Segment Information

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Segment Information

19.Segment Information

We have five primary reportable operating segments, which consist of private passenger auto insurance, non-standard auto insurance, home and farm insurance, crop insurance, and commercial insurance. A sixth segment captures all other insurance coverages we sell, including our assumed reinsurance lines of business. We operate only in the United States, and no single customer or agent provides 10 percent or more of our revenues. The following tables provide available information of these segments for the three and six month periods ended June 30, 2021 and 2020. For presentation in these tables, “LAE” refers to loss adjustment expenses.

The ratios presented in these tables are non-GAAP financial measures under SEC rules and regulations. While these ratios are used widely in the property and casualty insurance industry, such non-GAAP ratios may not be comparable to similarly-named measures reported by other companies.

The loss and LAE ratio equals losses and loss adjustment expenses divided by net premiums earned. The expense ratio equals amortization of deferred policy acquisition costs and other underwriting and general expenses, divided by net premiums earned. The combined ratio equals losses and loss adjustment expenses, amortization of deferred policy acquisition costs, and other underwriting and general expenses, divided by net premiums earned.

For purposes of evaluating profitability of the non-standard auto segment, management combines the policy fees paid by the insured with the underwriting gain or loss as its primary measure. As a result, these fees are allocated to the non-standard auto segment (included in fee and other income) in the tables below. The remaining fee and other income amounts are not allocated to any segment.

We do not assign or allocate all Consolidated Statement of Operations or Consolidated Balance Sheet line items to our operating segments. Those line items include investment income, net capital gain (loss) on investments, other income excluding non-standard auto insurance fees, and income taxes within the Consolidated Statement of Operations. For the Consolidated Balance Sheet, those items include cash and investments, property and equipment, other assets, accrued expenses, income taxes recoverable or payable, and shareholders’ equity.

30

NI Holdings, Inc.

Notes to Unaudited Consolidated Financial Statements

(dollar amounts in thousands, except per share amounts)

	Three Months Ended June 30, 2021
	Private Passenger Auto			Non- Standard Auto			Home and Farm			Crop			Commercial			All Other				Total
Direct premiums earned	$	19,012		$	15,263		$	20,808		$	14,574		$	16,195		$	1,207		$	87,059
Assumed premiums earned		-			-			-			2,084			-			1,432			3,516
Ceded premiums earned		(944	)		(365	)		(2,435	)		(8,305	)		(2,175	)		(70	)		(14,294	)
Net premiums earned		18,068			14,898			18,373			8,353			14,020			2,569			76,281
Direct losses and LAE		15,094			11,490			19,436			21,803			8,494			282			76,599
Assumed losses and LAE		-			-			-			523			-			1,437			1,960
Ceded losses and LAE		(189	)		-			(1,228	)		(12,994	)		(1,230	)		-			(15,641	)
Net losses and LAE		14,905			11,490			18,208			9,332			7,264			1,719			62,918
Gross margin		3,163			3,408			165			(979	)		6,756			850			13,363
Underwriting and general expenses		4,767			6,525			5,073			1,431			5,177			616			23,589
Underwriting gain (loss)		(1,604	)		(3,117	)		(4,908	)		(2,410	)		1,579			234			(10,226	)
Fee and other income					361															520
					(2,756	)
Net investment income																				1,710
Net capital gain on investments																				4,701
Loss before income taxes																				(3,295	)
Income tax benefit																				(561	)
Net loss																				(2,734	)
Net loss attributable to non-controlling interest																				(90	)
Net loss attributable to NI Holdings, Inc.																			$	(2,644	)
Non-GAAP Ratios:
Loss and LAE ratio		82.5%			77.1%			99.1%			111.7%			51.8%			66.9%			82.5%
Expense ratio		26.4%			43.8%			27.6%			17.1%			36.9%			24.0%			30.9%
Combined ratio		108.9%			120.9%			126.7%			128.9%			88.7%			90.9%			113.4%
Balances at June 30, 2021:
Premiums and agents’ balances receivable	$	20,100		$	9,408		$	9,739		$	30,438		$	14,048		$	730		$	84,463
Deferred policy acquisition costs		6,548			6,368			9,069			358			6,763			551			29,657
Reinsurance recoverables		905			-			1,600			13,918			5,934			2,217			24,574
Receivable from Federal Crop Insurance Corporation		-			-			-			17,191			-			-			17,191
Goodwill and other intangibles		-			2,835			-			-			15,123			-			17,958
Unpaid losses and LAE		26,161			43,727			20,839			23,638			26,812			11,163			152,340
Unearned premiums		30,518			19,968			43,229			27,615			37,047			3,215			161,592

31

NI Holdings, Inc.

Notes to Unaudited Consolidated Financial Statements

(dollar amounts in thousands, except per share amounts)

	Three Months Ended June 30, 2020
	Private Passenger Auto			Non- Standard Auto			Home and Farm			Crop			Commercial			All Other				Total
Direct premiums earned	$	18,501		$	13,177		$	20,215		$	19,254		$	10,153		$	1,152		$	82,452
Assumed premiums earned		-			-			-			1,935			-			748			2,683
Ceded premiums earned		(1,115	)		(43	)		(2,447	)		2,363			(1,812	)		(75	)		(3,129	)
Net premiums earned		17,386			13,134			17,768			23,552			8,341			1,825			82,006
Direct losses and LAE		8,624			8,195			11,080			20,247			10,994			235			59,375
Assumed losses and LAE		165			-			-			223			-			406			794
Ceded losses and LAE		(165	)		-			(220	)		(1,363	)		(5,757	)		(300	)		(7,805	)
Net losses and LAE		8,624			8,195			10,860			19,107			5,237			341			52,364
Gross margin		8,762			4,939			6,908			4,445			3,104			1,484			29,642
Underwriting and general expenses		4,335			5,146			4,705			1,299			3,624			516			19,625
Underwriting gain (loss)		4,427			(207	)		2,203			3,146			(520	)		968			10,017
Fee and other income					328															446
					121
Net investment income																				2,018
Net capital gain on investments																				11,197
Income before income ​​taxes																				23,678
Income tax expense																				4,911
Net income																				18,767
Net income attributable to non-controlling interest																				34
Net income attributable to NI Holdings, Inc.																			$	18,733
Non-GAAP Ratios:
Loss and LAE ratio		49.6%			62.4%			61.1%			81.1%			62.8%			18.7%			63.9%
Expense ratio		24.9%			39.2%			26.5%			5.5%			43.4%			28.3%			23.9%
Combined ratio		74.5%			101.6%			87.6%			86.6%			106.2%			47.0%			87.8%
Balances at June 30, 2020:
Premiums and agents’ balances receivable	$	19,825		$	7,643		$	10,293		$	37,864		$	12,006		$	705		$	88,336
Deferred policy acquisition costs		5,804			4,968			8,062			1,295			3,607			468			24,204
Reinsurance recoverables		351			-			1,803			1,384			3,999			1,474			9,011
Receivable from Federal Crop Insurance Corporation		-			-			-			12,294			-			-			12,294
Goodwill and other intangibles		-			2,885			-			-			16,600			-			19,485
Unpaid losses and LAE		19,370			42,830			11,217			20,159			13,710			8,728			116,014
Unearned premiums		30,150			17,317			42,636			19,714			24,465			2,930			137,212

32

NI Holdings, Inc.

Notes to Unaudited Consolidated Financial Statements

(dollar amounts in thousands, except per share amounts)

	Six Months Ended June 30, 2021
	Private Passenger Auto			Non- Standard Auto			Home and Farm			Crop			Commercial			All Other				Total
Direct premiums earned	$	37,700		$	28,844		$	41,391		$	14,558		$	30,917		$	2,392		$	155,802
Assumed premiums earned		-			-			-			2,084			-			2,880			4,964
Ceded premiums earned		(2,134	)		(688	)		(5,564	)		(8,242	)		(4,559	)		(163	)		(21,350	)
Net premiums earned		35,566			28,156			35,827			8,400			26,358			5,109			139,416
Direct losses and LAE		27,653			16,290			27,324			22,375			19,958			577			114,177
Assumed losses and LAE		-			-			-			523			-			2,385			2,908
Ceded losses and LAE		(494	)		-			(1,484	)		(13,005	)		(2,295	)		-			(17,278	)
Net losses and LAE		27,159			16,290			25,840			9,893			17,663			2,962			99,807
Gross margin		8,407			11,866			9,987			(1,493	)		8,695			2,147			39,609
Underwriting and general expenses		10,126			10,939			10,684			1,967			9,792			1,319			44,827
Underwriting gain (loss)		(1,719	)		927			(697	)		(3,460	)		(1,097	)		828			(5,218	)
Fee and other income					693															837
					1,620
Net investment income																				3,246
Net capital gain on investments																				10,512
Income before income ​​taxes																				9,377
Income tax expense																				2,329
Net income																				7,048
Net income attributable to non-controlling interest																				23
Net income attributable to NI Holdings, Inc.																			$	7,025
Non-GAAP Ratios:
Loss and LAE ratio		76.4%			57.9%			72.1%			117.8%			67.0%			58.0%			71.6%
Expense ratio		28.5%			38.9%			29.8%			23.4%			37.2%			25.8%			32.2%
Combined ratio		104.8%			96.7%			101.9%			141.2%			104.2%			83.8%			103.7%

33

NI Holdings, Inc.

Notes to Unaudited Consolidated Financial Statements

(dollar amounts in thousands, except per share amounts)

	Six Months Ended June 30, 2020
	Private Passenger Auto			Non- Standard Auto			Home and Farm			Crop			Commercial			All Other				Total
Direct premiums earned	$	36,897		$	26,371		$	40,374		$	19,249		$	19,658		$	2,296		$	144,845
Assumed premiums earned		-			-			-			1,935			-			2,348			4,283
Ceded premiums earned		(2,212	)		(86	)		(4,985	)		2,547			(3,464	)		(150	)		(8,350	)
Net premiums earned		34,685			26,285			35,389			23,731			16,194			4,494			140,778
Direct losses and LAE		19,753			14,135			18,748			23,058			16,913			660			93,267
Assumed losses and LAE		165			-			-			223			-			714			1,102
Ceded losses and LAE		(165	)		-			(1,350	)		(1,807	)		(7,961	)		(300	)		(11,583	)
Net losses and LAE		19,753			14,135			17,398			21,474			8,952			1,074			82,786
Gross margin		14,932			12,150			17,991			2,257			7,242			3,420			57,992
Underwriting and general expenses		9,145			10,343			9,594			2,001			7,553			1,148			39,784
Underwriting gain (loss)		5,787			1,807			8,397			256			(311	)		2,272			18,208
Fee and other income					657															808
					2,464
Net investment income																				3,989
Net capital loss on investments																				(3,722	)
Income before income ​​taxes																				19,283
Income tax expense																				4,071
Net income																				15,212
Net income attributable to non-controlling interest																				66
Net income attributable to NI Holdings, Inc.																			$	15,146
Non-GAAP Ratios:
Loss and LAE ratio		56.9%			53.8%			49.2%			90.5%			55.3%			23.9%			58.8%
Expense ratio		26.4%			39.3%			27.1%			8.4%			46.6%			25.5%			28.3%
Combined ratio		83.3%			93.1%			76.3%			98.9%			101.9%			49.4%			87.1%

34

Item 2. - Management’s Discussion and Analysis of Financial Condition and Results of Operations