What changed in this filing

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Item 1. Business

2025-03-07 compared with 2024-03-15 · 264 added, 320 removed, 482 unchanged (55% of the section changed)

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except per share amounts, are in thousands.

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,

These consolidated financial statements include the

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

NI Holdings is a North Dakota business corporation

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

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

The conversion

was completed on March 13, 2017.

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.

Mutual Group”), which then contributed the shares to NI Holdings in exchange for 55% of the outstanding shares of common stock of

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 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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● Primero Insurance Company (“Primero”) – an indirect wholly-owned subsidiary of Nodak Insurance;

● Battle Creek Mutual Insurance Company (“Battle Creek”) – an affiliated company of Nodak Insurance;

● Battle Creek Insurance Company (“Battle Creek”) – a wholly-owned subsidiary of Nodak Insurance, formerly Battle

Creek Mutual Insurance Company.

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 Insurance Company (“Direct Auto”) – a wholly-owned subsidiary of NI Holdings;

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

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.

● Westminster American Insurance Company (“Westminster”) – a wholly-owned subsidiary of NI Holdings until it was sold

to Scott Insurance Holdings, LLC (“Scott Insurance Holdings”) on June 30, 2024.

A chart of the corporate structure as of December 31, 2024, and a

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

NI HOLDINGS, INC.

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NI Holdings, Inc.

Direct Auto Insurance

Direct Auto Insurance Company

Nodak Insurance Company

Westminster American

Insurance Company

Nodak Agency, Inc.

American West Insurance

Battle Creek Mutual

Insurance Company (1)

American West Insurance Company

Battle Creek Insurance Company

Tri-State, Ltd

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.

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.

website address is www.niholdingsinc.com .

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Reinsurance Pooling Arrangement

Effective January 1, 2020, all of our active insurance subsidiary

and affiliate companies entered into an intercompany reinsurance pooling agreement.

This agreement was finalized, approved, and implemented

during the fourth quarter of 2020, retroactive to the January 1 effective date.

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.

the net premiums, net losses, and underwriting expenses from each of the other four companies.

Nodak Insurance then retrocedes balances

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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, 2023, 2022, and 2021, the pooling share

percentages by insurance company were:

Pool Percentage

Nodak Insurance Company

American West Insurance Company

Primero Insurance Company

Battle Creek Mutual Insurance Company

Direct Auto Insurance Company

Westminster American Insurance Company

Subsequent to the June

30, 2024, date of sale, Westminster is no longer a member of the pool, and the pooling percentages for the remaining insurance subsidiaries

were updated based on their respective surplus as a percentage of the pool as of December 31, 2023.

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.

company based in North Dakota, offering private passenger auto, homeowners, farmowners, commercial multi-peril, crop hail, and Federal

multi-peril crop insurance coverages through its captive agents in the state.

Nodak Insurance was formed in 1946 to offer property

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Primero is a property and casualty insurance company

writing non-standard automobile coverage in the states of Nevada, Arizona, North Dakota, and South Dakota.

Primero was acquired by Nodak

Insurance in 2014.

As of December 31, 2023, Primero distributed its policies through independent agents in 313 contracted agencies in

those four states.

Battle Creek Mutual Insurance Company

writing non-standard automobile coverage in the states of Nevada, Arizona, North Dakota, and South Dakota during 2024.

Primero was acquired

by Nodak Insurance in 2014.

As of December 31, 2024, Primero no longer writes coverage in the state of Nevada.

Primero distributed its

policies through independent agents in 216 contracted agencies in the three remaining states.

Battle Creek Insurance Company

Battle Creek is a property and casualty insurance

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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.

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.

On January 2, 2024, Battle Creek issued 300,000

shares of its common stock to Nodak Insurance at a $10.00 per share par value and became a wholly-owned subsidiary of Nodak Insurance.

Because we concluded that we controlled 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 for NI Holdings (“Consolidated Balance Sheets”) and its net income or loss was excluded

from net income or loss attributed to NI Holdings in our Consolidated Statements of Operations for NI Holdings (“Consolidated Statements

of Operations”).

Subsequent to January 2, 2024, Battle Creek is fully consolidated in our Consolidated Balance Sheets and Consolidated

Statements of Operations and, as such, no longer reflected as a non-controlling interest.

Direct Auto Insurance Company

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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, 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.

Westminster was sold to Scott Insurance Holdings on June 30, 2024.

Subsequent to the

date of sale, Westminster is reflected as discontinued operations within our Consolidated Balance Sheets and Consolidated Statements of

For additional information see Part II, Item 8, Note 20 “Discontinued Operations” of this 2024 Annual Report.

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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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.

Primero and Direct Auto personnel

manage the day-to-day operations of their respective companies.

Westminster personnel managed the day-to-day operations of their company

prior to the date of sale.

The consolidated financial statements of NI Holdings

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

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

Each of the six insurance

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

Market Overview

presented herein include the financial position and results of operations of NI Holdings, Direct Auto, Westminster (as discontinued operations),

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

Each of the insurance

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

Market Overview for Continuing Operations

We market our personal lines products in the upper

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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:

We offer commercial multi-peril insurance in the states of North Dakota and South Dakota.

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, 2023:

December 31, 2024

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Direct Premiums

North Carolina

South Carolina

District of Columbia

West Virginia

Total direct premiums written

Market size information is

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

Organic Growth Strategy

We believe we have many opportunities to organically

grow our business.

Market size information is not yet available for the year ended December 31, 2024.

Growth Strategy

We believe we have many opportunities to grow

our business.

Strategies we employ to achieve this growth include:

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● selective expansion of our insurance products in states where we currently operate, as well as those states where we hold insurance

External Growth Strategy

We acquired Direct Auto in 2018 with capital raised

through our IPO.

The acquisition was the initial step in executing our growth strategy developed at the time of the IPO.

We also acquired Westminster in January 2020 with

capital raised through our IPO.

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

of insurance risks.

Prior to the IPO, we successfully acquired Primero

in 2014, acquired control of Battle Creek in 2011, and acquired American West in 2001.

Going forward, we plan to consider other strategic

investments and acquisitions that can enhance our businesses, provide diversification with respect to geography and product line, and

achieve appropriate risk-adjusted returns over time.

● consideration of strategic acquisitions and investment opportunities in businesses that align with our growth objectives.

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 held by each of our insurance company subsidiaries.

● The second layer of capital is considered “contingency capital”.

While our regulatory capital is, by definition, a cushion

● The second layer of capital is considered “contingency capital.” While our regulatory capital is, by definition, a cushion

for absorbing financial consequences of adverse events, such as loss reserve development, litigation, weather catastrophes, and investment

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Our excess capital deployment priorities are to

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

(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

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”.

Our consolidated financial results from continuing

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

Information regarding

products and services offered in each segment is included below.

Additionally, revenues, underwriting results, and identifiable assets

and liabilities for each segment are shown in Part II, Item 8, Note 21 “Segment Information.” The financial performance of

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

Private Passenger Auto

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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 $95,295 (22.8%) of direct premiums written

by the Company on a consolidated basis during 2023.

Primero and Direct Auto write non-standard auto

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

Non-standard auto insurance accounted for $87,467 (25.6%) of direct premiums

written by the Company on a consolidated basis during 2024.

Home and Farm

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crop insurance accounted for $36,421 (10.6%) of direct premiums written by the Company on a consolidated basis during 2024.

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 $5,504 (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.

Insurance, American West, and Battle Creek write commercial and excess liability coverages.

Collectively, these other coverages accounted

for $14,002 (4.1%) of the direct premiums written by the Company on a consolidated basis during 2024.

This segment also includes an assumed

reinsurance book of business, with $820 of assumed premiums written on a consolidated basis during 2024.

The majority of these assumed

premiums written are related to a domestic and international reinsurance pool for which the Company made the decision to non-renew its

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

Crop Insurance

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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”.

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

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

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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

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 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”)

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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 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, and Direct Auto rely on independent agents.

We review our agents with respect to both premium

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The Risk Management Agency of

the United States Department of Agriculture (“RMA”) establishes the maximum commission that can be paid to agents with respect

to crop insurance policies.

Battle Creek and American West pay profit-sharing commissions to their agencies based on various annual agency

premium thresholds and the difference between the agency’s loss ratio and the loss ratio goal established by the insurance company.

The commission is paid with respect to all property and casualty (non-crop) business earned within the calendar year.

Nodak Insurance

pays a profit-sharing commission to its agents only with respect to farmowners business originated by such agents.

Westminster also pays

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

Department of Agriculture (“RMA”) establishes the maximum commission that can be paid to agents with respect to crop

insurance policies.

Nodak Insurance, Battle Creek, American West, and Direct Auto pay annual profit-sharing commissions with respect to

all property and casualty (non-crop) business based on company-specific production metrics related to premiums 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

for agents and policyholders.

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business growth over time.

While we rely on our independent agents for distribution and customer support, underwriting and claim handling

responsibilities are retained by us.

While we rely on our captive and independent agents for distribution and customer support, underwriting and

claim handling responsibilities are retained by us.

Many of our agents have had direct relationships with us for a number of years.

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.

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.

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.

The nature of our business requires that we remain

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philosophy not to sacrifice profitability for premium growth.

Our Nodak Insurance underwriting staff includes 20

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,

American West, and Battle Creek.

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

insurance business.

All of our crop insurance is underwritten by AFBIS, as described above.

Enterprise Risk Management

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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

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.

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

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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 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.

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, taxable corporate, and U.S.

municipal, taxable corporate,

agency mortgage-backed bonds.

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

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

Generally, the expected principal and

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

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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 Committee of NI Holdings’ Board of Directors

reviews and approves the Company’s investment policy periodically.

The investment portfolio is managed by Conning, Inc.

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

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

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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This rating can also affect an insurer’s

level of premium writings, the lines of business it can write, and, for insurers like us that are also public registrants, the market

level of written premiums, the lines of business it can write, and, for insurers like us that are also public registrants, the market

value of its securities.

All of the Company’s insurance subsidiary

and affiliate companies are rated “A” Excellent by AM Best, which is the third highest out of 15 possible ratings, under

a group rating due to the intercompany pooling reinsurance agreement.

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

All of the Company’s insurance subsidiaries

and affiliate companies are rated “A” Excellent by AM Best, which is the third highest out of 15 possible ratings, under a

group rating due to the intercompany pooling reinsurance agreement.

Effective May 10, 2024, AM Best affirmed a stable financial strength

outlook to the group.

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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.

Illinois and Arizona, our primary competitors are regional carriers.

Based on 2023 data, Nodak Insurance is the second

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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.

and Liberty Mutual insurance companies.

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

large national and regional carriers.

The principal competitors in our markets for multi-peril

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

crop insurance include Chubb, QBE Insurance Group, Zurich, AgriSompo, and Great American Insurance Group.

The premium rates for multi-peril

crop insurance are established by the RMA and, accordingly, we compete with other insurance companies on factors such as agency relationships,

claim service, and market reputation in the crop insurance market.

We believe that our relationship with the NDFB and our leading market

share are significant factors in maintaining our market share of the crop insurance business in North Dakota.

The Company’s multi-peril

crop insurance premiums for North Dakota were $30,641, $39,073, and $45,465 for the years ended December 31, 2024, 2023, and 2022, respectively.

Total North Dakota multi-peril crop premiums for the industry were $1,231,110, $1,491,650, and $1,537,758 for the years ended December

31, 2024, 2023, and 2022, respectively.

With respect to writing property and casualty

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

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.

To compete successfully in the property and casualty

insurance market, we rely on our ability to identify insureds that are most likely to produce an underwriting profit, operate with a

disciplined underwriting approach, practice prudent claims management, reserve appropriately for unpaid claims, and provide quality service

and competitive commissions to our independent and captive agents.

insurance market, we utilize data-driven insights and a disciplined underwriting approach to assess and price risks, practice prudent

claims management, reserve appropriately for unpaid claims, and provide quality service and competitive commissions to our independent

and captive agents.

We are subject to extensive regulation, particularly

at the state level.

The method, extent, and substance of such regulation varies by state, but generally has its source in statutes and

regulations that establish standards and requirements for conducting the business of insurance and that delegate regulatory authority

to state insurance regulatory agencies.

In general, such regulation is intended for the protection of those who purchase or use insurance

products, not the companies that write the policies.

These laws and regulations have a significant impact on our business and relate to

a wide variety of matters including accounting methods, agent and company licensure, claims procedures, corporate governance, examinations,

investing practices, policy forms, pricing, trade practices, reserve adequacy, and underwriting standards.

This regulation varies by state, but generally has its source in statutes and regulations that establish standards

and requirements for conducting the business of insurance and that delegate regulatory authority to state insurance regulatory agencies.

In general, such regulation is intended for the protection of those who purchase or use insurance products, not the companies that write

the policies.

These laws and regulations have a significant impact on our business and relate to a wide variety of matters including accounting

methods, agent and company licensure, claims procedures, corporate governance, examinations, investing practices, policy forms, pricing,

trade practices, reserve adequacy, and underwriting standards.

State insurance laws and regulations require our

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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”.

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.

As of December 31, 2024, all of our

insurance subsidiaries are domiciled in North Dakota.

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 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.

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insurance holding company system’s ultimate controlling person submit annually to its lead state insurance regulator an “enterprise

risk report”.

This enterprise risk report identifies the activities, circumstances, or events involving one or more affiliates of

risk report.” This enterprise risk report identifies the activities, circumstances, or events involving one or more affiliates of

an insurer that, if not remedied properly, are likely to have a material adverse effect upon the financial condition or liquidity of the

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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, 2024, 2023, and 2022, we paid only minimal assessments pursuant to state insurance guaranty association laws.

We establish reserves relating

to insurance companies that are subject to insolvency proceedings 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 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.

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.

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

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and file a report with OFAC.

Jumpstart Our Business Startups Act of

Jumpstart Our Business Startups Act

Until December 31, 2022, we were an emerging growth

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The ability of our subsidiaries to pay dividends to us is regulated by the laws of their state of domicile.

these laws, insurance companies must provide advance informational notice to the domicile state insurance regulatory authority prior to

these laws, insurance companies must provide advance

informational notice to the domicile state insurance regulatory authority prior to

payment of any dividend or distribution to its shareholders.

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before payment of an “extraordinary dividend” as defined under the state’s insurance code.

For additional information, see

Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital

Resources”, and Part II, Item 8, Note 21 “Statutory Net Income (Loss), Capital and Surplus, and Dividend Restrictions”.

For additional information,

see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and

Capital Resources,” and Part II, Item 8, Note 22 “Statutory Net Income (Loss), Capital and Surplus, and Dividend Restrictions.”

Holding Company Laws

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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 state.

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

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

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or more of the outstanding voting securities of an insurer or its holding company is presumed to be a change in control.

law also prohibits any person or entity from (i) making a tender offer for, or a request or invitation for tenders of, or seeking to

acquire or acquiring any voting security of a North Dakota insurer if, after the acquisition, the person or entity would be in control

of the insurer, or (ii) effecting or attempting to effect an acquisition of control of or merger with a North Dakota insurer, unless

the offer, request, invitation, acquisition, effectuation, or attempt has received the prior approval of the North Dakota Insurance Department.

law also prohibits any person or entity from (i) making a tender offer for, or a request or invitation for tenders of, or seeking to acquire

or acquiring any voting security of a North Dakota insurer if, after the acquisition, the person or entity would be in control of the

insurer, or (ii) effecting or attempting to effect an acquisition of control of or merger with a North Dakota insurer, unless the offer,

request, invitation, acquisition, effectuation, or attempt has received the prior approval of the North Dakota Insurance Department.

Human Capital

Our key human capital management objectives are to

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

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

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2023, and 25.2% during 2022.

A significant portion of this turnover is related to Direct Auto, which generally experiences higher turnover.

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