UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (IRS Employer | |
| incorporation or organization) | Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
Not applicable
Former name, former address, and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |
| Non-accelerated filer | ☐ | Smaller reporting company | |
| Emerging growth company |
i
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). ☐ Yes No
The number of shares of Registrant’s common stock outstanding
on April 30, 2024 was
ii
TABLE OF CONTENTS
iii
CERTAIN IMPORTANT INFORMATION
Unless the context otherwise requires, as used in this Quarterly Report on Form 10-Q (“Form 10-Q”):
| ● | “NI Holdings”, “the Company”, “we”, “us”, and “our” refer to NI Holdings, Inc., together with Nodak Insurance Company and its subsidiaries, Direct Auto Insurance Company (acquired August 31, 2018), and Westminster American Insurance Company (acquired January 1, 2020), for periods discussed after completion of the conversion, and for periods discussed prior to completion of the conversion refer to Nodak Mutual Insurance Company and all of its subsidiaries and Battle Creek Mutual Insurance Company; |
| ● | the “conversion” refers to the series of transactions consummated on March 13, 2017, by which Nodak Mutual Insurance Company converted from a mutual insurance company to a stock insurance company, as Nodak Insurance Company, and became a wholly-owned subsidiary of NI Holdings, an intermediate stock holding company formed on the date of conversion; |
| ● | “Nodak Mutual Group” refers to Nodak Mutual Group, Inc., which is the majority shareholder of NI Holdings; |
| ● | “Nodak Mutual” refers to Nodak Mutual Insurance Company, the predecessor company to Nodak Insurance Company prior to the conversion; |
| ● | “Nodak Insurance” refers to Nodak Insurance Company or Nodak Mutual Insurance Company interchangeably; |
| ● | “members” refers to the policyholders of Nodak Insurance, who are the named insureds under insurance policies issued by Nodak Insurance; |
| ● | “Battle Creek” refers to Battle Creek Mutual Insurance Company or Battle Creek Insurance Company interchangeably. Battle Creek Mutual Insurance Company became affiliated with Nodak Insurance in 2011 and, prior to January 2, 2024, was controlled by Nodak Insurance via a surplus note. The terms of the surplus note allowed Nodak Insurance to appoint two-thirds of the Battle Creek Mutual Insurance Company Board of Directors. As of January 2, 2024, the North Dakota Secretary of State approved the conversion of Battle Creek Mutual Insurance Company from a mutual insurance company to a stock insurance company. 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” refers to Direct Auto Insurance Company. Direct Auto is a wholly-owned subsidiary of NI Holdings; |
| ● | “American West” refers to American West Insurance Company. American West is a wholly-owned subsidiary of Nodak Insurance; |
| ● | “Primero” refers to Primero Insurance Company. Primero is an indirect, wholly-owned subsidiary of Nodak Insurance; |
| ● | “Westminster” refers to Westminster American Insurance Company. Westminster is a wholly-owned subsidiary of NI Holdings; and |
| ● | “Nodak Agency” refers to Nodak Agency, Inc. Nodak Agency is a wholly-owned subsidiary of Nodak Insurance. |
1
FORWARD-LOOKING STATEMENTS
This report contains, and management may make, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as “may”, “will”, “should”, “likely”, “anticipates”, “expects”, “intends”, “plans”, “projects”, “believes”, “views”, “estimates”, and similar expressions are used to identify these forward-looking statements. These statements include, among other things, the Company’s statements about:
| ● | our anticipated operating and financial performance, business plans, and prospects; |
| ● | strategic reviews, capital allocation objectives, dividends, and share repurchases; |
| ● | plans for and prospects of acquisitions, dispositions, and other business development activities, and our ability to successfully capitalize on these opportunities; |
| ● | the impact of a future pandemic and related economic conditions, including the potential impact on the Company's investments; |
| ● | our ability to enter new markets successfully and capitalize on growth opportunities either through acquisitions or the expansion of our distribution network; |
| ● | cyclical changes in the insurance industry, competition, and innovation and emerging technologies; |
| ● | expectations for impact of, or changes to, existing or new government regulations or laws; |
| ● | our ability to anticipate and respond to macroeconomic, geopolitical, health and industry trends, pandemics, acts of war, and other large-scale crises; |
| ● | developments in general economic conditions, domestic and global financial markets, interest rates, unemployment, or inflation, that could affect the performance of our insurance operations and/or investment portfolio; and |
| ● | our ability to effectively manage future growth, including additional necessary capital, systems, and personnel. |
Given their nature, we cannot assure that any outcome expressed in these or other forward-looking statements will be realized in whole or in part. Actual outcomes may vary materially from past results and those anticipated, estimated, implied, or projected. These forward-looking statements may be affected by underlying assumptions that may prove inaccurate or incomplete, or by known or unknown risks and uncertainties, including those described in Part II, Item 1A, “Risk Factors” of this Form 10-Q and in the Part I, Item 1A, “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Annual Report”). The occurrence of any of the risks identified in the Part I, Item 1A, “Risk Factors” section of the 2023 Annual Report, or other risks currently unknown, could have a material adverse effect on our business, financial condition or results of operations, or we may be required to increase our accruals for contingencies. It is not possible to predict or identify all such factors. Consequently, you should not consider such discussion to be a complete discussion of all potential risks or uncertainties.
Therefore, you are cautioned not to unduly rely on forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. You are advised, however, to consult any further disclosures we make on related subjects.
2
PART I. - FINANCIAL INFORMATION
Item 1. - Financial Statements
NI Holdings, Inc.
Consolidated Balance Sheets
(dollar amounts in thousands, except par value)
| March 31, 2024 | December 31, 2023 | |||||||
| (Unaudited) | ||||||||
| Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Fixed income securities, at fair value (net of allowance for expected credit losses of $ | ||||||||
| Equity securities, at fair value | ||||||||
| Other investments | ||||||||
| Total cash and investments | ||||||||
| Premiums and agents' balances receivable (net of allowance for expected credit losses of $ | ||||||||
| Deferred policy acquisition costs | ||||||||
| Reinsurance premiums receivable | ||||||||
| Reinsurance recoverables on losses (net of allowance for expected credit losses of $ | ||||||||
| Accrued investment income | ||||||||
| Property and equipment, net | ||||||||
| Deferred income taxes | ||||||||
| Receivable from Federal Crop Insurance Corporation | ||||||||
| Goodwill and other intangibles | ||||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities: | ||||||||
| Unpaid losses and loss adjustment expenses | $ | $ | ||||||
| Unearned premiums | ||||||||
| Income tax payable | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders’ equity: | ||||||||
| Common stock, $ | ||||||||
| Additional paid-in capital | ||||||||
| Unearned employee stock ownership plan shares | ( | ) | ( | ) | ||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss, net of income taxes | ( | ) | ( | ) | ||||
| Treasury stock, at cost, 2024 – | ( | ) | ( | ) | ||||
| Non-controlling interest | ||||||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
3
NI Holdings, Inc.
Consolidated Statements of Operations (Unaudited)
(dollar amounts in thousands, except per share data)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues: | ||||||||
| Net premiums earned | $ | $ | ||||||
| Fee and other income | ||||||||
| Net investment income | ||||||||
| Net investment gains | ||||||||
| Total revenues | ||||||||
| Expenses: | ||||||||
| Losses and loss adjustment expenses | ||||||||
| Amortization of deferred policy acquisition costs | ||||||||
| Other underwriting and general expenses | ||||||||
| Total expenses | ||||||||
| Income (loss) before income taxes | ( | ) | ||||||
| Income tax expense (benefit) | ( | ) | ||||||
| Net income (loss) | ( | ) | ||||||
| Net loss attributable to non-controlling interest | ( | ) | ||||||
| Net income (loss) attributable to NI Holdings, Inc. | $ | $ | ( | ) | ||||
| Earnings (loss) per common share: | ||||||||
| Basic | $ | $ | ( | ) | ||||
| Diluted | $ | $ | ( | ) | ||||
| Share data: | ||||||||
| Weighted average common shares outstanding used in basic per common share calculations | ||||||||
| Dilutive securities | ||||||||
| Weighted average common shares used in diluted per common share calculations | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
NI Holdings, Inc.
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(dollar amounts in thousands)
| Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | |||||||||||||||||||||||
| Attributable to NI Holdings, Inc. | Attributable to Non- Controlling Interest | Total | Attributable to NI Holdings, Inc. | Attributable to Non- Controlling Interest | Total | |||||||||||||||||||
| Net income (loss) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||
| Other comprehensive income (loss), before income taxes: | ||||||||||||||||||||||||
| Holding gains (losses) on investments | ( | ) | ( | ) | ||||||||||||||||||||
| Reclassification adjustment for net realized losses included in net income (loss) | ||||||||||||||||||||||||
| Other comprehensive income (loss), before income taxes | ( | ) | ( | ) | ||||||||||||||||||||
| Income tax benefit (expense) related to items of other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Other comprehensive income (loss), net of income taxes | ( | ) | ( | ) | ||||||||||||||||||||
| Comprehensive income (loss) | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
5
NI Holdings, Inc.
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(dollar amounts in thousands)
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Unearned Employee Stock Ownership Plan Shares | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Income Taxes | Treasury Stock | Non-Controlling Interest | Total Shareholders’ Equity | |||||||||||||||||||||||||
| Balance, January 1, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| Battle Creek demutualization | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Net income (loss) | ||||||||||||||||||||||||||||||||
| Other comprehensive income (loss), net of income taxes | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Purchase of treasury stock | ||||||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||
| Issuance of vested award shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid-in Capital | Unearned Employee Stock Ownership Plan Shares | Retained Earnings | Accumulated Other Comprehensive Loss, Net of Income Taxes | Treasury Stock | Non-Controlling Interest | Total Shareholders’ Equity | |||||||||||||||||||||||||
| Balance, January 1, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
| Battle Creek demutualization | ||||||||||||||||||||||||||||||||
| Net income (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Other comprehensive income (loss), net of income taxes | ||||||||||||||||||||||||||||||||
| Purchase of treasury stock | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||||||||||
| Issuance of vested award shares | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
6
NI Holdings, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(dollar amounts in thousands)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||||||||
| Net investment gains | ( | ) | ( | ) | ||||
| Deferred income tax expense (benefit) | ( | ) | ||||||
| Depreciation of property and equipment | ||||||||
| Amortization of intangibles | ||||||||
| Share-based compensation | ||||||||
| Amortization of deferred policy acquisition costs | ||||||||
| Deferral of policy acquisition costs | ( | ) | ( | ) | ||||
| Net amortization of premiums and discounts on investments | ||||||||
| Gain on sale of property and equipment | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Premiums and agents’ balances receivable | ( | ) | ( | ) | ||||
| Reinsurance premiums receivable / payable | ( | ) | ||||||
| Reinsurance recoverables on losses | ( | ) | ( | ) | ||||
| Accrued investment income | ( | ) | ||||||
| Federal Crop Insurance Corporation receivable / payable | ||||||||
| Other assets | ( | ) | ||||||
| Unpaid losses and loss adjustment expenses | ||||||||
| Unearned premiums | ||||||||
| Income tax recoverable / payable | ||||||||
| Accrued expenses and other liabilities | ( | ) | ( | ) | ||||
| Net cash flows from operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Proceeds from maturities and sales of fixed income securities | ||||||||
| Proceeds from sales of equity securities | ||||||||
| Purchases of fixed income securities | ( | ) | ( | ) | ||||
| Purchases of equity securities | ( | ) | ( | ) | ||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from sales of property and equipment | ||||||||
| Net cash flows from investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Purchases of treasury stock | ( | ) | ||||||
| Principal repayments of finance leases | ( | ) | ||||||
| Issuance of vested award shares | ( | ) | ( | ) | ||||
| Net cash flows from financing activities | ( | ) | ( | ) | ||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Federal and state income taxes paid (net of refunds received) | $ | ( | ) | $ | ||||
The accompanying notes are an integral part of these consolidated financial statements.
7
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| 1. | Organization |
NI Holdings is a North Dakota business corporation that is the stock
holding company of Nodak Insurance and became such in connection with the conversion of Nodak Mutual from a mutual to stock form of organization
and the creation of a mutual holding company. The conversion was consummated on March 13, 2017. Immediately following the conversion,
all of the outstanding shares of common stock of Nodak Insurance were issued to Nodak Mutual Group, which then contributed the shares
to NI Holdings in exchange for
These unaudited consolidated financial statements include the financial position and results of operations of NI Holdings and the following other entities:
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 Agency, Inc.
Nodak Agency is an inactive shell corporation.
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 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.
Primero Insurance Company
Primero is a wholly-owned subsidiary of Tri-State,
Ltd. Tri-State, Ltd. is an inactive shell corporation
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. Battle Creek became affiliated
with Nodak Insurance in 2011 and, prior to January 2, 2024, was controlled by Nodak Insurance via a surplus note. On January 2, 2024,
Battle Creek issued
Direct Auto Insurance Company
Direct Auto is a property and casualty insurance company licensed in Illinois. Direct Auto began writing non-standard auto coverage in 2007, and was acquired by NI Holdings on August 31, 2018, via a stock purchase agreement.
8
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
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, West Virginia, and the District of Columbia. Westminster was acquired by NI Holdings on January 1, 2020, via a stock purchase agreement.
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 A.M. Best Company, Inc. (“AM Best”), a global credit rating agency specializing in the insurance industry.
The same executive management team provides oversight and strategic direction for the entire organization. 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.
| 2. | Basis of Presentation and Accounting Policies |
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. All material intercompany transactions and balances have been eliminated. These financial statements should be read in conjunction with the financial statements and notes thereto included in our 2023 Annual Report.
The Consolidated Balance Sheet at December 31, 2023, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.
The preparation of the interim unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim unaudited consolidated financial statements and the reported amounts of revenues, claims, and expenses during the reporting period. Actual results could differ from those estimates. Operating results for the interim period ended March 31, 2024, are not necessarily indicative of the results that may be expected for the year ended December 31, 2024.
Our 2023 Annual Report describes the accounting policies and estimates that are critical to the understanding of our results of operations, financial condition, and liquidity. The accounting policies and estimation processes described in the 2023 Annual Report were consistently applied to the unaudited consolidated financial statements as of and for the three months ended March 31, 2024 and 2023.
Recent Accounting Pronouncements
Adopted
For information regarding accounting pronouncements that the Company adopted during the periods presented, see Item II, Part 8, Note 2 “Recent Accounting Pronouncements” section of the 2023 Annual Report.
Not Yet Adopted
Improvements to Reportable Segment Disclosures – In November 2023, the Financial Accounting Standards Board (“FASB”) issued guidance related to improving disclosures for reportable segments primarily through enhanced disclosures about significant segment expenses that are provided to the chief operating decision maker (“CODM”). This guidance also requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are currently evaluating the impact of the new standard on our consolidated financial statements, which is expected to result in enhanced disclosures.
9
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
Improvements to Income Tax Disclosures – In December 2023, the FASB issued guidance related to improving income tax disclosures. This guidance requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The guidance is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this update are effective for annual periods beginning after December 15, 2024. We are currently evaluating the impact of the new standard on our consolidated financial statements, which is expected to result in enhanced disclosures.
| 3. | Investments |
| March 31, 2024 | ||||||||||||||||||||
| Cost or Amortized Cost | Allowance for Expected Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||
| U.S. Government and agencies | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Obligations of states and political subdivisions | ( | ) | ||||||||||||||||||
| Corporate securities | ( | ) | ||||||||||||||||||
| Residential mortgage-backed securities | ( | ) | ||||||||||||||||||
| Commercial mortgage-backed securities | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ||||||||||||||||||
| Redeemable preferred stocks | ( | ) | ||||||||||||||||||
| Total fixed income securities | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Cost or Amortized Cost | Allowance for Expected Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||
| U.S. Government and agencies | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
| Obligations of states and political subdivisions | ( | ) | ||||||||||||||||||
| Corporate securities | ( | ) | ||||||||||||||||||
| Residential mortgage-backed securities | ( | ) | ||||||||||||||||||
| Commercial mortgage-backed securities | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ||||||||||||||||||
| Redeemable preferred stocks | ( | ) | ||||||||||||||||||
| Total fixed income securities | $ | $ | $ | $ | ( | ) | $ | |||||||||||||
10
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| March 31, 2024 | ||||||||
| Amortized Cost | Fair Value | |||||||
| Due to mature: | ||||||||
| One year or less | $ | $ | ||||||
| After one year through five years | ||||||||
| After five years through ten years | ||||||||
| After ten years | ||||||||
| Mortgage / asset-backed securities | ||||||||
| Redeemable preferred stocks | ||||||||
| Total fixed income securities | $ | $ | ||||||
| December 31, 2023 | ||||||||
| Amortized Cost | Fair Value | |||||||
| Due to mature: | ||||||||
| One year or less | $ | $ | ||||||
| After one year through five years | ||||||||
| After five years through ten years | ||||||||
| After ten years | ||||||||
| Mortgage / asset-backed securities | ||||||||
| Redeemable preferred stocks | ||||||||
| Total fixed income securities | $ | $ | ||||||
Fixed income securities with a fair value of $
11
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| March 31, 2024 | ||||||||||||||||||||||||
| Less than 12 Months | Greater than 12 months | Total | ||||||||||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||||||
| U.S. Government and agencies | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
| Obligations of states and political subdivisions | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Corporate securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Residential mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Commercial mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Redeemable preferred stocks | ( | ) | ( | ) | ||||||||||||||||||||
| Total fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
| December 31, 2023 | ||||||||||||||||||||||||
| Less than 12 Months | Greater than 12 months | Total | ||||||||||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||||||
| U.S. Government and agencies | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||
| Obligations of states and political subdivisions | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Corporate securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Residential mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Commercial mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Redeemable preferred stocks | ( | ) | ( | ) | ||||||||||||||||||||
| Total fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
We, along with our investment advisor, frequently review our investment portfolio for declines in fair value that could be indicative of credit losses. Beginning on December 31, 2022, credit losses are recognized through an allowance account. We consider a number of factors when determining if an allowance for credit losses is necessary, including payment and default history, credit spreads, credit ratings and rating actions, and probability of default. We determine the credit loss component of fixed income investments by utilizing discounted cash flow modeling to determine the present value of the security and comparing the present value with the amortized cost of the security. We did not recognize any credit losses for fixed income securities at the time of adoption of the new credit loss accounting standard and have not recognized any credit losses for fixed income securities since adoption of the credit loss standard. Therefore, there was no beginning balance, activity, or ending balance of credit losses as of and during the three months ended March 31, 2024 and 2023. See Item II, Part 8, Note 3 “Summary of Significant Accounting Policies” section of the 2023 Annual Report for additional information.
12
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Fixed income securities | $ | $ | ||||||
| Equity securities | ||||||||
| Real estate | ||||||||
| Cash and cash equivalents | ||||||||
| Total gross investment income | ||||||||
| Investment expenses | ||||||||
| Net investment income | $ | $ | ||||||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Gross realized gains: | ||||||||
| Fixed income securities | $ | $ | ||||||
| Equity securities | ||||||||
| Total gross realized gains | ||||||||
| Gross realized losses, excluding credit impairment losses: | ||||||||
| Fixed income securities | ( | ) | ( | ) | ||||
| Equity securities | ( | ) | ( | ) | ||||
| Total gross realized losses, excluding credit impairment losses | ( | ) | ( | ) | ||||
| Net realized gains (losses) | ( | ) | ||||||
| Change in net unrealized gains on equity securities | ( | ) | ||||||
| Net investment gains | $ | $ | ||||||
| 4. | Fair Value Measurements |
The Company uses fair value measurements to record fair value adjustments to certain assets to determine fair value disclosures. Investment securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record other assets or liabilities at fair value on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets. Accounting guidance on fair value measurements and disclosures establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The three levels of the fair value hierarchy are as follows:
| Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. |
| Level 2: | Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. Level 2 includes fixed income securities with quoted prices that are traded less frequently than exchange traded instruments. Valuation techniques include matrix pricing which is a mathematical technique used widely in the industry to value fixed income securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. |
| Level 3: | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity). |
The Company bases its fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy. Fair value measurements for assets where there exists limited or no observable market data and, therefore, are based primarily upon the estimates of the Company or other third-parties, are often calculated based on the characteristics of the asset, the economic and competitive environment, and other such factors. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts which could have been realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period-end and have not been re-evaluated or updated for purposes of our consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end. Additionally, changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future valuations.
13
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
The Company uses quoted values and other data provided by an independent pricing service in its process for determining fair values of its investments. The evaluations of such pricing services represent an exit price and a good faith opinion as to what a buyer in the marketplace would pay for a security in a current sale. This pricing service provides us with one quote per instrument. For fixed income securities that have quoted prices in active markets, market quotations are provided. For fixed income securities that do not trade on a daily basis, the independent pricing service prepares estimates of fair value using a wide array of observable inputs including relevant market information, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. The observable market inputs that the Company’s independent pricing service utilizes may include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers, and other reference data on markets, industry, and the economy. Additionally, the independent pricing service uses an option-adjusted spread model to develop prepayment and interest rate scenarios.
Should the independent pricing service be unable to provide a fair value estimate, we would first attempt to obtain a fair value estimate from our third-party investment advisor who utilizes different independent pricing services. If unsuccessful, we would attempt to obtain a non-binding fair value estimate from a number of broker-dealers and would review this estimate in conjunction with a fair value estimate reported by an independent business news service or other sources. In instances where only one broker-dealer provides a fair value for a fixed income security, we would use that estimate. In instances where the Company would be able to obtain fair value estimates from more than one broker-dealer, we would review the range of estimates and select the most appropriate value based on the facts and circumstances. Should neither the independent pricing service nor a broker-dealer provide a fair value estimate, we would develop a fair value estimate based on cash flow analyses and other valuation techniques that utilize certain unobservable inputs. Accordingly, the Company classifies such a security as a Level 3 investment.
The fair value estimates of our investments provided by the independent pricing service at each period-end were utilized, among other resources, in reaching a conclusion as to the fair value of its investments.
Management reviews the reasonableness of the pricing provided by the independent pricing service by employing various analytical procedures. We also use information from our third-party investment advisor who utilizes different independent pricing services to further validate the reasonableness of the valuation of our fixed income portfolio. If, after this review, management does not believe the pricing for any security is a reasonable estimate of fair value, then it will seek to resolve the discrepancy through discussions with the independent pricing service. In its review, management did not identify any such discrepancies and no adjustments were made to the estimates provided by the independent pricing service for the three-month period ended March 31, 2024, or the year ended December 31, 2023. The classification within the fair value hierarchy is then confirmed based on the final conclusions from the pricing review.
The valuation of money market accounts and equity securities are generally based on Level 1 inputs, which use the market-approach valuation technique. The valuation of certain cash equivalents and our fixed income securities generally incorporates significant Level 2 inputs using the market and income approach techniques. We may assign a lower level to inputs typically considered to be Level 2 based on our assessment of liquidity and relative level of uncertainty surrounding inputs. There were no assets or liabilities classified at Level 3 at March 31, 2024, or December 31, 2023.
14
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| March 31, 2024 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Fixed income securities: | ||||||||||||||||
| U.S. Government and agencies | $ | $ | $ | $ | ||||||||||||
| Obligations of states and political subdivisions | ||||||||||||||||
| Corporate securities | ||||||||||||||||
| Residential mortgage-backed securities | ||||||||||||||||
| Commercial mortgage-backed securities | ||||||||||||||||
| Asset-backed securities | ||||||||||||||||
| Redeemable preferred stock | ||||||||||||||||
| Total fixed income securities | ||||||||||||||||
| Equity securities: | ||||||||||||||||
| Common stock | ||||||||||||||||
| Non-redeemable preferred stock | ||||||||||||||||
| Total equity securities | ||||||||||||||||
| Money market accounts and cash equivalents | ||||||||||||||||
| Total assets at fair value | $ | $ | $ | $ | ||||||||||||
| December 31, 2023 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Fixed income securities: | ||||||||||||||||
| U.S. Government and agencies | $ | $ | $ | $ | ||||||||||||
| Obligations of states and political subdivisions | ||||||||||||||||
| Corporate securities | ||||||||||||||||
| Residential mortgage-backed securities | ||||||||||||||||
| Commercial mortgage-backed securities | ||||||||||||||||
| Asset-backed securities | ||||||||||||||||
| Redeemable preferred stock | ||||||||||||||||
| Total fixed income securities | ||||||||||||||||
| Equity securities: | ||||||||||||||||
| Common stock | ||||||||||||||||
| Non-redeemable preferred stock | ||||||||||||||||
| Total equity securities | ||||||||||||||||
| Money market accounts and cash equivalents | ||||||||||||||||
| Total assets at fair value | $ | $ | $ | $ | ||||||||||||
There were no liabilities measured at fair value on a recurring basis at March 31, 2024, or December 31, 2023.
15
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| 5. | Reinsurance |
External Reinsurance
The Company’s consolidated financial statements reflect the effects of assumed and ceded reinsurance transactions. Assumed reinsurance refers to the acceptance of certain insurance risks that other insurance companies have underwritten. Ceded reinsurance involves transferring certain insurance risks (along with the related written and earned premiums) the Company has underwritten to other insurance companies who agree to share these risks. The Company reinsures a portion of the risks it underwrites, through these ceded reinsurance agreements, in order to control its exposure to losses. Our ceded reinsurance is placed either on an automatic basis under general reinsurance contracts known as treaties or through facultative contracts placed on substantial individual risks. These contracts do not relieve the Company from its obligations to policyholders.
During the three-month period ended March 31, 2024, the Company maintained
property catastrophe reinsurance protection covering $
For the year ended December 31, 2023, the Company’s
catastrophe retention and retention limit were consistent with those for the three-month period ended March 31, 2024. In addition, limits,
retentions, and attachment points in our other reinsurance contracts were also consistent with those for the three-month period ended
March 31, 2024 (with the exception of Westminster for which per risk excess of loss treaties provided coverage of $
The Company actively monitors and evaluates the financial condition of the reinsurers and develops estimates of the uncollectible amounts due from reinsurers. Beginning on December 31, 2022, credit losses are recognized through an allowance account developed using a new credit loss model (current expected credit losses or “CECL”). See the Part II, Item 8, Note 2 “Recent Accounting Pronouncements” section of the 2023 Annual Report for additional information. Credit loss estimates are made based on periodic evaluation of balances due from reinsurers, changes in reinsurer credit standing, judgments regarding reinsurers’ solvency, known disputes, reporting characteristics of the underlying reinsured business, historical experience, current economic conditions, and the state of reinsurer relations in general. Collection risk is mitigated by entering into reinsurance arrangements only with reinsurers that have strong credit ratings and statutory surplus above certain levels. At March 31, 2024, and December 31, 2023, management has concluded that it is not necessary to record an allowance for expected credit losses related to reinsurance recoverables. All of our significant reinsurance partners are rated “A-” (Excellent) or better by AM Best, and there is no history of write-offs.
16
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| Three Months Ended March 31, 2024 | ||||||||
| Premiums Written | Premiums Earned | |||||||
| Direct premium | $ | $ | ||||||
| Assumed premium | ||||||||
| Ceded premium | ( | ) | ( | ) | ||||
| Net premiums | $ | $ | ||||||
| Three Months Ended March 31, 2023 | ||||||||
| Premiums Written | Premiums Earned | |||||||
| Direct premium | $ | $ | ||||||
| Assumed premium | ||||||||
| Ceded premium | ( | ) | ( | ) | ||||
| Net premiums | $ | $ | ||||||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Direct losses and loss adjustment expenses | $ | $ | ||||||
| Assumed losses and loss adjustment expenses | ||||||||
| Ceded losses and loss adjustment expenses | ( | ) | ( | ) | ||||
| Net losses and loss adjustment expenses | $ | $ | ||||||
If
Intercompany Reinsurance Pooling Arrangement
Effective January 1, 2020, all of our insurance subsidiary and affiliate companies entered into an intercompany reinsurance pooling agreement. Nodak Insurance is the lead company of the pool, and assumes the net premiums, net losses, and underwriting expenses from each of the other five 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. 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 AM Best on a group basis and hold a single combined financial strength rating, long-term issuer credit rating, and financial size category.
| Pool Percentage | ||||
| Nodak Insurance Company | ||||
| American West Insurance Company | ||||
| Primero Insurance Company | ||||
| Battle Creek Insurance Company | ||||
| Direct Auto Insurance Company | ||||
| Westminster American Insurance Company | ||||
| Total | ||||
17
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| 6. | Deferred Policy Acquisition Costs |
Expenses directly related to successfully acquired insurance policies,
primarily commissions, premium taxes and underwriting costs, are deferred and amortized over the terms of the policies. We update our
acquisition cost assumptions periodically to reflect actual experience, and we evaluate the costs for recoverability.
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Balance, beginning of period | $ | $ | ||||||
| Deferral of policy acquisition costs | ||||||||
| Amortization of deferred policy acquisition costs | ( | ) | ( | ) | ||||
| Balance, end of period | $ | $ | ||||||
| 7. | Unpaid Losses and Loss Adjustment Expenses |
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Balance, beginning of period: | ||||||||
| Liability for unpaid losses and loss adjustment expenses | $ | $ | ||||||
| Reinsurance recoverables on losses | ||||||||
| Net balance, beginning of period | ||||||||
| Incurred related to: | ||||||||
| Current year | ||||||||
| Prior years | ||||||||
| Total incurred | ||||||||
| Paid related to: | ||||||||
| Current year | ||||||||
| Prior years | ||||||||
| Total paid | ||||||||
| Balance, end of period: | ||||||||
| Liability for unpaid losses and loss adjustment expenses | ||||||||
| Reinsurance recoverables on losses | ||||||||
| Net balance, end of period | $ | $ | ||||||
During the three months ended March 31, 2024, the Company’s
incurred reported losses and loss adjustment expenses included $
Changes in unpaid losses and loss adjustment expense reserves are generally the result of ongoing analysis of recent loss development trends. As additional information becomes known regarding individual claims, original estimates are increased or decreased accordingly.
18
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| 8. | Property and Equipment |
| March 31, 2024 | December 31, 2023 | Estimated Useful Life | ||||||||
| Cost: | ||||||||||
| Land | $ | $ | indefinite | |||||||
| Building and improvements | ||||||||||
| Electronic data processing equipment | ||||||||||
| Furniture and fixtures | ||||||||||
| Automobiles | ||||||||||
| Gross cost | ||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||||
| Total property and equipment, net | $ | $ | ||||||||
Depreciation expense was $
| 9. | Goodwill and Other Intangibles |
Goodwill
| Three Months Ended March 31, 2024 | Year Ended December 31, 2023 | |||||||||||||||||||||||
| Non-standard Auto | Commercial | Total | Non-standard Auto | Commercial | Total | |||||||||||||||||||
| Goodwill, original recorded value | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Accumulated impairment losses at the beginning of the period | ( | ) | ( | ) | ||||||||||||||||||||
| Goodwill, beginning of period | ||||||||||||||||||||||||
| Impairment recognized during the period | ( | ) | ( | ) | ||||||||||||||||||||
| Goodwill, end of period | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Based on the qualitative analyses performed for the goodwill related to our non-standard auto segment, we concluded that goodwill was not impaired as of March 31, 2024, or December 31, 2023.
During the fourth quarter of 2023, we performed a quantitative
assessment of the goodwill related to the Westminster acquisition, which is allocated to our commercial segment, and concluded that the
goodwill was fully impaired as of December 31, 2023, resulting in a non-cash impairment charge of $
19
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
Other Intangible Assets
| March 31, 2024 | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||
| Subject to amortization: | ||||||||||||
| Trade names | $ | $ | $ | |||||||||
| Distribution network | ||||||||||||
| Total subject to amortization | ||||||||||||
| Not subject to amortization: | ||||||||||||
| State insurance licenses | ||||||||||||
| Total | $ | $ | $ | |||||||||
| December 31, 2023 | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||
| Subject to amortization: | ||||||||||||
| Trade names | $ | $ | $ | |||||||||
| Distribution network | ||||||||||||
| Total subject to amortization | ||||||||||||
| Not subject to amortization: | ||||||||||||
| State insurance licenses | ||||||||||||
| Total | $ | $ | $ | |||||||||
We determined during our reviews that other indefinite-lived intangible assets and finite-lived intangible assets were not impaired as of March 31, 2024, or December 31, 2023.
Amortization expense was $
Other intangible assets that have finite lives, including trade
names and distribution networks, are amortized over their useful lives.
| Year ending December 31, | ||||
| 2024 (nine months remaining) | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total other intangible assets with finite lives | $ | |||
20
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| 10. | Royalties, Dividends, and Affiliations |
North Dakota Farm Bureau
Nodak Insurance was organized by the North Dakota Farm Bureau (“NDFB”)
to provide insurance protection for its members. We have a royalty agreement with the NDFB that recognizes the use of their trademark
and provides royalties to the NDFB based on the premiums written on Nodak Insurance’s policies. Royalties paid to the NDFB were
$
Dividends
State insurance laws require our insurance subsidiaries to maintain certain minimum capital and surplus amounts on a statutory basis. Our insurance subsidiaries are subject to regulations that restrict the payment of dividends from statutory surplus and may require prior approval from their domiciliary insurance regulatory authorities. Our insurance subsidiaries are also subject to risk-based capital requirements that may further affect their ability to pay dividends. Our insurance subsidiaries statutory capital and surplus at December 31, 2023, exceeded the amount of statutory capital and surplus necessary to satisfy risk-based capital requirements by a significant margin. For information regarding the availability of subsidiaries to pay dividends to NI Holdings during 2024, see Item II, Part 8, Note 12 “Related Party Transactions” section of the 2023 Annual Report.
Battle Creek
Prior to January 2, 2024, we consolidated the financial statements
of Battle Creek, and Battle Creek’s policyholders’ interest in Battle Creek was reflected as a non-controlling interest in
shareholders’ equity in our Consolidated Balance Sheets. Subsequent to January 2, 2024, Battle Creek is fully consolidated in our
Consolidated Balance Sheets.
| December 31, 2023 | ||||
| Assets: | ||||
| Cash and cash equivalents | $ | |||
| Investments | ||||
| Premiums and agents’ balances receivable | ||||
| Deferred policy acquisition costs | ||||
| Reinsurance recoverables on losses (2) | ||||
| Accrued investment income | ||||
| Income tax recoverable | ||||
| Deferred income taxes | ||||
| Property and equipment | ||||
| Other assets | ||||
| Total assets | $ | |||
| Liabilities: | ||||
| Unpaid losses and loss adjustment expenses | $ | |||
| Unearned premiums | ||||
| Notes payable (1) | ||||
| Pooling payable (1) | ||||
| Reinsurance losses payable (2) | ||||
| Accrued expenses and other liabilities | ||||
| Total liabilities | ||||
| Equity: | ||||
| Non-controlling interest | ||||
| Total equity | ||||
| Total liabilities and equity | $ | |||
| (1) |
| (2) |
21
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| 11. | Benefit Plans |
Nodak Insurance sponsors a 401(k) plan with an automatic and matching
contribution for eligible employees at Nodak Insurance, Primero, and Direct Auto. Nodak Insurance also contributes an additional elective
amount of employee compensation as a profit-sharing contribution for eligible employees. Westminster also sponsors a separate 401(k) plan.
American West and Battle Creek have no employees. The Company reported expenses related to these plans totaling $
All fees associated with the plans are deducted from the eligible employee accounts.
The Company also offers a non-qualified deferred compensation
plan to key executives of the Company (as designated by the Board of Directors). The Company’s policy is to fund the plan by amounts
that represent the excess of the maximum contribution allowed by the Employee Retirement Income Security Act over the key executives’
allowable 401(k) contribution. The plan also allows employee-directed deferral of key executives’ compensation or incentive payments.
The Company reported expenses related to this plan totaling $
In connection with our initial public offering (“IPO”) in March 2017, the Company established its Employee Stock Ownership Plan (the “ESOP”) within the meaning of Internal Revenue Code Section 4975(e)(7) and invests solely in common stock of the Company.
Upon establishment of the ESOP, Nodak Insurance loaned $
The shares purchased by the ESOP Trust in the offering are held in a suspense account as collateral for the ESOP loan. Nodak Insurance makes semi-annual cash contributions to the ESOP in amounts no smaller than the amounts required for the ESOP Trust to make its loan payments to Nodak Insurance. While the ESOP makes two loan payments per year, a pre-determined portion of the shares are released from the suspense account and allocated to participant accounts at the end of the calendar year. This release and allocation occurs on an annual basis over the ten-year term of the ESOP loan. Nodak Insurance has a lien on the shares of common stock of the Company held by the ESOP to secure repayment of the loan from the ESOP to Nodak Insurance. If the ESOP is terminated as a result of a change in control of the Company, the ESOP may be required to pay the costs of terminating the plan.
It is anticipated that the only assets held by the ESOP will be shares of the Company’s common stock. Participants in the ESOP cannot direct the investment of any assets allocated to their accounts. The ESOP participants are employees of Nodak Insurance. The employees of Primero, Direct Auto, and Westminster do not participate in the ESOP.
Each employee of Nodak Insurance automatically becomes a participant in the ESOP if such employee is at least 21 years old, has completed a minimum of one thousand hours of service with Nodak Insurance, and has completed an Eligibility Computation Period. Employees are not permitted to make any contributions to the ESOP. Participants in the ESOP receive annual reports from the Company showing the number of shares of common stock of the Company allocated to the participants’ accounts and the market value of those shares. The shares are allocated to participants based on compensation as provided for in the ESOP.
In connection with the establishment of the ESOP, the Company created
a contra-equity account on the Consolidated Balance Sheet equal to the ESOP’s basis in the shares. The basis of those shares was
set at $
The Company recognized compensation expense related to the ESOP of
$
Through March 31, 2024, and December 31, 2023, the Company had released
and allocated
22
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| 12. | Line of Credit |
NI Holdings has a $
| 13. | Income Taxes |
As of January 2, 2024, Battle Creek became a
At March 31, 2024, and December 31, 2023, we had unrecognized tax benefits, no accrued interest and penalties, and no significant uncertain tax positions. interest and penalties were recognized during the three-month period ended March 31, 2024, or the year ended December 31, 2023.
At March 31, 2024, and December 31, 2023, the Company, other than Battle Creek, had income tax related carryforwards for net operating losses, alternative minimum tax credits, or capital losses.
Battle Creek had net operating loss carryforwards of $
| 14. | Leases |
Primero leases a facility in Spearfish, South Dakota
under a non-cancellable operating lease expiring in
Effective for the year ended December 31, 2022, the Company adopted the updated guidance for leases. See Part II, Item 8, Note 2 “Recent Accounting Pronouncements” section of the 2023 Annual Report for additional information. We determine whether a contract is or contains a lease at the inception of the contract. A contract will be deemed to be or contain a lease if the contract conveys the right to control and directs the use of identified property or equipment for a period of time in exchange for consideration. We generally must also have the right to obtain substantially all of the economic benefits from the use of the property and equipment. Lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. To determine the present value of lease payments not yet paid, we estimate incremental borrowing rates based on the floating interest rate on our Line of Credit with Wells Fargo Bank, N.A. at the lease commencement date, as rates are not implicitly stated in most leases. Lease liabilities are included in accrued expenses and other liabilities and right-of-use assets are included in other assets in the Consolidated Balance Sheets.
There were expenses of $
23
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| As of and For the Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Operating lease cost | $ | $ | ||||||
| Finance lease cost: | ||||||||
| Amortization of right-of-use assets | ||||||||
| Interest on lease liabilities | ||||||||
| Finance lease cost | ||||||||
| Total lease cost | $ | $ | ||||||
| Other information on leases: | ||||||||
| Cash payments included in operating cash flows from operating leases | $ | $ | ||||||
| Cash payments included in operating cash flows from finance leases | ||||||||
| Cash payments included in financing cash flows from finance leases | ||||||||
| Right-of-use assets obtained in exchange for new operating lease liabilities | ||||||||
| Right-of-use assets obtained in exchange for new finance lease liabilities | ||||||||
| Weighted average discount rate – operating leases | ||||||||
| Weighted average discount rate – finance leases | ||||||||
| Weighted average remaining lease term in years – operating leases | ||||||||
| Weighted average remaining lease term in years – finance leases | ||||||||
| Year ending December 31, | Operating Leases | Finance Leases | Total | |||||||||
| 2024 (nine months remaining) | $ | $ | $ | |||||||||
| 2025 | ||||||||||||
| 2026 | ||||||||||||
| 2027 | ||||||||||||
| 2028 | ||||||||||||
| Thereafter | ||||||||||||
| Total undiscounted lease payments | ||||||||||||
| Less: present value adjustment | ||||||||||||
| Lease liability at March 31, 2024 | $ | $ | $ | |||||||||
| 15. | Contingencies |
We have been named as a defendant in various lawsuits relating to our insurance operations. Contingent liabilities arising from litigation, income taxes, and other matters are not considered to be material to our financial position.
24
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| 16. | Common and Preferred Stock |
Common Stock
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Shares outstanding, beginning of period | ||||||||
| Treasury shares repurchased through stock repurchase authorization | ( | ) | ||||||
| Issuance of treasury shares for vesting of restricted stock units | ||||||||
| Shares outstanding, end of period | ||||||||
The changes in the number of common shares outstanding
excludes certain non-forfeitable stock award shares that are included in the weighted average common shares outstanding used in basic
earnings per common share calculations. The net loss per diluted common share for the three months ended March 31, 2023, excluded the
weighted average effects of
On May 9, 2022, our Board of Directors approved an
authorization for the repurchase of up to approximately $
The cost of this treasury stock is a reduction of shareholders’ equity within our Consolidated Balance Sheets.
Preferred Stock
The Company’s Articles of Incorporation provide authority to issue up to five million shares of preferred stock. No preferred shares are issued or outstanding.
| 17. | Share-Based Compensation |
The NI Holdings, Inc. 2020 Stock and Incentive Plan (the “Plan”) is designed to promote the interests of the Company and its shareholders by aiding the Company in attracting and retaining employees, officers, consultants, independent contractors, advisors, and non-employee directors capable of assuring the future success of the Company, to offer such persons incentives to put forth maximum efforts for the success of the Company’s business and to afford such persons an opportunity to acquire an ownership interest in the Company, thereby aligning the interests of such persons with the Company’s shareholders.
The Plan provides for the grant of nonqualified stock options, incentive stock options, restricted stock units (“RSUs”), stock appreciation rights, dividend equivalents, and performance share units (“PSUs”) to employees, officers, consultants, advisors, non-employee directors, and independent contractors designated by the Compensation Committee of the Board of Directors (the “Compensation Committee”). Awards made under the Plan are based upon, among other things, a participant’s level of responsibility and performance within the Company.
The total aggregate number of shares of common stock
that may be issued under the Plan shall not exceed
Restricted Stock Units
The Compensation Committee has awarded RSUs to non-employee
directors and select executives. RSUs are promises to issue actual shares of common stock at the end of a vesting period. The RSUs granted
to executives under the Plan are based on salary. RSUs granted prior to 2024 vest equally over a five-year period. Effective for executive
grants in 2024, the RSUs vest equally over a three-year period. The RSUs granted to non-employee directors vest
25
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
The Company recognizes stock-based compensation costs for RSUs based on the grant date fair value. The compensation costs are normally expensed over the vesting periods to each vesting date; however, the cost of RSUs granted to executives are expensed immediately if the executive has met certain retirement criteria and the RSUs become non-forfeitable. Estimated forfeitures are included in the determination of compensation costs. No forfeitures are currently estimated.
| RSUs | Weighted-Average Grant-Date Fair Value Per Share | |||||||
| Units outstanding and unearned at January 1, 2023 | $ | |||||||
| RSUs granted during 2023 | ||||||||
| RSUs earned during 2023 | ( | ) | ||||||
| Units outstanding and unearned at December 31, 2023 | ||||||||
| RSUs granted during 2024 | ||||||||
| RSUs earned during 2024 | ( | ) | ||||||
| Units outstanding and unearned at March 31, 2024 | ||||||||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| RSU compensation expense | $ | $ | ||||||
| Income tax benefit | ( | ) | ( | ) | ||||
| RSU compensation expense, net of income taxes | $ | $ | ||||||
At March 31, 2024, there was $
Performance Share Units
The Compensation Committee has awarded PSUs to select executives. PSUs are promises to issue actual shares of common stock at the end of a vesting period, if certain performance conditions are met. The PSUs granted to employees under the Plan are based on salary and, prior to 2024, include a three-year adjusted book value cumulative growth target with threshold and stretch goals . Effective for grants made in 2024, the performance metric is calculated based on an adjusted return on equity over a three-year period, with annual resets. They will vest on the third anniversary of the grant date, subject to the participant’s continuous employment through the vesting date and the level of performance achieved. Dividend equivalents on PSUs are accrued and paid in cash at the end of the performance period in accordance with the level of performance achieved but are subject to forfeiture until the underlying shares become vested. Participants do not have voting rights with respect to PSUs.
The Company recognizes stock-based compensation costs for PSUs based on the grant date fair value over the performance period of the awards. Estimated forfeitures are included in the determination of compensation costs. The current cost estimates represent the Company’s forecasted performance against cumulative growth targets.
26
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| PSUs | Weighted-Average Grant-Date Fair Value Per Share | |||||||
| Units outstanding at January 1, 2023 | $ | |||||||
| PSUs granted during 2023 (at target) | ||||||||
| PSUs earned during 2023 | ||||||||
| Performance adjustment (1) | ( | ) | ||||||
| Forfeitures | ||||||||
| Units outstanding at December 31, 2023 | ||||||||
| PSUs granted during 2024 (at target) | ||||||||
| PSUs earned during 2024 | ||||||||
| Performance adjustment (1) | ( | ) | ||||||
| Forfeitures | ||||||||
| Units outstanding at March 31, 2024 | ||||||||
(1)
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| PSU compensation expense | $ | $ | ||||||
| Income tax benefit | ( | ) | ( | ) | ||||
| PSU compensation expense, net of income taxes | $ | $ | ||||||
The cost estimates for PSU grants represent initial
target awards until we can reasonably forecast the financial performance of each PSU award grant. At the end of the performance period,
we will reflect a performance adjustment, which may be either an increase or decrease from the initial target awards. The actual number
of shares to be issued at the end of the performance period will range from
At March 31, 2024, there was $
27
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| 18. | Allowance for Expected Credit Losses |
Premiums Receivable
| As of and For the Three Months Ended March 31, 2024 | As of and For the Three Months Ended March 31, 2023 | |||||||||||||||
| Premiums and Agents’ Balances Receivable, Net of Allowance for Expected Credit Losses | Allowance for Expected Credit Losses | Premiums and Agents’ Balances Receivable, Net of Allowance for Expected Credit Losses | Allowance for Expected Credit Losses | |||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | ||||||||||||
| Current period charge for expected credit losses | ( | ) | ||||||||||||||
| Write-offs of uncollectible premiums receivable | ( | ) | ( | ) | ||||||||||||
| Balance, end of period | $ | $ | $ | $ | ||||||||||||
| 19. | Segment Information |
We have
For purposes of evaluating profitability of the non-standard auto segment, we combine the policy fees paid by the insured with the underwriting gain or loss as its primary measure. As a result, these fees are allocated to the non-standard auto segment (included in fee and other income) in the tables below. The remaining fee and other income amounts are not allocated to any segment.
We do not assign or allocate all line items in our
Consolidated Statement of Operations or Consolidated Balance Sheets to our operating segments. Those line items include net investment
income, net investment gains, fee and other income excluding non-standard auto, and income tax expense (benefit) within the Unaudited
Consolidated Statement of Operations.
28
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||
| Private Passenger Auto | Non-Standard Auto | Home and Farm | Crop | Commercial | All Other | Total | ||||||||||||||||||||||
| Direct premiums earned | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||
| Assumed premiums earned | ||||||||||||||||||||||||||||
| Ceded premiums earned | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Net premiums earned | ( | ) | ||||||||||||||||||||||||||
| Direct losses and loss adjustment expenses | ( | ) | ||||||||||||||||||||||||||
| Assumed losses and loss adjustment expenses | ||||||||||||||||||||||||||||
| Ceded losses and loss adjustment expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net losses and loss adjustment expenses | ( | ) | ||||||||||||||||||||||||||
| Gross margin | ||||||||||||||||||||||||||||
| Underwriting and general expenses | ||||||||||||||||||||||||||||
| Underwriting gain (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
| Fee and other income | ||||||||||||||||||||||||||||
| ( | ) | |||||||||||||||||||||||||||
| Net investment income | ||||||||||||||||||||||||||||
| Net investment gains | ||||||||||||||||||||||||||||
| Income (loss) before income taxes | ||||||||||||||||||||||||||||
| Income tax expense (benefit) | ||||||||||||||||||||||||||||
| Net income (loss) | ||||||||||||||||||||||||||||
| Net loss attributable to non-controlling interest | ||||||||||||||||||||||||||||
| Net income (loss) attributable to NI Holdings, Inc. | $ | |||||||||||||||||||||||||||
| Operating Ratios: | ||||||||||||||||||||||||||||
| Loss and loss adjustment expense ratio | ||||||||||||||||||||||||||||
| Expense ratio | ||||||||||||||||||||||||||||
| Combined ratio | ||||||||||||||||||||||||||||
| Balances at March 31, 2024: | ||||||||||||||||||||||||||||
| Premiums and agents’ balances receivable | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Deferred policy acquisition costs | ||||||||||||||||||||||||||||
| Reinsurance recoverables on losses | ||||||||||||||||||||||||||||
| Receivable from Federal Crop Insurance Corporation | ||||||||||||||||||||||||||||
| Goodwill and other intangibles | ||||||||||||||||||||||||||||
| Unpaid losses and loss adjustment expenses | ||||||||||||||||||||||||||||
| Unearned premiums | ||||||||||||||||||||||||||||
29
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| Three Months Ended March 31, 2023 | ||||||||||||||||||||||||||||
| Private Passenger Auto | Non-Standard Auto | Home and Farm | Crop | Commercial | All Other | Total | ||||||||||||||||||||||
| Direct premiums earned | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||
| Assumed premiums earned | ||||||||||||||||||||||||||||
| Ceded premiums earned | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Net premiums earned | ( | ) | ||||||||||||||||||||||||||
| Direct losses and loss adjustment expenses | ( | ) | ||||||||||||||||||||||||||
| Assumed losses and loss adjustment expenses | ||||||||||||||||||||||||||||
| Ceded losses and loss adjustment expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net losses and loss adjustment expenses | ( | ) | ||||||||||||||||||||||||||
| Gross margin | ( | ) | ||||||||||||||||||||||||||
| Underwriting and general expenses | ||||||||||||||||||||||||||||
| Underwriting gain (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
| Fee and other income | ||||||||||||||||||||||||||||
| ( | ) | |||||||||||||||||||||||||||
| Net investment income | ||||||||||||||||||||||||||||
| Net investment gains | ||||||||||||||||||||||||||||
| Income (loss) before income taxes | ( | ) | ||||||||||||||||||||||||||
| Income tax expense (benefit) | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) | ( | ) | ||||||||||||||||||||||||||
| Net loss attributable to non-controlling interest | ( | ) | ||||||||||||||||||||||||||
| Net income (loss) attributable to NI Holdings, Inc. | $ | ( | ) | |||||||||||||||||||||||||
| Operating Ratios: | ||||||||||||||||||||||||||||
| Loss and loss adjustment expense ratio | ||||||||||||||||||||||||||||
| Expense ratio | ||||||||||||||||||||||||||||
| Combined ratio | ||||||||||||||||||||||||||||
| Balances at March 31, 2023: | ||||||||||||||||||||||||||||
| Premiums and agents’ balances receivable | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Deferred policy acquisition costs | ||||||||||||||||||||||||||||
| Reinsurance recoverables on losses | ||||||||||||||||||||||||||||
| Receivable from Federal Crop Insurance Corporation | ||||||||||||||||||||||||||||
| Goodwill and other intangibles | ||||||||||||||||||||||||||||
| Unpaid losses and loss adjustment expenses | ||||||||||||||||||||||||||||
| Unearned premiums | ||||||||||||||||||||||||||||
30
NI Holdings, Inc.
Notes to Consolidated Financial Statements (Unaudited)
(dollar amounts in thousands, except per share amounts)
| 20. | Subsequent Events |
On May 7, 2024, NI Holdings signed an agreement to sell
its wholly-owned commercial insurance subsidiary, Westminster American Insurance Company, to a private party. The total consideration
for the sale is $
31
Item 2. - 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 unaudited consolidated financial statements alone. This discussion should be read in conjunction with the unaudited consolidated financial statements and the notes thereto included in Part I, Item 1, “Financial Statements.” Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-Q constitutes forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” included elsewhere in this Form 10-Q. Part I, Item 1A, “Risk Factors” included in our 2023 Annual Report should also be reviewed for a discussion of important factors that could cause actual results to differ materially from the results described, or implied by, the forward-looking statements contained herein.
All dollar amounts included in Item 2 herein, except per share data, are in thousands.
Financial Highlights
2024 First Quarter Consolidated Results of Operations
| ● | Net income of $6,419, or $0.31 per share basic and $0.30 per share diluted | |
| ● | Net premiums earned of $85,557 | |
| ● | Net investment income of $3,553 | |
| ● | Net unfavorable prior year reserve development of $1,284 | |
| ● | Underwriting gain of $2,387 | |
| ● | Combined ratio of 97.2% | |
| ● | Operating cash flows of $16,146 |
2024 First Quarter Consolidated Financial Condition
| ● | Total cash and investments of $449,946 | |
| ● | Total assets of $674,525 | |
| ● | Unpaid losses and loss adjustment expenses of $225,006 | |
| ● | Total liabilities of $418,679 | |
| ● | Shareholders’ equity of $255,846 |
32
Results of Operations
Our consolidated net income was $6,419 for the three months ended March 31, 2024, compared to a net loss of $4,500 for the three months ended March 31, 2023.
The major components of our revenues and net income (loss) for the two periods are shown below:
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues: | ||||||||
| Net premiums earned | $ | 85,557 | $ | 77,627 | ||||
| Fee and other income | 412 | 274 | ||||||
| Net investment income | 3,553 | 2,239 | ||||||
| Net investment gains | 1,828 | 1,416 | ||||||
| Total revenues | $ | 91,350 | $ | 81,556 | ||||
| Components of net income (loss): | ||||||||
| Net premiums earned | $ | 85,557 | $ | 77,627 | ||||
| Losses and loss adjustment expenses | 52,209 | 58,825 | ||||||
| Amortization of deferred policy acquisition costs and other underwriting and general expenses | 30,961 | 28,244 | ||||||
| Underwriting gain (loss) | 2,387 | (9,442 | ) | |||||
| Fee and other income | 412 | 274 | ||||||
| Net investment income | 3,553 | 2,239 | ||||||
| Net investment gains | 1,828 | 1,416 | ||||||
| Income (loss) before income taxes | 8,180 | (5,513 | ) | |||||
| Income tax expense (benefit) | 1,761 | (1,013 | ) | |||||
| Net income (loss) | $ | 6,419 | $ | (4,500 | ) | |||
Net Premiums Earned
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net premiums earned: | ||||||||
| Direct premium | $ | 94,900 | $ | 85,474 | ||||
| Assumed premium | 151 | 576 | ||||||
| Ceded premium | (9,494 | ) | (8,423 | ) | ||||
| Total net premiums earned | $ | 85,557 | $ | 77,627 | ||||
33
Our net premiums earned for the three months ended March 31, 2024, increased $7,930, or 10.2%, compared to the three months ended March 31, 2023.
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net premiums earned: | ||||||||
| Private passenger auto | $ | 22,102 | $ | 19,653 | ||||
| Non-standard auto | 24,989 | 20,879 | ||||||
| Home and farm | 21,414 | 19,991 | ||||||
| Crop | (1,549 | ) | (725 | ) | ||||
| Commercial | 17,138 | 16,017 | ||||||
| All other | 1,463 | 1,812 | ||||||
| Total net premiums earned | $ | 85,557 | $ | 77,627 | ||||
Below are comments regarding significant changes in net premiums earned by business segment:
Private passenger auto – Net premiums earned for the three months ended March 31, 2024, increased $2,449, or 12.5%, compared to the same period in 2023. This increase was driven by significant rate increases in North Dakota, South Dakota, and Nebraska, partially offset by lower new business levels in South Dakota and Nebraska as a result of underwriting actions taken to improve profitability.
Non-standard auto – Net premiums earned for the three months ended March 31, 2024, increased $4,110, or 19.7%, compared to the same period in 2023. This increase was driven by new business growth in Arizona and Illinois as well as significant rate increases in the Chicago market where our non-standard auto business is concentrated.
Home and farm – Net premiums earned for the three months ended March 31, 2024, increased $1,423, or 7.1%, compared to the same period in 2023. This increase was driven by rate increases along with increased insured property values, which were primarily the result of higher inflationary factors. These increases were partially offset by lower retention rates and new business levels in Nebraska and South Dakota as a result of underwriting actions taken to improve profitability.
Crop – Net premiums earned for the first quarter of any year are typically the result of prior crop year premium adjustments that correspond to the current year settlement of prior crop year claims. The majority of crop insurance premiums are generally written in the second quarter and earned ratably over the remainder of the calendar year.
Commercial – Net premiums earned for the three months ended March 31, 2024, increased $1,121, or 7.0%, compared to the same period in 2023. This increase was driven by significant rate increases partially offset by lower retention rates and new business levels as a result of underwriting actions taken to improve profitability.
All other – Net premiums earned for the three months ended March 31, 2024, decreased $349, or 19.3%, compared to the same period in 2023 primarily driven by the continued run-off of our participation in an assumed domestic and international reinsurance pool of business.
Losses and Loss Adjustment Expenses
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net losses and loss adjustment expenses: | ||||||||
| Direct losses and loss adjustment expenses | $ | 54,654 | $ | 70,861 | ||||
| Assumed losses and loss adjustment expenses | 45 | 90 | ||||||
| Ceded losses and loss adjustment expenses | (2,490 | ) | (12,126 | ) | ||||
| Total net losses and loss adjustment expenses | $ | 52,209 | $ | 58,825 | ||||
34
Our net losses and loss adjustment expenses for the three months ended March 31, 2024, decreased $6,616, or 11.2%, compared to the three months ended March 31, 2023.
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net losses and loss adjustment expenses: | ||||||||
| Private passenger auto | $ | 11,293 | $ | 15,625 | ||||
| Non-standard auto | 16,869 | 17,038 | ||||||
| Home and farm | 12,181 | 8,719 | ||||||
| Crop | (1,557 | ) | (773 | ) | ||||
| Commercial | 12,901 | 18,114 | ||||||
| All other | 522 | 102 | ||||||
| Total net losses and loss adjustment expenses | $ | 52,209 | $ | 58,825 | ||||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Loss and loss adjustment expense ratio: | ||||||||
| Private passenger auto | 51.1% | 79.5% | ||||||
| Non-standard auto | 67.5% | 81.6% | ||||||
| Home and farm | 56.9% | 43.6% | ||||||
| Crop | n/a | n/a | ||||||
| Commercial | 75.3% | 113.1% | ||||||
| All other | 35.7% | 5.6% | ||||||
| Total loss and loss adjustment expense ratio | 61.0% | 75.8% | ||||||
Below are comments regarding significant changes in the net losses and loss adjustment expenses, and the net loss and loss adjustment expense ratios, by business segment:
Private passenger auto – The net loss and loss adjustment expense ratio decreased 28.4 percentage points in the three-month period ended March 31, 2024, compared to the same period in 2023. This decrease was driven by the earned premium growth as well as lower levels of weather-related losses in the current year quarter due to the mild winter in the Midwest compared to elevated winter weather-related losses in the prior year quarter. Both periods were affected by elevated loss costs due to continued high levels of inflation.
Non-standard auto – The net loss and loss adjustment expense ratio decreased 14.1 percentage points in the three-month period ended March 31, 2024, compared to the same period in 2023. This decrease was primarily driven by earned premium growth resulting from significant rate increases. The reduction in net losses and loss adjustment expenses is attributable to the underwriting actions taken in recent periods, which was partially offset by continued elevated loss severity as a result of inflationary factors and unfavorable prior year development on loss reserves.
Home and farm – The net loss and loss adjustment expense ratio increased 13.3 percentage points in the three-month period ended March 31, 2024, compared to the same period in 2023. This increase was driven by elevated farm fire losses in the current quarter compared to the same period in 2023.
Crop – The net losses and loss adjustment expenses during the first quarter of any year are typically the result of the current year settlement of prior crop year claims. The majority of crop insurance losses and loss adjustment expenses are generally incurred in the last three quarters of the calendar year.
Commercial – The net loss and loss adjustment expense ratio decreased 37.8 points in the three-month period ended March 31, 2024, compared to the same period in 2023. This decrease is the result of taking significant rate increases and underwriting actions in recent periods to improve this segment’s profitability. In addition, the higher loss ratio in the prior year quarter was driven by unfavorable prior year reserve development attributable to freeze claims from Winter Storm Elliott.
All other – The net loss and loss adjustment expense ratio increased 30.1 percentage points in the three-month period ended March 31, 2024, compared to the same period in 2023. This increase was driven by unfavorable loss experience in the excess casualty line of business.
35
Underwriting and General Expenses and Expense Ratio
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Underwriting and general expenses: | ||||||||
| Amortization of deferred policy acquisition costs | $ | 20,663 | $ | 18,588 | ||||
| Other underwriting and general expenses | 10,298 | 9,656 | ||||||
| Total underwriting and general expenses | 30,961 | 28,244 | ||||||
| Expense ratio | 36.2% | 36.4% | ||||||
The expense ratio is calculated by dividing other underwriting and general expenses and amortization of deferred policy acquisition costs by net premiums earned. The expense ratio measures a company’s operational efficiency in producing, underwriting, and administering its insurance business. The overall expense ratio decreased 0.2 percentage points in the three-month period ended March 31, 2024, compared to the same period in 2023. The increase in the amortization of deferred policy acquisition costs is due to higher deferrable costs resulting from significant premium growth compared to the prior year quarter, including significant growth in the non-standard auto segment which generally pays higher agent commissions than our other segments.
Underwriting Gain (Loss) and Combined Ratio
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Underwriting gain (loss): | ||||||||
| Private passenger auto | $ | 3,820 | $ | (2,390 | ) | |||
| Non-standard auto | (2,146 | ) | (5,153 | ) | ||||
| Home and farm | 2,568 | 5,067 | ||||||
| Crop | 7 | 16 | ||||||
| Commercial | (1,844 | ) | (8,183 | ) | ||||
| All other | (18 | ) | 1,201 | |||||
| Total underwriting gain (loss) | $ | 2,387 | $ | (9,442 | ) | |||
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Combined ratio: | ||||||||
| Private passenger auto | 82.7% | 112.2% | ||||||
| Non-standard auto | 108.6% | 124.7% | ||||||
| Home and farm | 88.0% | 74.7% | ||||||
| Crop | n/a | n/a | ||||||
| Commercial | 110.8% | 151.1% | ||||||
| All other | 101.3% | 33.7% | ||||||
| Combined ratio | 97.2% | 112.2% | ||||||
Underwriting gain (loss) measures the pre-tax profitability of our insurance operations. It is derived by subtracting losses and loss adjustment expenses, amortization of deferred policy acquisition costs, and other underwriting and general expenses from net premiums earned. The combined ratio represents the sum of these losses and expenses as a percentage of net premiums earned and measures our overall underwriting profit.
The total underwriting gain (loss) improved $11,829 to a gain of $2,387 for the three-month period ended March 31, 2024, from a loss of $9,442 for the three-month period ended March 31, 2023. These results were driven by the factors discussed in the Loss and Loss Adjustment Expenses section above.
The overall combined ratio decreased 15.0 percentage points in the three-month period ended March 31, 2024, compared to the same period in 2023. These results were driven by the factors discussed in the Loss and Loss Adjustment Expenses section above.
36
Fee and Other Income
We had fee and other income of $412 for the three months ended March 31, 2024, compared to $274 for the three months ended March 31, 2023. Fee income is largely attributable to the non-standard auto segment and is a key component in measuring its profitability. Fee and other income on this business increased to $350 for the three months ended March 31, 2024, from $232 for the three months ended March 31, 2023, driven by growth in this segment.
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:
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Average cash and invested assets | $ | 442,072 | $ | 405,608 | ||||
| Net investment income | $ | 3,553 | $ | 2,239 | ||||
| Gross return on average cash and invested assets | 4.1% | 3.1% | ||||||
| Net return on average cash and invested assets | 3.2% | 2.2% | ||||||
Net investment income increased $1,315 for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. This increase primarily resulted from higher long-term average fixed income yields and an increased year-over-year average level of cash and invested assets.
Gross and net return on average cash and invested assets increased year-over-year, primarily driven by the favorable interest rate environment that resulted in significantly higher net investment income on a slightly increased average fixed income securities balance (measured at fair value). In addition, the increase in investments in high dividend yield equities resulted in relatively consistent year-over-year net investment income despite a reduction in the average equities balance (measured at fair value). The increase in average cash and invested assets was driven by increases in cash and investments from the generation of positive operating cash flows during 2023 and the first quarter of 2024.
Net Investment Gains
Net investment gains consisted of the following:
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Gross realized gains | $ | 235 | $ | 12,731 | ||||
| Gross realized losses, excluding credit impairment losses | (365 | ) | (1,145 | ) | ||||
| Net realized gains (losses) | (130 | ) | 11,586 | |||||
| Change in net unrealized gains on equity securities | 1,958 | (10,170 | ) | |||||
| Net investment gains | $ | 1,828 | $ | 1,416 | ||||
We had net realized losses of $130 for the three months ended March 31, 2024, compared to net realized gains of $11,586 for the three months ended March 31, 2023. The elevated net realized gains in the prior year quarter 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. No credit impairment losses were reported during any of the periods presented.
We experienced an increase in net unrealized gains on equity securities of $1,958 during the three months ended March 31, 2024, driven by impact of changes in fair value attributable to favorable equity markets during the quarter. We experienced a decrease in net unrealized gains on equity securities of $10,170 during the three months ended March 31, 2023, driven by the equity portfolio liquidation noted above, offset by the impact of changes in fair value attributable to favorable equity markets during the quarter.
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. The fixed income portion of the portfolio experienced net unrealized losses of $1,807 during the three months ended March 31, 2024, compared to net unrealized gains of $6,021 during the three months ended March 31, 2023. The change was primarily the result of changes in U.S. interest rates. 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.
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Income (Loss) before Income Taxes
For the three months ended March 31, 2024, we had pre-tax income of $8,180 compared to a pre-tax loss of $5,513 for the three months ended March 31, 2023. This change was largely attributable to strong premium growth primarily due to significant rate increases, higher net investment income, improved loss experience due to favorable winter weather conditions combined with efforts to improve our underwriting risk selection, and a reduction in unfavorable prior year loss development during the current year.
Income Tax Expense (Benefit)
We recorded income tax expense of $1,761 for the three months ended March 31, 2024, compared to an income tax benefit of $1,013 for the three months ended March 31, 2023. Our effective tax rate for the first quarter of 2024 was 21.5% compared to an effective tax rate of 18.4% for the first quarter of 2023.
Net Income (Loss)
For the three months ended March 31, 2024, we had net income of $6,419 compared to a net loss before non-controlling interest of $4,500 for the three months ended March 31, 2023. This change was largely attributable to strong premium growth primarily due to significant rate increases, higher net investment income, improved loss experience due to favorable winter weather conditions combined with efforts to improve our underwriting risk selection, and a reduction in unfavorable prior year loss development during the current year, partially offset by the impact of income taxes.
Return on Average Equity
For the three months ended March 31, 2024, we had annualized return on average equity of 10.2% compared to annualized return on average equity, after non-controlling interest, of (6.7%) for the three months ended March 31, 2023. Average equity is calculated as the average between beginning and ending equity for the period.
Critical Accounting Policies
The preparation of financial statements in accordance with GAAP requires both the use of estimates and judgment relative to the application of appropriate accounting policies. We are required to make estimates and assumptions in certain circumstances that affect amounts reported in the unaudited 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. There can be no assurance that actual results will conform to these estimates and assumptions or that reported results of operations will not be materially and adversely affected by the need to make accounting adjustments to reflect changes in these estimates and assumptions from time to time. Our critical accounting policies are more fully described in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” presented in our 2023 Annual Report. There have been no changes in our critical accounting policies from December 31, 2023.
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. Our primary sources of funds are premium collections, investment earnings, and fixed income maturities.
The change in cash and cash equivalents for the three months ended March 31, 2024 and 2023 were as follows:
| Three Months Ended March 31, | ||||||||
| 2024 | 2023 | |||||||
| Net cash flows from operating activities | $ | 16,146 | $ | (4,351 | ) | |||
| Net cash flows from investing activities | (4,143 | ) | 19,428 | |||||
| Net cash flows from financing activities | (178 | ) | (794 | ) | ||||
| Net increase in cash and cash equivalents | $ | 11,825 | $ | 14,283 | ||||
For the three months ended March 31, 2024, net cash provided by operating activities totaled $16,146 compared to net cash used of $4,351 in the prior year quarter. This change was primarily driven by lower levels of loss and loss adjustment payments as well as higher levels of cash received for premiums.
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For the three months ended March 31, 2024, net cash used by investing activities totaled $4,143 compared to net cash provided of $19,428 in the prior year quarter. This change was attributable to the investment of excess cash in the current year as well as a strategic increase in the sales of equity securities in the prior year quarter for which some of the proceeds had not been reinvested as of March 31, 2023.
For the three months ended March 31, 2024, net cash used by financing activities totaled $178 compared to $794 a year ago. This decrease in cash used was attributable to a reduction in share repurchases.
As a holding company, a principal source of long-term liquidity will be dividend payments from our directly-owned subsidiaries.
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 amount cannot exceed the lesser of (i) 10% of the Company’s surplus as regards policyholders as of the preceding December 31, or (ii) the Company’s statutory net income for the preceding calendar year (excluding realized investment gains), less any prior dividends paid during such twelve-month period. In addition, any insurance company other than a life insurance company may carry forward net income from the preceding two calendar years, not including realized investment gains, less any dividends actually paid during those two calendar years. Dividends in excess of this amount are considered “extraordinary” and are subject to the approval of the North Dakota Insurance Department.
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. 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. These restrictions or any subsequently imposed restrictions may affect our future liquidity. No dividends were declared or paid by Nodak Insurance during the three months ended March 31, 2024, or the year ended December 31, 2023.
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. No dividends were declared or paid by Direct Auto during the three months ended March 31, 2024, or the year ended December 31, 2023.
Westminster re-domesticated from Maryland 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 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 three months ended March 31, 2024, or the year ended December 31, 2023.
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Item 3. - Quantitative and Qualitative Disclosures about Market Risk
The Company’s assessment of market risk as of March 31, 2024, indicates there have been no material changes in the quantitative and qualitative disclosures from those in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our 2023 Annual Report.
Item 4. - Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this report, were designed and functioning effectively to provide reasonable assurance that the information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”), and that such material information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosures. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control over Financial Reporting
In the ordinary course of business, we periodically review our system of internal control over financial reporting to identify opportunities to improve our controls and increase efficiency, while ensuring that we maintain an effective internal control environment. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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Part II. - OTHER INFORMATION
Item 1. - 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 uncertainties attendant to litigation, we cannot assure you that our results of operations and financial condition will not be materially adversely affected by any litigation.
Item 1A. - Risk Factors
There have been no material changes in our assessment of our risk factors from those set forth in Part I, Item 1A, “Risk Factors” in our 2023 Annual Report.
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Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds
All dollar amounts included in Item 2 herein, except per share data, are in thousands.
The Company has not sold any unregistered securities within the past three years.
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. The Company received net proceeds of $93,145 from the offering, after deducting 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. 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. 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. To date, the Company has used the net proceeds from the IPO to fund these share repurchases.
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.
On May 9, 2022, 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, 2022, we completed the repurchase of 54,223 shares of our common stock for $734 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 three months ended March 31, 2024, we did not repurchase any shares of our common stock. At March 31, 2024, $2,052 remains available under this authorization.
Share repurchase activity during the three months ended March 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) (in thousands) | ||||||||||||
| January 1 – 31, 2024 | — | $ | — | — | $ | 2,052 | ||||||||||
| February 1 – 29, 2024 | — | — | — | 2,052 | ||||||||||||
| March 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. |
| (2) | Maximum dollar value of shares that may yet be purchased consist of up to approximately $2,052 under the May 9, 2022, publicly announced share repurchase authorization. |
| (3) | The Inflation Reduction Act of 2022 imposed a 1% excise tax on the net value of certain share repurchases made after December 31, 2022. All dollar amounts presented exclude such excise taxes, as applicable. |
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Item 3. - Defaults upon Senior Securities
Not Applicable
Item 4. - Mine Safety Disclosures
Not Applicable
Item 5. - Other Information
10b5-1 Trading Plans
During the first quarter of 2024, none of our directors or executive
officers (as defined in Rule 16a-1(f) under the Exchange Act)
Item 6. - Exhibits
| (1) | Filed as an exhibit to the Company’s Form 10-K (File No. 001-37973) filed with the SEC on March 15, 2024, and incorporated herein by reference. |
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on May 9, 2024.
|
NI HOLDINGS, INC.
| |
| /s/ Michael J. Alexander | |
| Michael J. Alexander | |
|
President and Chief Executive Officer (Principal Executive Officer) | |
| /s/ Seth C. Daggett | |
| Seth C. Daggett | |
|
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | |
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