OSG Q2 Earnings Miss Estimates, Revenues Beat on Distribution Growth

OSG's Insurance Distribution Gains Momentum        

Insurance Distribution revenues climbed 77% year over year to $58.4 million. Premiums placed increased 26% to $314.4 million, while organic revenue growth was 44.1%, reflecting growth across the Managing General Agent (MGA) portfolio and contributions from businesses launched over the past two years. The October 2025 ArmadaCare acquisition also supported the top line. 

Adjusted EBITDA attributable to shareholders surged to $9.8 million from $2.5 million a year earlier. The related margin expanded 920 basis points to 16.8%. Higher profit commissions and a larger ownership position in Octave Ventures also aided performance.

Octave's Everspan Underwriting Improves

Everspan generated revenues of $26.4 million, up 23% year over year. Gross premiums written dipped 2% to $94.7 million, while net premiums written jumped 52% to $23.1 million, reflecting a higher level of retained business.

The combined ratio improved 610 basis points to 100.6%, helped by a 640-basis-point decline in the loss ratio to 61.4%. The expense ratio edged up 30 basis points to 39.2%. Adjusted EBITDA attributable to shareholders increased 158% to $1.8 million.

OSG's Costs and Profitability Trend Better

Total expenses increased 21% year over year to $94.7 million. General and administrative expenses rose to $51.4 million from $40.5 million, while intangible amortization and depreciation increased to $12.3 million from $9.7 million.

Interest expense declined to $2.8 million from $5.6 million. Consolidated adjusted EBITDA attributable to shareholders improved to $3.7 million from a loss of $4.6 million, while adjusted net loss attributable to shareholders narrowed to $1.8 million from $10.6 million.

Octave Raises Insuarnce Distribution Outlook

Management raised its 2026 Insurance Distribution organic growth outlook to at least 25% from at least 20%. Adjusted EBITDA guidance for the segment was increased to $45 million from $40 million, reflecting continued momentum and portfolio diversity. 

However, Everspan's adjusted EBITDA forecast was reduced to $6 million from $7.5 million because of higher acquisition costs tied to newer programs. OSG also lowered its adjusted net income per share outlook to 15-20 cents from 50 cents, reflecting updated interest, depreciation, tax and noncontrolling-interest assumptions.

OSG's Balance Sheet Shows Higher Debt

OSG ended June with total assets of $2.28 billion, compared with $2.27 billion as of March-end. Cash and cash equivalents declined to $79.1 million from $93.5 million, while total investments decreased to $241.7 million from $254.4 million.

Long-term debt increased to $155.5 million from $117.1 million. Stockholders' equity attributable to common shareholders declined to $698.8 million from $712.6 million, with book value per share falling to $15.52 from $15.83.

Octave Details MGA and AI Growth

Management said nearly 75% of second-quarter organic growth came from MGAs launched in 2024 and 2025. Those nine launches represent about 40% of Octave's MGA portfolio, with roughly half already generating EBITDA. The company still expects one or two MGA launches in 2026 and targets two to four in 2027. 

Octave also continued rolling out its AI-driven underwriting platform. In one use case, the technology reduced submission-to-quote time from several hours to about seven minutes. Management expects implementation across the remaining applicable U.S. MGAs during the second half of 2026.

Zacks Rank

OSG currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Industry Players

Selective Insurance Group, Inc. SIGI reported second-quarter 2026 operating earnings of $1.95 per share, which beat the Zacks Consensus Estimate by 13.4%. The bottom line increased 48.9% year over year. Revenues of $1.37 billion rose 4.5% from the year-ago quarter and topped the consensus estimate by 0.7%. 

Net premiums written declined 5% year over year to $1.22 billion due to a 6% decrease in Standard Commercial Lines, an 8% fall in Standard Personal Lines and a 2% decline in Excess and Surplus Lines. Our estimate was $1.33 billion. Net premiums earned increased 2.3%. Direct new business fell to $206.1 million from $248.1 million. Renewal pure price increases averaged 6.5%, down from 9.9% in the prior-year quarter.

AXIS Capital Holdings Limited AXS reported second-quarter 2026 operating income of $2.84 per share, which missed the Zacks Consensus Estimate of $3.23 and fell 12.1% year over year. Total operating revenues of $1.7 billion marginally missed the Zacks Consensus Estimate by 1%. The top line rose nearly 7.4% year over year on higher premiums earned.

Net premiums written decreased 1.8% to $1.6 billion, reflecting lower premiums in the Reinsurance segment, partially offset by growth in the Insurance segment. AXIS Capital’s underwriting income of $142.9 million decreased 24.5% year over year. The combined ratio deteriorated to 93.1 in the quarter from 88.9 a year ago, reflecting higher catastrophe and weather-related losses. The Zacks Consensus Estimate was pegged at 93.2. Our estimate was 93.8.

Cincinnati Financial Corporation's CINF reported second-quarter 2026 operating income of $1.43 per share, which missed the Zacks Consensus Estimate by 21.4%. The bottom line declined 27.4% from the year-ago quarter. 

Total operating revenues for the quarter were $3 billion, reflecting a 6.8% year-over-year increase. The figure, however, missed the Zacks Consensus Estimate by 1.4%.

Earned premiums climbed 6.3% year over year to $2.6 billion, driven by higher renewal pricing, increased insured exposures and new business growth. The figure marginally missed the Zacks Consensus Estimate by 1.5%.

The combined ratio deteriorated 550 basis points year over year, underperforming the consensus estimate of 97.1.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research