~~OCTAVE ~~FINANCIAL~~SPECIALTY GROUP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Background and Business Description	98	Note 89. ~~Goodwill and Intangible Assets~~Debt	2422
Note 2. Segment Information	1211	Note 910. Revenues From Contracts with Customers	2422
Note 3. Discontinued Operation	14	Note 10. Comprehensive Income (Loss)	26
Note 3. Discontinued Operations	13	Note 11. Comprehensive Income (Loss)	23
Note 4. Investments	1614	Note 1112. Net Income Per Share	2723
Note 5. Fair Value Measurements	1817	Note 1213. Income Taxes	2824
Note 6. Insurance Contracts	2218	Note 1314. Commitments and Contingencies	2925
Note 7. Derivative Instruments	2320
Note 8. Goodwill and Intangible Assets	20

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. 87 ~~Third~~First Quarter ~~2025~~2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

1. BACKGROUND AND BUSINESS DESCRIPTION

Business

The following description provides an update of Note 1. Background and Business Description and Note 2. Basis of Presentation and Significant Accounting Policies in the Notes to the Consolidated Financial Statements included in Part II, Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025, and should be read in conjunction with the complete descriptions provided in the Form 10-K. Capitalized terms used, but not defined herein, and in the other footnotes to the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q shall have the meanings ascribed thereto in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025.

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. (“~~AFG~~OSG”), headquartered in New York City, is ana ~~insurance~~financial services holding company incorporated in the state of Delaware on April 29, 1991. References to “~~Ambac~~Octave,” "OSG", the “Company,” “we,” “our,” and “us” are to ~~AFG~~OSG and its subsidiaries, as the context requires. ~~Ambac's~~Octave operates two principal businesses ~~include~~:

•Insurance Distribution — ~~Ambac~~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 ~~underwriting~~related businesses. On October 31, 2025, the Company completed the acquisition of ArmadaCorp Capital, LLC and its subsidiaries (collectively, "~~ArmadaCare~~ArmadaCorp"), a leading specialty accident and health MGA. ~~Ambac~~ 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, ~~other~~Excess ~~professional~~& ~~and~~Surplus ("E&S") commercial package, professional lines and Directors & Officers ("D&O") .

•Specialty Property & Casualty Insurance — ~~Ambac~~Octave's Specialty Property & Casualty Insurance program insurer business currently includes five carriers (collectively, “Everspan”). Everspan carriers have an A.M. Best rating of 'A-' (Excellent), which was ~~last~~ affirmed on July 17, 2025.

The Company reports these two business operations as segments; see Note 2. Segment Information for further information.

Basis of Presentation

The Company has disclosed its significant accounting policies in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025. ~~The following significant accounting policies provide an update to those included in the Company’s Annual Report on Form 10-K.~~

The accompanying unaudited consolidated financial statements have been prepared inon ~~accordance~~the ~~with~~basis of U.S. generally accepted accounting principles ("GAAP") for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the

~~Regulation S-X. Accordingly, they do not include all of the~~ information and disclosures required by GAAP for annual periods. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025. The accompanying consolidated financial statements have not been audited by an independent registered public accounting firm in accordance with the standards of the Public Company Accounting Oversight Board (U.S.), but in the opinion of management such financial statements include all adjustments necessary for the fair presentation of the Company’s consolidated financial position and results of operations. The results of operations for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025~~2026, may not be indicative of the results that may be expected for the year ending December 31, ~~2025~~2026 due to seasonality within the Insurance Distribution segment and other factors. The December 31, ~~2024~~2025, consolidated balance sheet was derived from audited financial statements.

~~The~~Use ~~preparation~~ of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. As additional information becomes available or actual amounts become determinable, the recorded estimates are revised and reflected in operating results. Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Such estimates and assumptions could change in the future as more information becomes available or actual amounts become determinable, which could affect the amounts reported and disclosed herein, at which point the recorded estimates are revised and reflected in operating results. Actual results could differ from those estimates.

Consolidation

The consolidated financial statements include the accounts of ~~AFG~~OSG and all other entities in which ~~AFG~~OSG (directly or through its subsidiaries) has a controlling financial interest. All significant intercompany balances have been eliminated. The usual condition for a controlling financial interest is ownership of a majority of the voting interests of an entity.

Discontinued Operations

On September 29, 2025, the Company completed the sale of its Legacy Financial Guarantee business, inclusive of Ambac Assurance Corporation ("AAC") and its wholly owned subsidiary Ambac Assurance UK Limited. The results of discontinued operations for all periods to the date of sale are reported separately as Net income (loss) from discontinued operations within the Consolidated Statements of ~~Total Comprehensive~~ Income (Loss) for the ~~current and~~ prior periods. Assets and liabilities of AAC ~~are~~prior ~~presented~~to on the ~~Consolidated~~date ~~Balance Sheet as~~ of ~~December~~sale ~~31,~~are ~~2024,~~presented ~~under~~as Assets of discontinued operations and Liabilities of discontinued operations. AAC's cash flows for all periods to the date of sale are reflected as Net cash provided by (used in) discontinued operations within the Consolidated Statements of Cash Flows. ~~Given the exit from the legacy business, the Company will be changing its name and rebranding in the fourth quarter of 2025.~~

Refer to Sale of Ambac Assurance Corporation in Note 3. Discontinued ~~Operation~~Operations for further information.

~~Acquisition~~Octave ofSpecialty ~~ArmadaCare~~Group, Inc. 8 First Quarter 2026 Form 10-Q

On October 31, 2025, the Company closed on the acquisition of ArmadaCare for a purchase price of $250,000. The Company

Ambac Financial Group, Inc. 9 Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

purchased all of the issued and outstanding limited liability company interests in ArmadaCare from Sirius Re Holdings, Inc. and Sirius Acquisitions Holding Company.

Credit Facilities

Proceeds from the sale of AAC were used, in part, by the Company to repay the $150,000 credit facility that was used to partially finance the acquisition of Beat Capital Partners Limited ("Beat").

In connection with the acquisition of ArmadaCare on October 31, 2025, Cirrata Group LLC and certain of its subsidiaries (including ArmadaCare) entered into a credit facility providing for a $100,000 term loan and a $20,000 revolving credit facility. The term loan and revolving loans were fully drawn to pay part of the purchase price for ArmadaCare. The term loan will amortize in equal quarterly installments in an aggregate amount equal to 2.5% per annum of the original principal amount, with the remaining balance to be paid on the maturity date in five years. The revolver is payable on the maturity date in five years. Optional prepayments are permitted without premium or penalty. Mandatory prepayments will be due with net cash proceeds from certain asset sales, recovery events (such as insurance recoveries), issuances of indebtedness and indemnity payments. The credit agreement includes customary representations and warranties and covenants applicable to the Insurance Distribution businesses, including (without limitation) maintenance of certain financial ratios and limitations on indebtedness, liens, mergers, sales of assets, investments, restricted payments (such as dividends), and affiliate transactions. Pursuant to a separate guaranty and pledge agreement, AFG guarantees the payment and performance of all obligations under the credit agreement and other loan documents and pledges its ownership interest in Cirrata Group LLC as collateral. AFG makes customary representations and warranties and covenants and agrees to always maintain minimum cash liquidity of $10,000. Pursuant to a separate guaranty and security agreement, the borrowers and other wholly-owned subsidiaries of Cirrata Group LLC guarantee the payment and performance of all obligations under the credit agreement and other loan documents and grant security interests in substantially all of the assets of the borrowers and such other subsidiaries, including their respective ownership interests in their subsidiaries, as collateral.

Pivix Conversion

Effective September 1, 2025, AFG's wholly owned subsidiary, Cirrata Group, LLC ("Cirrata Group"), exercised its option to convert its $3,500 convertible note investment in Pivix Specialty Insurance Services ("Pivix"), an excess and surplus lines MGA/U, into common stock. As a result, Cirrata Group now has a 74% controlling stake in Pivix when combined with its previous 17% minority equity interest and includes Pivix in its consolidated financial statements.

Foreign Currency

The impact of non-functional currency transactions and the remeasurement of non-functional currency assets and liabilities into the respective subsidiaries' functional currency (collectively "foreign currency transactions gains/(losses)") are $(31,~~791)~~189 and $(51,~~974~~582) for the ~~nine~~three months ended ~~September~~March 3031, ~~2025,~~2026 and ~~2024~~2025, respectively. Foreign currency transaction gains/(losses) are primarily the result of Octave Ventures transactions in currencies (primarily the U.S. dollar) other than its functional currency (the British Pound Sterling).

are primarily the result of Beat transactions in currencies (primarily the U.S. dollar) other than its functional currency (the British Pound Sterling).

Noncontrolling Interests ("NCI")

Nonredeemable NCI

The total Nonredeemable NCI as of ~~September~~March 3031, ~~2025~~2026, and December 31, ~~2024~~2025, ~~were~~was $~~115~~120,~~790~~956 and $~~197~~117,~~755~~395, respectively, for the NCI share in certain Octave Ventures' operating units that are minority owned by the units' respective management teams that do not have associated put options. At the beginning of 2025, there were no put options associated with any of these minority interests, and as such, the aggregate amount was classified as nonredeemable NCI on the balance sheet. During the three months ended March 31, 2025, certain NCI shares were reclassified from nonredeemable to redeemable NCI as further described under "Redeemable NCI" below. When redeemable NCI shares are no longer redeemable, such as when put options expire unused, the NCI shares are reclassified to nonredeemable NCI with no change in carrying value.

For Beat, the Nonredeemable NCI of $115,790 and $146,837 as of September 30, 2025, and December 31, 2024, includes the NCI share in certain operating units which are minority owned by the units' respective management teams that do not have associated put options. As of December 31, 2024, there were no put options associated with any of these minority interests and as such, the aggregate amount was classified as nonredeemable NCI on the balance sheet. During the nine months ended September 30, 2025, certain NCI shares were reclassified between nonredeemable and redeemable NCI as further described under "Redeemable NCI" below. The acquisition date valuation method to determine the fair value of nonredeemable NCI was the discounted cash flow approach. The significant fair value assumptions used in the model included estimated long term revenue and expense forecasts and the discount rate. When redeemable NCI shares are no longer redeemable, such as when put options expire unused, the NCI shares are reclassified to nonredeemable NCI with no change in carrying value.

During the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, ~~Ambac~~the ~~paid $2,967 to purchase certain nonredeemable shares from~~ minority ~~interest~~ owners, ~~resulting~~of inOctave aVentures ~~$14,362~~exercised ~~decrease~~put tooptions ~~Nonredeemable~~and ~~noncontrolling~~certain ~~interest.~~Option ~~During~~Shares ~~the~~were ~~three~~also ~~months~~exercised. ~~ended~~In ~~September 30~~addition, ~~2205,~~Octave ~~there~~purchased ~~was~~certain noredeemable ~~activity~~NCI ~~related the purchases of nonredeemable~~ shares~~. The~~ ~~difference~~from ~~between~~a ~~the~~minority ~~consideration~~interest ~~paid~~owner ~~and carrying value~~ of ~~the nonredeemable NCI is recorded as an adjustment to additional paid-in capital~~CMC.

Redeemable Noncontrolling Interest


	Ownership Percentage
Company	March 31, 2026	December 31, 2025


Capacity Marine	87%	80%

Octave Ventures (1)	70%	60%

Ambac's acquisitions of MGA/Us has resulted in a majority ownership of the acquired entities by Ambac. Under the terms of applicable agreements, Ambac has call options to purchase the remaining interests from the minority owners (~~i.e., noncontrolling interests~~1)Octave ~~and~~Ventures' ~~the~~majority ~~minority owners have put options to sell their~~ interests ~~to Ambac. Because the exercise of the put options are outside the control of Ambac,~~ in ~~accordance~~its ~~with~~underlying ~~the~~MGAs ~~Distinguishing~~ranges ~~Liabilities~~ from ~~Equity~~51% ~~Topic~~to of100% ~~the~~at ~~ASC~~March 31, ~~Ambac reports redeemable NCI in the mezzanine section of its consolidated balance sheet. In addition~~2026, ~~during~~and ~~the~~60% ~~three~~to ~~months~~100% ~~ended~~at ~~March~~ December 31, 2025, ~~Ambac~~together ~~entered into put options~~ with ~~certain~~Octave's ~~minority~~direct ~~owners~~ownership ~~of the MGA/U operating entities that are majority owned by Beat. These put options are embedded~~ in ~~the~~some ~~associated~~underlying ~~NCI shares ("Option Shares")~~MGAs, resulting in ~~remeasurement~~Octave's ofinterest ~~the~~ranging ~~shares at fair value inclusive of the put options, and reclassification of the Option Shares~~ from ~~nonredeemable~~36% ~~NCI~~ to ~~redeemable~~70% ~~NCI.~~at ~~The~~March 31, ~~change~~2026 ~~in carrying value resulting from~~and ~~revaluation~~36% ~~of $10,276 is recorded as an offset~~ to ~~retained~~60% ~~earnings,~~at ~~with a corresponding impact on earnings per share for the nine months ended September 30~~December 31, 2025~~. During the nine months ended September 30~~, ~~2025~~respectively, ~~Ambac~~in ~~paid~~each underlying MGA/U.

~~Ambac~~Under ~~Financial~~the ~~Group~~terms of applicable agreements, ~~Inc~~Octave has call options to purchase the remaining NCI from the minority owners and the minority owners have put options to sell their interests to Octave. Because 10the ~~Third~~exercise ~~Quarter~~of the put options is outside of Octave's control, in accordance with the Distinguishing Liabilities from Equity Topic of the ASC, Octave reports redeemable NCI in the mezzanine section of its consolidated balance sheet. In addition, during the three months ended March 31, 2025, ~~Form~~Octave ~~10-Q~~entered into put options with certain minority owners of the MGA/U operating entities that are majority owned by Octave Ventures. These put options are embedded in the associated NCI shares ("Option Shares"), resulting in remeasurement of the shares at fair value inclusive of the put options, and reclassification of the

Option Shares from nonredeemable NCI to redeemable NCI. The change in carrying value resulting from revaluation of $10,276 was recorded as an offset to retained earnings, with a corresponding impact on earnings per share for the three months ended March 31, 2025. During the three months ended March 31, 2026 and 2025, put options on certain Option Shares expired, resulting in reclassification of the associated redeemable NCI balances of $3,841 and $1,877, respectively, to nonredeemable NCI.

During the three months ended March 31, 2026, Octave acquired redeemable NCI with a carrying value of $49,214 as a result of the exercise of put options by the minority owners of Octave Ventures and of certain Option Shares. The aggregate consideration payable for these shares of $43,644 is included in Other liabilities on the Consolidated Balance Sheets as of March 31, 2026, and was subsequently settled in cash in April 2026. The difference between the consideration paid and carrying value of the redeemable NCI is recorded as an adjustment to additional paid-in capital. Additionally, during the three months ended March 31, 2026, Octave paid $383 to purchase certain redeemable NCI shares from a minority interest owner of CMC, resulting in a $494 decrease to redeemable NCI. During the three months ended March 31, 2025, there was no activity related the exercise of the put options on the Option Shares.

The acquisition date valuation method used to determine the fair value of redeemable NCI and related put and call options was a Monte Carlo Simulation. The significant fair value assumptions used in the simulation include the exercise thresholds, EBITDA forecasts, discount rate and long-term growth rates. The redeemable NCI is remeasured each period as the greater of:

i.the carrying value under ASC 810, which attributes a portion of consolidated net income (loss) to the redeemable NCI, and

ii.the redemption value of the put option under ASC 480.

At each reporting period, the redeemable NCI balance increases or decreases due to activity related to net income and distributions. Management calculates the redemption value of the put options under ASC 480 on an annual basis using prior-year EBITDA and related adjustments as prescribed by the terms of the relevant redemption provisions, or when otherwise required based on the terms of the redemption provisions. Management evaluates the redemption value and would record adjustments other than annually upon a change in contractual terms.

Any increase or (decrease) in the carrying value of the redeemable NCI as a result of adjusting to the redemption value of the put option is recorded as an offset to retained earnings. The impact of such differences on earnings per share are presented in Note 12. Net Income Per Share.


Octave Specialty Group, Inc.			9			First Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

~~$1,068~~Following asis a ~~result~~rollforward of ~~exercise of put options on the Option Shares, acquiring~~ redeemable NCI ~~with~~interest afor ~~carrying value of $1,815. The difference between~~ the ~~consideration paid and carrying value of the redeemable NCI is recorded as an adjustment to additional paid-in capital. During the~~ three months ended ~~September 30,~~March ~~2025~~31, ~~there~~2026 ~~was~~and no2025: ~~activity related the exercise of the put options on the Option Shares.~~

The redeemable noncontrolling interest is remeasured on an annual basis as the greater of:



Three Months Ended March 31,	2026		2025
Beginning balance	$	252,981	$	199,402
Net income attributable to redeemable NCI (ASC 810)	1,980		258
Gain (loss) on foreign currency translation attributable to redeemable NCI	(4,193)		5,658

Reclassification from nonredeemable NCI, including remeasurement at fair value	—		42,180
Reclassification to nonredeemable NCI	(3,841)		(1,877)
Put / call option exercise	(49,708)		—
Distributions	(443)		(708)
Adjustment to redemption value (ASC 480 )	(807)		548
Ending balance	$	195,969	$	245,461

~~•the~~Immaterial ~~carrying~~Correction ~~value under ASC 810, which attributes a portion~~ of ~~consolidated~~Prior ~~net~~Period ~~income (loss) to the redeemable noncontrolling interest, and~~Error

•The Company previously identified an immaterial prior period error for the three months ended March 31, 2025, related to the redeemable NCI redemption value ofadjustment recorded under ASC 810-10. In accordance with the ~~put~~U.S. ~~option~~Securities ~~under~~and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 99, “Materiality,” and ASC ~~480~~250, asAccounting ifChanges itand ~~were~~Error ~~exercisable~~Corrections, atthe Company assessed the ~~end~~impact of this error correction on its previously issued consolidated financial statements and concluded that the ~~reporting~~error is not material to any prior period. The immaterial error impacts the Consolidated Balance Sheet, Consolidated Statement of Comprehensive Income (Loss), Consolidated Statement of Stockholders' Equity and Earnings (Loss) Per Share.

~~Management~~The ~~made~~error anwas ~~accounting~~identified ~~policy~~subsequent ~~election~~ to ~~calculate~~ the ~~redemption~~filing ~~value~~ of the ~~put~~Company's ~~options~~Quarterly ~~under~~Reports ~~ASC 480~~ on anForm ~~annual~~10-Q ~~basis.~~for ~~Quarterly,~~ the ~~redeemable~~three ~~noncontrolling~~months ~~interest~~ended ~~increases~~March or31, ~~decreases~~2025, ~~due~~June to30, ~~activity~~2025 ~~related~~and toSeptember ~~net~~30, ~~income~~2025, and ~~distributions.~~prior Asto the ~~redemption~~filing isof ~~calculated~~the atCompany's ~~year~~Annual ~~end,~~Report ~~management~~on ~~will~~Form ~~record~~10-K anfor ~~adjustment~~the toyear ~~bring~~ended ~~the~~December ~~redeemable~~31, ~~noncontrolling~~2025. ~~interest~~The toimpact of the ~~redemption~~correction ~~value~~for ~~calculated~~the atthree ~~year~~months ~~end.~~ended March 31, 2025 is shown below.

~~Any~~Corrected ~~increase~~Consolidated ~~(decrease)~~Statement ~~in the carrying amount~~ of ~~the~~Comprehensive redeemable noncontrolling interest as a result of adjusting to the redemption value of the put option is recorded as an offset to retained earnings. The impact of such differences on earnings per share are presented in Note 11. Net Income ~~Per~~(Loss): ~~Share.~~

Following is a rollforward of redeemable noncontrolling interest.


	Three Months Ended March 31, 2025
	As Reported		Immaterial Correction		As Corrected
Gain on foreign currency translation, net of income tax provision	$	36,220	$	8,500	$	44,720
(Gain) loss on foreign currency translation attributable to noncontrolling interest	$	(4,252)	$	(6,109)	$	(10,361)
Total comprehensive income (loss) attributable to shareholders	$	4,625	$	2,391	$	7,016

	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Beginning balance	$	190,347	$	17,079	$	140,860	$	17,079
Net income (loss) attributable to redeemable noncontrolling interest (ASC 810)	(271)		(1,776)		(1,012)		(857)
Gain (loss) on foreign currency translation attributable to redeemable NCI	(3,457)		7,189		10,313		7,189
Fair value of acquired redeemable noncontrolling interest at acquisition date	1,359		179,428		1,359		179,428
Reclassification from nonredeemable noncontrolling interest including remeasurement at fair value	—		—		42,180		—
Reclassification to nonredeemable noncontrolling interest	—		—		(5,136)		—
Put / call option exercise	—		—		(1,815)		—
Distributions	(300)		(626)		(1,219)		(1,676)
Adjustment to redemption value (ASC 480)	569		2,402		2,717		2,533
Ending balance	$	188,247	$	203,696	$	188,247	$	203,696

Corrected Consolidated Statement of Stockholders’ Equity:

Supplemental Disclosure of Cash Flow Information
	Three Months Ended March 31, 2025
	Nine Months Ended September 30,
	As Reported		Immaterial Correction		As Corrected
	2025		2024
Balance at December 31, 2024	$	1,054,661	$	(58,542)	$	996,119
Cash paid during the period for:
Total net income (loss)	—		(44,995)		(44,995)
Income taxes	3,889		$	1,234
Total other comprehensive income (loss)	—		58,110		58,110
Interest and related fees on debt	19,775		—
Total comprehensive income (loss)	8,877		(8,877)		—
Non-cash investing and financing activities:
Stock-based compensation	2,349		—		2,349
Ambac common stock issued as partial consideration to acquire Beat	—		29,229
Cost of shares repurchased	(3,122)		—		(3,122)
	September 30,
Cost of shares (acquired) issued under equity plan	(1,605)		—		(1,605)
	2025		2024
Changes to noncontrolling interest	(35,112)		(5,740)		(40,852)
Reconciliation of cash, cash equivalents, and restricted cash reported within the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows:
Balance at March 31, 2025	$	1,026,048	$	(60,044)	$	966,004
Cash and cash equivalents	$	27,520	$	40,803
Restricted cash	24,247		15,973
Total cash, cash equivalents, and restricted cash shown on the Consolidated Statements of Cash Flows	$	51,767	$	56,776

~~Restricted~~Corrected ~~cash~~Earnings is(Loss) ~~cash~~Per ~~that we do not have the right to use for general purposes and consists primarily of fiduciary cash held by Ambac's insurance distribution subsidiaries and Everspan state deposits.~~ Share:

Reclassifications and Rounding


	Three Months Ended March 31, 2025
	As Reported		Immaterial Correction		As Corrected
Net income (loss) from continuing operations per share attributable to stockholders
Basic	$	(0.58)	$	0.01	$	(0.57)
Diluted	$	(0.58)	$	0.01	$	(0.57)
Net income (loss) per share attributable to shareholders
Basic	$	(1.22)	$	0.01	$	(1.21)
Diluted	$	(1.22)	$	0.01	$	(1.21)

~~Reclassifications~~Corrected ~~may~~rollforward ~~have~~of ~~been~~redeemable ~~made to prior years' amounts to conform to the current year's presentation. Certain amounts and tables in the consolidated financial statements and associated notes may not add due to rounding.~~NCI:

Adopted Accounting Standards


	Three Months Ended March 31, 2025
	As Reported		Immaterial Correction		As Corrected
Beginning balance	$	140,860	$	58,542	$	199,402

Reclassification from nonredeemable NCI, including remeasurement at fair value	42,180		—		42,180
Reclassification to nonredeemable NCI	(1,877)		—		(1,877)
Net income attributable to redeemable NCI (ASC 810)	258		—		258
Distributions	(708)		—		(708)
Adjustment to redemption value (ASC 480)	907		(359)		548
Gain (loss) on foreign currency translation attributable to redeemable NCI	3,797		1,861		5,658
Ending balance	$	185,417	$	60,044	$	245,461

~~There~~Octave ~~have~~Specialty ~~been~~Group, noInc. ~~new~~10 ~~accounting~~First ~~standards~~Quarter ~~adopted~~2026 ~~during~~Form ~~the nine months ended September 30, 2025.~~10-Q

Future Application of Accounting Standards and Required Disclosures

Income Taxes:

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures. The enhancements in the ASU include the following:

•Within the rate reconciliation table, disclosure of additional categories of information about federal, state, and foreign income taxes and providing more details about the reconciling items in some categories if the items meet a quantitative threshold.

•Annual disclosure of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes and disaggregation of the information by jurisdiction based on a quantitative threshold.

•Other disclosures include: i) income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and ii) income

Ambac Financial Group, Inc. 11 Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

~~tax~~Reclassifications ~~expense (or benefit) from continuing operations disaggregated by federal (national), state,~~ and ~~foreign.~~Rounding

~~The~~Reclassifications ~~ASU~~may ishave ~~effective~~been ~~for~~made ~~annual~~to ~~periods~~prior ~~beginning~~years' ~~after December~~amounts ~~15,~~to ~~2024,~~conform ~~with~~to ~~early~~the ~~adoption~~current ~~permitted~~year's presentation. Certain ~~Ambac~~amounts ~~will~~and ~~adopt~~tables ~~this~~in ~~ASU for~~ the ~~annual~~consolidated ~~reporting~~financial ~~period~~statements ~~ending~~and ~~December~~associated ~~31,~~notes ~~2025.~~may ~~The standard is~~ not ~~expected~~add due to ~~have a consequential impact on Ambac's financial statements~~rounding.

~~Credit~~Adopted ~~Losses~~Accounting ~~for Accounts Receivable and Contract Assets:~~Standards

Credit Losses for Accounts Receivable and Contract Assets

In July 2025, the FASB issued ASU 2025-05, Financial Instruments— Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in the ASU provide all entities with a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions under Topic 606. The practical expedient allows entities to assume that current conditions as of the balance sheet date do not change for the remaining life of the asset.

~~The~~Octave has adopted the practical expedient allowed under this ASU isfor ~~effective~~the measurement of expected credit losses on current accounts receivable and current contract assets arising from transactions under Topic 606 for interim and annual reporting periods beginning ~~after~~January ~~December 15~~1, ~~2025~~2026. The standard isdid not ~~expected to~~ have a material impact on ~~Ambac~~Octave's financial statements.

~~Goodwill~~There ~~and~~have ~~Other—~~been ~~Internal-Use~~no ~~Software~~other new accounting standards adopted during the three months ended March 31, 2026.

InFuture ~~September~~Application ~~2025,~~of ~~the FASB issued ASU 2025-06, Intangibles— Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the~~ Accounting ~~for~~Standards Internal Use Software. This standard is intended to increase the operability of the accounting guidance for internal-use software development costs considering the evolution of software development methods. Amendments remove references to prescriptive and ~~sequential~~Required project stages, requiring entities to start capitalizing costs when: i) management has authorized and committed to funding the project and ii) it is probable that the project will be completed and the software will be used to perform the function intended. Disclosures

~~The~~Goodwill ~~ASU is effective for interim~~ and ~~annual~~Other ~~periods~~— ~~beginning~~Internal-Use ~~after December 15, 2027 with early adoption permitted. Ambac has not determined if it will early adopt this ASU and is evaluating its impact on Ambac's financial statements.~~ Software

~~Expense~~In ~~Disaggregation~~September ~~Disclosures~~2025, the FASB issued ASU 2025-06, Intangibles— Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal Use Software. This standard is intended to increase the operability of the accounting guidance for internal-use software development costs considering the evolution of software development methods. Amendments remove references to prescriptive and sequential project stages, requiring entities to

start capitalizing costs when: (i) management has authorized and committed to funding the project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended.

The ASU is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. Octave has not determined if it will early adopt this ASU and is evaluating the ASU's potential impact on Octave's financial statements.

Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The enhanced disclosures requirements include the following:

•Disclose the amounts of certain expense categories included in each relevant expense caption. Those categories applicable to ~~Ambac~~Octave include employee compensation, depreciation, and intangible asset amortization. A relevant expense caption is an expense caption presented on the face of the income statement within continuing operations that contains any of the expense categories listed above.

•Include certain amounts that are already required to be disclosed under current GAAP in the same disclosure as the other disaggregation requirements.

•Disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively.

•Disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses.

The ASU is effective for annual periods beginning after December 15, 2026 and for interim reporting periods after December 15, 2027 with early adoption permitted. ~~Ambac~~Octave has not determined if it will early adopt this ASU and is evaluating the potential impact on ~~Ambac~~Octave's financial statements.

2Octave Specialty Group, Inc. ~~SEGMENT~~ ~~INFORMATION~~11 First Quarter 2026 Form 10-Q

The Company reports its results of continuing operations in two segments: Specialty Property and Casualty Insurance and Insurance Distribution. These reportable segments offer distinct products and services as further described in Note 1. Background and Business Description. The Company's segments have separate management teams with incentive compensation structures based on segment level performance. Financial reporting for each segment is regularly provided to the Company's Chief Executive Officer, who is the chief operating decision maker ("CODM") for purposes of monitoring the businesses, assessing performance and allocating resources.

The following tables summarize the components of the Company’s total revenues and expenses, and pretax income (loss) by reportable business segment. Information provided below for “Corporate and Other” primarily relates to the operations of AFG, which will include investment income on its investment portfolio and costs to maintain the operations of AFG, including public company reporting, capital management and business development costs for the acquisition and development of new business initiatives. As a result of the Company reporting the results of operations of AAC as discontinued operations, certain corporate costs charged to AAC totaling $1,521 and $3,678 for the three months ended September 30, 2025 and 2024 and $6,786 and $11,258 for the nine months ended September 30, 2025 and 2024, respectively, have been reported in Net income from continuing operations on the Consolidated Statements of Total Comprehensive Income and included in Corporate and Other in the tables below.

Ambac Financial Group, Inc. 12 Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

	Three Months Ended September 30, 2025						Three Months Ended September 30, 2024
	Reportable Segments								Reportable Segments
	Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Total		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Total
Revenues:
Net premiums earned	$	17,027					$	17,027	$	27,441					$	27,441
Commissions			$	36,059			36,059				$	23,064			23,064
Servicing and other fees			4,855				4,855				2,266				2,266
Program fees	3,590						3,590		3,622						3,622
Investment income	1,648		401		$	617	2,666		1,672		300		$	1,516	3,488
Other	509		1,906		(7)		2,408		7,397		(1,635)		4,362		10,124
Total revenues from continuing operations	22,774		43,222		610		66,606		40,132		23,995		5,878		70,005
Less:
Losses and loss adjustment expenses	14,386						14,386		20,421						20,421
Policy acquisition costs	3,491						3,491		5,993						5,993
Commissions			11,167				11,167				9,499				9,499
Intangible amortization and depreciation			9,417		329		9,746				6,635		469		7,104
Interest			6,185				6,185				3,745				3,745
Compensation expense	2,734		15,649		14,746		33,129		2,802		9,273		6,517		18,592
Non Compensation expense	2,208		6,551		11,822		20,581		1,982		2,792		20,634		25,408
Total expenses from continuing operations	22,819		48,969		26,897		98,685		31,198		31,944		27,620		90,762
Segment pretax income (loss)	(45)		(5,747)		(26,287)		(32,079)		8,934		(7,949)		(21,742)		(20,757)
Segment income tax expense (benefit)	8		(1,241)		(8)		(1,241)		944		(883)		(928)		(867)
Segment net income (loss)	(53)		(4,506)		(26,279)		(30,838)		7,990		(7,066)		(20,814)		(19,890)
Segment net (income) loss attributable to noncontrolling interest	—		(892)				(892)		—		1,773				1,773
Net income (loss) attributable to shareholders	$	(53)	$	(5,398)	$	(26,279)	(31,730)		$	7,990	$	(5,293)	$	(20,814)	(18,117)
Reconciliation to consolidated net income (loss) attributable to shareholders
Discontinued operations							(80,890)								(9,386)
Net income (loss) attributable to shareholders							$	(112,620)							$	(27,503)
Reconciliation of segment assets to consolidated total assets
Total assets	$	898,722	$	971,160	$	278,428	$	2,148,310	$	811,564	$	936,578	$	149,916	$	1,898,058
Discontinued operations															7,358,328
Total consolidated assets															$	9,256,386
EBITDA RECONCILIATION
Segment net income (loss)	$	(53)	$	(4,506)	$	(26,279)	$	(30,838)	$	7,990	$	(7,066)	$	(20,814)	$	(19,890)
Adjustments:
Interest expense	—		6,185		—		6,185		—		3,745		—		3,745
Income taxes	8		(1,241)		(8)		(1,241)		944		(883)		(928)		(867)
Depreciation expense	—		145		329		474		—		206		475		681
Amortization expense	—		9,272		—		9,272		—		6,423		—		6,423
EBITDA	(45)		9,855		(25,958)		(16,148)		8,934		2,425		(21,267)		(9,908)
Impact of noncontrolling interests	—		(3,927)				(3,927)		—		(557)				(557)
EBITDA to shareholders	$	(45)	$	5,928	$	(25,958)	$	(20,075)	$	8,934	$	1,868	$	(21,267)	$	(10,465)

2. SEGMENT INFORMATION

~~Ambac~~The ~~Financial~~Company ~~Group~~reports its results of continuing operations in two segments: Specialty Property and Casualty Insurance and Insurance Distribution ("ID"). These reportable segments offer distinct products and services as further described in Note 1. Background and Business Description. The operating entities within each segment are wholly or majority owned by separate intermediate holding companies: Everspan Holdings, ~~Inc~~LLC for Specialty Property and Casualty Insurance and Octave Partners LLC for ID. 13The ~~Third~~Company's ~~Quarter~~segments ~~2025~~have ~~Form~~separate ~~10-Q~~management teams with incentive compensation structures based on segment level performance. Financial reporting for each segment is regularly provided to the Company's Chief Executive Officer, who is the chief operating decision maker ("CODM") for purposes of monitoring the businesses, assessing performance and allocating resources.

The following tables summarize the components of the Company’s total revenues and expenses and pretax income (loss) by reportable business segment for the three months ended March 31, 2026 and 2025 as well as segment assets as of March 31, 2026 and 2025. Information provided below for “Corporate and Other” primarily relates to the operations of OSG, which include investment income on its investment portfolio and costs to maintain the operations of OSG, including public company reporting, capital management and business development costs for the acquisition and development of new business initiatives. As a result of the Company reporting the results of operations of AAC as discontinued operations, certain corporate costs charged to AAC totaling $2,763 for the three months ended March 31, 2025, have been reported in Net income from continuing operations on the Consolidated Statements of Income (Loss) and included in Corporate and Other in the tables below.


Octave Specialty Group, Inc.			12			First Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

	Nine Months Ended September 30, 2025						Nine Months Ended September 30, 2024
	Three Months Ended March 31, 2026						Three Months Ended March 31, 2025
	Reportable Segments								Reportable Segments
	Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Total		Specialty Property & Casualty Insurance		Insurance Distribution		Corporate & Other		Total
Revenues:
Net premiums earned	$	4820,~~908~~001					$	4820,~~908~~001	$	8015,~~074~~678					$	8015,~~074~~678
Commissions			$	~~103~~68,~~152~~178			~~103~~68,~~152~~178				$	5436,~~014~~771			5436,~~014~~771
Servicing and other fees			149,~~291~~362				149,~~291~~362				24,~~266~~964				24,~~266~~964
Program fees	103,~~739~~644						103,~~739~~644		93,~~517~~652						93,~~517~~652
Investment income	51,~~238~~649		~~1,117~~308		$	~~1,735~~398	82,~~090~~355		41,~~536~~842		~~427~~376		$	~~5,928~~597	102,~~891~~815
Other	~~450~~5		~~(1,300)~~678		(1253)		~~(862)~~630		~~7,375~~(1)		(1,~~541~~113)		~~7,997~~(10)		13(1,~~831~~124)
Total revenues from continuing operations	6525,~~335~~299		~~117~~78,~~261~~526		~~1,723~~345		~~184~~104,~~319~~170		~~101~~21,~~502~~171		5540,~~166~~998		~~13,925~~587		~~170~~62,~~593~~756
Less:
Losses and loss adjustment expenses	3519,~~860~~679						3519,~~860~~679		6210,~~800~~496						6210,~~800~~496
Policy acquisition costs	116,~~031~~371						116,~~031~~371		153,~~816~~841						153,~~816~~841
Commissions			2814,~~935~~005				2814,~~935~~005				2710,~~209~~365				2710,~~209~~365
Intangible amortization and depreciation			2711,~~590~~942		~~1,073~~272		2812,~~663~~214				8,~~931~~872		~~1,401~~304		109,~~332~~176
Interest			172,~~209~~090				172,~~209~~090				35,~~745~~454				35,~~745~~454
Compensation expense	85,~~850~~298		4324,~~636~~983		266,~~312~~763		7837,~~798~~044		73,~~653~~510		13,~~467~~533		185,~~704~~844		3922,~~824~~887
Non Compensation expense	7,517		18,050		28,416		53,983		5,578		4,665		39,369		49,612
Non-compensation expense	2,234		8,721		5,156		16,111		1,821		5,017		8,806		15,644
Total expenses from continuing operations	6333,~~258~~581		~~135~~61,~~420~~741		5512,~~801~~192		~~254~~107,~~479~~514		9119,~~847~~668		5843,~~017~~241		5914,~~474~~954		~~209~~77,~~338~~863
Segment pretax income (loss)	2(8,~~077~~282)		~~(18~~16,~~159)~~785		(5411,~~078~~847)		(703,~~160~~344)		91,~~655~~503		(2,~~851~~243)		(4514,~~549~~367)		(3815,~~745~~107)
Segment income tax expense (benefit)	~~278~~(592)		(~~3,922~~368)		~~(386)~~479		(~~4,030~~481)		~~1,023~~78		(~~756~~500)		(~~1,034~~195)		(~~767~~617)
Segment net income (loss)	1(7,~~799~~690)		~~(14~~17,~~237)~~153		(5312,~~692~~326)		(662,~~130~~863)		81,~~632~~425		(21,~~095~~743)		(4414,~~515~~172)		(3714,~~978~~490)
Segment net (income) loss attributable to noncontrolling interest	—		(2,292)				(2,292)		2		857				859
Segment net (income) loss attributable to NCI	—		(3,988)				(3,988)		—		(1,654)				(1,654)
Net income (loss) attributable to shareholders	$	1(7,~~799~~690)	$	~~(16~~13,~~529)~~165	$	(5312,~~692~~326)	(686,~~422~~851)		$	81,~~634~~425	$	(13,~~238~~397)	$	(4414,~~515~~172)	(3716,~~119~~144)
Reconciliation to consolidated net income (loss) attributable to shareholders
Discontinued operations							~~(163,288)~~—								28(30,~~936~~247)
Net income (loss) attributable to shareholders							$	(~~231~~6,~~710~~851)							$	(846,~~183~~391)
EBITDA RECONCILIATION
Reconciliation of segment assets to consolidated total assets
Segment net income (loss)	$	1,799	$	(14,237)	$	(53,692)	$	(66,130)	$	8,632	$	(2,095)	$	(44,515)	$	(37,978)
Total assets	$	933,974	$	1,264,704	$	68,348	$	2,267,026	$	802,856	$	929,172	$	129,250	$	1,861,278
Discontinued operations															6,392,004
Total consolidated assets															$	8,253,282
EBITDA Reconciliation
Segment net income (loss)	$	(7,690)	$	17,153	$	(12,326)	$	(2,863)	$	1,425	$	(1,743)	$	(14,172)	$	(14,490)
Adjustments:
Interest expense	—		172,~~209~~090		—		172,~~209~~090		—		35,~~745~~454		—		35,~~745~~454
Income taxes	278		(3,922)		(386)		(4,030)		1,023		(756)		(1,034)		(767)
Income tax expense (benefit)	(592)		(368)		479		(481)		78		(500)		(195)		(617)
Depreciation expense	—		~~343~~295		~~1,073~~272		~~1,416~~567		—		~~230~~109		~~1,401~~304		~~1,631~~413
Amortization expense	—		27,247		—		27,247		—		8,701		—		8,701
Intangible amortization expense	—		11,647		—		11,647		—		8,763		—		8,763
EBITDA	2(8,~~077~~282)		2630,~~640~~817		(5311,~~005~~575)		~~(24~~10,~~288)~~960		91,~~655~~503		912,~~825~~083		(4414,~~148~~063)		(~~24,668~~477)
Impact of noncontrolling interests	—		(117,~~132~~350)		—		(117,~~132~~350)		—		(15,~~907~~000)		—		(15,~~907~~000)
EBITDA to shareholders	$	2,077	$	15,508	$	(53,005)	$	(35,420)	$	9,655	$	7,918	$	(44,148)	$	(26,575)
EBITDA attributable to shareholders	$	(8,282)	$	23,467	$	(11,575)	$	3,610	$	1,503	$	7,083	$	(14,063)	$	(5,477)

(1)Inter-segment revenues and inter-segment pretax income (loss) amounts are insignificant and are not presented separately.

~~(1)Inter-segment revenues and inter-segment pre-tax income (loss) amounts are insignificant and are not presented separately~~3. DISCONTINUED OPERATIONS

3. DISCONTINUED OPERATION

Sale of Ambac Assurance Corporation ("AAC")

On September 29, 2025, ~~pursuant to~~ the ~~stock~~Company ~~purchase~~completed ~~agreement dated as of June 4, 2024, as amended by~~ the ~~First~~sale ~~Amendment thereto dated as~~ of ~~July~~AAC. See 3,Note ~~2025~~5. ~~(the~~Discontinued ~~"Purchase~~Operation ~~Agreement")~~in ~~and~~ the ~~Letter~~Notes ~~Agreements~~to ~~dated~~Consolidated ~~July~~Financial 3,Statements ~~2025~~included ~~and~~in ~~September 22, 2025, with American Acorn Corporation (~~the ~~“Buyer”),~~Company’s aAnnual ~~Delaware~~Report ~~corporation~~on ~~owned~~Form by10-K ~~funds~~for ~~managed by Oaktree Capital Management, L.P., AFG sold all of~~ the ~~issued~~year ~~and~~ended ~~outstanding shares of common stock of AAC~~December 31, ~~a wholly-owned subsidiary of AFG~~2025, ~~to the Buyer~~ for ~~$420,000~~ infurther ~~cash~~information ~~(the~~regarding ~~"Sale"). The Buyer acquired complete ownership of~~ the ~~common stock of AAC and all of its wholly owned subsidiaries, including~~ sale.

~~Ambac~~Octave ~~Assurance~~Specialty ~~UK Limited. In connection with and pursuant to the Purchase Agreement~~Group, ~~AFG issued to Buyer a warrant exercisable for 5,092,707 shares of common stock, par value $0~~Inc.~~01,~~ of13 ~~AFG~~First ~~representing~~Quarter ~~9.9%~~2026 ofForm the fully diluted shares of AFG’s common stock as of March 31, 2024, pro forma for the issuance of the warrant. The warrant has an exercise price per share of $18.50 and expires March 29, 2032. Under terms of the Letter Agreement dated July 3, 2025, between the parties to the Purchase Agreement, the Buyer may convert the warrant at a value equal to its Black10-Scholes value, over specified time periods, with the conversion value delivered in shares of AFG common stock or cash at AFG's election. In addition, the Buyer made an incremental payment to AFG totalling $4,300 to resolve other agreed upon matters. See Note 5. Discontinued Operation in the Notes to Consolidated Financial Statements included in the Q

Ambac Financial Group, Inc. 14 Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

~~Company’s~~The ~~Annual~~following ~~Report~~table onsummarizes ~~Form~~the ~~10-K~~major ~~for~~line items constituting net income (loss) from discontinued operations reconciled to net income (loss) from discontinued operations presented in the ~~year~~Consolidated ~~ended~~Statements ~~December 31,~~of ~~2024,~~Income (Loss) for ~~further~~the ~~information~~three ~~regarding~~months ~~the~~ended ~~Sale.~~March 31, 2025:

AFG recorded an expected loss on sale in the Statement of Comprehensive Income (Loss) for the year ended December 31, 2024 of $(570,145), equal to the difference between the sale proceeds (net of the value of the warrants to be issued) and the carrying value of AAC's net assets held-for-sale, less expected closing costs. AFG recorded adjustments to the loss on sale of AAC equal to $(50,012) and $(117,468) in the three and nine months ended September 30, 2025, reflecting remeasurement of net assets held-for-sale, changes in fair value of the warrant issued to Buyer, other agreed upon payments, and reestimation of closing costs during the periods up the final Sale closing. The loss on sale for the three and nine months ended September 30, 2025 also included the reclassification of net unrealized gains (losses) on available-for-sale investment securities, cumulative foreign currency translation adjustments and cumulative credit risk changes of fair value option liabilities attributable to AAC and subsidiaries, totaling $(85,096), from Accumulated Other Comprehensive Income (Loss) ("AOCI") to Net income (loss) from discontinued operation at Sale closing.


Three months ended March 31,	2025
Revenues:
Net premiums earned	$	4,763
Net investment income	20,700
Net investment gains (losses), including impairments	(5,954)
Net gains (losses) on derivative contracts	(533)


Other revenues	7,821
Total revenues	26,797
Expenses:
Loss and loss adjustment expenses (benefit)	10,735
Intangible amortization	5,826
General & administrative and other expenses	9,082
Interest expense	15,951

Total expenses	41,594
Pretax income (loss)	(14,797)
Provision for income taxes	953
Loss on disposal (1)	(14,497)
Net income (loss) from discontinued operations	$	(30,247)

~~The~~(1) Loss ~~components~~on ofdisposal ~~the~~reflects ~~loss~~changes onto ~~sale,~~the ~~reflected~~difference inbetween the ~~valuation~~fair ~~allowance~~value onof net ~~assets~~consideration ofto ~~discontinued~~be ~~operations~~received ~~as of December 31, 2024,~~ and atthe ~~Sale~~carrying ~~closing~~value onof ~~September~~net ~~29,~~assets ~~2025~~held-for-sale, ~~are~~less ~~summarized~~expected ~~below:~~closing costs.

	Sale Closing on September 29, 2025		December 31,2024
Fair value of net consideration	$	407,300	$	399,727
Less: estimated closing costs	7,098		7,235
	400,202		392,492
Carrying amount of net assets of discontinued operations	1,002,719		962,637
Reclassification of AOCI	(85,096)
Loss on disposal	$	(687,613)	$	(570,145)

4. INVESTMENTS

~~The~~Octave's ~~following~~invested ~~table~~assets ~~summarizes~~are ~~the~~primarily ~~major~~comprised ~~classes~~ of ~~assets~~(i) fixed maturity securities classified as available for sale, (ii) an investment in a limited partnership and ~~liabilities~~(iii) ofpreferred ~~discontinued~~equity ~~operations~~investments. The investments in the limited partnership interest and preferred equity investments are reported within Other investments on the Consolidated Balance Sheets. The limited partnership, which holds pooled investments, is reported using the equity method.

~~Sheet~~Fixed atMaturity ~~December 31, 2024 after elimination of intercompany balances~~Securities:

	December 31, 2024
ASSETS:
Total investments	2,226,505
Cash and equivalents	8,322
Premiums receivable	217,096
Reinsurance recoverable on paid and unpaid losses	25,274
Deferred ceded premiums	79,074
Subrogation recoverable	113,962
Intangible assets	213,457
Other assets, net	49,396
VIE assets (including restricted cash of $57,755)	3,904,259
Valuation allowance on assets held-for-sale	(570,145)
Total assets held-for-sale	$	6,267,200
LIABILITIES:
Unearned premiums	$	228,177
Loss and loss adjustment reserves	577,167
Ceded premiums payable	56,404
Long-term debt and accrued interest	1,046,658
Other liabilities, net	105,772
VIE liabilities	3,873,507
Total liabilities held-for-sale	$	5,887,685

The amortized cost and estimated fair value of available-for-sale investments, at March 31, 2026 and December 31, 2025, were as follows:

The following table summarizes the major line items constituting net income (loss) from discontinued operations reconciled to net income (loss) from discontinued operations presented in the Consolidated Statement of Comprehensive Income (Loss):


	March 31, 2026:										December 31, 2025:
	Amortized Cost		Allowance for Credit Losses		Gross Unrealized				Estimated Fair Value		Amortized Cost		Allowance for Credit Losses	Gross Unrealized				Estimated Fair Value
					Gains		Losses							Gains		Losses
Fixed maturity securities:
Municipal obligations	$	10,606			$	87	$	217	$	10,476	$	11,697	—	$	121	$	228	$	11,590
Corporate obligations	78,891				298		2,249		76,940		67,881		—	634		1,942		66,573

U.S. government obligations	39,094				166		218		39,042		35,190		—	365		131		35,424

Residential mortgage-backed securities	2,643				5		21		2,627		1,604		—	—		7		1,597
Commercial mortgage-backed securities	5,002				23		40		4,985		3,307		—	42		8		3,341
Collateralized debt obligations	1,626				5		1		1,630		1,963		—	12		—		1,975
Other asset-backed securities	1,380				12		—		1,392		1,772		—	23		—		1,795
Total fixed maturity securities	139,242		—		596		2,746		137,092		123,414		—	1,197		2,316		122,295
Short-term investments	92,295		—		—		—		92,295		146,434		—	8		—		146,442





Total available-for-sale investments	$	231,537	$	—	$	596	$	2,746	$	229,387	$	269,848	—	$	1,205	$	2,316	$	268,737

	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
REVENUES:
Net premiums earned	$	5,183	$	5,660	$	15,145	$	18,715
Net investment income	43,396		34,497		100,203		104,947
Net investment gains (losses), including impairments	5,852		(920)		(12,616)		(1,308)
Net gains (losses) on derivative contracts	9,669		(1,349)		302		1,127
Other revenues	1,355		6,253		18,016		27,206
Total revenues	65,455		44,141		121,050		150,687
EXPENSES:
Loss and loss adjustment expenses (benefit)	2,366		17,210		10,444		(8,768)
Intangible amortization	5,909		6,194		17,097		24,535
General & administrative and other expenses	64,427		10,756		81,034		47,488
Interest expense	15,723		15,766		47,617		47,732
Other expenses	—		(20)		—		(1)
Total expenses	88,425		49,906		156,192		110,986
Pretax income (loss)	(22,970)		(5,765)		(35,142)		39,701
Provision (benefit) for income taxes	7,908		3,621		10,678		10,765
Loss on disposal	(50,012)		—		(117,468)		—
Net income (loss) from discontinued operations	$	(80,890)	$	(9,386)	$	(163,288)	$	28,936


Octave Specialty Group, Inc.			14			First Quarter 2026 Form 10-Q

Ambac Financial Group, Inc. 15 Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

~~4. INVESTMENTS~~The amortized cost and estimated fair value of available-for-sale investments, by contractual maturity, were as follows:

Ambac’s invested assets are primarily comprised of (i) fixed maturity securities classified as available-for-sale, (ii) interests in pooled investment funds which are reported within Other investments on the Consolidated Balance Sheets and (iii) preferred equity investments which are reported within Other investments on the Consolidated Balance Sheets. Interests in pooled investment funds are limited partner interests and are reported using the equity method.


	March 31, 2026
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	117,446	$	117,313
Due after one year through five years	47,546		45,845
Due after five years through ten years	55,344		55,042
Due after ten years	550		553
	220,886		218,753
Residential mortgage-backed securities	2,643		2,627
Commercial mortgage-backed securities	5,002		4,985
Collateralized debt obligations	1,626		1,630
Other asset-backed securities	1,380		1,392
Total available-for-sale investments	$	231,537	$	229,387

Fixed Maturity Securities:


	December 31, 2025
	Amortized Cost		Estimated Fair Value
Due in one year or less	$	180,013	$	179,824
Due after one year through five years	32,409		31,588
Due after five years through ten years	47,801		47,619
Due after ten years	979		998
	261,202		260,029
Residential mortgage-backed securities	1,604		1,597
Commercial mortgage-backed securities	3,307		3,341
Collateralized debt obligations	1,963		1,975
Other asset-backed securities	1,772		1,795
Total	$	269,848	$	268,737

The amortized cost and estimated fair value of available-for-sale investments, at September 30, 2025, and December 31, 2024, were as follows:

	September 30, 2025:										December 31, 2024:
	AmortizedCost		Allowance for Credit Losses		Gross Unrealized				EstimatedFair Value		AmortizedCost		Allowance for Credit Losses	Gross Unrealized				EstimatedFair Value
					Gains		Losses							Gains		Losses
Fixed maturity securities:
Municipal obligations	$	11,689	$	—	$	100	$	279	$	11,510	$	14,646	—	$	7	$	570	$	14,083
Corporate obligations	72,280		—		590		2,180		70,690		92,990		—	107		3,905		89,192
U.S. government obligations	38,978		—		398		205		39,171		41,706		—	98		809		40,995
Residential mortgage-backed securities	3,265		—		43		14		3,294		2,475		—	—		29		2,446
Commercial mortgage-backed securities	1,827		—		1		9		1,819		2,127		—	8		34		2,101
Collateralized debt obligations	2,304		—		15		—		2,319		3,131		—	13		2		3,142
Other asset-backed securities	2,274		—		24		—		2,298		5,049		—	14		2		5,061
	132,617		—		1,171		2,687		131,101		162,124		—	247		5,351		157,020
Short-term	295,815		—		10		—		295,825		127,588		—	13		—		127,601
Total available-for-sale investments	$	428,432	$	—	$	1,181	$	2,687	$	426,926	$	289,712	—	$	260	$	5,351	$	284,621

The amortized cost and estimated fair value of available-for-sale investments, at September 30, 2025, by contractual maturity, were as follows:

	AmortizedCost		EstimatedFair Value
Due in one year or less	$	331,403	$	331,164
Due after one year through five years	35,584		34,749
Due after five years through ten years	50,797		50,296
Due after ten years	978		987
	418,762		417,196
Residential mortgage-backed securities	3,265		3,294
Commercial mortgage-backed securities	1,827		1,819
Collateralized debt obligations	2,304		2,319
Other asset-backed securities	2,274		2,298
	$	428,432	$	426,926

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay certain obligations with or without call or prepayment penalties.

Unrealized Losses on Fixed Maturity Securities:

The following table shows gross unrealized losses and fair values of ~~Ambac’~~Octave's available-for-sale investments, which at ~~September~~March 3031, ~~2025,~~2026 and December 31, ~~2024~~2025, did not have an allowance for credit losses under the CECL standard. This information is aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at ~~September~~March 3031, ~~2025,~~2026 and December 31, ~~2024~~2025:

	September 30, 2025												December 31, 2024
	March 31, 2026												December 31, 2025
	Less Than 12 Months				12 Months or More				Total				Less Than 12 Months				12 Months or More				Total
	Fair Value		GrossUnrealizedLoss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		GrossUnrealizedLoss		Fair Value		GrossUnrealizedLoss		Fair Value		GrossUnrealizedLoss
Fixed maturity securities:
Municipal obligations	$	~~318~~532	$	1520	$	64,~~191~~904	$	~~264~~197	$	65,~~509~~436	$	~~279~~217	$	~~6,042~~535	$	~~112~~16	$	65,~~582~~820	$	~~458~~212	$	126,~~624~~355	$	~~570~~228
Corporate obligations	322,~~269~~033		13249		3226,~~855~~654		2,~~167~~000		3648,~~124~~687		2,~~180~~249		231,~~784~~807		~~269~~10		4630,~~612~~751		31,~~636~~932		7032,~~396~~558		31,~~905~~942
U.S. government obligations	314,~~012~~522		34124		136,~~064~~770		~~171~~94		1621,~~076~~292		~~205~~218		152,~~919~~206		~~344~~14		149,~~818~~491		~~465~~117		3011,~~737~~697		~~809~~131
Residential mortgage-backed securities	—473		—8		1,~~722~~454		1413		1,~~722~~927		1421		~~2,446~~—		29—		—1,596		—7		21,~~446~~596		297
Commercial mortgage-backed securities	~~761~~2,518		940		—		—		~~761~~2,518		940		~~738~~763		348		—		—		~~738~~763		348
Collateralized debt obligations	~~390~~68		—		—		—1		~~390~~68		—1		~~655~~—		2—		—		—		~~655~~—		2—
Other asset-backed securities	—		—		—		—		—		—		~~1,428~~—		2—		—		—		~~1,428~~—		2—
	7,750		71		53,832		2,616		61,582		2,687		51,012		792		68,012		4,559		119,024		5,351
	40,146		441		39,782		2,305		79,928		2,746		5,311		48		47,658		2,268		52,969		2,316
Short-term	—		—		—		—		—		—		—		—		—		—		—		—
	7,750		71		53,832		2,616		61,582		2,687		51,012		792		68,012		4,559		119,024		5,351
	40,146		441		39,782		2,305		79,928		2,746		5,311		48		47,658		2,268		52,969		2,316
Total temporarily impaired securities	$	740,~~750~~146	$	71441	$	5339,~~832~~782	$	2,~~616~~305	$	6179,~~582~~928	$	2,~~687~~746	$	515,~~012~~311	$	~~792~~48	$	6847,~~012~~658	$	42,~~559~~268	$	~~119~~52,~~024~~969	$	52,~~351~~316

~~Ambac~~Management ~~Financial~~has ~~Group~~determined that the securities in the above table do not have credit impairment as of March 31, ~~Inc.~~2026 16and ~~Third~~December ~~Quarter~~31, 2025, ~~Form~~based ~~10-Q~~upon (i) no actual or expected principal and interest payment defaults on these securities and (ii) analysis of the creditworthiness of the issuer.

Octave's assessment about whether a security is credit impaired reflects management’s current judgment regarding facts and circumstances specific to the security and other factors. If that judgment changes, Octave may record a charge for credit impairment in future periods.

The declines in fair value and resultant unrealized losses across asset classes as of March 31, 2026, included in the above table resulted primarily from the impact of increasing interest rates

since the securities were purchased. Management has determined that the securities with unrealized losses are not credit impaired. Additionally, management does not intend to sell and it is not more likely than not that the Company will be required to sell the securities with unrealized losses before recovery of their amortized cost basis. Further discussion of management's assessment with respect to security categories with larger unrealized loss balances is below.

Corporate obligations

The gross unrealized losses on corporate obligations as of March 31, 2026, resulted primarily from an increase in interest rates since the securities were purchased. Management believes that the full and timely receipt of all principal and interest


Octave Specialty Group, Inc.			15			First Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

~~Management~~payment ~~has~~on ~~determined~~corporate ~~that~~obligations ~~the~~with ~~securities~~unrealized inlosses ~~the above table do not have credit impairment~~ as of ~~September~~March ~~30, 2025, and December~~ 31, ~~2024~~2026, ~~based~~is ~~upon (i) no actual or expected principal and interest payment defaults on these securities and (ii) analysis of the creditworthiness of the issuer~~probable.

~~Ambac’s~~Accrued ~~assessment~~interest ~~about~~receivable ~~whether~~for aavailable-for-sale ~~security~~investments, isexcluded ~~credit~~from ~~impaired~~amortized ~~reflects~~cost ~~management’s~~above ~~current~~and ~~judgment~~included ~~regarding~~in ~~facts~~Other ~~and~~assets ~~circumstances~~on ~~specific~~the toConsolidated ~~the~~Balance ~~security~~Sheets, at March 31, 2026 and ~~other~~December ~~factors.~~31, If2025 ~~that~~was ~~judgment~~$1,494 ~~changes~~and $1,432, ~~Ambac~~respectively. ~~may~~Accrued ~~record~~interest areceivable ~~charge~~is not measured for credit impairment inand ~~future~~is ~~periods~~written off by reversing interest income when the receivable becomes 90 days past due.

The declines in fair value and resultant unrealized losses across asset classes as of September 30, 2025, included in the above table resulted from the impact of increasing interest rates since the securities were purchased. Management has determined that the securities with unrealized losses are not credit impaired. Further discussion of management's assessment with respect to security categories with larger unrealized loss balances is below.

Corporate obligations

The gross unrealized losses on corporate obligations as of September 30, 2025, resulted primarily from an increase in interest rates since the securities were purchased. Unrealized losses of $2,180 related to 99 investment grade securities with an average unrealized loss equal to 6% of amortized cost at September 30, 2025. Management believes that the full and timely receipt of all principal and interest payment on corporate obligations with unrealized losses as of September 30, 2025, is probable.

Investment Income (Loss)

Net investment income (loss) was comprised of the following for the ~~affected~~three ~~periods~~months ended March 31, 2026 and 2025:

	Three Months Ended September 30,				Nine Months Ended September 30,
Three Months Ended March 31,	2026		2025
	2025		2024		2025		2024
Fixed maturity securities	$	1,211	$	1,400
Fixed maturity securities	$	1,192	$	1,133	$	4,063	$	3,567
Short-term investments	1,244		1,457
Short-term investments	1,344		2,495		3,991		8,072
Loans	—		35
Loans	24		—		93		—
Investment expense	(100)		2
Investment expense	(93)		(84)		(177)		(276)
Securities available-for-sale and short-term	2,355		2,894
Securities available-for-sale and short-term	2,467		3,544		7,970		11,363
Other investments	—		(79)
Other investments	199		(56)		120		(472)
Total net investment income (loss)	$	2,355	$	2,815
Total net investment income (loss)	$	2,666	$	3,488	$	8,090	$	10,891

Net investment income (loss) from Other investments primarily represents changes in the fair value of equity securities, including income from investment limited partnerships, and other equity interests accounted for under the equity method.

Net Investments Gains (Losses), including Impairments:

Realized gains and losses on the sale of investments are determined on a first-in-first-out basis. The following table details amounts included in net investment gains (losses) and impairments included in ~~earnings~~Revenues, ~~within~~other, ~~Other~~on ~~revenues~~the Consolidated Statements of Income (Loss) for the ~~affected~~three ~~periods~~months ended March 31, 2026 and 2025:

	Three Months Ended September 30,				Nine Months Ended September 30,
Three Months Ended March 31,	2026		2025
	2025		2024		2025		2024
Gross realized gains on securities	$	5	$	—
Gross realized gains on securities	$	512	$	4	$	514	$	6,066
Gross realized losses on securities	(2)		(3)
Gross realized losses on securities	(5)		—		(7)		(46)
Credit impairments	—		—
Credit impairments	—		(581)		—		(2,061)
Net investment gains (losses), including impairments	$	3	$	(3)
Net investment gains (losses), including impairments	$	507	$	(577)	$	507	$	3,959

~~Ambac~~Octave ~~had~~did annot ~~allowance~~purchase ~~for~~any financial assets with credit ~~losses~~deterioration offor $0the ~~and~~three $0months atended ~~September 30,~~March ~~2025~~31, 2026 and ~~2024, respectively~~2025.

~~Ambac~~Deposits ~~did not purchase any financial assets~~ with ~~credit~~Regulators ~~deterioration for the three~~ and ~~nine~~Other ~~months ended September 30, 2025 and 2024.~~Restrictions

~~Deposits~~Securities with ~~Regulators~~a carrying value of $37,507 and ~~Other~~$34,016, ~~Restrictions:~~at March 31, 2026 and December 31, 2025, respectively, were deposited by Octave's insurance subsidiaries with governmental authorities or designated custodian banks as required by laws affecting insurance companies. Fixed maturity securities with a carrying value of $152 and $153, at March 31, 2026 and December 31, 2025, respectively, were deposited as security in connection with a letter of credit issued for a corporate office lease. Fiduciary funds held by Octave's insurance distribution subsidiaries, carried at $1,691 and $2,656, at March 31, 2026 and December 31, 2025, respectively, are included in invested assets.

~~Securities~~Other carried at $32,587 and $22,861 at September 30, 2025, and December 31, 2024, respectively, were deposited by Ambac's insurance company subsidiaries with governmental authorities or designated custodian banks as required by laws affecting insurance companies. Invested assets carried at $765 and $800 at September 30, 2025, and December 31, 2024, were deposited as security in connection with a letter of credit issued for an office lease. Invested assets include certain fiduciary funds held by Ambac's insurance distribution subsidiaries, carried at $3,916 and $2,845 at September 30, 2025, and December 31, 2024, respectively. Investments

~~Other~~Octave's ~~Investments:~~investment portfolio includes a limited partnership interest in a private equity fund that seeks to generate long-term capital appreciation through investments in private equity, equity-related and other instruments. The fair value of Octave's investment in the fund was $7,454 and $7,454 as of March 31, 2026 and December 31, 2025, respectively, determined using net asset value ("NAV") as a practical expedient. Redemptions may be made quarterly with 90 days notice subject to withdrawal limitations and/or redemption fees, which vary with the timing and notification of withdrawal provided by the investor. Octave's unfunded commitments total $1,501 on this private equity fund at March 31, 2026.

~~Ambac's~~Other ~~investment~~investments ~~portfolio~~also ~~includes~~include apreferred ~~limited partnership interest in a private~~ equity ~~fund which seeks to generate long-term capital appreciation through venture~~ investments inwith ~~insurtech~~a ~~companies. The~~carrying ~~fair~~ value of ~~Ambac's investment in the fund was~~ $717,~~684~~517 and $717,~~499~~517 as of ~~September~~March 3031, ~~2025,~~2026 and December 31, ~~2024~~2025, ~~determined~~respectively, ~~using~~that ~~net~~do ~~asset~~not ~~value~~have ~~("NAV")~~readily asdeterminable afair ~~practical~~values ~~expedient. Redemptions~~and ~~may~~are becarried ~~made~~at ~~quarterly~~cost, ~~with~~less 90any ~~days~~impairments ~~notice~~as ~~subject~~permitted tounder ~~withdrawal~~the ~~limitations~~Investments ~~and/or~~— ~~redemption~~Equity ~~fees~~Securities ~~which~~Topic ~~vary~~of ~~with~~ the ~~timing~~ASC. ~~and~~There ~~notification~~were ofno ~~withdrawal~~impairments ~~provided~~recorded byon ~~the~~these ~~investor. Ambac's~~investments ~~unfunded~~in ~~commitments~~the ~~total~~three ~~$1,658~~months onended ~~this~~March ~~private~~31, ~~equity~~2026 ~~fund~~and ~~at September 30,~~ 2025.

~~Other~~Octave ~~investments~~Specialty ~~also include preferred equity investments with a carrying value of $20~~Group,~~618~~ and $20,618 as of September 30, 2025, and December 31, 2024, respectively, that do not have readily determinable fair values and are carried at cost, less any impairments as permitted under the Investments — Equity Securities Topic of the ASCInc. ~~There~~ ~~were~~16 noFirst ~~impairments~~Quarter ~~recorded~~2026 onForm ~~these investments in the three and nine months ended September 30, 2025, and $581 and $2,061 in the three and nine months ended September 30, 2024, respectively.~~10-Q

Ambac Financial Group, Inc. 17 Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

5. FAIR VALUE MEASUREMENTS

The Fair Value Measurement Topic of the ASC establishes a framework for measuring fair value and disclosures about fair value measurements.

Fair Value Hierarchy:

The Fair Value Measurement Topic of the ASC specifies a fair value hierarchy based on whether the inputs to valuation techniques used to measure fair value are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect Company-based assumptions. The fair value hierarchy has three broad levels as follows:

l	Level 1	Quoted prices for identical instruments in active markets. Assets and liabilities classified as Level 1 include US Treasury and other foreign government obligations traded in highly liquid and transparent markets, and money market funds.
l	Level 2	Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Assets and liabilities classified as Level 2 generally include investments in fixed maturity securities and certain derivatives valued using only market observable data.
l	Level 3	Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. This hierarchy requires the use of observable market data when available. Financial instruments classified as Level 3 ~~may~~includes ~~include certain loans, investment securities, or derivatives~~debt.

The Fair Value Measurement Topic of the ASC permits, as a practical expedient, the estimation of fair value of certain investments in funds using the net asset value per share of the investment or its equivalent (“NAV”). Investments in funds valued using NAV are not categorized as Level 1, 2 or 3 under the fair value hierarchy. The Investments — Equity Securities Topic of the ASC permits the measurement of certain equity securities without a readily determinable fair value at cost, less impairment, and adjusted to fair value when observable price changes in identical or similar investments from the same issuer occur (the "measurement alternative"). The fair values of investments measured under this measurement alternative are not included in the below disclosures of fair value of financial instruments.

The following table sets forth the carrying amount and fair value of ~~Ambac’~~Octave's financial assets and liabilities as of ~~September~~March 3031, ~~2025,~~2026 and December 31, ~~2024~~2025, including the level within the fair value hierarchy at which fair value measurements are categorized. As required by the Fair Value Measurement Topic of the ASC, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

	September 30, 2025										December 31, 2024
	March 31, 2026										December 31, 2025
	CarryingAmount		Total FairValue		Fair Value Measurements Categorized as:						CarryingAmount		Total FairValue		Fair Value Measurements Categorized as:
					Level 1		Level 2		Level 3						Level 1		Level 2		Level 3
Financial assets:
Fixed maturity securities:
Municipal obligations	$	1110,~~510~~476	$	1110,~~510~~476	$	—	$	1110,~~510~~476	$	—	$	1411,~~083~~590	$	1411,~~083~~590	$	—	$	1411,~~083~~590	$	—
Corporate obligations	7076,~~690~~940		7076,~~690~~940		—		7076,~~690~~940		—		8966,~~192~~573		8966,~~192~~573		—		8966,~~192~~573		—
U.S. government obligations	39,~~171~~042		39,~~171~~042		39,~~171~~042		—		—		4035,~~995~~424		4035,~~995~~424		4035,~~995~~424		—		—
Residential mortgage-backed securities	32,~~294~~627		32,~~294~~627		—		32,~~294~~627		—		21,~~446~~597		21,~~446~~597		—		21,~~446~~597		—
Commercial mortgage-backed securities	14,~~819~~985		14,~~819~~985		—		14,~~819~~985		—		23,~~101~~341		23,~~101~~341		—		23,~~101~~341		—
Collateralized debt obligations	21,~~319~~630		21,~~319~~630		—		21,~~319~~630		—		31,~~142~~975		31,~~142~~975		—		31,~~142~~975		—
Other asset-backed securities	21,~~298~~392		21,~~298~~392		—		21,~~298~~392		—		51,~~061~~795		51,~~061~~795		—		51,~~061~~795		—
Short term investments	~~295~~92,~~825~~295		~~295~~92,~~825~~295		~~295~~92,~~825~~295		—		—		~~127~~146,~~601~~442		~~127~~146,~~601~~442		~~127~~146,~~601~~442		—		—
Other investments (1)	2824,~~302~~971		7,~~685~~454		—		—		—		2824,~~294~~971		7,~~499~~454		—		—		—
Cash, cash equivalents and restricted cash	5193,~~767~~537		5193,~~767~~537		5193,~~767~~537		—		—		4768,~~275~~440		4768,~~275~~440		4768,~~275~~440		—		—
Other assets-loans	—		—		—		—		—		~~3,434~~—		~~3,434~~—		—		—		~~3,434~~—
Other assets - Derivatives:
Derivative assets:
FX forward contracts	~~378~~—		~~378~~—		—		~~378~~—		—		—		—		—		—		—
Total financial assets	$	~~507~~347,~~373~~895	$	~~486~~330,~~756~~378	$	~~386~~224,~~763~~874	$	9298,~~308~~050	$	—	$	~~363~~362,~~624~~148	$	~~342~~344,~~829~~631	$	~~215~~250,~~871~~306	$	~~116~~86,~~025~~871	$	~~3,434~~—
Financial liabilities:
Short-term debt, including accrued interest	$	—	$	—	$	—	$	—	$	—	$	~~152,560~~—	$	~~152,560~~—	$	—	$	—	$	~~152,560~~—
Other liabilities - Derivatives:
Long term debt, including accrued interest	118,367		118,367		—		—		118,367		118,901		121,343		—		—		121,343
FX forward contracts	—		—		—		—		—		317		317		—		317		—
Derivative liabilities:
Total financial liabilities	$	—	$	—	$	—	$	—	$	—	$	152,877	$	152,877	$	—	$	317	$	152,560
FX forward contracts	426		426		—		426		—		8		8		—		8		—
Total financial liabilities	$	118,793	$	118,793	$	—	$	426	$	118,367	$	118,909	$	121,351	$	—	$	8	$	121,343

(1)Excluded from the fair value measurement categories in the table above are investment funds of $7,~~684~~454 and $7,~~499~~454 as of ~~September~~March 3031, ~~2025,~~2026 and December 31, ~~2024~~2025, respectively, which are measured using NAV as a practical expedient. Also excluded from the fair value amounts in the table above are equity securities with a carrying value of $2017,~~618~~517 and $2017,~~618~~517 as of ~~September~~March 3031, ~~2025,~~2026 and December 31, ~~2024~~2025, respectively, that do not have readily determinable fair values and have carrying amounts determined using the measurement alternative~~, and an equity method investment of $— and $177 as of September 30, 2025, and December 31, 2024~~.

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. 1817 ~~Third~~First Quarter ~~2025~~2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

Determination of Fair Value:

When available, ~~Ambac~~Octave uses quoted active market prices specific to the financial instrument to determine fair value, and classifies such items within Level 1. The determination of fair value for financial instruments categorized in Level 2 or 3 involves judgment due to the complexity of factors contributing to the valuation. Third-party sources from which we obtain independent market quotes also use assumptions, judgments and estimates in determining financial instrument values and different third parties may use different methodologies or provide different values for financial instruments. In addition, the use of internal valuation models may require assumptions about hypothetical or inactive markets. As a result of these factors, the actual trade value of a financial instrument in the market, or exit value of a financial instrument position by ~~Ambac~~Octave, may be significantly different from its recorded fair value.

~~Ambac’~~Octave's financial instruments carried at fair value are mainly comprised of investments in fixed maturity securities, short-term investments, ~~and~~an ~~equity~~investment ~~interests~~ in ~~pooled~~a ~~investment~~limited ~~funds~~partnership, and derivative instruments. Valuation of financial instruments is performed by ~~Ambac’~~Octave's finance group using methods approved by senior financial management with consultation from risk management and third-party portfolio managers as appropriate. Preliminary valuation results are discussed ~~with~~internally ~~senior financial management~~ and with third-party portfolio managers as necessary quarterly to assess consistency with market transactions and trends as applicable. Market transactions such as trades or negotiated settlements of similar positions, if any, are reviewed to validate fair value model results. However, financial instruments valued using significant unobservable inputs have very little or no observable market activity. Methods and significant inputs and assumptions used to determine fair values across portfolios are reviewed quarterly by senior financial management. Other valuation control procedures specific to particular portfolios are described further below.

Fixed Maturity Securities:

The fair values of fixed maturity investment securities are based primarily on market prices received from independent pricing sources. Because many fixed maturity securities do not trade on a daily basis, pricing sources apply available market information through processes such as matrix pricing to calculate fair value. Such prices generally consider a variety of factors, including recent trades of the same and similar securities. In those cases, the items are classified within Level 2. For those fixed maturity investments where quotes were not available or cannot be reasonably corroborated, fair values are based on internal valuation models. Key inputs to the internal valuation models generally include maturity date, coupon and yield curves for asset-type and credit rating characteristics that closely match those characteristics of the specific investment securities being valued. Items valued using valuation models are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be significant inputs that are readily observable. Longer (shorter) expected maturities or higher (lower) yields used in the valuation model will, in isolation, result in decreases (increases) in fair value. Generally, lower credit ratings or longer expected maturities will be accompanied by higher yields used to value a security.

~~higher~~Octave ~~(lower)~~performs ~~yields~~various ~~used~~review inand ~~the~~validation ~~valuation~~procedures ~~model~~to ~~will~~quoted and modeled prices for fixed maturity securities, inincluding ~~isolation~~price variance analyses, ~~result~~missing inand ~~decreases~~static ~~(increases)~~price inreviews, ~~fair~~overall ~~value~~valuation analysis by portfolio managers and finance managers and reviews associated with our ongoing impairment analysis. ~~Generally~~Unusual prices identified through these procedures will be evaluated further against alternative third-party quotes (if available), ~~lower~~internally ~~credit~~modeled ~~ratings~~prices and/or ~~longer~~other ~~expected~~relevant ~~maturities~~data, and the pricing source values will be ~~accompanied~~challenged as necessary. Price challenges generally result in the use of the pricing source’s quote as originally provided or as revised by ~~higher~~the ~~yields~~source ~~used~~following totheir internal diligence process. A price challenge may result in a determination by either the pricing source or Octave management that the pricing source cannot provide a reasonable value for a security or cannot adequately support a quote, in which case Octave would resort to using either other quotes or internal models. Results of price challenges are reviewed by portfolio managers and finance managers.

Ambac performs various review and validation procedures to quoted and modeled prices for fixed maturity securities, including price variance analyses, missing and static price reviews, overall valuation analysis by portfolio managers and finance managers and reviews associated with our ongoing impairment analysis. Unusual prices identified through these procedures will be evaluated further against alternative third-party quotes (if available), internally modeled prices and/or other relevant data, and the pricing source values will be challenged as necessary. Price challenges generally result in the use of the pricing source’s quote as originally provided or as revised by the source following their internal diligence process. A price challenge may result in a determination by either the pricing source or Ambac management that the pricing source cannot provide a reasonable value for a security or cannot adequately support a quote, in which case Ambac would resort to using either other quotes or internal models. Results of price challenges are reviewed by portfolio managers and finance managers.

Other Investments:

Other investments ~~primarily~~includes ~~relate~~an toinvestment ~~investments~~ in ~~pooled~~a ~~investment~~limited ~~funds. The~~partnership, ~~fair~~which ~~value~~holds of pooled investment funds, isthat ~~determined using dealer quotes or alternative pricing sources when such investments have readily determinable fair values. When fair value~~ is ~~not~~carried ~~readily~~under ~~determinable,~~the ~~pooled~~equity ~~investment~~method ~~funds are valued~~ using NAV as a practical expedient as permitted under the Fair Value Measurement Topic of the ASC. Refer to Note 4. Investments for additional information about such investments in pooled funds that are reported at fair value using NAV as a practical expedient.

Derivative Instruments:

At ~~September~~March 3031, ~~2025,~~2026 and December 31, ~~2024~~2025, ~~Ambac~~Octave has foreign ~~currency~~exchange ("FX") forward contracts and holds warrants to purchase preferred stock of a development stage company. The fair value of ~~foreign~~FX ~~currency~~forward ~~forwards~~contracts are determined using valuation models with observable market inputs. Fair value of the warrants are determined using a standard warrant valuation model with internally developed input assumptions.

~~Short-term~~ Debt:

~~Short-term~~Debt ~~debt~~consists atof ~~December 31,~~Secured ~~2024,~~Overnight ~~consisted~~Financing ofRate ("SOFR ")-indexed borrowing. ~~used~~The ~~for~~fair ~~partial~~value ~~funding~~ of ~~the Beat acquisition and is classified as Level 3. Such~~ debt ~~was~~approximates ~~fully~~its ~~repaid~~carrying ~~in September 2025~~value.

~~Other~~6. INSURANCE ~~Financial~~CONTRACTS ~~Assets:~~

~~Included in Other assets at December 31, 2024 are loans carried at amortized cost, the fair values of which are estimated based upon internal valuation models and are classified as Level 3.~~Premiums

~~Ambac~~The ~~Financial~~effect ~~Group,~~of ~~Inc.~~reinsurance 19on ~~Third~~premiums ~~Quarter~~written and earned for the three months ended March 31, 2026 and 2025 ~~Form~~was ~~10-Q~~as follows:


	Three Months Ended March 31,
	2026				2025
	Written		Earned		Written		Earned
Direct	$	95,043	$	85,003	$	77,191	$	80,446
Assumed	8,672		7,209		9,724		7,529
Ceded	71,266		72,211		68,911		72,297
Net premiums	$	32,449	$	20,001	$	18,004	$	15,678


Octave Specialty Group, Inc.			18			First Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

~~Additional~~Premium ~~Fair~~Receivables, ~~Value~~including ~~Information~~Credit ~~for Financial Assets and Liabilities Accounted for at Fair Value:~~Impairments

~~The~~Premium ~~following~~receivables ~~tables~~at ~~present~~March 31, ~~the~~2026 ~~changes~~and inDecember ~~the~~31, ~~Level~~2025, 3were ~~fair~~$87,653 ~~value~~and ~~category~~$75,085, ~~for~~respectively. Management ~~the~~evaluates ~~periods~~premium ~~presented~~receivables infor ~~2025~~expected ~~and~~credit ~~2024.~~losses ~~Ambac~~("credit ~~classifies~~impairment") ~~financial instruments~~ in ~~Level~~accordance 3with of the ~~fair~~CECL ~~value~~standard, ~~hierarchy~~which ~~when there~~ is ~~reliance~~further ondescribed atin ~~least~~Note ~~one significant unobservable input to the valuation model~~2. InBasis ~~addition to these unobservable inputs, the valuation models for Level 3 financial instruments typically also rely on a number~~ of ~~inputs~~Presentation ~~that~~and ~~are~~Significant ~~readily~~Accounting ~~observable~~Policies ~~either~~in ~~directly or indirectly. Thus,~~ the ~~gains~~Company’s ~~and~~Annual ~~losses~~Report ~~presented~~on ~~below~~Form ~~include~~10-K ~~changes~~for in the ~~fair~~year ~~value~~ended ~~related~~December 31, ~~to both observable and unobservable inputs~~2025.

Level 3 - Financial Assets and Liabilities Accounted for at Fair Value
	Investments		Derivatives		Total
Three Months Ended September 30, 2025:
Balance, beginning of period	$	—	$	—	$	—
Total gains/(losses) realized and unrealized:
Included in earnings	—		—		—
Included in other comprehensive income	—		—		—
Purchases	—		—		—
Settlements	—		—		—
Balance, end of period	$	—	$	—	$	—
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—
Three Months Ended September 30, 2024:
Balance, beginning of period	$	—	$	548	$	548
Total gains/(losses) realized and unrealized:
Included in earnings	—		—		—
Included in other comprehensive income	—		—		—
Purchases	—		—		—
Settlements	—		—		—
Balance, end of period	$	—	$	548	$	548
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—

Below is a rollforward of the premium receivable allowance for credit losses for the three months ended March 31, 2026 and 2025.

Ambac Financial Group, Inc. 20 Third Quarter 2025 Form 10-Q



Three Months Ended March 31,	2026		2025
Beginning balance	$	500	$	142
Current period provision	—		—
Write-offs of the allowance	—		—
Recoveries of previously written-off amounts	—		—
Ending balance	$	500	$	142

~~Table~~At three months ended March 31, 2026 and 2025, $11,683 and $5,690, respectively, of ~~Contents~~premiums were past due.

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

Level 3 - Financial Assets and Liabilities Accounted for at Fair Value
	Investments		Derivatives		Total
Nine Months Ended September 30, 2025:
Balance, beginning of period	$	—	$	—	$	—
Total gains/(losses) realized and unrealized:
Included in earnings	—		—		—
Included in other comprehensive income	—		—		—
Settlements	—		—		—
Balance, end of period	$	—	$	—	$	—
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—
Nine Months Ended September 30, 2024:
Balance, beginning of period	$	13,920	$	656	$	14,576
Total gains/(losses) realized and unrealized:
Included in earnings	6,016		(108)		5,908
Included in other comprehensive income	125		—		125
Settlements	(20,061)		—		(20,061)
Balance, end of period	$	—	$	548	$	548
The amount of total gains/(losses) included in earnings attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	6,016	$	(108)	$	5,908
The amount of total gains/(losses) included in other comprehensive income attributable to the change in unrealized gains or losses relating to assets and liabilities still held at the reporting date	$	—	$	—	$	—

Invested assets are transferred into Level 3 when internal valuation models that include significant unobservable inputs are used to estimate fair value. All such securities that have internally modeled fair values have been classified as Level 3. Derivative instruments are transferred into Level 3 when the use of unobservable inputs becomes significant to the overall valuation. There were no transfers of financial instruments into or out of Level 3 in the periods disclosed.

Gains and losses (realized and unrealized) relating to Level 3 assets and liabilities included in earnings for the affected periods are reported as follows:

	Three Months Ended September 30, 2025						Three Months Ended September 30, 2024
	NetInvestmentIncome		Net Gains(Losses) onDerivativeContracts		OtherIncome or(Expense)		NetInvestmentIncome		Net Gains(Losses) onDerivativeContracts		OtherIncome or(Expense)
Total gains (losses) included in earnings for the period	$	—	$	—	$	—	$	—	$	—	$	—
Changes in unrealized gains (losses) relating to financial instruments still held at the reporting date	—		—		—		—		—		—
	Nine Months Ended September 30, 2025						Nine Months Ended September 30, 2024
	NetInvestmentIncome		Net Gains(Losses) onDerivativeContracts		OtherIncome or (Expense)		NetInvestmentIncome		Net Gains(Losses) onDerivativeContracts		OtherIncome or (Expense)
Total gains or losses included in earnings for the period	$	—	$	—	$	—	$	—	$	(108)	$	6,016
Changes in unrealized gains or losses included in earnings relating to the assets and liabilities still held at the reporting date	—		—		—		—		(108)		—

Ambac Financial Group, Inc. 21 Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

Ambac Financial Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

6. INSURANCE CONTRACTS

Amounts presented in this Note relate only to Ambac’s continuing operations.

Premiums:

The effect of reinsurance on premiums written and earned was as follows:

	Three Months Ended September 30,
	2025				2024
	Written		Earned		Written		Earned
Direct	$	89,780	$	83,058	$	92,776	$	79,847
Assumed	7,405		8,053		22,378		16,999
Ceded	79,408		74,084		82,400		69,405
Net premiums	$	17,777	$	17,027	$	32,754	$	27,441
	Nine Months Ended September 30,
	2025				2024
	Written		Earned		Written		Earned
Direct	$	256,820	$	243,104	$	262,726	$	211,820
Assumed	23,527		22,556		60,057		49,804
Ceded	229,360		216,752		231,493		181,550
Net premiums	$	50,987	$	48,908	$	91,290	$	80,074

Premium Receivables, including credit impairments:

Premium receivables at September 30, 2025, and December 31, 2024, were $74,760 and $57,222, respectively. Management evaluates premium receivables for expected credit losses ("credit impairment") in accordance with the CECL standard, which is further described in Note 2. Basis of Presentation and Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Below is a rollforward of the premium receivable allowance for credit losses for the periods presented.

Nine Months Ended September 30,	2025		2024
Beginning balance	$	142	$	—
Current period provision	58		142
Write-offs of the allowance	—		—
Recoveries of previously written-off amounts	—		—
Ending balance	$	200	$	142

At September 30, 2025, and December 31, 2024, $9,445 and $5,690 of premiums were past due.

Loss and Loss Adjustment Expense Reserves

Below is the loss and loss reserve expense ~~roll-forward~~rollforward, net of subrogation recoverable and reinsurance, for the ~~affected~~three ~~periods:~~months ended March 31, 2026 and 2025.

Nine Months Ended September 30,	2025		2024
Three Months Ended March 31,	2026		2025
Beginning gross loss and loss expense reserves	$	349,062	$	197,089
Beginning gross loss and loss adjustment expense reserves	$	459,990	$	349,062
Reinsurance recoverable	~~270~~375,~~081~~722		~~156~~270,~~301~~081
Beginning balance of net loss and loss expense reserves	78,981		40,788
Beginning balance of net loss and loss adjustment expense reserves	84,268		78,981
Losses and loss expenses:
Current year	3110,~~577~~689		5910,~~742~~325
Prior years	48,~~283~~990		~~3,058~~171
Total (1)	3519,~~860~~679		6210,~~800~~496
Loss and loss expenses paid (recovered):
Loss and loss adjustment expenses paid (recovered):
Current year	~~4,263~~534		91,~~572~~120
Prior years	277,~~814~~504		1310,~~585~~172
Total	328,~~077~~038		2311,~~157~~292
Ending net loss and loss expense reserves	82,764		80,431
Ending net loss and loss adjustment expense reserves	95,909		78,185
Reinsurance recoverable (2)	~~354~~391,~~775~~352		~~242~~294,~~800~~920
Ending gross loss and loss expense reserves	$	437,539	$	323,231
Ending gross loss and loss adjustment expense reserves	$	487,261	$	373,105

(1)Total losses and loss adjustment expense (benefit) is net of $(~~166~~45,~~959~~601) and $(7245,~~160~~778) for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025, respectively, related to ceded reinsurance.

(2)Represents reinsurance recoverable on future loss and loss ~~expenses~~adjustment expense. Additionally, the Balance Sheet line "Reinsurance recoverable on paid and unpaid losses" includes reinsurance recoverables ~~(payables)~~ of $8578,~~687~~507 and $4156,~~225~~190 as of ~~September~~March 3031, ~~2025,~~2026 and ~~2024~~2025, respectively, related to previously paid loss and loss ~~expenses~~adjustment expense.

Prior accident years losses incurred development for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, was primarily driven by ~~increased~~$2,125 ~~commercial~~of ~~auto~~net ~~loss~~losses ~~experience for programs in run-off~~ and ~~excess liability claims~~$5,787 ~~whereas~~of ~~prior~~LAE ~~accident~~(legal ~~years~~expenses) ~~losses~~from ~~incurred development for~~ the ~~nine months ended September 30, 2024, was primarily driven by increased commercial auto loss experience for programs in run-off.~~

settlement of a potential litigation matter related to an insurance claim, whereas prior accident years losses incurred development for the three months ended March 31, 2025, was nominal.

Specialty Property & Casualty Loss Reserves

Claims Development

The following is a summary of loss and loss adjustment expense reserves, including certain components, for the Company’s major product lines by reporting segment at ~~September~~March 3031, ~~2025~~2026.

September 30, 2025	Net Loss and Loss Adjustment Expense Reserves		Reinsurance Recoverables on Unpaid Losses (1)		Loss and Loss Adjustment Reserves (1)
March 31, 2026	Net Loss and Loss Adjustment Expense Reserves		Reinsurance Recoverables on Unpaid Losses (1)		Loss and Loss Adjustment Reserves (1)
Commercial auto	$	2429,~~961~~446	$	~~134~~133,~~859~~407	$	~~159~~162,~~820~~853
Excess liability	1418,~~025~~764		83109,~~086~~617		97128,~~111~~381
General liability	1012,~~961~~750		4449,~~175~~641		5562,~~136~~391
Workers compensation	1819,~~086~~752		—		1819,~~086~~752
Non-standard personal auto	52,~~195~~704		~~195~~191		52,~~390~~895
Professional Liability	2,892		35,473		38,365
Professional liability	3,388		44,831		48,219
Surety	(6)		15,216		15,210
Multi-peril / business owners (BOP)	2,328		8,918		11,246
Unallocated loss adjustment expense reserves	5,672		9,966		15,638
Surety	1,060		9,707		10,767
Other	$	978	$	31,805	$	32,783
Unallocated loss adjustment expense reserves	5,546		9,969		15,515
Total	$	82,764	$	354,775	$	437,539
Other	171		25,071		25,242
Total	$	95,908	$	391,352	$	487,261

~~Ambac~~(1)Other ~~Financial~~includes ~~Group~~$21,273 ~~Inc~~related to legacy liabilities obtained from the acquisitions of Providence Washington Insurance Company, Greenwood Insurance Company, and Consolidated Specialty Insurance Company. 22All ~~Third~~legacy ~~Quarter~~liabilities ~~2025~~remain ~~Form~~obligations ~~10-Q~~of affiliates of the sellers through reinsurance and contractual indemnities.

Reinsurance Recoverables, Including Credit Impairments:

Everspan’s reinsurance assets, including deferred ceded premiums and reinsurance recoverables on losses, amounted to $615,279 at March 31, 2026. Credit exposure existed at March 31, 2026, with respect to reinsurance recoverables to the extent that any reinsurer may not be able to reimburse Everspan under the terms of these reinsurance arrangements. At March 31, 2026, there were ceded reinsurance balances payable of $89,148 offsetting this credit exposure. Contractually ceded reinsurance payables can only be offset against amounts owed from the same reinsurer in the event that such reinsurer is unable to meet its obligations to reimburse Everspan.

To minimize its credit exposure to losses from reinsurer insolvencies, Everspan (i) is entitled to receive collateral from its reinsurance counterparties in certain reinsurance contracts and (ii) has certain cancellation rights that can be exercised by Everspan in the event of rating agency downgrades of a reinsurer (among other events and circumstances). Everspan held letters of credit and collateral amounting to $80,351 from its reinsurers at March 31, 2026. For those reinsurance counterparties that do not currently post collateral, Everspan's reinsurers are well capitalized, highly rated, authorized capacity providers. Additionally, while legacy liabilities from the Providence Washington Insurance Company ("PWIC") acquisition and the


Octave Specialty Group, Inc.			19			First Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

~~(1)Other~~admitted ~~includes~~carriers ~~$28,999~~previously ~~related~~acquired toby ~~legacy~~Everspan ~~liabilities~~on ~~obtained~~January ~~from~~3, ~~the acquisitions of Providence Washington Insurance Company~~2022, (Greenwood Insurance Company, and Consolidated Specialty Insurance Company.), ~~All~~were ~~legacy~~fully ~~liabilities~~ceded ~~remain~~to ~~obligations~~certain ofreinsurers, ~~affiliates~~Everspan ofalso ~~the~~benefits ~~sellers~~from ~~through~~an ~~reinsurance~~unlimited, uncapped indemnity from Enstar Holdings (US) and ~~contractual~~21st ~~indemnities~~Century Premier Insurance Company to mitigate any residual risk to these reinsurers.

~~Reinsurance~~At ~~Recoverables~~March 31, ~~Including~~2026, ~~Credit~~our ~~Impairments:~~top five reinsurers represented 52.1% of our total reinsurance recoverables on paid and unpaid losses. These reinsurance recoverables were primarily from reinsurers with applicable ratings of A or better. The following table sets forth our five most significant reinsurers by amount of reinsurance recoverables as of March 31, 2026.

Everspan’s reinsurance assets, including deferred ceded premiums and reinsurance recoverables on losses amounted to $601,368 at September 30, 2025. Credit exposure existed at September 30, 2025, with respect to reinsurance recoverables to the extent that any reinsurer may not be able to reimburse Everspan under the terms of these reinsurance arrangements. At September 30, 2025, there were ceded reinsurance balances payable of $87,635 offsetting this credit exposure. Contractually ceded reinsurance payables can only be offset against amounts owed from the same reinsurer in the event that such reinsurer is unable to meet its obligations to reimburse Everspan.


Reinsurers	Rating (1)			Reinsurance Recoverable (2)				Unsecured Recoverable (3)
General Reinsurance Company	A++			$	128,406			$	100,301
Munich Reinsurance Company	A+			65,092				63,828
QBE Insurance Corporation	A			17,989				17,989
Everest Reinsurance Company	A+			17,776				18,256
Swiss Reinsurance America Corporation	A+			15,512				14,788
All other reinsurers				225,084				112,773
Total recoverables		$	469,859			$	327,935

~~To minimize its credit exposure to losses from reinsurer insolvencies, Everspan~~ (i1) isRepresents ~~entitled~~financial tostrength ~~receive~~ratings ~~collateral~~ from ~~its~~AM reinsurance counterparties in certain reinsurance contracts and (ii) has certain cancellation rights that can be exercised by Everspan in the event of rating agency downgrades of a reinsurer (among other events and circumstances)Best. Everspan held letters of credit and collateral amounting to $72,454 from its reinsurers at September 30, 2025. We believe that Everspan's reinsurance counterparties that do not currently post collateral are well capitalized, highly rated, authorized capacity providers. Additionally, while legacy liabilities from the Providence Washington Insurance Company acquisition and the admitted carriers previously acquired by Everspan (Greenwood Insurance Company and Consolidated Specialty Insurance Company), were fully ceded to certain reinsurers, Everspan also benefits from an unlimited, uncapped indemnity from Enstar Holdings (US) and 21st Century Premier Insurance Company, respectively, to mitigate any residual risk to these reinsurers.

~~At September 30, 2025, our top five reinsurers represented 60.~~(2%)Represents ~~of our total~~ reinsurance recoverables on paid and unpaid losses. ~~These~~ ~~reinsurance~~Unsecured ~~recoverables~~amounts ~~were primarily~~ from ~~reinsurers~~QBE ~~with~~Insurance ~~applicable~~Corporation ~~ratings~~are ofalso ~~A or better. The following table sets forth our five most significant reinsurers by amount of reinsurance recoverable as of September 30, 2025.~~

Reinsurers	Rating (1)			ReinsuranceRecoverable(2)				Unsecured Recoverable(3)
General Reinsurance Company	A++			$	148,776			$	130,515
Munich Reinsurance Company	A+			49,677				32,540
QBE Insurance Corporation	A			27,255				27,255
Guaranty Captive Insurance Company	NR			21,937				—
Swiss Reinsurance America Corporation	A+			17,486				15,890
All other reinsurers				175,331				98,083
Total recoverables		$	440,462			$	304,283

supported by an unlimited, uncapped indemnity from Enstar Holdings (US).

(13)~~Represents~~Reinsurance ~~financial~~recoverables ~~strength~~reduced ~~ratings~~by ~~from~~ceded AMpremiums ~~Best~~payables ~~for~~due ~~P&C~~to reinsurers, letters of credit, and collateral posted for the benefit of Everspan.

~~(2)Represents~~As ~~reinsurance~~of ~~recoverables~~March 31, on2026 ~~paid~~and December 31, 2025, Everspan has uncollateralized credit exposure to reinsurers of $327,935 and ~~unpaid~~$311,795, respectively, and has recorded an allowance for credit losses of less than a million at March 31, 2026 and December 31, 2025. ~~Unsecured~~The ~~amounts~~uncollateralized credit exposure to reinsurers includes legacy liabilities obtained from ~~QBE~~the ~~Insurance~~acquisitions ~~Corporation~~of ~~are~~PWIC ~~also~~and ~~supported~~the admitted carriers acquired by anEverspan ~~unlimited~~on January 3, ~~uncapped~~2022, ~~indemnity~~of ~~from~~$21,273 ~~Enstar~~and ~~Holdings~~$23,530 ~~(US)~~at March 31, 2026 and December 31, 2025, respectively. All legacy liabilities remain with affiliates of sellers through reinsurance and contractual indemnities.

(3)Reinsurance recoverables reduced by ceded premiums payables due to reinsurers, letters of credit, and collateral posted for the benefit of Ambac.

Everspan has uncollateralized credit exposure of $304,283 and $232,310 and has recorded an allowance for credit losses of less than a million at September 30, 2025, and December 31, 2024. The uncollateralized credit exposure includes legacy liabilities obtained from the acquisitions of PWIC and the 21st Century Companies of $28,999 and $35,146 at September 30, 2025, and December 31, 2024, respectively. All legacy liabilities, which are fully ceded to reinsurers, also benefit from an unlimited, uncapped indemnity from the respective sellers to mitigate the Company from any residual risk from these reinsurers.

7. DERIVATIVE INSTRUMENTS

The following ~~tables~~table ~~summarize~~summarizes the location and gross fair values of individual derivative instruments and the impact of legal rights of offset as reported in the Consolidated Balance Sheets as of ~~September~~March 3031, ~~2025,~~2026 and December 31, ~~2024~~2025:

	September 30, 2025										December 31, 2024
	March 31, 2026										December 31, 2025
	GrossAmounts ofRecognizedAssets /Liabilities		GrossAmountsOffset in theConsolidatedBalance Sheet		Net Amountsof Assets/LiabilitiesPresented in the ConsolidatedBalance Sheet		Gross Amountof CollateralReceived /Pledged ~~NotOffset~~notOffset in theConsolidatedBalance Sheet		NetAmount		GrossAmounts ofRecognizedAssets /Liabilities		GrossAmountsOffset in theConsolidatedBalance Sheet		Net Amountsof Assets/LiabilitiesPresented in the ConsolidatedBalance Sheet		Gross Amountof CollateralReceived /Pledged ~~NotOffset~~notOffset in theConsolidatedBalance Sheet		NetAmount
Other assets:
FX forwards	~~378~~3		—3		~~378~~—		—		~~378~~—		—		—		—		—		—
Total derivative assets	$	~~378~~3	$	—3	$	~~378~~—	$	—	$	~~378~~—	$	—	$	—	$	—	$	—	$	—
Other liabilities:
FX forwards	—429		—3		—426		—		—426		~~317~~8		—		~~317~~8		—		~~317~~8
Total derivative liabilities	$	—429	$	—3	$	—426	$	—	$	—426	$	~~317~~8	$	—	$	~~317~~8	$	—	$	~~317~~8

~~Ambac~~The ~~Financial~~following ~~Group,~~table ~~Inc.~~summarizes 23the ~~Third~~location ~~Quarter~~and ~~2025~~amount ~~Form~~of ~~10-Q~~gains and losses of derivative contracts in the Consolidated Statements of Income (Loss) for the three months ended March 31, 2026 and 2025:


	Location of Gain (Loss) Recognized in Consolidated Statements of Income (Loss)	Amount of Gain (Loss) Recognized in Consolidated Statements of Income (Loss)
		Three Months Ended March 31,
		2026		2025
Derivatives:









FX forwards	Revenues, other	$	(519)	$	427

Total derivatives		$	(519)	$	427


Octave Specialty Group, Inc.			20			First Quarter 2026 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

~~The~~Octave ~~following~~Ventures ~~tables~~utilizes ~~summarize~~FX ~~the~~forward ~~location~~contracts ~~and~~to ~~amount~~partially ofhedge ~~gains~~its ~~and~~foreign ~~losses~~currency ofexposure. Octave ~~derivative~~Ventures' ~~contracts~~functional incurrency is the ~~Unaudited~~British ~~Consolidated~~Pound, ~~Statements~~but a significant portion of ~~Total~~its ~~Comprehensive~~revenues ~~Income~~are ~~(Loss)~~generated ~~for~~in currencies other than the ~~three~~British ~~and~~Pound, ~~nine~~particularly ~~months~~the ~~ended~~US ~~September 30~~Dollar. Octave Ventures, ~~2025~~therefore, ~~and~~typically ~~2024:~~enters into forward contracts to partially hedge its exposure to fluctuations in exchange rates relative to the British Pound.

	Location of Gain (Loss)Recognized inConsolidated Statements of TotalComprehensive Income (Loss)	Amount of Gain (Loss) Recognized in Consolidated Statement of Total Comprehensive Income (Loss)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2025		2024		2025	2024
Derivatives:
Warrants	Net gains (losses) on derivative contracts	—		(2)		—	(110)
FX forwards	Net gains (losses) on derivative contracts	21		6,547		1,128	6,143
Total derivatives		$	21	$	6,545	1,128	6,033

Octave also holds warrants to purchase equity shares of a development stage company.

~~Beat~~Information ~~utilizes~~about ~~foreign~~FX ~~exchange~~ forward contracts toas ~~partially hedge its foreign currency exposure. Beat’s functional currency is the British Pound, but a significant portion~~ of ~~its revenues are generated in currencies other then the British Pound~~March 31, ~~particularly~~2026 ~~the~~and ~~US Dollar. Beat~~December 31, ~~therefore~~2025, ~~typically~~is ~~enters~~summarized ~~into~~below: forward contracts to partially hedge its exposure to fluctuations in exchange rates relative to the British Pound. AFG used FX forward contracts to mitigate British Pound to US Dollar exchange risk leading up to its purchase of Beat in August 2024.

Ambac also holds warrants to purchase equity shares of a development stage company and was party to foreign exchange (FX) forward contracts in 2024.


Derivative Type	Weighted-Average Remaining Term (years)	Face Amount (Buy)	Face Amount (Sell)	Fair Value Asset (Liability)
March 31, 2026
FX Forwards-Buy GBP/Sell USD	1.23	32,134	42,700	(429)

FX Forwards-Buy GBP/Sell CAD	0.56	1,149	2,400	3
December 31, 2025
FX Forwards-Buy GBP/Sell USD	1.39	17,876	24,000	(6)

FX Forwards-Buy GBP/Sell CAD	0.73	1,530	2,800	(2)

~~Information~~Octave ~~about~~Specialty ~~FX forward contracts as of September 30~~Group, ~~2025,~~Inc. ~~and~~21 ~~December 31,~~First ~~2024,~~Quarter is2026 ~~summarized~~Form ~~below:~~ 10-Q

Derivative Type	WeightedAverageRemainingTerm(years)	FaceAmount(Buy)	FaceAmount(Sell)	Fair ValueAsset(Liability)
September 30, 2025
FX Forwards-Buy GBP/Sell USD	0.22	3,925	5,000	378
December 31, 2024
FX Forwards-Buy GBP/Sell USD	0.61	15,720	20,000	(317)

8. GOODWILL AND INTANGIBLE ASSETS

The following table presents the Company's goodwill asset.

	September 30,2025		December 31,2024
Beginning balance	$	418,234	$	69,694
Business acquisitions	1,313		357,316
Foreign exchange	25,835		(8,776)
Impairments	—		—
Ending balance	$	445,382	$	418,234

Intangible assets and accumulated amortization are included in the Consolidated Balance Sheets, as shown below.

	Gross Carrying Amount		Accumulated Amortization		Net
September 30, 2025
Finite-lived Intangible Assets:
Customer relationships	$	370,366	$	51,798	$	318,568
Non-compete agreements	1,350		1,283		67
Trade name	11,414		2,065		9,349
Total finite lived intangible assets	383,130		55,146		327,984
Indefinite lived intangible assets:
Licenses	11,213		—		11,213
Total intangible assets	394,343		55,146		339,197
December 31, 2024
Finite-lived Intangible Assets:
Customer relationships	$	348,350	$	24,630	$	323,720
Non-compete agreements	1,350		1,080		270
Trade name	10,767		1,195		9,572
Total finite lived intangible assets	360,467		26,905		333,562
Indefinite lived intangible assets:
Licenses	11,213		—		11,213
Total intangible assets	371,680		26,905		344,775

9. REVENUES FROM CONTRACTS WITH CUSTOMERS

As further described in the Revenue Recognition section of Note 2. Basis of Presentation and Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, the Insurance Distribution businesses have contracts that are subject to the Revenue from Contracts with Customers Topic of the ASC ("ASC 606").

Ambac Financial Group, Inc. 24 Third Quarter 2025 Form 10-Q

Table of Contents

Notes to Unaudited Consolidated Financial Statements

~~Ambac~~Octave ~~Financial~~Specialty Group, Inc. and Subsidiaries

(Dollar Amounts in Thousands, Except Per Share Amounts)

~~The~~8. GOODWILL ~~following~~AND ~~table~~INTANGIBLE ~~presents Insurance Distribution commission income recognized disaggregated by policy type for the periods presented.~~ASSETS

	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Accident & Health	$	6,753	$	6,755	$	20,226	$	24,260
Specialty Auto	6,485		7,180		14,245		14,151
Other Professional	3,086		2,437		10,064		6,703
Marine & Energy	904		500		4,246		2,298
Niche Specialty Risks	3,300		2,414		10,273		2,414
Property	3,666		1,578		17,558		1,578
Reinsurance	3,868		1,074		11,803		1,317
Environmental	620		667		3,417		667
Professional D&O	1,840		303		4,841		303
Surety	5,327		31		6,599		31
Misc. Specialty	210		125		(120)		292
Total	$	36,059	$	23,064	$	103,152	$	54,014

Below is a rollforward of the Company's goodwill.

For the three and nine months ended September 30, 2025 and 2024, revenue of $4,855 and $2,266, $14,291 and $2,266 respectively, was recognized in accordance with ASC 606 and reported in Servicing and other fees on the Consolidated Statement of Comprehensive Income (Loss).


	March 31, 2026		December 31, 2025
Beginning balance	$	540,345	$	418,234
Business acquisitions	—		95,357
Foreign exchange	(6,848)		26,754

Ending balance	$	533,497	$	540,345

~~During~~Intangible ~~the~~assets ~~nine~~consisted ~~months~~of ~~ended September 30, 2025 and 2024,~~ the ~~amount~~following as of ~~revenue recognized related to performance obligations satisfied in a previous period~~March 31, ~~inclusive~~2026 ~~of changes due to estimates was approximately $314~~ and ~~$413~~December 31, ~~respectively.~~2025:

Contract Assets and Liabilities


	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
March 31, 2026
Finite-lived intangible assets:
Customer relationships	$	503,392	$	72,629	$	430,763
Non-compete agreements	1,350		1,350		—
Trade names	19,225		2,821		16,404
Total finite-lived intangible assets	523,967		76,800		447,167
Indefinite-lived intangible assets:
Insurance licenses	11,213		—		11,213
Total intangible assets	535,180		76,800		458,380

December 31, 2025
Finite-lived intangible assets:
Customer relationships	$	509,197	$	62,362	$	446,835
Non-compete agreements	1,350		1,350		—
Trade names	19,383		2,433		16,950
Total finite-lived intangible assets	529,930		66,145		463,785
Indefinite-lived intangible assets:
Insurance licenses	11,213		—		11,213
Total intangible assets	541,143		66,145		474,998

~~The balances of contract assets and contract liabilities with customers were as follows:~~9. DEBT

	September 30, 2025		December 31, 2024
Contract assets	$	31,111	$	15,967
Contract liabilities	3,167		2,705

2025 Credit Facility

~~Contract~~In ~~assets~~connection with the acquisition of ArmadaCorp Capital, LLC on October 31, 2025, Octave Partners LLC and ~~Contract~~certain ~~liabilities~~of isits ~~reported~~subsidiaries inentered ~~Other~~into ~~Assets~~a credit agreement providing for a $100,000 term loan and ~~Other~~a ~~Liabilities~~$20,000 revolving credit facility (together, the "2025 Credit Facility"), both maturing October 31, 2030. Refer to Note 12. Debt in the Company's Annual Report on Form 10-K for the ~~Balance~~year ~~Sheet~~ended December 31, 2025, for a full description of the terms and conditions of the 2025 Credit Facility.

~~Insurance~~On ~~Distribution~~April 1, 2026, the Company entered into the First Amendment to the 2025 Credit Facility, which provided an additional term loan of $40,000, constituting the same class, type and tranche as the existing term loan, with the same maturity date, and fully fungible therewith. Following the scheduled principal repayment on the term loan of $625 on March 31, 2026, the total principal amount outstanding on the term loan was $139,375 as of April 1, 2026. Proceeds from the additional term loan were used to help fund the acquisition of redeemable NCI on April 9, 2026 (refer to Note 1. Background and Business Description for additional

~~Contract~~details ~~assets~~regarding ~~represent estimated future consideration related to base commissions and profit-sharing commissions that were recognized as revenue upon~~ the ~~placement~~acquisition of ~~the~~redeemable ~~policy, but are not yet due~~NCI). In ~~The~~connection ~~Company~~with ~~does~~the ~~not~~First ~~have~~Amendment, the ~~right~~Company topledged ~~bill~~its orownership ~~collect~~interests ~~payment~~in ~~on i) base commissions until~~ the ~~related~~capital ~~premiums~~stock ~~from~~of ~~policyholders~~Everspan ~~has~~Holdings, ~~been~~LLC ~~collected~~as ~~nor~~additional ~~ii) profit-sharing commissions until after the contract year is completed~~collateral.

Contract liabilities represent advance consideration received from customers related to employer stop loss base commissions that will be recognized over time as claims servicing is performed, which typically occurs between 17 and 20 months from contract inception10. REVENUES ~~During~~FROM ~~the~~CONTRACTS ~~nine~~WITH ~~months ended September 30, 2025 and 2024, the Company recognized revenue that was included in the contract liability balance as of the beginning of the period of $606 and $479, respectively.~~ CUSTOMERS

~~Ambac~~As ~~Financial~~further ~~Group,~~described ~~Inc~~in the Revenue Recognition section of Note 2. 25Basis ~~Third~~of ~~Quarter~~Presentation ~~2025~~and Significant Accounting Policies in the Company’s Annual Report on Form 10-QK for the year ended December 31, 2025, the ID businesses have contracts that are subject to the Revenue from Contracts with Customers Topic of the ASC ("ASC 606").

The following table presents ID commission income disaggregated by policy type for the three months ended March 31, 2026 and 2025.



Three Months Ended March 31,	2026		2025
Accident & Health	$	32,067	$	8,151
Specialty Auto	5,930		5,172
Other Professional	3,528		3,223
Marine & Energy	1,645		1,848
Niche Specialty Risks	3,693		4,027
Property	6,781		5,184
Reinsurance	1,576		1,734
Environmental	2,093		3,942
Professional D&O	1,779

Filing Compare · OCTAVE SPECIALTY GROUP INC