NI Holdings earns $5.53M in Q3 2026 turnaround
Non-standard auto runoff accompanied a 12.5% nine-month decrease in premiums earned; underwriting reported a gain for the same period.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
NI Holdings, Inc. reported third-quarter 2026 net income of $5.528 million, compared with a $1.666 million net loss a year earlier; nine-month net income was $18.182 million versus a $7.257 million loss. Third-quarter net premiums earned fell 8.6% to $65.756 million, and nine-month premiums fell 12.5% to $185.886 million.
The premium decline primarily reflects decisions to stop writing non-standard auto business in Illinois, Arizona and South Dakota in 2025 and North Dakota in third-quarter 2026, with existing policies being non-renewed; NI Holdings anticipates further near-term reductions as these operations run off. Underwriting produced a $4.191 million gain for the quarter and a $10.425 million gain for nine months, compared with losses in both year-earlier periods; the third-quarter combined ratio was 93.6%, versus 109.1%. Operating activities used $16.006 million of cash in the nine months. Fixed-income securities recorded $13.897 million of net unrealized losses in the nine months, reflected in other comprehensive income rather than net income.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Positive
- Moderate pointThird-quarter net income was $5.528 million, versus a $1.666 million loss a year earlier.
- Moderate pointNine-month underwriting gain was $10.425 million, versus a $21.085 million loss.
Negative
- Moderate pointNine-month net premiums earned declined 12.5% to $185.886 million.
Filing Explained
No borrowing was outstanding on the 3,000-thousand-dollar credit line during the first nine months; it is scheduled to expire December 11, 2026.
For the nine months ended
The company reports a
Key Figures
Key Terms
Net premiums earned financial
Combined ratio financial
Underwriting gain (loss) financial
Prior year development on loss reserves financial
Deferred policy acquisition costs financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much did NODK earn in the third quarter of 2026?
How much did NODK's premiums decline in 2026?
Why did NODK's non-standard auto premiums fall?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
| 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
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
Not applicable
Former name, former address, and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | |
| Non-accelerated filer | ☐ | Smaller reporting company | |
| Emerging growth company |
i
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes No
The number of shares of Registrant’s common stock outstanding on October 31, 2026 was
ii
TABLE OF CONTENTS
| FORWARD-LOOKING STATEMENTS | 2 |
| Part I. - FINANCIAL INFORMATION | 3 |
| Item 1. - Financial Statements | 3 |
| Consolidated Balance Sheets (Unaudited) – September 30, 2026 and December 31, 2025 | 3 |
| Consolidated Statements of Operations (Unaudited) – Three Months and Nine Months Ended September 30, 2026 and 2025 | 4 |
| Consolidated Statements of Comprehensive Income (Loss) (Unaudited) – Three Months and Nine Months Ended September 30, 2026 and 2025 | 5 |
| Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) – Three Months and Nine Months Ended September 30, 2026 and 2025 | 6 |
| Consolidated Statements of Cash Flows (Unaudited) – Nine Months Ended September 30, 2026 and 2025 | 8 |
| Notes to Unaudited Consolidated Financial Statements | 9 |
| Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of Operations | 30 |
| Item 3. - Quantitative and Qualitative Disclosures about Market Risk | 39 |
| Item 4. - Controls and Procedures | 39 |
| Part II. - OTHER INFORMATION | 40 |
| Item 1. - Legal Proceedings | 40 |
| Item 1A. - Risk Factors | 40 |
| Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds | 41 |
| Item 3. - Defaults upon Senior Securities | 41 |
| Item 4. - Mine Safety Disclosures | 41 |
| Item 5. - Other Information | 42 |
| Item 6. - Exhibits | 42 |
| Signatures | 43 |
iii
CERTAIN IMPORTANT INFORMATION
Unless the context otherwise requires, as used in this Quarterly Report on Form 10-Q (“Form 10-Q”):
| · | “NI Holdings,” “the Company,” “we,” “us,” and “our” refer to NI Holdings, Inc., together with Nodak Insurance Company and its subsidiaries, and Direct Auto Insurance Company, for periods discussed after completion of the conversion; |
| · | the “Nodak conversion” refers to the series of transactions consummated on March 13, 2017, by which Nodak Mutual Insurance Company converted from a mutual insurance company to a stock insurance company, as Nodak Insurance Company, and became a wholly-owned subsidiary of NI Holdings, an intermediate stock holding company formed on the date of conversion; |
| · | “Nodak Mutual Group” refers to Nodak Mutual Group, Inc., which is the majority shareholder of NI Holdings; |
| · | “Nodak Mutual Insurance Company” is the predecessor company to Nodak Insurance Company prior to the conversion; |
| · | “Nodak Insurance” refers to Nodak Insurance Company or Nodak Mutual Insurance Company interchangeably; |
| · | “Battle Creek” refers to Battle Creek Insurance Company. Battle Creek is a wholly-owned subsidiary of Nodak Insurance; |
| · | “Direct Auto” refers to Direct Auto Insurance Company. Direct Auto is a wholly-owned subsidiary of NI Holdings; |
| · | “American West” refers to American West Insurance Company. American West is a wholly-owned subsidiary of Nodak Insurance; |
| · | “Primero” refers to Primero Insurance Company. Primero is an indirect, wholly-owned subsidiary of Nodak Insurance; and |
| · | “Nodak Agency” refers to Nodak Agency, Inc. Nodak Agency is a wholly-owned subsidiary of Nodak Insurance. |
1
FORWARD-LOOKING STATEMENTS
This report contains, and management may make, certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. Words such as “may,” “will,” “should,” “likely,” “anticipates,” “expects,” “intends,” “plans,” “projects,” “believes,” “views,” “estimates,” and similar expressions are used to identify these forward-looking statements. These statements include, among other things, the Company’s statements about:
| · | our anticipated operating and financial performance, business plans, and prospects; |
| · | strategic reviews, capital allocation objectives, dividends, and share repurchases; |
| · | plans for and prospects of acquisitions, dispositions, and other business development activities, and our ability to successfully capitalize on these opportunities; |
| · | the impact of a future pandemic and related economic conditions, including the potential impact on the Company's investments; |
| · | our ability to enter new markets successfully and capitalize on growth opportunities either through acquisitions or the expansion of our distribution network; |
| · | cyclical changes in the insurance industry, competition, innovation, and emerging technologies; |
| · | expectations for the impact of, or changes to, existing or new government regulations or laws; |
| · | our ability to anticipate and respond to macroeconomic, geopolitical, health and industry trends, pandemics, acts of war, government shutdowns, and other large-scale crises; |
| · | developments in general economic conditions (including the impact of tariffs and changes in tax laws), domestic and global financial markets, interest rates, unemployment, or inflation, that could affect the performance of our insurance operations and/or investment portfolio; and |
| · | our ability to effectively manage future growth, including additional necessary capital, systems, and personnel. |
Given their nature, we cannot assure that any outcome expressed in these or other forward-looking statements will be realized in whole or in part. Actual outcomes may vary materially from past results and those anticipated, estimated, implied, or projected. These forward-looking statements may be affected by underlying assumptions that may prove inaccurate or incomplete, or by known or unknown risks and uncertainties, including those described in Part II, Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q (“Form 10-Q”) and in the Part I, Item 1A, “Risk Factors” section in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Annual Report”). The occurrence of any of the risks identified in the Part I, Item 1A, “Risk Factors” section of the 2025 Annual Report, or other risks currently unknown, could have a material adverse effect on our business, financial condition or results of operations, or we may be required to increase our accruals for contingencies. It is not possible to predict or identify all such factors. Consequently, you should not consider such discussion to be a complete discussion of all potential risks or uncertainties.
Therefore, you are cautioned not to unduly rely on forward-looking statements, which speak only as of the date of this Form 10-Q. We undertake no obligation to update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law. You are advised, however, to consult any further disclosures we make on related subjects.
2
Part I. - FINANCIAL INFORMATION
Item 1. - Financial Statements
NI Holdings, Inc.
Consolidated Balance Sheets (Unaudited)
(dollar amounts in thousands, except par value)
| September 30, 2026 | December 31, 2025 | |||||||
| Assets: | ||||||||
| Cash and cash equivalents (including restricted cash of $ | $ | $ | ||||||
| Fixed income securities, at fair value (amortized cost $ | ||||||||
| Equity securities, at fair value (cost $ | ||||||||
| Other investments | ||||||||
| Total cash and investments | ||||||||
| Premiums and agents' balances receivable (net of allowance for expected credit losses of $ | ||||||||
| Deferred policy acquisition costs | ||||||||
| Reinsurance recoverables on losses (net of allowance for expected credit losses of $ | ||||||||
| Income tax recoverable | ||||||||
| Accrued investment income | ||||||||
| Property and equipment, net | ||||||||
| Deferred income taxes | ||||||||
| Receivable from Federal Crop Insurance Corporation | ||||||||
| Ceded unearned premiums | — | |||||||
| Other assets | ||||||||
| Total assets | $ | $ | ||||||
| Liabilities: | ||||||||
| Unpaid losses and loss adjustment expenses | $ | $ | ||||||
| Unearned premiums | ||||||||
| Reinsurance premiums payable | ||||||||
| Accrued expenses and other liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (refer to Note 13): | — | — | ||||||
| Shareholders’ equity: | ||||||||
| Common stock, $ issued: | ||||||||
| Additional paid-in capital | ||||||||
| Unearned employee stock ownership plan shares | ( | ) | ( | ) | ||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss, net of income taxes | ( | ) | ( | ) | ||||
| Treasury stock, at cost, 2026 – | ( | ) | ( | ) | ||||
| Total shareholders’ equity | ||||||||
| Total liabilities and shareholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
3
NI Holdings, Inc.
Consolidated Statements of Operations (Unaudited)
(dollar amounts in thousands, except per share data)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues: | ||||||||||||||||
| Net premiums earned | $ | $ | $ | $ | ||||||||||||
| Net investment income | ||||||||||||||||
| Net investment gains (losses) | ( | ) | ||||||||||||||
| Fee and other income | ||||||||||||||||
| Total revenues | ||||||||||||||||
| Expenses: | ||||||||||||||||
| Losses and loss adjustment expenses | ||||||||||||||||
| Amortization of deferred policy acquisition costs | ||||||||||||||||
| Other underwriting and general expenses | ||||||||||||||||
| Total expenses | ||||||||||||||||
| Income (loss) before income taxes | ( | ) | ( | ) | ||||||||||||
| Income tax expense (benefit) | ( | ) | ( | ) | ||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Earnings (loss) per common share: | ||||||||||||||||
| Basic | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Diluted | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Share data: | ||||||||||||||||
| Weighted average common shares outstanding used in basic per common share calculations | ||||||||||||||||
| Dilutive securities – restricted stock units and performance share units | — | — | ||||||||||||||
| Weighted average common shares used in diluted per common share calculations | ||||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
4
NI Holdings, Inc.
Consolidated Statements of Comprehensive Income (Loss) (Unaudited)
(dollar amounts in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||
| Other comprehensive income (loss), before income taxes: | ||||||||||||||||
| Change in unrealized gains (losses) on investments | ( | ) | ( | ) | ||||||||||||
| Reclassification adjustment for net realized gains (losses) included in net income (loss) | ||||||||||||||||
| Other comprehensive income (loss), before income taxes | ( | ) | ( | ) | ||||||||||||
| Income tax benefit (expense) related to items of other comprehensive income (loss) | ( | ) | ( | ) | ||||||||||||
| Other comprehensive income (loss), net of income taxes | ( | ) | ( | ) | ||||||||||||
| Comprehensive income (loss) | $ | ( | ) | $ | $ | $ | ( | ) | ||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
5
NI Holdings, Inc.
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(dollar amounts in thousands)
| Three Months Ended September 30, 2026 | ||||||||||||||||||||||||||||
| Common Stock |
Additional Paid-in Capital |
Unearned Employee Stock Ownership Plan Shares |
Retained Earnings |
Accumulated Other Comprehensive Loss, Net of Income Taxes |
Treasury Stock |
Total Shareholders’ Equity |
||||||||||||||||||||||
| Balance, July 1, 2026 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net income (loss) | — | — | — | — | — | |||||||||||||||||||||||
| Other comprehensive income (loss), net of income taxes | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Issuance of vested award shares | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||
| Common Stock |
Additional Paid-in Capital |
Unearned Employee Stock Ownership Plan Shares |
Retained Earnings |
Accumulated Other Comprehensive Loss, Net of Income Taxes |
Treasury Stock |
Total Shareholders’ Equity |
||||||||||||||||||||||
| Balance, January 1, 2026 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net income (loss) | — | — | — | — | — | |||||||||||||||||||||||
| Other comprehensive income (loss), net of income taxes | — | — | — | — | ( | ) | — | ( | ) | |||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Issuance of vested award shares | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
6
NI Holdings, Inc.
Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)
(dollar amounts in thousands)
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||
| Common Stock |
Additional Paid-in Capital |
Unearned Employee Stock Ownership Plan Shares |
Retained Earnings |
Accumulated Other Comprehensive Loss, Net of Income Taxes |
Treasury Stock |
Total Shareholders’ Equity |
||||||||||||||||||||||
| Balance, July 1, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net income (loss) | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||
| Other comprehensive income (loss), net of income taxes | — | — | — | — | — | |||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Issuance of vested award shares | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||
| Common Stock |
Additional Paid-in Capital |
Unearned Employee Stock Ownership Plan Shares |
Retained Earnings |
Accumulated Other Comprehensive Loss, Net of Income Taxes |
Treasury Stock |
Total Shareholders’ Equity |
||||||||||||||||||||||
| Balance, January 1, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Net income (loss) | — | — | — | ( | ) | — | — | ( | ) | |||||||||||||||||||
| Other comprehensive income (loss), net of income taxes | — | — | — | — | — | |||||||||||||||||||||||
| Purchase of treasury stock | — | — | — | — | — | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | — | — | — | — | — | |||||||||||||||||||||||
| Issuance of vested award shares | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
7
NI Holdings, Inc.
Consolidated Statements of Cash Flows (Unaudited)
(dollar amounts in thousands)
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash flows from operating activities: | ||||||||
| Net investment gains (losses) | ( | ) | ( | ) | ||||
| Deferred income tax expense (benefit) | ( | ) | ||||||
| Depreciation of property and equipment | ||||||||
| Share-based compensation | ||||||||
| Amortization of deferred policy acquisition costs | ||||||||
| Deferral of policy acquisition costs | ( | ) | ( | ) | ||||
| Net amortization of premiums and discounts on investments | ||||||||
| Gain on sale of property and equipment | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Premiums and agents’ balances receivable | ( | ) | ( | ) | ||||
| Reinsurance premiums receivable / payable | ||||||||
| Reinsurance recoverables on losses | ( | ) | ||||||
| Income tax recoverable / payable | ( | ) | ||||||
| Accrued investment income | ( | ) | ||||||
| Federal Crop Insurance Corporation receivable / payable | ( | ) | ( | ) | ||||
| Other assets | ( | ) | ( | ) | ||||
| Unpaid losses and loss adjustment expenses | ( | ) | ||||||
| Unearned premiums | ( | ) | ||||||
| Accrued expenses and other liabilities | ||||||||
| Total adjustments | ( | ) | ( | ) | ||||
| Net cash flows from operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from maturities and sales of fixed income securities | ||||||||
| Proceeds from sales of equity securities | ||||||||
| Purchases of fixed income securities | ( | ) | ( | ) | ||||
| Purchases of equity securities | ( | ) | ( | ) | ||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from sales of property and equipment | ||||||||
| Net cash flows from investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Purchase of treasury stock | ( | ) | ( | ) | ||||
| Principal repayments of finance leases | ( | ) | ( | ) | ||||
| Issuance of vested award shares | ( | ) | ( | ) | ||||
| Net cash flows from financing activities | ( | ) | ( | ) | ||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Federal and state income taxes paid (net of refunds received) | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited consolidated financial statements.
8
Notes to Unaudited Consolidated Financial Statements
| 1. | Organization |
NI Holdings is a North Dakota business corporation that is the stock holding company of Nodak Insurance and became such in connection with the Nodak conversion, whereby Nodak Mutual Insurance Company converted from a mutual to stock form of organization and the creation of a mutual holding company. The Nodak conversion was consummated on March 13, 2017. Immediately following the Nodak conversion, all of the outstanding shares of common stock of Nodak Insurance were issued to Nodak Mutual Group, which then contributed the shares to NI Holdings in exchange for
These unaudited consolidated financial statements include the financial position and results of operations of NI Holdings and the following other entities:
Nodak Insurance Company
Nodak Insurance is the largest domestic property and casualty insurance company based in North Dakota, offering private passenger auto, homeowners, farmowners, commercial multi-peril, excess lines, dwelling, crop hail, and federal multi-peril crop insurance coverages through its captive agents in the state.
Nodak Agency, Inc.
Nodak Agency is an inactive shell corporation.
American West Insurance Company
American West is a property and casualty insurance company licensed in eight states in the Midwest and Western regions of the United States (“U.S.”). American West primarily writes private passenger auto, homeowners, and farm coverages in South Dakota. American West also writes private passenger auto coverage in North Dakota, as well as crop hail and federal multi-peril crop insurance coverages in Minnesota and South Dakota.
Battle Creek Insurance Company
Battle Creek is a property and casualty insurance company writing private passenger auto, homeowners, and farm coverages solely in the state of Nebraska. Battle Creek became affiliated with Nodak Insurance in 2011 and, prior to January 2, 2024, was controlled by Nodak Insurance via a surplus note. On January 2, 2024, Battle Creek issued
Primero Insurance Company
Primero is a wholly-owned subsidiary of Tri-State, Ltd. Tri-State, Ltd. is an inactive shell corporation that is
Direct Auto Insurance Company
Direct Auto is a property and casualty insurance company that provides non-standard auto coverage in the state of Illinois. The Company made the strategic decision to stop writing non-standard auto business for Direct Auto in Illinois during the third quarter of 2025, and existing policies have been non-renewed.
9
Organizational Structure and Credit Ratings
Nodak Insurance markets and distributes its policies through its captive agents, while all other companies utilize the independent agent distribution channel. Additionally, all of the Company’s insurance subsidiary and affiliate companies as of September 30, 2026, are rated “A” Excellent by A.M. Best Company, Inc. (“AM Best”), a global credit rating agency specializing in the insurance industry. The same executive management team provides oversight and strategic direction for the entire organization.
Geographic Concentration
The states of North Dakota, Nebraska, and South Dakota accounted for
| 2. | Basis of Presentation and Significant Accounting Policies |
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. All material intercompany transactions and balances have been eliminated. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2025 Annual Report.
The Consolidated Balance Sheet at December 31, 2025, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements.
The preparation of the interim unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the interim unaudited consolidated financial statements and the reported amounts of revenues, claims, and expenses during the reporting period.
We make estimates and assumptions that can have a significant effect on amounts and disclosures we report in our unaudited consolidated financial statements. The most significant estimates relate to our reserves for unpaid losses and loss adjustment expenses, earned premiums for crop insurance, valuation of investments, determination of credit impairments, valuation allowances for deferred income tax assets, as well as deferred policy acquisition costs. While we believe our estimates are appropriate, the ultimate amounts may differ from the estimates provided. We regularly review our methods for making these estimates as well as the continued appropriateness of the estimated amounts, and we reflect any adjustment we consider necessary in our current results of operations.
Operating results for the interim periods ended September 30, 2026, are not necessarily indicative of the results that may be expected for the year ending December 31, 2026.
Our 2025 Annual Report describes the accounting policies and estimates that are critical to the understanding of our results of operations, financial condition, and liquidity. The accounting policies and estimation processes described in the 2025 Annual Report were consistently applied to the unaudited consolidated financial statements as of and for the three and nine months ended September 30, 2026 and 2025.
Enactment of the One Big Beautiful Bill Act of 2025
On July 4, 2025, the U.S. enacted a budget reconciliation package known as the One Big Beautiful Bill Act of 2025 (“OBBBA”) which includes both tax and non-tax provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others through 2027. The Company believes that the changes resulting from the tax provisions in the OBBBA are not expected to have a material impact on the Company’s results of operations.
10
Recent Accounting Pronouncements
Not Yet Adopted
Disaggregation of Income Statement Expenses
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” This guidance is intended to improve disclosures about a public business entity's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. Such information should allow investors to better understand an entity's performance, assess future cash flows, and compare performance over time and with other entities. The amendments will require public business entities to disclose in the notes to the financial statements, at each interim and annual reporting period, specific information about certain costs and expenses, including purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each expense caption presented on the face of the statement of operations, and the total amount of an entity's selling expenses. The amendments are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, and may be applied either prospectively or retrospectively. Early adoption is permitted. The Company is currently in the process of adopting this guidance.
Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software." This guidance modernizes the accounting for internal-use software under ASC 350-40 to adapt to different development practices, especially agile and iterative methods. The updated guidance requires that an entity capitalize software costs when both: 1) management has authorized and committed to the funding of the software project, and 2) it is probable that the project will be completed, and the software will be used to perform its intended function. This update is effective for interim and annual periods beginning after December 15, 2027, with early adoption permitted. The Company has determined this guidance is not expected to have a material impact on the consolidated financial statements.
11
| 3. | Investments |
The amortized cost and estimated fair value of fixed income securities as of September 30, 2026, and December 31, 2025, were as follows:
| September 30, 2026 | ||||||||||||||||||||
| Amortized Cost | Allowance for Expected Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||
| U.S. Government and agencies | $ | $ | — | $ | — | $ | ( | ) | $ | |||||||||||
| Obligations of states and political subdivisions | — | ( | ) | |||||||||||||||||
| Corporate securities | — | ( | ) | |||||||||||||||||
| Residential mortgage-backed securities | — | ( | ) | |||||||||||||||||
| Commercial mortgage-backed securities | — | ( | ) | |||||||||||||||||
| Asset-backed securities | — | ( | ) | |||||||||||||||||
| Redeemable preferred stocks | — | — | ( | ) | ||||||||||||||||
| Total fixed income securities | $ | $ | — | $ | $ | ( | ) | $ | ||||||||||||
| December 31, 2025 | ||||||||||||||||||||
| Amortized Cost | Allowance for Expected Credit Losses | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||
| U.S. Government and agencies | $ | $ | — | $ | $ | ( | ) | $ | ||||||||||||
| Obligations of states and political subdivisions | — | ( | ) | |||||||||||||||||
| Corporate securities | — | ( | ) | |||||||||||||||||
| Residential mortgage-backed securities | — | ( | ) | |||||||||||||||||
| Commercial mortgage-backed securities | — | ( | ) | |||||||||||||||||
| Asset-backed securities | — | ( | ) | |||||||||||||||||
| Redeemable preferred stocks | — | — | ( | ) | ||||||||||||||||
| Total fixed income securities | $ | $ | — | $ | $ | ( | ) | $ | ||||||||||||
The amortized cost and estimated fair value of fixed income securities by contractual maturity are shown below. Actual maturities could differ from contractual maturities because issuers may have the right to call or prepay these securities.
| September 30, 2026 | ||||||||
| Amortized Cost | Fair Value | |||||||
| Due to mature: | ||||||||
| One year or less | $ | $ | ||||||
| After one year through five years | ||||||||
| After five years through ten years | ||||||||
| After ten years | ||||||||
| Mortgage / asset-backed securities | ||||||||
| Redeemable preferred stocks | ||||||||
| Total fixed income securities | $ | $ | ||||||
| December 31, 2025 | ||||||||
| Amortized Cost | Fair Value | |||||||
| Due to mature: | ||||||||
| One year or less | $ | $ | ||||||
| After one year through five years | ||||||||
| After five years through ten years | ||||||||
| After ten years | ||||||||
| Mortgage / asset-backed securities | ||||||||
| Redeemable preferred stocks | ||||||||
| Total fixed income securities | $ | $ | ||||||
12
Fixed income securities and restricted cash with a fair value of $
The investment category and duration of the Company’s gross unrealized losses on fixed income securities are shown below.
| September 30, 2026 | ||||||||||||||||||||||||
| Less than 12 Months | Greater than 12 months | Total | ||||||||||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||||||
| U.S. Government and agencies | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
| Obligations of states and political subdivisions | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Corporate securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Residential mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Commercial mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Redeemable preferred stocks | — | — | ( | ) | ( | ) | ||||||||||||||||||
| Total fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||
| Less than 12 Months | Greater than 12 months | Total | ||||||||||||||||||||||
| Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | |||||||||||||||||||
| Fixed income securities: | ||||||||||||||||||||||||
| U.S. Government and agencies | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
| Obligations of states and political subdivisions | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Corporate securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Residential mortgage-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Commercial mortgage-backed securities | — | — | ( | ) | ( | ) | ||||||||||||||||||
| Asset-backed securities | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Redeemable preferred stocks | — | — | ( | ) | ( | ) | ||||||||||||||||||
| Total fixed income securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||
We, along with our investment advisor, frequently review our investment portfolio for declines in fair value that could be indicative of credit losses, which are recognized through an allowance account. We consider a number of factors when determining if an allowance for credit losses is necessary, including payment and default history, credit spreads, credit ratings and rating actions, and probability of default. We determine the credit loss component of fixed income investments by utilizing discounted cash flow modeling to determine the present value of the security and comparing the present value with the amortized cost of the security. We have not recognized any credit losses for fixed income securities and have concluded that an allowance is not required. There was no beginning balance, activity, or ending balance of credit losses as of and during the three and nine months ended September 30, 2026 and 2025.
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Net investment income consisted of the following:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Fixed income securities | $ | $ | $ | $ | ||||||||||||
| Equity securities | ||||||||||||||||
| Rental income | ||||||||||||||||
| Cash and cash equivalents | ||||||||||||||||
| Total gross investment income | ||||||||||||||||
| Investment expenses | ||||||||||||||||
| Net investment income | $ | $ | $ | $ | ||||||||||||
Net investment gains (losses) consisted of the following:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Gross realized gains: | ||||||||||||||||
| Fixed income securities | $ | $ | $ | $ | ||||||||||||
| Equity securities | ||||||||||||||||
| Total gross realized gains | ||||||||||||||||
| Gross realized losses, excluding credit impairment losses: | ||||||||||||||||
| Fixed income securities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Equity securities | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total gross realized losses, excluding credit impairment losses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net realized gains (losses) | ||||||||||||||||
| Change in net unrealized gains on equity securities | ( | ) | ||||||||||||||
| Net investment gains (losses) | $ | ( | ) | $ | $ | $ | ||||||||||
Non-cash investment transactions were $
The Company maintains cash and money market accounts at multiple major financial institutions. Certain account balances exceed the Federal Deposit Insurance Corporation insurance limits of $
14
| 4. | Fair Value Measurements |
The Company uses fair value measurements to record fair value adjustments to certain assets to determine fair value disclosures. Investment securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, we may be required to record other assets or liabilities at fair value on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of lower-of-cost-or-market accounting or write-downs of individual assets. Accounting guidance on fair value measurements and disclosures establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The three levels of the fair value hierarchy are as follows:
| Level 1: | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. | |
| Level 2: | Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability. Level 2 includes fixed income securities with quoted prices that are traded less frequently than exchange traded instruments. Valuation techniques include matrix pricing which is a mathematical technique used widely in the industry to value fixed income securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices. | |
| Level 3: | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity). |
The Company bases its fair values on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. It is our policy to maximize the use of observable inputs and minimize the use of unobservable inputs when developing fair value measurements, in accordance with the fair value hierarchy. Fair value measurements for assets where there exists limited or no observable market data and, therefore, are based primarily upon the estimates of the Company or other third-parties, are often calculated based on the characteristics of the asset, the economic and competitive environment, and other such factors. Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts which could have been realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period-end and have not been re-evaluated or updated for purposes of our consolidated financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end. Additionally, changes in the underlying assumptions used, including discount rates and estimates of future cash flows, could significantly affect the results of current or future valuations.
The Company uses quoted values and other data provided by an independent pricing service in its process for determining fair values of its investments. The evaluations of such pricing services represent an exit price and a good faith opinion as to what a buyer in the marketplace would pay for a security in a current sale. This pricing service provides us with one quote per instrument. For fixed income securities that have quoted prices in active markets, market quotations are provided. For fixed income securities that do not trade on a daily basis, the independent pricing service prepares estimates of fair value using a wide array of observable inputs including relevant market information, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. The observable market inputs that the Company’s independent pricing service utilizes may include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers, and other reference data on markets, industry, and the economy. Additionally, the independent pricing service uses an option-adjusted spread model to develop prepayment and interest rate scenarios.
Should the independent pricing service be unable to provide a fair value estimate, we would first attempt to obtain a fair value estimate from a second independent pricing service. If unsuccessful, we would attempt to obtain a non-binding fair value estimate from a number of broker-dealers and would review this estimate in conjunction with a fair value estimate reported by an independent business news service or other sources. In instances where only one broker-dealer provides a fair value for a fixed income security, we would use that estimate. In instances where the Company would be able to obtain fair value estimates from more than one broker-dealer, we would review the range of estimates and select the most appropriate value based on the facts and circumstances. Should neither the independent pricing service nor a broker-dealer provide a fair value estimate, we would develop a fair value estimate based on cash flow analyses and other valuation techniques that utilize certain unobservable inputs. Accordingly, the Company classifies such a security as a Level 3 investment.
The fair value estimates of our investments provided by the independent pricing service at each period-end were utilized, among other resources, in reaching a conclusion as to the fair value of our investments.
15
Management reviews the reasonableness of the pricing provided by the independent pricing service by employing various analytical procedures. We also use information from a second independent pricing service to further validate the reasonableness of the valuation of our fixed income portfolio. If, after this review, management does not believe the pricing for any security is a reasonable estimate of fair value, then it will seek to resolve the discrepancy through discussions with the independent pricing services. In its review, management did not identify any such discrepancies and no adjustments were made to the estimates provided by the independent pricing services for the nine-month period ended September 30, 2026, or the year ended December 31, 2025. The classification within the fair value hierarchy is then confirmed based on the final conclusions from the pricing review.
The valuation of money market accounts, preferred stocks, and equity securities are generally based on Level 1 inputs, which use the market-approach valuation technique. The valuation of certain cash equivalents and our fixed income securities generally incorporates significant Level 2 inputs using the market and income approach techniques. We may assign a lower level to inputs typically considered to be Level 2 based on our assessment of liquidity and relative level of uncertainty surrounding inputs. There were no assets or liabilities classified at Level 3 at September 30, 2026, or December 31, 2025.
The following tables set forth our assets which are measured on a recurring basis by the level within the fair value hierarchy in which fair value measurements fall:
| September 30, 2026 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Fixed income securities: | ||||||||||||||||
| U.S. Government and agencies | $ | $ | — | $ | $ | — | ||||||||||
| Obligations of states and political subdivisions | — | — | ||||||||||||||
| Corporate securities | — | — | ||||||||||||||
| Residential mortgage-backed securities | — | — | ||||||||||||||
| Commercial mortgage-backed securities | — | — | ||||||||||||||
| Asset-backed securities | — | — | ||||||||||||||
| Redeemable preferred stock | — | |||||||||||||||
| Total fixed income securities | — | |||||||||||||||
| Equity securities - common stock | — | — | ||||||||||||||
| Money market accounts and cash equivalents | — | |||||||||||||||
| Total assets at fair value | $ | $ | $ | $ | — | |||||||||||
| December 31, 2025 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Fixed income securities: | ||||||||||||||||
| U.S. Government and agencies | $ | $ | — | $ | $ | — | ||||||||||
| Obligations of states and political subdivisions | — | — | ||||||||||||||
| Corporate securities | — | — | ||||||||||||||
| Residential mortgage-backed securities | — | — | ||||||||||||||
| Commercial mortgage-backed securities | — | — | ||||||||||||||
| Asset-backed securities | — | — | ||||||||||||||
| Redeemable preferred stock | — | |||||||||||||||
| Total fixed income securities | — | |||||||||||||||
| Equity Securities - Common stock | — | |||||||||||||||
| Money market accounts and cash equivalents | — | — | ||||||||||||||
| Total assets at fair value | $ | $ | $ | $ | — | |||||||||||
There were no liabilities measured at fair value on a recurring basis at September 30, 2026, or December 31, 2025.
16
| 5. | Reinsurance |
External Reinsurance
The Company’s consolidated financial statements reflect the effects of assumed and ceded reinsurance transactions. Assumed reinsurance refers to the acceptance of certain insurance risks that other insurance companies have underwritten. Ceded reinsurance involves transferring certain insurance risks (along with the related written and earned premiums) the Company has underwritten to other insurance companies who agree to share these risks. The Company reinsures a portion of the risks it underwrites, through these ceded reinsurance agreements, in order to control its exposure to losses. Our ceded reinsurance is placed either on an automatic basis under general reinsurance contracts known as treaties or through facultative contracts placed on substantial individual risks. These contracts do not relieve the Company from its obligations to policyholders. Treaty reinsurance contracts are typically effective from January 1 through December 31 each year.
During the nine-month period ended September 30, 2026, the Company maintained property catastrophe reinsurance protection covering $
During the year ended December 31, 2025, the Company maintained property catastrophe reinsurance protection covering $
The Company actively monitors and evaluates the financial condition of the reinsurers and develops estimates of the uncollectible amounts due from reinsurers, which would be recognized as credit losses through an allowance account developed using the current expected credit losses (“CECL”) model. Credit loss estimates are made based on periodic evaluation of balances due from reinsurers, changes in reinsurer credit standing, judgments regarding reinsurers’ solvency, known disputes, reporting characteristics of the underlying reinsured business, historical experience, current economic conditions, the state of reinsurer relations in general, and other relevant factors. Collection risk is mitigated by entering into reinsurance arrangements only with reinsurers that have strong credit ratings and statutory surplus above certain levels. At September 30, 2026, and December 31, 2025, management has concluded that it is not necessary to record an allowance for expected credit losses related to reinsurance recoverables. All of our significant reinsurance partners are rated “A-” (Excellent) or better by AM Best or “A+” or better by Standard & Poor’s, and there is no history of write-offs.
17
A reconciliation of direct to net premiums on both a written and an earned basis is as follows:
| Three Months Ended September 30, 2026 | Three Months Ended September 30, 2025 | |||||||||||||||
| Premiums Written | Premiums Earned | Premiums Written | Premiums Earned | |||||||||||||
| Direct premium | $ | $ | $ | $ | ||||||||||||
| Assumed premium | ||||||||||||||||
| Ceded premium | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net premiums | $ | $ | $ | $ | ||||||||||||
| Nine Months Ended September 30, 2026 | Nine Months Ended September 30, 2025 | |||||||||||||||
| Premiums Written | Premiums Earned | Premiums Written | Premiums Earned | |||||||||||||
| Direct premium | $ | $ | $ | $ | ||||||||||||
| Assumed premium | ||||||||||||||||
| Ceded premium | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net premiums | $ | $ | $ | $ | ||||||||||||
A reconciliation of direct to net losses and loss adjustment expenses is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Direct losses and loss adjustment expenses | $ | $ | $ | $ | ||||||||||||
| Assumed losses and loss adjustment expenses | ( | ) | ||||||||||||||
| Ceded losses and loss adjustment expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net losses and loss adjustment expenses | $ | $ | $ | $ | ||||||||||||
Intercompany Reinsurance Pooling Arrangement
Effective January 1, 2020, all of our insurance subsidiary and affiliate companies entered into an intercompany reinsurance pooling agreement. Nodak Insurance is the lead company of the pool, and assumes the net premiums, net losses, and underwriting expenses from each of the other companies. Nodak Insurance then retrocedes balances back to each company, while retaining its own share of the pool’s net underwriting results, based on individual pool percentages established in the respective pooling agreement. This arrangement allows each insurance company to rely upon the capacity of the pool’s total statutory capital and surplus. As a result, they are evaluated by AM Best on a group basis and hold a single combined financial strength rating, long-term issuer credit rating, and financial size category. Pooling percentages for the insurance subsidiaries are updated periodically based on their respective surplus as a percentage of the pool’s surplus.
18
| 6. | Deferred Policy Acquisition Costs |
Expenses directly related to successfully acquired insurance policies, primarily commissions, premium taxes and underwriting costs, are deferred and amortized over the terms of the policies. We update our acquisition cost assumptions periodically to reflect actual experience, and we evaluate the costs for recoverability.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | ||||||||||||
| Deferral of policy acquisition costs | ||||||||||||||||
| Amortization of deferred policy acquisition costs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Balance, end of period | $ | $ | $ | $ | ||||||||||||
| 7. | Unpaid Losses and Loss Adjustment Expenses |
Activity in the liability for unpaid losses and loss adjustment expenses is summarized as follows:
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Balance, beginning of period: | ||||||||
| Liability for unpaid losses and loss adjustment expenses | $ | $ | ||||||
| Reinsurance recoverables on losses | ||||||||
| Net balance, beginning of period | ||||||||
| Incurred related to: | ||||||||
| Current year | ||||||||
| Prior years | ( | ) | ||||||
| Total incurred | ||||||||
| Paid related to: | ||||||||
| Current year | ||||||||
| Prior years | ||||||||
| Total paid | ||||||||
| Balance, end of period: | ||||||||
| Liability for unpaid losses and loss adjustment expenses | ||||||||
| Reinsurance recoverables on losses | ||||||||
| Net balance, end of period | $ | $ | ||||||
During the three and nine months ended September 30, 2026, the Company’s incurred reported losses and loss adjustment expense included $
Changes in unpaid losses and loss adjustment expense reserves are generally the result of ongoing analysis of recent loss development trends. As additional information becomes known regarding individual claims, original estimates are increased or decreased accordingly.
19
| 8. | Property and Equipment |
Property and equipment consisted of the following:
| September 30, 2026 | December 31, 2025 | Estimated Useful Life | ||||||||
| Cost: | ||||||||||
| Land | $ | $ | indefinite | |||||||
| Building and improvements | ||||||||||
| Electronic data processing equipment | ||||||||||
| Furniture and fixtures | ||||||||||
| Automobiles | ||||||||||
| Gross cost | ||||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||||
| Total property and equipment, net | $ | $ | ||||||||
Depreciation expense was $
| 9. | Royalties and Dividends |
North Dakota Farm Bureau
Nodak Insurance was organized by the North Dakota Farm Bureau (“NDFB”) to provide insurance protection for its members. We have a royalty agreement with the NDFB that recognizes the use of their trademark and provides royalties to the NDFB based on the premiums written on Nodak Insurance’s policies. Royalties paid to the NDFB were $
Dividends
State insurance laws require our insurance subsidiaries to maintain certain minimum capital and surplus amounts on a statutory basis. Our insurance subsidiaries are subject to regulations that restrict the payment of dividends from statutory surplus and may require prior approval from their domiciliary insurance regulatory authorities. Our insurance subsidiaries are also subject to risk-based capital requirements that may further affect their ability to pay dividends. Our insurance subsidiaries statutory capital and surplus at December 31, 2025, exceeded the amount of statutory capital and surplus necessary to satisfy risk-based capital requirements. For information regarding the availability of subsidiaries to pay dividends to NI Holdings during 2026, see Part II, Item 8, Note 11 “Royalties, Dividends, and Affiliations” section of the 2025 Annual Report.
| 10. | Benefit Plans |
Nodak Insurance sponsors a 401(k) plan with an automatic and matching contribution for eligible employees at Nodak Insurance, Primero, and Direct Auto. Nodak Insurance also contributes an additional elective amount of employee compensation as a profit-sharing contribution for eligible employees. American West and Battle Creek have no employees. The Company reported expenses related to these plans totaling $
All fees associated with the plans are deducted from the eligible employee accounts.
The Company also offers a non-qualified deferred compensation plan to key executives of the Company (as designated by the Board of Directors). The Company’s policy is to fund the plan by amounts that represent the excess of the maximum contribution allowed by the Employee Retirement Income Security Act over the key executives’ allowable 401(k) contribution. The plan also allows employee-directed deferral of key executives’ compensation or incentive payments. The Company reported expenses related to this plan totaling $
20
In connection with our initial public offering (“IPO”) in March 2017, the Company established its Employee Stock Ownership Plan (the “ESOP”) within the meaning of Internal Revenue Code Section 4975(e)(7) and invests solely in common stock of the Company.
Upon establishment of the ESOP, Nodak Insurance loaned $
The shares purchased by the ESOP Trust in the offering are held in a suspense account as collateral for the ESOP loan. Nodak Insurance makes semi-annual cash contributions to the ESOP in amounts no smaller than the amounts required for the ESOP Trust to make its loan payments to Nodak Insurance. While the ESOP makes two loan payments per year, a pre-determined portion of the shares are released from the suspense account and allocated to participant accounts at the end of the calendar year. This release and allocation occurs on an annual basis over the ten-year term of the ESOP loan. Nodak Insurance has a lien on the shares of common stock of the Company held by the ESOP to secure repayment of the loan from the ESOP to Nodak Insurance. If the ESOP is terminated as a result of a change in control of the Company, the ESOP may be required to pay the costs of terminating the plan.
It is anticipated that the only assets held by the ESOP will be shares of the Company’s common stock. Participants in the ESOP cannot direct the investment of any assets allocated to their accounts. The ESOP participants are employees of Nodak Insurance. The employees of Primero and Direct Auto do not participate in the ESOP.
Each employee of Nodak Insurance automatically becomes a participant in the ESOP if such employee is at least 21 years old, has completed a minimum of one thousand hours of service with Nodak Insurance, and has completed an Eligibility Computation Period. Employees are not permitted to make any contributions to the ESOP. Participants in the ESOP receive annual reports from the Company showing the number of shares of common stock of the Company allocated to the participants’ accounts and the market value of those shares. The shares are allocated to participants based on compensation as provided for in the ESOP.
In connection with the establishment of the ESOP, the Company created a contra-equity account on the Consolidated Balance Sheet equal to the ESOP’s basis in the shares. The basis of those shares was set at $
The Company recognized compensation expense related to the ESOP of $
Through September 30, 2026, and December 31, 2025, the Company had released and allocated
| 11. | Line of Credit |
NI Holdings has a $
| 12. | Income Taxes |
We record any change to a previously recorded valuation allowance as a result of re-measuring existing temporary differences and loss carryforwards as a component of income tax expense (benefit). The valuation allowance against certain deferred income tax assets was $
At September 30, 2026, and December 31, 2025, we had no unrecognized tax benefits, no accrued interest and penalties, and no significant uncertain tax positions. No interest and penalties on uncertain tax positions were recognized during the nine-month period ended September 30, 2026, or the year ended December 31, 2025.
Our effective tax rate was
21
| 13. | Contingencies |
We are, from time to time, party to routine litigation incidental to the normal course of our business. Based upon information presently available to us, we do not consider any litigation to be material. However, given the uncertainties attendant to litigation, we cannot assure you that our results of operations and financial condition will not be materially adversely affected by any litigation. Contingent liabilities arising from litigation, income taxes, and other matters are not considered to be material to our financial position.
| 14. | Common and Preferred Stock |
Common Stock
Changes in the number of common stock shares outstanding were as follows:
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Shares outstanding, beginning of period | ||||||||
| Treasury shares repurchased through stock repurchase authorization | ( | ) | ( | ) | ||||
| Issuance of treasury shares for vesting of restricted stock units | ||||||||
| Shares outstanding, end of period | ||||||||
The changes in the number of common shares outstanding excludes certain non-forfeitable stock award shares that are included in the weighted average common shares outstanding used in basic earnings per common share calculations.
On August 25, 2025, our Board of Directors approved an authorization for the repurchase of up to approximately $
The cost of this treasury stock is a reduction of shareholders’ equity within our Consolidated Balance Sheets.
Preferred Stock
The Company’s Articles of Incorporation provide authority to issue up to
| 15. | Share-Based Compensation |
The NI Holdings, Inc. 2020 Stock and Incentive Plan (the “Plan”) is designed to promote the interests of the Company and its shareholders by aiding the Company in attracting and retaining employees, officers, consultants, independent contractors, advisors, and non-employee directors capable of assuring the future success of the Company, to offer such persons incentives to put forth maximum efforts for the success of the Company’s business and to afford such persons an opportunity to acquire an ownership interest in the Company, thereby aligning the interests of such persons with the Company’s shareholders.
The Plan provides for the grant of nonqualified stock options, incentive stock options, restricted stock units (“RSUs”), stock appreciation rights, dividend equivalents, and performance share units (“PSUs”) to employees, officers, consultants, advisors, non-employee directors, and independent contractors designated by the Compensation Committee of the Board of Directors (the “Compensation Committee”). Awards made under the Plan are based upon, among other things, a participant’s level of responsibility and performance within the Company.
22
The total aggregate number of shares of common stock that may be issued under the Plan shall not exceed
Restricted Stock Units
The Compensation Committee has awarded RSUs to non-employee directors and select executives. RSUs are promises to issue actual shares of common stock at the end of a vesting period. The RSUs granted to executives under the Plan are based on salary. RSUs granted prior to 2024 vest equally over a five-year period. Effective for executive grants beginning in 2024, the RSUs vest equally over a three-year period. As approved by the Compensation Committee, all executive share-based compensation granted in 2025 and 2026 was awarded as RSUs. The RSUs granted to non-employee directors vest
The Company recognizes stock-based compensation costs for RSUs based on the grant date fair value. The compensation costs are normally expensed over the vesting periods to each vesting date; however, the cost of RSUs granted to executives are expensed immediately if the executive has met certain retirement criteria and the RSUs become non-forfeitable. Estimated forfeitures are included in the determination of compensation costs. No forfeitures are currently estimated.
A summary of the Company’s outstanding and unearned RSUs is presented below:
| RSUs | Weighted-Average Grant-Date Fair Value Per Share | |||||||
| Units outstanding and unearned at January 1, 2025 | $ | |||||||
| RSUs granted during 2025 | ||||||||
| RSUs earned during 2025 | ( | ) | ||||||
| Forfeitures (1) | ( | ) | ||||||
| Units outstanding and unearned at December 31, 2025 | ||||||||
| RSUs granted during 2026 | ||||||||
| RSUs earned during 2026 | ( | ) | ||||||
| Forfeitures | ( | ) | ||||||
| Units outstanding and unearned at September 30, 2026 | ||||||||
(1)
The following table shows the impact of RSU activity to the Company’s financial results:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| RSU compensation expense | $ | $ | $ | $ | ||||||||||||
| Income tax benefit | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| RSU compensation expense, net of income taxes | $ | $ | $ | $ | ||||||||||||
At September 30, 2026, there was $
23
Performance Share Units
The Compensation Committee has awarded PSUs to select executives. PSUs are promises to issue actual shares of common stock at the end of a vesting period, if certain performance conditions are met. The PSUs granted to employees under the Plan are based on salary and, prior to 2024, include a three-year adjusted book value cumulative growth target with threshold and stretch goals. For grants made in 2024, the performance metric is calculated based on an adjusted return on equity over a three-year period, with annual resets. There were no PSUs granted in 2025 or 2026. PSUs will vest on the third anniversary of the grant date, subject to the participant’s continuous employment through the vesting date and the level of performance achieved. If applicable, dividend equivalents on PSUs are accrued and paid in cash at the end of the performance period in accordance with the level of performance achieved but are subject to forfeiture until the underlying shares become vested. Participants do not have voting rights with respect to PSUs.
The Company recognizes stock-based compensation costs for PSUs based on the grant date fair value over the performance period of the awards. Estimated forfeitures are included in the determination of compensation costs. The current cost estimates represent the Company’s forecasted performance against cumulative growth targets.
A summary of the Company’s outstanding PSUs is presented below:
| PSUs | Weighted-Average Grant-Date Fair Value Per Share | |||||||
| Units outstanding at January 1, 2025 | $ | |||||||
| PSUs granted during 2025 (at target) | — | — | ||||||
| PSUs earned during 2025 | — | — | ||||||
| Performance adjustment (1) | — | — | ||||||
| Forfeitures (2) | ( | ) | ||||||
| Units outstanding at December 31, 2025 | ||||||||
| PSUs granted during 2026 (at target) | — | — | ||||||
| PSUs earned during 2026 | — | — | ||||||
| Performance adjustment (1) | ( | ) | ||||||
| Forfeitures | ( | ) | ||||||
| Units outstanding at September 30, 2026 | ||||||||
(1)
(2)
The following table shows the impact of PSU activity to the Company’s financial results:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| PSU compensation expense | $ | $ | $ | ( | ) | $ | ||||||||||
| Income tax (benefit) expense | ( | ) | ( | ) | ( | ) | ||||||||||
| PSU compensation expense, net of income taxes | $ | $ | $ | ( | ) | $ | ||||||||||
The cost estimates for PSU grants represent initial target awards until we can reasonably forecast the financial performance of each PSU award grant. At the end of the performance period, we will reflect a performance adjustment, which may be either an increase or decrease from the initial target awards. The actual number of shares to be issued at the end of the performance period will range from
At September 30, 2026, there was $
24
| 16. | Allowance for Expected Credit Losses |
Premiums Receivable
The following table presents the balances of premiums and agents’ balances receivable, net of the allowance for expected credit losses as of September 30, 2026 and 2025, and the changes in the allowance for expected credit losses for the three and nine months ended September 30, 2026 and 2025.
| As of and For the Three Months Ended September 30, 2026 | As of and For the Three Months Ended September 30, 2025 | |||||||||||||||
| Premiums and Agents’ Balances Receivable, Net of Allowance for Expected Credit Losses | Allowance for Expected Credit Losses | Premiums and Agents’ Balances Receivable, Net of Allowance for Expected Credit Losses | Allowance for Expected Credit Losses | |||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | ||||||||||||
| Current period charge for expected credit losses | ( | ) | ||||||||||||||
| Write-offs of uncollectible premiums receivable | ( | ) | ( | ) | ||||||||||||
| Balance, end of period | $ | $ | $ | $ | ||||||||||||
| As of and For the Nine Months Ended September 30, 2026 | As of and For the Nine Months Ended September 30, 2025 | |||||||||||||||
| Premiums and Agents’ Balances Receivable, Net of Allowance for Expected Credit Losses | Allowance for Expected Credit Losses | Premiums and Agents’ Balances Receivable, Net of Allowance for Expected Credit Losses | Allowance for Expected Credit Losses | |||||||||||||
| Balance, beginning of period | $ | $ | $ | $ | ||||||||||||
| Current period charge for expected credit losses | ( | ) | ||||||||||||||
| Write-offs of uncollectible premiums receivable | ( | ) | ( | ) | ||||||||||||
| Balance, end of period | $ | $ | $ | $ | ||||||||||||
25
| 17. | Segment Information |
We have five reportable operating segments, which consist of Private Passenger Auto, Non-Standard Auto, Home and Farm, Crop, and All Other (which primarily consists of commercial, assumed reinsurance, and our excess liability business). We operate only in the U.S., and no single customer or agent provides 10 percent or more of our revenues. The following tables provide available information of these segments.
We do not assign or allocate all line items in our Consolidated Statement of Operations or Consolidated Balance Sheets to our operating segments. Those line items include fee and other income, net investment income, net investment gains (losses), and income tax expense (benefit) within the Consolidated Statement of Operations.
| Three Months Ended September 30, 2026 | ||||||||||||||||||||||||
| Private Passenger Auto | Non-Standard Auto | Home and Farm | Crop | All Other | Total | |||||||||||||||||||
| Direct premiums earned | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Assumed premiums earned | — | — | — | |||||||||||||||||||||
| Ceded premiums earned | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Net premiums earned | ||||||||||||||||||||||||
| Direct losses and loss adjustment expenses | ( | ) | ||||||||||||||||||||||
| Assumed losses and loss adjustment expenses | — | — | — | ( | ) | ( | ) | |||||||||||||||||
| Ceded losses and loss adjustment expenses | ( | ) | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||
| Net losses and loss adjustment expenses | ( | ) | ||||||||||||||||||||||
| Gross margin | ||||||||||||||||||||||||
| Amortization of deferred policy acquisition costs | ||||||||||||||||||||||||
| Other underwriting and general expenses (1) | ||||||||||||||||||||||||
| Underwriting and general expenses | ||||||||||||||||||||||||
| Underwriting gain (loss) | ( | ) | ||||||||||||||||||||||
| Net investment income | ||||||||||||||||||||||||
| Net investment gains (losses) | ( | ) | ||||||||||||||||||||||
| Fee and other income | ||||||||||||||||||||||||
| Income (loss) before income taxes | ||||||||||||||||||||||||
| Income tax expense (benefit) | ||||||||||||||||||||||||
| Net income (loss) | $ | |||||||||||||||||||||||
| Operating Ratios: | ||||||||||||||||||||||||
| Loss and loss adjustment expense ratio | NM | |||||||||||||||||||||||
| Expense ratio | NM | |||||||||||||||||||||||
| Combined ratio | NM | |||||||||||||||||||||||
(1)
NM = not meaningful due to the significantly reduced amount of net premium earned in the current year as a result of the strategic decision to stop writing non-standard auto business
26
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||
| Private Passenger Auto | Non-Standard Auto | Home and Farm | Crop | All Other | Total | |||||||||||||||||||
| Direct premiums earned | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Assumed premiums earned | — | — | — | |||||||||||||||||||||
| Ceded premiums earned | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Net premiums earned | ||||||||||||||||||||||||
| Direct losses and loss adjustment expenses | ||||||||||||||||||||||||
| Assumed losses and loss adjustment expenses | — | — | — | |||||||||||||||||||||
| Ceded losses and loss adjustment expenses | ( | ) | — | ( | ) | ( | ) | ( | ) | |||||||||||||||
| Net losses and loss adjustment expenses | ||||||||||||||||||||||||
| Gross margin | ( | ) | ||||||||||||||||||||||
| Amortization of deferred policy acquisition costs | ||||||||||||||||||||||||
| Other underwriting and general expenses (1) | ||||||||||||||||||||||||
| Underwriting and general expenses | ||||||||||||||||||||||||
| Underwriting gain (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Net investment income | ||||||||||||||||||||||||
| Net investment gains (losses) | ||||||||||||||||||||||||
| Fee and other income | ||||||||||||||||||||||||
| Income (loss) before income taxes | ( | ) | ||||||||||||||||||||||
| Income tax expense (benefit) | ( | ) | ||||||||||||||||||||||
| Net income (loss) | $ | ( | ) | |||||||||||||||||||||
| Operating Ratios: | ||||||||||||||||||||||||
| Loss and loss adjustment expense ratio | ||||||||||||||||||||||||
| Expense ratio | ||||||||||||||||||||||||
| Combined ratio | ||||||||||||||||||||||||
(1) Other underwriting and general expenses for each segment include expenses related to compensation, vendor services, and other administrative items.
NM = not meaningful due to the significantly reduced amount of net premium earned in the current year as a result of the strategic decision to stop writing non-standard auto business
27
| Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||
| Private Passenger Auto | Non-Standard Auto | Home and Farm | Crop | All Other | Total | |||||||||||||||||||
| Direct premiums earned | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Assumed premiums earned | — | — | — | |||||||||||||||||||||
| Ceded premiums earned | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Net premiums earned | ||||||||||||||||||||||||
| Direct losses and loss adjustment expenses | ( | ) | ||||||||||||||||||||||
| Assumed losses and loss adjustment expenses | — | — | — | |||||||||||||||||||||
| Ceded losses and loss adjustment expenses | ( | ) | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||
| Net losses and loss adjustment expenses | ( | ) | ||||||||||||||||||||||
| Gross margin | ||||||||||||||||||||||||
| Amortization of deferred policy acquisition costs | ||||||||||||||||||||||||
| Other underwriting and general expenses (1) | ||||||||||||||||||||||||
| Underwriting and general expenses | ||||||||||||||||||||||||
| Underwriting gain (loss) | ( | ) | ||||||||||||||||||||||
| Net investment income | ||||||||||||||||||||||||
| Net investment gains (losses) | ||||||||||||||||||||||||
| Fee and other income | ||||||||||||||||||||||||
| Income (loss) before income taxes | ||||||||||||||||||||||||
| Income tax expense (benefit) | ||||||||||||||||||||||||
| Net income (loss) | $ | |||||||||||||||||||||||
| Operating Ratios: | ||||||||||||||||||||||||
| Loss and loss adjustment expense ratio | NM | |||||||||||||||||||||||
| Expense ratio | NM | |||||||||||||||||||||||
| Combined ratio | NM | |||||||||||||||||||||||
(1) Other underwriting and general expenses for each segment include expenses related to compensation, vendor services, and other administrative items.
NM = not meaningful due to the significantly reduced amount of net premium earned in the current year as a result of the strategic decision to stop writing non-standard auto business
28
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||
| Private Passenger Auto | Non-Standard Auto | Home and Farm | Crop | All Other | Total | |||||||||||||||||||
| Direct premiums earned | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Assumed premiums earned | — | — | — | |||||||||||||||||||||
| Ceded premiums earned | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Net premiums earned | ||||||||||||||||||||||||
| Direct losses and loss adjustment expenses | ||||||||||||||||||||||||
| Assumed losses and loss adjustment expenses | — | — | — | ( | ) | |||||||||||||||||||
| Ceded losses and loss adjustment expenses | ( | ) | — | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||
| Net losses and loss adjustment expenses | ||||||||||||||||||||||||
| Gross margin | ( | ) | ||||||||||||||||||||||
| Amortization of deferred policy acquisition costs | ||||||||||||||||||||||||
| Other underwriting and general expenses (1) | ||||||||||||||||||||||||
| Underwriting and general expenses | ||||||||||||||||||||||||
| Underwriting gain (loss) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Net investment income | ||||||||||||||||||||||||
| Net investment gains (losses) | ||||||||||||||||||||||||
| Fee and other income | ||||||||||||||||||||||||
| Income (loss) before income taxes | ( | ) | ||||||||||||||||||||||
| Income tax expense (benefit) | ( | ) | ||||||||||||||||||||||
| Net income (loss) | $ | ( | ) | |||||||||||||||||||||
| Operating Ratios: | ||||||||||||||||||||||||
| Loss and loss adjustment expense ratio | ||||||||||||||||||||||||
| Expense ratio | ||||||||||||||||||||||||
| Combined ratio | ||||||||||||||||||||||||
(1) Other underwriting and general expenses for each segment include expenses related to compensation, vendor services, and other administrative items.
NM = not meaningful due to the significantly reduced amount of net premium earned in the current year as a result of the strategic decision to stop writing non-standard auto business
29
| Balances at September 30, 2026 | ||||||||||||||||||||||||
| Private Passenger Auto | Non-Standard Auto | Home and Farm | Crop | All Other | Total | |||||||||||||||||||
| Premiums and agents’ balances receivable | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Deferred policy acquisition costs | ||||||||||||||||||||||||
| Reinsurance recoverables on losses | — | |||||||||||||||||||||||
| Receivable from Federal Crop Insurance Corporation | — | — | — | — | ||||||||||||||||||||
| Unpaid losses and loss adjustment expenses | ||||||||||||||||||||||||
| Unearned premiums | ||||||||||||||||||||||||
| Balances at December 31, 2025 | ||||||||||||||||||||||||
| Private Passenger Auto | Non-Standard Auto | Home and Farm | Crop | All Other | Total | |||||||||||||||||||
| Premiums and agents’ balances receivable | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Deferred policy acquisition costs | — | |||||||||||||||||||||||
| Reinsurance recoverables on losses | — | |||||||||||||||||||||||
| Receivable from Federal Crop Insurance Corporation | — | — | — | — | ||||||||||||||||||||
| Unpaid losses and loss adjustment expenses | ||||||||||||||||||||||||
| Unearned premiums | — | |||||||||||||||||||||||
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Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion is intended to provide a more comprehensive review of our operating results and financial condition than can be obtained from reading the unaudited consolidated financial statements alone. This discussion should be read in conjunction with the unaudited consolidated financial statements and the notes thereto included in Part I, Item 1, “Financial Statements.” Some of the information contained in this discussion and analysis or set forth elsewhere in this Form 10-Q constitutes forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” included elsewhere in this Form 10-Q. Part I, Item 1A, “Risk Factors” included in our 2025 Annual Report should also be reviewed for a discussion of important factors that could cause actual results to differ materially from the results described, or implied by, the forward-looking statements contained herein.
All dollar amounts, except per share data, are in thousands.
Financial Highlights
2026 Third Quarter Consolidated Results of Operations
| · | Net income of $5,528, or $0.27 per share basic and $0.27 per share diluted |
| · | Net premiums earned of $65,756 |
| · | Net investment income of $2,716 |
| · | Net favorable prior year reserve development of $4,292 |
| · | Underwriting gain of $4,191 |
| · | Combined ratio of 93.6% |
| · | Operating cash flows of ($16,006) |
2026 Third Quarter Consolidated Financial Condition
| · | Total cash and investments of $347,888 |
| · | Total assets of $501,494 |
| · | Unpaid losses and loss adjustment expenses of $118,998 |
| · | Total liabilities of $256,973 |
| · | Shareholders’ equity of $244,521 |
31
Results of Operations
Our consolidated net income (loss) was $5,528 and ($1,666) for the three months ended September 30, 2026 and 2025, respectively. Our consolidated net income (loss) was $18,182 and ($7,257) for the nine months ended September 30, 2026 and 2025, respectively.
The major components of our revenues and net loss are shown below:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenues: | ||||||||||||||||
| Net premiums earned | $ | 65,756 | $ | 71,905 | $ | 185,886 | $ | 212,407 | ||||||||
| Net investment income | 2,716 | 3,040 | 8,181 | 9,024 | ||||||||||||
| Net investment gains (losses) | (93 | ) | 1,362 | 3,674 | 1,821 | |||||||||||
| Fee and other income | 198 | 261 | 672 | 807 | ||||||||||||
| Total revenues | 68,577 | 76,568 | 198,413 | 224,059 | ||||||||||||
| Components of net income (loss): | ||||||||||||||||
| Net premiums earned | 65,756 | 71,905 | 185,886 | 212,407 | ||||||||||||
| Losses and loss adjustment expenses | 42,138 | 56,197 | 113,911 | 161,329 | ||||||||||||
| Amortization of deferred policy acquisition costs and other underwriting and general expenses | 19,427 | 22,229 | 61,550 | 72,163 | ||||||||||||
| Underwriting gain (loss) | 4,191 | (6,521 | ) | 10,425 | (21,085 | ) | ||||||||||
| Net investment income | 2,716 | 3,040 | 8,181 | 9,024 | ||||||||||||
| Net investment gains (losses) | (93 | ) | 1,362 | 3,674 | 1,821 | |||||||||||
| Fee and other income | 198 | 261 | 672 | 807 | ||||||||||||
| Income (loss) before income taxes | 7,012 | (1,858 | ) | 22,952 | (9,433 | ) | ||||||||||
| Income tax expense (benefit) | 1,484 | (192 | ) | 4,770 | (2,176 | ) | ||||||||||
| Net income (loss) | $ | 5,528 | $ | (1,666 | ) | $ | 18,182 | $ | (7,257 | ) | ||||||
Net Premiums Earned
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net premiums earned: | ||||||||||||||||
| Direct premium | $ | 71,056 | $ | 81,819 | $ | 200,551 | $ | 236,523 | ||||||||
| Assumed premium | 3,402 | 1,741 | 8,004 | 2,476 | ||||||||||||
| Ceded premium | (8,702 | ) | (11,655 | ) | (22,669 | ) | (26,592 | ) | ||||||||
| Total net premiums earned | $ | 65,756 | $ | 71,905 | $ | 185,886 | $ | 212,407 | ||||||||
Net premiums earned for the three months ended September 30, 2026, decreased $6,149, or 8.6%, compared to the three months ended September 30, 2025. Net premiums earned for the nine months ended September 30, 2026, decreased $26,521, or 12.5%, compared to the nine months ended September 30, 2025.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net premiums earned: | ||||||||||||||||
| Private Passenger Auto | $ | 21,879 | $ | 23,206 | $ | 66,269 | $ | 68,787 | ||||||||
| Non-Standard Auto | 338 | 10,859 | 3,884 | 43,617 | ||||||||||||
| Home and Farm | 26,605 | 23,642 | 78,417 | 68,673 | ||||||||||||
| Crop | 11,645 | 10,364 | 21,482 | 20,697 | ||||||||||||
| All Other | 5,289 | 3,834 | 15,834 | 10,633 | ||||||||||||
| Total net premiums earned | $ | 65,756 | $ | 71,905 | $ | 185,886 | $ | 212,407 | ||||||||
32
Below are comments regarding significant changes in net premiums earned by business segment:
Private Passenger Auto – Net premiums earned for the third quarter of 2026 decreased $1,327, or 5.7%, compared to the same period in 2025. Net premiums earned for the first nine months of 2026 decreased $2,518, or 3.7% from the first nine months of 2025. Results were driven by lower new business and renewal premiums in South Dakota and Nebraska and the impact of rate decreases in North Dakota, South Dakota and Nebraska, partially offset by increased new business year to date in North Dakota.
Non-Standard Auto – Net premiums earned for the third quarter of 2026 decreased $10,521, or 96.9%, compared to the same period in 2025. Net premiums earned for the first nine months of 2026 decreased $39,733, or 91.1% from the first nine months of 2025. These decreases were driven by the strategic decisions to stop writing non-standard auto business in Illinois, Arizona, and South Dakota during the third quarter of 2025 and in North Dakota during the third quarter of 2026, with existing policies being non-renewed. We anticipate further reductions in net premiums earned in the near term as a result of the decisions to run off these non-standard auto operations.
Home and Farm – Net premiums earned for the third quarter of 2026 increased $2,963, or 12.5%, compared to the same period in 2025. Net premiums earned for the first nine months of 2026 increased $9,744, or 14.2% from the first nine months of 2025. Results were driven by higher renewal premiums, increased new business and rate increases in North Dakota, partially offset by lower new business in South Dakota and Nebraska. Results were also impacted by lower ceded premiums earned compared to the prior year due to the significant catastrophe event in North Dakota during the second quarter of 2025.
Crop – Net premiums earned for the third quarter of 2026, increased $1,281, or 12.4%, compared to the same period in 2025. Net premiums earned for the first nine months of 2026 increased $785, or 3.8% from the first nine months of 2025. The increase in both periods was primarily the result of increased direct written premiums within the segment due to an increased governmental subsidy for certain multi-peril crop insurance products, as well as improved quoting capabilities that led to increased new business.
All Other – Net premiums earned for the third quarter of 2026, increased $1,455, or 37.9%, compared to the same period in 2025. Net premiums earned for the first nine months of 2026 increased $5,201, or 48.9%, from the first nine months of 2025. Results were primarily driven by the Company’s decision to participate on the catastrophe reinsurance programs of certain farm bureau insurance companies.
Losses and Loss Adjustment Expenses
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net losses and loss adjustment expenses: | ||||||||||||||||
| Direct losses and loss adjustment expenses | $ | 48,691 | $ | 57,828 | $ | 122,596 | $ | 207,589 | ||||||||
| Assumed losses and loss adjustment expenses | (573 | ) | 523 | 1,936 | 574 | |||||||||||
| Ceded losses and loss adjustment expenses | (5,980 | ) | (2,154 | ) | (10,621 | ) | (46,834 | ) | ||||||||
| Total net losses and loss adjustment expenses | $ | 42,138 | $ | 56,197 | $ | 113,911 | $ | 161,329 | ||||||||
Our net losses and loss adjustment expenses for the three months ended September 30, 2026, decreased $14,059, or 25.0%, compared to the three months ended September 30, 2025. Our net losses and loss adjustment expenses for the nine months ended September 30, 2026, decreased $47,418, or 29.4%, compared to the nine months ended September 30, 2025.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net losses and loss adjustment expenses: | ||||||||||||||||
| Private Passenger Auto | $ | 18,566 | $ | 14,114 | $ | 41,548 | $ | 41,309 | ||||||||
| Non-Standard Auto | (3,714 | ) | 15,380 | (2,656 | ) | 46,777 | ||||||||||
| Home and Farm | 15,831 | 18,556 | 54,525 | 55,355 | ||||||||||||
| Crop | 8,922 | 5,339 | 15,901 | 13,306 | ||||||||||||
| All Other | 2,533 | 2,808 | 4,593 | 4,582 | ||||||||||||
| Total net losses and loss adjustment expenses | $ | 42,138 | $ | 56,197 | $ | 113,911 | $ | 161,329 | ||||||||
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| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Loss and loss adjustment expense ratio: | ||||||||||||||||
| Private Passenger Auto | 84.9% | 60.8% | 62.7% | 60.1% | ||||||||||||
| Non-Standard Auto | NM | 141.6% | NM | 107.2% | ||||||||||||
| Home and Farm | 59.5% | 78.5% | 69.5% | 80.6% | ||||||||||||
| Crop | 76.6% | 51.5% | 74.0% | 64.3% | ||||||||||||
| All Other | 47.9% | 73.2% | 29.0% | 43.1% | ||||||||||||
| Total loss and loss adjustment expense ratio | 64.1% | 78.2% | 61.3% | 76.0% | ||||||||||||
NM = not meaningful due to the significantly reduced amount of net premium earned in the current year as a result of the strategic decision to stop writing non-standard auto business
Below are comments regarding significant changes in the net losses and loss adjustment expenses, and the net loss and loss adjustment expense ratios, by business segment:
Private Passenger Auto – The net loss and loss adjustment expense ratio increased 24.1 percentage points and 2.6 percentage points in the three- and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. The increases in the three- and nine-month periods were driven by increased large loss experience in South Dakota and adverse prior year development on loss reserves in North Dakota, partially offset by lower severity in Nebraska. The nine-month period also benefited from lower frequency of losses during the first and second quarters of the year. Both periods were adversely impacted by lower earned premiums.
Non-Standard Auto – The change in net loss and loss adjustment expense ratio is not meaningful due to the significantly reduced amount of net premium earned in the current year as a result of the strategic decision to stop writing non-standard auto business in Illinois, Arizona, and South Dakota, with existing policies being non-renewed. The decreases in net loss and loss adjustment expense in the three- and nine-month periods ended September 30, 2026, were primarily driven by favorable prior year development on loss reserves in the current year compared to unfavorable prior year development on loss reserves in the prior year.
Home and Farm – The net loss and loss adjustment expense ratio decreased 19.0 percentage points and 11.1 percentage points in the three- and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. The three-month period decrease was driven by favorable development on loss reserves for current year storms as well as lower weather-related losses in North Dakota, offset by increased weather-related losses in Nebraska. The nine-month period decrease was primarily driven by lower catastrophe losses and corresponding ceded premiums earned, as well as favorable prior year development on loss reserves. Both periods benefited from growth in net premiums earned and were impacted by increased non-catastrophe weather related losses, primarily in Nebraska.
Crop – The net loss and loss adjustment expense ratio increased 25.1 percentage points and 9.7 percentage points in the three- and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. These increases were primarily driven by drought conditions in North Dakota adversely impacting multi-peril crop insurance.
All Other – The net loss and loss adjustment expense ratio decreased 25.3 percentage points and 14.1 percentage points in the three- and nine-month periods ended September 30, 2026, compared to the same period in 2025. These decreases were primarily driven by lower losses within the commercial line of business in North Dakota. The segment also benefited from the strong performance of the assumed reinsurance line of business associated with the Company’s participation on reinsurance pools of certain farm bureau reinsurance companies.
Underwriting and General Expenses and Expense Ratio
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Underwriting and general expenses: | ||||||||||||||||
| Amortization of deferred policy acquisition costs | $ | 10,781 | $ | 13,725 | $ | 34,903 | $ | 46,627 | ||||||||
| Other underwriting and general expenses | 8,646 | 8,504 | 26,647 | 25,536 | ||||||||||||
| Total underwriting and general expenses | 19,427 | 22,229 | 61,550 | 72,163 | ||||||||||||
| Expense Ratio | 29.5% | 30.9% | 33.1% | 34.0% | ||||||||||||
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The expense ratio is calculated by dividing other underwriting and general expenses and amortization of deferred policy acquisition costs by net premiums earned. The expense ratio measures a company’s operational efficiency in producing, underwriting, and administering its insurance business. The overall expense ratio decreased 1.4 percentage points and 0.9 percentage points in the three- and nine-month periods ended September 30, 2026, respectively, compared to the same periods in 2025. The decrease in the 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, which generally pays higher agent commissions than our other segments. Other underwriting and general expenses increased year-over-year, primarily due to strategic investments in the business.
Underwriting Gain (Loss) and Combined Ratio
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Underwriting gain (loss): | ||||||||||||||||
| Private Passenger Auto | $ | (3,219 | ) | $ | 2,527 | $ | 2,912 | $ | 6,144 | |||||||
| Non-Standard Auto | 3,460 | (9,464 | ) | 3,384 | (22,828 | ) | ||||||||||
| Home and Farm | 1,949 | (2,751 | ) | (3,828 | ) | (10,814 | ) | |||||||||
| Crop | 829 | 3,287 | 1,691 | 4,013 | ||||||||||||
| All Other | 1,172 | (120 | ) | 6,266 | 2,400 | |||||||||||
| Total underwriting gain (loss) | $ | 4,191 | $ | (6,521 | ) | $ | 10,425 | $ | (21,085 | ) | ||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Combined ratio: | ||||||||||||||||
| Private Passenger Auto | 114.8% | 89.1% | 95.6% | 91.1% | ||||||||||||
| Non-Standard Auto | NM | 187.1% | NM | 152.3% | ||||||||||||
| Home and Farm | 92.7% | 111.6% | 104.8% | 115.7% | ||||||||||||
| Crop | 92.9% | 68.3% | 92.1% | 80.6% | ||||||||||||
| All Other | 77.8% | 103.1% | 60.4% | 77.4% | ||||||||||||
| Combined ratio | 93.6% | 109.1% | 94.4% | 110.0% | ||||||||||||
NM = not meaningful due to the significantly reduced amount of net premium earned in the current year as a result of the strategic decision to stop writing non-standard auto business
Underwriting gain (loss) measures the pre-tax profitability of our insurance operations. It is derived by subtracting losses and loss adjustment expenses, amortization of deferred policy acquisition costs, and other underwriting and general expenses from net premiums earned. The combined ratio represents the sum of these losses and expenses as a percentage of net premiums earned and measures our overall underwriting profit.
The total underwriting gain increased $10,712 for the three-month period ended September 30, 2026, compared to the same period in 2025. The total underwriting income increased $31,510 for the nine-month period ended September 30, 2026, compared to the same period in 2025. These results were driven by the factors discussed in the Loss and Loss Adjustment Expenses as well as the Underwriting and General Expenses and Expense Ratio sections above.
The overall combined ratio decreased 15.5 percentage points in the three-month period ended September 30, 2026, compared to the same period in 2025. The overall combined ratio decreased 15.6 percentage points in the nine-month period ended September 30, 2026, compared to the same period in 2025. These results were driven by the factors discussed in the Loss and Loss Adjustment Expenses as well as the Underwriting and General Expenses and Expense Ratio sections above.
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Net Investment Income
The following table shows our average cash and invested assets, net investment income, and return on average cash and invested assets for the reported periods:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Average cash and invested assets | $ | 362,182 | $ | 385,668 | $ | 369,488 | $ | 388,833 | ||||||||
| Net investment income | $ | 2,716 | $ | 3,040 | $ | 8,181 | $ | 9,024 | ||||||||
| Gross return on average cash and invested assets | 3.9% | 4.0% | 3.8% | 4.0% | ||||||||||||
| Net return on average cash and invested assets | 3.0% | 3.2% | 3.0% | 3.1% | ||||||||||||
Net investment income decreased $324 for the three months ended September 30, 2026, compared to the three months ended September 30, 2025. Net investment income decreased $843 for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. These decreases were primarily the result of a lower average fixed income asset base and a small decrease in yield.
Gross and net return on average cash and invested assets decreased year-over-year, primarily driven by consistent yields on a lower average fixed income securities balance (measured at fair value) and lower returns on cash and other short-term investments, partially offset by lower investment expenses. The decrease in average cash and invested assets was driven by a decrease in the fixed income securities balance in 2026 as proceeds from maturities and sales were used to fund operating cash needs in the Non-Standard Auto segment.
Net Investment Gains (Losses)
Net investment gains (losses) consisted of the following:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Gross realized gains | $ | 1,386 | $ | 1,151 | $ | 3,510 | $ | 1,900 | ||||||||
| Gross realized losses, excluding credit impairment losses | (147 | ) | (340 | ) | (600 | ) | (656 | ) | ||||||||
| Net realized gains (losses) | 1,239 | 811 | 2,910 | 1,244 | ||||||||||||
| Change in net unrealized gains on equity securities | (1,332 | ) | 551 | 764 | 577 | |||||||||||
| Net investment gains (losses) | $ | (93 | ) | $ | 1,362 | $ | 3,674 | $ | 1,821 | |||||||
We had net realized gains of $1,239 and $2,910 for the three and nine months ended September 30, 2026, respectively, compared to net realized gains of $811 and $1,244 for the three and nine months ended September 30, 2025, respectively. The elevated net realized gains in the nine months ended September 30, 2026, were driven by sales of securities that were executed to raise cash for operational liquidity related to claim payments in the Non-Standard Auto segment. No credit impairment losses were reported during any of the periods presented.
We experienced a decrease of $1,332 and an increase of $764 in net unrealized gains on equity securities during the three and nine months ended September 30, 2026, respectively. These results were driven by the sale of equity securities that were executed to raise cash for operational liquidity related to claim payments in the Non-Standard Auto segment as well as the impact of changes in fair value attributable to overall favorable equity markets during those periods.
Our fixed income securities are classified as available for sale because we will, from time to time, execute sales of securities that are not impaired, consistent with our investment goals and policies. The fixed income portion of the portfolio experienced net unrealized losses of $11,628 and $13,897 during the three and nine months ended September 30, 2026, respectively, compared to net unrealized gains of $3,895 and $8,677 during the three and nine months ended September 30, 2025, respectively. The changes were primarily the result of changes in U.S. interest rates. The change in the fair value of fixed income securities is not reflected in net income; rather it is reflected as a separate component (net of income taxes) of other comprehensive income.
Fee and Other Income
We had fee and other income of $198 and $672 for the three and nine months ended September 30, 2026, respectively, compared to $261 and $807 for the three and nine months ended September 30, 2025, respectively. These decreases were driven by strategic reductions in the premiums that generate fee income and write-offs of uncollectible premiums receivable.
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Income (Loss) before Income Taxes
For the three months ended September 30, 2026, we had pre-tax income of $7,012 compared to a pre-tax loss of $1,858 for the three months ended September 30, 2025. For the nine months ended September 30, 2026, we had pre-tax income of $22,952 compared to a pre-tax loss of $9,433 for the nine months ended September 30, 2025. These year-over-year changes were largely attributable to favorable prior year development on loss reserves for Non-Standard Auto compared to unfavorable prior year development on loss reserves for Non-Standard Auto in the prior year, lower catastrophe losses and corresponding ceded premiums earned, and strong results for the assumed business with certain farm bureau insurance companies within All Other. These were partially offset by increased non-catastrophe weather-related losses in Home and Farm, drought conditions impacting multi-peril crop insurance, and lower net earned premiums in Private Passenger Auto.
Income Tax Expense (Benefit)
We recorded income tax expense of $1,484 for the three months ended September 30, 2026, compared to income tax benefit of $192 for the three months ended September 30, 2025. Our effective tax rate for the third quarter of 2026 was 21.2% compared to an effective tax rate of 10.3% for the third quarter of 2025.
We recorded income tax expense of $4,770 for the nine months ended September 30, 2026, compared to income tax benefit of $2,176 for the nine months ended September 30, 2025. Our effective tax rate for the nine months ended September 30, 2026 was 20.8%, which reflects the impact of tax-exempt investment income on the calculation of the Company’s income tax provision. The effective tax rate was 23.1% for the nine months ended September 30, 2025, which was impacted by a change in the recorded valuation allowance.
Net Income (Loss)
For the three months ended September 30, 2026, we had a net income of $5,528 compared to net loss of $1,666 for the three months ended September 30, 2025. For the nine months ended September 30, 2026, we had a net income of $18,182 compared to net loss of $7,257 for the nine months ended September 30, 2025. These year-over-year changes were largely attributable to favorable prior year development on loss reserves for Non-Standard Auto compared to unfavorable prior year development on loss reserves for Non-Standard Auto in the prior year, lower catastrophe losses and corresponding ceded premiums earned, and strong results for the assumed business with certain farm bureau insurance companies within All Other. These were partially offset by increased non-catastrophe weather-related losses in Home and Farm, drought conditions impacting multi-peril crop insurance, and lower net earned premiums in Private Passenger Auto.
Return on Average Equity
For the three months ended September 30, 2026, we had annualized return on average equity of 9.0% compared to (2.7)% for the three months ended September 30, 2025.
For the nine months ended September 30, 2026, we had annualized return on average equity of 10.0% compared to (4.0)% for the nine months ended September 30, 2025.
Average equity is calculated as the average between beginning and ending equity for the period.
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Critical Accounting Policies
The preparation of financial statements in accordance with GAAP requires both the use of estimates and judgment relative to the application of appropriate accounting policies. We are required to make estimates and assumptions in certain circumstances that affect amounts reported in the unaudited consolidated financial statements and related footnotes. We evaluate these estimates and assumptions on an ongoing basis based on historical developments, market conditions, industry trends, and other information that we believe to be reasonable under the circumstances. There can be no assurance that actual results will conform to these estimates and assumptions or that reported results of operations will not be materially and adversely affected by the need to make accounting adjustments to reflect changes in these estimates and assumptions from time to time. Our critical accounting policies are more fully described in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations” presented in our 2025 Annual Report. There have been no changes in our critical accounting policies from December 31, 2025.
Liquidity and Capital Resources
We expect to generate sufficient funds from our operations and maintain a high degree of liquidity in our investment portfolio to meet the demands of claim settlements and operating expenses for the foreseeable future, with the exception of our Non-Standard Auto segment which may be required to sell securities to fund claim payments in future periods. Our primary sources of funds are premium collections, investment earnings, and fixed income maturities, supplemented by sales of securities when necessary.
We also have a $3,000 line of credit with Wells Fargo Bank, N.A. The terms of the line of credit include a floating interest rate of 2.25% above the daily simple secured overnight financing rate. There were no outstanding amounts during the nine months ended September 30, 2026, or the year ended December 31, 2025. This line of credit is scheduled to expire on December 11, 2026.
The change in cash and cash equivalents for the nine months ended September 30, 2026 and 2025, were as follows:
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash flows from operating activities | $ | (16,006 | ) | $ | (28,511 | ) | ||
| Net cash flows from investing activities | 13,454 | 3,621 | ||||||
| Net cash flows from financing activities | (4,135 | ) | (1,387 | ) | ||||
| Net change in cash and cash equivalents | $ | (6,687 | ) | $ | (26,277 | ) | ||
For the nine months ended September 30, 2026, net cash used by operating activities totaled $16,006 compared to net cash used of $28,511 a year ago. This change was primarily driven by lower levels of claim payments, higher investment gains, and lower taxes paid, partially offset by lower levels of premium collections, in the current year.
For the nine months ended September 30, 2026, net cash provided by investing activities totaled $13,454 compared to net cash provided of $3,621 a year ago. The net cash provided in both periods was driven by cash inflows from net sales of equity and fixed income securities.
For the nine months ended September 30, 2026, net cash used by financing activities totaled $4,135 compared to net cash used of $1,387 a year ago. This change was primary driven by net cash outflows for share repurchases.
As a holding company, a principal source of long-term liquidity will be dividend payments from our directly-owned subsidiaries.
Nodak Insurance is restricted by the insurance laws of North Dakota as to the amount of dividends or other distributions it may pay to NI Holdings. North Dakota law sets the maximum amount of dividends that may be paid by Nodak Insurance during any twelve-month period after notice to, but without prior approval of, the North Dakota Insurance Department. This amount cannot exceed the lesser of (i) 10% of the Company’s surplus as regards policyholders as of the preceding December 31, or (ii) the Company’s statutory net income for the preceding calendar year (excluding realized investment gains), less any prior dividends paid during such twelve-month period. In addition, any insurance company other than a life insurance company may carry forward net income from the preceding two calendar years, not including realized investment gains, less any dividends actually paid during those two calendar years. Dividends in excess of this amount are considered “extraordinary” and are subject to the approval of the North Dakota Insurance Department.
The amount available for payment of dividends from Nodak Insurance to NI Holdings during 2026 without the prior approval of the North Dakota Insurance Department was approximately $6,730 as of December 31, 2025. The Nodak Insurance Board of Directors declared and Nodak Insurance paid dividends of $3,000 to NI Holdings during the nine months ended September 30, 2026. No dividends were declared or paid by Nodak Insurance during the year ended December 31, 2025.
38
The amount available for payment of dividends from Direct Auto to NI Holdings during 2026 without the prior approval of the North Dakota Insurance Department was approximately $3,829 as of December 31, 2025. The Direct Auto Board of Directors declared and Direct Auto paid dividends of $2,000 to NI Holdings during the nine months ended September 30, 2026. No dividends were declared or paid by Direct Auto during the year ended December 31, 2025.
Prior to its payment of any dividend, Nodak Insurance will be required to provide notice of the dividend to the North Dakota Insurance Department. This notice must be provided to the North Dakota Insurance Department 30 days prior to the payment of an extraordinary dividend and 10 days prior to the payment of an ordinary dividend. The North Dakota Insurance Department has the power to limit or prohibit dividend payments if an insurance company is in violation of any law or regulation. These restrictions or any subsequently imposed restrictions may affect our future liquidity.
Item 3. - Quantitative and Qualitative Disclosures about Market Risk
The Company’s assessment of market risk as of September 30, 2026, indicates there have been no material changes in the quantitative and qualitative disclosures from those in Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our 2025 Annual Report.
Item 4. - Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company’s Chief Executive Officer and Chief Financial Officer have reviewed and evaluated the effectiveness of the Company’s disclosure controls and procedures (as required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this report, were designed and functioning effectively to provide reasonable assurance that the information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission (“SEC”), and that such material information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosures. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.
Changes in Internal Control over Financial Reporting
In the ordinary course of business, we periodically review our system of internal control over financial reporting to identify opportunities to improve our controls and increase efficiency, while ensuring that we maintain an effective internal control environment. There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
39
Part II. - OTHER INFORMATION
Item 1. - Legal Proceedings
We are party to litigation in the normal course of business. Based upon information presently available to us, we do not consider any litigation to be material. However, given the inherent uncertainties of litigation, we cannot assure you that our results of operations and financial condition will not be materially adversely affected by any litigation.
Item 1A. - Risk Factors
There have been no material changes in our assessment of our risk factors from those set forth in Part I, Item 1A, “Risk Factors” in our 2025 Annual Report.
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Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds
All dollar amounts included in Item 2 herein, except per share data, are in thousands.
The Company has not sold any unregistered securities within the past three years.
From time to time, the Company may repurchase its own stock. To date, the Company has used the net proceeds from the IPO to fund these share repurchases.
On May 9, 2022, our Board of Directors approved an authorization for the repurchase of up to approximately $10,000 of the Company’s outstanding common stock. During the year ended December 31, 2022, we completed the repurchase of 54,223 shares of our common stock for $734 under this authorization. During the year ended December 31, 2023, we repurchased an additional 548,549 shares of our common stock for $7,278, including the effect from applicable excise taxes. During the year ended December 31, 2024, we did not repurchase any shares of our common stock.
On August 25, 2025, our Board of Directors approved an authorization for the repurchase of up to approximately $5,000 of the Company’s outstanding common stock in addition to the $2,052 remaining from the May 9, 2022 authorization. During the year ended December 31, 2025, we completed the repurchase of 188,185 shares of our common stock for $2,517, including the effects from applicable excise taxes under these authorizations. As of December 31, 2025, these share repurchases closed out the May 9, 2022 authorization, and $4,549 remained available under the August 25, 2025 authorization. During the nine months ended September 30, 2026, we completed the repurchase of 266,988 shares of our common stock for $3,819, including the effects from applicable excise taxes under these authorizations. At September 30, 2026, $760 remains available under this authorization.
Share repurchase activity during the three months ended September 30, 2026, is presented below:
| Period in 2026 | Total Number of Shares Purchased | Average Price Paid Per Share (3) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)(2) | Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1)(2)(3) (in thousands) | ||||||||||||
| July 1-31, 2026 | 31,865 | $ | 15.69 | 31,865 | $ | 1,760 | ||||||||||
| August 1-31, 2026 | 32,506 | 15.38 | 32,506 | 1,260 | ||||||||||||
| September 1-30, 2026 | 32,860 | 15.22 | 32,860 | 760 | ||||||||||||
| Total | 97,231 | $ | 15.43 | 97,231 | $ | 760 | ||||||||||
| (1) | Shares purchased pursuant to the August 25, 2025 publicly announced share repurchase authorization of up to approximately $5,000 of the Company’s outstanding common stock. |
| (2) | Maximum dollar value of shares that may yet be purchased consist of up to $760 under the August 25, 2025, publicly announced share repurchase authorization. |
| (3) | The Inflation Reduction Act of 2022 imposed a 1% excise tax on the net value of certain share repurchases made after December 31, 2022. All dollar amounts presented exclude such excise taxes, as applicable. |
Item 3. - Defaults upon Senior Securities
Not Applicable
Item 4. - Mine Safety Disclosures
Not Applicable
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Item 5. - Other Information
10b5-1 Trading Plans
During the third quarter of 2026, none of our directors or executive officers (as defined in Rule 16a-1(f) under the Exchange Act)
Item 6. - Exhibits
| EXHIBIT NO. | DESCRIPTION OF EXHIBIT
|
| 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32** | Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS* | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Linkbase Document |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Filed herewith.
** Furnished herewith.
42
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 6, 2026.
| NI HOLDINGS, INC.
| |
| /s/ Cindy L. Launer | |
| Cindy L. Launer | |
| President and Chief Executive Officer (Principal Executive Officer) | |
| /s/ Matthew J. Maki | |
| Matthew J. Maki | |
| Chief Financial Officer (Principal Financial Officer) | |
43