Company: NODK
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001174947-25-000304
Chunk: 16

Company: NI Holdings, Inc.
Filing Date: 2025-03-07
Form: 10-K
Item: Item 1
Chunk 16
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 and obligations; (iii) the interest rate risk with respect to the
insurer’s business; and (iv) all other business risks and such other relevant risks as are set forth in the risk-based capital instructions.
A company’s “total adjusted capital” is the sum of statutory capital and surplus and such other items as the risk-based
capital instructions may provide. The formula is designed to allow state insurance regulators to identify insufficiently capitalized companies.

11 

The requirements provide for four different levels
of regulatory attention. The “company action level” is triggered if a company’s total adjusted capital is less than
2.0 times its authorized control level but greater than or equal to 1.5 times its authorized control level. At the company action level,
the company must submit a comprehensive plan to the regulatory authority that discusses proposed corrective actions to improve the capital
position. The “regulatory action level” is triggered if a company’s total adjusted capital is less than 1.5 times but
greater than or equal to 1.0 times its authorized control level. At the regulatory action level, the regulatory authority will perform
a special examination of the company and issue an order specifying corrective actions that must be followed. The “authorized control
level” is triggered if a company’s total adjusted capital is less than 1.0 times but greater than or equal to 0.7 times its
authorized control level. At this level, the regulatory authority may take action it deems necessary, including placing the company under
regulatory control. The “mandatory control level” is triggered if a company’s total adjusted capital is less than 0.7
times its authorized control level. At this level, the regulatory authority is mandated to place the company under its control. The capital
levels of our insurance subsidiary and affiliate companies all exceed the authorized control level and have never triggered any of these
regulatory capital levels. We cannot guarantee, however, that the capital requirements applicable to such companies will not increase
in the future, or that the underlying ratios will not erode.

NAIC Ratios 

The NAIC has also developed a set of 13 financial
ratios referred to as the Insurance Regulatory Information System (“IRIS”). Based on statutory-basis financial statements
filed with state insurance regulators, the NAIC annually calculates these IRIS ratios to assist state insurance regulators in monitoring
the financial condition of insurance companies. The NAIC has established an acceptable range for each of the IRIS financial ratios. If