Company: NODK
Filing Date: 2025-03-07
Form Type: 10-K
Source: 0001174947-25-000304
Chunk: 929

Company: NI Holdings, Inc.
Filing Date: 2025-03-07
Form: 10-K
Item: Item 2
Chunk 929
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write 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