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Item 1A. Risk Factors

2025-03-07 compared with 2024-03-15 · 223 added, 186 removed, 304 unchanged (57% of the section changed)

An investment in the Company’s common shares

involves certain risks.

An investment in the Company’s common

shares involves certain risks.

The following is a discussion of material risks and uncertainties that may affect the Company’s business,

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Insurance Risks

Catastrophic or other significant natural or

man-made losses may negatively affect our financial condition and operating results.

Catastrophic or other significant natural

or man-made losses may negatively affect our financial condition and operating results.

As a property and casualty insurer, we are subject

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change as economic shifts alter the return dynamic of long-term investments and reduce valuations.

Despite our continued geographic expansion, we write

a significant amount of business in North Dakota.

As a result, adverse developments from severe weather events in North Dakota would have

a greater effect on our financial condition and results of operations than if our business was less geographically concentrated.

The incidence

and severity of such events are inherently unpredictable.

We write a significant amount of business in North

As a result, adverse developments from severe weather events in North Dakota would have a greater effect on our financial condition

and results of operations than if our business was less geographically concentrated.

The incidence and severity of such events are inherently

unpredictable.

We attempt to reduce our exposure to catastrophe

losses through a disciplined underwriting and risk management approach that emphasizes long-term profitability over short-term gains in

premiums or market share, continued geographical diversification of our operations, and the use of reinsurance.

However, there can be

no guarantee that our underwriting and risk management efforts will be successful in mitigating our exposure to catastrophe losses or

the impact of such losses when they occur.

In addition, while we maintain reinsurance coverage with a catastrophe excess of loss program,

such coverage may be insufficient to cover our losses.

Our reinsurance coverage includes a catastrophe excess of loss program, which in

2023 limited our catastrophe exposure to $20 million retention per event, with $133 million of reinsurance coverage placed in excess of

this retention.

For 2024, we anticipate that these amounts will remain consistent.

If we are not able to effectively mitigate our exposure

to catastrophe losses, whether through our underwriting process or reinsurance coverage, in the event of such losses our business and

results of operations could be adversely affected.

premiums or market share, geographical diversification of our operations, and the use of reinsurance.

However, there can be no guarantee

that our underwriting and risk management efforts will be successful in mitigating our exposure to catastrophe losses or the impact of

such losses when they occur.

In addition, while we maintain reinsurance coverage with a catastrophe excess of loss program, such coverage

may be insufficient to cover our losses.

Our reinsurance coverage includes a catastrophe excess of loss program, which in 2024 limited

our catastrophe exposure to $20 million retention per event, with $133 million of reinsurance coverage placed in excess of this retention.

For 2025, we expect our catastrophe excess of loss program will limit our catastrophe exposure to $20 million retention per event, with

$117 million of reinsurance coverage placed in excess of this retention.

If we are not able to effectively mitigate our exposure to catastrophe

losses, whether through our underwriting process or reinsurance coverage, in the event of such losses our business and results of operations

could be adversely affected.

For additional information, see Part II, Item

Note 3 “Summary of Significant Accounting Policies” and Note 6 “Reinsurance.”

If actual losses exceed our loss and loss adjustment

expense reserves or if changes in the estimated level of loss and loss adjustment expense reserves are necessary as a result of changes

in the legal, regulatory, and economic environments in which we operate, our financial results could be materially and adversely affected.

We maintain reserves to cover estimated unpaid losses and expenses

necessary to settle claims.

The reserves for losses and loss adjustment expenses that we have established are estimates of amounts needed

to pay reported and unreported claims and related expenses, based on facts and circumstances known to us at the time we established the

Reserves are actuarially projected based on historical claims information, industry statistics, anticipated trends, and other

8, Note 3 “Summary of Significant Accounting Policies and Basis of Presentation” and Note 6 “Reinsurance.”

If actual losses exceed our loss and loss

adjustment expense reserves or if changes in the estimated level of loss and loss adjustment expense reserves are necessary as a result

of changes in the legal, regulatory, and economic environments in which we operate, our financial results could be materially and adversely

We maintain reserves to cover estimated unpaid losses and expenses necessary

to settle claims.

The reserves for losses and loss adjustment expenses that we have established are estimates of amounts needed to pay

reported and unreported claims and related expenses, based on facts and circumstances known to us at the time we established the reserves.

Reserves are actuarially projected based on historical claims information, industry statistics, anticipated trends, and other factors.

The process of estimating loss reserves involves a high degree of judgment and is subject to a number of variables.

believe that our reserves for unpaid losses and loss adjustment expenses are appropriate, to the extent that such reserves prove to be

inadequate or excessive in the future, we would adjust them and recognize the change in earnings in the period the reserves are adjusted.

There can be no assurance that the estimates of such liabilities will not change in the future and any such adjustment could have a material

impact on our financial condition and results of operations.

For additional information, see Part II, Item 7, “Management’s

Discussion and Analysis of Financial Condition and Results of Operations”, “Losses and Loss Adjustment Expenses”, and

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

It is possible that, among other things, past or future steps taken

by the federal government and the Federal Reserve to manage the U.S.

economy, including fiscal and monetary policy measures, could lead

to higher than anticipated levels of inflation, which generally leads to increased loss costs and other operating expenses.

While we believe that

our reserves for unpaid losses and loss adjustment expenses are appropriate, to the extent that such reserves prove to be inadequate or

excessive in the future, we would adjust them and recognize the change in earnings in the period the reserves are adjusted.

be no assurance that the estimates of such liabilities will not change in the future and any such adjustment could have a material impact

on our financial condition and results of operations.

For additional information, see Part II, Item 7, “Management’s Discussion

and Analysis of Financial Condition and Results of Operations,” “Losses and Loss Adjustment Expenses,” and Part II,

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

It is possible that, among other things, past or future steps taken by

the federal government and the Federal Reserve to manage the U.S.

economy, including fiscal and monetary policy measures, could lead to

higher than anticipated levels of inflation, which generally leads to increased loss costs and other operating expenses.

relatively high concentration in short tail lines of business limits the potential impact of this exposure long-term and allows us to

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could affect our ability to write new business or renew our existing business, which would lead to a decrease in revenue and net income.

Third-party rating agencies, such as AM Best, periodically

assess and rate the claims-paying ability of insurers based on criteria established by the rating agencies.

Ratings assigned by AM Best

are an important factor influencing the competitive position of insurance companies.

AM Best ratings, which are reviewed at least annually,

represent independent opinions of financial strength and ability to meet obligations to policyholders and are not directed toward the

protection of investors.

Therefore, our AM Best rating should not be relied upon as a basis for an investment decision to purchase our

common stock.

Third-party rating agencies, such as AM Best,

periodically assess and rate the claims-paying ability of insurers based on criteria established by the rating agencies.

Ratings assigned

by AM Best are an important factor influencing the competitive position of insurance companies.

AM Best ratings, which are reviewed at

least annually, represent independent opinions of financial strength and ability to meet obligations to policyholders and are not directed

toward the protection of investors.

Therefore, our AM Best rating should not be relied upon as a basis for an investment decision to purchase

our common stock.

All of the Company’s insurance subsidiaries

hold a financial strength rating of “A” (Excellent) by AM Best, the third highest rating out of 15 rating classifications.

Our most recent rating by AM Best was affirmed on April 25, 2023.

Our most recent rating by AM Best was affirmed on May 10, 2024.

Financial strength ratings are used by agents, customers, lenders, and

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For additional information, see Part I, Item 1, “Business” and “Financial

Our results may fluctuate as a result of many

factors, including cyclical changes in the insurance industry, competition, and innovation and emerging technologies.

Our results may fluctuate as a result of

many factors, including cyclical changes in the insurance industry, competition, and innovation and emerging technologies.

The property and casualty insurance industry has

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the industry could also influence future growth and profit potential.

Innovation and emerging technologies continue to

greatly impact the insurance industry.

If we are unable to keep pace with the technological changes that our competitors implement, we

may not be able to attract and retain customers, adequately price risks, or operate as efficiently as our competitors.

In addition, emerging

technologies in the automotive industry such as autonomous vehicles, driver-assistance and accident-avoidance features, sensor technology,

and other forms of automation may reduce the future need for, or decrease the future pricing of, our auto insurance products.

Innovation and emerging technologies continue

to greatly impact the insurance industry.

If we are unable to keep pace with the technological changes that our competitors implement,

we may not be able to attract and retain customers, adequately price risks, or operate as efficiently as our competitors.

emerging technologies in the automotive industry such as autonomous vehicles, driver-assistance and accident-avoidance features, sensor

technology, and other forms of automation may reduce the future need for, or decrease the future pricing of, our auto insurance products.

Our success depends primarily on our ability

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● adverse changes in claims experience, such as distracted driving or a more aggressive tort environment.

Under the federal crop insurance program, each insurer

is required to accept every application for multi-peril crop insurance that they receive, and the premiums and the policy terms are set

by the RMA, which is the federal government agency administering the federal crop insurance program.

Under the federal crop insurance program, each

insurer is required to accept every application for multi-peril crop insurance that they receive, and the premiums and the policy terms

are set by the RMA, which is the federal government agency administering the federal crop insurance program.

Accordingly, no policy underwriting

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to decline to issue the policy.

Volatility in crop prices and yields, as a result

of weather conditions or other events, could adversely impact our financial condition and operating results.

Volatility in crop prices and yields, as

a result of weather conditions, trade policies, or other events, could adversely impact our financial condition and operating results.

Unpredictable weather conditions and other events

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volatility in our crop insurance business.

In addition, the amount of multi-peril crop insurance business we retain is subject to the

terms of the SRA and is dependent on the actual direct loss ratio experience.

A significant decrease in crop prices and variability in

the loss experience could have a material negative effect on our business and results of operations.

Additionally, international trade policies, including the imposition of tariffs between major

trading partners such as the United States and China, can create significant fluctuations in crop prices.

We are unable to predict the

ultimate result and duration of any tariff actions by the U.S.

government, or countermeasures that may be taken by other nations.

trade tensions and retaliatory tariffs may affect agricultural commodity prices and create additional market uncertainty in our crop insurance

In addition, the amount of multi-peril crop insurance business we retain is subject to the terms of the SRA and is dependent

on the actual direct loss ratio experience.

A significant decrease in crop prices and variability in the loss experience, whether caused

by weather events, trade policies, or other events, could have a material negative effect on our business and results of operations.

Our ability to manage our exposure to underwriting

risks depends on the availability and cost of reinsurance coverage.

We use reinsurance arrangements to manage the amount

of risk we retain, stabilize underwriting results, and increase underwriting capacity.

The availability and cost of reinsurance are subject

to current market conditions and may vary significantly over time.

Any decrease in the amount of reinsurance maintained will increase

our risk of loss.

We may be unable to maintain our desired reinsurance coverage or to obtain other reinsurance coverage in adequate amounts

and/or at favorable rates.

If we are unable to maintain appropriate reinsurance coverage, it may be difficult for us to manage our underwriting

risks and operate our business profitably.

We use reinsurance arrangements to manage the

amount of risk we retain, stabilize underwriting results, and increase underwriting capacity.

The availability and cost of reinsurance

are subject to current market conditions and may vary significantly over time.

Any decrease in the amount of reinsurance maintained will

increase our risk of loss.

We may be unable to maintain our desired reinsurance coverage or to obtain other reinsurance coverage in adequate

amounts and/or at favorable rates.

If we are unable to maintain appropriate reinsurance coverage, it may be difficult for us to manage

our underwriting risks and operate our business profitably.

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

If we cannot collect loss recoveries from our

reinsurers in accordance with our reinsurance agreements, we may incur additional losses.

If we cannot collect loss recoveries from

our reinsurers in accordance with our reinsurance agreements, we may incur additional losses.

Although reinsurance creates a contractual liability

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Business and Operational Risks

The impact of a future pandemic, and related economic conditions,

could materially affect our results of operations, financial position, and/or liquidity.

We face risks associated with pandemics, including the impact of reduced

economic activity and unemployment, government actions, and capital markets disruption.

These risks are unpredictable and difficult to

quantify, and could vary significantly depending on the extent and duration of the pandemic and related economic conditions, along with

potentially impacting each of our business segments and geographic markets differently.

The impact of a future pandemic, and related economic conditions, could

materially affect our results of operations, financial position, and/or liquidity.

We face risks associated with pandemics, including the impact

of reduced economic activity and unemployment, government actions, and capital markets disruption.

These risks are unpredictable and difficult

to quantify, and could vary significantly depending on the extent and duration of the pandemic and related economic conditions, along

with potentially impacting each of our business segments and geographic markets differently.

Any future federal, state, and local government actions to address

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in real estate valuations, and/or declines in fixed income yields, along with increased volatility in our equity portfolio.

We may not be able to grow our business if we

cannot retain and expand our captive and independent agent relationships, we cannot provide competitive products for these agents to sell,

and/or consumers seek other distribution methods offered by our competitors.

Our ability to retain existing agents, and to attract

new agents, is essential to the continued growth of our business.

We may not be able to grow our business if

we cannot retain and expand our captive and independent agent relationships, we cannot provide competitive products for these agents to

sell, and/or consumers seek other distribution methods offered by our competitors.

Our ability to retain existing agents, and to

attract new agents, is essential to the continued growth of our business.

Nodak Insurance utilizes captive agents who only sell our Company’s

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● changes in strategy resulting in the sale of an acquired business which may result in a capital loss.

Our access to capital may be limited or may not be available on favorable

Our future capital requirements depend on many factors, including rating

agency and regulatory requirements, the performance of our investment portfolio, strategic initiatives, acquisition opportunities, and

the ability to write business successfully at rate levels sufficient to cover losses.

We may need to raise additional capital in the future

through debt or equity financings.

However, we can provide no assurance that we will be successful in raising funds pursuant to additional

equity or debt financings or that such funds will be raised at prices that do not create substantial dilution for our existing stockholders.

Any debt financing obtained by us in the future would cause us to incur debt service expenses and could include restrictive covenants

relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain

additional capital and pursue business opportunities.

Macroeconomic challenges and volatility in capital markets could limit our ability

to raise capital when needed on terms favorable to us, or at all.

If we cannot obtain adequate capital or sources of credit on favorable

terms, or at all, our business, financial condition, results of operations, and strategic initiatives could be adversely affected.

We may be unable to attract, retain or effectively

manage the succession of key personnel.

The success of our business is dependent, to a large

extent, on our ability to attract and retain key employees, in particular our senior officers and key management of our insurance subsidiaries.

Our business may be adversely affected if labor market conditions make it difficult for us to retain or, if needed, replace our current

key officers with individuals having equivalent qualifications and experience at compensation levels competitive for our industry.

we believe we offer competitive compensation and benefit arrangements, there can be no guarantee that we will be able to retain our key

There is significant competition from within the property and casualty insurance industry and from businesses outside the industry

for those in key management positions, as well as others possessing highly specialized knowledge in areas such as actuarial, accounting,

information technology, and data and analytics.

In addition, our employment and other agreements with our key officers do not include

non-compete covenants or non-solicitation provisions because they are unenforceable under North Dakota law.

If we are not able to successfully

attract, retain, and motivate our employees, our business, financial results, and reputation could be materially and adversely affected.

The success of our business is dependent, to a

large extent, on our ability to attract and retain key employees, in particular our senior officers and key management of our insurance

subsidiaries.

Our business may be adversely affected if labor market conditions make it difficult for us to retain or, if needed, replace

our current key officers with individuals having equivalent qualifications and experience at compensation levels competitive for our industry.

While we believe we offer competitive compensation and benefit arrangements, there can be no guarantee that we will be able to retain

our key employees.

There is significant competition from within the property and casualty insurance industry and from businesses outside

the industry for those in key management positions, as well as others possessing highly specialized knowledge in areas such as actuarial,

accounting, information technology, and data and analytics.

In addition, our employment and other agreements with our key officers do

not include non-compete covenants or non-solicitation provisions because they are unenforceable under North Dakota law.

If we are not

able to successfully attract, retain, and motivate our employees, our business, financial results, and reputation could be materially

and adversely affected.

A failure in our operational systems or infrastructure,

or those of our third-party service providers, including operational errors, could disrupt business, damage our reputation, and cause

Our operations rely on the secure processing, storage,

and transmission of confidential information, including in our computer systems and networks and those of third-party service providers.

We rely heavily on our operating systems in connection with issuing policies, paying claims, and providing the information we need to

conduct our business.

We also rely on the operating systems of AFBIS in

connection with various processes with respect to our crop lines

Our business depends on effective information security and systems, and we place significant reliance on the integrity and

timeliness of the data our information systems process to support our business.

A breakdown or disruption of any of these systems could

materially adversely affect our ability to conduct our business and our results of operations.

Our operations rely on the secure processing,

storage, and transmission of confidential information, including in our computer systems and networks and those of third-party service

We rely heavily on our operating systems in connection with issuing policies, paying claims, and providing the information

we need to conduct our business.

We also rely on the operating systems of AFBIS in connection with various processes with respect to our

crop lines of business.

Our business depends on effective information security and systems, and we place significant reliance on the integrity

and timeliness of the data our information systems process to support our business.

A breakdown or disruption of any of these systems

could materially adversely affect our ability to conduct our business and our results of operations.

We are exposed to many other types of operational

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breakdown or failure, either as a result of human error or intentional sabotage or fraudulent manipulation of our operations or systems.

Cyberattacks, security breaches, or similar events

affecting the technologies and systems we rely on to operate our business and to maintain and protect sensitive Company and customer data

could disrupt our operations, harm our reputation, and result in material losses.

Cyberattacks, security breaches, or similar

events affecting the technologies and systems we rely on to operate our business and to maintain and protect sensitive Company and customer

data could disrupt our operations, harm our reputation, and result in material losses.

We have implemented administrative and technical

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Such laws and regulations

have become increasingly widespread and demanding in recent years and may result in increased compliance costs and risk of regulatory

have become increasingly widespread and demanding in recent

years and may result in increased compliance costs and risk of regulatory

actions or penalties.

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Regulatory Risks

A portion of our written premiums and net profits

are generated from multi-peril crop insurance business, and the loss of such business as a result of a termination of or substantial changes

to the federal crop insurance program could have an adverse effect on our revenues and net income.

A portion of our written premiums and net

profits are generated from multi-peril crop insurance business, and the loss of such business as a result of a termination of or substantial

changes to the federal crop insurance program could have an adverse effect on our revenues and net income.

In 2024, 2023, and 2022, our direct premiums written

generated from the multi-peril crop insurance line of business were 9.8%, 10.2%, and 12.8%, respectively, of total written premiums.

Through the FCIC, the U.S.

government subsidizes insurance companies by assuming an increasingly higher portion of losses incurred by

farmers as a result of weather-related and other perils as well as commodity price fluctuations.

government also subsidizes the

premium cost to farmers for multi-peril crop yield and revenue insurance.

the FCIC, the U.S.

government subsidizes insurance companies by assuming an increasingly higher portion of losses incurred by farmers

as a result of weather-related and other perils as well as commodity price fluctuations.

government also subsidizes the premium

cost to farmers for multi-peril crop yield and revenue insurance.

Without this risk assumption, losses incurred by insurance companies

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amount of insurance premium subsidy provided to farmers or otherwise reduce the coverage provided under multi-peril crop insurance policies,

would increase and purchases of multi-peril crop insurance could experience a significant decline nationwide and in our market

losses would increase and purchases of multi-peril crop insurance could experience a significant decline nationwide and in our market

Such changes could have an adverse effect on our revenues and income.

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federal corporate income taxes, could be enacted or changed and could have a material adverse impact on us.

We are subject to insurance industry laws and

regulations, as well as claims and legal proceedings, which if determined unfavorably, could have a material adverse effect on our profitability.

We are subject to insurance industry laws

and regulations, as well as claims and legal proceedings, which if determined unfavorably, could have a material adverse effect on our

profitability.

We are subject to extensive supervision and regulation

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our ability to operate our business.

Federal laws and regulations, and the influence of international laws and regulations, may have adverse

Federal laws and regulations, and

the influence of international laws and regulations, may have adverse

effects on our business, potentially including a change from a state-based system of regulation to a system of federal regulation, the

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We may become subject to class actions and individual

suits alleging breach of fiduciary or other duties, including our obligations to indemnify directors and officers in connection with

certain legal matters.

We are also subject to litigation arising out of our general business activities such as contractual and employment

relationships and claims regarding the infringement of the intellectual property of others.

Plaintiffs in class action and other lawsuits

against us may seek large or indeterminate amounts of damages, including punitive and treble damages, which may remain unknown for substantial

periods of time.

suits alleging breach of fiduciary or other duties, including our obligations to indemnify directors and officers in connection with certain

legal matters.

We are also subject to litigation arising out of our general business activities such as contractual and employment relationships

and claims regarding the infringement of the intellectual property of others.

Plaintiffs in class action and other lawsuits against us

may seek large or indeterminate amounts of damages, including punitive and treble damages, which may remain unknown for substantial periods

New or changes to existing accounting rules and standards could adversely

impact our reported results of operations.

Our consolidated financial statements are prepared in accordance with accounting

principles generally accepted in the United States of America (“GAAP”), as promulgated by the Financial Accounting Standards

Board (“FASB”), subject to the accounting-related rules and interpretations of the SEC.

New accounting rules or changes in

accounting standards or how they apply to our business may impact our reported financial condition or results of operations, and could

cause increased volatility in reported earnings, which could affect the trading price of our common stock or our credit ratings.

Risks Related to Our Common Stock

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its voting control to defeat a shareholder nominee for election to the Board of Directors of NI Holdings.

In addition, certain provisions of our Articles of

Incorporation, such as the prohibition of cumulative voting for the election of directors and the prohibition on any person or group acquiring

and having the right to vote in excess of 10% of our outstanding stock without the prior approval of the Board of Directors will make

removal of the Company’s management difficult.

Our status as an insurance holding company with

no direct operations could adversely affect our ability to fund operations, execute future share repurchases, or meet potential future

In addition, certain provisions of our Articles

of Incorporation, such as the prohibition of cumulative voting for the election of directors and the prohibition on any person or group

acquiring and having the right to vote in excess of 10% of our outstanding stock without the prior approval of the Board of Directors

will make removal of the Company’s management difficult.

Our status as an insurance holding company

with no direct operations could adversely affect our ability to fund operations, execute future share repurchases, or meet potential future

shareholder dividend and/or debt obligations.

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results could be adversely affected.

Statutory provisions and provisions of our Articles

of Incorporation and Bylaws may discourage takeover attempts of NI Holdings that shareholders may believe are in their best interests.

Statutory provisions and provisions of our

Articles of Incorporation and Bylaws may discourage takeover attempts of NI Holdings that shareholders may believe are in their best interests.

We are subject to provisions of North Dakota corporate

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that the transaction would be detrimental to policyholders.

Our Articles of Incorporation and Bylaws also contain

provisions that may discourage a change in control.

These provisions may serve to entrench management and may discourage a takeover attempt

that shareholders may consider to be in their best interest or in which they would receive a substantial premium over the current market

These provisions may make it extremely difficult for any one person, entity, or group of affiliated persons or entities to acquire

voting control of NI Holdings, with the result that it may be extremely difficult to bring about a change in the Board of Directors or

Some of these provisions also may perpetuate present management because of the additional time required to cause a change

in the control of the Board of Directors.

Other provisions make it difficult for shareholders owning less than a majority of the voting

stock to be able to elect even a single director.

Our Articles of Incorporation and Bylaws also

contain provisions that may discourage a change in control.

These provisions may serve to entrench management and may discourage a takeover

attempt that shareholders may consider to be in their best interest or in which they would receive a substantial premium over the current

market price.

These provisions may make it extremely difficult for any one person, entity, or group of affiliated persons or entities

to acquire voting control of NI Holdings, with the result that it may be

extremely difficult to bring about a change in the Board of

Directors or management.

Some of these provisions also may perpetuate present management because of the additional time required to cause

a change in the control of the Board of Directors.

Other provisions make it difficult for shareholders owning less than a majority of

the voting stock to be able to elect even a single director.

General Risks

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market fluctuations, and developments in the capital markets.

Investment income is an important component of our

net income and overall profitability.

We invest premiums received from policyholders and other available cash to generate investment income

and capital appreciation, while also maintaining sufficient liquidity to pay claims and operating expenses.

Changes in interest rates

and credit quality may result in fluctuations in the income derived from, the valuation of, and in the case of declines in credit quality,

payment defaults on our fixed income securities.

Such conditions could give rise to significant realized and unrealized investment losses

or the impairment of securities.

Potential higher interest rates could reduce the carrying value of our fixed income and short-term investments,

negatively impacting the Company’s carrying value in the short-term.

Over the long-term, however, higher interest rates would provide

an incremental benefit to our net investment income as excess cash and the proceeds of maturing bonds are reinvested at higher rates.

We manage our exposure to interest rate increases by monitoring the duration within our investment portfolio and maintaining maturities

that minimize any forced sales within the portfolio.

However, even with such monitoring efforts, we may be forced to sell securities at

a loss, which would adversely affect our results of operations.

Investment income is an important component of

our net income and overall profitability.

We invest premiums received from policyholders and other available cash to generate investment

income and capital appreciation, while also maintaining sufficient liquidity to pay claims and operating expenses.

Changes in interest

rates and credit quality may result in fluctuations in the income derived from, the valuation of, and in the case of declines in credit

quality, payment defaults on our fixed income securities.

Such conditions could give rise to significant realized and unrealized investment

losses or the impairment of securities.

Potential higher interest rates could reduce the carrying value of our fixed income and short-term

investments, negatively impacting the Company’s carrying value in the short-term.

Over the long-term, however, higher interest rates

would provide an incremental benefit to our net investment income as excess cash and the proceeds of maturing bonds are reinvested at

higher rates.

We manage our exposure to interest rate increases by monitoring the duration within our investment portfolio and maintaining

maturities that minimize any forced sales within the portfolio.

However, even with such monitoring efforts, we may be forced to sell securities

at a loss, which would adversely affect our results of operations.

We also invest a portion of our assets in equity

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We may not be able to manage our growth effectively.

We intend to continue to grow our business in the

future, which could require additional capital, systems development, and skilled personnel.

We intend to continue to grow our business in

the future, which could require additional capital, systems development, and skilled personnel.

However, there are inherent risks associated

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adverse effect on our business, financial condition, and results of operations.

We could be adversely affected by a future unexpected

business interruption involving our office buildings, operational systems and infrastructure, key external vendors, and/or workforce.

Our business operations could be substantially interrupted

by flooding, snow, ice, wind, and other weather-related incidents, or from fire, pandemics, power loss, telecommunications failures,

terrorism, or other such events.

Our business continuity plans may not sufficiently remediate all risks associated with future significant

business interruptions.

Any damage caused by such a failure or loss may cause interruptions in our business operations that may adversely

affect our service levels and business.

We could be adversely affected by a future

unexpected business interruption involving our office buildings, operational systems and infrastructure, key external vendors, and/or

Our business operations could be substantially

interrupted by flooding, snow, ice, wind, and other weather-related incidents, or from fire, pandemics, power loss, telecommunications

failures, terrorism, or other such events.

Our business continuity plans may not sufficiently remediate all risks associated with future

significant business interruptions.

Any damage caused by such a failure or loss may cause interruptions in our business operations that

may adversely affect our service levels and business.

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 1A. Risk Factors