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What changed in NI Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NI Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+274 added−265 removedSource: 10-K (2025-03-07) vs 10-K (2024-03-15)

Top changes in NI Holdings, Inc.'s 2024 10-K

274 paragraphs added · 265 removed · 221 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

88 edited+11 added−25 removed70 unchanged
Biggest changeThe following chart shows our direct premiums written during the last two years and our relative market share within each of our states during the year ended December 31, 2022: Year Ended December 31, 2023 Year Ended December 31, 2022 Direct Premiums Written Direct Premiums Written Market Size Rank in State North Dakota $ 163,505 $ 159,260 $ 3,629,000 6 th Illinois 86,348 70,599 33,307,000 63 rd Nebraska 50,698 47,554 6,905,000 30 th South Dakota 29,660 26,880 3,671,000 31 st Maryland 13,389 14,227 14,857,000 83 rd North Carolina 11,822 8,110 21,714,000 136 th Virginia 11,554 8,606 18,087,000 126 th New Jersey 11,539 9,732 26,686,000 139 th Georgia 7,576 15,448 29,009,000 117 th Pennsylvania 6,279 8,486 30,235,000 173 rd South Carolina 4,976 3,630 13,279,000 153 rd District of Columbia 4,342 4,182 2,606,000 60 th Arizona 4,077 1,175 15,628,000 215 th Minnesota 4,008 5,075 15,533,000 130 th Nevada 2,938 4,552 7,672,000 110 th Tennessee 2,552 516 15,561,000 262 nd Delaware 2,122 1,545 3,516,000 112 th Kentucky 1,014 83 9,268,000 274 th West Virginia — 46 3,342,000 220 th Total direct premiums written $ 418,399 $ 389,706 Market size information is not yet available for the year ended December 31, 2023. 6 Organic Growth Strategy We believe we have many opportunities to organically grow our business.
Biggest changeThe following chart shows our direct premiums written during the last two years and our relative market share within each of our states during the year ended December 31, 2023: 5 Year Ended December 31, 2024 Year Ended December 31, 2023 Direct Premiums Written Direct Premiums Written Market Size Rank in State North Dakota $ 167,713 $ 163,505 $ 3,827,000 5 th Illinois 78,523 86,348 35,939,000 59 th Nebraska 53,244 50,698 7,573,000 32 nd South Dakota 32,421 29,660 3,970,000 30 th Arizona 5,180 4,077 17,959,000 163 rd Minnesota 3,786 4,008 17,081,000 140 th Nevada 1,434 2,938 8,562,000 139 th Total direct premiums written $ 342,301 $ 341,234 Market size information is not yet available for the year ended December 31, 2024.
General Information Nodak Insurance markets and distributes its policies through its captive agents, while all other companies utilize the independent agent distribution channel. Additionally, all of the Company’s insurance subsidiary and affiliate companies are rated “A” Excellent by AM Best. 5 The same executive management team provides oversight and strategic direction for the entire organization.
General Information Nodak Insurance markets and distributes its policies through its captive agents, while all other companies utilize the independent agent distribution channel. Additionally, all of the Company’s insurance subsidiary and affiliate companies are rated “A” Excellent by AM Best. The same executive management team provides oversight and strategic direction for the entire organization.
We also invest a much smaller percentage of the portfolio in private placement debt offerings and equity securities, which have the potential for higher returns but also involve varying degrees of risk, including higher volatility and/or less liquidity. The Executive Committee of NI Holdings’ Board of Directors reviews and approves the Company’s investment policy periodically.
We also invest a much smaller percentage of the portfolio in private placement debt offerings and equity securities, which have the potential for higher returns but also involve varying degrees of risk, including higher volatility and/or less liquidity. The Investment Committee of NI Holdings’ Board of Directors reviews and approves the Company’s investment policy periodically.
The NAIC has established an acceptable range for each of the IRIS financial ratios. If four or more of its IRIS ratios fall outside the range deemed acceptable by the NAIC, an 13 insurance company may receive inquiries from individual state insurance departments. However, a ratio falling outside the usual range may not necessarily be considered adverse.
The NAIC has established an acceptable range for each of the IRIS financial ratios. If four or more of its IRIS ratios fall outside the range deemed acceptable by the NAIC, an insurance company may receive inquiries from individual state insurance departments. However, a ratio falling outside the usual range may not necessarily be considered adverse.
A company’s “total adjusted capital” is the sum of statutory capital and surplus and such other items as the risk-based capital instructions may provide. The formula is designed to allow state insurance regulators to identify insufficiently capitalized companies. The requirements provide for four different levels of regulatory attention.
A company’s “total adjusted capital” is the sum of statutory capital and surplus and such other items as the risk-based capital instructions may provide. The formula is designed to allow state insurance regulators to identify insufficiently capitalized companies. 11 The requirements provide for four different levels of regulatory attention.
These pricing reviews involve evaluating our claims experience and loss trends on a periodic basis to identify changes in the frequency and severity of our claims. We then consider whether our premium rates are adequate relative to the level of underwriting risk as well as the sufficiency of our underwriting guidelines.
These pricing reviews involve 8 evaluating our claims experience and loss trends on a periodic basis to identify changes in the frequency and severity of our claims. We then consider whether our premium rates are adequate relative to the level of underwriting risk as well as the sufficiency of our underwriting guidelines.
Under these laws, insurance companies must provide advance informational notice to the domicile state insurance regulatory authority prior to payment of any dividend or distribution to its shareholders. Prior approval from the state insurance regulatory authority must be obtained before payment of an “extraordinary dividend” as defined under the state's insurance code.
Under these laws, insurance companies must provide advance 13 informational notice to the domicile state insurance regulatory authority prior to payment of any dividend or distribution to its shareholders. Prior approval from the state insurance regulatory authority must be obtained before payment of an “extraordinary dividend” as defined under the state’s insurance code.
While we rely on our independent agents for distribution and customer support, underwriting and claim handling responsibilities are retained by us. Many of our agents have had direct relationships with us for a number of years.
While we rely on our captive and independent agents for distribution and customer support, underwriting and claim handling responsibilities are retained by us. Many of our agents have had direct relationships with us for a number of years.
The Company makes available on its website, free of charge, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (“the Exchange Act”) as soon as reasonably practicable after it electronically files such material with, or furnish it to, the United States Securities and Exchange Commission (“SEC”).
The Company makes available on its website, free of charge, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) as soon as reasonably practicable after it electronically files such material with, or furnish it to, the United States Securities and Exchange Commission (“SEC”).
We hold regular training sessions when we introduce new products or product changes, and we identify specific topics that may help our agents more effectively market our products. For the year ended December 31, 2023, no individual agent was responsible for more than 5% of the Company’s direct premiums written. Agents are compensated through a fixed base commission structure.
We hold regular training sessions when we introduce new products or product changes, and we identify specific topics that may help our agents more effectively market our products. For the year ended December 31, 2024, no individual agent was responsible for more than 5% of the Company’s direct premiums written. Agents are compensated through a fixed base commission structure.
In some years, it may not be unusual for financially sound companies to have several ratios with results outside the usual ranges. During the years ended December 31, 2023 and 2021, none of our insurance company subsidiaries produced results outside the acceptable range for more than three of the IRIS tests.
In some years, it may not be unusual for financially sound companies to have several ratios with results outside the usual ranges. During the years ended December 31, 2024 and 2023, none of our insurance company subsidiaries produced results outside the acceptable range for more than three of the IRIS tests.
We view our capital position to consist of three layers, each of which has a specific size and purpose: ● The first layer of capital, which we refer to as “regulatory capital”, is the amount of capital needed to satisfy state insurance regulatory requirements while supporting our growth objectives.
We view our capital position to consist of three layers, each of which has a specific size and purpose: ● The first layer of capital, which we refer to as “regulatory capital,” is the amount of capital needed to satisfy state insurance regulatory requirements while supporting our growth objectives.
Under the current license agreement, Nodak Insurance is required to pay to the NDFB an annual royalty payment equal to 1.3% of Nodak Insurance’s written premiums (excluding multi-peril crop insurance premiums), subject to a minimum annual payment of $900 and a maximum annual payment of $1,623.
Under the current license agreement, Nodak Insurance is required to pay to the NDFB an annual royalty payment equal to 1.3% of Nodak Insurance’s written premiums (excluding multi-peril crop insurance premiums), subject to a minimum annual payment of $900 and a maximum annual payment of $1,672.
Nodak Insurance distributes its insurance products through exclusive agents in North Dakota, while American West, Battle Creek, Primero, Direct Auto, and Westminster rely on independent agents. 9 We review our agents with respect to both premium volume and profitability.
Nodak Insurance distributes its insurance products through exclusive agents in North Dakota, while American West, Battle Creek, Primero, and Direct Auto rely on independent agents. We review our agents with respect to both premium volume and profitability.
For additional information, see Part II, Item 7, “Critical Accounting Policies” and Part II, Item 8, Note 8 “Unpaid Losses and Loss Adjustment Expenses”. Investments The majority of funds available for investments are deployed in a widely diversified portfolio of high quality, liquid taxable U.S. government, tax-exempt and taxable U.S. municipal, taxable corporate, and U.S. agency mortgage-backed bonds.
For additional information, see Part II, Item 7, “Critical Accounting Policies” and Part II, Item 8, Note 8 “Unpaid Losses and Loss Adjustment Expenses.” Investments The majority of funds available for investments are deployed in a widely diversified portfolio of high quality, liquid taxable U.S. government, tax-exempt and taxable U.S. municipal, taxable corporate, and U.S. agency mortgage-backed bonds.
The current license agreement between the NDFB and Nodak Insurance renewed on October 1, 2023, with an expiration date of September 30, 2024. The agreement has historically been renewed annually by a vote of the Nodak Insurance Board of Directors.
The current license agreement between the NDFB and Nodak Insurance renewed on October 1, 2024, with an expiration date of September 30, 2025. The agreement has historically been renewed annually by a vote of the Nodak Insurance Board of Directors.
For the years ended December 31, 2023, 2022, and 2021, we paid only minimal assessments pursuant to state insurance guaranty association laws. We establish reserves relating to insurance companies that are subject to insolvency proceedings when it becomes probable that we will be subject to an assessment and the amount of such assessment can be estimated.
For the years ended December 31, 2024, 2023, and 2022, we paid only minimal assessments pursuant to state insurance guaranty association laws. We establish reserves relating to insurance companies that are subject to insolvency proceedings 12 when it becomes probable that we will be subject to an assessment and the amount of such assessment can be estimated.
We regularly monitor the effective duration of our fixed income investments, and our investment purchases and sales are executed with the objective of having adequate funds available to satisfy our insurance and debt obligations. Generally, the expected principal and interest payments produced by our fixed income portfolio adequately fund the estimated runoff of the Company’s insurance reserves.
We regularly monitor the effective duration of our fixed income investments, and our investment purchases and sales are executed with the objective of having adequate funds available to satisfy our insurance and other obligations. Generally, the expected principal and 9 interest payments produced by our fixed income portfolio adequately fund the estimated runoff of the Company’s insurance reserves.
We offer comprehensive compensation and benefits packages to our employees including a 401k Plan, Employee Stock Ownership Plan (“ESOP”), healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, and flexible work arrangements. We also offer stock-based compensation to certain management personnel as a way to attract and retain key talent.
We offer comprehensive compensation and benefits packages to our employees including a 401(k) Plan, Employee Stock Ownership Plan (“ESOP”), healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, and flexible work arrangements. We also offer stock-based compensation to certain management personnel as a way to attract and retain key talent.
Information contained on such website is not incorporated by reference into this 2023 Annual Report, and such information should not be considered to be part of this 2023 Annual Report. 3 Subsidiary and Affiliate Companies Intercompany Reinsurance Pooling Arrangement Effective January 1, 2020, all of our active insurance subsidiary and affiliate companies entered into an intercompany reinsurance pooling agreement.
Information contained on such website is not incorporated by reference into this 2024 Annual Report, and such information should not be considered to be part of this 2024 Annual Report. 3 Subsidiary and Affiliate Companies Intercompany Reinsurance Pooling Arrangement Effective January 1, 2020, all of our insurance subsidiary and affiliate companies entered into an intercompany reinsurance pooling agreement.
We reimburse AFBIS for its actual loss adjustment expense with respect to the policies issued by us and pay AFBIS a percentage of the premiums we receive with respect to such policies. Marketing and Distribution Our marketing philosophy is to sell profitable business in our core states using a focused, cost-effective distribution system.
We reimburse AFBIS for its actual loss adjustment expense with respect to the policies issued by us and pay AFBIS a percentage of the premiums we receive with respect to such policies. Marketing and Distribution Our marketing philosophy is to sell profitable business using a focused, cost-effective distribution system.
The investment portfolio is managed by Conning, Inc. For additional information, see Part II, Item 7, “Critical Accounting Policies” and Part II, Item 8, Note 4 “Investments”. Financial Strength Ratings are an important factor in assessing the Company’s competitive position in the insurance industry.
The investment portfolio is managed by Conning, Inc. For additional information, see Part II, Item 7, “Critical Accounting Policies” and Part II, Item 8, Note 4 “Investments.” Financial Strength Ratings are an important factor in assessing the Company’s competitive position in the insurance industry.
We may choose in the future to reevaluate the use of reinsurance to increase or decrease the amounts of risk ceded to reinsurers. For additional information, see Part II, Item 8, Note 6 “Reinsurance”. Unpaid Losses and Loss Adjustment Expenses We maintain reserves for unpaid losses and loss adjustment expenses.
We may choose in the future to reevaluate the use of reinsurance to increase or decrease the amounts of risk ceded to reinsurers. For additional information, see Part II, Item 8, Note 6 “Reinsurance.” Unpaid Losses and Loss Adjustment Expenses We maintain reserves for unpaid losses and loss adjustment expenses.
American West also writes private passenger auto coverage in North Dakota, as well as crop hail and Federal multi-peril crop insurance coverages in Minnesota and South Dakota. As of December 31, 2023, American West distributed its products through independent agents in 71 contracted agencies. Primero Insurance Company Primero is a wholly-owned subsidiary of Tri-State, Ltd.
American West also writes private passenger auto coverage in North Dakota, as well as crop hail and Federal multi-peril crop insurance coverages in Minnesota and South Dakota. As of December 31, 2024, American West distributed its products through independent agents in 63 contracted agencies. Primero Insurance Company Primero is a wholly-owned subsidiary of Tri-State, Ltd.
Based on 2022 data, Nodak Insurance is the second largest writer of farmowners insurance in North Dakota. Our largest competitors include Farmers Union, North Star Mutual, American Family, and Farmers Alliance insurance companies. In Nebraska and South Dakota, we have a small farmowners market share, which is dominated by the large national and regional carriers.
Based on 2023 data, Nodak Insurance is the second largest writer of farmowners insurance in North Dakota. Our largest competitors include Farmers Union, North Star Mutual, American Family, and Liberty Mutual insurance companies. In Nebraska and South Dakota, we have a small farmowners market share, which is dominated by the large national and regional carriers.
The maximum royalty payment is adjusted annually based upon the June index month for the Consumer Price Index. As of December 31, 2023, Nodak Insurance distributed its insurance products through 66 exclusive agents appointed by Nodak Insurance. Nodak Agency, Inc. Nodak Agency is an inactive shell corporation. Tri-State, Ltd.
The maximum royalty payment is adjusted annually based upon the June index month for the Consumer Price Index. As of December 31, 2024, Nodak Insurance distributed its insurance products through 63 exclusive agents appointed by Nodak Insurance. Nodak Agency, Inc. Nodak Agency is an inactive shell corporation. Tri-State, Ltd. Tri-State, Ltd. is an inactive shell corporation.
Strategies we employ to achieve this growth include: ● continued emphasis on our relationship with the NDFB, a key advocacy group for agricultural and rural interests which enjoys a high profile and favorable reputation throughout North Dakota; ● expansion and enhancement of independent agency relationships, including the use of technology such as mobile apps, online quoting, and policy issuance initiatives to make it easy for agents and insureds to do business with us; ● capitalizing on our excellent claims service for all insureds; and ● selective expansion of our insurance products in states where we currently operate, as well as those states where we hold insurance licenses.
Strategies we employ to achieve this growth include: ● continued emphasis on our relationship with the NDFB, a key advocacy group for agricultural and rural interests which enjoys a high profile and favorable reputation throughout North Dakota; ● expansion and enhancement of independent agency relationships, including the use of technology such as mobile apps, online quoting, and policy issuance initiatives to make it easy for agents and insureds to do business with us; ● capitalizing on our excellent claims service for all insureds; ● selective expansion of our insurance products in states where we currently operate, as well as those states where we hold insurance licenses; and ● consideration of strategic acquisitions and investment opportunities in businesses that align with our growth objectives.
Agents receive commission as a percentage of premiums as their primary compensation from us. The Risk Management Agency of the United States Department of Agriculture (“RMA”) establishes the maximum commission that can be paid to agents with respect to crop insurance policies.
Agents receive commission as a percentage of premiums as their primary compensation from us. The Risk Management Agency of the U.S. Department of Agriculture (“RMA”) establishes the maximum commission that can be paid to agents with respect to crop insurance policies.
Total North Dakota multi-peril crop premiums for the industry were $1,491,650, $1,537,758, and $1,083,565 for the years ended December 31, 2023, 2022, and 2021, respectively. With respect to writing property and casualty insurance, competitive factors include pricing, agency relationships, policy support, claim service, and market reputation.
Total North Dakota multi-peril crop premiums for the industry were $1,231,110, $1,491,650, and $1,537,758 for the years ended December 31, 2024, 2023, and 2022, respectively. With respect to writing property and casualty insurance, competitive factors include pricing, agency relationships, policy support, claim service, and market reputation.
Nodak Insurance provides common product oversight, pricing practices, and underwriting standards, as well as underwriting and claims administration, to itself, American West, and Battle Creek. Primero, Direct Auto, and Westminster personnel manage the day-to-day operations of their respective companies.
Nodak Insurance provides common product oversight, pricing practices, and underwriting standards, as well as underwriting and claims administration, to itself, American West, and Battle Creek. Primero and Direct Auto personnel manage the day-to-day operations of their respective companies. Westminster personnel managed the day-to-day operations of their company prior to the date of sale.
The consolidated financial statements of NI Holdings presented herein include the financial position and results of operations of NI Holdings, Direct Auto, Westminster, and Nodak Insurance, including Nodak Insurance’s subsidiaries of American West and Primero and its affiliate Battle Creek.
The consolidated financial statements of NI Holdings presented herein include the financial position and results of operations of NI Holdings, Direct Auto, Westminster (as discontinued operations), and Nodak Insurance, including Nodak Insurance’s subsidiaries of American West, Primero and Battle Creek.
We believe that our relationship with the NDFB and our leading market share are significant factors in maintaining our market share of the crop insurance business in North Dakota. The Company’s multi-peril crop insurance premiums for North Dakota were $39,073, $45,465, and $38,325 for the years ended December 31, 2023, 2022, and 2021, respectively.
We believe that our relationship with the NDFB and our leading market share are significant factors in maintaining our market share of the crop insurance business in North Dakota. The Company’s multi-peril crop insurance premiums for North Dakota were $30,641, $39,073, and $45,465 for the years ended December 31, 2024, 2023, and 2022, respectively.
For additional information, see Part II, Item 8, Note 12 “Benefit Plans” and Note 18 “Share-Based Compensation” for further discussion of our benefit plans and stock-based compensation. As of December 31, 2023, NI Holdings and its subsidiaries had 234 total employees, of which 219 were full-time employees.
For additional information, see Part II, Item 8, Note 12 “Benefit Plans” and Note 18 “Share-Based Compensation” for further discussion of our benefit plans and stock-based compensation. As of December 31, 2024, NI Holdings and its subsidiaries had 216 total employees, of which 202 were full-time employees.
For additional information, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources”, and Part II, Item 8, Note 21 “Statutory Net Income (Loss), Capital and Surplus, and Dividend Restrictions”. Holding Company Laws Most states, including North Dakota, have enacted legislation that regulates insurance holding company systems.
For additional information, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources,” and Part II, Item 8, Note 22 “Statutory Net Income (Loss), Capital and Surplus, and Dividend Restrictions.” Holding Company Laws Most states, including North Dakota, have enacted legislation that regulates insurance holding company systems.
NI HOLDINGS, INC. ORGANIZATIONAL CHART Nodak Mutual Group, Inc. ≥ 60% ownership NI Holdings, Inc. 100% 100% 100% ownership ownership ownership Direct Auto Insurance Company Nodak Insurance Company Westminster American Insurance Company 100% 100% 100% ownership ownership Affiliation ownership Nodak Agency, Inc.
NI HOLDINGS, INC. ORGANIZATIONAL CHART Nodak Mutual Group, Inc. ≥ 60% ownership NI Holdings, Inc. 100% 100% ownership ownership Direct Auto Insurance Company Nodak Insurance Company 100% 100% 100% 100% ownership ownership ownership ownership Nodak Agency, Inc.
Tri-State, Ltd. is an inactive shell corporation. 4 American West Insurance Company American West is a property and casualty insurance company licensed in eight states in the Midwest and Western regions of the United States (“U.S.”). American West began writing policies in 2002 and primarily writes private passenger auto, homeowners, and farm coverages in South Dakota.
American West Insurance Company American West is a property and casualty insurance company licensed in eight states in the Midwest and Western regions of the United States (“U.S.”). American West began writing policies in 2002 and primarily writes private passenger auto, homeowners, and farm coverages in South Dakota.
Tri-State, Ltd. is an inactive shell corporation 100% owned by Nodak Insurance. Primero is a property and casualty insurance company writing non-standard automobile coverage in the states of Nevada, Arizona, North Dakota, and South Dakota. Primero was acquired by Nodak Insurance in 2014.
Tri-State, Ltd. is an inactive shell corporation 100% owned by Nodak Insurance. Primero is a property and casualty insurance company writing non-standard automobile coverage in the states of Nevada, Arizona, North Dakota, and South Dakota during 2024. Primero was acquired by Nodak Insurance in 2014. As of December 31, 2024, Primero no longer writes coverage in the state of Nevada.
Notice of certain material transactions between NI Holdings and any person or entity in our holding company system will be required to be given to the Department of Insurance of the applicable domiciliary state.
Notice of certain material transactions between NI Holdings and any person or entity in our holding company system will be required to be given to the Department of Insurance of the applicable domiciliary state. Certain transactions cannot be completed without the prior approval of the various Departments of Insurance.
Crop-yield insurance protects against a reduction in the yield per acre from the historical average yield in a specified area, such as a county or National Oceanic and Atmospheric Administration weather grid, while crop-revenue insurance provides protection against declines in the price of the particular crop.
The two general categories of crop insurance are referred to as “crop-yield insurance” and “crop-revenue insurance.” Crop-yield insurance protects against a reduction in the yield per acre from the historical average yield in a specified area, such as a county or National Oceanic and Atmospheric Administration weather grid, while crop-revenue insurance provides protection against declines in the price of the particular crop.
Many jurisdictions have laws and regulations that limit an insurer’s ability to withdraw from a particular market. For example, states may limit an insurer’s ability to cancel or non-renew policies. Laws and regulations that limit cancellation and non-renewal may restrict our ability to exit unprofitable marketplaces in a timely manner.
For additional information, see Part I, Item 1, “Crop Insurance.” Many jurisdictions have laws and regulations that limit an insurer’s ability to withdraw from a particular market. For example, states may limit an insurer’s ability to cancel or non-renew policies. Laws and regulations that limit cancellation and non-renewal may restrict our ability to exit unprofitable marketplaces in a timely manner.
The multi-disciplinary ERMC regularly monitors risk reports and metrics regarding a variety of continuing and emerging risks that may adversely affect the Company, its shareholders, its policyholders, or other stakeholders.
The multi-disciplinary ERMC regularly monitors risk reports and metrics regarding a variety of continuing and emerging risks that may adversely affect the Company, its shareholders, its policyholders, or other stakeholders. The Audit Committee of the Board of Directors oversees risk management and regularly receives reports from the ERMC.
Item 1. Business All dollar amounts, except per share amounts, are in thousands. Overview NI Holdings, Inc.
Item 1. Business All dollar amounts, except per share amounts, are in thousands.
Each of the six insurance companies is subject to examination and comprehensive regulation by the insurance department of its state of domicile. Market Overview We market our personal lines products in the upper Midwest states of North Dakota, Nebraska, South Dakota, and Minnesota. We offer non-standard auto insurance in the states of Illinois, Arizona, Nevada, South Dakota, and North Dakota.
Each of the insurance companies is subject to examination and comprehensive regulation by the insurance department of its state of domicile, North Dakota. Market Overview for Continuing Operations We market our personal lines products in the upper Midwest states of North Dakota, Nebraska, South Dakota, and Minnesota.
While our regulatory capital is, by definition, a cushion for absorbing financial consequences of adverse events, such as loss reserve development, litigation, weather catastrophes, and investment market corrections, we view that as a base and hold additional capital for even more extreme operating conditions.
This capital is held by each of our insurance company subsidiaries. 6 ● The second layer of capital is considered “contingency capital.” While our regulatory capital is, by definition, a cushion for absorbing financial consequences of adverse events, such as loss reserve development, litigation, weather catastrophes, and investment market corrections, we view that as a base and hold additional capital for even more extreme operating conditions.
This enterprise risk report identifies the activities, circumstances, or events involving one or more affiliates of an insurer that, if not remedied properly, are likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.
The NAIC Amendments include a requirement that an insurance holding company system’s ultimate controlling person submit annually to its lead state insurance regulator an “enterprise risk report.” This enterprise risk report identifies the activities, circumstances, or events involving one or more affiliates of an insurer that, if not remedied properly, are likely to have a material adverse effect upon the financial condition or liquidity of the insurer or its insurance holding company system as a whole.
As of December 31, 2023, Primero distributed its policies through independent agents in 313 contracted agencies in those four states. Battle Creek Mutual Insurance Company Battle Creek is a property and casualty insurance company writing private passenger auto, homeowners, and farm coverages solely in the state of Nebraska.
Primero distributed its policies through independent agents in 216 contracted agencies in the three remaining states. 4 Battle Creek Insurance Company Battle Creek is a property and casualty insurance company writing private passenger auto, homeowners, and farm coverages solely in the state of Nebraska.
The premium rates for multi-peril crop insurance are established by the RMA and, accordingly, we compete with other insurance companies on factors such as agency relationships, claim service, and market reputation in the crop insurance market.
The principal competitors in our markets for multi-peril crop insurance include Chubb, QBE Insurance Group, Zurich, AgriSompo, and Great American Insurance Group. The premium rates for multi-peril crop insurance are established by the RMA and, accordingly, we compete with other insurance companies on factors such as agency relationships, claim service, and market reputation in the crop insurance market.
As mandated by the Gramm-Leach-Bliley Act (“GLBA”), states have promulgated laws and regulations that require financial institutions, including insurance companies, to take steps to protect the privacy of certain consumer and customer information.
Congress, state legislatures, and regulatory authorities are expected to consider additional regulation relating to privacy and other aspects of customer information. As mandated by the Gramm-Leach-Bliley Act (“GLBA”), states have promulgated laws and regulations that require financial institutions, including insurance companies, to take steps to protect the privacy of certain consumer and customer information.
In North Dakota, the acquisition of 10% or more of the outstanding voting securities of an insurer or its holding company is presumed to be a change in control.
Approval of the state insurance commissioner is required prior to any transaction affecting the control of an insurer domiciled in that state. In North Dakota, the acquisition of 10% or more of the outstanding voting securities of an insurer or its holding company is presumed to be a change in control.
All Other In addition to the products described above, Nodak Insurance and American West write excess liability coverages. Collectively, these other coverages accounted for $5,504 (1.3%) of the direct premiums written by the Company on a consolidated basis during 2023.
Collectively, crop insurance accounted for $36,421 (10.6%) of direct premiums written by the Company on a consolidated basis during 2024. All Other In addition to the products described above, Nodak Insurance, American West, and Battle Creek write commercial and excess liability coverages.
Private passenger auto accounted for $92,077 (22.0%) of direct premiums written by the Company on a consolidated basis during 2023. Non-standard Auto Primero and Direct Auto write non-standard auto insurance with a focus on minimum-limit auto liability coverage.
Private passenger auto accounted for $97,209 (28.4%) of direct premiums written by the Company on a consolidated basis during 2024. Non-Standard Auto Primero and Direct Auto write non-standard auto insurance with a focus on minimum-limit auto liability coverage. Non-standard auto insurance accounted for $87,467 (25.6%) of direct premiums written by the Company on a consolidated basis during 2024.
These consolidated financial statements include the financial position and results of operations of NI Holdings and the following other entities: ● Nodak Insurance – a wholly-owned subsidiary of NI Holdings; ● Nodak Agency, Inc.
The newly issued shares of NI Holdings were available for public trading on March 16, 2017. These consolidated financial statements include the financial position and results of operations of NI Holdings and the following other entities: ● Nodak Insurance – a wholly-owned subsidiary of NI Holdings; ● Nodak Agency, Inc.
In the states in which our insurance company subsidiaries write insurance, premium rates for the various lines of insurance are subject to either prior approval or limited review upon implementation. The premium rates for multi-peril crop insurance are established by the RMA. For additional information, see Part I, Item 1, “Crop Insurance”.
Premium rate regulation varies greatly among jurisdictions and lines of insurance. In the states in which our insurance company subsidiaries write insurance, premium rates for the various lines of insurance are subject to either prior approval or limited review upon implementation. The premium rates for multi-peril crop insurance are established by the RMA.
(“NI Holdings”, “the Company”, “we”, “us”, and “our”) is a North Dakota business corporation that is the stock holding company of Nodak Insurance Company and became such in connection with the conversion of Nodak Mutual Insurance Company (“Nodak Mutual”) from a mutual to stock form of organization and the creation of a mutual holding company.
Overview NI Holdings is a North Dakota business corporation that is the stock holding company of Nodak Insurance Company and became such in connection with the conversion of Nodak Mutual Insurance Company (“Nodak Mutual”) from a mutual to stock form of organization and the creation of a mutual holding company. The conversion was completed on March 13, 2017.
We are also subject to the Fair and Accurate Credit Transactions Act of 2003 and the Health Insurance Portability and Accountability Act of 1996, both of which require us to protect the privacy of our customers’ information, including health and credit information. 14 Privacy We are subject to numerous U.S. federal and state laws governing the collection, disclosure, and protection of personal and confidential information of our clients or employees.
We are also subject to the Fair and Accurate Credit Transactions Act of 2003 and the Health Insurance Portability and Accountability Act of 1996, both of which require us to protect the privacy of our customers’ information, including health and credit information.
As of December 31, 2023, Battle Creek distributed its policies through independent agents in 114 contracted agencies. Battle Creek became affiliated with Nodak Insurance in 2011, and Nodak Insurance provides underwriting, claims management, policy administration, and other administrative services to Battle Creek. Effective January 1, 2020, all of our insurance company subsidiaries entered into an intercompany reinsurance pooling agreement.
As of December 31, 2024, Battle Creek distributed its policies through independent agents in 113 contracted agencies. Battle Creek became affiliated with Nodak Insurance in 2011, and Nodak Insurance provides underwriting, claims management, policy administration, and other administrative services to Battle Creek.
Our insurance company subsidiaries prepare statutory-basis financial statements in accordance with accounting practices and procedures prescribed or permitted by the state in which they are domiciled.
Our insurance company subsidiaries prepare statutory-basis financial statements in accordance with accounting practices and procedures prescribed or permitted by the state in which they are domiciled. Our domiciliary states generally conform to National Association of Insurance Commissioners (“NAIC”) accounting practices and procedures, so our examination reports and other filings generally are accepted by other states.
Enterprise Risk Management Our Company is subject to significant risks, including the normal risks of a property and casualty insurance company. These risks are discussed in more detail in Part I, Item 1A, “Risk Factors”.
Enterprise Risk Management Our Company is subject to significant risks, including the normal risks of a property and casualty insurance company.
Westminster is headquartered in Owings Mills, Maryland and underwrites commercial multi-peril insurance in the states of Delaware, Georgia, Kentucky, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and the District of Columbia. Westminster was acquired by NI Holdings on January 1, 2020, via a stock purchase agreement.
Westminster American Insurance Company Westminster is a property and casualty insurance company licensed in 18 states and the District of Columbia. Westminster is headquartered in Owings Mills, Maryland and underwrites commercial multi-peril insurance in the states of Delaware, Georgia, Kentucky, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia, and the District of Columbia.
See Part II, Item 8, Note 22 “Subsequent Event” for additional information regarding changes to Battle Creek Mutual Insurance Company. The executive offices of NI Holdings and Nodak Insurance are located at 1101 First Avenue North, Fargo, North Dakota 58102, and the main office phone number is 701-298-4200. NI Holdings’ website address is www.niholdingsinc.com.
American West Insurance Company Battle Creek Insurance Company Tri-State, Ltd 100% ownership Primero Insurance Company The executive offices of NI Holdings and Nodak Insurance are located at 1101 First Avenue North, Fargo, North Dakota 58102, and the main office phone number is 701-298-4200. NI Holdings’ website address is www.niholdingsinc.com .
Insurance Products by Segment Our consolidated financial results include our Private Passenger Auto, Non-Standard Auto, Home and Farm, Commercial, Crop, and All Other reporting segments. Information regarding products and services offered in each segment is included below. Additionally, revenues, underwriting results, and identifiable assets and liabilities for each segment are shown in Part II, Item 8, Note 20 “Segment Information”.
Insurance Products by Segment Our consolidated financial results from continuing operations include our Private Passenger Auto, Non-Standard Auto, Home and Farm, Crop, and All Other reporting segments. Information regarding products and services offered in each segment is included below.
(“Nodak Mutual Group”), which then contributed the shares to NI Holdings in exchange for 55% of the outstanding shares of common stock of NI Holdings. Nodak Insurance then became a wholly-owned stock subsidiary of NI Holdings. Prior to completion of the conversion, NI Holdings conducted no business and had no assets or liabilities.
Nodak Insurance then became a wholly-owned stock subsidiary of NI Holdings. Prior to completion of the conversion, NI Holdings conducted no business and had no assets or liabilities. As a result of the conversion, NI Holdings became the holding company for Nodak Insurance and its existing subsidiaries.
The Audit Committee of the Board of Directors oversees risk management and regularly receives reports from the ERMC. 10 Reinsurance We cede and assume certain premiums and losses to and from various companies and associations under a variety of reinsurance agreements.
Reinsurance We cede and assume certain premiums and losses to and from various companies and associations under a variety of reinsurance agreements.
We consider an enterprise-wide risk management program to be an integral part of managing our business and a key element in our approach to corporate governance. Our Enterprise Risk Management Committee (the “ERMC”) is responsible for the alignment of operational risk management strategies as the coordination point for enterprise-level direction setting with regard to risk management issues.
Our Enterprise Risk Management Committee (the “ERMC”) is responsible for the alignment of operational risk management strategies as the coordination point for enterprise-level direction setting with regard to risk management issues.
Crop Insurance Crop insurance is purchased by agricultural producers, including farmers, ranchers, and others to protect themselves against either the loss of their crops (yield) due to natural disasters such as hail, freezing, plant disease, drought, and floods, or the loss of revenue due to declines in the prices of agricultural products.
The majority of these assumed premiums written are related to a domestic and international reinsurance pool for which the Company made the decision to non-renew its participation as of January 1, 2022, and the associated assumed premiums represent run-off of this business. 7 Crop Insurance Crop insurance is purchased by agricultural producers, including farmers, ranchers, and others to protect themselves against either the loss of their crops (yield) due to natural disasters such as hail, freezing, plant disease, drought, and floods, or the loss of revenue due to declines in the prices of agricultural products.
As a result of the conversion, NI Holdings became the holding company for Nodak Insurance and its existing subsidiaries. Concurrent with the conversion, on March 13, 2017, the Company completed an initial public offering (“IPO”) of 10,350,000 shares of common stock at a price of $10.00 per share.
Concurrent with the conversion, on March 13, 2017, the Company completed an initial public offering (“IPO”) of 10,350,000 shares of common stock at a price of $10.00 per share. The Company received net proceeds of $93,145 from the offering, after deducting the underwriting discounts and offering expenses.
Our largest competitors in North Dakota for private passenger auto and homeowners include Progressive, State Farm, American Family, National General, Farmers Union, and Auto-Owners insurance companies. In South Dakota and Nebraska, we have small market shares and our competitors are the large national and regional companies as well as Farmers Mutual of Nebraska.
Competition The property casualty and crop insurance markets are competitive. We compete with stock insurance companies, mutual insurance companies, and other underwriting organizations. Our largest competitors in North Dakota for private passenger auto and homeowners include Progressive, State Farm, American Family, National General, Farmers Union, and Auto-Owners insurance companies.
Regulation General We are subject to extensive regulation, particularly at the state level. The method, extent, and substance of such regulation varies by state, but generally has its source in statutes and regulations that establish standards and requirements for conducting the business of insurance and that delegate regulatory authority to state insurance regulatory agencies.
This regulation varies by state, but generally has its source in statutes and regulations that establish standards and requirements for conducting the business of insurance and that delegate regulatory authority to state insurance regulatory agencies. In general, such regulation is intended for the protection of those who purchase or use insurance products, not the companies that write the policies.
It should be noted that these “model” laws are regulations that have no authority until the individual states pass them as part of the state legislative process, which may, or may not, be done as suggested, or with modifications. Premium rate regulation varies greatly among jurisdictions and lines of insurance.
The NAIC provides guidance to the states with respect to standardized laws and regulations (including the accounting practices and procedures discussed above), which represent an effort to standardize insurance industry practices across state lines, oftentimes referred to as “Model Regulations.” It should be noted that these “model” laws are regulations that have no authority until the individual states pass them as part of the state legislative process, which may, or may not, be done as suggested, or with modifications.
The conversion was completed on March 13, 2017. Immediately following the conversion, all of the outstanding shares of common stock of Nodak Insurance Company (“Nodak Insurance”, the successor to Nodak Mutual Insurance Company) were issued to Nodak Mutual Group, Inc.
Immediately following the conversion, all of the outstanding shares of common stock of Nodak Insurance Company (“Nodak Insurance,” the successor to Nodak Mutual Insurance Company) were issued to Nodak Mutual Group, Inc. (“Nodak Mutual Group”), which then contributed the shares to NI Holdings in exchange for 55% of the outstanding shares of common stock of NI Holdings.
To compete successfully in the property and casualty insurance market, we rely on our ability to identify insureds that are most likely to produce an underwriting profit, operate with a disciplined underwriting approach, practice prudent claims management, reserve appropriately for unpaid claims, and provide quality service and competitive commissions to our independent and captive agents.
To compete successfully in the property and casualty insurance market, we utilize data-driven insights and a disciplined underwriting approach to assess and price risks, practice prudent claims management, reserve appropriately for unpaid claims, and provide quality service and competitive commissions to our independent and captive agents. 10 Regulation General We are subject to extensive regulation, particularly at the state level.
These policies also cover liability arising from injury to other persons or their property while on the insured’s premises. Home and farm accounted for $96,396 (23.0%) of direct premiums written by the Company on a consolidated basis during 2023. Crop Nodak Insurance, American West, and Battle Creek offer crop hail and multi-peril crop insurance policies.
Home and farm accounted for $107,203 (31.3%) of direct premiums written by the Company on a consolidated basis during 2024. Crop Nodak Insurance, American West, and Battle Creek offer crop hail and multi-peril crop insurance policies.
Nodak Insurance then retrocedes balances back to each company, while retaining its own share of the pool’s net underwriting results, based on individual pool percentages established in the respective pooling agreement. This arrangement allows each insurance company to rely upon the capacity of the pool’s total statutory capital and surplus. As a result, they are evaluated by A.M.
Nodak Insurance is the lead company of the pool, and assumes the net premiums, net losses, and underwriting expenses from each of the other four companies. Nodak Insurance then retrocedes balances back to each company, while retaining its own share of the pool’s net underwriting results, based on individual pool percentages established in the respective pooling agreement.
Private Passenger Auto Nodak Insurance, Battle Creek, and American West each write private passenger auto insurance to provide protection against liability for bodily injury and property damage arising from automobile accidents as well as protection against loss from damage to automobiles owned by the insured.
Additionally, revenues, underwriting results, and identifiable assets and liabilities for each segment are shown in Part II, Item 8, Note 21 “Segment Information.” The financial performance of each segment is discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Private Passenger Auto Nodak Insurance, Battle Creek, and American West each write private passenger auto insurance to provide protection against liability for bodily injury and property damage arising from automobile accidents as well as protection against loss from damage to automobiles owned by the insured.
Non-standard auto insurance accounted for $95,295 (22.8%) of direct premiums written by the Company on a consolidated basis during 2023. 8 Home and Farm Nodak Insurance, Battle Creek, and American West each write homeowners and farmowners policies to provide coverage for damage to buildings, equipment, and contents for a variety of perils, including fire, lightning, wind, hail, and theft.
Home and Farm Nodak Insurance, Battle Creek, and American West each write homeowners and farmowners policies to provide coverage for damage to buildings, equipment, and contents for a variety of perils, including fire, lightning, wind, hail, and theft. These policies also cover liability arising from injury to other persons or their property while on the insured’s premises.
Direct Auto Insurance Company Direct Auto is a property and casualty insurance company licensed in Illinois. Direct Auto began writing non-standard automobile coverage in 2007, and was acquired by NI Holdings on August 31, 2018, via a stock purchase agreement.
Direct Auto began writing non-standard automobile coverage in 2007, and was acquired by NI Holdings on August 31, 2018, via a stock purchase agreement. As of December 31, 2024, Direct Auto distributed its policies through independent agents in 156 contracted agencies, concentrated primarily in the Chicago area.
For the years ended December 31, 2023, 2022, and 2021, the pooling share percentages by insurance company were: Pool Percentage Nodak Insurance Company 66.0% American West Insurance Company 7.0% Primero Insurance Company 3.0% Battle Creek Mutual Insurance Company 2.0% Direct Auto Insurance Company 13.0% Westminster American Insurance Company 9.0% Total 100.0% Nodak Insurance Company Nodak Insurance is the largest domestic property and casualty insurance company in North Dakota, offering private passenger auto, homeowners, farmowners, commercial multi-peril, crop hail, and Federal multi-peril crop insurance coverages through its captive agents in the state.
Nodak Insurance Company Nodak Insurance is the largest domestic property and casualty insurance company based in North Dakota, offering private passenger auto, homeowners, farmowners, commercial multi-peril, crop hail, and Federal multi-peril crop insurance coverages through its captive agents in the state.
(“Nodak Agency”) – a wholly-owned subsidiary of Nodak Insurance; ● American West Insurance Company (“American West”) – a wholly-owned subsidiary of Nodak Insurance; ● Primero Insurance Company (“Primero”) – an indirect wholly-owned subsidiary of Nodak Insurance; ● Battle Creek Mutual Insurance Company (“Battle Creek”) – an affiliated company of Nodak Insurance; ● Direct Auto Insurance Company (“Direct Auto”) – a wholly-owned subsidiary of NI Holdings; and ● Westminster American Insurance Company (“Westminster”) – a wholly-owned subsidiary of NI Holdings. 2 A chart of the corporate structure as of December 31, 2023, and a more complete description of each of the NI Holdings subsidiaries, is included below.
In accordance with the approved plan of conversion, the name of Battle Creek Mutual Insurance Company became Battle Creek Insurance Company, the surplus note was considered paid in full as of the conversion date, and Battle Creek became a wholly-owned subsidiary of Nodak Insurance; ● Direct Auto Insurance Company (“Direct Auto”) – a wholly-owned subsidiary of NI Holdings; and ● Westminster American Insurance Company (“Westminster”) – a wholly-owned subsidiary of NI Holdings until it was sold to Scott Insurance Holdings, LLC (“Scott Insurance Holdings”) on June 30, 2024. 2 A chart of the corporate structure as of December 31, 2024, and a more complete description of each of the NI Holdings subsidiaries, is included below.
This rating can also affect an insurer’s level of premium writings, the lines of business it can write, and, for insurers like us that are also public registrants, the market value of its securities. 11 All of the Company’s insurance subsidiary and affiliate companies are rated “A” Excellent by AM Best, which is the third highest out of 15 possible ratings, under a group rating due to the intercompany pooling reinsurance agreement.
All of the Company’s insurance subsidiaries and affiliate companies are rated “A” Excellent by AM Best, which is the third highest out of 15 possible ratings, under a group rating due to the intercompany pooling reinsurance agreement. Effective May 10, 2024, AM Best affirmed a stable financial strength outlook to the group.
Going forward, we plan to consider other strategic investments and acquisitions that can enhance our businesses, provide diversification with respect to geography and product line, and achieve appropriate risk-adjusted returns over time. 7 Corporate Capital Strategy Our philosophy is to deploy capital in a manner that provides long-term protection for our policyholders and creates long-term value for our shareholders.
Corporate Capital Strategy Our philosophy is to deploy capital in a manner that provides long-term protection for our policyholders and creates long-term value for our shareholders.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeUnpredictable weather conditions and other events such as excessive rain, flooding, droughts, hail, pests, and plant diseases can significantly impact crop prices and yields, creating volatility in our crop insurance business. In addition, the amount of multi-peril crop insurance business we retain is subject to the terms of the SRA and is dependent on the actual direct loss ratio experience.
Biggest changeVolatility in crop prices and yields, as a result of weather conditions, trade policies, or other events, could adversely impact our financial condition and operating results. Unpredictable weather conditions and other events such as excessive rain, flooding, droughts, hail, pests, and plant diseases can significantly impact crop prices and yields, creating volatility in our crop insurance business.
Federal laws and regulations, and the influence of international laws and regulations, may have adverse effects on our business, potentially including a change from a state-based system of regulation to a system of federal regulation, the repeal of the McCarran Ferguson Act, and/or measures under the Dodd-Frank Act that establish the Federal Insurance Office and provide for a determination that a non-bank financial company presents systemic risk and therefore should be subject to heightened supervision by the Federal Reserve Board.
Federal laws and regulations, and 20 the influence of international laws and regulations, may have adverse effects on our business, potentially including a change from a state-based system of regulation to a system of federal regulation, the repeal of the McCarran Ferguson Act, and/or measures under the Dodd-Frank Act that establish the Federal Insurance Office and provide for a determination that a non-bank financial company presents systemic risk and therefore should be subject to heightened supervision by the Federal Reserve Board.
Such laws and regulations have become increasingly widespread and demanding in recent years and may result in increased compliance costs and risk of regulatory actions or penalties. If incurred, such regulatory actions or penalties could harm our reputation. Any such events could have an adverse impact on our business, financial condition or results of operations.
Such laws and regulations have become increasingly widespread and demanding in recent 19 years and may result in increased compliance costs and risk of regulatory actions or penalties. If incurred, such regulatory actions or penalties could harm our reputation. Any such events could have an adverse impact on our business, financial condition or results of operations.
If legislation is adopted to reduce the amount of risk the government assumes, the amount of insurance premium subsidy provided to farmers or otherwise reduce the coverage provided under multi-peril crop insurance policies, losses 21 would increase and purchases of multi-peril crop insurance could experience a significant decline nationwide and in our market area.
If legislation is adopted to reduce the amount of risk the government assumes, the amount of insurance premium subsidy provided to farmers or otherwise reduce the coverage provided under multi-peril crop insurance policies, losses would increase and purchases of multi-peril crop insurance could experience a significant decline nationwide and in our market area.
The ability to effectively underwrite risks and price products appropriately is subject to a number of uncertainties, including: ● availability of sufficient reliable data and our ability to properly analyze available data; ● market and competitive conditions; ● regulatory or legislative changes; ● selection and application of appropriate pricing techniques; and ● adverse changes in claims experience, such as distracted driving or a more aggressive tort environment. 18 Under the federal crop insurance program, each insurer is required to accept every application for multi-peril crop insurance that they receive, and the premiums and the policy terms are set by the RMA, which is the federal government agency administering the federal crop insurance program.
The ability to effectively underwrite risks and price products appropriately is subject to a number of uncertainties, including: ● availability of sufficient reliable data and our ability to properly analyze available data; ● market and competitive conditions; ● regulatory or legislative changes; ● selection and application of appropriate pricing techniques; and ● adverse changes in claims experience, such as distracted driving or a more aggressive tort environment. 16 Under the federal crop insurance program, each insurer is required to accept every application for multi-peril crop insurance that they receive, and the premiums and the policy terms are set by the RMA, which is the federal government agency administering the federal crop insurance program.
These provisions may make it extremely difficult for any one person, entity, or group of affiliated persons or entities to acquire voting control of NI Holdings, with the result that it may be extremely difficult to bring about a change in the Board of Directors or management.
These provisions may make it extremely difficult for any one person, entity, or group of affiliated persons or entities to acquire voting control of NI Holdings, with the result that it may be 21 extremely difficult to bring about a change in the Board of Directors or management.
We attempt to reduce our exposure to catastrophe losses through a disciplined underwriting and risk management approach that emphasizes long-term profitability over short-term gains in premiums or market share, continued geographical diversification of our operations, and the use of reinsurance.
We attempt to reduce our exposure to catastrophe losses through a disciplined underwriting and risk management approach that emphasizes long-term profitability over short-term gains in premiums or market share, geographical diversification of our operations, and the use of reinsurance.
Additionally, potential capital markets disruption could lead to our fixed income portfolio being adversely impacted by ratings downgrades, increased bankruptcies, declines in real estate valuations, and/or declines in fixed income yields, along with increased volatility in our equity portfolio. 19 We may not be able to grow our business if we cannot retain and expand our captive and independent agent relationships, we cannot provide competitive products for these agents to sell, and/or consumers seek other distribution methods offered by our competitors.
Additionally, potential capital markets disruption could lead to our fixed income portfolio being adversely impacted by ratings downgrades, increased bankruptcies, declines in real estate valuations, and/or declines in fixed income yields, along with increased volatility in our equity portfolio. 17 We may not be able to grow our business if we cannot retain and expand our captive and independent agent relationships, we cannot provide competitive products for these agents to sell, and/or consumers seek other distribution methods offered by our competitors.
We rely heavily on our operating systems in connection with issuing policies, paying claims, and providing the information we need to conduct our business. We also rely on the operating systems of AFBIS in 20 connection with various processes with respect to our crop lines of business.
We rely heavily on our operating systems in connection with issuing policies, paying claims, and providing the information we need to conduct our business. We also rely on the operating systems of AFBIS in connection with various processes with respect to our crop lines of business.
For additional information, see Part II, Item 8, Note 3 “Summary of Significant Accounting Policies” and Note 6 “Reinsurance.” If actual losses exceed our loss and loss adjustment expense reserves or if changes in the estimated level of loss and loss adjustment expense reserves are necessary as a result of changes in the legal, regulatory, and economic environments in which we operate, our financial results could be materially and adversely affected.
For additional information, see Part II, Item 8, Note 3 “Summary of Significant Accounting Policies and Basis of Presentation” and Note 6 “Reinsurance.” If actual losses exceed our loss and loss adjustment expense reserves or if changes in the estimated level of loss and loss adjustment expense reserves are necessary as a result of changes in the legal, regulatory, and economic environments in which we operate, our financial results could be materially and adversely affected.
For additional information, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Losses and Loss Adjustment Expenses”, and Part II, Item 8, Note 8 “Unpaid Losses and Loss Adjustment Expenses.” 17 It is possible that, among other things, past or future steps taken by the federal government and the Federal Reserve to manage the U.S. economy, including fiscal and monetary policy measures, could lead to higher than anticipated levels of inflation, which generally leads to increased loss costs and other operating expenses.
For additional information, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Losses and Loss Adjustment Expenses,” and Part II, Item 8, Note 8 “Unpaid Losses and Loss Adjustment Expenses.” 15 It is possible that, among other things, past or future steps taken by the federal government and the Federal Reserve to manage the U.S. economy, including fiscal and monetary policy measures, could lead to higher than anticipated levels of inflation, which generally leads to increased loss costs and other operating expenses.
Our most recent rating by AM Best was affirmed on April 25, 2023. Financial strength ratings are used by agents, customers, lenders, and other insurance carriers as a means of assessing the financial strength and quality of insurance companies. If our financial position deteriorates, we may not maintain our favorable financial strength rating from AM Best.
Our most recent rating by AM Best was affirmed on May 10, 2024. Financial strength ratings are used by agents, customers, lenders, and other insurance carriers as a means of assessing the financial strength and quality of insurance companies. If our financial position deteriorates, we may not maintain our favorable financial strength rating from AM Best.
In 2023, 2022, and 2021, our direct premiums written generated from the multi-peril crop insurance line of business were 10.2%, 12.8%, and 12.0%, respectively, of total written premiums.
In 2024, 2023, and 2022, our direct premiums written generated from the multi-peril crop insurance line of business were 9.8%, 10.2%, and 12.8%, respectively, of total written premiums.
Unlike fixed income securities, the changes in the fair value of our equity securities are recognized in net income. General economic conditions, stock market volatility, changes in tax laws, and many other factors beyond our control can adversely affect the value of these securities and potentially reduce our net investment income and/or lead to net investment losses.
General economic conditions, stock market volatility, changes in tax laws, and many other factors beyond our control can adversely affect the value of these securities and potentially reduce our net investment income and/or lead to net investment losses.
Despite our continued geographic expansion, we write a significant amount of business in North Dakota. As a result, adverse developments from severe weather events in North Dakota would have a greater effect on our financial condition and results of operations than if our business was less geographically concentrated. The incidence and severity of such events are inherently unpredictable.
As a result, adverse developments from severe weather events in North Dakota would have a greater effect on our financial condition and results of operations than if our business was less geographically concentrated. The incidence and severity of such events are inherently unpredictable.
The impact of changing climate conditions on the overall insurance industry may also materially affect the availability and cost of reinsurance to us. Our investment portfolio is also subject to the effects of climate change as economic shifts alter the return dynamic of long-term investments and reduce valuations.
The impact of changing climate conditions on the overall insurance industry may also materially affect the availability and cost of reinsurance to us. Our investment portfolio is also subject to the effects of climate change as economic shifts alter the return dynamic of long-term investments and reduce valuations. We write a significant amount of business in North Dakota.
A significant decrease in crop prices and variability in the loss experience could have a material negative effect on our business and results of operations. Our ability to manage our exposure to underwriting risks depends on the availability and cost of reinsurance coverage.
A significant decrease in crop prices and variability in the loss experience, whether caused by weather events, trade policies, or other events, could have a material negative effect on our business and results of operations. Our ability to manage our exposure to underwriting risks depends on the availability and cost of reinsurance coverage.
We may be unable to attract, retain or effectively manage the succession of key personnel. The success of our business is dependent, to a large extent, on our ability to attract and retain key employees, in particular our senior officers and key management of our insurance subsidiaries.
The success of our business is dependent, to a large extent, on our ability to attract and retain key employees, in particular our senior officers and key management of our insurance subsidiaries.
Our reinsurance coverage includes a catastrophe excess of loss program, which in 2023 limited our catastrophe exposure to $20 million retention per event, with $133 million of reinsurance coverage placed in excess of this retention. For 2024, we anticipate that these amounts will remain consistent.
Our reinsurance coverage includes a catastrophe excess of loss program, which in 2024 limited our catastrophe exposure to $20 million retention per event, with $133 million of reinsurance coverage placed in excess of this retention.
If we believe the policy will expose us to too much risk in a particular geographic area or if we are unwilling to insure the crop, we have the ability to decline to issue the policy. Volatility in crop prices and yields, as a result of weather conditions or other events, could adversely impact our financial condition and operating results.
If we believe the policy will expose us to too much risk in a particular geographic area or if we are unwilling to insure the crop, we have the ability to decline to issue the policy.
We manage our exposure to interest rate increases by monitoring the duration within our investment portfolio and maintaining maturities that minimize any forced sales within the portfolio.
We manage our exposure to interest rate increases by monitoring the duration within our investment portfolio and maintaining maturities that minimize any forced sales within the portfolio. However, even with such monitoring efforts, we may be forced to sell securities at a loss, which would adversely affect our results of operations.
However, even with such monitoring efforts, we may be forced to sell securities at a loss, which would adversely affect our results of operations. 23 We also invest a portion of our assets in equity securities, which are subject to greater volatility in their investment returns than fixed income investments.
We also invest a portion of our assets in equity securities, which are subject to greater volatility in their investment returns than fixed income investments. Unlike fixed income securities, the changes in the fair value of our equity securities are recognized in net income.
Plaintiffs in class action and other lawsuits against us may seek large or indeterminate amounts of damages, including punitive and treble damages, which may remain unknown for substantial periods of time. 22 Risks Related to Our Common Stock Nodak Mutual Group’s majority control of our common stock will enable it to exercise voting control over most matters put to a vote of shareholders.
Risks Related to Our Common Stock Nodak Mutual Group’s majority control of our common stock will enable it to exercise voting control over most matters put to a vote of shareholders.
Added
For 2025, we expect our catastrophe excess of loss program will limit our catastrophe exposure to $20 million retention per event, with $117 million of reinsurance coverage placed in excess of this retention.
Added
Additionally, international trade policies, including the imposition of tariffs between major trading partners such as the United States and China, can create significant fluctuations in crop prices. We are unable to predict the ultimate result and duration of any tariff actions by the U.S. government, or countermeasures that may be taken by other nations.
Added
These trade tensions and retaliatory tariffs may affect agricultural commodity prices and create additional market uncertainty in our crop insurance business. In addition, the amount of multi-peril crop insurance business we retain is subject to the terms of the SRA and is dependent on the actual direct loss ratio experience.
Added
Our access to capital may be limited or may not be available on favorable terms. Our future capital requirements depend on many factors, including rating agency and regulatory requirements, the performance of our investment portfolio, strategic initiatives, acquisition opportunities, and the ability to write business successfully at rate levels sufficient to cover losses.
Added
We may need to raise additional capital in the future through debt or equity financings. However, we can provide no assurance that we will be successful in raising funds pursuant to additional equity or debt financings or that such funds will be raised at prices that do not create substantial dilution for our existing stockholders.
Added
Any debt financing obtained by us in the future would cause us to incur debt service expenses and could include restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and pursue business opportunities.
Added
Macroeconomic challenges and volatility in capital markets could limit our ability to raise capital when needed on terms favorable to us, or at all.
Added
If we cannot obtain adequate capital or sources of credit on favorable terms, or at all, our business, financial condition, results of operations, and strategic initiatives could be adversely affected. 18 We may be unable to attract, retain or effectively manage the succession of key personnel.
Added
Plaintiffs in class action and other lawsuits against us may seek large or indeterminate amounts of damages, including punitive and treble damages, which may remain unknown for substantial periods of time. New or changes to existing accounting rules and standards could adversely impact our reported results of operations.
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Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), as promulgated by the Financial Accounting Standards Board (“FASB”), subject to the accounting-related rules and interpretations of the SEC.
Added
New accounting rules or changes in accounting standards or how they apply to our business may impact our reported financial condition or results of operations, and could cause increased volatility in reported earnings, which could affect the trading price of our common stock or our credit ratings.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAudit Committee meetings include discussions of specific risk areas throughout the year, including, among others, those relating to cybersecurity threats, and reports from management on our enterprise risk profile on an annual basis.
Biggest changeThe Audit Committee of the board oversees our risk management program, which focuses on the most significant risks we face in the short-, intermediate-, and long-term timeframes. Audit Committee meetings include discussions of specific risk areas throughout the year, including, among others, those relating to cybersecurity threats, and reports from management on our enterprise risk profile on an annual basis.
As of the date of this report, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition.
As of the date of this 2024 Annual Report, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition.
Refer to the risk factor captioned “Cyberattacks, security breaches, or similar events affecting the technologies and systems we rely on to operate our business and to maintain and protect sensitive Company and customer data could disrupt our operations, harm our reputation, and result in material losses” in Part I, Item 1A.
Refer to the risk factor captioned “Cyberattacks, security breaches, or similar events affecting the technologies and systems we rely on to operate our business and to maintain and protect sensitive Company and customer data could disrupt our operations, harm our reputation, and result in material losses” in Part I, Item 1A, “Risk Factors” for additional details regarding cybersecurity risks and potential impacts on our business.
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The 24 Audit Committee of the board oversees our risk management program, which focuses on the most significant risks we face in the short-, intermediate-, and long-term timeframes.
Removed
“Risk Factors” for additional details regarding cybersecurity risks and potential impacts on our business.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeDirect Auto leases office space at 8700 West Bryn Mawr Avenue, Chicago, Illinois under a lease that expires on August 31, 2029. Westminster owns a portion of the building in which its offices are located at 8890 McDonogh Road, Suite 310, Owings Mills, Maryland.
Biggest changeTri-State Ltd. leases the building at 506 5 th Street, Spearfish, South Dakota. Direct Auto leases office space at 8700 West Bryn Mawr Avenue, Chicago, Illinois under a lease that expires on August 31, 2029.
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On December 30, 2021, Primero entered into a new lease at 9950 West Cheyenne Ave, Las Vegas, Nevada, and sold its owned portion of the building at 2640 South Jones Blvd, Suite 2, Las Vegas, Nevada on January 5, 2022. Tri-State Ltd. leases the building at 506 5 th Street, Spearfish, South Dakota.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings We are party to litigation in the normal course of business. Based upon information presently available to us, we do not consider any litigation to be material. However, given the inherent uncertainties of litigation, we cannot assure you that our results of operations and financial condition will not be materially adversely affected by any litigation.
Biggest changeItem 3. Legal Proceedings We are party to litigation in the normal course of business. Based upon information presently available to us, we do not consider any litigation to be material. However, given the inherent uncertainties of litigation, we cannot assure you that our results of operations and financial condition will not be materially adversely affected by any litigation. 23
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Item 4. Mine Safety Disclosures Not applicable. 25 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeFor information regarding the regulatory restrictions on dividends our insurance subsidiaries can pay, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Liquidity and Capital Resources”, and Part II, Item 8, Note 21 “Statutory Net Income (Loss), Capital and Surplus, and Dividend Restrictions”.
Biggest changeFor information regarding the regulatory restrictions on dividends our insurance subsidiaries can pay, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Liquidity and Capital Resources,” and Part II, Item 8, Note 22 “Statutory Net Income (Loss), Capital and Surplus, and Dividend Restrictions.” Even if we receive dividends from Nodak Insurance or Direct Auto, we may not declare any dividends to our shareholders due to working capital requirements.
We are not currently subject to regulatory restrictions on the payment of dividends to our shareholders. However, any future dividends may be restricted to those received from our insurance subsidiaries. North Dakota law limits the amount of dividends and other distributions that Nodak Insurance, Direct Auto, and Westminster may pay to us.
We are not currently subject to regulatory restrictions on the payment of dividends to our shareholders. However, any future dividends may be restricted to those received from our insurance subsidiaries. North Dakota law limits the amount of dividends and other distributions that Nodak Insurance and Direct Auto may pay to us.
Share repurchase activity during the three months ended December 31, 2023, is presented below: Period in 2023 Total Number of Shares Purchased Average Price Paid Per Share (3) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2)(3) (in thousands) October 1 – 31, 2023 — $ — — $ 2,052 November 1 – 30, 2023 — — — 2,052 December 1 – 31, 2023 — — — 2,052 Total — $ — — $ 2,052 (1) Shares purchased pursuant to the May 9, 2022, publicly announced share repurchase authorizations of up to approximately $10,000 of the Company’s outstanding common stock.
Share repurchase activity during the three months ended December 31, 2024, is presented below: Period in 2024 Total Number of Shares Purchased Average Price Paid Per Share (3) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2)(3) (in thousands) October 1 – 31, 2024 — $ — — $ 2,052 November 1 – 30, 2024 — — — 2,052 December 1 – 31, 2024 — — — 2,052 Total — $ — — $ 2,052 (1) Shares purchased pursuant to the May 9, 2022 publicly announced share repurchase authorization of up to approximately $10,000 of the Company’s outstanding common stock.
The graph assumes that the value of the investment in the common stock and each index was $100 on December 31, 2018, and that all dividends were reinvested. 26 Dividend Policy Our Board of Directors continues to evaluate a potential policy of paying regular cash dividends but has not decided on the amounts that may be paid, the frequency of any payment, or when any payments may begin.
The graph assumes that the value of the investment in the common stock and each index was $100 on December 31, 2019, and that all dividends were reinvested. 25 Dividend Policy Our Board of Directors continues to evaluate a potential policy of paying regular cash dividends but has not decided on the amounts that may be paid, the frequency of any payment, or when any payments may begin.
Stock Performance Graph The following graph shows the cumulative total shareholder return (stock price increase plus dividends) on our common stock from December 31, 2018 through December 31, 2023, along with the corresponding returns for the Russell 2000 Index (as the broad stock market index) and the Standard & Poor’s (S&P) 1500 US P&C Insurance Index (as the published industry index).
Stock Performance Graph The following graph shows the cumulative total shareholder return (stock price increase plus dividends) on our common stock from December 31, 2019 through December 31, 2024, along with the corresponding returns for the Russell 2000 Index (as the broad stock market index) and the Standard & Poor’s (S&P) 1500 US P&C Insurance Index (as the published industry index).
During the year ended December 31, 2023, we repurchased an additional 548,549 shares of our common stock for $7,278, including the effect from applicable excise taxes. At December 31, 2023, $2,052 remains available under this authorization.
During the year ended December 31, 2023, we repurchased an additional 548,549 shares of our common stock for $7,278, including the effect from applicable excise taxes. During the year ended December 31, 2024, we did not repurchase any shares of our common stock. At December 31, 2024, $2,052 remains available under this authorization.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities Market Information The Company’s common shares trade on the NASDAQ Capital Market under the symbol “NODK”. As of February 29, 2024, there were approximately 533 shareholders of record for the Company’s common stock.
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters, and Issuer Purchases of Equity Securities Market Information The Company’s common shares trade on the Nasdaq Capital Market (“Nasdaq”) under the symbol “NODK.” As of February 28, 2025, there were approximately 502 shareholders of record for the Company’s common stock.
This law requires our total assets to exceed our total liabilities plus the amount that would be needed to satisfy the preferential rights upon dissolution of holders of stock with senior liquidation rights if we were to be dissolved at the time the dividend or distribution is paid. 27 Unregistered Securities The Company has not sold any unregistered securities within the past three years.
This law requires our total assets to exceed our total liabilities plus the amount that would be needed to satisfy the preferential rights upon dissolution of holders of stock with senior liquidation rights if we were to be dissolved at the time the dividend or distribution is paid.
Even if we receive dividends from Nodak Insurance, Direct Auto, or Westminster, we may not declare any dividends to our shareholders due to working capital requirements. We are not subject to regulatory restrictions on the payment of dividends to shareholders, but we are subject to the requirements of the North Dakota Business Corporation Act.
We are not subject to regulatory restrictions on the payment of dividends to shareholders, but we are subject to the requirements of the North Dakota Business Corporation Act.
During the nine months ended September 30, 2021, we repurchased an additional 144,110 shares of our common stock for $2,762 to close out this authorization. On August 11, 2021, our Board of Directors approved an authorization for the repurchase of up to approximately $5,000 of the Company’s outstanding common stock.
Unregistered Securities The Company has not sold any unregistered securities within the past three years. 26 Issuer Stock Purchases The Company had no common shares outstanding prior to March 13, 2017. On August 11, 2021, our Board of Directors approved an authorization for the repurchase of up to approximately $5,000 of the Company’s outstanding common stock.
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Use of Proceeds from Initial Public Offering On January 17, 2017, our registration statement on Form S-1 registering our common stock was declared effective by the SEC. On March 13, 2017, the Company completed the IPO of 10,350,000 shares of common stock at a price of $10.00 per share.
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The Company received net proceeds of $93,145 from the offering, after deducting the underwriting discounts and offering expenses. Direct Auto was acquired on August 31, 2018, with $17,000 of the net proceeds from the IPO. On January 1, 2020, we acquired Westminster for $40,000. We paid $20,000 at the time of closing.
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The terms of the acquisition agreement included payment of the remaining $20,000, subject to certain adjustments, in three equal installments on each of the first and second anniversaries of the closing, and on the first business day of the month preceding the third anniversary of the closing.
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The first two installments were paid in January 2021 and January 2022, and the final installment was paid in December 2022 with no adjustments from the originally anticipated amount. The Company used net proceeds from the IPO to satisfy these obligations. From time to time, the Company may also repurchase its own stock.
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To date, the Company has used net proceeds from the IPO to fund these share repurchases. For more information, see Part II, Item 5, “Issuer Stock Purchases”.
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There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC on January 17, 2017. 28 Issuer Stock Purchases The Company had no common shares outstanding prior to March 13, 2017.
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On May 4, 2020, our Board of Directors approved an authorization for the repurchase of up to approximately $10,000 of the Company’s outstanding common stock. During the year ended December 31, 2020, we completed the repurchase of 454,443 shares of our common stock for $7,238 under this authorization.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThis decrease was driven by the decision to non-renew our participation in an assumed domestic and international reinsurance pool of business as of January 1, 2022. 32 Losses and Loss Adjustment Expenses Year Ended December 31, 2023 2022 2021 Net losses and loss adjustment expenses: Direct losses and loss adjustment expenses $ 293,978 $ 333,397 $ 280,998 Assumed losses and loss adjustment expenses 1,140 2,369 6,899 Ceded losses and loss adjustment expenses (50,706 ) (41,334 ) (71,518 ) Total net losses and loss adjustment expenses $ 244,412 $ 294,432 $ 216,379 The Company’s net losses and loss adjustment expenses for the year ended December 31, 2023 decreased $50,020, or 17.0%, to $244,412, compared to $294,432 for the year ended December 31, 2022.
Biggest changeThis 31 decrease was driven by the decision to non-renew our participation in an assumed domestic and international reinsurance pool of business as of January 1, 2022.
Paid and Case Incurred Loss Development (Chain-Ladder) Method — The Paid and Case Incurred Loss Development Method utilizes ratios of cumulative paid or case incurred losses or loss adjustment expenses at each age of development as a percent of the preceding development age.
Paid and Case Incurred Loss Development (Chain-Ladder) Method - The Paid and Case Incurred Loss Development Method utilizes ratios of cumulative paid losses, case incurred losses, or paid loss adjustment expenses at each age of development as a percent of the preceding development age.
Except for claims occurring in the spring (primarily for prevented planting and required replanting claims), claims are 37 required to be filed with the FCIC by December 15. A different cycle exists for crops planted in the fall, such as winter wheat, but the vast majority of crop insurance we write covers crops planted in the spring.
Except for claims occurring in the spring (primarily for prevented planting and required replanting claims), claims are required to be filed with the FCIC by December 15. A different cycle exists for crops planted in the fall, such as winter wheat, but the vast majority of crop insurance we write covers crops planted in the spring.
This decrease was driven by the much-improved loss experience as a result of having no catastrophe losses during 2023 compared to 2022, combined with improved non-catastrophe weather losses and the significant rate increases and underwriting actions we have implemented to address the profitability on these lines of business.
This decrease was driven by the much-improved loss experience as a result of having no catastrophe losses during 2023 compared to 2022, combined with improved non-catastrophe weather losses and the significant rate increases and underwriting actions we implemented to address the profitability on these lines of business.
We are required to make estimates and assumptions in certain circumstances that affect amounts reported in our consolidated financial statements and related footnotes. We evaluate these estimates and assumptions on an ongoing basis based on historical developments, market conditions, industry trends, and other information that we believe to be 38 reasonable under the circumstances.
We are required to make estimates and assumptions in certain circumstances that affect amounts reported in our consolidated financial statements and related footnotes. We evaluate these estimates and assumptions on an ongoing basis based on historical developments, market conditions, industry trends, and other information that we believe to be reasonable under the circumstances.
This process allows us to determine within a reasonable time (5 – 7 days) an estimated number of claims and estimated losses from the storm. We have also begun reviewing the results of the predicted cost of the claim generated by the catastrophe models as a reasonability check on the anticipated cost of the storm.
This process allows us to determine within a 38 reasonable time (5-7 days) an estimated number of claims and estimated losses from the storm. We have also begun reviewing the results of the predicted cost of the claim generated by the catastrophe models as a reasonability check on the anticipated cost of the storm.
Selected ratios are then multiplied together to produce a set of loss development factors which when applied to the most current data value, by accident year, develop the estimated ultimate losses or loss adjustment expenses. Ultimate losses or loss adjustment expenses are then selected for each accident year from the various methods employed.
Selected ratios are then multiplied together to produce a set of loss development factors which when applied to the most current data value, by accident period, develop the estimated ultimate losses or loss adjustment expenses. Ultimate losses or loss adjustment expenses are then selected for each accident year from the various methods employed.
This notice must be provided to the North Dakota Insurance Department 43 30 days prior to the payment of an extraordinary dividend and 10 days prior to the payment of an ordinary dividend. The North Dakota Insurance Department has the power to limit or prohibit dividend payments if an insurance company is in violation of any law or regulation.
This notice must be provided to the North Dakota Insurance Department 30 days prior to the payment of an extraordinary dividend and 10 days prior to the payment of an ordinary dividend. The North Dakota Insurance Department has the power to limit or prohibit dividend payments if an insurance company is in violation of any law or regulation.
Amortization of Deferred Policy Acquisition Costs and Other Underwriting and General Expenses Expenses incurred to underwrite risks are referred to as policy acquisition costs. Policy acquisition costs consist of commission expenses, state premium taxes, and certain other underwriting expenses that vary with and are primarily related to the writing and acquisition of new and renewal business.
Amortization of Deferred Policy Acquisition Costs and Other Underwriting and General Expenses Expenses incurred to underwrite risks are referred to as policy acquisition costs. Policy acquisition costs consist of commission expenses, state premium taxes, and certain other underwriting expenses that vary with and are primarily related to the writing and 37 acquisition of new and renewal business.
The resulting dollars are then multiplied by the expected percentage of unpaid (or 39 unreported) losses described above. This provides an estimate of future paid (or reported) losses that is then added to actual paid (or incurred) loss data to produce the estimated ultimate loss.
The resulting dollars are then multiplied by the expected percentage of unpaid (or unreported) losses described above. This provides an estimate of future paid (or reported) losses that is then added to actual paid (or incurred) loss data to produce the estimated ultimate loss.
If we estimate the damages to be in excess of the retained catastrophe amount, reinsurers are notified immediately of a potential loss so that we can quickly recover reinsurance payments once the retention is exceeded.
If we estimate the damages to be in excess of half of the retained catastrophe amount, reinsurers are notified immediately of a potential loss so that we can quickly recover reinsurance payments once the retention is exceeded.
For example, demand surge caused by a significant catastrophe, such as a hurricane, has an impact on not only the availability and cost of building materials such as roofing and other materials, but also the availability and cost of labor. Numerous other factors could also cause claim severity to increase beyond what our historic reserves would reflect.
For example, demand surge caused by a significant catastrophe, such as a derecho, has an impact on not only the availability and cost of building materials such as roofing and other materials, but also the availability and cost of labor. Numerous other factors could also cause claim severity to increase beyond what our historic reserves would reflect.
The discussion should be read in conjunction with the consolidated financial statements and the notes thereto included in Part II, Item 8, “Financial Statements and Supplementary Data.” Some of the information contained in this discussion and analysis or set forth elsewhere in this 2023 Annual Report constitutes forward-looking information that involves risks and uncertainties.
The discussion should be read in conjunction with the consolidated financial statements and the notes thereto included in Part II, Item 8, “Financial Statements and Supplementary Data.” Some of the information contained in this discussion and analysis or set forth elsewhere in this 2024 Annual Report constitutes forward-looking information that involves risks and uncertainties.
Gross and net return on average cash and invested assets increased year-over-year, driven by the higher net investment income and a higher proportion of the equity portfolio being invested in high dividend yield equities in 2023, along with a decrease in average cash and invested assets (measured at fair value).
Gross and net return on average cash and invested assets increased year-over-year from 2022 to 2023, driven by the higher net investment income and a higher proportion of the equity portfolio being invested in high dividend yield equities in 2023, along with a decrease in average cash and invested assets (measured at fair value).
If the time to settle the claim extends over a period of years, which is possible but unlikely as we usually settle claims in less than 50 days on average, the initial reserve may not anticipate an economic inflation rate that is significantly higher than the 40 current inflation rate. This can also apply to IBNR reserves.
If the time to settle the claim extends over a period of years, which is possible but unlikely as we usually settle claims in less than a year on average, the initial reserve may not anticipate an economic inflation rate that is significantly higher than the current inflation rate. This can also apply to IBNR reserves.
The expense ratio measures a company’s operational efficiency in producing, underwriting, and administering its insurance business. The overall expense ratio increased 3.6 percentage points in the year ended December 31, 2023, compared to the same period in 2022.
The expense ratio measures a company’s operational efficiency in producing, underwriting, and administering its insurance business. The overall expense ratio increased 0.6 percentage points in the year ended December 31, 2024, compared to the same period in 2023.
A valuation allowance is required to be established for any portion of the deferred income tax asset for which we believe it is more likely than not that it will not be realized. A valuation allowance of $505 and $694 was maintained at December 31, 2023, and December 31, 2022, respectively.
A valuation allowance is required to be established for any portion of the deferred income tax asset for which we believe it is more likely than not that it will not be realized. A valuation allowance of $2,506 and $505 was maintained at December 31, 2024, and December 31, 2023, respectively.
Insurance premiums on property and casualty policies are recognized in proportion to the underlying risk insured and are earned ratably over the duration of the policies or, in the case of crop insurance, over the period of risk to the Company.
Premiums Earned Premiums earned is the earned portion of net premiums written. Insurance premiums on property and casualty policies are recognized in proportion to the underlying risk insured and are earned ratably over the duration of the policies or, in the case of crop insurance, over the period of risk to the Company.
Catastrophe losses, net of reinsurance, for the Home and Farm segment accounted for 72.1 percentage points of the net loss and loss adjustment expense ratio for the year ended December 31, 2022. 33 Crop – The net loss and loss adjustment expenses ratio decreased 14.1 percentage points in 2023 compared to 2022.
Catastrophe losses, net of reinsurance, for the Home and Farm segment accounted for 72.1 percentage points of the net loss and loss adjustment expense ratio for the year ended December 31, 2022. Crop – The net loss and loss adjustment expenses ratio increased 1.1 percentage points in 2024 compared to 2023.
We had gross deferred income tax liabilities of $9,254 at December 31, 2023, and $8,201 at December 31, 2022, arising primarily from deferred policy acquisition costs and other intangible assets. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting income tax liabilities and assets.
We had gross deferred income tax liabilities of $6,116 at December 31, 2024, and $9,254 at December 31, 2023, arising primarily from deferred policy acquisition costs and other intangible assets. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting income tax liabilities and assets.
Goodwill Impairment Charge We had a goodwill impairment charge of $6,756 for the year ended December 31, 2023, compared to $0 for the years ended December 31, 2022 and 2021.
Goodwill Impairment Charge We had a goodwill impairment charge of $2,628 for the year ended December 31, 2024, compared to $6,756 for the years ended December 31, 2023, and $0 for the year ended December 31, 2022.
We had gross deferred income tax assets of $18,172 at December 31, 2023, and $17,900 at December 31, 2022, arising primarily from unearned premiums, loss reserve discounting, net unrealized investment losses, and net operating loss carryforwards.
We had gross deferred income tax assets of $15,946 at December 31, 2024, and $18,172 at December 31, 2023, arising primarily from unearned premiums, loss reserve discounting, net unrealized investment losses, and net operating loss carryforwards.
This increase was driven by rate increases along with increased insured property values, which were primarily the result of higher inflationary factors. These premium increases were partially offset by lower levels of new business production as a result of underwriting actions taken to improve profitability. Crop – Net premiums earned for 2023 decreased $8,904, or 25.6%, from 2022.
This increase was driven by rate increases along with increased insured property values, which were primarily the result of higher inflationary factors. These premium increases were partially offset by lower levels of new business production as a result of underwriting actions taken to improve profitability Crop – Net premiums earned for 2024 decreased $4,675, or 18.1%, from 2023.
We had net realized gains on the sale of equity securities of $12,633, $2,075, and $17,118 during the years ended December 31, 2023, 2022, and 2021, respectively. Our fixed income securities are classified as available for sale because we will, from time to time, execute sales of securities that are not impaired, consistent with our investment goals and policies.
We had net realized gains on the sale of equity securities of $750, $12,619, and $2,051 during the years ended December 31, 2024, 2023, and 2022, respectively. 35 Our fixed income securities are classified as available for sale because we will, from time to time, execute sales of securities that are not impaired, consistent with our investment goals and policies.
This decrease was the result of recent significant rate increases, lower loss frequency in the current year, and favorable prior year reserve development, partially offset by elevated loss costs due to continued high levels of inflation. Non-standard auto – The net loss and loss adjustment expenses ratio increased 12.9 percentage points in 2023 compared to 2022.
The net loss and loss adjustment expenses ratio decreased 12.1 percentage points in 2023 compared to 2022. This decrease was the result of recent significant rate increases, lower loss frequency compared to the prior year, and favorable prior year loss reserve development, partially offset by elevated loss costs due to high levels of inflation.
Historical payment experience indicates that approximately 48% of this amount will be paid during 2024 and another 36% will be paid over the subsequent two years. The actual timing and amounts of these payments in the future may vary. Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, see Part II, Item 8, Note 2 “Recent Accounting Pronouncements”. 44
Historical payment experience indicates that approximately 46% of this amount will be paid during 2025 and another 37% will be paid over the subsequent two years. The actual timing and amounts of these payments in the future may vary. Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, see Part II, Item 8, Note 2 “Recent Accounting Pronouncements.” 43
The current period change in net unrealized gains on equity securities was driven by the equity portfolio liquidation noted above and the impact of changes in fair value attributable to equity market volatility. The prior year decreases were driven by the impact of changes in fair value attributable to unfavorable equity markets.
The change in net unrealized gains on equity securities for 2023 was driven by the equity portfolio liquidation noted above and the impact of changes in fair value attributable to equity market volatility. The 2022 decreases were driven by the impact of changes in fair value attributable to unfavorable equity markets.
This increase was driven by significant rate increases in North Dakota, South Dakota, and Nebraska, partially offset by lower new business production as a result of underwriting actions taken to improve profitability. Non-standard auto – Net premiums earned for 2023 increased $20,849, or 31.2%, from 2022.
This increase was driven by significant rate increases in North Dakota, South Dakota, and Nebraska, partially offset by lower new business production as a result of underwriting actions taken to improve profitability. Non-Standard auto – Net premiums earned for 2024 increased $7,465, or 8.5%, from 2023.
All other – The net loss and loss adjustment expenses ratio decreased 44.8 percentage points in 2023 compared to 2022. This decrease was driven by improved loss experience related to the excess liability lines of business.
The net loss and loss adjustment expenses ratio decreased 55.5 percentage points in 2023 compared to 2022. This decrease was driven by improved loss experience related to the commercial and excess liability lines of business.
Fee and Other Income We had fee and other income of $1,978 for the year ended December 31, 2023, compared to $1,453 for the year ended December 31, 2022, and $1,775 for the year ended December 31, 2021. Fee income is largely attributable to the non-standard auto segment and is a key component in measuring its profitability.
Fee and Other Income We had fee and other income of $1,938 for the year ended December 31, 2024, compared to $1,940 for the year ended December 31, 2023, and $1,381 for the year ended December 31, 2022. Fee income is largely attributable to the Non-Standard Auto segment and is a key component in measuring its profitability.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion is intended to provide a more comprehensive review of our operating results and financial condition than can be obtained from reading the consolidated financial statements alone.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion is intended to provide a more comprehensive review of our operating results and financial condition than can be obtained from reading the consolidated financial statements alone. Unless otherwise noted, the information in the following discussion is being presented for our continuing operations.
The overall combined ratio decreased 16.5 percentage points in the year ended December 31, 2023, compared to the same period in 2022. These results were driven by the factors discussed in the Losses and Loss Adjustment Expenses section above.
The overall combined ratio decreased 21.0 percentage points in the year ended December 31, 2023, compared to the same period in 2022. These results were driven by the factors discussed in the Losses and Loss Adjustment Expenses and the Underwriting and General Expenses and Expense Ratio sections above.
The amount available for payment of dividends from Westminster to NI Holdings during 2024 without the prior approval of the North Dakota Insurance Department is approximately $1,200 as of December 31, 2023. No dividends were declared or paid by Westminster during the years ended December 31, 2023, 2022 or 2021.
The amount available for payment of dividends from Nodak Insurance to NI Holdings during 2025 without the prior approval of the North Dakota Insurance Department is approximately $8,273 as of December 31, 2024. No dividends were declared or paid by Nodak Insurance during the years ended December 31, 2024 and 2023.
Return on Average Equity For the year ended December 31, 2023, we had annualized return on average equity, after non-controlling interest, of (2.2)%, compared to annualized return on average equity, after non-controlling interest, of (17.9)% and 2.4% for the years ended December 31, 2022 and 2021, respectively.
Return on Average Equity For the year ended December 31, 2024, we had annualized return on average equity, after non-controlling interest, of 2.8%, compared to annualized return on average equity, after non-controlling interest, of 7.9% and (13.6)% for the years ended December 31, 2023 and 2022, respectively.
At December 31, 2023 and 2022, deferred policy acquisition costs (“DAC”) and the related liability for unearned premiums were as follows: December 31, 2023 2022 Deferred policy acquisition costs $ 34,120 $ 29,768 Liability for unearned premiums 164,100 148,513 The method followed in computing DAC limits the amount of deferred costs to their estimated realizable value, which gives effect to the premium to be earned, related investment income, losses and loss adjustment expenses, and certain other costs expected to be 41 incurred as the premium is earned.
At December 31, 2024 and 2023, deferred policy acquisition costs (“DAC”) and the related liability for unearned premiums were as follows: December 31, 2024 2023 Deferred policy acquisition costs $ 26,300 $ 26,790 Liability for unearned premiums 126,498 126,100 The method followed in computing DAC limits the amount of deferred costs to their estimated realizable value, which gives effect to the premium to be earned, related investment income, losses and loss adjustment expenses, and certain other costs expected to be incurred as the premium is earned.
Changing Climate Conditions Longer-term natural catastrophe trends may be changing, and new types of catastrophe losses may be developing due to climate change, a phenomenon that has been associated with extreme weather events linked to rising temperatures, and includes effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, rain, hail, and snow.
Federal income tax returns for the years 2020 through 2023 remain subject to examination. 41 Changing Climate Conditions Longer-term natural catastrophe trends may be changing, and new types of catastrophe losses may be developing due to climate change, a phenomenon that has been associated with extreme weather events linked to rising temperatures, and includes effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels, rain, hail, and snow.
The fixed income portion of the portfolio experienced net unrealized gains of $10,654 during the year ended December 31, 2023, compared to net unrealized losses of $46,362 during the year ended December 31, 2022. The changes were primarily the result of changes in U.S. interest rates.
The fixed income portion of the portfolio experienced net unrealized losses of $191 during the year ended December 31, 2024, compared to net unrealized gains of $9,168 during the year ended December 31, 2023. The changes were primarily the result of changes in U.S. interest rates.
When a claim is reported to one of the insurance companies, its claims personnel establish a case reserve for the estimated amount of the ultimate payment to the extent it can be determined or estimated.
When a claim is reported to one of the insurance companies, its claims personnel establish a case reserve for the estimated amount of the ultimate payment to the extent it can be determined or estimated, in many cases a default reserve is utilized until the claims personnel can determine a more claim specific amount.
The valuation allowance against certain deferred income tax assets was $505 as of December 31, 2023 compared to $694 as of December 31, 2022.
The valuation allowance against certain deferred income tax assets was $2,506 as of December 31, 2024, $505 as of December 31, 2023, and $694 as of December 31, 2022.
As some claims may not be reported for several years, the liability for unpaid losses and loss adjustment expenses includes significant estimates for IBNR. Loss adjustment expenses consist of two components – allocated loss adjustment expenses and unallocated loss adjustment expenses.
As some claims may not be reported for several years, the liability for unpaid losses and loss adjustment expenses may include significant estimates for IBNR based on the time necessary to settle the claim. Loss adjustment expenses consist of two components – allocated loss adjustment expenses and unallocated loss adjustment expenses.
The year-over-year improvement in 2023 compared to 2022 was largely attributable to the significant catastrophe losses and significantly higher investment losses during 2022, partially offset by higher unfavorable prior year reserve development during 2023.
The year-over-year improvement in 2023 compared to 2022 was largely attributable to the significant catastrophe losses and significantly higher investment losses during 2022.
The year-over-year improvement in 2023 compared to 2022 was largely attributable to the significant catastrophe losses and significantly higher investment losses during 2022, partially offset by higher unfavorable prior year reserve development during 2023.
The year-over-year improvement in 2023 compared to 2022 was largely attributable to the significant catastrophe losses and significantly higher investment losses during 2022.
Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred income tax assets. As of December 31, 2023, we had no material unrecognized income tax benefits or accrued interest and penalties. Federal income tax returns for the years 2020 through 2022 are open for examination.
Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred income tax assets. As of December 31, 2024, we had no material unrecognized income tax benefits or accrued interest and penalties.
North Dakota law sets the maximum amount of dividends that may be paid by Nodak Insurance during any twelve-month period after notice to, but without prior approval of, the North Dakota Insurance Department.
Nodak Insurance is restricted by the insurance laws of North Dakota as to the amount of dividends or other distributions it may pay to NI Holdings. North Dakota law sets the maximum amount of dividends that may be paid by Nodak Insurance during any twelve-month period after notice to, but without prior approval of, the North Dakota Insurance Department.
This decrease was driven by lower commodity prices and lower muti-peril crop insurance rates, combined with fewer acres insured in the current year. In addition, the strong multi-peril crop results for the current year resulted in higher ceded premiums as required by the SRA. Commercial – Net premiums earned for 2023 increased $3,045, or 5.0%, from 2022.
This decrease was driven by lower commodity prices and lower muti-peril crop insurance rates in 2023, combined with fewer acres insured compared to the prior year. In addition, the strong multi-peril crop results for 2023 resulted in higher ceded premiums as required by the SRA. All other – Net premiums earned for 2024 increased $877, or 7.4%, from 2023.
Average equity is calculated as the average between beginning and ending equity, excluding non-controlling interest, for the period. Principal Revenue Items Revenue is primarily derived from net premiums earned, net investment income, and net investment gains (losses). Gross and Net Premiums Written Gross premiums written is equal to direct premiums written and assumed premiums before the effect of ceded reinsurance.
Average equity is calculated as the average between beginning and ending equity, excluding non-controlling interest, for the period. 36 Principal Revenue Items Revenue is primarily derived from net premiums earned, net investment income, and net investment gains (losses).
For the year ended December 31, 2022, net cash provided by investing activities totaled $25,048 compared to $48,151 net cash used by investing activities a year ago.
For the year ended December 31, 2023, net cash used by investing activities totaled $8,813 compared to $25,048 net cash provided by investing activities during 2022.
This change was primarily driven by lower claim payments and the receipt of a significant income tax refund during the current period. For the year ended December 31, 2023, net cash used by investing activities totaled $8,813 compared to $25,048 net cash provided by investing activities a year ago.
For the year ended December 31, 2023, net cash provided by operating activities totaled $51,028 compared to $15,294 net cash used by operating activities during 2022. This change was primarily driven by lower claim payments and the receipt of a significant income tax refund during 2023.
This increase was primarily driven by higher reinvestment rates as well as a strategic increased allocation to fixed income securities in our investment portfolio. Net investment income increased $689 for the year ended December 31, 2022, compared to the year ended December 31, 2021.
This increase was primarily driven by higher reinvestment rates as well as a strategic increased allocation to fixed income securities in our investment portfolio.
The year-to-date increase in net realized gains was primarily the result of a strategic liquidation of a portfolio of equity securities in the first quarter of 2023. The gross realized gains from the sale of these securities were largely offset by the elimination of the unrealized gain position of these securities.
The elevated net realized gains for the year ended December 31, 2023, were the result of a strategic liquidation of a portfolio of equity securities. The gross realized gains from the sale of these securities were largely offset by the elimination of the unrealized gain position of these securities.
Deferred Policy Acquisition Costs Certain direct policy acquisition costs consisting of commissions, state premium taxes, and other direct underwriting expenses that vary with and are primarily related to the production of business are deferred and amortized over the effective period of the related insurance policies as the underlying policy premiums are earned.
For additional information on our investments, see Part II, Item 8, Note 4 “Investments” and Note 5 “Fair Value Measurements.” Deferred Policy Acquisition Costs Certain direct policy acquisition costs consisting of commissions, state premium taxes, and other direct underwriting expenses that vary with and are primarily related to the production of business are deferred and amortized over the effective period of the related insurance policies as the underlying policy premiums are earned.
Investments Our fixed income securities and equity securities are classified as available-for-sale and carried at estimated fair value as determined by management based upon quoted market prices or a recognized independent pricing service at the reporting date for those or similar investments.
We reflect adjustments to the liability for unpaid losses and loss adjustment expenses in the results of operations during the period in which the estimates are changed. 40 Investments Our fixed income securities and equity securities are classified as available-for-sale and carried at estimated fair value as determined by management based upon quoted market prices or a recognized independent pricing service at the reporting date for those or similar investments.
The change in the fair value of fixed income securities is not reflected in net income; rather it is reflected as a separate component (net of income taxes) of other comprehensive income.
The change in the fair value of fixed income securities is not reflected in net income; rather it is reflected as a separate component (net of income taxes) of other comprehensive income. The fixed income portfolio experienced net unrealized losses of $39,971 during the year ended December 31, 2022.
See Part II, Item 8, Note 10 “Goodwill and Other Intangibles” for additional information. 35 Net Investment Income The following table shows our average cash and invested assets, net investment income, and return on average cash and invested assets for the reported periods: Year Ended December 31, 2023 2022 2021 Average cash and invested assets $ 408,845 $ 455,366 $ 502,375 Net investment income $ 10,456 $ 7,820 $ 7,131 Gross return on average cash and invested assets 3.4% 2.5% 2.1% Net return on average cash and invested assets 2.6% 1.7% 1.4% Net investment income increased $2,636 for the year ended December 31, 2023, compared to the year ended December 31, 2022.
See Part II, Item 8, Note 10 “Goodwill and Other Intangibles” for additional information. 34 Net Investment Income The following table shows our average cash and invested assets, net investment income, and return on average cash and invested assets for the reported periods for continuing operations: Year Ended December 31, 2024 2023 2022 Average cash and invested assets $ 371,110 $ 335,821 $ 391,584 Net investment income $ 10,943 $ 8,034 $ 6,636 Gross return on average cash and invested assets 3.9% 3.5% 2.5% Net return on average cash and invested assets 3.0% 2.6% 1.7% Net investment income increased $2,909 for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Other factors that may have an impact on our case and IBNR reserves include, but are not limited to, those described below. Changes in liability law and public attitudes regarding damage awards Laws governing liability claims and judicial interpretations thereof can change over time, which can expand the scope of coverage anticipated by insurers when initially establishing reserves for claims.
Changes in liability law and public attitudes regarding damage awards Laws governing liability claims and judicial interpretations thereof can change over time, which can expand the scope of coverage anticipated by insurers when initially establishing reserves for claims.
For more information on the Company’s results of operations by segment, see Part II, Item 8, Note 20 “Segment Information”. 30 Years ended December 31, 2023, 2022, and 2021 The consolidated net loss for the Company was $5,226 for the year ended December 31, 2023, compared to a net loss of $53,775 for the year ended December 31, 2022, and net income of $8,332 for the year ended December 31, 2021.
For more information on the Company’s results of operations by segment, see Part II, Item 8, Note 21 “Segment Information.” 29 Years ended December 31, 2024, 2023, and 2022 The consolidated net income from continuing operations for the Company was $6,600 for the year ended December 31, 2024, compared to net income of $19,831 for the year ended December 31, 2023, and a net loss of $38,685 for the year ended December 31, 2022.
Allocated loss adjustment expenses are defense and cost containment expenses, including legal fees, court costs, and investigation fees, which are linked to the settlement of specific individual claims or losses.
Allocated loss adjustment expenses are the expenses for defense and cost containment, including legal fees, court costs, and investigation fees, which are linked to the settlement of specific individual claims or losses. Unallocated loss adjustment expenses are expenses that generally cannot be associated with a specific claim, including internal costs such as salaries and other overhead costs.
Our effective tax rate for 2023 was (22.6)% compared to an effective tax rate of 22.1% and 26.3% for 2022 and 2021, respectively. Our 2023 effective tax rate was impacted by several factors, but the current year non-taxable goodwill impairment charge was the most significant driver of the variance from the statutory rate.
Our 2023 effective tax rate was impacted by several factors, but the 2023 non-taxable goodwill impairment charge was the most significant driver of the variance from the statutory rate.
In addition, these changes could impact the creditworthiness of issuers of securities in which we invest, subjecting our investment portfolio to increased credit and interest rate risk, with the potential for reduced investment returns and/or material realized or unrealized losses. 42 Liquidity and Capital Resources We expect to generate sufficient funds from our operations and maintain a high degree of liquidity in our investment portfolio to meet the demands of claim settlements and operating expenses for the foreseeable future.
In addition, these changes could impact the creditworthiness of issuers of securities in which we invest, subjecting our investment portfolio to increased credit and interest rate risk, with the potential for reduced investment returns and/or material realized or unrealized losses.
No credit impairment losses were reported during any of the periods presented. We experienced a decrease in net unrealized gains on equity securities of $9,927 during the year ended December 31, 2023.
No credit impairment losses were reported during any of the periods presented. We experienced an increase in net unrealized gains on equity securities of $1,662 during the year ended December 31, 2024, attributable to overall favorable equity markets during the current year.
Investment income from fixed income securities is recognized when earned, and realized investment gains (losses) are recognized when investments are sold, the fair value of equity securities change, or credit impairments are recognized. For additional information on our investments, see Part II, Item 8, Note 4 “Investments” and Note 5 “Fair Value Measurements”.
Investment income from fixed income securities is recognized when earned, and realized investment gains (losses) are recognized when investments are sold, the fair value of equity securities change, or credit impairments are recognized.
Income Tax Expense (Benefit) We recorded income tax expense of $963 for the year ended December 31, 2023, an income tax benefit of $15,254 for the year ended December 31, 2022, and income tax expense of $2,974 for the year ended December 31, 2021.
Including the impacts of discontinued operations and the loss on sale of discontinued operations, we recorded an income tax benefit of $3,192 for the year ended December 31, 2024, income tax expense of $963 for the year ended December 31, 2023, and an income tax benefit of $15,254 for the year ended December 31, 2022.
For the year ended December 31, 2023, net cash used by financing activities totaled $7,466 compared to $18,281 a year ago. This decrease in cash used was attributable to installment payments on the Westminster consideration payable during 2022, partially offset by an increase in share repurchases during 2023 compared to 2022.
This change was primarily attributable to a decrease in maturities and sales of fixed income securities and an increase in purchases of fixed income securities during 2023 compared to 2022, partially offset by an increase in sales of equity securities and a decrease in purchases of equity securities. 42 For the year ended December 31, 2023, net cash used by financing activities totaled $7,466 compared to $18,281 during 2022.
This decrease was due to improved crop growing conditions in 2023 in comparison to 2022. Commercial – The net loss and loss adjustment expenses ratio decreased 2.0 percentage points in 2023 compared to 2022.
The strong results for 2024 were the result of favorable crop growing conditions, similar to the prior year. The net loss and loss adjustment expenses ratio decreased 14.1 percentage points in 2023 compared to 2022. This decrease was due to improved crop growing conditions in 2023 in comparison to 2022.
Net Income (Loss) We had a net loss before non-controlling interest of $5,226 for the year ended December 31, 2023, a net loss of $53,775 for the year ended December 31, 2022, and net income of $8,332 for the year ended December 31, 2021.
Net Income (Loss) We had net income before non-controlling interest of $6,600 for the year ended December 31, 2024, net income of $19,831 for the year ended December 31, 2023, and a net loss of $38,685 for the year ended December 31, 2022.
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this document generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this document discusses 2024 and 2023 items and year-over-year comparisons between 2024 and 2023 as well as discussions of 2022 items and year-over-year comparisons between 2023 and 2022, which were included due to the impacts of discontinued operations for those prior periods.
Year Ended December 31, 2023 2022 2021 Net losses and loss adjustment expenses: Private passenger auto $ 60,204 $ 65,420 $ 59,721 Non-standard auto 63,041 39,400 34,453 Home and farm 50,935 107,823 52,145 Crop 10,793 19,418 27,831 Commercial 58,745 57,216 34,779 All other 694 5,155 7,450 Total net losses and loss adjustment expenses $ 244,412 $ 294,432 $ 216,379 Year Ended December 31, 2023 2022 2021 Loss and loss adjustment expenses ratio: Private passenger auto 72.2% 84.3% 82.3% Non-standard auto 71.8% 58.9% 58.8% Home and farm 61.1% 137.6% 70.7% Crop 41.8% 55.9% 103.7% Commercial 91.1% 93.1% 60.7% All other 11.0% 55.8% 70.6% Total loss and loss adjustment expenses ratio 69.6% 89.7% 72.2% Below are comments regarding significant changes in net losses and loss adjustment expenses, and the net loss and loss adjustment expenses ratios by business segment: Private passenger auto – The net loss and loss adjustment expenses ratio decreased 12.1 percentage points in 2023 compared to 2022.
Year Ended December 31, 2024 2023 2022 Net losses and loss adjustment expenses: Private passenger auto $ 51,869 $ 60,204 $ 65,420 Non-Standard auto 76,130 63,041 39,400 Home and farm 64,561 50,935 107,823 Crop 9,071 10,793 19,418 All other 5,834 1,543 9,689 Total net losses and loss adjustment expenses $ 207,465 $ 186,516 $ 241,750 Year Ended December 31, 2024 2023 2022 Loss and loss adjustment expenses ratio: Private passenger auto 57.4% 72.2% 84.3% Non-Standard auto 79.9% 71.8% 58.9% Home and farm 71.1% 61.1% 137.6% Crop 42.9% 41.8% 55.9% All other 46.1% 13.1% 68.6% Total loss and loss adjustment expenses ratio 66.9% 63.8% 89.0% Below are comments regarding significant changes in net losses and loss adjustment expenses, and the net loss and loss adjustment expenses ratios by business segment: Private passenger auto – The net loss and loss adjustment expenses ratio decreased 14.8 percentage points in 2024 compared to 2023.
Contractual Obligations The primary contractual obligations of the Company include gross loss and loss adjustment expenses payments as well as operating and finance lease obligations. The Company’s unpaid losses and loss adjustment expenses were $217,119 as of December 31, 2023.
See Part II, Item 8, Note 20 “Discontinued Operations” for additional information. Contractual Obligations The primary contractual obligations of the Company include gross loss and loss adjustment expenses payments as well as operating and finance lease obligations. The Company’s unpaid losses and loss adjustment expenses were $137,288 as of December 31, 2024.
Direct Auto re-domesticated from Illinois to North Dakota during 2021 and is now subject to the same dividend restrictions as Nodak Insurance. The amount available for payment of dividends from Direct Auto to NI Holdings during 2024 without the prior approval of the North Dakota Insurance Department is approximately $90 as of December 31, 2023.
The Nodak Insurance Board of Directors declared and paid dividends of $3,000 to NI Holdings during the year ended December 31, 2022. The amount available for payment of dividends from Direct Auto to NI Holdings during 2025 without the prior approval of the North Dakota Insurance Department is approximately $3,146 as of December 31, 2024.
The changes in cash and cash equivalents for the years ended December 31, 2023, 2022, and 2021 were as follows: Year Ended December 31, 2023 2022 2021 Net cash flows from operating activities $ 25,970 $ (30,388 ) $ 29,168 Net cash flows from investing activities (8,813 ) 25,048 (48,151 ) Net cash flows from financing activities (7,466 ) (18,281 ) (11,471 ) Net increase (decrease) in cash and cash equivalents $ 9,691 $ (23,621 ) $ (30,454 ) For the year ended December 31, 2023, net cash provided by operating activities totaled $25,970 compared to $30,388 net cash used by operating activities a year ago.
The changes in cash and cash equivalents for continuing and discontinued operations for the years ended December 31, 2024, 2023, and 2022 were as follows: Year Ended December 31, 2024 2023 2022 Net cash flows from operating activities $ 38,506 $ 51,028 $ (15,294 ) Net cash flows from investing activities (4,541 ) (8,813 ) 25,048 Net cash flows from financing activities (3,643 ) (7,466 ) (18,281 ) Net increase (decrease) in cash and cash equivalents $ 30,322 $ 34,749 $ (8,527 ) For the year ended December 31, 2024, net cash provided by operating activities totaled $38,506 compared to $51,028 net cash provided by operating activities a year ago.
These restrictions or any subsequently imposed restrictions may affect our future liquidity. The Nodak Insurance Board of Directors declared and paid dividends of $3,000 to NI Holdings during the year ended December 31, 2022. No dividends were declared or paid by Nodak Insurance during the years ended December 31, 2023 and 2021.
These restrictions or any subsequently imposed restrictions may affect our future liquidity. Westminster was sold on June 30, 2024, and therefore no dividends are available to be paid to NI Holdings subsequent to that date. No dividends were declared or paid by Westminster during the years ended December 31, 2024, 2023 or 2022.
Gross premiums written are recognized upon sale of new insurance contracts or renewal of existing contracts. Net premiums written is equal to gross premiums written less premiums ceded to reinsurers. Premiums Earned Premiums earned is the earned portion of net premiums written. Gross premiums written include all premiums recorded by an insurance company during a specified policy period.
Gross and Net Premiums Written Gross premiums written is equal to direct premiums written and assumed premiums before the effect of ceded reinsurance. Gross premiums written are recognized upon sale of new insurance contracts or renewal of existing contracts. Net premiums written is equal to gross premiums written less premiums ceded to reinsurers.
The total underwriting loss decreased $53,111, or 81.5%, for the year ended December 31, 2023, compared to the same period in 2022. These results were driven by the factors discussed in the Losses and Loss Adjustment Expenses section above.
These results were driven by the factors discussed in the Losses and Loss Adjustment Expenses and the Underwriting and General Expenses and Expense Ratio sections above. The overall combined ratio increased 3.7 percentage points in the year ended December 31, 2024, compared to the same period in 2023.
Net Investment Gains (Losses) Net investment gains (losses) consisted of the following: Year Ended December 31, 2023 2022 2021 Gross realized gains $ 13,975 $ 7,195 $ 18,130 Gross realized losses, excluding credit impairment losses (1,924 ) (5,271 ) (362 ) Net realized gains 12,051 1,924 17,768 Change in net unrealized gain on equity securities (9,927 ) (15,050 ) (2,289 ) Net investment gains (losses) $ 2,124 $ (13,126 ) $ 15,479 We had net realized gains of $12,051 for the year ended December 31, 2023, compared to $1,924 for the year ended December 31, 2022, and $17,768 for the year ended December 31, 2021.
Net Investment Gains (Losses) Net investment gains (losses) consisted of the following: Year Ended December 31, 2024 2023 2022 Gross realized gains $ 1,341 $ 13,841 $ 7,083 Gross realized losses, excluding credit impairment losses (790 ) (1,745 ) (5,099 ) Net realized gains 551 12,096 1,984 Change in net unrealized gain on equity securities 1,662 (10,167 ) (13,959 ) Net investment gains (losses) $ 2,213 $ 1,929 $ (11,975 ) We had net realized gains of $551 for the year ended December 31, 2024, compared to $12,096 for the year ended December 31, 2023, and $1,984 for the year ended December 31, 2022.
The increase in other underwriting and general expenses was due to the impact of continued high levels of inflation and 2022 expenses being favorably impacted by multi-peril crop insurance final settlements. 34 Underwriting Gain (Loss) and Combined Ratio Year Ended December 31, 2023 2022 2021 Underwriting gain (loss): Private passenger auto $ (1,341 ) $ (9,416 ) $ (7,704 ) Non-standard auto (12,654 ) 622 1,362 Home and farm 7,752 (52,512 ) (475 ) Crop 8,762 12,294 (9,195 ) Commercial (18,576 ) (17,958 ) 2,506 All other 3,992 1,794 427 Total underwriting loss $ (12,065 ) $ (65,176 ) $ (13,079 ) Year Ended December 31, 2023 2022 2021 Combined ratio: Private passenger auto 101.6% 112.1% 110.6% Non-standard auto 114.4% 99.1% 97.7% Home and farm 90.7% 167.0% 100.7% Crop 66.1% 64.6% 134.3% Commercial 128.8% 129.2% 95.6% All other 37.0% 80.6% 95.9% Total combined ratio 103.4% 119.9% 104.3% Underwriting gain (loss) measures the pre-tax profitability of our insurance operations.
The increase in other underwriting and general expenses was due to the impact of continued high levels of inflation and 2022 expenses being favorably impacted by multi-peril crop insurance final settlements. 33 Underwriting Gain (Loss) and Combined Ratio Year Ended December 31, 2024 2023 2022 Underwriting gain (loss): Private passenger auto $ 10,407 $ (1,536 ) $ (9,548 ) Non-Standard auto (17,637 ) (12,860 ) 508 Home and farm (2,373 ) 7,557 (52,644 ) Crop 7,189 8,702 12,236 All other 93 6,781 530 Total underwriting gain (loss) $ (2,321 ) $ 8,644 $ (48,918 ) Year Ended December 31, 2024 2023 2022 Combined ratio: Private passenger auto 88.4% 101.8% 112.3% Non-Standard auto 118.5% 114.6% 99.3% Home and farm 102.6% 91.0% 167.2% Crop 66.0% 66.3% 64.7% All other 99.3% 42.5% 96.2% Total combined ratio 100.7% 97.0% 118.0% Underwriting gain (loss) measures the pre-tax profitability of our insurance operations.
This change was primarily attributable to a decrease in maturities and sales of fixed income securities and an increase in purchases of fixed income securities in the current year compared to the prior year, partially offset by an increase in sales of equity securities and a decrease in purchases of equity securities.
This change was primarily attributable to the proceeds from the sale of Westminster as well as a decrease in the net cash outflows for fixed income securities in the current year, partially offset by a decrease in the cash inflows from equity securities in the current year.
Our primary sources of funds are premium collections, investment earnings, and fixed income maturities. We also have a $3,000 line of credit with Wells Fargo Bank, N.A. The terms of the line of credit include a floating interest rate of 2.50% above the daily simple secured overnight financing rate.
We also have a $3,000 line of credit with Wells Fargo Bank, N.A. The terms of the line of credit include a floating interest rate of 2.50% above the daily simple secured overnight financing rate. There were no outstanding amounts during the years ended December 31, 2024, 2023, or 2022.
This increase was driven by new business growth, improved retention, and significant rate increases in the Chicago market where our non-standard auto business is concentrated. Home and farm – Net premiums earned for 2023 increased $5,008, or 6.4%, from 2022.
Results were driven by prior period new business growth in Illinois and Arizona as well as significant rate increases in the Chicago market where our non-standard auto business is concentrated, partially offset by lower retention compared to the prior year and the decision to exit Nevada. Net premiums earned for 2023 increased $20,849, or 31.2%, from 2022.
This increase was driven by elevated loss severity as a result of inflationary factors as well as unfavorable prior year loss reserve development, partially offset by recent significant rate increases. We continue to take significant rate and underwriting actions as a result of these elevated losses and challenging market conditions.
This increase was driven by elevated loss severity as a result of inflationary factors as well as unfavorable prior year loss reserve development, partially offset by significant rate increases. 32 Home and farm – The net loss and loss adjustment expenses ratio increased 10.0 percentage points in 2024 compared to 2023.
There is no amount available for payment of dividends from Nodak Insurance to NI Holdings during 2024 without the prior approval of the North Dakota Insurance Department. Prior to its payment of any dividend, Nodak Insurance will be required to provide notice of the dividend to the North Dakota Insurance Department.
No dividends were declared or paid by Direct Auto during the years ended December 31, 2024, 2023, or 2022. Prior to its payment of any dividend, Nodak Insurance will be required to provide notice of the dividend to the North Dakota Insurance Department.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe table below shows the interest rate sensitivity of our fixed income securities measured in terms of fair value (which is equal to the carrying value for all of our investment securities that are subject to interest rate changes) at December 31, 2023 and 2022: As of December 31, 2023 As of December 31, 2022 Hypothetical Change in Interest Rate Estimated Change in Fair Value Fair Value Estimated Change in Fair Value Fair Value 200 basis point increase $ (31,125 ) $ 316,606 $ (26,433 ) $ 276,891 100 basis point increase (15,826 ) 331,905 (13,504 ) 289,820 No change — 347,731 — 303,324 100 basis point decrease 16,199 363,930 13,986 317,310 200 basis point decrease 32,572 380,303 28,347 331,671 The interest rate exposure of our portfolio was proportionately consistent in the current year compared to the prior year, which is expected given the generally consistent composition and duration of the fixed income portfolio over this time. 45 Credit Risk Credit risk is the potential economic loss principally arising from adverse changes in the financial condition of a specific debt issuer.
Biggest changeThe table below shows the interest rate sensitivity of our fixed income securities (including both continuing and discontinued operations) measured in terms of fair value (which is equal to the carrying value for all of our investment securities that are subject to interest rate changes) at December 31, 2024 and 2023: As of December 31, 2024 As of December 31, 2023 Hypothetical Change in Interest Rate Estimated Change in Fair Value Fair Value Estimated Change in Fair Value Fair Value 200 basis point increase $ (28,085 ) $ 279,627 $ (31,125 ) $ 316,606 100 basis point increase (14,687 ) 293,025 (15,826 ) 331,905 No change — 307,712 — 347,731 100 basis point decrease 13,509 321,221 16,199 363,930 200 basis point decrease 27,977 335,689 32,572 380,303 The interest rate exposure of our portfolio was proportionately consistent in the current year compared to the prior year, which is expected given the generally consistent composition and duration of the fixed income portfolio over this time. 44 Credit Risk Credit risk is the potential economic loss principally arising from adverse changes in the financial condition of a specific debt issuer.
We develop our investment strategies based on a number of factors, including estimated duration of reserve liabilities, short and long-term liquidity needs, general economic conditions, expected rates of inflation and regulatory requirements. The portfolio duration of the fixed income securities in our investment portfolio at December 31, 2023 was 4.52 years.
We develop our investment strategies based on a number of factors, including estimated duration of reserve liabilities, short and long-term liquidity needs, general economic conditions, expected rates of inflation and regulatory requirements. The portfolio duration of the fixed income securities in our investment portfolio at December 31, 2024 was 4.77 years.
Our investment policy helps mitigate these risks by diversifying the portfolio and establishing parameters to help manage exposures. 46
Our investment policy helps mitigate these risks by diversifying the portfolio and establishing parameters to help manage exposures. 45

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