Octave Specialty Group Q4 Earnings Call HighlightsFeb 25, 2026
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Key Points
Octave completed its first full quarter as a standalone specialty-insurance platform, with insurance distribution revenue up 65% year-over-year (14% organic) and the ArmadaCare acquisition — described as recurring, high-margin A&H (EBITDA >40%) — integrating ahead of schedule to deepen A&H exposure. Despite a Q4 net loss of $30 million, adjusted EBITDA improved to $1.4 million and distribution adjusted EBITDA rose ~33%; management’s 2026 targets include at least 20% organic growth in insurance distribution, ~ $40 million distribution adjusted EBITDA, consolidated adjusted net income ≈ $0.50/share, and corporate adjusted expenses under $30 million. Octave is rolling out AI-driven underwriting (proprietary “Hammurabi” for medical stop-loss) to boost pricing and efficiency, while Everspan’s repositioning produced a Q4 combined ratio of 99.4% (below 100%) and is positioned for controlled growth in 2026. Interested in Octave Specialty Group, Inc.? Here are five stocks we like better.
Octave Specialty Group (NYSE:OSG) used its fourth-quarter 2025 earnings call to outline the first full reporting period as a standalone specialty insurance platform and to provide 2026 guidance centered on organic growth, improving margins, and the integration of its ArmadaCare acquisition.
Management highlights standalone transition and growth drivers
President and CEO Claude LeBlanc said the fourth quarter marked the first full period in which the company operated as a standalone specialty insurance platform following a multi-year strategic transformation. He described Octave’s distribution platform—comprised of Octave Partners and Octave Ventures—as positioned for organic growth and margin expansion, supported by underwriting talent, aligned third-party capacity, and a scalable data and technology infrastructure.
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LeBlanc said that despite a more challenging market in 2025, the company grew insurance distribution business revenue by 65% over 2024, including 14% organic growth. He noted this figure excludes eight months of Octave Ventures (formerly Beat) and does not include the company’s acquisition of ArmadaCare.
LeBlanc highlighted several tailwinds he believes support growth in the coming years:
Embedded growth from newer MGAs: Nine of Octave’s 22 MGAs were launched in 2024 and 2025, with more than 40% of the MGA portfolio in early growth stages. LeBlanc said these businesses are expected to contribute meaningfully to organic growth over the next two to four years as they scale. Diversification by geography and product: Nine MGAs are based in London and Bermuda and 13 are in the U.S. LeBlanc said Lloyd’s market MGAs tend to reach profitability faster and move more quickly through pricing cycles, while U.S. MGAs offer more rate stability. By line of business, he said approximately 28% of the portfolio is in specialty accident and health (A&H), with the remaining 72% in specialty P&C, split between casualty and non-cat exposed property. Aligned third-party capacity: LeBlanc said Octave expanded capacity through its Lloyd’s syndicates and curated partners, totaling more than $2 billion entering 2026, including Everspan. Minority interest buy-in rights: For certain MGAs, Octave has contractual ability to acquire minority interests over time, which LeBlanc characterized as a built-in driver of earnings growth as the underlying MGAs perform.
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ArmadaCare acquisition and new MGA launch
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LeBlanc said the fourth-quarter acquisition of ArmadaCare fits Octave’s goal of increasing shareholder value, enhancing product diversification, and deepening its position in A&H. He described ArmadaCare as generating recurring revenue streams with EBITDA margins of over 40% that are less correlated to the commercial P&C cycle. While the fourth-quarter results included only a two-month contribution, he said integration was progressing ahead of schedule and early performance was exceeding expectations.
With ArmadaCare added, LeBlanc said the company is pursuing revenue synergies across its broader A&H MGAs and expects A&H to account for roughly a quarter of the distribution business in 2026 across three platforms and seven lines of business.
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LeBlanc also noted the fourth-quarter launch of 1889 Specialty, a management liability and professional lines MGA focused on the SME financial institutions market. He said the business is led by Blair Bartlett and is backed by A-plus rated capacity.
Technology and Everspan update
LeBlanc said Octave is working to unify operating infrastructure onto a single integrated data and technology architecture and is integrating AI-driven tools across its MGA platform to improve risk selection, pricing sophistication, and operational efficiency.
He highlighted the launch of “Hammurabi,” a proprietary AI platform built for medical stop-loss underwriting. LeBlanc said Hammurabi replaces labor-intensive processes with near-instant risk prediction and pricing accuracy and has helped drive record results in the company’s ESL business after several challenging years. He added that the company believes the platform can expand to other business lines over time.
On Everspan, LeBlanc said the company was satisfied with steps taken to reposition the book in 2024. After reserve strengthening in the first nine months of 2025, he said Everspan produced a fourth-quarter loss ratio, including the impact of sliding scale commissions, of 62.9% and is now positioned for “reasonable and controlled growth” in 2026, with a continued focus on casualty markets.
Fourth-quarter financial results: net loss, but adjusted EBITDA improved
Chief Financial Officer David Trick reported a fourth-quarter 2025 net loss to shareholders of $30 million, or $0.84 per share, compared with a net loss from continuing operations to shareholders of $22 million, or $0.56 per share, in the fourth quarter of 2024. Trick said the higher loss reflected costs tied to the ArmadaCare acquisition, the exit from the financial guarantee business and related expense reduction initiatives, and an impairment of a legacy strategy minority investment. He added that significantly lower interest expense and the two-month contribution from ArmadaCare partially offset those items.
Adjusted EBITDA from continuing operations attributable to stockholders increased to $1.4 million from $0.5 million a year earlier, driven by growth in insurance distribution and lower adjusted corporate expenses, partially offset by lower results at Everspan.
Total revenues increased 5% year over year to just under $47 million. Trick said results were impacted by lower profit commissions and FX gains, which together declined by about $4 million. He emphasized the reduction in profit commissions was not due to a systemic shift and that underwriting results remained in line with expectations.
In the insurance distribution segment, Trick said premium production grew 9% and commission revenue increased 13%, with organic revenue growth of just over 8% during the quarter. The segment’s net loss to shareholders improved to $1.4 million from a $6 million net loss in the prior-year quarter, aided by reduced interest expense and growth, including ArmadaCare’s two-month contribution. Adjusted EBITDA attributable to shareholders rose to just over $7 million from just over $5 million, a 33% increase.
Trick said investments in startup MGAs reduced total adjusted EBITDA by just under $3 million (about $1.5 million to shareholders). He noted six entities produced negative EBITDA in the quarter, but all but two are expected to reach break-even or profitability by the fourth quarter of 2026.
Insurance distribution adjusted EBITDA margin was 15% in the quarter, up from 12% a year earlier, and Trick said the company continues to target “mid-20s plus” margins longer term.
For Everspan, Trick reported fourth-quarter gross premium written of $80 million, net premium written of $23 million, and net earned premium of $18 million. Gross premium written increased 34%, and net earned premium was roughly flat year over year. The net loss and LAE ratio was 61.8% versus 51.9% a year earlier; however, including sliding scale commissions, the effective loss and LAE ratio was 62.9% compared with 66.8% in the fourth quarter of 2024. He said the combined ratio was 99.4%, below 100% for the first time in 2025, and the company expects it to remain below 100% in 2026.
Everspan posted pre-tax income of $1.3 million and adjusted EBITDA of $1.5 million, down from $2.6 million and $2.7 million, respectively, in the prior-year quarter, which Trick attributed primarily to a $1.8 million revenue decline and higher G&A.
Corporate G&A expenses were $25 million versus $14.6 million a year earlier. On an adjusted basis, corporate G&A was $7.5 million compared to $8.8 million. Trick said the gap between reported and adjusted expenses reflected acquisition and integration costs of about $7.8 million, impairment of a legacy minority investment of $3.1 million, and restructuring and expense reduction initiatives of $7.6 million. He reiterated that previously outlined expense reduction initiatives are estimated to generate about $17 million of reported expense savings versus pre-sale levels of the legacy financial guarantee business, with more than a $10 million impact on adjusted corporate EBITDA when complete.
2026 guidance and Q&A: buy-ins, seasonality, and pricing
LeBlanc provided 2026 guidance, calling for improved margins and operating leverage as newer MGAs scale and the company pursues synergies across platforms. Octave’s 2026 expectations include:
Insurance distribution: organic revenue growth of at least 20% and adjusted EBITDA of approximately $40 million for full-year 2026. Specialty insurance (including Everspan): gross written premiums around $410 million and adjusted EBITDA of approximately $7.5 million for 2026. Corporate adjusted expenses: below $30 million for the year. Consolidated adjusted net income: around $0.50 per share for 2026.
In response to analyst questions, LeBlanc said Octave continues to see opportunities for de novo MGA startups, primarily in the U.S., but expects a slower pace than in 2024 and 2025, targeting roughly two to four launches per year while focusing on scaling existing launches.
On cash flow and non-controlling interest buy-ins, Trick said cash flow is improving and that buy-ins in 2026 are expected to be less than $50 million, funded by cash and “some marginal additional borrowing.” He said net investment income is expected to be flat to marginally higher in 2026, and equity-based compensation is expected to be down a few million dollars versus 2025.
Trick also addressed earnings seasonality, saying results remain heavily weighted to the first and fourth quarters, noting that some A&H businesses, including ArmadaCare, are weighted about 60% toward the first quarter.
On pricing, management said non-cat property is seeing roughly 5% to 10% rate reductions in some programs with stability in others; casualty trends were described as mixed, with excess casualty seeing double-digit increases. In A&H, LeBlanc said pricing is “close to double-digit,” around 10% to 12%, with significant growth also coming from volume, new products, and other growth initiatives.
About Octave Specialty Group (NYSE:OSG)
Ambac Financial Group, Inc (NYSE:AMBC) is a specialized financial services holding company headquartered in New York City. Through its principal subsidiary, Ambac Assurance Corporation, the company provides financial guarantee insurance and surety bonds designed to enhance the credit quality of public finance and structured finance transactions. Ambac’s offerings are tailored to municipal issuers, financial institutions and corporate borrowers, supporting infrastructure projects, energy and transportation initiatives, as well as asset-backed securities.
Ambac’s core business activities center on credit enhancement and risk-transfer solutions.
The article "Octave Specialty Group Q4 Earnings Call Highlights" was originally published by MarketBeat.
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Ambac (AMBC) Q3 2025 Earnings Call TranscriptNov 11, 2025
Image source: The Motley Fool.
DATE
Tuesday, Nov. 11, 2025 at 8:30 a.m. ET
CALL PARTICIPANTS
President and Chief Executive Officer — Claude LeBlanc Chief Financial Officer — David Trick
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Full Conference Call Transcript
Claude LeBlanc, President and CEO of Octave, and David Trick, Chief Financial Officer. With that, I will turn over the call to Claude LeBlanc, President and CEO of Octave.
Claude LeBlanc: Thank you, Karen. We are very pleased to have you participating on the call today, and I would like to extend a warm welcome to you as the newest member of our team. For those joining our call today, we are excited to welcome you to the inaugural earnings call for Octave Specialty Group, the new name and brand replacing Ambac Financial Group, which we announced last night. We have a number of significant updates to share with you today. I will start by providing you with key highlights for the quarter, followed by David Trick, who will cover our financial update.
Following David's remarks, I will provide an overview of key themes included in the new investor presentation posted to our website last evening.
Today begins a new era for our company as a pure-play specialty P&C insurance company. This transformation reflects the culmination of years of hard work, underscored by significant milestone achievements. Starting with the successful restructuring and exit from rehabilitation of our financial guarantee business in 2018, ultimately leading to its recent sale. In parallel, we defined a vision and strategy for our new business, which we launched just under five years ago. These accomplishments have progressed our company from a runoff business with no access to future distributable earnings to a thriving high-growth insurance distribution platform.
I am very proud of our accomplishments, and I want to thank our employees, board of directors, and others who have supported us throughout this monumental transformation.
Turning to our quarterly highlights and progress against our recently announced 120-day plan, I am pleased to report we have made material progress against this plan, including: one, the launch of Octave Specialty Group, our new corporate brand and vision; two, we made material progress in executing our capital management plan, completing repurchases totaling 3,100,000 shares or 6.5% of weighted average shares outstanding; three, we undertook additional material corporate expense reductions this quarter that will result in more than a $10 million decrease in our run rate adjusted corporate expenses; and four, in addition to the successful close of the sale of our legacy financial guarantee business to Oaktree for $420 million, we announced and closed the purchase of ArmadaCare, a leading specialty NHMG platform.
Story Continues
With respect to our organic growth initiatives, we announced the launch of a new professional lines MGA, 1889 Specialty Insurance Services, the launch of the Alcor US MGA, and we converted our investment in the recently launched PIVX MGA, led by Mac Miller, to a majority stake, bringing our total class of 2025 MGA startups to three. We expect to continue to make material progress on our strategic initiatives during the fourth quarter, positioning our company for strong performance in 2026 and beyond. As we enter 2026, we expect to maintain robust organic growth, bolstered by continued momentum across our core businesses, including the significant number of startups launched in the 2024 and 2025 period.
We also remain focused on reducing corporate expenses to a more cost-efficient and sustainable level, with an initial target of approximately $30 million of adjusted expenses for 2026.
Capital management continues to be a top priority, guided by our multipronged strategy that includes investment in startups, organic growth opportunities, share repurchases, selective and disciplined acquisitions, and continued investments in data, AI, and core technologies that will advance growth opportunities and lead to reductions in operating expenses. We look forward to providing you with guidance for 2026 during our fourth quarter earnings call.
Before I turn it over to David, I would like to share some further thoughts on our new brand, Octave Specialty Group. Our new brand is much more than a name change. It is tied to a new vision, strategy, and culture that defines our business and our future. We've evolved from a capital business to one that is defined by people and services working in a collaborative and entrepreneurial ecosystem. We believe Octave captures the essence of who we are today: a collection of unique, high-performing businesses working in harmony. I should note that our aligned capacity, including our Lloyd's syndicates and Everspan, will retain their brand identity, as will the individual MGAs within our portfolio. The new Octave brand encompasses the holding company Octave Specialty Group, along with our two insurance distribution divisions, formerly known as Serata and B. I will now turn the call over to David Trick to walk us through our financial results for the quarter. David?
David Trick: Thank you, Claude. Good morning, everyone. For the 2025, Ambac reported a net loss from continuing operations to shareholders of $32 million or 67¢ per diluted share, compared to a loss of $18 million or $0.43 per share in 2024. The higher loss was driven by a $15 million combined increase in intangible amortization and interest and G&A expenses, coupled with the impact of Everspan's prior period $7.5 million gain on the sale of Scenic, all of which more than offset stronger results in the insurance distribution. The 2024 also benefited by a $4.8 million gain at corporate on an FX hedge related to the July 2024 acquisition of Veep.
The increase in expenses resulted from the acquisition of Viat as well as costs related to the exit from the financial guarantee business and expense reduction initiatives. It is worthy to note that the debt used to finance a portion of the acquisition of BEAT was repaid with the proceeds from the sale of AEC.
Adjusted EBITDA from continuing operations to stockholders was a loss of $3 million compared to a sub $2 million gain in 2024. The reduction in adjusted EBITDA resulted from the $4.8 million FX gain in 2024, a $1.5 million reduction in Everspan adjusted EBITDA, and $1.2 million corporate expenses mostly related to M&A and legacy litigation. These variances more than offset a threefold increase to $6 million in adjusted EBITDA in the insurance distribution segment. With regards to the insurance distribution segment, revenue increased by 80% compared to 2024, to $43 million. This growth was driven mostly by strong organic growth, which was 40%, and the inclusion of an additional month of B.
On an operating basis, that is before the impact of NCI, insurance distribution reported $10 million of adjusted EBITDA, producing a 23% margin, compared to $3 million and an 11.1% margin in 2024. Adjusted EBITDA to shareholders was $6 million for the quarter, at a 13.9% margin, up 183% compared to $2.1 million at an 8.8% margin in 2024. The increased margin to shareholders in 2025 versus 2024 is mostly related to the strong organic growth and higher profit commissions and fees.
Included in this quarter's insurance distribution segment results was just over $1 million of de novo loss, approximately $700,000 of which were attributable to shareholders. As noted previously, our margins can be expected to flex a bit, period to period, depending on the relative performance of each MGA compared to our ownership level, but will converge over time with margins on an operating basis as we buy in certain NCI. Everspan's net written and net earned premium in the quarter were $18 million and $17 million, down from $33 million and $27 million, respectively, from the prior year period, due to the previously disclosed proactive nonrenewal of certain personal and commercial auto programs.
While reported losses in LAE declined year over year, the loss ratio increased to 84.5% in 2025 from 74.4% in 2024. Adverse development accounted for just over 23 percentage points of this quarter's loss ratio, due mostly to development in runoff commercial auto programs. These losses were partially offset by a sliding scale commission benefit of approximately seven percentage points recognized as an offset to acquisition cost. In-force programs are running in the mid-sixties, materially better than the book in runoff and in line with our expectations.
The third quarter expense ratio of 28.4% was up from 26.1% in the prior year quarter. This increase was driven by a shift in mix of business and a reduction in earned premiums, resulting in approximately three and a half points of increase in the acquisition cost and G&A expense ratios, partially offset by a five-point increase in the sliding scale benefit. As Everspan is experiencing steady growth in earned premium sequentially, we continue to expect the expense ratio to improve. The resulting combined ratio for the third quarter of 112.9% compared to 100.5% in the prior year period. For the quarter, Everspan was breakeven on an adjusted EBITDA, which was down from $1.6 million in 2024.
Corporate G&A expenses were $26.6 million in the quarter, compared to $27.2 million in 2024. On an adjusted basis, G&A expenses were $9.3 million compared to $8.5 million in 2024. The difference between reported expenses and adjusted expenses in the current quarter is attributable to equity compensation and costs associated with our exit from the legacy business and expense reduction initiatives. We outlined in our investor materials certain select expense reduction initiatives, which include, for example, the termination of our corporate headquarters lease. These select initiatives are estimated to generate over $17 million of reported expense savings and will have over a $10 million impact on adjusted corporate EBITDA when fully complete.
I will now turn the call back to Claude LeBlanc.
Claude LeBlanc: Thanks, David. I would now like to review key themes and select information set out in our investor presentation posted last night. Starting with Slide 5, outlining the key actions we have taken to reposition Octave along with our go-forward value creation opportunity. One, platform expansion. Since beginning our journey five years ago, we've expanded from one MGA to 22, including ArmadaCare. On a pro forma basis, our revenue has grown more than sevenfold since 2021. Two, accretive M&A transactions. We have a proven track record of attracting high-performing MGAs to our platform, most recently demonstrated by the acquisition of BEAT in 2024 and ArmadaCare last week. Three, expense reductions.
As noted, we have already taken significant steps to reduce our corporate expenses across both compensation and non-comp areas and will continue to pursue additional measures to align our cost structure with the scale of our business. And four, capital allocation. We take a disciplined approach to capital allocation, balancing the return of capital against other strategic uses. We believe the actions we have taken to date position us to deliver sustainable long-term shareholder value.
Moving to Slide 11. Consistent with the expansion of our business, we have built a leadership team that I am incredibly proud of. A team with an average of more than thirty years of industry experience, deep expertise across market cycles, and broad subject matter knowledge. Combined with our extensive industry relationships and market visibility, this experience provides significant value to the MGA partners on our platform.
Moving to Slide 13. We believe Octave is uniquely positioned and differentiated in the MGA sector as a strategic operator, having a true partnership model to align interests with our MGA leaders as a pure-play MGA platform having a holistic and unified business service platform, and aligned capacity through our Lloyd's Syndicates and Everspan.
Moving to Slide 14. Our platform is uniquely positioned to deliver value through two complementary growth engines. Our de novo incubation division, Octave Ventures, led by John Kavanaugh and Paul Rayner, and our M&A division, Octave Partners, led by Naveen Anand. Both are supported by access to broad, aligned, and curated third-party capacity relationships, including our Lloyd's Syndicate and Everspan. This dual strategy has created a diversified, high-performing platform where our MGA partners operate independently but with shared alignment, supported by our comprehensive technology-led business services platform.
Now taking a closer look at our ventures division on Slide 16. This division is built on a strong foundation that allows us to consistently attract top-performing underwriting teams. We offer them a broad wholesale and retail distribution network, a strong network of aligned and curated third-party capacity partners, access to a stable capital base, and an experienced leadership team providing strategic oversight and direction, and an integrated technology-enabled business services infrastructure. To date, we have made targeted investments in high-performing underwriting teams with proven track records in their respective markets. We generally expect these MGAs to reach profitability within eighteen to twenty-four months.
Our UK MGAs typically achieve scale in approximately three years, while in the US, the timeline is slightly longer but generally offers a much larger addressable market and stronger long-term growth potential. The nine new MGAs launched in 2024 and 2025 will be a key driver of EBITDA margin expansion as they scale and achieve profitability over the next three years.
Turning to our partner division on Slide 17. Within our partners division, we take a disciplined and selective approach to acquisitions, targeting high-growth platforms that operate in niche markets with significant barriers to entry. When evaluating M&A opportunities, we focus on businesses that have the following attributes: natural entry barriers and strong market positioning, a proven track record of underwriting excellence, owners willing to retain equity to ensure an aligned partner, a strong cultural fit, a clear and sustainable growth trajectory, and identifiable enterprise synergies. Our partners division has enabled us to achieve substantial product diversification in businesses supported by leading MGA entrepreneurs.
Turning to Slide 18. Once launched or acquired, our focus shifts to growth and margin expansion for our MGA platform. We utilize a number of key growth and margin drivers, including expanded carrier relationships, producer network growth, digital platform enhancements, producer and coverage expansion, geographic market expansion, and cross-selling and revenue synergies. This is supported by streamlined shared services supported by tech-enabled infrastructure that enables underwriting discipline and accelerated speed to market.
Looking ahead to our aspirational $80 million EBITDA goal for 2028 on Slide 24. This table represents our initial targeted aspirational goal we shared with investors earlier this year. We wanted to provide you with an update on our progress to date, including additional information supportive of our growth. On Slide 25, we provide additional information showcasing Octave's strong organic growth. 2025 year-to-date organic revenue growth for Octave Ventures stands at 47%. As we previously outlined, bottom-line EBITDA expansion has a development curve that follows top-line growth as MGAs reach breakeven and later critical scale.
With the nine MGAs launched and completed in 2024 and 2025, Octave Ventures has significant potential built-in EBITDA growth and margin expansion, which we expect will push through into the 2026 to 2028 period.
As it relates to another key EBITDA growth driver, on Slide 26, we provide a schedule of BEAT and other MGA call put dates. The most significant EBITDA buying opportunity will be driven by BEAT, where we will have the opportunity to buy in the remaining 40% over the next four years. Finally, on Slide 27, we provide an outline of key corporate expense reductions, as previously addressed by David. In summary, we remain confident in our ability to reach our aspirational 2028 goal of $80 million of EBITDA, understanding that the individual contributing components in reaching that goal may vary as we progress through our growth cycle.
The next chapter of our journey is now in full flight, and I am very excited about the enormous progress we've made in a short amount of time. Thank you for your continued support. I am truly optimistic about the road ahead and the Octave chapter. With that, operator, please open the call for questions from analysts.
Operator: Thank you. We will now be conducting a question and answer session. If you'd like to ask a question at this time, you may press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you.
Mark Hughes: Thank you. Our first question is from the line of Mark Hughes with Truist Securities. Please proceed with your question.
Mark Hughes: Yeah. Thank you. Good morning. The organic growth of 40% in the distribution business is quite strong. Could you talk about the, I think you said in Q1, Q2, if you had incorporated the growth, it would have been in the teens, I think, low teens, upper teens. Obviously, nice acceleration in the third quarter. I wonder if you could talk about what contributed to that? And were there any, say, contingent or performance-based commissions that might be nonrecurring that contributed to that 40%?
David Trick: Hi, Mark. It's David. Thanks for the question. No, I think it was really driven by just momentum in the business. There's no profit commissions or contingent commissions that are included in the revenue numbers for the calculation of organic growth. No impact from FX either. So it is a purely same-store sales type of calculation. And what we've seen is just continued momentum in the business. A number of the MGAs that we have started, particularly the ones that started up in '23 and '24, have started to really build momentum in terms of their business.
So just a solid quarter with growth moving in line with our expectations for a number of the businesses as we had set those expectations when we launched them.
Mark Hughes: Very good. And then the third-party capacity, I think you've highlighted the $1.5 billion in capacity for 2025. How is that shaping up if you've got 40% organic growth? That presumably suggests you're going to need some more capacity to back the distribution business. How should we think about that going into 2026?
David Trick: Yeah. At this time, Mark, we believe we have sufficient capacity for the business. The $1.5 billion does not include the new business of ArmadaCare, which is coming online October 1. Just to point that out, it also does not include Everspan. So we believe we have sufficient capacity with interest from capital providers that well exceeded what our needs are for next year. So in the event that additional capacity were needed, we are very confident we would be able to get that capacity.
Mark Hughes: Very good. And then when you think about capital allocation, I think you've made the point that of your expected M&A on the distribution side, you've achieved 80% of your target with ArmadaCare. When we think about the use of capital, the noncontrolling interest would be one. But what would be the priority, the pay down debt, buyback stock, additional M&A, perhaps above and beyond that target? How do we think about uses of capital?
Claude LeBlanc: Look, I think, you know, we're obviously very focused on balancing these various interests or capital, but I would put them in the, you know, strategic launches as being a continued focus of ours as we are a very growth-focused business. We will look at the deployment of some capital potentially in M&A, although I don't believe there'll be any large M&As in the near future, given our focus on organic growth. We'll certainly continue to look at share buybacks. It's also a very important component, especially given where our current stock price or recent stock price has been.
We're also going to continue investing in select M&A, data, and technology platforms as we continue to build out our infrastructure and support for our various businesses.
Mark Hughes: Yeah. I did have one real specific question. The timeline of acquisitions of noncontrolling interest, the BEAT, the 10% per year, understand that. The MGA one is the one of the other, the single MGA that you're looking at a 2026 buy-in of that noncontrolling interest. How much capital roughly at this point is involved in that MGA 120% piece? Sorry. I know that's a little detailed, but just sort of curious about the magnitude of what your capital spending would be on that and then the associated EBITDA if you have some thoughts there.
David Trick: Sure, Mark. So that is not a significant amount of capital. Today, it would be less than a double-digit capital commitment, and it is not something that we've determined whether or not we would call, and the management team hasn't decided whether they would put in. We would have a conversation with the management team and talk about what's the best path forward for the business and for them, so it would be done in a collaborative way, but not a significant financial commitment.
Mark Hughes: Okay. That's helpful. Thank you. I had a couple more questions. I'll get back in the queue. Thank you.
Operator: Thank you. As a reminder, to ask a question at this time, you may press star 1 from your telephone keypad.
Mark Hughes: Our next question is a follow-up from the line of Mark Hughes, Truist Securities. Please proceed with your question.
Mark Hughes: Yeah. Thank you. In Everspan, what should we think about the premium outlook there? You've had some adjustments that have focused on your more profitable programs. Is there kind of a run rate to think about going into 2026?
David Trick: Yeah, Mark. I mean, if you look at the last couple of quarters in 2025, right, we've seen relatively controlled, modest growth on a sequential basis. So that is what I would expect to continue through the end of the year and into 2026. Sometimes, due to some seasonality depending on programs that come online and a number of other factors that are somewhat unique to the program business, you can get little jumps and bops and weeds, if you will. But generally speaking, we're looking to grow that top line at a relatively controlled pace. So I think the prior guidance we've given is around $400 million for this year.
I'd say we'd probably be in the $370 million to $380 million or so this year, based on the current pace unless there's a little bit of a year-end burst from some of the underlying MGAs. And then next year, while we haven't put out full-year guidance, we would continue to expect some of that modest growth. So somewhere north of $400 million, you know, not looking to push the top line.
Mark Hughes: And then interest expense, post your credit repair, what's the run rate on interest expense?
David Trick: Probably about $7 million, but the full-year interest expense next year will probably run around what the average quarterly was for this year. So a significant drop in interest expense.
Mark Hughes: Yeah. And then just to make sure I've got it straight, I think you talk about EBITDA margins, kind of the or EBITDA ratios, five to 7% relative to written premium. When you think about revenue to written premium, I wonder if you could, if you have any specific numbers there that you might share when thinking about that outlook?
David Trick: Yeah. That's a little more challenging because it does really depend on the underlying business. And what I mean by that is there are a number of businesses that, I would say, average, let's say, 20% of premium production would be your revenue number. But there's also businesses that we, because of the nature of the contract, our commission income is reported on a net basis. So what you wind up having is some kind of adjustments to that ratio based on both seasonality and relative growth. So as the business that reports on a net grows, then that ratio of revenue to premiums placed would come down.
But at the end of the day, the bottom line results shift dramatically. That's why we're focused more on the bottom line results relative to that premium as opposed to the nuances of the revenue recognition at the top line.
Mark Hughes: Understood. Am I right to think that's largely UK versus the US?
David Trick: That's primarily the difference. That's correct.
Mark Hughes: Okay. Very good. Thank you. Appreciate it.
Operator: Thank you. At this time, this will conclude today's question and answer session. It will also conclude today's conference. We thank you for your participation. You may now disconnect your lines. Have a wonderful day.
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On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
Nvidia:if you invested $1,000 when we doubled down in 2009,you’d have $516,252!* Apple: if you invested $1,000 when we doubled down in 2008, you’d have $51,256!* Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $604,044!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, available when you joinStock Advisor, and there may not be another chance like this anytime soon.
See the 3 stocks »
*Stock Advisor returns as of November 10, 2025
This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.
The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Ambac (AMBC) Q3 2025 Earnings Call Transcript was originally published by The Motley Fool
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