Company: NODK
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001174947-25-000304
Chunk: 62

Company: NI Holdings, Inc.
Filing Date: 2025-03-07
Form: 10-K
Item: Item 1
Chunk 62
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 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