NI Holdings, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed March 15, 2024. The filing is an annual report and does not provide a clear standalone fourth-quarter results table. Dollar amounts below are in thousands unless stated otherwise.
Business context
NI Holdings is an insurance holding company whose subsidiaries and affiliate write property-and-casualty insurance, including private passenger and non-standard auto, home and farm, crop, and commercial coverage. Its insurance companies share an intercompany reinsurance pool and were rated “A” (Excellent) by AM Best, with a stable outlook affirmed in April 2023.
Financial performance and position
| Metric | FY2023 | FY2022 |
|---|---|---|
| Total revenue | $365,695 | $324,437 |
| Net premiums earned | $351,137 | $328,290 |
| Underwriting loss | $(12,065) | $(65,176) |
| Net investment income | $10,456 | $7,820 |
| Net investment gains (losses) | $2,124 | $(13,126) |
| Goodwill impairment charge | $6,756 | — |
| Net loss | $(5,226) | $(53,775) |
| Net loss attributable to NI Holdings | $(5,476) | $(53,096) |
| Basic and diluted loss per share | $(0.26) | $(2.49) |
| Operating cash flow | $25,970 | $(30,388) |
- Revenue increased 12.7%; net premiums earned rose 7.0%. Direct premiums written were $418,399, up from $389,706.
- The combined ratio improved to 103.4% from 119.9%, but remained above 100%, indicating an underwriting loss. The loss ratio fell to 69.6% from 89.7%; the expense ratio rose to 33.8% from 30.2%.
- At year-end, cash and investments were $434,197, total assets $654,886, total liabilities $404,487, and shareholders’ equity $250,399. Unpaid losses and loss adjustment expenses were $217,119; unearned premiums were $164,100.
- The company reported no outstanding borrowings on its $3,000 revolving credit line; it expires December 13, 2024. Lease liabilities were $2,063. The filing reports no significant external funded debt.
- Cash and cash equivalents increased to $56,693 from $47,002. Investing cash flow was $(8,813) and financing cash flow was $(7,466).
Material changes versus FY2022
- The net loss narrowed substantially, mainly reflecting lower catastrophe losses and improved investment results compared with 2022. FY2023 still included a $6,756 non-cash impairment that fully wrote off Westminster goodwill, due primarily to actual and expected performance below initial projections.
- Net losses and loss adjustment expenses declined 17.0%. Home and farm improved markedly as the company had no catastrophe losses in that segment in 2023, compared with catastrophe losses that added 72.1 percentage points to its 2022 loss ratio.
- Growth was strongest in non-standard auto: net premiums earned rose 31.2%, while its loss ratio increased 12.9 percentage points to 71.8%, amid elevated severity and unfavorable prior-year reserve development. Commercial remained challenged, with a 128.8% combined ratio.
- Crop net premiums earned declined 25.6%, reflecting lower commodity prices, rates, and insured acres. Private passenger auto and home and farm benefited from rate increases and underwriting actions.
- Prior-year reserves developed unfavorably by $20,452 in 2023, primarily in Westminster commercial and Direct Auto non-standard auto, partly offset by favorable development in other operations.
- Net investment income increased 33.7%. Fixed-income unrealized losses narrowed, contributing to an improvement in accumulated other comprehensive loss to $(21,384) from $(29,286).
Outlook, risks and other notable items
- The filing provides no numeric earnings or premium guidance. Management describes plans to pursue profitable organic growth, consider selective acquisitions, and deploy excess capital to existing businesses, strategic investments, or shareholder returns.
- Management expects catastrophe reinsurance protection in 2024 to remain at $133,000 above a $20,000 retention. Reinsurance availability, cost, and collectability remain risks; the company remains liable to policyholders if a reinsurer does not pay.
- Key exposures include severe weather and geographic concentration in North Dakota, crop conditions and federal crop-program changes, claims inflation and reserve uncertainty, investment interest-rate and credit risk, competition, regulation, and cyber or operational disruption.
- Liquidity is supported by premiums, investment income, and fixed-income maturities. The holding company depends on subsidiary distributions, which are regulator-restricted: no Nodak Insurance dividend was available in 2024 without prior regulatory approval; estimated amounts available without prior approval from Direct Auto and Westminster were approximately $90 and $1,200, respectively.
- The board had not established a regular cash-dividend policy. No regular or special shareholder dividend is assured. The company repurchased 548,549 shares for $7,278 during 2023, with $2,052 remaining under the authorization at year-end.
- On January 2, 2024, Battle Creek converted from mutual to stock form and became wholly owned by Nodak Insurance; its $3,000 surplus note was considered paid in full. Accounting for the transaction was to be reflected in the first-quarter 2024 filing.
- The auditor issued unqualified opinions on the financial statements and internal control over financial reporting; management and the auditor considered controls effective. Loss-reserve evaluation was identified as a critical audit matter. The company said ordinary-course litigation was not material based on information then available.
Important facts for investors to verify
- Whether the combined ratio can move below 100%, particularly in non-standard auto and commercial, and whether pricing actions keep pace with loss severity and inflation.
- Further development of the $217,119 loss reserve, including the $20,452 of unfavorable prior-year development in 2023 and Westminster’s and Direct Auto’s experience.
- Westminster’s operating trajectory following the full goodwill impairment, and whether further asset impairment or restructuring risks emerge.
- Crop premium and underwriting trends, and the effects of weather, commodity prices, federal program terms, and reinsurance settlements.
- Subsidiary statutory capital, regulatory dividend capacity, and parent-company liquidity; confirm renewal or replacement of the $3,000 credit line before its December 2024 expiry.
- Progress on capital returns and the board’s dividend policy, as well as the financial and reporting effects of Battle Creek’s January 2024 conversion.