David: the losses and expenses incurred in connection with a settlement to resolve potential litigation matters related to an insurance claim. This settlement resulted in additional losses incurred of $2.1 million and LAE incurred for legal fees of $5.8 million. The settlement accounted for 39.6 loss ratio points in the quarter. On a pro forma basis, including the settlement costs, severance as well as other expenses mostly related to timing differences, our combined ratio for the quarter was approximately 95%, which is more in line with our long-term expectations. For the first quarter of 2026, our risk band reduced a pre-tax loss of $8 million and adjusted EBITDA was $2 million, up 2% from the first quarter of 2025. Our recent expense reduction initiatives at corporate also began to take hold the first quarter of 2026 as well with nominal expenses declining to just over 12 million from 15 million last year moreover adjusted expenses declined to 7.2 million from 10.6 million in the prior year comparable period the difference between reported expenses and adjusted expenses in the current quarter were mainly attributable to acquisition integration costs of about 1.1 million severance and restructuring expenses of half a million, and equity compensation of 3.1 million, which included a catch-up accrual due to a change in performance factors of 1.7 million. We continue to evaluate all expenses in an effort to trend toward adjusted expenses downward towards our longer-term goals. I'll now turn the call back to Claude.
Claude: Thank you, David. I am immensely proud of what our team accomplished And we are very optimistic about our company's long-term trajectory and target goals we previously shared. As we look forward in 2026, we are very focused on the execution of our strategy with organic growth being our primary driver. Having taken steps to rebalance its portfolio, Everspan is also now well positioned and on a trajectory towards delivering solid top line and bottom line results. As David previously mentioned, We have also made significant progress in addressing our corporate expenses, which will continue to be a central area of focus for us as we progress through the coming quarters. Operator, I would now like to open the call for questions.
Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your questions 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 you poll for questions. The first question comes from the line of Mark Hughes with Truist Securities. Please go ahead.
Mark Hughes: Yeah, thank you. Good morning. Good morning, Mark. On the presentation, you show your 2026 guidance. You point out it was initially presented in February. Was the Q1 kind of relative to the guidance? Was it consistent with your expectations? Seems like it was quite a strong quarter. Do you feel like you're ahead of where you started out at the beginning of the year, or was this execution sort of according to plan?
Claude: good question mark you know i think we feel q1 was a very strong quarter so i think i put it ahead of our plan certainly for uh our expectations on q1 and uh you know i think we see a lot of tailwind carrying through for the rest of the year as well on some of the programs that we launched in the last couple years in the uh just to be clear the guidance is essentially unchanged but um
Mark Hughes: But you're off to a strong start. Is that the key point?
Claude: That's correct, yeah. We will consider adjusting guidance in the upcoming quarters.
Mark Hughes: Very good. What does the pipeline look like for startup MGAs? Is there going to be a 2026 class? How do we think about that?
Claude: What we indicated previously is that we were targeting more in the range of our initial expectations on startups. for 26 in the range of one to two startups. Part of that is the significant number of launches that we undertook in the class of 24 and 25 that were actively pursuing growth and expansion. Having said that, we have seen and continue to see a very deep and robust pipeline of opportunities that we're evaluating. Our team is very selective in terms of who we'd like to move forward with, but we We do expect, I'll say, at least one to two launches this year. Could be a little bit more, but I think we're trying to keep it in that range, given the number of service that we had in the last couple years.
Mark Hughes: Understood. And then plans for buy-in for the remainder of the year. You spent the $44 million, looks like, right at the end of Q1, so that'll have an impact on Q2. what is the outlook now for any additional buy-ins of the non-controlling interest through the balance of the year?
David: Yeah, for the rest of the year, Mark, there wouldn't be any additional buy-ins currently planned.
Mark Hughes: And then, any observations about the Capacity, you talked about how you're seeing some deceleration in rates, still robust in some of these casualty lines, but maybe broadly speaking with property and some other lower hazard lines, maybe a little bit less buoyancy. How about in terms of capacity providers, your ability to you know, to secure sufficient capacity for the MGAs and the startup MGAs? Any observations there?
Claude: Yeah, I think we've seen just continued increases in opportunities with both existing and new capacity providers. You know, I think the reinsurance markets in particular, you know, we've seen improvements in terms, broadening of appetite and opportunity. I think we mentioned on our last call that You know we've increased our our capacity, both in amount and duration of both aligned at their party capacity from 1.5 billion entering. 2026 at over 2 million, so we continue to see many opportunities we do manager business on our curated capacity. model uh and we'll continue to look to expand that as we progress through the year uh but today uh you know the opportunities continue to come to us and uh we're seeing uh broader i'd say more diversified opportunities as we continue to uh to expand our platform thank you very much thanks mark thank you thank you
Operator: Next question comes from the line of Ryan Tunis with Kent or Fitzgerald. Please go ahead.
Ryan Tunis: Hey, thanks. Good morning. I guess first question, kind of following along with the capacity discussion that you just had with Mark. The property, it looks like it's your second biggest line. You mentioned geographically diverse. I'm curious, though, just from a concentration standpoint, is it Do you have concentrated MGA? Where does the premium sit? Is it that you have MGAs that are largely property dedicated, or does the property premium tend to sit in places where, yeah, it's not solely just focused on property, is that question?
Claude: That's a great question, Ryan. I'm going to pass that over to Paul Rayner, Senior Executive. and director at OctaVentures to respond to that.
Paul Rayner: Yeah, we're very pleased to. So, Paul Rayner, executive at OctaVentures. Ryan, in response to your question, I mean, we have a number of different MGAs that play into the property market. And very much the model is each of our MGAs have their own specific pocket. So, we have an MGA that is focused more on the large commercial DNF We have one in the US more focused on middle market property. We then have another focused on small commercial. And then outside of that, we have MGAs that will have various package policies, which will include property and liability components. On the whole, as you look across our market, our property focus, we are relatively low-cat compared to our peers, particularly in the London marketplace. And so I think that goes to a lot of Claude's comments around how, whilst we are seeing rating changes, they're somewhat more muted for us. They're being led in our large commercial sector and becoming increasingly muted as we move through the ranks as we get to the smaller end of the specter.
Ryan Tunis: Did I respond to your question there, Brian? Yeah, you did. That's helpful. I just wanted to push a little bit more on just the conversations I guess you're having with the capacity, you know, relative to a year ago. I mean, there's so much discussion about the property market. Yeah, just what are the types of, you know, questions you're getting from capacity providers, or is it just that they're just really focused on results that, I mean, they clearly have been good, but I mean, it's just a little bit surprising to me that the capital wouldn't start being a little bit antsy given the competitive environment.
Paul Rayner: Should I continue, Claude? Sure, Paul. Yeah, sure. We can continue to see technical rate adequacy in our property markets. You'll recall they've gone through a period of strong hardening. And whilst we are seeing rate reduction, we still see technical profitability within the rates. And that's very much the conversation with our capacity partners. I think the add-on comment on capacity and building from closed comments is The capacity has been very loyal and strategic with our businesses. We've built good and deep relationships with them, and they're very bolted on to the fact that we seek to govern our businesses in a way that protects their interests. And so on the one hand, they're very understanding, ask a lot of questions, but they come from a very knowledgeable place. And on the second part, we've got a lot of structures to access capacity through both our managed balance sheets, the syndicates included, which are all third-party capital as well as the traditional arrangements. And so we have a lot of different conversations, a lot of different questions, but they come from a knowledgeable perspective, and ultimately that we are reselecting through this cycle to deliver the returns that we represent to them.
Ryan Tunis: I'm just shifting gears last one for Quad. Really just on Everspan and what the vision is for that from here, how it HOW IT FITS IN WITH THE OVERALL BUSINESS AS IT OBVIOUSLY CONTINUES TO SHRINK AS A PERCENTAGE OF THE MIX. WE HAD A LITTLE MORE NOISE THIS CORNER. I GUESS UPDATE US ON THE STRATEGIC PRIORITY OF THAT BUSINESS AT THIS MOMENT IN TIME.
Claude: THANKS. SURE. SO OUR VIEWS ON EVERSPAN HAVE NOT CHANGED IN THAT IT IS A STRATEGIC BUSINESS WITHIN OUR ECOSYSTEM. WE DO VIEW THE PROGRAM a lot of business between Octave Ventures and Everspan. So again, I think we have to remember it is primarily a third party market business, but that business continues to grow. It's provided us some opportunities on introductions to new MTAs, quite frankly, and new opportunities in the marketplace. We have done some selective programs that we've moved into Everspan. avoid competition in other third-party markets that Everspan competes in, but there are some good opportunities, and we have added a couple more into Everspan. So again, the strategic fit and nature of Everspan is still very valuable to us and remains so. I would say that we have and continue to look for ways to have Everspan be more relevant and valuable to us, and I think As we continue to grow and expand, you know, broadening of risk appetite, scale, risk limits, and rating, for example, are all things that we're hoping to be able to find ways to leverage Everspan in a greater way to the extent we can achieve that. And we've been, you know, working and considering different ways to achieve that in order to allow Everspan to broaden, you know, again, its risk appetite, broaden its growth opportunities. uh in the marketplace um and increase its relevance to our core business as well so uh again it remains an important part of our business uh we we think we have it uh going in the right direction we made some changes uh you know having this litigation summit behind us it's another important step uh but i believe we're well positioned uh as we look uh at the balance of the year
Operator: Thank you. Next question comes from the line of Tommy McJoyne with KBW. Please go ahead.
Tommy McJoyne: Hey, good morning. A couple questions on the insurance distribution segment. To start off, could you go into a bit more detail on how you see the quarterly seasonality of earnings this year following this very strong first quarter? In some sense, can we look at the quarterly seasonality of last year as a proxy, or has the recent acquisitions and growth in the A&H impacted that too much where we can't really look to the past to think about seasonality? Thanks.
David: Sure, Tommy. Thanks. So, yeah, last year gave us a little bit of a roadmap to seasonality. We had some of the same dynamics last year in terms of the A&H business as we do this year. A little more pronounced given the inclusion of ArmadaCare. But, you know, first quarter is, you know, certainly going to continue to be our strongest quarter. Fourth quarter is probably the second strongest. And, you know, the second and third quarters are more in line with each other.
Tommy McJoyne: Okay. Got it. We've seen the public broker multiples sink on concerns of brokers being disintermediated by AI. As part of your evaluation and underwriting of MGAs, what are you looking for to make sure that those MGAs aren't going to be disintermediated or at least face lower barriers to entry that drives up competition? What does your underwriting process of those MGAs look like?
Claude: It's a good question. I think from our perspective, we're not a broker, we're not into a retailer wholesale broking, and we are really more of a pure play MGA platform. I think the risk associated with AI on the, in particular the MGA market, I think is much more limited. Having said that, I believe, and we strongly believe, and we build this into our strategy that AI will be a core component of our growth strategy and oversight of our business going forward. And we've made significant strides, as I mentioned earlier, investments into AI. I think we're approaching this from a position of strength, given that while we meet some acquisitions, our largest acquisition being B Capital Partners, where most of our MTAs have been launched initially are on a homogeneous tech stack. We've been actively moving our other MGAs on to the same tech stack, which we'll have completed that in the U.S. marketplace by mid-year this year, and aggressively moving into a data architecture across all of our MGAs globally. Being able to do that without legacy systems and desperate systems, I think, gives us a big advantage to implement that quickly. So we believe that we're going to start seeing the benefits of that in terms of efficiency, velocity of underwriting, you know, underwriting effectiveness, if you will, better risk selection as we progress through the year and into next year. I believe those are some of the key benefits that we see coming out of AI in the near term. But, you know, I don't see AI as an individual, you know, component or business model, you know, disintermediating the MGA space in any way, especially in the commercial or more complex specialized opponents of the MGA sector. Thank you, Paul.
Operator: Thank you. Ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to Karen Beyer for closing comments.
Karen Beyer: Thank you, everyone, for joining us this morning. We'll be around for your calls today. Thanks and have a great day.
Operator: Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
