[FORWARD-LOOKING STATEMENTS](index=4&type=section&id=FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements regarding anticipated operating and financial performance, business plans, acquisitions, market entry, industry changes, regulatory impacts, macroeconomic trends, and growth management - This report contains forward-looking statements regarding anticipated operating and financial performance, business plans, acquisitions, market entry, industry changes, regulatory impacts, macroeconomic trends, and growth management. **Actual outcomes may vary materially** due to underlying assumptions, known or unknown risks, and uncertainties, including those detailed in the 'Risk Factors' sections of this 10-Q and the 2021 Annual Report[12](index=12&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk) [Part I. - FINANCIAL INFORMATION](index=5&type=section&id=Part%20I.%20-%20FINANCIAL%20INFORMATION) Presents unaudited consolidated financial statements and management's discussion and analysis [Item 1. - Financial Statements](index=5&type=section&id=Item%201.%20-%20Financial%20Statements) This section presents the unaudited consolidated financial statements of NI Holdings, Inc. for the periods ended September 30, 2022, and December 31, 2021, including balance sheets, statements of operations, comprehensive income (loss), changes in shareholders' equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, investments, and segment performance [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Presents the company's financial position, detailing assets, liabilities, and shareholders' equity at specific dates Consolidated Balance Sheets (in thousands) | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | :----------- | :----------- | | Total Assets | $636,537 | $651,782 | | Total Liabilities | $385,716 | $304,369 | | Total Shareholders' Equity | $250,821 | $347,413 | - Total assets decreased by **$15,245 (2.3%)** from December 31, 2021, to September 30, 2022, primarily due to a decrease in total cash and investments. Total liabilities increased by **$81,347 (26.7%)** during the same period, mainly driven by higher unpaid losses and loss adjustment expenses and unearned premiums. Total shareholders' equity decreased by **$96,592 (27.8%)** over the nine-month period[16](index=16&type=chunk) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net income or loss over specific reporting periods Consolidated Statements of Operations (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenues | $89,175 | $84,609 | $231,105 | $238,620 | | Total Expenses | $102,418 | $91,090 | $300,792 | $235,724 | | Net Income (Loss) | $(10,169) | $(4,859) | $(54,766) | $2,189 | | Net Income (Loss) attributable to NI Holdings, Inc. | $(9,985) | $(4,737) | $(53,986) | $2,288 | | Basic EPS | $(0.47) | $(0.22) | $(2.53) | $0.11 | - The company reported a **significant increase in net loss** for both the three-month and nine-month periods ended September 30, 2022, compared to the prior year. Total revenues for the nine months **decreased by $7,515 (3.1%)**, while total expenses **increased by $65,068 (27.6%)**, primarily driven by higher losses and loss adjustment expenses[17](index=17&type=chunk) [Consolidated Statements of Comprehensive Income (Loss)](index=7&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Reports net income or loss and other comprehensive income or loss, reflecting all non-owner changes in equity Consolidated Statements of Comprehensive Income (Loss) (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Income (Loss) | $(10,169) | $(4,859) | $(54,766) | $2,189 | | Other comprehensive income (loss), net of income taxes | $(9,834) | $(1,676) | $(38,594) | $(5,090) | | Comprehensive Income (Loss) | $(20,003) | $(6,535) | $(93,360) | $(2,901) | - The company experienced a **substantial increase in comprehensive loss**, primarily due to **significant holding losses on investments**, net of income taxes, which **worsened from $(1,676) thousand in Q3 2021 to $(9,834) thousand in Q3 2022**, and **from $(5,090) thousand in 9M 2021 to $(38,594) thousand in 9M 2022**[19](index=19&type=chunk)[20](index=20&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Outlines changes in equity components, including common stock, retained earnings, and comprehensive income Consolidated Statements of Changes in Shareholders' Equity (in thousands) | Metric (in thousands) | Balance, Dec 31, 2021 | Balance, Sep 30, 2022 | | :-------------------- | :-------------------- | :-------------------- | | Common Stock | $230 | $230 | | Additional Paid-in Capital | $98,166 | $95,980 | | Retained Earnings | $267,207 | $213,231 | | Accumulated Other Comprehensive Income (Loss) | $5,237 | $(31,986) | | Treasury Stock | $(26,452) | $(27,508) | | Non-controlling Interest | $4,209 | $2,058 | | Total Shareholders' Equity | $347,413 | $250,821 | - Shareholders' equity **significantly decreased from $347,413 thousand at December 31, 2021, to $250,821 thousand at September 30, 2022**. This decline was primarily driven by a **net loss of $53,986 thousand** and a **substantial decrease in accumulated other comprehensive income (loss) by $37,223 thousand**, reflecting unfavorable investment market conditions[22](index=22&type=chunk) [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities over specific periods Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | | Net cash flows from operating activities | $(24,680) | $9,489 | | Net cash flows from investing activities | $18,639 | $(52,471) | | Net cash flows from financing activities | $(10,305) | $(10,366) | | Net decrease in cash and cash equivalents | $(16,346) | $(53,348) | | Cash and cash equivalents at end of period | $54,277 | $47,729 | - Operating activities **shifted from providing $9,489 thousand in cash in 9M 2021 to using $24,680 thousand in 9M 2022**, mainly due to higher claim payments from catastrophe losses and increased receivables. Investing activities **provided $18,639 thousand in 9M 2022**, a **significant improvement from using $52,471 thousand in 9M 2021**, driven by more sales of securities to cover losses and less new investment purchases[24](index=24&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) Provides detailed explanations and supplementary information for financial statements, policies, and segment data [1. Organization](index=12&type=section&id=1.%20Organization) Describes the company's corporate structure, subsidiaries, and their operational roles in the insurance industry - NI Holdings, Inc. is a North Dakota business corporation serving as the stock holding company for Nodak Insurance and its subsidiaries, including American West, Primero, Direct Auto, and Westminster. Nodak Insurance is the **largest domestic property and casualty insurer in North Dakota**, offering various coverages through captive agents, while other subsidiaries utilize independent agents[26](index=26&type=chunk)[27](index=27&type=chunk)[35](index=35&type=chunk) - Battle Creek Mutual Insurance Company is affiliated with Nodak Insurance, which provides administrative services and controls Battle Creek via a surplus note, leading to its consolidation in NI Holdings' financial statements with policyholders' interest reflected as a non-controlling interest[31](index=31&type=chunk) [2. Basis of Presentation and Accounting Policies](index=13&type=section&id=2.%20Basis%20of%20Presentation%20and%20Accounting%20Policies) Outlines financial statement preparation principles, GAAP compliance, and future accounting standard adoptions - The unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information, with all necessary adjustments included. The company will **lose its Emerging Growth Company (EGC) status on December 31, 2022**, and will adopt new FASB guidance on leases, credit losses, and income taxes in Q4 2022, though **no significant impact** on financial position, results of operations, or cash flows is expected[37](index=37&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) - The Inflation Reduction Act (IRA), effective January 1, 2023, is **not expected to significantly impact** the company's financial position, results of operations, and cash flows, as it is not anticipated to be subject to the new corporate alternative minimum tax, and any excise tax on stock repurchases will be recognized as part of treasury stock cost[46](index=46&type=chunk) [3. Investments](index=15&type=section&id=3.%20Investments) Details the company's investment portfolio, including fixed income and equity securities, and fair value measurements Investment Portfolio Fair Value (in thousands) | Investment Type (in thousands) | Fair Value (Sep 30, 2022) | Fair Value (Dec 31, 2021) | | :----------------------------- | :------------------------ | :------------------------ | | Fixed income securities | $294,211 | $364,651 | | Equity securities | $58,377 | $77,690 | | Other investments | $2,005 | $2,005 | | Total cash and investments | $408,870 | $514,969 | Net Investment Income and Gains (Losses) (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net investment income | $2,035 | $1,713 | $5,703 | $4,959 | | Net investment gains (losses) | $(2,868) | $222 | $(19,532) | $10,734 | - Fixed income securities experienced **significant gross unrealized losses of $(43,283) thousand** at September 30, 2022, **compared to $(2,299) thousand** at December 31, 2021, primarily due to rising interest rates. The company **did not record any other-than-temporary impairments** during the reported periods[48](index=48&type=chunk)[53](index=53&type=chunk) [4. Fair Value Measurements](index=19&type=section&id=4.%20Fair%20Value%20Measurements) Explains the methodology for valuing financial instruments, categorizing them by fair value hierarchy levels - The company uses a fair value hierarchy (Level I, II, III) to measure assets, primarily relying on an independent pricing service. Most fixed income securities are valued using **Level II inputs**, while equity securities and cash equivalents are based on **Level I inputs**. There were **no Level III assets or liabilities** at September 30, 2022, or December 31, 2021[57](index=57&type=chunk)[59](index=59&type=chunk)[61](index=61&type=chunk)[64](index=64&type=chunk) Assets at Fair Value by Level (in thousands) | Asset Type (in thousands) | Total Fair Value (Sep 30, 2022) | Level I (Sep 30, 2022) | Level II (Sep 30, 2022) | | :------------------------ | :------------------------------ | :--------------------- | :---------------------- | | Fixed income securities | $294,211 | $- | $294,211 | | Equity securities | $58,377 | $58,377 | $- | | Cash equivalents | $26,357 | $26,357 | $- | | Total assets at fair value | $378,945 | $84,734 | $294,211 | [5. Reinsurance](index=21&type=section&id=5.%20Reinsurance) Describes the company's reinsurance strategies to mitigate risk and manage catastrophic losses - The company uses reinsurance to limit maximum net loss from large or concentrated risks, **retaining the first $15,000 of weather-related catastrophic losses in 2022 (up to $125,000 in excess)** and **$10,000 in 2021 (up to $117,000 in excess)**. Multiple severe weather events in Q2 and Q3 2022 led to an accrual for reinsurance recoveries. Reinsurance recoverables on paid and unpaid losses are from companies with **'A' or higher AM Best ratings**[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) Net Premiums Earned and Losses & LAE (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net premiums earned | $89,532 | $82,173 | $243,615 | $221,589 | | Net losses and loss adjustment expenses | $78,917 | $65,742 | $227,641 | $165,549 | [6. Deferred Policy Acquisition Costs](index=22&type=section&id=6.%20Deferred%20Policy%20Acquisition%20Costs) Details the deferral and amortization of costs associated with acquiring new insurance policies Deferred Policy Acquisition Costs (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Balance, beginning of period | $30,917 | $29,657 | $24,947 | $23,968 | | Deferral of policy acquisition costs | $16,491 | $8,717 | $54,328 | $47,879 | | Amortization of deferred policy acquisition costs | $(17,589) | $(12,898) | $(49,456) | $(46,371) | | Balance, end of period | $29,819 | $25,476 | $29,819 | $25,476 | - Deferred policy acquisition costs **increased to $29,819 thousand** at September 30, 2022, **from $24,947 thousand** at the beginning of the nine-month period. The deferral of policy acquisition costs **significantly increased by $6,449 thousand (13.5%)** for the nine months ended September 30, 2022, compared to the same period in 2021[75](index=75&type=chunk) [7. Unpaid Losses and Loss Adjustment Expenses](index=23&type=section&id=7.%20Unpaid%20Losses%20and%20Loss%20Adjustment%20Expenses) Reports the liabilities for estimated future payments on reported and unreported insurance claims Unpaid Losses and Loss Adjustment Expenses (in thousands) | Metric (in thousands) | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | | Net balance, beginning of period | $118,462 | $97,040 | | Total incurred | $227,641 | $165,549 | | Total paid | $193,156 | $125,691 | | Net balance, end of period | $152,947 | $136,898 | - The net liability for unpaid losses and loss adjustment expenses **increased to $152,947 thousand** at September 30, 2022, **from $118,462 thousand** at the beginning of the period. The company reported **$7,182 thousand of net favorable development** on prior accident years in 9M 2022, primarily from Battle Creek and American West, **compared to $6,894 thousand in 9M 2021**[77](index=77&type=chunk) [8. Property and Equipment](index=23&type=section&id=8.%20Property%20and%20Equipment) Provides information on the company's tangible assets, including cost, depreciation, and net value Property and Equipment (in thousands) | Metric (in thousands) | Sep 30, 2022 | Dec 31, 2021 | | :-------------------- | :----------- | :----------- | | Gross cost | $21,357 | $21,227 | | Accumulated depreciation | $(11,433) | $(11,358) | | Total property and equipment, net | $9,924 | $9,869 | - Net property and equipment remained relatively stable, **increased slightly to $9,924 thousand** at September 30, 2022, **from $9,869 thousand** at December 31, 2021. **Depreciation expense for the nine months ended September 30, 2022, was $517 thousand**, a **slight increase from $503 thousand** in the prior year[79](index=79&type=chunk) [9. Goodwill and Other Intangibles](index=24&type=section&id=9.%20Goodwill%20and%20Other%20Intangibles) Details the company's intangible assets, including goodwill from acquisitions and other amortizable assets Goodwill and Other Intangibles (in thousands) | Intangible Type (in thousands) | Sep 30, 2022 (Net) | Dec 31, 2021 (Net) | | :----------------------------- | :----------------- | :----------------- | | Goodwill | $9,384 | $9,384 | | Other Intangible Assets (Net) | $7,984 | $8,338 | | Total Goodwill and Other Intangibles | $17,368 | $17,722 | - **Goodwill remained constant at $9,384 thousand**, primarily from the acquisitions of Primero and Westminster. Other intangible assets, including trade names and distribution networks, decreased slightly due to amortization. **Amortization expense for other intangible assets was $354 thousand** for both the nine months ended September 30, 2022, and 2021[81](index=81&type=chunk)[82](index=82&type=chunk) [10. Related Party Transactions](index=25&type=section&id=10.%20Related%20Party%20Transactions) Describes intercompany agreements, reinsurance pooling, and transactions with affiliated entities - Effective January 1, 2020, all insurance subsidiary and affiliate companies entered an **intercompany reinsurance pooling agreement**, with **Nodak Insurance as the lead company**, assuming net premiums, losses, and underwriting expenses. This arrangement allows for group evaluation by AM Best and a **single combined financial strength rating**[85](index=85&type=chunk) Reinsurance Pool Percentages | Company | Pool Percentage | | :------ | :-------------- | | Nodak Insurance Company | 66.0% | | American West Insurance Company | 7.0% | | Primero Insurance Company | 3.0% | | Battle Creek Mutual Insurance Company | 2.0% | | Direct Auto Insurance Company | 13.0% | | Westminster American Insurance Company | 9.0% | | Total | 100.0% | - The company has a royalty agreement with North Dakota Farm Bureau (NDFB) based on Nodak Insurance's written premiums, with **royalties paid totaling $1,141 thousand** for the nine months ended September 30, 2022. Insurance subsidiaries are subject to state regulations restricting dividend payments, with specific amounts available for Nodak Insurance (**$21,493 thousand**), Direct Auto (**$3,796 thousand**), and Westminster (**$2,471 thousand**) in 2022 without prior approval[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk)[93](index=93&type=chunk) [11. Benefit Plans](index=28&type=section&id=11.%20Benefit%20Plans) Outlines the company's employee benefit programs, including 401(k), profit-sharing, and stock ownership plans - The company sponsors 401(k) plans for eligible employees, with **expenses of $502 thousand** for 9M 2022. It also contributes to a profit-sharing plan (**$648 thousand** for 9M 2022) and offers a non-qualified deferred compensation plan for key executives (**$150 thousand** for 9M 2022)[98](index=98&type=chunk)[99](index=99&type=chunk)[101](index=101&type=chunk) - An Employee Stock Ownership Plan (ESOP) was established in 2017, investing solely in company common stock. Nodak Insurance makes semi-annual contributions to the ESOP, which then makes loan payments, releasing shares to participant accounts annually. **Compensation expense related to the ESOP was $298 thousand** for 9M 2022[102](index=102&type=chunk)[103](index=103&type=chunk)[104](index=104&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) [12. Line of Credit](index=29&type=section&id=12.%20Line%20of%20Credit) Details the company's available credit facility, its terms, and usage during the reporting periods - Nodak Insurance maintains a **$5,000 thousand line of credit** with Wells Fargo Bank, N.A., bearing a floating interest rate with a **3.25% floor**, set to **expire on May 31, 2023**. There were **no outstanding amounts** on this line of credit during the nine months ended September 30, 2022, or the year ended December 31, 2021[111](index=111&type=chunk) [13. Income Taxes](index=29&type=section&id=13.%20Income%20Taxes) Provides information on tax positions, deferred tax assets, and net operating loss carryforwards - As of September 30, 2022, and December 31, 2021, the company had **no unrecognized tax benefits**, accrued interest, or penalties. Battle Creek had net operating loss carryforwards of **$3,215 thousand** at December 31, 2021, expiring through 2032, and Westminster had a **$2,122 thousand** NOL carryforward expiring in 2023[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) [14. Operating Leases](index=30&type=section&id=14.%20Operating%20Leases) Details the company's lease commitments for facilities and associated expenses - The company's subsidiaries lease various facilities under non-cancellable operating leases, with **total expenses of $239 thousand** for the nine months ended September 30, 2022. **Minimum future commitments under these leases total $2,126 thousand**, with **$96 thousand remaining for 2022** and **$775 thousand thereafter**[116](index=116&type=chunk)[117](index=117&type=chunk) [15. Contingencies](index=30&type=section&id=15.%20Contingencies) Discusses potential liabilities from lawsuits and other uncertain events that may impact financial results - The company is involved in various lawsuits in the normal course of business, but currently **does not consider any litigation to be material** to its financial position. However, uncertainties inherent in litigation mean that results of operations and financial condition **could be materially adversely affected**[118](index=118&type=chunk) [16. Common Stock](index=30&type=section&id=16.%20Common%20Stock) Provides details on the company's common stock, including shares outstanding and repurchase activities Common Stock Activity | Metric | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :----- | :-------------------------- | :-------------------------- | | Shares outstanding, beginning of period | 21,219,808 | 21,318,638 | | Treasury shares repurchased | (173,419) | (168,393) | | Issuance of treasury shares for vesting of restricted stock units | 101,292 | 102,060 | | Shares outstanding, end of period | 21,147,681 | 21,252,305 | - The company **repurchased 173,419 shares for $2,870 thousand** during the nine months ended September 30, 2022, under a **$5,000 thousand authorization** approved in August 2021, with **$575 thousand remaining**. A **new $10,000 thousand repurchase authorization** was approved in May 2022, with no shares repurchased under it during the period[121](index=121&type=chunk)[123](index=123&type=chunk) [17. Stock Based Compensation](index=31&type=section&id=17.%20Stock%20Based%20Compensation) Explains the company's equity incentive plans, including Restricted Stock Units and Performance Stock Units - The NI Holdings, Inc. 2020 Stock and Incentive Plan allows for grants of various equity awards, including Restricted Stock Units (RSUs) and Performance Stock Units (PSUs), to attract and retain talent. RSUs vest over five years for executives or on the next annual meeting date for non-employee directors, with **compensation expense of $725 thousand** for 9M 2022[124](index=124&type=chunk)[125](index=125&type=chunk)[127](index=127&type=chunk)[131](index=131&type=chunk) - PSUs are granted to executives with a three-year book value cumulative growth target. **Compensation expense for PSUs was a benefit of $(349) thousand** for 9M 2022, as the company expects the threshold performance objective for 2020 awards not to be met. **Unrecognized compensation cost for RSUs is $1,043 thousand** (1.94 years weighted-average period) and **for PSUs is $1,295 thousand** (2.07 years weighted-average period)[132](index=132&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) [18. Segment Information](index=33&type=section&id=18.%20Segment%20Information) Presents financial data for the company's insurance segments, including premiums, losses, and combined ratios - The company operates in **six reportable segments**: private passenger auto, non-standard auto, home and farm, crop, commercial, and all other. Key financial metrics like investment income and income taxes are not allocated to these segments. The non-standard auto segment's profitability is evaluated by combining policy fees with underwriting gain or loss[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk) Segment Performance (in thousands) | Segment | Net Premiums Earned (3M Sep 2022) | Net Premiums Earned (9M Sep 2022) | Net Losses & LAE (3M Sep 2022) | Net Losses & LAE (9M Sep 2022) | Combined Ratio (3M Sep 2022) | Combined Ratio (9M Sep 2022) | | :-------------------- | :-------------------------------- | :-------------------------------- | :----------------------------- | :----------------------------- | :--------------------------- | :--------------------------- | | Private passenger auto | $19,813 | $57,818 | $20,354 | $51,918 | 128.3% | 118.1% | | Non-standard auto | $17,579 | $47,469 | $11,958 | $24,582 | 104.4% | 92.6% | | Home and farm | $19,751 | $58,919 | $28,822 | $97,492 | 173.2% | 195.1% | | Crop | $14,566 | $26,848 | $6,974 | $17,135 | 50.2% | 69.0% | | Commercial | $15,884 | $45,103 | $9,812 | $32,821 | 98.6% | 109.9% | | All other | $1,939 | $7,458 | $997 | $3,693 | 75.2% | 74.1% | | Total | $89,532 | $243,615 | $78,917 | $227,641 | 114.4% | 123.5% | [Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20-%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive review of the company's operating results and financial condition, highlighting significant changes in revenues, expenses, and profitability drivers for the three and nine months ended September 30, 2022, compared to the prior year. It also discusses critical accounting policies, liquidity, capital resources, and recent accounting pronouncements [Results of Operations](index=40&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, focusing on revenue, expenses, and net income trends Key Financial Metrics (in thousands) | Metric (in thousands) | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net premiums earned | $89,532 | $82,173 | $243,615 | $221,589 | | Underwriting loss | $(12,886) | $(8,917) | $(57,177) | $(14,135) | | Net investment gains (losses) | $(2,868) | $222 | $(19,532) | $10,734 | | Net income (loss) | $(10,169) | $(4,859) | $(54,766) | $2,189 | - The company's **consolidated net loss significantly increased to $(10,169) thousand for Q3 2022 and $(54,766) thousand for 9M 2022**, **compared to losses of $(4,859) thousand and income of $2,189 thousand** in the prior year periods, respectively. This deterioration was primarily driven by **higher catastrophe losses** in Nebraska, South Dakota, and North Dakota, coupled with **unfavorable net investment losses** due to equity market impacts[154](index=154&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - Net premiums earned **increased by 9.0% for Q3 2022 and 9.9% for 9M 2022**, driven by new business growth and rate increases in private passenger auto and non-standard auto, increasing insured property values in home and farm, and higher commodity prices impacting crop insurance. However, net losses and loss adjustment expenses **increased by 20.0% for Q3 2022 and 37.5% for 9M 2022**, largely due to elevated loss costs from inflation and severe weather events[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - The overall **combined ratio increased to 114.4% for Q3 2022 and 123.5% for 9M 2022**, **up from 110.8% and 106.4%** respectively, reflecting the increased loss ratios across most segments, particularly home and farm due to catastrophe losses. The expense ratio decreased due to higher multi-peril crop insurance net premiums earned, which operate at a lower expense ratio[170](index=170&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) - Net investment income **increased by $322 thousand for Q3 2022 and $744 thousand for 9M 2022**, driven by a rising interest rate environment and higher allocation to private placement and high dividend yield equities. However, net investment gains (losses) **shifted from gains of $222 thousand (Q3 2021) and $10,734 thousand (9M 2021) to losses of $(2,868) thousand (Q3 2022) and $(19,532) thousand (9M 2022)**, primarily due to unfavorable equity markets and unrealized losses on fixed income securities[177](index=177&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) [Critical Accounting Policies](index=48&type=section&id=Critical%20Accounting%20Policies) Discusses accounting policies requiring significant judgment and estimates in financial statement preparation - There have been **no changes in the company's critical accounting policies** from December 31, 2021, as described in its 2021 Annual Report. The preparation of financial statements requires estimates and judgments, which are continuously evaluated based on historical developments, market conditions, and industry trends[190](index=190&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) Examines the company's ability to generate cash, meet obligations, and manage its capital structure - The company generates funds from operations and maintains a liquid investment portfolio to meet claims and expenses. Primary sources are premium collections, investment earnings, and maturing investments. **Net cash used by operating activities was $(24,680) thousand for 9M 2022**, a **decrease from $9,489 thousand provided in 9M 2021**, due to higher claim payments and increased receivables[191](index=191&type=chunk)[194](index=194&type=chunk) - **IPO net proceeds of $93,145 thousand** were used for acquisitions, including Direct Auto (**$17,000 thousand**) and Westminster (**$40,000 thousand, with $20,000 thousand paid at closing** and two of three remaining installments paid). The final Westminster payment is anticipated in December 2022 using IPO proceeds. The company also uses IPO proceeds for stock buyback programs[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[196](index=196&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - Insurance subsidiaries are restricted by North Dakota law on dividend payments to NI Holdings, requiring notice and sometimes prior approval. For 2022, Nodak Insurance, Direct Auto, and Westminster have **$21,493 thousand**, **$3,796 thousand**, and **$2,471 thousand**, respectively, available for dividends without prior approval. **No dividends were declared or paid** by these subsidiaries during 9M 2022 or 2021[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk) [Recent Accounting Pronouncements](index=49&type=section&id=Recent%20Accounting%20Pronouncements) References disclosures on new accounting standards and their anticipated impact on financial reporting - For a discussion of recent accounting pronouncements, refer to Part I, Item 1, Note 2, 'Basis of Presentation and Accounting Policies--Recent Accounting Pronouncements' in this Quarterly Report on Form 10-Q[202](index=202&type=chunk) [Item 3. - Quantitative and Qualitative Disclosures about Market Risk](index=50&type=section&id=Item%203.%20-%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's assessment indicates no material changes in quantitative and qualitative disclosures about market risk from those presented in its 2021 Annual Report - There have been **no material changes** in the company's assessment of market risk disclosures from those in its 2021 Annual Report[204](index=204&type=chunk) [Item 4. - Controls and Procedures](index=50&type=section&id=Item%204.%20-%20Controls%20and%20Procedures) The company's CEO and CFO concluded that disclosure controls and procedures were effective as of September 30, 2022. The company is continuously reviewing and improving its internal control over financial reporting, including preparing for the first audit required by Section 404 of the Sarbanes-Oxley Act for the annual period ending December 31, 2022, but no material changes occurred during the quarter - The CEO and CFO have concluded that the company's disclosure controls and procedures were **effective as of September 30, 2022**[205](index=205&type=chunk) - The company is making ongoing improvements to its internal control over financial reporting, including **preparing for the first audit required by Section 404** of the Sarbanes-Oxley Act for the annual period ending December 31, 2022. **No material changes** in internal control over financial reporting occurred during the quarter ended September 30, 2022[206](index=206&type=chunk)[207](index=207&type=chunk) [Part II. - OTHER INFORMATION](index=51&type=section&id=Part%20II.%20-%20OTHER%20INFORMATION) Provides additional information on legal proceedings, risk factors, equity sales, and other disclosures [Item 1. - Legal Proceedings](index=51&type=section&id=Item%201.%20-%20Legal%20Proceedings) The company is involved in routine litigation related to its insurance operations but does not consider any current proceedings to be material. However, the inherent uncertainties of litigation could still materially affect financial results - The company is party to litigation in the normal course of business, but **does not consider any current litigation to be material**. However, the uncertainties of litigation mean that results of operations and financial condition **could be materially adversely affected**[210](index=210&type=chunk) [Item 1A. - Risk Factors](index=51&type=section&id=Item%201A.%20-%20Risk%20Factors) There have been no material changes in the company's assessment of its risk factors from those previously disclosed in its 2021 Annual Report - There have been **no material changes** in the company's assessment of its risk factors from those set forth in Part I, Item 1A, 'Risk Factors' in its 2021 Annual Report[211](index=211&type=chunk) [Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20-%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has not sold any unregistered securities. Net proceeds from its 2017 IPO ($93,145 thousand) have been used for strategic acquisitions, including Direct Auto and Westminster, and to fund share repurchase programs. The planned use of IPO proceeds remains materially unchanged - The company has **not sold any unregistered securities** within the past three years. **Net proceeds of $93,145 thousand from the 2017 IPO** were used for strategic acquisitions, including Direct Auto (**$17,000 thousand**) and Westminster (**$40,000 thousand**, with remaining installments to be paid in December 2022)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) - The company periodically repurchases its common stock, using IPO proceeds for these programs. During the nine months ended September 30, 2022, **173,419 shares were repurchased for $2,870 thousand** under an August 2021 authorization. A new **$10,000 thousand repurchase authorization** was approved in May 2022[217](index=217&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) [Item 3. - Defaults upon Senior Securities](index=53&type=section&id=Item%203.%20-%20Defaults%20upon%20Senior%20Securities) This item is not applicable to the company - Not Applicable[222](index=222&type=chunk) [Item 4. - Mine Safety Disclosures](index=53&type=section&id=Item%204.%20-%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not Applicable[222](index=222&type=chunk) [Item 5. - Other Information](index=53&type=section&id=Item%205.%20-%20Other%20Information) There is no other information to report under this item - None[222](index=222&type=chunk) [Item 6. - Exhibits](index=53&type=section&id=Item%206.%20-%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and XBRL-related documents - The exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32) and various XBRL (eXtensible Business Reporting Language) documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[222](index=222&type=chunk) [SIGNATURES](index=54&type=section&id=Signatures) The report was duly signed on behalf of NI HOLDINGS, INC. by Michael J. Alexander, President and Chief Executive Officer, and Seth C. Daggett, Chief Financial Officer, on November 7, 2022 - The report was duly signed on behalf of NI HOLDINGS, INC. by Michael J. Alexander, President and Chief Executive Officer, and Seth C. Daggett, Chief Financial Officer, on November 7, 2022[224](index=224&type=chunk)[225](index=225&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to _____ Commission file number 001-37973 NI HOLDINGS, INC. (Exact name of registrant as specified in its charter) NORTH DAKOTA (State or other jurisdiction of incorpor ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to _____ Commission file number 001-37973 NI HOLDINGS, INC. (Exact name of registrant as specified in its charter) NORTH DAKOTA (State or other jurisdiction of incorpo ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 1101 First Avenue North Fargo, North Dakota (Address of principal executive offices) (701) 298-4200 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to _____ Commission file number 001-37973 NI HOLDINGS, INC. (Exact na ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to _____ Commission file number 001-37973 | NI HOLDINGS, INC. | | --- | | (Exact name of registrant as specified in its charter) | NORTH DAKOTA (State or other jur ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 NORTH DAKOTA (State or other jurisdiction of incorporation or organization) 1101 First Avenue North Fargo, North Dakota 58102 (Address of principal executive offices) (Zip Code) (701) 298-4200 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the tra ...

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to _____ Commission file number 001-37973 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q | NI HOLDINGS, INC. | | --- | | (Exact name of registrant as specified in its charter) | NORTH DAKOTA (State or other jurisdi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to _____ Commission file number 001-37973 NI HOLDINGS, INC. (Exact name of registrant as specified in its charter) NORTH DAKOTA 81-2683619 (State or other jurisdiction o ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to _____ Commission file number 001-37973 NI HOLDINGS, INC. (Exact name of registrant as specified in its charter) NORTH DAKOTA (State or other jurisdiction of inc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to _____ Commission file number 001-37973 NI HOLDINGS, INC. (Exact name of registrant as specified in its charter) NORTH DAKOTA (State or other jurisdiction of incorpor ...