NI (NODK) - 2025 Q2 - Quarterly Report

FORWARD-LOOKING STATEMENTS This section contains cautionary language regarding forward-looking statements, which are not guarantees of future performance and are subject to various risks and uncertainties - This section contains cautionary language regarding forward-looking statements, which are not guarantees of future performance and are subject to various risks and uncertainties[11][12][13] - Forward-looking statements include anticipated operating and financial performance, strategic reviews, capital allocation, acquisitions/dispositions, impact of pandemics, market expansion, industry cycles, regulatory changes, macroeconomic trends, and ability to manage future growth[14] PART I. - FINANCIAL INFORMATION This section presents the unaudited consolidated financial information for the company Item 1. - Financial Statements This section presents the unaudited consolidated financial statements of NI Holdings, Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, comprehensive income (loss), changes in shareholders' equity, and cash flows, along with detailed notes explaining the company's accounting policies, investments, reinsurance, and other financial activities Consolidated Balance Sheets This section presents the unaudited consolidated balance sheets for the specified periods Consolidated Balance Sheet Highlights (in thousands): | Item | June 30, 2025 | December 31, 2024 | Change | % Change | | :----------------------------------- | :------------ | :---------------- | :----- | :------- | | Assets: | | | | | | Total cash and investments | $406,097 | $385,094 | $21,003 | 5.5% | | Premiums and agents' balances receivable, net | $85,604 | $52,907 | $32,697 | 61.8% | | Reinsurance recoverables on losses | $51,278 | $12,561 | $38,717 | 308.2% | | Total assets | $620,051 | $526,545 | $93,506 | 17.8% | | Liabilities: | | | | | | Unpaid losses and loss adjustment expenses | $203,530 | $137,288 | $66,242 | 48.2% | | Unearned premiums | $142,889 | $126,498 | $16,391 | 13.0% | | Total liabilities | $376,728 | $281,914 | $94,814 | 33.6% | | Shareholders' Equity: | | | | | | Total shareholders' equity | $243,323 | $244,631 | $(1,308) | -0.5% | Consolidated Statements of Operations This section presents the unaudited consolidated statements of operations for the specified periods Consolidated Statements of Operations Highlights (in thousands, except per share data): | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net premiums earned | $73,005 | $85,169 | $140,502 | $155,053 | | Total revenues | $76,057 | $87,807 | $147,491 | $162,306 | | Losses and loss adjustment expenses | $66,607 | $69,358 | $105,132 | $109,502 | | Total expenses | $91,381 | $96,877 | $155,066 | $162,543 | | Loss from continuing operations before income taxes | $(15,324) | $(9,070) | $(7,575) | $(237) | | Net loss | $(12,051) | $(19,622) | $(5,591) | $(13,203) | | Basic loss per common share | $(0.57) | $(0.94) | $(0.27) | $(0.63) | | Diluted loss per common share | $(0.57) | $(0.94) | $(0.27) | $(0.63) | Consolidated Statements of Comprehensive Income (Loss) This section presents the unaudited consolidated statements of comprehensive income (loss) for the specified periods Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands): | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(12,051) | $(19,622) | $(5,591) | $(13,203) | | Other comprehensive income (loss), net of income taxes | $1,135 | $(714) | $3,695 | $(2,114) | | Comprehensive loss | $(10,916) | $(20,336) | $(1,896) | $(15,317) | Consolidated Statements of Changes in Shareholders' Equity This section presents the unaudited consolidated statements of changes in shareholders' equity for the specified periods Consolidated Statements of Changes in Shareholders' Equity Highlights (in thousands): | Item | Balance, January 1, 2025 | Net Loss (H1 2025) | Other Comprehensive Income (Loss), Net of Income Taxes (H1 2025) | Share-based Compensation (H1 2025) | Issuance of Vested Award Shares (H1 2025) | Balance, June 30, 2025 | | :----------------------------------- | :----------------------- | :----------------- | :---------------------------------------------------------------- | :--------------------------------- | :----------------------------------------- | :--------------------- | | Common Stock | $230 | — | — | — | — | $230 | | Additional Paid-in Capital | $95,796 | — | — | $724 | $(696) | $95,824 | | Unearned Employee Stock Ownership Plan Shares | $(455) | — | — | — | — | $(455) | | Retained Earnings | $201,584 | $(5,591) | — | — | $(81) | $195,912 | | Accumulated Other Comprehensive Loss, Net of Income Taxes | $(18,231) | — | $3,695 | — | — | $(14,536) | | Treasury Stock | $(34,293) | — | — | — | $641 | $(33,652) | | Total Shareholders' Equity | $244,631 | $(5,591) | $3,695 | $724 | $(136) | $243,323 | Consolidated Statements of Cash Flows This section presents the unaudited consolidated statements of cash flows for the specified periods Consolidated Statements of Cash Flows Highlights (in thousands): | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash flows from operating activities | $16,289 | $34,760 | | Net cash flows from investing activities | $(10,246) | $(3,776) | | Net cash flows from financing activities | $(189) | $(202) | | Net change in cash and cash equivalents | $5,854 | $30,782 | | Cash and cash equivalents at end of period – continuing operations | $56,784 | $51,390 | Notes to Unaudited Consolidated Financial Statements This section provides detailed notes explaining the company's accounting policies, investments, reinsurance, and other financial activities 1. Organization This note describes the company's corporate structure and its key insurance subsidiaries - NI Holdings, Inc. is the stock holding company for Nodak Insurance Company and its subsidiaries, formed through the Nodak conversion on March 13, 2017[27] - Key subsidiaries include Nodak Insurance (largest P&C in North Dakota), American West Insurance Company (Midwest/Western U.S.), Primero Insurance Company (non-standard auto), Battle Creek Insurance Company (converted to wholly-owned subsidiary on January 2, 2024), and Direct Auto Insurance Company (non-standard auto)[28][30][31][32][33] - Westminster American Insurance Company was sold on June 30, 2024, and is now reported as discontinued operations[34] - All of the Company's insurance subsidiary and affiliate companies, excluding Westminster, are rated "A" Excellent by A.M. Best Company, Inc[35] 2. Basis of Presentation and Accounting Policies This note outlines the basis of financial statement preparation and significant accounting estimates - The unaudited consolidated financial statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions, requiring management estimates and assumptions[37][39] - Significant estimates include reserves for unpaid losses, crop insurance earned premiums, investment valuation, credit impairments, deferred income tax assets, and deferred policy acquisition costs[40] - Westminster is reported as discontinued operations for all periods presented following its sale on June 30, 2024[44] - The Company is evaluating the impact of new accounting pronouncements: ASU 2023-09 (Income Tax Disclosures, effective after Dec 15, 2024) and ASU 2024-03 (Expense Disaggregation Disclosures, effective after Dec 15, 2026)[46][47] 3. Investments This note details the company's investment portfolio, including fixed income securities and investment income Fixed Income Securities Fair Value (in thousands): | Date | Fair Value | | :----------------- | :----------- | | June 30, 2025 | $322,113 | | December 31, 2024 | $307,712 | Gross Unrealized Losses on Fixed Income Securities (in thousands): | Date | Gross Unrealized Losses | | :----------------- | :---------------------- | | June 30, 2025 | $(20,626) | | December 31, 2024 | $(24,485) | Net Investment Income – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $3,146 | $2,523 | $623 | | Six Months Ended June 30 | $5,984 | $5,278 | $706 | Net Investment Gains (Losses) – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $(410) | $(580) | $170 | | Six Months Ended June 30 | $459 | $876 | $(417) | 4. Fair Value Measurements This note explains the company's methodology for fair value measurements of financial instruments - The Company uses a fair value hierarchy (Level 1, 2, 3) to categorize inputs for valuation, maximizing observable inputs[56][57][61] - Valuation relies on independent pricing services and broker-dealer quotes, with management review for reasonableness[58][59][62] - As of June 30, 2025, and December 31, 2024, there were no assets or liabilities classified at Level 3 in the fair value hierarchy[63] 5. Reinsurance This note describes the company's reinsurance arrangements and their impact on premiums and losses - For the six months ended June 30, 2025, the Company maintained property catastrophe reinsurance protection covering $117,000K in excess of a $20,000K retention[66] - An intercompany reinsurance pooling agreement is in place, with Nodak Insurance as the lead company, allowing subsidiaries to rely on the pool's total statutory capital and surplus[73] Net Premiums Earned – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | % Change | | :----------------- | :----- | :----- | :----- | :------- | | Three Months Ended June 30 | $73,005 | $85,169 | $(12,164) | -14.3% | | Six Months Ended June 30 | $140,502 | $155,053 | $(14,551) | -9.4% | Net Losses and Loss Adjustment Expenses – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | % Change | | :----------------- | :----- | :----- | :----- | :------- | | Three Months Ended June 30 | $66,607 | $69,358 | $(2,751) | -4.0% | | Six Months Ended June 30 | $105,132 | $109,502 | $(4,370) | -4.0% | 6. Deferred Policy Acquisition Costs This note provides information on deferred policy acquisition costs and their amortization Deferred Policy Acquisition Costs – Continuing Operations (in thousands): | Date | Balance, End of Period | | :----------------- | :--------------------- | | June 30, 2025 | $26,320 | | June 30, 2024 | $31,157 | Amortization of Deferred Policy Acquisition Costs – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $16,374 | $19,290 | $(2,916) | | Six Months Ended June 30 | $32,902 | $36,107 | $(3,205) | 7. Unpaid Losses and Loss Adjustment Expenses This note details the company's reserves for unpaid losses and loss adjustment expenses Net Balance of Unpaid Losses and Loss Adjustment Expenses – Continuing Operations (in thousands): | Date | Net Balance | | :----------------- | :---------- | | June 30, 2025 | $152,252 | | June 30, 2024 | $139,104 | - The Company's incurred reported losses and loss adjustment expense included net unfavorable development on prior accident years of $11,238K for the six months ended June 30, 2025, and $7,773K for the six months ended June 30, 2024, primarily attributable to the Non-Standard Auto segment[76] 8. Property and Equipment This note presents the carrying value and depreciation of the company's property and equipment Total Property and Equipment, Net (in thousands): | Date | Amount | | :----------------- | :----- | | June 30, 2025 | $7,375 | | December 31, 2024 | $7,547 | Depreciation Expense – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Six Months Ended June 30 | $344 | $341 | $3 | 9. Goodwill and Other Intangibles This note discusses the company's goodwill and other intangible assets, including impairment assessments - Goodwill related to the Primero acquisition (Non-Standard Auto segment) was fully impaired as of December 31, 2024, resulting in a non-cash impairment charge of $2,628K[80] - Other intangible assets, consisting of the state insurance license for Direct Auto, had a gross and net carrying value of $100K at June 30, 2025, and December 31, 2024, and were not impaired[81] 10. Royalties, Dividends, and Affiliations This note outlines royalty payments and dividend restrictions for the company's subsidiaries Royalties Paid to North Dakota Farm Bureau (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $522 | $480 | $42 | | Six Months Ended June 30 | $962 | $883 | $79 | - Nodak Insurance and Direct Auto are subject to state insurance laws restricting dividend payments to NI Holdings; no dividends were declared or paid by these subsidiaries during the six months ended June 30, 2025, or the year ended December 31, 2024[84][183][184] 11. Benefit Plans This note provides details on the company's employee benefit plans and associated expenses Benefit Plan Expenses (in thousands): | Plan Type | Period | 2025 | 2024 | Change | | :----------------------------------- | :------------------------- | :----- | :----- | :----- | | 401(k) Plan | Three Months Ended June 30 | $482 | $459 | $23 | | | Six Months Ended June 30 | $802 | $805 | $(3) | | Non-Qualified Deferred Compensation Plan | Three Months Ended June 30 | $24 | $33 | $(9) | | | Six Months Ended June 30 | $158 | $231 | $(73) | | ESOP Compensation Expense | Three Months Ended June 30 | $78 | $92 | $(14) | | | Six Months Ended June 30 | $167 | $176 | $(9) | - As of June 30, 2025, 45,480 ESOP shares remained in a suspense account, with a fair value of $579K[96] 12. Line of Credit This note describes the company's available line of credit and its usage - NI Holdings has a $3,000K line of credit with Wells Fargo Bank, N.A., expiring on December 13, 2025[97] - There were no outstanding amounts on the line of credit during the six months ended June 30, 2025, or the year ended December 31, 2024[97] 13. Income Taxes This note presents information on income taxes, including deferred tax assets and effective tax rates Valuation Allowance Against Deferred Income Tax Assets (in thousands): | Date | Amount | | :----------------- | :----- | | June 30, 2025 | $2,093 | | December 31, 2024 | $2,506 | Effective Tax Rate for Continuing Operations: | Period | 2025 | 2024 | | :----------------- | :----- | :----- | | Six Months Ended June 30 | 26.2% | 34.0% | - The effective tax rate for the six months ended June 30, 2025, was impacted by a $413K change in the recorded valuation allowance[100] 14. Leases This note details the company's lease arrangements and associated costs and liabilities Total Lease Cost (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $114 | $122 | $(8) | | Six Months Ended June 30 | $230 | $244 | $(14) | Lease Liability at June 30, 2025 (in thousands): | Lease Type | Amount | | :----------------- | :----- | | Operating Leases | $1,456 | | Finance Leases | $152 | 15. Contingencies This note addresses potential liabilities arising from routine litigation and other contingencies - The Company is party to routine litigation incidental to its normal course of business, which is not considered material to its financial position[105] 16. Common and Preferred Stock This note provides information on the company's common shares outstanding and share repurchase authorization Common Shares Outstanding: | Date | Shares | | :----------------- | :----------- | | June 30, 2025 | 20,713,358 | | December 31, 2024 | 20,673,268 | - No shares of common stock were repurchased during the six months ended June 30, 2025, or the year ended December 31, 2024. $2,052K remains available under the share repurchase authorization[107][197] - No preferred shares are issued or outstanding[109] 17. Share-Based Compensation This note details the company's share-based compensation plans and related expenses RSU Compensation Expense (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $233 | $371 | $(138) | | Six Months Ended June 30 | $696 | $767 | $(71) | PSU Compensation Expense (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $11 | $184 | $(173) | | Six Months Ended June 30 | $28 | $369 | $(341) | - At June 30, 2025, there was $2,044K of unrecognized compensation cost for RSUs (weighted-average period of 2.25 years) and $163K for PSUs (weighted-average period of 1.66 years)[116][121] 18. Allowance for Expected Credit Losses This note presents the allowance for expected credit losses on premiums and agents' balances receivable Premiums and Agents' Balances Receivable, Net of Allowance for Expected Credit Losses (in thousands): | Date | Amount | | :----------------- | :----- | | June 30, 2025 | $85,604 | | December 31, 2024 | $52,907 | Allowance for Expected Credit Losses (in thousands): | Date | Amount | | :----------------- | :----- | | June 30, 2025 | $313 | | December 31, 2024 | $337 | 19. Discontinued Operations This note provides financial information related to the company's discontinued operations - Westminster American Insurance Company was sold on June 30, 2024, for a net cash purchase price of $12,272K[126] - The sale resulted in an after-tax loss on sale of discontinued operations of $11,148K[126] Net Loss from Discontinued Operations (in thousands): | Period | 2024 | | :----------------- | :----- | | Three Months Ended June 30 | $(996) | | Six Months Ended June 30 | $(1,512) | 20. Segment Information This note presents financial performance data broken down by the company's operating segments - The Company has five reportable operating segments for continuing operations: Private Passenger Auto, Non-Standard Auto, Home and Farm, Crop, and All Other[128] Underwriting Gain (Loss) by Segment – Three Months Ended June 30, 2025 (in thousands): | Segment | Underwriting Gain (Loss) | | :----------------- | :----------------------- | | Private Passenger Auto | $1,832 | | Non-Standard Auto | $(8,798) | | Home and Farm | $(14,162) | | Crop | $626 | | All Other | $2,126 | Combined Ratio by Segment – Three Months Ended June 30, 2025: | Segment | Combined Ratio | | :----------------- | :------------- | | Private Passenger Auto | 92.0% | | Non-Standard Auto | 160.6% | | Home and Farm | 166.4% | | Crop | 94.2% | | All Other | 40.2% | - Net premiums earned for the six months ended June 30, 2025, increased for Private Passenger Auto (2.3%), Home and Farm (3.9%), Crop (9.6%), and All Other (13.6%), but decreased significantly for Non-Standard Auto (36.7%)[144][145][146][147][148][149] - Loss and loss adjustment expense ratios for the six months ended June 30, 2025, improved for Private Passenger Auto (down 10.3 pts) and All Other (down 9.6 pts), but worsened for Non-Standard Auto (up 25.9 pts), Home and Farm (up 2.8 pts due to catastrophe), and Crop (up 16.1 pts)[152][153][154][155][156] Item 2. - Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the Company's financial performance and condition for the periods presented, highlighting key drivers of revenues, expenses, and profitability, as well as an analysis of liquidity and capital resources. It focuses on continuing operations unless otherwise noted Financial Highlights This section summarizes key consolidated financial results and condition for the reported period 2025 Second Quarter Consolidated Results of Operations (in thousands, except per share data): | Metric | Amount | | :----------------------------------- | :------- | | Net loss | $(12,051) | | Loss per share basic and diluted | $(0.57) | | Net premiums earned | $73,005 | | Net unfavorable prior year reserve development | $9,820 | | Underwriting loss | $(18,376) | | Combined ratio | 125.1% | | Operating cash flows | $16,289 | 2025 Second Quarter Consolidated Financial Condition (in thousands): | Metric | Amount | | :----------------------------------- | :------- | | Total cash and investments | $406,097 | | Total assets | $620,051 | | Unpaid losses and loss adjustment expenses | $203,530 | | Total liabilities | $376,728 | | Shareholders' equity | $243,323 | Results of Continuing Operations This section provides a detailed analysis of the financial performance of the company's continuing operations Net Premiums Earned This subsection analyzes the changes and drivers of net premiums earned across different segments Net Premiums Earned – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | % Change | | :----------------- | :----- | :----- | :----- | :------- | | Three Months Ended June 30 | $73,005 | $85,169 | $(12,164) | -14.3% | | Six Months Ended June 30 | $140,502 | $155,053 | $(14,551) | -9.4% | - For the six months ended June 30, 2025, Private Passenger Auto net premiums earned increased by $1,008K (2.3%), driven by new business growth in North Dakota and rate increases in South Dakota and Nebraska[145] - Non-Standard Auto net premiums earned decreased by $18,973K (36.7%) for the six months ended June 30, 2025, due to strategic decisions to exit Nevada and significantly reduce written premium in the Chicago market[146] - Home and Farm net premiums earned increased by $1,692K (3.9%) for the six months ended June 30, 2025, due to new business growth in North Dakota, rate increases, and increased insured property values[147] - Crop net premiums earned increased by $906K (9.6%) for the six months ended June 30, 2025, driven by more favorable premium adjustments in the first quarter of 2025[148] - All Other net premiums earned increased by $816K (13.6%) for the six months ended June 30, 2025, due to rate increases for North Dakota commercial lines of business[149] Losses and Loss Adjustment Expenses This subsection discusses the trends and factors influencing losses and loss adjustment expenses Net Losses and Loss Adjustment Expenses – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | % Change | | :----------------- | :----- | :----- | :----- | :------- | | Three Months Ended June 30 | $66,607 | $69,358 | $(2,751) | -4.0% | | Six Months Ended June 30 | $105,132 | $109,502 | $(4,370) | -4.0% | Loss and Loss Adjustment Expense Ratio – Continuing Operations (YoY Change in Percentage Points): | Segment | Three Months Ended June 30, 2025 vs 2024 | Six Months Ended June 30, 2025 vs 2024 | | :----------------- | :--------------------------------------- | :------------------------------------- | | Private Passenger Auto | -28.9 pts | -10.3 pts | | Non-Standard Auto | +44.0 pts | +25.9 pts | | Home and Farm | +26.2 pts | +2.8 pts | | Crop | +12.5 pts | +16.1 pts | | All Other | -9.5 pts | -9.6 pts | | Total | +9.8 pts | +4.2 pts | - The increase in Home and Farm loss ratio was driven by losses from a significant catastrophe event in North Dakota during Q2 2025, which accounted for 94.7 and 45.1 percentage points of the net loss and loss adjustment expense ratio for the three- and six-month periods, respectively[154] Underwriting and General Expenses and Expense Ratio This subsection examines the company's underwriting and general expenses and their impact on the expense ratio Total Underwriting and General Expenses – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $24,774 | $27,519 | $(2,745) | | Six Months Ended June 30 | $49,934 | $53,041 | $(3,107) | Expense Ratio – Continuing Operations: | Period | 2025 | 2024 | Change (pts) | | :----------------- | :----- | :----- | :----------- | | Three Months Ended June 30 | 33.9% | 32.3% | +1.6 | | Six Months Ended June 30 | 35.5% | 34.2% | +1.3 | - The decrease in amortization of deferred policy acquisition costs is due to lower deferrable costs resulting from the strategic reduction in premium for the Non-Standard Auto segment[157] Underwriting Gain (Loss) and Combined Ratio This subsection analyzes the company's underwriting profitability and combined ratio Total Underwriting Loss – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $(18,376) | $(11,708) | $(6,668) | | Six Months Ended June 30 | $(14,564) | $(7,490) | $(7,074) | Combined Ratio – Continuing Operations: | Period | 2025 | 2024 | Change (pts) | | :----------------- | :----- | :----- | :----------- | | Three Months Ended June 30 | 125.1% | 113.7% | +11.4 | | Six Months Ended June 30 | 110.3% | 104.8% | +5.5 | Fee and Other Income This subsection discusses the sources and changes in fee and other income Fee and Other Income – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $316 | $695 | $(379) | | Six Months Ended June 30 | $546 | $1,099 | $(553) | - The decrease was driven by strategic reductions in premiums that generate fee income and write-offs of uncollectable premiums receivable[161] Net Investment Income This subsection analyzes the company's net investment income and its drivers Net Investment Income – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $3,146 | $2,523 | $623 | | Six Months Ended June 30 | $5,984 | $5,278 | $706 | Gross Return on Average Cash and Invested Assets – Continuing Operations: | Period | 2025 | 2024 | Change (pts) | | :----------------- | :----- | :----- | :----------- | | Three Months Ended June 30 | 3.9% | 3.6% | +0.3 | | Six Months Ended June 30 | 3.9% | 3.8% | +0.1 | - The increase in net investment income was primarily driven by the higher interest rate environment, resulting in higher reinvestment rates in the fixed income portfolio[162] Net Investment Gains (Losses) This subsection details the company's net investment gains and losses, including realized and unrealized components Net Realized Gains (Losses) – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $107 | $9 | $98 | | Six Months Ended June 30 | $433 | $(82) | $515 | Change in Net Unrealized Gains on Equity Securities – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $(517) | $(589) | $72 | | Six Months Ended June 30 | $26 | $958 | $(932) | - The fixed income portfolio experienced net unrealized gains of $4,782K during the six months ended June 30, 2025, compared to net unrealized losses of $2,730K in the prior year, primarily due to changes in U.S. interest rates[166] Income (Loss) before Income Taxes This subsection analyzes the company's pre-tax income or loss from continuing operations Loss from Continuing Operations Before Income Taxes (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :------- | :------- | :------- | | Three Months Ended June 30 | $(15,324) | $(9,070) | $(6,254) | | Six Months Ended June 30 | $(7,575) | $(237) | $(7,338) | - The increased loss was largely attributable to catastrophe losses for Home and Farm and unfavorable prior year loss reserve development for Non-Standard Auto, partially offset by improved loss experience for Private Passenger Auto and higher net investment income[167][168] Income Tax Expense (Benefit) This subsection discusses the company's income tax expense or benefit and effective tax rate Income Tax Expense (Benefit) – Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :----- | :----- | :----- | | Three Months Ended June 30 | $3,273 | $1,592 | $1,681 | | Six Months Ended June 30 | $1,984 | $(306) | $2,290 | Effective Tax Rate – Continuing Operations: | Period | 2025 | 2024 | | :----------------- | :----- | :----- | | Three Months Ended June 30 | 21.4% | 17.6% | | Six Months Ended June 30 | 26.2% | -129.1% | - The effective tax rate for the six months ended June 30, 2025, was impacted by changes in valuation allowances against deferred income tax assets[170] Net Income (Loss) This subsection presents the company's net income or loss from continuing operations and its contributing factors Net Loss from Continuing Operations (in thousands): | Period | 2025 | 2024 | Change | | :----------------- | :------- | :------- | :------- | | Three Months Ended June 30 | $(12,051) | $(7,478) | $(4,573) | | Six Months Ended June 30 | $(5,591) | $(543) | $(5,048) | - The increased net loss was largely attributable to catastrophe losses for Home and Farm and unfavorable prior year loss reserve development for Non-Standard Auto, partially offset by improved loss experience for Private Passenger Auto and higher net investment income[171][172] Return on Average Equity This subsection analyzes the company's annualized return on average equity Annualized Return on Average Equity – Continuing Operations: | Period | 2025 | 2024 | Change (pts) | | :----------------- | :------- | :------- | :----------- | | Three Months Ended June 30 | (19.4)% | (12.8)% | -6.6 | | Six Months Ended June 30 | (4.6)% | (0.5)% | -4.1 | Critical Accounting Policies This section confirms that there have been no changes to the company's critical accounting policies - There have been no changes in the Company's critical accounting policies from December 31, 2024[175] Liquidity and Capital Resources This section discusses the company's ability to generate cash, manage its investment portfolio, and meet financial obligations - The Company expects to generate sufficient funds from operations and maintain high liquidity in its investment portfolio to meet claim settlements and operating expenses[176] Net Cash Flows (in thousands): | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :----------------------------------- | :----------------------------- | :----------------------------- | :----- | | Operating activities | $16,289 | $34,760 | $(18,471) | | Investing activities | $(10,246) | $(3,776) | $(6,470) | | Financing activities | $(189) | $(202) | $13 | - Net cash from operating activities decreased primarily due to lower premium collections, partially offset by lower loss and loss adjustment payments[178] - Net cash used by investing activities increased primarily due to proceeds from the Westminster sale in the prior year, partially offset by decreased net cash outflows for investment activities in the current year[179] - Nodak Insurance can pay approximately $8,273K in dividends to NI Holdings in 2025 without prior regulatory approval, and Direct Auto can pay approximately $3,146K. No dividends were declared or paid by these subsidiaries in H1 2025 or 2024[183][184] Item 3. - Quantitative and Qualitative Disclosures about Market Risk This section states that there have been no material changes in the Company's assessment of market risk from those disclosed in its 2024 Annual Report - There have been no material changes in the quantitative and qualitative disclosures about market risk from the 2024 Annual Report[188] Item 4. - Controls and Procedures This section reports on the effectiveness of the Company's disclosure controls and procedures and confirms no material changes in internal control over financial reporting during the quarter Evaluation of Disclosure Controls and Procedures This subsection reports on the effectiveness of the company's disclosure controls and procedures - The Company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were designed and functioning effectively as of June 30, 2025[189] Changes in Internal Control over Financial Reporting This subsection confirms no material changes in the company's internal control over financial reporting - There have been no material changes in the Company's internal control over financial reporting during the fiscal quarter ended June 30, 2025[190] PART II. - OTHER INFORMATION This section contains other information required to be disclosed in the report Item 1. - Legal Proceedings This section states that the Company is involved in routine litigation, but none is considered material to its financial condition or operations - The Company is party to routine litigation incidental to the normal course of business, which is not considered material[193] Item 1A. - Risk Factors This section indicates that there have been no material changes to the Company's risk factors from its 2024 Annual Report, except for an updated discussion on the potential adverse impact of trade policies, including tariffs - No material changes in risk factors from the 2024 Annual Report, except for the discussion on trade policies and tariffs[194] - Trade policies, including tariffs, could adversely impact financial condition and operating results by increasing costs for raw materials, components, or finished goods, and leading to economic uncertainty and volatility[194] Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds This section confirms that the Company has not sold any unregistered equity securities and provides an update on its share repurchase authorization, noting no repurchases during the reported periods - The Company has not sold any unregistered securities within the past three years[196] - No shares of common stock were repurchased during the year ended December 31, 2024, or the six months ended June 30, 2025[197] - As of June 30, 2025, $2,052K remains available under the $10,000K share repurchase authorization approved on May 9, 2022[197][198] Item 3. - Defaults upon Senior Securities This item is marked as not applicable, indicating no defaults upon senior securities - Not Applicable[200] Item 4. - Mine Safety Disclosures This item is marked as not applicable, indicating no mine safety disclosures - Not Applicable[200] Item 5. - Other Information This section reports on 10b5-1 trading plans, stating that no directors or executive officers adopted or terminated such arrangements during the second quarter of 2025 - None of the Company's directors or executive officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the second quarter of 2025[200] Item 6. - Exhibits This section lists all exhibits filed as part of the Form 10-Q, including certifications and XBRL documents - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[201] SIGNATURES This section provides the official signatures of the company's executive officers for the report - The report was duly signed on behalf of NI Holdings, Inc. by Seth C. Daggett (President and Chief Executive Officer) and Matthew J. Maki (Chief Financial Officer) on August 8, 2025[204][206]