NI Holdings, Inc. (NODK)

CIK: 0001681206. SIC: 6331 Fire, Marine & Casualty Insurance. Latest 10-K as of: 2026-03-06.

SIC breadcrumb: Finance, Insurance, And Real Estate > Insurance Carriers > SIC 6331 Fire, Marine & Casualty Insurance

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1681206. Latest filing source: 0001174947-26-000305.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001681206.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-08. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001681206.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001174947-26-000570.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-08. Report date: 2026-03-31.

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 First Quarter Consolidated Results of Operations

·

Net income of $12,508, or $0.60 per share basic and $0.60 per share diluted

·

Net premiums earned of $55,113

·

Net investment income of $2,655

·

Net favorable prior year reserve development of $4,048

·

Underwriting gain of $11,221

·

Combined ratio of 79.7%

·

Operating cash flows of ($1,867)

2026 First Quarter Consolidated Financial Condition

·

Total cash and investments of $374,910

·

Total assets of $492,109

·

Unpaid losses and loss adjustment expenses of $123,594

·

Total liabilities of $241,913

·

Shareholders’
equity of $250,196

28 

Results of Operations

Our consolidated net income was $12,508 and $6,460 for the three months
ended March 31, 2026 and 2025, respectively.

The major components of our revenues and net income for the two periods
are shown below:

Three Months Ended March 31,

2026

2025

Revenues:

Net premiums earned

$

55,113

$

67,497

Net investment income

2,655

2,838

Net investment gains

1,704

869

Fee and other income

130

230

Total revenues

$

59,602

$

71,434

Components of net income:

Net premiums earned

$

55,113

$

67,497

Losses and loss adjustment expenses

23,356

38,525

Amortization of deferred policy acquisition costs and other underwriting and general expenses

20,536

25,160

Underwriting gain

11,221

3,812

Net investment income

2,655

2,838

Net investment gains

1,704

869

Fee and other income

130

230

Income before income taxes

15,710

7,749

Income tax expense

3,202

1,289

Net income

$

12,508

$

6,460

Net Premiums Earned

Three Months Ended March 31,

2026

2025

Net premiums earned:

Direct premium

$

58,391

$

72,161

Assumed premium

1,983

39

Ceded premium

(5,261

)

(4,703

)

Total net premiums earned

$

55,113

$

67,497

Net premiums earned for the three months ended March 31, 2026, decreased
$12,384, or 18.3%, compared to the three months ended March 31, 2025.

Three Months Ended March 31,

2026

2025

Net premiums earned:

Private Passenger Auto

$

22,296

$

22,658

Non-Standard Auto

2,604

18,253

Home and Farm

25,694

23,721

Crop

(670

)

(376

)

All Other

5,189

3,241

Total net premiums earned

$

55,113

$

67,497

29 

Below are comments regarding significant changes in net premiums earned
by business segment:

Private Passenger Auto – Net premiums earned for
the three months ended March 31, 2026, decreased $362, or 1.6%, compared to the same period in 2025. Results were driven by lower renewal
premiums in South Dakota and Nebraska as a result of underwriting actions taken in recent periods, partially offset by new business growth
in North Dakota.

Non-Standard Auto – Net premiums earned for the
three months ended March 31, 2026, decreased $15,649, or 85.7%, compared to the same period in 2025. This decrease was driven by strategic
decision during the third quarter of 2025 to stop writing non-standard auto business in Illinois, Arizona, and South Dakota, with existing
policies being non-renewed. We anticipate further reductions in net earned premiums 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 three
months ended March 31, 2026, increased $1,973, or 8.3%, compared to the same period in 2025. Results were driven by new business growth
in North Dakota and South Dakota, rate increases, and increased insured property values. These increases were partially offset by lower
homeowners renewal premiums in South Dakota and Nebraska as a result of underwriting actions taken to improve profitability.

Crop – Net premiums earned for the first quarter
of any year are typically the result of prior crop year premium adjustments that correspond to the current year settlement of prior crop
year claims. The majority of crop insurance premiums are generally written in the second quarter and earned ratably over the remainder
of the calendar year.

All Other – Net premiums earned for the three months
ended March 31, 2026, increased $1,948, or 60.1%, compared to the same period in 2025 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 March 31,

2026

2025

Net losses and loss adjustment expenses:

Direct losses and loss adjustment expenses

$

24,069

$

40,379

Assumed losses and loss adjustment expenses

121

(233

)

Ceded losses and loss adjustment expenses

(834

)

(1,621

)

Total net losses and loss adjustment expenses

$

23,356

$

38,525

30 

Our net losses and loss adjustment expenses for the three months ended
March 31, 2026, decreased $15,169, or 39.4%, compared to the three months ended March 31, 2025.

Three Months Ended March 31,

2026

2025

Net losses and loss adjustment expenses:

Private Passenger Auto

$

10,292

$

13,495

Non-Standard Auto

2,582

14,538

Home and Farm

10,361

9,787

Crop

(693

)

(499

)

All Other

814

1,204

Total net losses and loss adjustment expenses

$

23,356

$

38,525

Three Months Ended March 31,

2026

2025

Loss and loss adjustment expense ratio:

Private Passenger Auto

46.2%

59.6%

Non-Standard Auto

99.2%

79.6%

Home and Farm

40.3%

41.3%

Crop

103.4%

132.7%

All Other

15.7%

37.1%

Total loss and loss adjustment expense ratio

42.4%

57.1%

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 decreased 13.4 percentage points in the three-month period ended March 31, 2026, compared to the same period
in 2025. This decrease was driven by lower frequency of losses as well as favorable prior year development on loss reserves in the current
year quarter.

Non-Standard Auto – The net loss and loss adjustment
expense ratio increased 19.6 percentage points in the three-month period ended March 31, 2026, compared to the same period in 2025. This
increase was primarily driven by significant strategic reductions in net earned premium in the current year quarter while continuing to
incur expenses necessary to adjust and settle claims.

Home and Farm – The net loss and loss adjustment
expense ratio decreased 1.0 percentage point in the three-month period ended March 31, 2026, compared to the same period in 2025. This
decrease in the current year quarter was driven by favorable prior year development on loss reserves and rate increases impacting net
premiums earned.

Crop – The net losses and loss adjustment expenses
during the first quarter of any year are typically the result of the current year settlement of prior crop year claims. The majority of
crop insurance losses and loss adjustment expenses are generally incurred in the last three quarters of the calendar year.

All Other – The net loss and loss adjustment expense
ratio decreased 21.4 percentage points in the three-month period ended March 31, 2026, compared to the same period in 2025. This decrease
was primarily driven by the strong results in the current year quarter related to the Company’s decision to participate on the catastrophe
reinsurance programs of certain farm bureau insurance companies.

31 

Underwriting and General Expenses and Expense Ratio

Three Months Ended March 31,

2026

2025

Underwriting and general expenses:

Amortization of deferred policy acquisition costs

$

11,886

$

16,528

Other underwriting and general expenses

8,650

8,632

Total underwriting and general expenses

20,536

25,160

Expense ratio

37.3%

37.3%

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 remained consistent
in the three-month period ended March 31, 2026, compared to the same period 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 were consistent with the
prior year quarter and reflect strategic investments in human capital and technology during the current year.

Underwriting Gain (Loss) and Combined Ratio

Three Months Ended March 31,

2026

2025

Underwriting gain (loss):

Private Passenger Auto

$

4,309

$

1,785

Non-Standard Auto

(1,623

)

(4,566

)

Home and Farm

5,835

6,101

Crop

6

99

All Other

2,694

393

Total underwriting gain (loss)

$

11,221

$

3,812

Three Months Ended March 31,

2026

2025

Combined ratio:

Private Passenger Auto

80.7%

92.2%

Non-Standard Auto

162.4%

125.0%

Home and Farm

77.3%

74.3%

Crop

100.9%

126.3%

All Other

48.1%

87.8%

Combined ratio

79.7%

94.4%

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 $7,409 to a gain of $11,221 for
the three-month period ended March 31, 2026, from a gain of $3,812 for the three-month period ended March 31, 2025. These results were
driven by the factors discussed in the Net Premiums Earned, Loss and Loss Adjustment Expenses, and the Underwriting and General Expenses
and Expense Ratio sections above.

The overall combined ratio decreased 14.7 percentage points in the
three-month period ended March 31, 2026, compared to the same period in 2025. These results were driven by the factors discussed in the
Net Premiums Earned, Loss and Loss Adjustment Expenses, and the Underwriting and General Expenses and Expense Ratio sections above.

32 

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 March 31,

2026

2025

Average cash and invested assets

$

376,795

$

391,998

Net investment income

$

2,655

$

2,838

Gross return on average cash and invested assets

3.7%

3.9%

Net return on average cash and invested assets

2.8%

2.9%

Net investment income decreased $183 for the three months ended March
31, 2026, compared to the three months ended March 31, 2025. This decrease was primarily driven by earning slightly lower yields on a
l

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-03-06. Report date: 2025-12-31.

Item 7.

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 consolidated financial
statements alone. Unless otherwise noted, the information in the following discussion is being presented for our continuing operations.
The discussion should be read in conjunction with the consolidated financial statements and the notes thereto included in Part II, Item
8, “Financial Statements and Supplementary Data.” Some of the information contained in this discussion and analysis or set
forth elsewhere in this 2025 Annual Report constitutes forward-looking information that involves risks and uncertainties. Please see “Forward-Looking
Statements” and Part I, Item 1A, “Risk Factors” 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.

Our Management’s Discussion and Analysis of
Financial Condition and Results of Operations included in this document discusses 2025 and 2024 items and year-over-year comparisons between
2025 and 2024 as well as discussions of 2023 items and year-over-year comparisons between 2024 and 2023, which were included due to the
impacts of discontinued operations for those prior periods.

All dollar amounts, except per share amounts, are
in thousands.

Financial Highlights

2025 Consolidated Results of Operations

·

Net loss of $10,413, or ($0.50) per share basic and diluted

·

Net premiums earned of $270,655

·

Net investment income of $11,702

·

Net unfavorable prior year reserve development of $30,330

·

Underwriting loss of $26,724

·

Combined ratio of 109.9%

·

Operating cash flows of ($4,859)

2025 Consolidated Financial Condition

·

Total cash and investments of $378,680

·

Total assets of $506,002

·

Unpaid losses and loss adjustment expenses of $137,855

·

Total liabilities of $265,665

·

Shareholders’ equity of $240,337

28 

Results of Continuing Operations

Our consolidated financial statements are prepared in accordance with
GAAP. Management evaluates our operations by monitoring key measures of growth and profitability, which may include the disclosure of
certain non-GAAP financial measures. Our results of operations are influenced by numerous factors affecting the U.S. property and casualty
insurance industry including competition, weather, catastrophic events, innovation and emerging technologies, changes in regulations,
inflation, general economic conditions, judicial trends, fluctuations in interest rates, and other changes in the financial markets.

Our premium levels and underwriting results have been, and will continue
to be, influenced by market conditions. The property and casualty insurance industry has historically been characterized by soft markets
(periods of relatively high levels of price competition, less restrictive underwriting practices, and generally low premium rates) followed
by hard markets (periods of capital shortages resulting in a lack of insurance availability, relatively low levels of price competition,
more selective underwriting of risks, and relatively high premium rates). During soft markets, we may lose business to other carriers
offering competitive insurance at lower rates. We may also choose to reduce our premiums or limit premium increases leading to a reduction
in profit margins and revenues. Our industry is also influenced by general economic conditions, which could reduce overall premium volume
for us and our competitors. Additionally, the industry is impacted by changes in customer preferences, including customer demand for direct,
point-of-sale, or other non-traditional distribution channels. We regularly monitor our performance and competitive position by line of
business and geographic market to determine appropriate rate actions.

Premiums in the multi-peril crop insurance business are primarily influenced
by the types of crops planted, number of acres insured, and commodity prices because the rates are established by the RMA rather than
individual insurance carriers. The expected experience of this business for the calendar year may also significantly affect the reported
net earned premiums and losses due to the risk-sharing arrangement with the federal government. Multi-peril crop insurance premiums are
generally written in the second quarter, and earned ratably over the period of risk, which generally extends into the fourth quarter.
Premiums in the crop hail insurance business are also generally written in the second quarter and earned ratably until the end of the
third quarter.

Premiums in our other lines of business are written and earned throughout
the year based on their coverage periods. Losses on this business are also incurred throughout the year but are usually more frequent
and/or severe during periods of elevated weather-related activity.

Property Claims Service (“PCS”), a division of the Insurance
Services Office, maintains industry loss data related to catastrophe loss events. PCS defines a catastrophe as an event that causes damage
of $25 million or more in insured property losses and affects a significant number of insureds. When reporting on our losses from catastrophe
events, we may include losses from those events that were defined as a catastrophe by PCS or those events which may include losses that
we believe are, or will be, material to our operations, either in amount or in number of claims made. The frequency and severity of catastrophic
losses we experience in any year may significantly affect our results of operations and financial position. In analyzing the underwriting
performance of our property and casualty insurance business, we evaluate performance both including and excluding catastrophe losses.
Portions of our catastrophe losses may be recoverable under our catastrophe reinsurance agreements.

For more information on the Company’s results of operations
by segment, see Part II, Item 8, Note 21 “Segment Information.”

29 

Years ended December 31, 2025, 2024, and 2023

The consolidated net loss from continuing operations for the Company
was $10,413 for the year ended December 31, 2025, compared to net income of $6,600 for the year ended December 31, 2024, and net income
of $19,831 for the year ended December 31, 2023.

The major components of our revenues and net income (loss) for the
three periods are shown below:

Year Ended December 31,

2025

2024

2023

Revenues:

Net premiums earned

$

270,655

$

310,110

$

292,117

Fee and other income

997

1,938

1,940

Net investment income

11,702

10,943

8,034

Net investment gains

1,696

2,213

1,929

Total revenues

$

285,050

$

325,204

$

304,020

Components of net income (loss):

Net premiums earned

$

270,655

$

310,110

$

292,117

Losses and loss adjustment expenses

200,788

207,465

186,516

Amortization of deferred policy acquisition costs and other underwriting and general expenses

96,591

104,966

96,957

Underwriting gain (loss)

(26,724

)

(2,321

)

8,644

Fee and other income

997

1,938

1,940

Net investment income

11,702

10,943

8,034

Net investment gains

1,696

2,213

1,929

Goodwill impairment charge

—

(2,628

)

—

Income (loss) from continuing operations before income taxes

(12,329

)

10,145

20,547

Income tax expense (benefit)

(1,916

)

3,545

716

Net income (loss) from continuing operations

$

(10,413

)

$

6,600

$

19,831

30 

Net Premiums Earned

Year Ended December 31,

2025

2024

2023

Net premiums earned:

Direct premium

$

309,782

$

341,885

$

325,590

Assumed premium

2,627

2,984

3,570

Ceded premium

(41,754

)

(34,759

)

(37,043

)

Total net premiums earned

$

270,655

$

310,110

$

292,117

Net premiums earned for the year ended December 31, 2025 decreased
$39,455, or 12.7%, to $270,655, compared to $310,110 for the year ended December 31, 2024.

Net premiums earned for the year ended December 31, 2024 increased
$17,993, or 6.2%, to $310,110, compared to $292,117 for the year ended December 31, 2023.

Year Ended December 31,

2025

2024

2023

Net premiums earned:

Private passenger auto

$

91,027

$

90,314

$

83,360

Non-Standard auto

50,000

95,225

87,760

Home and farm

93,920

90,761

83,389

Crop

21,665

21,142

25,817

All other

14,043

12,668

11,791

Total net premiums earned

$

270,655

$

310,110

$

292,117

Below are comments regarding significant changes in net premiums earned
by business segment:

Private passenger auto – Net premiums earned for
2025 increased $713, or 0.8%, from 2024. This increase was driven by new business growth in North Dakota, significant rate increases in
South Dakota and Nebraska, and improved retention in North Dakota and Nebraska, partially offset by lower new business and retention levels
in South Dakota. Net premiums earned for 2024 increased $6,954, or 8.3%, from 2023. This increase was driven by new business growth in
North Dakota as well as significant rate increases in North Dakota, South Dakota, and Nebraska, partially offset by lower new business
and retention levels in South Dakota and Nebraska as a result of underwriting actions taken to improve profitability.

Non-Standard auto – Net premiums earned for 2025
decreased $45,225, or 47.5%, from 2024. This decrease was driven by strategic decisions to exit Nevada during 2024 and significantly reduce
written premium in the Chicago market for 2025 as well as the decision during the third quarter of 2025 to ultimately stop writing non-standard
auto business in Illinois, Arizona, and South Dakota, with existing policies being non-renewed. We anticipate further reductions in net
earned premiums over the next twelve months as a result of the decisions to run off these non-standard auto operations. Net premiums earned
for 2024 increased $7,465, or 8.5%, from 2023. Results were driven by prior period new business growth in Illinois and Arizona as well
as significant rate increases in the Chicago market where our non-standard auto business was concentrated, partially offset by lower retention
compared to the prior year and the decision to exit Nevada.

Home and farm – Net premiums earned for 2025 increased
$3,159, or 3.5%, from 2024. Results were driven by new business growth, rate increases, and increased insured property values in North
Dakota, South Dakota, and Nebraska, partially offset by lower retention rates in South Dakota. In addition, net premiums earned for 2025
were impacted by the recognition of higher ceded premiums earned as a result of reinstatement premium for a significant catastrophe event
in North Dakota during the second quarter of 2025. Net premiums earned for 2024 increased $7,372, or 8.8%, from 2023. This increase was
driven by new business growth in North Dakota, rate increases, and increased insured property values, which were primarily the result
of higher inflationary factors. These increases were partially offset by lower retention rates and new business levels in Nebraska and
South Dakota as a result of underwriting actions taken to improve profitability.

Crop – Net premiums earned for 2025 increased $523,
or 2.5%, from 2024. The year-over-year increase was driven by the recognition of more favorable premium adjustments, related to the settlement
of prior crop year claims, in the first quarter of 2025 compared to the first quarter of 2024. Net premiums earned for 2024 decreased
$4,675, or 18.1%, from 2023. This decrease was

31 

driven by a reduction in acres insured and lower commodity prices, which are a key determinant
of premiums on a Federal multi-peril crop insurance policy, in the current year.

All other – Net premiums earned for 2025 increased
$1,375, or 10.9%, from 2024. This increase was driven by rate and insured value increases for the commercial and excess lines of business.
Net premiums earned for 2024 increased $877, or 7.4%, from 2023. This increase was driven by rate and insured value increases for the
commercial and excess lines of business, partially offset by the continued run-off of our participation in an assumed domestic and international
reinsurance pool of business.

Losses and Loss Adjustment Expenses

Year Ended December 31,

2025

2024

2023

Net losses and loss adjustment expenses:

Direct losses and loss adjustment expenses

$

247,431

$

220,991

$

195,138

Assumed losses and loss adjustment expenses

606

784

1,140

Ceded losses and loss adjustment expenses

(47,249

)

(14,310

)

(9,762

)

Total net losses and loss adjustment expenses

$

200,788

$

207,465

$

186,516

The Company’s net losses and loss adjustment expenses for the
year ended December 31, 2025 decreased $6,677, or 3.2%, to $200,788, compared to $207,465 for the year ended December 31, 2024.

The Company’s net losses and loss adjustment expenses for the
year ended December 31, 2024 increased $20,949, or 11.2%, to $207,465, compared to $186,516 for the year ended December 31, 2023.

Year Ended December 31,

2025

2024

2023

Net losses and loss adjustment expenses:

Private passenger auto

$

55,258

$

51,869

$

60,204

Non-Standard auto

67,848

76,130

63,041

Home and farm

61,425

64,561

50,935

Crop

11,140

9,071

10,793

All other

5,117

5,834

1,543

Total net losses and loss adjustment expenses

$

200,788

$

207,465

$

186,516

Year Ended December 31,

2025

2024

2023

Loss and loss adjustment expenses ratio:

Private passenger auto

60.7%

57.4%

72.2%

Non-Standard auto

135.7%

79.9%

71.8%

Home and farm

65.4%

71.1%

61.1%

Crop

51.4%

42.9%

41.8%

All other

36.4%

46.1%

13.1%

Total loss and loss adjustment expenses ratio

74.2%

66.9%

63.8%

Below are comments regarding significant changes in net losses and
loss adjustment expenses, and the net loss and loss adjustment expenses ratios by business segment:

Private passenger auto – The net loss and loss
adjustment expenses ratio increased 3.3 percentage points in 2025 compared to 2024. This increase was driven by higher severity on bodily
injury liability losses. The net loss and loss adjustment expenses ratio decreased 14.8 percentage points in 2024 compared to 2023. This
decrease was the result of lower levels of weather-related losses in 2024 due to the mild winter in the Midwest compared to elevated winter
weather-related losses in 2023 as well as favorable prior year loss reserve development. Both periods were positively affected by earned
premium growth.

Non-Standard auto – The net loss and loss adjustment
expenses ratio increased 55.8 percentage points in 2025 compared to 2024. This increase was driven by higher unfavorable prior year development
on liability loss reserves, primarily related to bodily injury coverage. The net loss and loss adjustment expenses ratio increased 8.1
percentage points in 2024 compared to 2023. This increase

32 

was driven by unfavorable prior year loss reserve development related to elevated
bodily injury losses, partially offset by earned premium growth resulting from new business growth and significant rate increases.

Home and farm – The net loss and loss adjustment
expenses ratio decreased 5.7 percentage points in 2025 compared to 2024. The 2025 net loss and loss adjustment expense ratio was impacted
by losses from a significant catastrophe event in North Dakota during the second quarter of 2025 that exceeded the Company’s $20,000
retention as well as the related ceded premiums earned. Although there were no catastrophes during 2024, the net loss and loss adjustment
expense ratio for 2024 was impacted by elevated non-catastrophe weather losses in North Dakota and Nebraska. Catastrophe losses, net
of reinsurance, for the Home and Farm segment accounted for 21.2 percentage points of the net loss and loss adjustment expense ratio
for the year ended December 31, 2025. The net loss and loss adjustment expenses ratio increased 10.0 percentage points in 2024 compared
to 2023. This increase was driven by higher loss severity and higher non-catastrophe weather-related losses in North Dakota and Nebraska
during 2024 compared 2023.

Crop – The net loss and loss adjustment expenses
ratio increased 8.5 percentage points in 2025 compared to 2024. This increase was driven by higher crop hail losses in the current year
compared to the prior year. The net loss and loss adjustment expenses ratio increased 1.1 percentage points in 2024 compared to 2023.
The strong results for 2024 were the result of favorable crop growing conditions, similar to 2023.

All other – The net loss and loss adjustment expenses
ratio decreased 9.7 percentage points in 2025 compared to 2024. This decrease was driven by lower severity on commercial property losses
as well as the effects of earned premium growth. The net loss and loss adjustment expenses ratio increased 33.0 percentage points in 2024
compared to 2023. This increase was driven by elevated large loss experience compared to 2023 and an inter-segment reclassification of
a large loss during 2023.

Underwriting and General Expenses and Expense Ratio

Year Ended December 31,

2025

2024

2023

Underwriting and general expenses:

Amortization of deferred policy acquisition costs

$

59,993

$

71,257

$

67,631

Other underwriting and general expenses

36,598

33,709

29,326

Total underwriting and general expenses

$

96,591

$

104,966

$

96,957

Expense ratio

35.7%

33.8%

33.2%

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 increased 1.9 percentage
points in the year ended December 31, 2025, compared to the same period in 2024. 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. The increase in the other underwriting and general expenses is due to strategic
investments in human capital and technology during the current year. The overall other underwriting and general expenses for the years
ended December 31, 2025 and 2024, were elevated due to costs associated with separation agreements. The overall expense ratio increased
0.6 percentage points in the year ended December 31, 2024, compared to the same period in 2023. The increase in the amortization of deferred
policy acquisition costs is due to higher deferrable costs resulting from significant earned premium growth compared to the prior year,
including significant growth in the Non-Standard Auto segment which generally pays higher agent commissions than our other segments. The
increase in the other underwriting and general expenses is due to the costs incurred in 2024 associated with the execution of separation
agreements with our former Chief Executive Officer and former Senior Vice President of Operations.

33 

Underwriting Gain (Loss) and Combined Ratio

Year Ended December 31,

2025

2024

2023

Underwriting gain (loss):

Private passenger auto

$

5,980

$

10,407

$

(1,536

)

Non-Standard auto

(40,805

)

(17,637

)

(12,860

)

Home and farm

(1,493

)

(2,373

)

7,557

Crop

5,870

7,189

8,702

All other

3,724

93

6,781

Total underwriting gain (loss)

$

(26,724

)

$

(2,321

)

$

8,644

Year Ended December 31,

2025

2024

2023

Combined ratio:

Private passenger auto

93.4%

88.4%

101.8%

Non-Standard auto

181.6%

118.5%

114.6%

Home and farm

101.6%

102.6%

91.0%

Crop

72.9%

66.0%

66.3%

All other

73.4%

99.3%

42.5%

Total combined ratio

109.9%

100.7%

97.0%

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 (loss) decreased $24,403, or 1,051%, for
the year ended December 31, 2025, compared to the same period in 2024. The total underwriting gain (loss) decreased $10,965, or 126.9%,
for the year ended December 31, 2024, compared to the same period in 2023. These results were driven by the factors discussed in the Losses
and Loss Adjustment Expenses and the Underwriting and General Expenses and Expense Ratio sections above.

The overall combined ratio increased 9.2 percentage points in the year
ended December 31, 2025, compared to the same period in 2024. The overall combined ratio increased 3.7 percentage points in the year ended
December 31, 2024, compared to the same period in 2023. These results were driven by the factors discussed in the Losses and Loss Adjustment
Expenses and the Underwriting and General Expenses and Expense Ratio sections above.

Fee and Other Income

We had fee and other income of $997, $1,938, and $1,940 for the years
ended December 31, 2025, 2024, and 2023, respectively. The decrease in the current year was driven by write-offs of uncollectable premiums
receivable as well as strategic reductions in non-standard auto premiums that typically generate the majority of the fee income. Fee and
other income for 2024 was generally consistent with 2023 due to elevated other income in 2023.

Goodwill Impairment Charge

We did not have a goodwill impairment charge for the year ended December
31, 2025, compared to $2,628 for the year ended December 31, 2024, and $6,756 for the year ended December 31, 2023. See Part II, Item
8, Note 10 “Goodwill and Other Intangibles” for additional information.

34 

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 for continuing operations:

Year Ended December 31,

2025

2024

2023

Average cash and invested assets

$

386,802

$

371,110

$

335,821

Net investment income

$

11,702

$

10,943

$

8,034

Gross return on average cash and invested assets

3.9%

3.9%

3.5%

Net return on average cash and invested assets

3.0%

3.0%

2.6%

Net investment income increased $759 for the year ended December 31,
2025, compared to the year ended December 31, 2024. This increase was primarily driven by the favorable interest rate environment that
resulted in higher net investment income on an increased average fixed income securities balance (measured at fair value), partially offset
by lower interest rates in the current year for cash and cash equivalents. The increase in average cash and invested assets was driven
by changes in the fair value of fixed income securities due to the interest rate environment as well as positive operating cash flows
during the first six months of 2025. Net investment income increased $2,909 for the year ended December 31, 2024, compared to the year
ended December 31, 2023. This increase was primarily driven by the favorable interest rate environment which resulted in higher reinvestment
rates in our fixed income portfolio as well as higher yields on our cash and cash equivalents, partially offset by higher investment expenses.

Gross and net return on average cash and invested assets remained consistent
year-over-year from 2024 to 2025, primarily driven by the favorable interest rate environment that resulted in slightly higher yields
for fixed income securities, offset by lower interest rates in the current year periods for cash and cash equivalents.

Gross and net return on average cash and invested assets increased
year-over-year from 2023 to 2024, driven by the favorable interest rate environment that resulted in significantly higher net investment
income on an increased average balance of fixed income securities as well as cash and cash equivalents (measured at fair value). In addition,
the increase in investments in high dividend yield equities resulted in relatively consistent year-over-year dividend income despite a
reduction in the average equities balance (measured at fair value). The increase in average cash and invested assets was driven by additional
investments in fixed income securities as a result of positive operating cash flows during 2024.

Net Investment Gains (Losses)

Net investment gains (losses) consisted of the following:

Year Ended December 31,

2025

2024

2023

Gross realized gains

$

2,386

$

1,341

$

13,841

Gross realized losses, excluding credit impairment losses

(1,080

)

(790

)

(1,745

)

Net realized gains

1,306

551

12,096

Change in net unrealized gain on equity securities

390

1,662

(10,167

)

Net investment gains (losses)

$

1,696

$

2,213

$

1,929

We had net realized gains of $1,306 for the year ended December 31,
2025, compared to $551 for the year ended December 31, 2024, and $12,096 for the year ended December 31, 2023. The net realized gains
for the year ended December 31, 2025, were driven by sales of equity securities that were executed as part of the strategic management
of our investment portfolio. The elevated net realized gains for the year ended December 31, 2023, were the result of a strategic liquidation
of a portfolio of equity securities. The gross realized gains from the sale of these securities were largely offset by the elimination
of the unrealized gain position of these securities. No credit impairment losses were reported during any of the periods presented.

We experienced an increase in net unrealized gains on equity securities
of $390 and $1,662 during the years ended December 31, 2025 and 2024, respectively. These results were driven by the impact of changes
in fair value attributable to overall favorable equity markets during those periods. The change in net unrealized gains on equity securities
for 2023 was driven by the equity portfolio liquidation noted above and the impact of changes in fair value attributable to equity market
volatility. We had net realized gains on the sale of equity securities of $1,646, $750, and $12,619 during the years ended December 31,
2025, 2024, and 2023, respectively.

35 

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 gains of $10,180 during the year ended December 31, 2025, compared to
net unrealized losses of $191 during the year ended December 31, 2024. The fixed income portfolio experienced net unrealized losses of
$9,168 during the year ended December 31, 2023. These 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.

Income (Loss) before Income Taxes

We had pre-tax loss of ($12,329) for the year ended December 31, 2025,
a pre-tax income of $10,145 for the year ended December 31, 2024, and pre-tax income of $20,547 for the year ended December 31, 2023.
The year-over-year decrease in 2025 compared to 2024 was largely attributable to higher unfavorable prior year loss reserve development
for Non-Standard Auto and higher expenses associated with investments in human capital and technology, partially offset by higher net
investment income and lower goodwill impairment charges. The year-over-year decrease in 2024 compared to 2023 was largely attributable
to higher loss severity and non-catastrophe weather-related losses for Home and Farm in the states of North Dakota and Nebraska, unfavorable
prior year loss reserve development for Non-Standard Auto, a goodwill impairment charge for Non-Standard Auto, and expenses incurred related
to the separation agreements with our former Chief Executive Officer and former Senior Vice President of Operations, partially offset
by net earned premium growth, improved loss experience for Private Passenger Auto, and higher net investment income.

Income Tax Expense (Benefit)

We recorded income tax benefit of ($1,916) for the year ended December
31, 2025, income tax expense of $3,545 for the year ended December 31, 2024, and an income tax expense of $716 for the year ended December
31, 2023. Including the impacts of discontinued operations and the loss on sale of discontinued operations, we recorded an income tax
benefit of $3,192 for the year ended December 31, 2024, and an income tax expense of $963 for the year ended December 31, 2023. Including
the impacts of discontinued operations and the loss on sale of discontinued operations, our effective tax rate for 2025 was 15.5% compared
to an effective tax rate of 35.2% and (22.6)% for 2024 and 2023, respectively. Our 2025 effective tax rate was impacted by several factors,
but non-taxable compensation-related expenses and prior-year true-ups on the loss on sale of discontinued operations were the most significant
drivers of the variance from the statutory rate. Our 2024 effective tax rate was impacted by several factors, but the loss on sale of
discontinued operations, non-taxable compensation-related expenses, and non-taxable goodwill impairment charge were the most significant
drivers of the variance from the statutory rate. Our 2023 effective tax rate was impacted by several factors, but the 2023 non-taxable
goodwill impairment charge was the most significant driver of the variance from the statutory rate. The valuation allowance against certain
deferred income tax assets was $2,345 as of December 31, 2025, $2,506 as of December 31, 2024, and $505 as of December 31, 2023.

Net Income (Loss)

We had net loss of ($10,413) for the year ended December 31, 2025,
net income of $6,600 for the year ended December 31, 2024, and a net income of $19,831 for the year ended December 31, 2023. The year-over-year
decrease in 2025 compared to 2024 was largely attributable to higher unfavorable prior year loss reserve development for Non-Standard
Auto and higher expenses associated with investments in human capital and technology, partially offset by higher net investment income
and lower goodwill impairment charges. The year-over-year decrease in 2024 compared to 2023 was largely attributable to higher loss severity
and non-catastrophe weather-related losses for Home and Farm in the states of North Dakota and Nebraska, unfavorable prior year loss reserve
development for Non-Standard Auto, a goodwill impairment charge for Non-Standard Auto, and expenses incurred related to the separation
agreements with our former Chief Executive Officer and former Senior Vice President of Operations, partially offset by net earned premium
growth, improved loss experience for Private Passenger Auto, and higher net investment income.

Return on Average Equity

For the year ended December 31, 2025, we had annualized return on average
equity of (4.3%), compared to annualized return on average equity, after non-controlling interest, of 2.8% and 7.9% for the years ended
December 31, 2024 and 2023, respectively.

Average equity is calculated as the average between beginning and ending
equity, excluding non-controlling interest, for the period.

36 

Principal Revenue Items

Revenue is primarily derived from net premiums earned, net investment
income, and net investment gains (losses).

Gross and Net Premiums Written

Gross premiums written is equal to direct premiums
written and assumed premiums before the effect of ceded reinsurance. Gross premiums written are recognized upon sale of new insurance
contracts or renewal of existing contracts. Net premiums written is equal to gross premiums written less premiums ceded to reinsurers.

Premiums Earned

Premiums earned is the earned portion of net premiums written. Insurance
premiums on property and casualty policies are recognized in proportion to the underlying risk insured and are earned ratably over the
duration of the policies or, in the case of crop insurance, over the period of risk to the Company. At the end of each accounting period,
the portion of the premiums that is not yet earned is included in unearned premiums and is realized as revenue in subsequent periods over
the remaining term of the policy or period of risk. Our property and casualty policies, other than some of our auto lines and the non-standard
auto policies, typically have a term of twelve months.

Due to the nature of the crop planting and harvesting cycle and the
deadlines for filing and processing claims under the federal crop insurance program, insurance premiums for multi-peril crop insurance
are recognized and earned during the period of risk, which usually begins in spring and ends with harvest in the fall. Under the federal
crop insurance program, farmers must purchase crop insurance with respect to spring planted crops by March 15. By July 15, the farmer
must report the number of acres planted in each crop. On September 1, the insurer bills the farmer for the insurance premium, which is
due and payable by the farmer by October 1. If the farmer does not pay the premium by such date, the insurer will charge interest at a
rate of 15% because the insurer is required to pay the farmer’s portion of the premium to the FCIC by November 15, regardless of
whether the farmer pays the premium to the insurer. Except for claims occurring in the spring (primarily for prevented planting and required
replanting claims), claims are required to be filed with the FCIC by December 15. A different cycle exists for crops planted in the fall,
such as winter wheat, but the vast majority of crop insurance we write covers crops planted in the spring.

Net Investment Income and Net Investment
Gains (Losses)

We invest our excess cash in fixed income and equity securities. Investment
income includes interest and dividends earned on invested assets and is reported net of investment-related expenses. Net investment gains
(losses) are reported separately from net investment income. We recognize realized gains when investments are sold for an amount greater
than their cost or amortized cost (in the case of fixed income securities) and realized losses when investments are sold for an amount
less than their cost or amortized cost or when credit impairments are recorded, as applicable. We recognize changes in unrealized gains
and losses of equity securities in net income as part of net investment gains (losses). These gains and losses may be significant given
the fair market value of the equity portfolio and the inherent volatility in equity markets. The changes in unrealized gains and losses
on fixed income securities are recorded in other comprehensive income (loss), net of income taxes. Therefore, these changes have no impact
on net income but do impact shareholders’ equity.

The portfolio of investments for NI Holdings and its insurance subsidiaries
is managed by Conning, Inc., which has discretion to buy and sell securities in accordance with the investment policy approved by our
Board of Directors.

Principal Expense Items

Our expenses consist primarily of losses and loss adjustment expenses,
amortization of deferred policy acquisition costs, other underwriting and general expenses, and income taxes.

Losses and Loss Adjustment Expenses

Losses and loss adjustment expenses represent the largest expense item
and include (1) claim payments made, (2) estimates for future claim payments and changes in those estimates from prior periods, and (3)
costs associated with investigating, defending, and adjusting claims, including legal fees.

Amortization of Deferred Policy Acquisition Costs and Other Underwriting
and General Expenses

Expenses incurred to underwrite risks are referred to as policy acquisition
costs. Policy acquisition costs consist of commission expenses, state premium taxes, and certain other underwriting expenses that vary
with and are primarily related to the writing and

37 

acquisition of new and renewal business. These policy acquisition costs are deferred
and amortized over the effective period of the related insurance policies. Other underwriting and general expenses consist of salaries,
professional fees, office supplies, depreciation, and all other operating expenses not otherwise classified separately.

Income Taxes

Current income taxes represent amounts paid or owed
to the federal government and certain states whose payment is based upon net income (subject to regulatory adjustments) generated by the
Company. The generation of net losses may result in income tax benefits. As noted above, it does not include state premium taxes that
are based purely on the collection of policyholder premiums.

We use the asset and liability method of accounting
for deferred income taxes. Deferred income taxes arise from the recognition of temporary differences between financial statement carrying
amounts and the income tax bases of its assets and liabilities. A valuation allowance is provided when it is more likely than not that
some portion of the deferred income tax asset will not be realized. The effect of a change in tax rates is recognized in the period of
the enactment date. Total income taxes reflect both current income taxes and the change in the net deferred income tax asset or liability,
excluding amounts attributed to accumulated other comprehensive income.

Critical Accounting Policies

General

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 our 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 and that reported results of operations would not be materially adversely affected by
the need to make accounting adjustments to reflect changes in these estimates and assumptions from time to time. We believe the following
policies are the most sensitive to estimates and judgments.

Unpaid Losses and Loss Adjustment Expenses

How reserves are established

With respect to our traditional property and casualty insurance products,
we maintain reserves for the payment of claims (indemnity losses) and expenses related to adjusting those claims (loss adjustment expenses).
Our liability for unpaid losses and loss adjustment expenses consists of (1) case reserves, which are reserves for claims that have been
reported to us, and (2) IBNR, which represents reserves for claims that have been incurred but have not yet been reported and for the
future development of reported claims. As some claims may not be reported for several years, the liability for unpaid losses and loss
adjustment expenses may include significant estimates for IBNR based on the time necessary to settle the claim.

Loss adjustment expenses consist of two components – allocated
loss adjustment expenses and unallocated loss adjustment expenses. Allocated loss adjustment expenses are the expenses for defense and
cost containment, including legal fees, court costs, and investigation fees, which are linked to the settlement of specific individual
claims or losses. Unallocated loss adjustment expenses are expenses that generally cannot be associated with a specific claim, including
internal costs such as salaries and other overhead costs. Estimates of future costs to administer reported and unreported claims for both
allocated and unallocated expenses are included in IBNR.

When a claim is reported to one of the insurance companies, its claims
personnel or assigned external parties establish a case reserve for the estimated amount of the ultimate payment to the extent it can
be determined or estimated. In many cases a default reserve is utilized until the claims personnel can determine a more claim specific
amount. The amount of the loss reserve for the reported claim is based primarily upon an evaluation of coverage, liability, damages suffered,
and any other information considered pertinent to estimating the exposure presented by the claim. Each claim is contested or settled
individually based upon its merits, and some property and casualty claims may take years to resolve, especially in situations where legal
action may be involved. Case reserves are reviewed on a regular basis and are updated as new information becomes available.

When a catastrophe occurs, which in our case usually involves the weather
perils of wind and hail, we utilize mapping technology, through geographic coding of our property risks, to overlay the path of the storm.
This enables us to establish estimated damage amounts based on the wind speed and size of the hail for case or per claim loss amounts.
This process allows us to determine within a

38 

reasonable time (5-7 days) an estimated number of claims and estimated losses from the storm.
We have also begun reviewing the results of the predicted cost of the claim generated by the catastrophe models as a reasonability check
on the anticipated cost of the storm. If we estimate the damages to be in excess of half of the retained catastrophe amount, reinsurers
are notified of a potential loss so that we can quickly recover reinsurance payments once the retention is exceeded.

We estimate multi-peril crop insurance losses on a quarterly basis
based upon historical loss patterns, current crop conditions, current weather patterns, input from crop loss adjusters, and other factors.
These estimates have proven to be reasonably accurate indicators of our anticipated losses for this line of business.

Our actuaries assist with the estimation of the liability for unpaid
losses and loss adjustment expenses. The actuaries prepare estimates by first deriving an actuarially based estimate of the ultimate
cost of total losses and loss adjustment expenses incurred as of the financial statement date based on established actuarial methods
as described below or other appropriate methods. We then reduce the estimated ultimate loss and loss adjustment expenses by loss and
loss adjustment expenses payments and case reserves carried as of the financial statement date to determine the appropriate IBNR amount.
The actuarially determined estimate is based upon indications from various actuarial methodologies including paid chain-ladder, incurred
chain-ladder, Bornhuetter-Ferguson, weighted averages of the methods, and judgment. The specific method used to estimate the ultimate
losses varies depending on the judgment of the actuaries as to what is the most appropriate for the line of business. Management reviews
these estimates and supplements the actuarial analysis with information not fully incorporated into the actuarially based estimate, such
as changes in the external business environment and internal company processes. Management may adjust the actuarial estimates based on
this supplemental information in order to arrive at the amount recorded in the consolidated financial statements.

A further discussion of the actuarial methodologies used follows:

Bornhuetter-Ferguson Method - The Bornhuetter-Ferguson
Method is a blended method that explicitly considers both actual loss development to date and expected future loss emergence. This method
is applied on both a paid loss basis and an incurred loss basis. This method uses selected loss development patterns to calculate the
expected percentage of losses unpaid (or unreported). The expected future loss component of the method is calculated by multiplying earned
premium for the given exposure period by a selected a priori (i.e. deductive) loss ratio. The resulting dollars are then multiplied by
the expected percentage of unpaid (or unreported) losses described above. This provides an estimate of future paid (or reported) losses
that is then added to actual paid (or incurred) loss data to produce the estimated ultimate loss.

Paid and Case Incurred Loss Development (Chain-Ladder) Method
- The Paid and Case Incurred Loss Development Method utilizes ratios of cumulative paid losses, case incurred losses, or paid loss adjustment
expenses at each age of development as a percent of the preceding development age. Selected ratios are then multiplied together to produce
a set of loss development factors which when applied to the most current data value, by accident period, develop the estimated ultimate
losses or loss adjustment expenses. Ultimate losses or loss adjustment expenses are then selected for each accident year from the various
methods employed.

Ratio of Paid Allocated Loss Adjustment Expenses to Paid Loss
Method - The Ratio of Paid Allocated Loss Adjustment Expenses to Paid Loss Method utilizes the ratio of paid allocated loss adjustment
expenses to paid losses and is similar to the Paid and Case Incurred Loss Development (Chain-Ladder) Method described above, except that
the data projected are the ratios of paid allocated loss adjustment expenses to paid losses. The projected ultimate ratio is then multiplied
by the selected ultimate losses, by accident year, to yield the ultimate allocated loss adjustment expenses. Allocated loss adjustment
expenses reserves are calculated by subtracting paid losses from ultimate allocated loss adjustment expenses.

The process of estimating loss reserves involves a high degree of judgment
and is subject to a number of variables. These variables can be affected by both internal and external events, such as changes in claims
handling procedures/staffing, inflation, weather, legal trends, and regulatory and legislative changes. The impact of many of these items
on ultimate costs for losses and loss adjustment expenses is difficult to estimate. Loss reserve estimation is also affected by the volume
of claims, the potential severity of individual claims, the determination of occurrence date for a claim, and reporting lags (the time
between the occurrence of the policyholder event and when it is actually reported to the insurer). Informed judgment is applied throughout
the process, including the application of various individual experiences and expertise to multiple sets of data and analyses. We continually
refine our estimates of unpaid losses and loss adjustment expenses in a regular ongoing process as historical loss experience develops
and additional claims are reported and settled. We consider all significant facts and circumstances known at the time the liabilities
for unpaid losses and loss adjustment expenses are established.

There is an inherent amount of uncertainty in the establishment of
liabilities for unpaid losses and loss adjustment expenses. This uncertainty is greatest in the current and most recent accident years
due to the more recent nature of the claims being reported and relatively small percentage of these claims that have been reported, investigated,
and adjusted by our claims staff. Therefore, the reserves carried in these more recent accident years are generally more conservative
than those carried for older accident years. As we have the opportunity to investigate and adjust the reported claims, both the case and
IBNR reserves are adjusted to more closely reflect the ultimate expected loss.

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Other factors that may have an impact on our case and IBNR reserves
include, but are not limited to, those described below.

Changes in liability law and public attitudes regarding damage awards

Laws governing liability claims and judicial interpretations thereof
can change over time, which can expand the scope of coverage anticipated by insurers when initially establishing reserves for claims.
In addition, public attitudes regarding damage awards can result in judges and juries granting higher recoveries for damages than expected
by claims personnel when reserves are established. In addition, these changes can result in both increased claim frequency and severity
as both plaintiffs and their legal counsel perceive the opportunity for higher damage awards. Reserves established for claims that occurred
in prior years would not have anticipated these legal changes and, therefore, could prove to be inadequate for the ultimate losses paid
by the Company, causing us to experience adverse development and higher loss payments in future years.

Change in claims handling and/or setting case reserves

Changes in Company personnel and/or the approach to how claims are
reported, adjusted, and reserved may affect the reserves we establish. As discussed above, the setting of IBNR reserves is not an exact
science and involves the expert judgment of an actuary. One actuary’s reserve opinion may differ slightly from another actuary’s
opinion. This is the primary reason why the IBNR reserve estimate is customarily reported as a range by a company’s actuary, which
provides a company with an acceptable range to use in establishing its best estimate for IBNR reserves.

Economic inflation

A sudden and extreme increase in the economic inflation rate could
have a significant impact on our case and IBNR reserves. When establishing case reserves, claims personnel generally establish an amount
that in their opinion will provide a conservative amount to settle the loss. If the time to settle the claim extends over a period of
years, which is possible but unlikely as we usually settle claims in less than a year on average, the initial reserve may not anticipate
an economic inflation rate that is significantly higher than the current inflation rate. This can also apply to IBNR reserves. Should
the economic inflation rate increase significantly, we may not anticipate the need to adjust the IBNR reserves accordingly, which could
lead to deficient IBNR reserves.

Increases or decreases in claim severity for reasons other than
inflation

Factors exist that can drive the cost to settle claims for reasons
other than standard inflation. For example, demand surge caused by a significant catastrophe, such as a derecho, has an impact on not
only the availability and cost of building materials such as roofing and other materials, but also the availability and cost of labor.
Numerous other factors could also cause claim severity to increase beyond what our historic reserves would reflect. In addition, unexpected
increases in labor, healthcare, or building material costs and other factors may cause fluctuations in the ultimate development of the
case reserves.

Actual settlement experience different from historical data trends

When establishing IBNR reserves, our actuaries consider many of the
factors discussed above. One of the more important factors that is considered when setting reserves is the past or historical claim settlement
experience. Our actuaries consider factors such as the number of files entering litigation, payment patterns, length of time it takes
our claims personnel to settle the claims, and average payment amounts when estimating reserve amounts. Should future settlement patterns
change due to the legal environment, our claims handling philosophy, or personnel, it may have an impact on the future claims payments,
which could cause existing reserves to either be redundant (excessive) or deficient (below) compared to the actual loss amount.

Change in Reporting Lag

As discussed above, we utilize historical patterns to provide an accurate
estimate of what will take place in the future. Should we experience an unexpected delay in reporting time (claims are slower to be reported
than in the past), we may underestimate the anticipated number of future claims, which could cause the ultimate loss we may experience
to be underestimated. A lag in reporting may be caused by changes in how claims are reported, the types or lines of business we write,
our distribution system, and the geographic area where we choose to insure risk.

Due to the inherent uncertainty underlying loss reserve estimates,
final resolution of the estimated liability for unpaid losses and loss adjustment expenses may be higher or lower than the related loss
reserves at the reporting date. Therefore, actual paid losses, as claims are settled in the future, may be materially higher or lower
in amount than current loss reserves. We reflect adjustments to the liability for unpaid losses and loss adjustment expenses in the results
of operations during the period in which the estimates are changed.

40 

Investments

Our fixed income securities and equity securities are classified as
available-for-sale and carried at estimated fair value as determined by management based upon quoted market prices or a recognized independent
pricing service at the reporting date for those or similar investments. Changes in unrealized investment gains or losses on the fixed
income securities, net of applicable income taxes, are reflected directly in shareholders’ equity as a component of other comprehensive
income (loss) and, accordingly, have no effect on net income (loss). Changes in unrealized investment gains or losses on equity securities
are reported in net income (loss). Investment income from fixed income securities is recognized when earned, and realized investment gains
(losses) are recognized when investments are sold, the fair value of equity securities change, or credit impairments are recognized.

For additional information on our investments, see
Part II, Item 8, Note 4 “Investments” and Note 5 “Fair Value Measurements.”

Deferred Policy Acquisition Costs

Certain direct policy acquisition costs consisting of commissions,
state premium taxes, and other direct underwriting expenses that vary with and are primarily related to the production of business are
deferred and amortized over the effective period of the related insurance policies as the underlying policy premiums are earned.

At December 31, 2025 and 2024, deferred policy acquisition
costs (“DAC”) and the related liability for unearned premiums were as follows:

December 31,

2025

2024

Deferred policy acquisition costs

$

19,209

$

26,300

Liability for unearned premiums

106,498

126,498

The method followed in computing DAC limits the amount
of deferred costs to their estimated realizable value, which gives effect to the premium to be earned, related investment income, losses
and loss adjustment expenses, and certain other costs expected to be incurred as the premium is earned. Future changes in estimates, the
most significant of which is expected losses and loss adjustment expenses, may require adjustments to DAC. If the estimation of net realizable
value indicates that DAC are not recoverable, they would be written off or a premium deficiency reserve would be established.

Income Taxes

Current income taxes represent amounts paid or owed
to the federal government and certain states whose payment is based upon net income (subject to regulatory adjustments) generated by the
Company. The generation of net losses may result in income tax benefits, a portion of which may be in the form of refunds of prior income
taxes paid to taxing authorities. We use the asset and liability method of accounting for deferred income taxes. Deferred income taxes
arise from the recognition of temporary differences between financial statement carrying amounts and the income tax bases of our assets
and liabilities. A valuation allowance is established when it is more likely than not that some portion of the deferred income tax asset
will not be realized. Total income taxes reflect both current income taxes and the change in the net deferred income tax asset or liability,
excluding amounts attributed to accumulated other comprehensive income.

We had gross deferred income tax assets of $12,680
at December 31, 2025, and $15,946 at December 31, 2024, arising primarily from unearned premiums, loss reserve discounting, net unrealized
investment losses, and net operating loss carryforwards. A valuation allowance is required to be established for any portion of the deferred
income tax asset for which we believe it is more likely than not that it will not be realized. A valuation allowance of $2,345 and $2,506
was maintained at December 31, 2025, and December 31, 2024, respectively.

We had gross deferred income tax liabilities of $4,190 at December
31, 2025, and $6,116 at December 31, 2024, arising primarily from deferred policy acquisition costs and other intangible assets.

We exercise significant judgment in evaluating the
amount and timing of recognition of the resulting income tax liabilities and assets. These judgments require us to make projections of
future taxable income. The judgments and estimates we make in determining our deferred income tax assets, which are inherently subjective,
are reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require
us to record a valuation allowance against our deferred income tax assets.

As of December 31, 2025, we had no material unrecognized
income tax benefits or accrued interest and penalties. Federal income tax returns for the years 2021 through 2024 remain subject to examination.

41 

Changing Climate Conditions

Longer-term natural catastrophe trends may be changing, and new types
of catastrophe losses may be developing due to climate change, a phenomenon that has been associated with extreme weather events linked
to rising temperatures, and includes effects on global weather patterns, greenhouse gases, sea, land and air temperatures, sea levels,
rain, hail, and snow. The frequency, number, and severity of these losses are unpredictable. The extent of losses from a catastrophe is
a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Our ability to
effectively manage catastrophe risk is dependent, in part, on our reliance on various catastrophe models, which may produce unreliable
output as a result of inaccurate or incomplete data, along with the inherent uncertainty of future frequency and severity of losses. The
impact of changing climate conditions on the overall insurance industry may also materially affect the availability and cost of reinsurance
to us. In addition, these changes could impact the creditworthiness of issuers of securities in which we invest, subjecting our investment
portfolio to increased credit and interest rate risk, with the potential for reduced investment returns and/or material realized or unrealized
losses.

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. Our primary sources of funds are premium collections, investment earnings, and fixed income maturities.

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 years ended December 31, 2025, 2024, or 2023. This line of credit is scheduled to expire
on December 11, 2026.

The changes in cash and cash equivalents for continuing
and discontinued operations for the years ended December 31, 2025, 2024, and 2023 were as follows:

Year Ended December 31,

2025

2024

2023

Net cash flows from operating activities

$

(15,272

)

$

38,506

$

51,028

Net cash flows from investing activities

18,839

(4,541

)

(8,813

)

Net cash flows from financing activities

(2,782

)

(3,643

)

(7,466

)

Net increase (decrease) in cash and cash equivalents

$

785

$

30,322

$

34,749

For the year ended December 31, 2025, net cash used by operating activities
totaled $15,272 compared to $38,506 net cash provided by operating activities a year ago. This change was primarily driven by reductions
in cash received due to strategic decisions to stop writing non-standard auto in the current year and greater cash received in the prior
year from Westminster’s operations prior to the sale.

For the year ended December 31, 2025, net cash provided by investing
activities totaled $18,839 compared to $4,541 net cash used by investing activities a year ago. This change was primarily attributable
to the decrease in the net cash outflows for fixed income securities in the current year, partially offset by proceeds from the sale of
Westminster in the prior year.

For the year ended December 31, 2025, net cash used by financing activities
totaled $2,782 compared to $3,643 a year ago. This decrease in cash used was attributable to the final pooling settlement between Nodak
Insurance and Westminster in the prior year, partially offset by the resumption of share repurchases in the current year.

For the year ended December 31, 2024, net cash provided by operating
activities totaled $38,506 compared to $51,028 net cash provided by operating activities during 2023. This change was primarily driven
by the severance payments to our former Chief Executive Officer and former Senior Vice President of Operations in the current year as
well as the receipt of a significant income tax refund during 2023.

For the year ended December 31, 2024, net cash used by investing activities
totaled $4,541 compared to $8,813 net cash used by investing activities during 2023. This change was primarily attributable to the proceeds
from the sale of Westminster as well as a decrease in the net cash outflows for fixed income securities in the current year, partially
offset by a decrease in the cash inflows from equity securities in the current year.

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For the year ended December 31, 2024, net cash used by financing activities
totaled $3,643 compared to $7,466 during 2023. This decrease in cash used was attributable to a reduction in share repurchases in the
current year partially offset by the final pooling settlement between Nodak Insurance and Westminster.

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 is approximately $6,730 as of December
31, 2025. No dividends were declared or paid by Nodak Insurance during the years ended December 31, 2024 and 2023.

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 is approximately $3,829 as of December 31, 2025.
No dividends were declared or paid by Direct Auto during the years ended December 31, 2024 and 2023.

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.

Westminster was sold on June 30, 2024, and therefore no dividends are
available to be paid to NI Holdings subsequent to that date. No dividends were declared or paid by Westminster during the years ended
December 31, 2024 and 2023. See Part II, Item 8, Note 20 “Discontinued Operations” for additional information.

Contractual Obligations

The primary contractual obligations of the Company
include gross loss and loss adjustment expenses payments as well as operating and finance lease obligations.

The Company’s unpaid losses and loss adjustment
expenses were $137,855 as of December 31, 2025. Historical payment experience indicates that approximately 50% of this amount will be
paid during 2026 and another 34% will be paid over the subsequent two years. The actual timing and amounts of these payments in the future
may vary.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements,
see Part II, Item 8, Note 2 “Recent Accounting Pronouncements.”

43