NI Holdings Inc

Previous wording

2024 Third Quarter Consolidated Results of Continuing Operations

Current wording

2025 First Quarter Consolidated Results of Operations

Previous wording

2024 Third Quarter Consolidated Financial Condition

Current wording

2025 First Quarter Consolidated Financial Condition

Previous wording

Our consolidated net loss from continuing operations was $2,705 for the three months ended September 30, 2024, compared to net income from continuing operations of $805 for the three months ended September 30, 2023. Our consolidated net loss from continuing operations was $3,248 for the nine months ended September 30, 2024, compared to net income from continuing operations of $43 for the nine months ended September 30, 2023.

Current wording

Our consolidated net income from continuing operations was $6,460 and $6,935 for the three months ended March 31, 2025 and 2024, respectively.

Previous wording

The major components of revenues and net loss are shown below:

Current wording

The major components of our revenues and net income for the two periods are shown below:

Previous wording

Below are comments regarding net premiums earned by business segment:

Current wording

Below are comments regarding significant changes in net premiums earned by business segment:

Previous wording

Private Passenger Auto – Net premiums earned for the third quarter of 2024 increased $1,377, or 6.5%, compared to the same period in 2023. Net premiums earned for the first nine months of 2024 increased $5,754, or 9.4% from the first nine months of 2023. Results were driven by new business growth in North Dakota as well as significant rate increases in North Dakota, South Dakota, and Nebraska, partially offset by lower new business and retention levels in South Dakota and Nebraska as a result of underwriting actions taken to improve profitability.

Current wording

Private Passenger Auto – Net premiums earned for the three months ended March 31, 2025, increased $556, or 2.5%, compared to the same period in 2024. Results were driven by new business growth in North Dakota as well as significant rate increases in South Dakota, and Nebraska, partially offset by lower new business and retention levels in South Dakota and Nebraska as a result of underwriting actions taken.

Previous wording

Home and Farm – Net premiums earned for the third quarter of 2024 increased $2,170, or 10.2%, compared to the same period in 2023. Net premiums earned for the first nine months of 2024 increased $5,103, or 8.3% from the first nine months of 2023. Results were driven by new business growth in North Dakota, rate increases, and increased insured property values, which were primarily the result of higher inflationary factors. These increases were partially offset by lower retention rates and new business levels in Nebraska and South Dakota as a result of underwriting actions taken to improve profitability.

Current wording

Home and Farm – Net premiums earned for the three months ended March 31, 2025, increased $2,307, or 10.8%, compared to the same period in 2024. Results were driven by new business growth in North Dakota, rate increases, and increased insured property values. These increases were partially offset by lower retention rates and new business levels in Nebraska as a result of underwriting actions taken to improve profitability.

Previous wording

All Other – Net premiums earned for the third quarter of 2024, increased $396, or 13.7%, compared to the same period in 2023. Net premiums earned for the first nine months of 2024 increased $406, or 4.6%, from the first nine months of 2023. Results were driven by rate and insured value increases for the commercial and excess lines of business, partially offset by the continued run-off of our participation in an assumed domestic and international reinsurance pool of business.

Current wording

All Other – The net loss and loss adjustment expense ratio decreased 9.3 percentage points in the three-month period ended March 31, 2025, compared to the same period in 2024. This decrease was driven by favorable loss development related to the continued run-off of our participation in an assumed domestic and international reinsurance pool of business.

Previous wording

The expense ratio is calculated by dividing other underwriting and general expenses and amortization of deferred policy acquisition costs by net premiums earned. The expense ratio measures a company’s operational efficiency in producing, underwriting, and administering its insurance business. The overall expense ratio increased 1.6 percentage points and 1.2 percentage points in the three-and nine-month periods ended September 30, 2024, respectively, compared to the same periods in 2023. The increase in the amortization of deferred policy acquisition costs is due to higher deferrable costs resulting from significant premium growth compared to the prior year, including significant growth in the Non-Standard Auto segment which generally pays higher agent commissions than our other segments. The increase in the other underwriting and general expenses is due to the costs incurred in the current quarter associated with the execution of the separation agreement with our former Chief Executive Officer.

Current wording

The expense ratio is calculated by dividing other underwriting and general expenses and amortization of deferred policy acquisition costs by net premiums earned. The expense ratio measures a company’s operational efficiency in producing, underwriting, and administering its insurance business. The overall expense ratio increased 0.8 percentage points in the three-month period ended March 31, 2025, compared to the same period in 2024. The increase was driven by generally consistent expenses compared to lower net premiums earned in the current quarter as a result of the strategic reduction of written premium in our Non-Standard Auto segment.

Previous wording

The total underwriting loss increased $8,578 for the three-month period ended September 30, 2024, compared to the same period in 2023. The total underwriting loss increased $9,508 for the nine-month period ended September 30, 2024, compared to the same period in 2023. These results were driven by the factors discussed in the Loss and Loss Adjustment Expenses as well as the Underwriting and General Expenses and Expense Ratio sections above.

Current wording

The total underwriting gain decreased $406 to a gain of $3,812 for the three-month period ended March 31, 2025, from a gain of $4,218 for the three-month period ended March 31, 2024. These results were driven by the factors discussed in the Loss and Loss Adjustment Expenses the Underwriting and General Expenses and Expense Ratio sections above.

Previous wording

The overall combined ratio increased 10.2 percentage points in the three-month period ended September 30, 2024, compared to the same period in 2023. The overall combined ratio increased 3.7 percentage points in the nine-month period ended September 30, 2024, compared to the same period in 2023. These results were driven by the factors discussed in the Loss and Loss Adjustment Expenses as well as the Underwriting and General Expenses and Expense Ratio sections above.

Current wording

The overall combined ratio increased 0.5 percentage points in the three-month period ended March 31, 2025, compared to the same period in 2024. These results were driven by the factors discussed in the Loss and Loss Adjustment Expenses and the Underwriting and General Expenses and Expense Ratio sections above.

Previous wording

We had fee and other income of $491 and $1,590 for the three and nine months ended September 30, 2024, respectively, compared to $445 and $1,196 for the three and nine months ended September 30, 2023, respectively. Fee income is largely attributable to the Non-Standard Auto segment and is a key component in measuring its profitability. Fee and other income on this business increased to $281 and $971 for the three and nine months ended September 30, 2024, respectively, from $278 and $748 for the three and nine months ended September 30, 2023, respectively, driven by growth in this segment.

Current wording

We had fee and other income of $230 for the three months ended March 31, 2025, compared to $404 for the three months ended March 31, 2024. Fee income is largely attributable to the Non-Standard Auto segment and is a key component in measuring its profitability. Fee and other income on this business decreased to $221 for the three months ended March 31, 2025, from $350 for the three months ended March 31, 2024, driven by the strategic reduction in written premium within this segment.

Previous wording

The following table shows our average cash and invested assets, net investment income, and return on average cash and invested assets for the reported periods for continuing operations:

Current wording

The following table shows our average cash and invested assets, net investment income, and return on average cash and invested assets for the reported periods:

Previous wording

Gross and net return on average cash and invested assets increased year-over-year, primarily driven by the favorable interest rate environment that resulted in significantly higher net investment income on an increased average balance of fixed income securities as well as cash and cash equivalents (measured at fair value). In addition, the increase in investments in high dividend yield equities resulted in relatively consistent year-over-year dividend income despite a reduction in the average equities balance (measured at fair value). The increase in average cash and invested assets was driven by changes in the fair value of fixed income securities due to the interest rate environment as well as higher operating cash flows during the first nine months of 2024.

Current wording

Gross and net return on average cash and invested assets decreased year-over-year, primarily driven by lower returns on high dividend yield equities as well as cash and other short-term investments, partially offset by higher returns on the average fixed income securities balance (measured at fair value). The increase in average cash and invested assets was driven by increases in cash and investments from the generation of positive operating cash flows during 2024 and the first quarter of 2025.

Previous wording

We had net realized gains of $45 and losses of $37 for the three and nine months ended September 30, 2024, respectively, compared to net realized gains of $509 and $12,046 for the three and nine months ended September 30, 2023, respectively. The elevated net realized gains in the nine months ended September 30, 2023, were the result of a strategic liquidation of a portfolio of equity securities. The gross realized gains from the sale of these securities were largely offset by the elimination of the unrealized gain position of these securities. No credit impairment losses were reported during any of the periods presented.

Current wording

We had net realized gains of $326 for the three months ended March 31, 2025, compared to net realized losses of $91 for the three months ended March 31, 2024, which were the result of routine portfolio management decisions. No credit impairment losses were reported during any of the periods presented.

Previous wording

We experienced an increase of $2,367 and $3,325 in net unrealized gains on equity securities during the three and nine months ended September 30, 2024, respectively, attributable to overall favorable equity markets during the current quarter and year-to-date. We experienced a decrease in net unrealized gains on equity securities of $1,464 and $11,771 during the three and nine months ended September 30, 2023, respectively. The decrease in unrealized gains on equity securities during the nine months ended September 30, 2023, was driven by the equity portfolio liquidation noted above and the impact of changes in fair value attributable to equity market volatility.

Current wording

We experienced an increase in net unrealized gains on equity securities of $543 and $1,547 during the three months ended March 31, 2025 and 2024, respectively, driven by the impact of changes in fair value attributable to favorable equity markets during these periods.

Previous wording

Our fixed income securities are classified as available for sale because we will, from time to time, make sales of securities that are not impaired, consistent with our investment goals and policies. The fixed income portion of the portfolio experienced net unrealized gains of $11,138 and $8,848 during the three and nine months ended September 30, 2024, respectively, compared to net unrealized losses of $8,718 and $5,741 during the three and nine months ended September 30, 2023, respectively. The changes were primarily the result of changes in U.S. interest rates. The change in the fair value of fixed income securities is not reflected in net income; rather it is reflected as a separate component (net of income taxes) of other comprehensive income.

Current wording

Our fixed income securities are classified as available for sale because we will, from time to time, execute sales of securities that are not impaired, consistent with our investment goals and policies. The fixed income portion of the portfolio experienced net unrealized gains of $3,313 during the three months ended March 31, 2025, compared to net unrealized losses of $1,531 during the three months ended March 31, 2024. The change was primarily the result of changes in U.S. interest rates. The change in the fair value of fixed income securities is not reflected in net income; rather it is reflected as a separate component (net of income taxes) of other comprehensive income.

Previous wording

For the three months ended September 30, 2024, we had a pre-tax loss of $3,456 compared to a pre-tax income of $1,019 for the three months ended September 30, 2023. The year-over-year change was largely attributable to higher non-catastrophe weather-related losses for Home and Farm in the states of North Dakota and Nebraska, unfavorable prior year loss reserve development for Non-Standard Auto, and expenses incurred related to the separation agreement with our former Chief Executive Officer, partially offset by net earned premium growth, improved loss experience for Private Passenger Auto, and higher net investment income.

Current wording

For the three months ended March 31, 2025, we had pre-tax income of $7,749 compared to a pre-tax income of $8,833 for the three months ended March 31, 2024. This change was attributable to the higher underwriting loss in the Non-Standard Auto segment, and less favorable market conditions for equity investments, partially offset by earned premium growth in our other segments, higher net investment income, and lower frequency of large loss experience in the Home and Farm segment.

Previous wording

We recorded an income tax benefit of $751 for the three months ended September 30, 2024, compared to an income tax expense of $214 for the three months ended September 30, 2023. Our effective tax rate for the third quarter of 2024 was 21.7% compared to an effective tax rate of 21.0% for the third quarter of 2023.

Current wording

We recorded income tax expense of $1,289 for the three months ended March 31, 2025, compared to income tax expense of $1,898 for the three months ended March 31, 2024. Our effective tax rate for the first quarter of 2025 was 16.6% compared to an effective tax rate of 21.5% for the first quarter of 2024. The current quarter effective tax rate was impacted by a change in our valuation allowance against deferred income tax assets.

Previous wording

For the three months ended September 30, 2024, we had annualized return on average equity, after non-controlling interest, of (4.5)% compared to annualized return on average equity, after non-controlling interest, of 1.3% for the three months ended September 30, 2023.

Current wording

For the three months ended March 31, 2025, we had annualized return on average equity of 10.4% compared to 12.1% for the three months ended March 31, 2024.

Previous wording

Average equity is calculated as the average between beginning and ending equity, excluding non-controlling interest, for the period.

Current wording

Average equity is calculated as the average between beginning and ending equity for the period.

Previous wording

The change in cash and cash equivalents for continuing and discontinued operations for the nine months ended September 30, 2024 and 2023, were as follows:

Current wording

The change in cash and cash equivalents for continuing and discontinued operations for the three months ended March 31, 2025 and 2024, were as follows:

Previous wording

For the nine months ended September 30, 2024, net cash provided by operating activities totaled $16,780 compared to $9,458 a year ago. This change was primarily driven by lower levels of loss and loss adjustment payments in the current year partially offset by higher levels of tax payments (net of refunds) in the current year.

Current wording

For the three months ended March 31, 2025, net cash provided by operating activities totaled $9,888 compared to $16,663 in the prior year quarter. This change was primarily driven by lower levels of cash received for premiums in the current year quarter and positive cash flows from discontinued operations in the prior year quarter, partially offset by lower levels of loss and loss adjustment expense payments in the current year quarter.

Previous wording

For the nine months ended September 30, 2024, net cash used by financing activities totaled $3,613 compared to $7,454 a year ago. This decrease in cash used was attributable to a reduction in share repurchases in the current year partially offset by the final pooling settlement between Nodak Insurance and Westminster.

Current wording

For the three months ended March 31, 2025, net cash used by financing activities totaled $157 compared to $178 a year ago. This decrease in cash used was attributable to a reduction in the issuance of vested award shares in the current year quarter.

Previous wording

Direct Auto re-domesticated from Illinois to North Dakota during 2021 and is now subject to the same dividend restrictions as Nodak Insurance. The amount available for payment of dividends from Direct Auto to NI Holdings during 2024 without the prior approval of the North Dakota Insurance Department is approximately $90 as of December 31, 2023. No dividends were declared or paid by Direct Auto during the nine months ended September 30, 2024, or the year ended December 31, 2023.

Current wording

The amount available for payment of dividends from Direct Auto to NI Holdings during 2025 without the prior approval of the North Dakota Insurance Department is approximately $3,146 as of December 31, 2024. No dividends were declared or paid by Direct Auto during the three months ended March 31, 2025, or the year ended December 31, 2024.

Previous wording

There is no amount available for payment of dividends from Nodak Insurance to NI Holdings during 2024 without the prior approval of the North Dakota Insurance Department. Prior to its payment of any dividend, Nodak Insurance will be required to provide notice of the dividend to the North Dakota Insurance Department. This notice must be provided to the North Dakota Insurance Department 30 days prior to the payment of an extraordinary dividend and 10 days prior to the payment of an ordinary dividend. The North Dakota Insurance Department has the power to limit or prohibit dividend payments if an insurance company is in violation of any law or regulation. These restrictions or any subsequently imposed restrictions may affect our future liquidity. No dividends were declared or paid by Nodak Insurance during the nine months ended September 30, 2024, or the year ended December 31, 2023.

Current wording

Prior to the payment of any dividend, we will be required to provide notice of the dividend to the North Dakota Insurance Department. This notice must be provided to the North Dakota Insurance Department 30 days prior to the payment of an extraordinary dividend and 10 days prior to the payment of an ordinary dividend. The North Dakota Insurance Department has the power to limit or prohibit dividend payments if an insurance company is in violation of any law or regulation. These restrictions or any subsequently imposed restrictions may affect our future liquidity.

Previous wording

Westminster re-domesticated from Maryland to North Dakota during 2021 and was subject to the same dividend restrictions as Nodak Insurance. Westminster was sold on June 30, 2024. No dividends were declared or paid by Westminster to NI Holdings during the nine months ended September 30, 2024, or the year ended December 31, 2023. For additional information see Part I, Item 1, Note 19 “Discontinued Operations” of this Quarterly Report on Form 10-Q.

Current wording

Westminster was sold on June 30, 2024, and therefore no dividends are available to be paid to NI Holdings subsequent to that date. No dividends were declared or paid by Westminster during the year ended December 31, 2024. See Part I, Item 1, Note 19 “Discontinued Operations” of this Form 10-Q for additional information.