Company: NODK
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001174947-25-000304
Chunk: 960

Company: NI Holdings, Inc.
Filing Date: 2025-03-07
Form: 10-K
Item: Item 2
Chunk 960
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Measurement of Credit Losses on Financial Instruments

In December 2022, the Company adopted amended guidance from
the FASB that applies a new credit loss model (current expected credit losses or “CECL”) for determining credit-related impairments
for financial instruments measured at amortized cost and requires an entity to estimate the credit losses expected over the life of an
exposure or pool of exposures. The expected credit losses, and subsequent adjustments to such losses, are recorded through an allowance
account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented
on the Consolidated Balance Sheet at the amount expected to be collected. The updated guidance also amended the previous other-than-temporary
impairment model for available-for-sale fixed income securities by requiring the recognition of impairments relating to credit losses
through an allowance account and limiting the amount of credit loss to the difference between a security’s amortized cost basis
and its fair value. In addition, the length of time a security has been in an unrealized loss position no longer impacts the determination
of whether a credit loss exists.

The Company adopted the updated guidance for the year ended
December 31, 2022. The adoption of this guidance resulted in an allowance for expected credit losses of $425 for premiums and agents'
balances receivable in the Consolidated Balance Sheet as of December 31, 2022. Based on the results of the receivable analyses and management’s
review of our available-for-sale fixed income securities, it was determined that no allowance was required for reinsurance recoverables
or available-for-sale fixed income 

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securities in the Consolidated Balance Sheet as of December 31, 2022. See Item II, Part 8, Note 4 “Investments”
section of this Annual Report for applicable disclosures required by this guidance.

Leases

Effective for the year ended December 31, 2022, the Company
adopted the updated guidance for leases and elected to utilize a cumulative-effect adjustment to the opening balance of retained earnings
for the year of adoption, if necessary. Accordingly, the Company’s reporting for the comparative periods prior to adoption continue
to be presented in the consolidated financial statements in accordance with previous lease accounting guidance. The Company also elected
to apply all practical expedients applicable to the Company in the updated guidance for transition for leases in effect at adoption, including
using hindsight to determine the lease term of existing leases, the option to not reass