Core Viewpoint - NI Holdings, Inc. reported mixed financial results for the year ended December 31, 2024, with a strong fourth quarter net income but challenges in certain segments leading to increased combined ratios and a decline in earnings per share [1][5][6]. Financial Performance - Direct written premiums for Q4 2024 were $73.1 million, down 7.9% from Q4 2023, while full-year direct written premiums increased slightly by 0.3% to $342.3 million [3][5]. - Net earned premiums for Q4 2024 were $71.8 million, a decrease of 3.0% compared to the prior year quarter, but full-year net earned premiums rose by 6.2% to $310.1 million [3][5]. - The loss and LAE (Loss Adjustment Expense) ratio for Q4 2024 was 45.8%, up 2.3 percentage points from the prior year quarter, and the full-year ratio was 66.9%, an increase of 3.1 percentage points [3][5]. - The combined ratio for Q4 2024 was 80.0%, up 1.3 percentage points year-over-year, while the full-year combined ratio was 100.7%, compared to 97.0% in 2023 [3][5]. - Net income attributable to NI Holdings for Q4 2024 was $9.8 million, a 48.6% increase from $6.6 million in Q4 2023, but the full-year net income showed a loss of $6.1 million compared to a loss of $5.5 million in 2023 [3][5][6]. Management Commentary - The newly appointed President and CEO expressed optimism about the company's future and emphasized the importance of collaboration with the board, employees, and agents to drive success [4][6]. - The company highlighted strong performance in the Private Passenger Auto and Home and Farm segments, aided by improved weather conditions and strategic underwriting actions [6][8]. Strategic Focus - NI Holdings plans to implement a comprehensive long-term strategic plan focusing on enhancing investments in people and technology, improving distribution management, and managing expenses to create lasting shareholder value [8]. - The company is taking aggressive actions to address challenges in the Non-Standard Auto segment, which has faced unfavorable reserve developments [6][7].

Financial Data and Key Metrics Changes - In 2024, the company achieved a gross combined ratio of 95 on $1.3 billion of gross premiums written, generating GAAP net income of $31 million and adjusted EBITDA of $112 million, marking significant improvements from 2023 [8] - For Q4 2024, the company reported net income of $22 million, a $46 million improvement year-over-year, with operating income of $35 million and adjusted EBITDA of $43 million, reflecting year-over-year increases of $47 million and $43 million respectively [20][21] - The gross accident period loss ratio for Q4 was 61%, a 2-point improvement year-over-year, while the growth combined ratio was 91%, a 19-point improvement year-over-year [22] Business Line Data and Key Metrics Changes - Policies in force grew by 21% year-over-year to over 414,000, with a gross loss ratio of 59% and a gross combined ratio of 95% [10] - The company ceded approximately 9% of its gross earned premium in Q4, with a minimal difference of 1 point between gross and net loss ratios [22] Market Data and Key Metrics Changes - The company expanded its reach to 76% of the U.S. population with the recent launch in Minnesota and has filings pending in additional states [14] - The partnership channel saw new writings more than doubling in 2024, with Q4 new writings through this channel representing roughly a third of overall new business [12] Company Strategy and Development Direction - The company aims to accelerate growth by expanding its partnerships channel and reinvesting in the business for long-term returns, emphasizing disciplined underwriting and leveraging technology [9][15] - The focus remains on providing a great customer experience and competitive pricing, with a commitment to maintaining a long-term growth strategy [15][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth avenues while acknowledging the need for selective rate decreases in certain geographies [29] - The company is prepared to respond quickly to changes in the macroeconomic landscape, leveraging its technology platform for real-time adjustments [47] Other Important Information - The company has successfully reduced its run rate interest expense by over 50% and made significant strides in diversifying its distribution channels [10][23] - Management highlighted the importance of maintaining a disciplined approach to customer acquisition costs, which leads to accelerated expense recognition [21] Q&A Session Summary Question: Direction of premium per policy in the year ahead - Management expects to see modest rate decreases, which may apply pressure to average premiums, but growth in independent agency and partnership channels may keep per policy premiums relatively flat to modestly increasing [29][30] Question: Modeling session rate on premium going forward - Management indicated that session levels of earned premium are expected to remain consistent with Q4 levels around 9% [33][34] Question: Retention levels on recent cohorts - Management refrained from sharing specific data points but noted improvements in retention and a normalization of churn rates [36] Question: Expected loss ratio trends with rate reductions - Management projects a low-to-mid single-digit loss trend for 2025, with slight increases in the loss ratio expected but nothing material [40] Question: Impact of tariffs on future performance - Management is not currently predicting any impacts from tariffs but is prepared to respond quickly if changes occur [46][47] Question: Ad spend strategy for 2025 - The company is shifting towards more mid-to-upper funnel channels while maintaining a rigorous measurement of returns on marketing investments [51][52] Question: Returns from direct vs. embedded partnership channels - Both channels are operating at target returns, with the embedded channel showing longer retention and higher average premiums [55] Question: Competition dynamics in 2025 - Management expects competition dynamics to remain stable, despite a slight increase in competition observed in Q4 [58]

Financial Data and Key Metrics Changes - Core income increased by $27 million to $325 million in Q1 2023, representing a 9% year-over-year growth [6][24] - Net investment income rose by $77 million year-over-year to $525 million pretax, a 17% increase [6][24] - The all-in combined ratio was strong at 93.9%, with pretax catastrophe losses of $52 million, which is below the 10-year Q1 average [6][7] Business Line Data and Key Metrics Changes - The P&C underlying combined ratio improved to 90.8%, down 0.6 points year-over-year [7] - Specialty segment's all-in and underlying combined ratios were both strong at 90% [11] - Commercial segment's all-in combined ratio was 96%, with an underlying combined ratio of 91.8%, the lowest on record [15] - International segment's all-in combined ratio was 97.2%, with an underlying combined ratio of 89.3%, a record low [22] Market Data and Key Metrics Changes - Gross written premiums in the commercial segment grew by 19% in Q1 2023 [15] - International gross written premiums increased by 10% or 17% excluding currency fluctuations [22] - Retention rates remained high at 86% for commercial and 83% for international segments [11][22] Company Strategy and Development Direction - The company is focused on growing profit dollars across business segments and strengthening industry verticals [10][11] - There is a continued emphasis on securing high-quality new business opportunities, particularly in commercial and international markets [11][21] - The company aims to maintain strong retention levels and capitalize on improved terms and conditions in the marketplace [18][36] Management's Comments on Operating Environment and Future Outlook - Management highlighted strong top and bottom line performance, with pricing resiliency persisting in several lines of business [36] - The company does not foresee significant changes in the marketplace, with rates expected to continue to rise in certain areas [18] - Management remains conservative in underwriting and is focused on maintaining appropriate insurance to value during inflationary times [18][19] Other Important Information - The effective tax rate on core income was 20% for Q1 2023, with expectations for similar rates throughout the year [35] - The company announced a regular quarterly dividend of $0.42 per share to be paid on June 1, 2023 [35] Q&A Session Summary Question: Can you discuss reserve development in the Specialty and Commercial segments? - Management noted that development was flat for both segments, with unfavorable claim settlements in older accident years offset by favorable reserve development in other parts of the specialty portfolio [39][40] Question: What is the outlook for catastrophe losses in 2023? - Management refrained from providing specific guidance but emphasized conservative management practices [41] Question: How has D&O pricing been affected by recent banking sector issues? - Management indicated that D&O pricing had stabilized closer to flat after a negative trend in Q4 [44]