What changed in this filing

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Item 1. Business

2024-03-15 compared with 2023-03-08 · 311 added, 327 removed, 491 unchanged (57% of the section changed)

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NI Holdings, Inc.

(“NI Holdings”,

“the Company”, “we”, “us”, and “our”) is a North Dakota business corporation that is the

stock holding company of Nodak Insurance Company and became such in connection with the conversion of Nodak Mutual Insurance Company (“Nodak

Mutual”) from a mutual to stock form of organization and the creation of a mutual holding company.

The conversion was completed

on March 13, 2017.

Immediately following the conversion, all of the outstanding shares of common stock of Nodak Insurance Company (“Nodak

Insurance”, the successor to Nodak Mutual Insurance Company) were issued to Nodak Mutual Group, Inc.

(“Nodak Mutual Group”),

which then contributed the shares to NI Holdings in exchange for 55% of the outstanding shares of common stock of NI Holdings.

Nodak Insurance

then became a wholly-owned stock subsidiary of NI Holdings.

Prior to completion of the conversion, NI Holdings conducted no business and

had no assets or liabilities.

As a result of the conversion, NI Holdings became the holding company for Nodak Insurance and its existing

subsidiaries.

Concurrent with the conversion, on March 13, 2017, the Company completed an initial public offering (“IPO”)

of 10,350,000 shares of common stock at a price of $10.00 per share.

The Company received net proceeds of $93,145 from the offering, after

deducting the underwriting discounts and offering expenses.

The newly issued shares of NI Holdings were available for public trading on

March 16, 2017.

These consolidated financial statements include include the financial

position and results of operations of NI Holdings and the following other entities:

(“NI Holdings”, “the

Company”, “we”, “us”, and “our”) is a North Dakota business corporation that is the stock holding

company of Nodak Insurance Company and became such in connection with the conversion of Nodak Mutual Insurance Company (“Nodak Mutual”)

from a mutual to stock form of organization and the creation of a mutual holding company.

The conversion was completed on March 13, 2017.

Immediately following the conversion, all of the outstanding shares of common stock of Nodak Insurance Company (“Nodak Insurance”,

the successor to Nodak Mutual Insurance Company) were issued to Nodak Mutual Group, Inc.

(“Nodak Mutual Group”), which then

contributed the shares to NI Holdings in exchange for 55% of the outstanding shares of common stock of NI Holdings.

Nodak Insurance then

became a wholly-owned stock subsidiary of NI Holdings.

Prior to completion of the conversion, NI Holdings conducted no business and had

no assets or liabilities.

As a result of the conversion, NI Holdings became the holding company for Nodak Insurance and its existing subsidiaries.

Concurrent with the conversion, on March 13, 2017, the Company completed an initial public offering (“IPO”) of 10,350,000

shares of common stock at a price of $10.00 per share.

The Company received net proceeds of $93,145 from the offering, after deducting

the underwriting discounts and offering expenses.

The newly issued shares of NI Holdings were available for public trading on March 16,

These consolidated financial statements include the

financial position and results of operations of NI Holdings and the following other entities:

● Nodak Insurance – a wholly-owned subsidiary of NI Holdings;

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● Westminster American Insurance Company (“Westminster”) – a wholly-owned subsidiary of NI Holdings.

A chart of the corporate structure as of December 31, 2022, and a

more complete description of each of the NI Holdings subsidiaries, is included below.

A chart of the corporate structure as of December 31, 2023, and a more

complete description of each of the NI Holdings subsidiaries, is included below.

NI HOLDINGS, INC.

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NI Holdings, Inc.

Direct Auto Insurance Company

Direct Auto Insurance

Nodak Insurance Company

Westminster American Insurance Company

Westminster American

Insurance Company

Nodak Agency, Inc.

American West Insurance Company

Battle Creek Mutual Insurance Company

American West Insurance

Battle Creek Mutual

Insurance Company (1)

Tri-State, Ltd

Primero Insurance Company

The executive offices of NI Holdings and Nodak

Insurance are located at 1101 First Avenue North, Fargo, North Dakota 58102, and the main office phone number is 701-298-4200.

Primero Insurance

(1) As of January 2, 2024, Battle

Creek Mutual Insurance Company converted from a mutual insurance company to a stock company

and became a 100% wholly-owned subsidiary.

See Part II, Item 8, Note 22 “Subsequent

Event” for additional information regarding changes to Battle Creek Mutual Insurance

The executive offices of NI Holdings and Nodak Insurance

are located at 1101 First Avenue North, Fargo, North Dakota 58102, and the main office phone number is 701-298-4200.

website address is www.niholdingsinc.com.

The Company makes available on its website,

free of charge, its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those

reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable

after it electronically files such material with, or furnish it to, the United States Securities and Exchange Commission (“SEC”).

Information contained on such website is not incorporated by reference into this 2022 Annual Report, and such information should not be

considered to be part of this 2022 Annual Report.

The Company makes available on its website, free of charge, its Annual Reports on Form

10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section

13(a) or 15(d) of the Securities Exchange Act of 1934 (“the Exchange Act”) as soon as reasonably practicable after it electronically

files such material with, or furnish it to, the United States Securities and Exchange Commission (“SEC”).

Information contained

on such website is not incorporated by reference into this 2023 Annual Report, and such information should not be considered to be part

of this 2023 Annual Report.

Subsidiary and Affiliate Companies

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and hold a single combined financial strength rating, long-term issuer credit rating, and financial size category.

In connection with the pooling agreement, the

quota share agreement between Battle Creek and Nodak Insurance was cancelled.

As a result, the Company’s consolidated financial

position and results of operations are impacted by the portion of Battle Creek’s underwriting results that are allocated to the

policyholders of Battle Creek rather than the shareholders of NI Holdings.

For the years ended December 31, 2022, 2021, and 2020, the

pooling share percentages by insurance company were:

In connection with the pooling agreement, the quota

share agreement between Battle Creek and Nodak Insurance was cancelled.

As a result, the Company’s consolidated financial position

and results of operations are impacted by the portion of Battle Creek’s underwriting results that are allocated to the policyholders

of Battle Creek rather than the shareholders of NI Holdings.

For the years ended December 31, 2023, 2022, and 2021, the pooling share

percentages by insurance company were:

Pool Percentage

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American West began writing

policies in 2002 and primarily writes personal auto, homeowners, and farm coverages in South Dakota.

American West also writes personal

auto coverage in North Dakota, as well as crop hail and Federal multi-peril crop insurance coverages in Minnesota and South Dakota.

of December 31, 2022, American West distributed its products through independent agents in 74 contracted agencies.

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.

As of December 31, 2023, American West distributed its products through independent agents in 71 contracted agencies.

Primero Insurance Company

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Battle Creek is a property and casualty insurance

company writing personal auto, homeowners, and farm coverages solely in the state of Nebraska.

As of December 31, 2022, Battle Creek distributed

its policies through independent agents in 124 contracted agencies.

Battle Creek became affiliated with Nodak Insurance in 2011, and Nodak

Insurance provides underwriting, claims management, policy administration, and other administrative services to Battle Creek.

Effective January 1, 2020, all of our insurance

company subsidiaries entered into an intercompany reinsurance pooling agreement.

In conjunction with this agreement, the previous 100%

quota-share reinsurance agreement between Battle Creek and Nodak Insurance was terminated on a cut-off basis as of January 1, 2020.

termination, Nodak Insurance transferred to Battle Creek all liabilities related to outstanding loss and loss adjustment expense reserves

and all liabilities related to the adjusted unearned premium reserve.

In exchange, an intercompany cash payment was made to compensate

Battle Creek for the transfer of these liabilities.

The $3.0 million surplus note originally issued by Battle Creek and purchased by Nodak Insurance

in connection with their affiliation agreement remains in place.

company writing private passenger auto, homeowners, and farm coverages solely in the state of Nebraska.

As of December 31, 2023, Battle

Creek distributed its policies through independent agents in 114 contracted agencies.

Battle Creek became affiliated with Nodak Insurance

in 2011, and Nodak Insurance provides underwriting, claims management, policy administration, and other administrative services to Battle

Effective January 1, 2020, all of our insurance company

subsidiaries entered into an intercompany reinsurance pooling agreement.

In conjunction with this agreement, the previous 100% quota-share

reinsurance agreement between Battle Creek and Nodak Insurance was terminated on a cut-off basis as of January 1, 2020.

Upon termination,

Nodak Insurance transferred to Battle Creek all liabilities related to outstanding loss and loss adjustment expense reserves and all liabilities

related to the adjusted unearned premium reserve.

In exchange, an intercompany cash payment was made to compensate Battle Creek for the

transfer of these liabilities.

As of December 31, 2023, the $3.0 million surplus

note originally issued by Battle Creek and purchased by Nodak Insurance in connection with their affiliation agreement remained in place.

It bears interest at an annual rate of 1.0% and matures on December 30, 2040.

Battle Creek must obtain prior approval from the appropriate state of domicile before making any payment of interest or principal

on the surplus note.

Pursuant to the affiliation agreement, so long

as the surplus note remains outstanding, Nodak Insurance is entitled to appoint two-thirds of the Board of Directors of Battle Creek.

The affiliation agreement can be terminated by mutual written agreement of Battle Creek and Nodak Insurance or by either party if there

is a material breach of the agreement by the other party and such breach is not cured within 15 days after written notice of such breach

Battle Creek must obtain prior approval from the appropriate

state of domicile before making any payment of interest or principal on the surplus note.

Pursuant to the affiliation agreement, so long as

the surplus note remains outstanding, Nodak Insurance is entitled to appoint two-thirds of the Board of Directors of Battle Creek.

affiliation agreement can be terminated by mutual written agreement of Battle Creek and Nodak Insurance or by either party if there is

a material breach of the agreement by the other party and such breach is not cured within 15 days after written notice of such breach

is given by the terminating party to the other party.

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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 is a property and casualty insurance

company licensed in 18 states and the District of Columbia.

Westminster is headquartered in Owings Mills, Maryland and underwrites commercial

multi-peril insurance in the states of Delaware, Georgia, Kentucky, Maryland, New Jersey, North Carolina, Pennsylvania, South Carolina,

Tennessee, Virginia, and the District of Columbia.

Westminster was acquired by NI Holdings on January 1, 2020, via a stock purchase agreement.

As of December

31, 2022, Westminster distributed its policies through independent agents in 61 contracted agencies in those 11 states and the District

The financial results of Westminster have been included in the consolidated financial statements and the Company’s

commercial segment following the acquisition date.

See Part II, Item 8, Note 4 “Acquisition of Westminster American Insurance Company.

As of December 31, 2023, Westminster distributed its policies through independent agents in 53 contracted agencies in those 10 states

and the District of Columbia.

The financial results of Westminster have been included in the consolidated financial statements and the

Company’s commercial segment following the acquisition date.

General Information

Nodak Insurance markets and distributes its policies through

its captive agents, while all other companies utilize the independent agent distribution channel.

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

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presented herein include the financial position and results of operations of NI Holdings, Direct Auto, Westminster, and Nodak Insurance,

including Nodak Insurance’s subsidiaries American West and Primero, and its affiliate Battle Creek.

Each of the six insurance companies

is subject to examination and comprehensive regulation by the insurance department of its state of domicile.

including Nodak Insurance’s subsidiaries of American West and Primero and its affiliate Battle Creek.

Each of the six insurance

companies is subject to examination and comprehensive regulation by the insurance department of its state of domicile.

Market Overview

We market our personal lines products in the upper

Midwest states of North Dakota, South Dakota, Nebraska, and Minnesota.

We offer non-standard auto insurance in the states of Nevada, Arizona,

North Dakota, South Dakota, and Illinois.

We offer commercial multi-peril insurance in the states of New Jersey, Maryland, Pennsylvania,

Virginia, Georgia, North Carolina, Delaware, South Carolina, West Virginia, North Dakota, South Dakota, Tennessee, Kentucky, and the District

The following chart shows our direct premiums written during the last two years and our relative market share within each

of our states during the year ended December 31, 2021:

Midwest states of North Dakota, Nebraska, South Dakota, and Minnesota.

We offer non-standard auto insurance in the states of Illinois,

Arizona, Nevada, South Dakota, and North Dakota.

We offer commercial multi-peril insurance in the states of Maryland, North Carolina,

Virginia, New Jersey, Georgia, North Dakota, Pennsylvania, South Carolina, Tennessee, Delaware, Kentucky, South Dakota, West Virginia,

and the District of Columbia.

The following chart shows our direct premiums written during the last two years and our relative market

share within each of our states during the year ended December 31, 2022:

December 31, 2023

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North Carolina

District of Columbia

South Carolina

District of Columbia

West Virginia

Total direct premiums written

Market size information is not yet available for the year ended December 31, 2022.

Market size information is

not yet available for the year ended December 31, 2023.

Organic Growth Strategy

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profile and favorable reputation throughout North Dakota;

● leveraging our AM Best financial strength rating and financial size category to strategically grow Westminster’s commercial

● expansion and enhancement of independent agency relationships, including the use of technology such as mobile apps, online quoting,

and policy issuance initiatives to make it easy for agents and insureds to do business with us;

● expansion of our non-standard auto business in selective markets;

● capitalizing on our excellent claims service for all insureds;

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capital raised through our IPO.

This acquisition expanded our commercial insurance business, geographically diversified our spread of

insurance risks, and provided additional expense efficiencies.

This acquisition expanded our commercial insurance business and geographically diversified our spread

of insurance risks.

Prior to the IPO, we successfully acquired Primero

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Corporate Capital Strategy

Our philosophy is to deploy capital in a manner

that provides long-term protection for our policyholders and creates long-term value for our shareholders.

This philosophy is supported

by a number of underlying strategies implemented across the organization that are focused on preservation of capital, including:

Our philosophy is to deploy capital in a manner that

provides long-term protection for our policyholders and creates long-term value for our shareholders.

This philosophy is supported by

a number of underlying strategies implemented across the organization that are focused on preservation of capital, including:

● prioritizing the use of data and modeling tools to help estimate the frequency and severity of risks within our insurance portfolio;

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This capital is available for deployment by NI Holdings in conjunction with our excess capital deployment priorities.

Our excess capital deployment priorities are

to (1) invest in existing businesses where we see opportunities for profitable growth, (2) make strategic investments and acquisitions

that enhance our businesses and achieve appropriate risk-adjusted returns over time, and (3) return capital to shareholders through share

repurchases or shareholder dividends.

Our excess capital deployment priorities are to (1)

invest in existing businesses where we see opportunities for profitable growth, (2) make strategic investments and acquisitions that enhance

our businesses and achieve appropriate risk-adjusted returns over time, and (3) return capital to shareholders through share repurchases

or shareholder dividends.

Insurance Products by Segment

The Company’s consolidated financial results

include our Private Passenger Auto, Non-Standard Auto, Home and Farm, Commercial, Crop, and All Other reporting segments.

regarding products and services offered in each segment is included below.

Additionally, revenues, underwriting results, and identifiable

assets and liabilities for each segment are shown in Part II, Item 8, Note 20 “Segment Information”.

The financial performance

of each segment is discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results

of Operations”.

Our consolidated financial results include our Private

Passenger Auto, Non-Standard Auto, Home and Farm, Commercial, Crop, and All Other reporting segments.

Information regarding products and

services offered in each segment is included below.

Additionally, revenues, underwriting results, and identifiable assets and liabilities

for each segment are shown in Part II, Item 8, Note 20 “Segment Information”.

The financial performance of each segment is

discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

Private Passenger Auto

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each write private passenger auto insurance to provide protection against liability for bodily injury and property damage arising from

automobile accidents and protection against loss from damage to automobiles owned by the insured.

Private passenger auto accounted for

$82,311 (21.1%) of direct premiums written by the Company on a consolidated basis during 2022.

automobile accidents as well as protection against loss from damage to automobiles owned by the insured.

Private passenger auto accounted

for $92,077 (22.0%) of direct premiums written by the Company on a consolidated basis during 2023.

Non-standard Auto

Primero and Direct Auto write non-standard auto

insurance with a focus on minimum-limit auto liability coverage.

Non-standard auto insurance accounted for $77,798 (20.0%) of direct premiums

written by the Company on a consolidated basis during 2022.

Primero and Direct Auto write non-standard auto insurance

with a focus on minimum-limit auto liability coverage.

Non-standard auto insurance accounted for $95,295 (22.8%) of direct premiums written

by the Company on a consolidated basis during 2023.

Home and Farm

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basis during 2023.

Crop hail and multi-peril crop insurance policies

are also offered by Nodak Insurance, American West, and Battle Creek.

Multi-peril crop insurance is a federal program that protects against

crop yield losses from all types of natural causes including drought, excessive moisture, freeze, and disease.

Crop hail insurance is

a private insurance product designed to provide protection against losses to farmer’s crops due primarily to hail damage.

Nodak Insurance, American West, and Battle Creek

offer crop hail and multi-peril crop insurance policies.

Multi-peril crop insurance is a federal program that protects against crop yield

losses from all types of natural causes and loss of revenue due to declines in the prices of agricultural products.

Crop hail insurance

is a private insurance product designed to provide protection against losses to farmers’ crops due primarily to hail damage.

Collectively,

crop insurance accounted for $45,272 (10.8%) of direct premiums written by the Company on a consolidated basis during 2023.

Insurance, American West, and Westminster write commercial multi-peril policies.

Nodak Insurance,

American West, and Westminster write commercial multi-peril policies.

Collectively, commercial insurance accounted for $83,854 (20.0%)

of the direct premiums written by the Company on a consolidated basis during 2023.

In addition to the products described above,

Nodak Insurance and American West write excess liability coverages.

Collectively, these other coverages accounted for $5,238 (1.3%) of

the direct premiums written by the Company on a consolidated basis during 2022.

This segment also includes an assumed reinsurance book

of business, with $4,045 of assumed premiums written on a consolidated basis during 2022.

The Company made the decision to non-renew

its participation in this assumed book of business as of January 1, 2022, and the associated assumed premiums represent run-off of this

In addition to the products described above, Nodak

Insurance and American West write excess liability coverages.

Collectively, these other coverages accounted for $5,504 (1.3%) of the direct

premiums written by the Company on a consolidated basis during 2023.

This segment also includes an assumed reinsurance book of business,

with $836 of assumed premiums written on a consolidated basis during 2023.

The Company made the decision to non-renew its participation

in this assumed book of business as of January 1, 2022, and the associated assumed premiums represent run-off of this business.

Crop Insurance

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including farmers, ranchers, and others to protect themselves against either the loss of their crops (yield) due to natural disasters

such as hail, drought, and floods, or the loss of revenue due to declines in the prices of agricultural products.

The two general categories

of crop insurance are generally referred to as “crop-yield insurance” and “crop-revenue insurance”.

insurance protects against a reduction in the yield per acre from the historical average yield in a specified area, such as a county or

National Oceanic and Atmospheric Administration weather grid, while crop-revenue insurance provides protection against declines in the

price of the particular crop.

such as hail, freezing, plant disease, drought, and floods, or the loss of revenue due to declines in the prices of agricultural products.

The two general categories of crop insurance are generally referred to as “crop-yield insurance” and “crop-revenue insurance”.

Crop-yield insurance protects against a reduction in the yield per acre from the historical average yield in a specified area, such as

a county or National Oceanic and Atmospheric Administration weather grid, while crop-revenue insurance provides protection against declines

in the price of the particular crop.

Most of the multi-peril crop insurance policies written today combine both yield and revenue protection,

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Beginning in 1980, the U.S.

Congress expanded

the federal crop insurance program to cover more crops and regions of the country.

More importantly, Congress permitted private sector

insurers to market and administer federal insurance policies in exchange for an opportunity to earn a profit while bearing a portion of

the insurance risk.

Congress expanded the

federal crop insurance program to cover more crops and regions of the country.

More importantly, Congress permitted private sector insurers

to market and administer federal insurance policies in exchange for an opportunity to earn a profit while bearing a portion of the insurance

Congress also authorized a premium subsidy for the farmers and ranchers.

As a result, there was a rapid increase in

the acres insured from approximately 26 million acres in 1980 to 100 million acres in 1990.

The Federal Crop Insurance Reform Act of 1994

made participation in the crop insurance program mandatory for farmers to be eligible to participate in other government support programs

and provided a minimum level of free catastrophic risk coverage for insured and noninsured crops.

As a result, there was a rapid increase in the acres insured

from approximately 26 million acres in 1980 to 100 million acres in 1990.

The Federal Crop Insurance Reform Act of 1994 made participation

in the crop insurance program mandatory for farmers to be eligible to participate in other government support programs and provided a

minimum level of free catastrophic risk coverage for insured and noninsured crops.

American Farm Bureau Insurance Services (“AFBIS”)

underwrites all of our multi-peril crop and crop hail insurance policies, as well as several other state Farm Bureau-affiliated insurers.

underwrites all of our, as well as several other state Farm Bureau affiliated insurers, multi-peril crop and crop hail insurance policies.

AFBIS also processes and administers all claims made by policyholders under such policies.

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Marketing and Distribution

Our marketing philosophy is to sell profitable

business in our core states, using a focused, cost-effective distribution system.

Nodak Insurance distributes its insurance products through

exclusive agents in North Dakota, while American West, Battle Creek, Primero, Direct Auto, and Westminster rely on independent agents.

Our marketing philosophy is to sell profitable business

in our core states using a focused, cost-effective distribution system.

Nodak Insurance distributes its insurance products through exclusive

agents in North Dakota, while American West, Battle Creek, Primero, Direct Auto, and Westminster rely on independent agents.

We review our agents with respect to both premium

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profit-sharing commissions to its agencies based on annual premium thresholds and profitability.

Our marketing efforts are further supported by

our claims philosophy, which is designed to provide prompt and efficient service and claims processing, resulting in a positive experience

Our marketing efforts are further supported by our

claims philosophy, which is designed to provide prompt and efficient service and claims processing, resulting in a positive experience

for agents and policyholders.

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Underwriting, Risk Assessment, and Pricing

We strive to be disciplined in our pricing by

pursuing rate increases to maintain or improve our underwriting profitability while still being able to attract and retain customers.

We utilize pricing reviews that we believe will help us price risks more accurately, maintain appropriate policyholder retention, and

support the production of profitable new business.

These pricing reviews involve evaluating our claims experience and loss trends on a

periodic basis to identify changes in the frequency and severity of our claims.

We then consider whether our premium rates are adequate

relative to the level of underwriting risk as well as the sufficiency of our underwriting guidelines.

We strive to be disciplined in our pricing by pursuing

rate increases to maintain or improve our underwriting profitability while still being able to attract and retain customers.

pricing reviews that we believe will help us price risks more accurately, maintain appropriate policyholder retention, and support the

production of profitable new business.

These pricing reviews involve evaluating our claims experience and loss trends on a periodic basis

to identify changes in the frequency and severity of our claims.

We then consider whether our premium rates are adequate relative to the

level of underwriting risk as well as the sufficiency of our underwriting guidelines.

The nature of our business requires that we remain

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employees with approximately 285 combined years of experience in property and casualty underwriting.

They are located primarily at

our home office in Fargo, North Dakota, as well as our office in Battle Creek, Nebraska, and underwrite coverage issued by Nodak Insurance,

They are located primarily at our

home office in Fargo, North Dakota, as well as our office in Battle Creek, Nebraska, and underwrite coverage issued by Nodak Insurance,

American West, and Battle Creek.

Primero and Direct Auto employ 12 underwriters

in connection with their non-standard auto insurance businesses.

Primero and Direct Auto employ 17 underwriters in

connection with their non-standard auto insurance businesses.

Westminster has a staff of 12 in the underwriting area of its commercial

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These risks are discussed in more detail in Part I, Item 1A, “Risk

We consider an enterprise-wide risk management

program to be an integral part of managing our business and a key element in our approach to corporate governance.

Our Enterprise Risk

Management Committee (the “ERMC”) is responsible for the alignment of operational risk management strategies as the coordination

point for enterprise-level direction setting with regard to risk management issues.

The multi-disciplinary ERMC regularly monitors risk

reports and metrics regarding a variety of continuing and emerging risks that may adversely affect the Company, its shareholders, its

policyholders, or other stakeholders.

The Audit Committee of the Board of Directors oversees risk management and regularly receives reports

from the ERMC.

Cybersecurity risk is an important and evolving

focus for the Company.

The increased sophistication and activities of unauthorized parties attempting to access our systems is an ever-present

Cybersecurity risks may also arise from human error, fraud, or malice on the part of employees or third parties who have authorized

access to the Company’s systems or information.

Our cybersecurity strategy employs a variety of tactics to monitor and assess

threat levels, remediate our exposures, and enhance our systems and applications security.

The Company collaborates with third-party cybersecurity

advisors to provide periodic penetration tests, system assessments, and recommendations based on industry best practices.

also requires monthly online security training to be completed by all employees.

While we have experienced threats to our data and systems,

to date, we have not experienced any known cybersecurity breaches.

We consider an enterprise-wide risk management program

to be an integral part of managing our business and a key element in our approach to corporate governance.

Our Enterprise Risk Management

Committee (the “ERMC”) is responsible for the alignment of operational risk management strategies as the coordination point

for enterprise-level direction setting with regard to risk management issues.

The multi-disciplinary ERMC regularly monitors risk reports

and metrics regarding a variety of continuing and emerging risks that may adversely affect the Company, its shareholders, its policyholders,

or other stakeholders.

The Audit Committee of the Board of Directors oversees risk management and regularly receives reports from the

We cede and assume certain premiums and losses to and from various

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reinsurance will continue to be available to us to the same extent, and at the same cost, as it has in the past.

The Company may choose

in the future to reevaluate the use of reinsurance to increase or decrease the amounts of risk ceded to reinsurers.

We may choose in the

future to reevaluate the use of reinsurance to increase or decrease the amounts of risk ceded to reinsurers.

For additional information, see Part II, Item 8, Note 6 “Reinsurance”.

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reported to us, and (2) reserves for claims that have been incurred but not yet been reported and for the future development of case reserves

The Company determines a provision for the ultimate cost of those claims without regard to how long it takes to

settle them or the time value of money.

The determination of reserves involves actuarial and statistical projections of what we expect

to be the cost of the ultimate settlement and administration of such claims.

The liability for unpaid losses and loss adjustment expenses

is set based on facts and circumstances then known, estimates of future trends in claims severity, and other variable factors such as

inflation and changing judicial theories of liability.

We determine a provision for the ultimate cost of those claims without regard to how long it takes to settle them

or the time value of money.

The determination of reserves involves actuarial and statistical projections of what we expect to be the cost

of the ultimate settlement and administration of such claims.

The liability for unpaid losses and loss adjustment expenses is set based

on facts and circumstances then known, estimates of future trends in claims severity, and other variable factors such as inflation and

changing judicial theories of liability.

Our liability for unpaid losses and loss adjustment expenses is not discounted.

For additional information, see Part II, Item 7, “Critical

Accounting Policies” and Part II, Item 8, Note 9 “Unpaid Losses and Loss Adjustment Expenses”.

The majority of funds available for investments are deployed in

a widely diversified portfolio of high quality, liquid, taxable U.S.

For additional information, see Part II, Item 7, “Critical Accounting

Policies” and Part II, Item 8, Note 8 “Unpaid Losses and Loss Adjustment Expenses”.

The majority of funds available for investments are deployed in a widely

diversified portfolio of high quality, liquid taxable U.S.

government, tax-exempt and taxable U.S.

municipal and taxable corporate

municipal, taxable corporate, and U.S.

agency mortgage-backed bonds.

The Company regularly monitors the effective duration of its fixed maturity investments, and the

Company’s investment purchases and sales are executed with the objective of having adequate funds available to satisfy its insurance

and debt obligations.

Generally, the expected principle and interest payments produced by the Company’s fixed maturity portfolio

adequately fund the estimated runoff of the Company’s insurance reserves.

The substantial amount by which the fair value of the

fixed maturity portfolio exceeds the value of the net insurance liabilities, as well as the positive cash flow from newly sold policies

and the large amount of high-quality liquid bonds, contribute to the Company’s ability to fund claim payments without having to

sell illiquid assets or access its credit facilities.

The Company also invests a much smaller percentage of the portfolio

in private placement debt offerings and equity securities, which have the potential for higher returns but also involve varying degrees

of risk, including higher volatility and/or less liquidity.

The Executive Committee of NI Holdings’ Board of Directors

reviews and approves the Company’s investment policy periodically.

We regularly monitor the effective duration of our fixed income investments, and our investment purchases

and sales are executed with the objective of having adequate funds available to satisfy our insurance and debt obligations.

the expected principal and interest payments produced by our fixed income portfolio adequately fund the estimated runoff of the Company’s

insurance reserves.

The substantial amount by which the fair value of the fixed income portfolio exceeds the value of the net insurance

liabilities, as well as the positive cash flow from newly sold policies and the large amount of high-quality liquid bonds, contribute

to the Company’s ability to fund claim payments without having to sell illiquid assets or access its credit facilities.

We also invest a much smaller percentage of the portfolio in private

placement debt offerings and equity securities, which have the potential for higher returns but also involve varying degrees of risk,

including higher volatility and/or less liquidity.

The Executive Committee of NI Holdings’ Board of Directors reviews

and approves the Company’s investment policy periodically.

The investment portfolio is managed by Conning, Inc.

and Disciplined

Growth Investors.

For additional information, see Part II, Item 7, “Critical

Accounting Policies” and Part II, Item 8, Note 5 “Investments”.

For additional information, see Part II, Item 7, “Critical Accounting

Policies” and Part II, Item 8, Note 4 “Investments”.

Financial Strength

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a group rating due to the intercompany pooling reinsurance agreement.

Effective April 14, 2022, AM Best has affirmed a stable financial

strength outlook to the group.

Effective April 25, 2023, AM Best affirmed a stable financial strength

outlook to the group.

The property casualty and crop insurance markets

are competitive.

We compete with stock insurance companies, mutual companies, and other underwriting organizations.

Our largest competitors

in North Dakota for private passenger auto and homeowners include Progressive Casualty Insurance Company, State Farm Mutual Insurance

Company, American Family Insurance, Allstate Corporation, Farmers Union Mutual Insurance Company, and Auto-Owners Insurance.

Dakota and Nebraska, we have small market shares and our competitors are the large national and regional companies as well as Farmers

Mutual of Nebraska.

In our non-standard auto markets, which are primarily Illinois, Nevada, and Arizona, our primary competitors are regional

Westminster’s primary competition comes

from regional carriers including Harford Mutual Insurance Company, Greater New York Mutual, and Millers Capital.

We also see competition

from national companies like The Travelers Companies and Nationwide Mutual Insurance Company.

We compete with stock insurance companies, mutual insurance companies, and other underwriting organizations.

competitors in North Dakota for private passenger auto and homeowners include Progressive, State Farm, American Family, National General,

Farmers Union, and Auto-Owners insurance companies.

In South Dakota and Nebraska, we have small market shares and our competitors are

the large national and regional companies as well as Farmers Mutual of Nebraska.

In our non-standard auto markets, which are primarily

Illinois, Nevada, and Arizona, our primary competitors are regional carriers.

Westminster’s primary competition comes from

regional carriers including Harford Mutual Insurance Company, Greater New York Mutual, and Millers Capital.

We also see competition from

national companies like The Travelers Companies and State Farm.

Based on 2022 data, Nodak Insurance is the second

largest writer of farmowners insurance in North Dakota.

Our largest competitors include Farmers Union Mutual Insurance Company, North

Star Mutual Insurance Company, American Family Insurance, and Liberty Mutual Insurance Company.

In Nebraska and South Dakota, we have

a small farmowners market share, which is dominated by the large national and regional carriers.

Our largest competitors include Farmers Union, North Star Mutual, American Family,

and Farmers Alliance insurance companies.

In Nebraska and South Dakota, we have a small farmowners market share, which is dominated by

the large national and regional carriers.

The principal competitors in our markets for multi-peril

crop insurance include Chubb Corporation, QBE Insurance Group, Rural Community Insurance Services, CGB Enterprises, and Great American

Insurance Group.

The premium rates for multi-peril crop

insurance are established by the RMA and, accordingly, we

compete with other insurance companies on factors such as agency relationships, claim service, and market reputation in the crop

insurance market.

We believe that our relationship with the NDFB and our leading market share are significant factors in maintaining

our market share of the crop insurance business in North Dakota.

The Company’s multi-peril crop insurance premiums for North

Dakota were $45,465, $38,325, and $32,674 for the years ended December 31, 2022, 2021, and 2020, respectively.

Total North Dakota

multi-peril crop premiums for the industry were $1,537,758, $1,083,565, and $861,567 for the years ended December 31, 2022, 2021,

and 2020, respectively.

With respect to writing property and casualty

insurance, competitive factors include pricing, agency relationships, policy support, claim service, and market reputation.

writers of property and casualty insurance, our policy terms vary from state to state based on state regulations, competition, pricing,

and other factors including the prescribed minimum liability limits in each state.

We believe our Company differentiates itself from many

larger companies competing for this business by focusing on ease of doing business and providing excellent claims service with local,

knowledgeable employees.

crop insurance include Chubb, QBE Insurance Group, Zurich, American Agri-Business Insurance Company, and Great American Insurance Group.

The premium rates for multi-peril crop insurance are established by the RMA and, accordingly, we compete with other insurance companies

on factors such as agency relationships, claim service, and market reputation in the crop insurance market.

We believe that our relationship

with the NDFB and our leading market share are significant factors in maintaining our market share of the crop insurance business in North

The Company’s multi-peril crop insurance premiums for North Dakota were $39,073, $45,465, and $38,325 for the years ended

December 31, 2023, 2022, and 2021, respectively.

Total North Dakota multi-peril crop premiums for the industry were $1,491,650, $1,537,758,

and $1,083,565 for the years ended December 31, 2023, 2022, and 2021, respectively.

With respect to writing property and casualty insurance,

competitive factors include pricing, agency relationships, policy support, claim service, and market reputation.

Like other writers of

property and casualty insurance, our policy terms vary from state to state based on state regulations, competition, pricing, and other

factors including the prescribed minimum liability limits in each state.

We believe our Company differentiates itself from many larger

companies competing for this business by focusing on ease of doing business and providing excellent claims service with local, knowledgeable

To compete successfully in the property and casualty

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and procedures, so our examination reports and other filings generally are accepted by other states.

The NAIC provides guidance to the states with

respect to standardized laws and regulations (including the accounting practices and procedures discussed above), which represent an effort

to standardize insurance industry practices across state lines, oftentimes referred to as “Model Regulations”.

noted that these “model” laws are regulations that have no authority until the individual states pass them as part of the

state legislative process, which may, or may not, be done as suggested, or with modifications.

The NAIC provides guidance to the states with respect

to standardized laws and regulations (including the accounting practices and procedures discussed above), which represent an effort to

standardize insurance industry practices across state lines, oftentimes referred to as “Model Regulations”.

It should be noted

that these “model” laws are regulations that have no authority until the individual states pass them as part of the state

legislative process, which may, or may not, be done as suggested, or with modifications.

Premium rate regulation varies greatly among jurisdictions

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The AIPs are required to use

the policies, premium rates, and loss adjustment

procedures set by the RMA without modification and are required to issue a policy to

the policies, premium rates, and loss adjustment procedures set by the RMA without modification and are required to issue a policy to

any eligible applicant regardless of risk or profitability.

The RMA conducts audits of AIPs with respect to claims and loss adjustment

American Agricultural Insurance Company is the

AIP through which we issue multi-peril crop insurance policies and is the holder of the SRA with the FCIC.

American Agricultural Insurance Company is the AIP

through which we issue multi-peril crop insurance policies and is the holder of the SRA with the FCIC.

NAIC Risk-Based Capital Requirements

North Dakota and most other states have adopted

the NAIC system of risk-based capital requirements that require insurance companies to calculate and report information under a risk-based

North Dakota and most other states have adopted the

NAIC system of risk-based capital requirements that require insurance companies to calculate and report information under a risk-based

These risk-based capital requirements attempt to measure statutory capital and surplus needs based on the risks in a company’s

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The NAIC has established an acceptable range for each of the IRIS financial ratios.

four or more of its IRIS ratios fall outside the range deemed acceptable by the NAIC, an insurance company may receive inquiries from

four or more of its IRIS ratios fall outside the range deemed acceptable by the NAIC, an

insurance company may receive inquiries from

individual state insurance departments.

However, a ratio falling outside the usual range may not necessarily

be considered adverse.

In some years, it may not be unusual for financially sound companies to have several ratios with results outside

the usual ranges.

During the year ended December 31, 2022, our insurance company subsidiaries produced results outside the acceptable

range for as many as six of the IRIS tests, primarily driven by our significant net loss for the current year that negatively impacted

However, a ratio falling outside the usual range may not necessarily be considered adverse.

some years, it may not be unusual for financially sound companies to have several ratios with results outside the usual ranges.

the years ended December 31, 2023 and 2021, none of our insurance company subsidiaries produced results outside the acceptable range for

more than three of the IRIS tests.

During the year ended December 31, 2022, our insurance company subsidiaries produced results outside

the acceptable range for as many as six of the IRIS tests, primarily driven by our significant net loss for the year that negatively impacted

IRIS ratios related to the operating ratio and certain ratios based on policyholders’ surplus.

During the years ended December 31,

2021 and 2020, none of our insurance company subsidiaries produced results outside the acceptable range for more than two of the IRIS

Enterprise Risk Assessment

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Although our insurance company subsidiaries are exempt from ORSA because of their

size, we intend to incorporate those elements of ORSA that it believes constitute “best practices” into its internal enterprise

size, we intend to incorporate those elements of ORSA that we believe constitute “best practices” into our internal enterprise

risk assessment.

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Guaranty Fund Laws

All states have guaranty fund laws under which

insurers doing business in the state can be assessed to fund policyholder liabilities of insolvent insurance companies.

Under these laws,

an insurer is subject to assessment depending upon its market share in the state of a given line of business.

All states have guaranty fund laws under which insurers

doing business in the state can be assessed to fund policyholder liabilities of insolvent insurance companies.

Under these laws, an insurer

is subject to assessment depending upon its market share in the state of a given line of business.

For the years ended December 31, 2023,

2022, and 2021, we paid only minimal assessments pursuant to state insurance guaranty association laws.

We establish reserves

relating to insurance companies that are subject to insolvency proceedings when it becomes probable that we will be subject to an assessment

and the amount of such assessment can be estimated.

We establish reserves relating

to insurance companies that are subject to insolvency proceedings when it becomes probable that we will be subject to an assessment and

the amount of such assessment can be estimated.

We cannot predict the amount and timing of any future assessments under these laws.

Federal Regulation

federal government generally does not

directly regulate the insurance industry except for certain areas of the market, such as insurance for crops, flood, nuclear, and terrorism

However, the federal government has undertaken initiatives or considered legislation in several areas that may affect the insurance

industry, including tort reform, corporate governance, and the taxation of reinsurance companies.

The Dodd-Frank Act established the Federal

Insurance Office, which is authorized to study, monitor, and report to Congress on the insurance industry and to recommend that the Financial

Stability Oversight Council designate an insurer as an entity posing risks to the U.S.

financial stability in the event of the insurer’s

material financial distress or failure.

In December 2013, the Federal Insurance Office issued a report on alternatives to modernize and

improve the system of insurance regulation in the U.S., including by increasing national uniformity through either a federal charter or

effective action by the states.

Changes to federal legislation and administrative policies in several areas, including changes in federal

taxation, can also significantly affect the insurance industry and us.

federal government generally does not directly

regulate the insurance industry except for certain areas of the market, such as insurance for crops, flood, nuclear, and terrorism risks.

However, the federal government has undertaken initiatives or considered legislation in several areas that may affect the insurance industry,

including tort reform, corporate governance, and the taxation of reinsurance companies.

The Dodd-Frank Act established the Federal Insurance

Office, which is authorized to study, monitor, and report to Congress on the insurance industry and to recommend that the Financial Stability

Oversight Council designate an insurer as an entity posing risks to the U.S.

financial stability in the event of the insurer’s material

financial distress or failure.

In December 2013, the Federal Insurance Office issued a report on alternatives to modernize and improve

the system of insurance regulation in the U.S., including by increasing national uniformity through either a federal charter or effective

action by the states.

Changes to federal legislation and administrative policies in several areas, including changes in federal taxation,

can also significantly affect the insurance industry and us.

We are also subject to the Fair and Accurate Credit

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procedures to comply with the GLBA’s related privacy requirements.

In October 2017, the NAIC adopted the Insurance

Data Security Model Law (“IDSML”), which requires insurers, insurance agents, and other entities required to be licensed under

In October 2017, the NAIC adopted the Insurance Data

Security Model Law (“IDSML”), which requires insurers, insurance agents, and other entities required to be licensed under

state insurance laws to develop and maintain a written information security program, conduct risk assessments, oversee the data security

practices of third-party service providers, and other related requirements.

It is not clear whether, and to what extent, legislatures

or insurance regulators in the states in which we, or our subsidiaries, operate will enact the IDMSL.

Such enactments and regulations

could raise compliance costs and subject us to the risk of regulatory enforcement actions, penalties, and reputational harm.

events could potentially have an adverse impact on our business, financial condition, or results of operations.

Several states in which we operate, including North Dakota,

have adopted the IDSML.

Such enactments and regulations could raise compliance costs and subject us to the risk of regulatory enforcement

actions, penalties, and reputational harm.

Any such events could potentially have an adverse impact on our business, financial condition,

or results of operations.

Office of Foreign Asset Control

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However, beginning on December 31, 2022,

we are no longer an EGC and will no longer have the ability to delay adoption of these new or revised accounting standards, or to take

advantage of reduced corporate governance disclosures.

we are no longer an EGC and no longer have the ability to delay adoption of these new or revised accounting standards or to take advantage

of reduced corporate governance disclosures.

As an insurance holding company with no independent

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Under these laws, the North Dakota Insurance Department will have the right to examine us at

All transactions within our consolidated group

affecting our insurance company subsidiaries must be fair and equitable.

Notice of certain material transactions between NI Holdings and

any person or entity in our holding company system will be required to be given to the Department of Insurance of the applicable domiciliary

All transactions within our consolidated group affecting

our insurance company subsidiaries must be fair and equitable.

Notice of certain material transactions between NI Holdings and any person

or entity in our holding company system will be required to be given to the Department of Insurance of the applicable domiciliary state.

Certain transactions cannot be completed without the prior approval of the various Departments of Insurance.

Approval of the state insurance commissioner

is required prior to any transaction affecting the control of an insurer domiciled in that state.

Approval of the state insurance commissioner is

required prior to any transaction affecting the control of an insurer domiciled in that state.

In North Dakota, the acquisition of 10%

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Human Capital

The Company’s key human capital management

objectives are to attract, retain, and develop talent to deliver on the Company’s strategy.

To support these objectives, the Company’s

human resources programs are designed to recruit and retain talented individuals;

provide training and development within the Company

and the insurance industry;

Our key human capital management objectives are to

attract, retain, and develop talent to deliver on the Company’s strategy.

To support these objectives, our human resources programs

are designed to recruit and retain talented individuals;

provide training and development within the Company and the insurance industry;

reward and support employees through competitive pay and benefit programs;

keep employees safe and healthy;

and provide opportunities for community involvement.

and provide opportunities

for community involvement.

We offer comprehensive compensation and benefits

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business