OSG Q2 Earnings Call Focuses on MGA Growth and Mixed Guidance

OSG Raises Distribution Outlook

Executive vice president and CFO David Trick raised 2026 Insurance Distribution organic growth guidance to at least 25% from at least 20% and increased adjusted EBITDA guidance to $45 million from $40 million.

President and CEO Claude LeBlanc tied the stronger outlook to a diversified MGA portfolio and the scaling of newer businesses. Second-quarter organic growth was 44%, while adjusted EBITDA to shareholders reached $9.8 million.

LeBlanc said that MGAs launched in 2024 and 2025 remain early in their scaling curves, keeping management focused on turning revenue growth into greater EBITDA contributions through 2027 and 2028.

Octave Cuts Earnings Expectations

Trick reduced Everspan's 2026 adjusted EBITDA guidance to $6 million from $7.5 million, citing higher acquisition costs tied to newer programs.

Trick also lowered adjusted net income per share guidance to $0.15-$0.20 from $0.50. He cited updated interest expense, depreciation, taxes and a refined allocation of noncontrolling interests.

Despite the reset, Trick said that 2026 is still expected to be the first year of positive adjusted net income per share, excluding the legacy financial guarantee business, since the P&C strategy began in 2021.

OSG Sees New MGAs Driving Growth

A Truist Securities analyst asked about the startup MGA pipeline. LeBlanc said that OSG still expects one or two launches in 2026 and two to four in 2027.

LeBlanc said that roughly 75% of second-quarter organic growth came from the 2024 and 2025 MGA classes, with about half of those businesses already producing EBITDA.

He described the pipeline as deep but emphasized selectivity. LeBlanc also said that adding teams to existing MGA platforms can provide a faster route to growth than launching entirely new entities.

Octave Balances Pricing and Everspan Scale

A Truist Securities analyst pressed management on property pricing. Cirrata Group president Naveen Anand said that large-account and catastrophe-exposed property rates were declining about 10-20%, while LeBlanc put Octave's portfolio impact closer to 5-10%.

A KBW analyst asked about Everspan's scale economics. LeBlanc said that management defines scale as more than $500 million of premium, versus 2026 guidance of about $410 million, and expects the business to move closer to that level in 2027.

Trick stated that Everspan's long-term combined-ratio target remains 90-95%. The second-quarter combined ratio improved to 100.6% from 106.7% a year earlier.

OSG Keeps AI Investment in Focus

LeBlanc said the company's AI underwriting platform reduced submission-to-quote time from several hours to about seven minutes in one application.

LeBlanc expects implementation across remaining applicable U.S. MGAs during the second half of 2026. He placed annual AI customization and implementation costs in the low-to-mid-single-digit millions, with technology upgrades adding a similar amount.

He said that much of that spending is one-time, with costs beginning to decline early in 2027 and a meaningful portion ending by midyear as Octave pursues efficiency and revenue benefits.

Octave Maintains a Disciplined Growth Stance

LeBlanc closed the call by emphasizing underwriting quality, portfolio management and responsible growth as market conditions soften.

Management's posture combines faster MGA scaling and broader capacity access with selectivity at Everspan, while accepting lower near-term earnings guidance to support what executives described as stronger long-term program economics.

Zacks Rank and Style Score

OSG carries a Zacks Rank #3 (Hold) at present. Its Momentum Score of A is strongest, while it has a Value Score of C, a Growth Score of C and a VGM Score of C. Under the Zacks framework, A ranks above B and the Style Score is designed to complement the Zacks Rank.

Zacks emphasizes Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks paired with A or B Style Scores as the preferred combinations, while Zacks Rank #3 stocks can still be held under the framework. OSG's current mix is therefore outside those preferred combinations. The Zacks Rank can change as analyst estimates are revised following the just-reported results. You can see the complete list of today’s Zacks #1 Rank stocks here.

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