Company: NODK
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001174947-25-000304
Chunk: 1987

Company: NI Holdings, Inc.
Filing Date: 2025-03-07
Form: 10-K
Item: Item 7
Chunk 1987
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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 

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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