NODK 10-K & 10-Q changes, risk factors and insider trading

Innovation and emerging technologiestechnologies, including artificial intelligence, continue to greatly impact the insurance industry. If we are unable to keep pace with the technological changes that our competitors implement, we may not be able to attract and retain customers, adequately price risks, or operate as efficiently as our competitors. In addition, emerging technologies in the automotive industry such as autonomous vehicles, driver-assistance and accident-avoidance features, sensor technology, and other forms of automation may reduce the future need for, or decrease the future pricing of, our auto insurance products.

Unpredictable weather conditions and other events such as excessive rain, flooding, droughts, hail, pests, and plant diseases can significantly impact crop prices and yields, creating volatility in our crop insurance business. Additionally, international trade policies, including the imposition of tariffs between major trading partners such as the United StatesU.S. and China, can create significant fluctuations in crop prices. We are unable to predict the ultimate ultimate result and duration of any tariff actions by the U.S. government, or countermeasures that may be taken by other nations. These trade tensions and retaliatory tariffs may affect agricultural commodity prices and create additional market uncertainty in our crop insurance business. business. In addition, the amount of multi-peril crop insurance business we retain is subject to the terms of the SRA and is dependent on the actual direct loss ratio experience. A significant decrease in crop prices and variability in the loss experience, whether caused by weather events, trade policies, or other events, could have a material negative effect on our business and results of operations.

Although reinsurance creates a contractual liability for reinsurers to the extent the risk is transferred, it does not eliminate our liability to policyholders because we remain liable as the primary insurer on all reinsured risks. Our reinsurance program strategically spreads exposure among a group of highly-rated, geographically diverse, and well-capitalized reinsurers. All of our significant reinsurance partners are rated “A-” (Excellent) or better by AM Best.Best or “A+” or better by Standard & Poor’s. However, we remain subject to credit risk relating to our ability to collect these recoverables. Our reinsurance recoveries are also subject to the underlying losses meeting the qualifying conditions and specified limits within the respective contracts. Additionally, we are subject to the risk that reinsurers may dispute their obligations to pay our claims. Our inability to collect a material recovery from a reinsurer on a timely basis, or at all, could have a material adverse effect on our liquidity, operating results, and financial condition. For additional information, see Part II, Item 8, Note 6 “Reinsurance.”

We face risks associated with pandemics, including the impact of reduced economic activity and unemployment, government actions, and capital markets disruption. These risks are unpredictable and difficult to to quantify,quantify and could vary significantly depending on the extent and duration of the pandemic and related economic conditions, along with with potentially impacting each of our business segments and geographic markets differently.

In 2025, 2024, 2023, and 2022,2023, our direct premiums written generated from the multi-peril crop insurance line of business were 11.7%, 9.8%, 10.2%, and 12.8%,10.2%, respectively, of total written premiums. Through the FCIC, the U.S. government subsidizes insurance companies by assuming an increasingly higher portion of losses incurred by farmers as a result of weather-related and other perils as well as commodity price fluctuations. The U.S. government also subsidizes the premium cost to farmers for multi-peril crop yield and revenue insurance. Without this risk assumption, losses incurred by insurance companies would be higher. Without the premium subsidy, the number of farmers purchasing multi-peril crop insurance would decline significantly. Periodically, members of the U.S. Congress propose to significantly reduce the government’s involvement in the federal crop insurance program in an effort to reduce government spending. If legislation is adopted to reduce the amount of risk the government assumes, the amount of insurance premium subsidy provided to farmers or otherwise reduce the coverage provided under multi-peril crop insurance policies, losses would increase and purchases of multi-peril crop insurance could experience a significant decline nationwide and in our market area. Such changes could have an adverse effect on our revenuesresults of operations and income.financial condition.

20242025 Consolidated Results of Continuing Operations

The consolidated net incomeloss from continuing operations for the Company was $10,413 for the year ended December 31, 2025, compared to net income of $6,600 for the year ended December 31, 2024, compared toand net income of $19,831 for the year ended December 31, 2023, and a net loss of $38,685 for the year ended December 31, 2022.2023.

Private passenger auto – Net premiums earned for for 20242025 increased $6,954,$713, or 8.3%,0.8%, from 2023.2024. ResultsThis wereincrease was driven by new business growth in North Dakota as well asDakota, significant rate increases in increasesSouth Dakota and Nebraska, and improved retention in North Dakota, South Dakota,Dakota and Nebraska, partially offset by lower new business and retention levels in South Dakota and Nebraska as a result of underwriting actions taken to improve profitability.Dakota. Net premiums earned for 20232024 increased $5,755,$6,954, or 7.4%,8.3%, from 2022. 2023. This increase was driven by new business growth in North Dakota as well as significant rate increases in North Dakota, South Dakota, and Nebraska, partially offset by lower new business businessand productionretention levels in South Dakota and Nebraska as a result of underwriting actions taken to improve profitability.

All otherCrop – Net premiums earned for 20242025 increased $523, $877, or 7.4%,2.5%, from 2023.2024. ResultsThe wereyear-over-year increase was driven by ratethe andrecognition insuredof valuemore increasesfavorable forpremium adjustments, related to the commercialsettlement of andprior excesscrop linesyear claims, in the first quarter of business,2025 partially offsetcompared byto the continuedfirst run-offquarter of our participation in an assumed domestic and international reinsurance pool of business.2024. Net premiums earned for 20232024 decreased $2,331, $4,675, or 16.5%,18.1%, from 2022.2023. This decrease was driven by thea decision to non-renew our participationreduction in anacres assumed domesticinsured and internationallower reinsurancecommodity poolprices, which are a key determinant of businesspremiums ason ofa JanuaryFederal 1,multi-peril 2022.crop insurance policy, in the current year.

AllPrivate otherpassenger auto – The net loss and loss adjustment adjustment expenses ratio increased 33.03.3 percentage points in 20242025 compared to 2023.2024. This increase was driven by elevatedhigher largeseverity losson experiencebodily injury compared toliability the prior year and an inter-segment reclassification of a large loss during 2023.losses. The net loss and loss adjustment expenses ratio decreased 55.5 14.8 percentage points in 20232024 compared to 2022.2023. This decrease was driventhe byresult improvedof losslower experiencelevels relatedof weather-related losses in 2024 due to the commercialmild andwinter excessin the Midwest compared to elevated winter liabilityweather-related lineslosses ofin business.2023 as well as favorable prior year loss reserve development. Both periods were positively affected by earned premium growth.

The expense ratio is calculated by dividing other underwriting and general expenses and amortization of deferred policy acquisition costs by net premiums earned. The expense ratio measures a company’s operational efficiency in producing, underwriting, and administering its insurance business. The overall expense ratio increased 1.9 percentage points in the year ended December 31, 2025, compared to the same period in 2024. The decrease in the amortization of deferred policy acquisition costs is due to lower deferrable costs resulting from the strategic reduction in premium for the Non-Standard Auto segment, which generally pays higher agent commissions than our other segments. The increase in the other underwriting and general expenses is due to strategic investments in human capital and technology during the current year. The overall other underwriting and general expenses for the years ended December 31, 2025 and 2024, were elevated due to costs associated with separation agreements. The overall expense ratio increased 0.6 percentage points in the year ended December 31, 2024, compared to the same period in 2023. The increase in the amortization of deferred policy acquisition costs is due to higher deferrable costs resulting from significant earned premium growth compared to the prior year, including significant growth in the Non-Standard Auto segment which generally pays higher agent commissions than our other segments. The increase in the other underwriting and general expenses is due to the costs incurred in the current year2024 associated with the execution of separation agreements agreements with our former Chief Executive Officer and former Senior Vice President of Operations. The overall expense ratio increased 4.2 percentage points in the year ended December 31, 2023, compared to the same period in 2022. The increase in amortization of deferred policy acquisition costs was driven by higher deferrable costs resulting from overall premium growth compared to the prior year, including significant growth in the non-standard auto segment which generally pays higher agent commissions than our other segments. The increase in other underwriting and general expenses was due to the impact of continued high levels of inflation and 2022 expenses being favorably impacted by multi-peril crop insurance final settlements.

The total underwriting gain (loss) decreased $24,403, or 1,051%, for the year ended December 31, 2025, compared to the same period in 2024. The total underwriting gain (loss) decreased $10,965, or 126.9%, for the year ended December 31, 2024, compared to the same period in 2023. The total underwriting gain (loss) increased $57,562, or 117.7%, for the year ended December 31, 2023, compared to the same period in 2022. These results were driven by the factors discussed in the Losses and Loss Adjustment Expenses and the Underwriting and General Expenses and Expense Ratio sections above.

The overall combined ratio increased 9.2 percentage points in the year ended December 31, 2025, compared to the same period in 2024. The overall combined ratio increased 3.7 percentage points in the year ended December 31, 2024, compared to the same period in 2023. The overall combined ratio decreased 21.0 percentage points in the year ended December 31, 2023, compared to the same period in 2022. These results were driven by the factors discussed in the Losses and Loss Adjustment Expenses and the Underwriting and General Expenses and Expense Ratio sections above.

We haddid not have a goodwill impairment charge of $2,628 for the year ended December December 31, 2024,2025, compared to $6,756 for the years ended December 31, 2023, and $0$2,628 for the year ended December 31, 2022.2024, and $6,756 for the year ended December 31, 2023. See Part II, Item Item 8, Note 10 “Goodwill and Other Intangibles” for additional information.

Gross and net return on average cash and invested assets increased year-over-year from 2023 to 2024, primarily driven by the favorable interest rate environment that resulted in significantly higher net investment investment income on an increased average balance of fixed income securities as well as cash and cash equivalents (measured at fair value). In addition, the increase in investments in high dividend yield equities resulted in relatively consistent year-over-year dividend income despite a reduction in the average equities balance (measured at fair value). The increase in average cash and invested assets was driven by additional investments in fixed income securities as a result of positive operating cash flows during 2024.

We had net realized gains of $1,306 for the year ended December 31, 2025, compared to $551 for the year ended December 31, 2024, compared toand $12,096 for the year ended December 31, 2023,2023. andThe $1,984net realized gains for the year ended December 31, 2022.2025, were driven by sales of equity securities that were executed as part of the strategic management of our investment portfolio. The elevated net realized gains for the year ended December 31, 2023, were the result of a strategic liquidation of a portfolio of equity securities. The gross realized gains from the sale of these securities were largely offset by the elimination of the unrealized gain position of these securities. No credit impairment losses were reported during any of the periods presented.

We experienced an increase in net unrealized gains on equity securities of $390 and $1,662 during the yearyears ended December 31, 2025 and 2024, respectively. These results were driven by the impact of changes in fair value attributable to overall favorable equity markets during thethose current year.periods. The change in net unrealized gains on equity securities for 2023 was driven by the equity portfolio liquidation noted above and the impact of changes in fair value attributable to equity market volatility. The 2022 decreases were driven by the impact of changes in fair value attributable to unfavorable equity markets. We had net realized gains on the sale of equity securities of $1,646, $750, $12,619, and $2,051$12,619 during the years ended December 31, 2025, 2024, and 2023, and 2022, respectively.

Our fixed income securities are classified as available for sale because because we will, from time to time, execute sales of securities that are not impaired, consistent with our investment goals and policies. The The fixed income portion of the portfolio experienced net unrealized gains of $10,180 during the year ended December 31, 2025, compared to net unrealized losses of $191 during the year ended December 31, 2024,2024. compared toThe fixed income portfolio experienced net unrealized gainslosses of $9,168 during the year ended December 31, 2023. TheThese changes were primarily the result of changes in U.S. interest rates. The change in the fair value of fixed income securities is not reflected in net income; rather it is reflected as a separate component (net of income taxes) of other comprehensive income. The fixed income portfolio experienced net unrealized losses of $39,971 during the year ended December 31, 2022.

We had pre-tax loss of ($12,329) for the year ended December 31, 2025, a pre-tax income of $10,145 for the year ended December 31, 2024, aand pre-tax income of $20,547 for the year ended December 31, 2023,2023. The year-over-year decrease in 2025 compared to 2024 was largely attributable to higher unfavorable prior year loss reserve development for Non-Standard Auto and pre-taxhigher lossexpenses ofassociated $52,876with forinvestments thein yearhuman endedcapital Decemberand 31,technology, 2022.partially offset by higher net investment income and lower goodwill impairment charges. The year-over-year decrease in 2024 compared to 2023 was largely attributable to higher loss severity and non-catastrophe weather-related losses for Home and Farm in the states of North Dakota and Nebraska, unfavorable prior year loss reserve development for Non-Standard Auto, a goodwill impairment charge for Non-Standard Auto, and expenses incurred related to the separation agreements with our former Chief Executive Officer and former Senior Vice President of Operations, partially offset by net earned premium growth, improved loss experience for Private Passenger Auto, and higher net investment income. The year-over-year improvement in 2023 compared to 2022 was largely attributable to the significant catastrophe losses and significantly higher investment losses during 2022.

We recorded income tax benefit of ($1,916) for the year ended December 31, 2025, income tax expense of $3,545 for the year ended December 31, 2024, and an income tax expense of $716 for the year ended December 31, 2023, and an income tax benefit of $14,191 for the year ended December 31, 2022.2023. Including the impacts of discontinued operations and the loss on sale of discontinued operations, we recorded an income tax benefit of $3,192 for the year ended December 31, 2024, and an income tax expense of $963 for the year ended December 31, 2023, and an income tax benefit of $15,254 for the year ended December 31, 2022.2023. Including the impacts of discontinued operations and the loss on sale of discontinued operations, our effective tax rate for 20242025 was 35.2%15.5% compared to an effective tax rate of 35.2% and (22.6)% for 2024 and 22.1%2023, forrespectively. 2023Our 2025 effective tax rate was impacted by several factors, but non-taxable compensation-related expenses and prior-year true-ups on the loss on sale of discontinued operations were the most significant 2022,drivers respectively.of the variance from the statutory rate. Our 2024 effective tax rate was impacted by several factors, but the loss on sale of discontinued operations, non-taxable compensation-related expenses, and non-taxable goodwill impairment charge were the most significant drivers of the variance from the statutory rate. Our 2023 effective tax rate was impacted by several factors, but the 2023 non-taxable goodwill impairment charge was the most significant driver of the variance from the statutory rate. Our 2022 effective tax rate was impacted by several factors, but the change in valuation allowance and non-taxable executive compensation were the most significant drivers of the variance from the statutory rate. The valuation allowance against certain deferred income tax assets was $2,345 as of December 31, 2025, $2,506 as of December 31, 2024, and $505 as of December 31, 2023, and $694 as of December 31, 2022.2023.

We had net loss of ($10,413) for the year ended December 31, 2025, net income before non-controlling interest of $6,600 for the year ended December 31, 2024, and a net income of $19,831 for the year ended December 31, 2023,2023. The year-over-year decrease in 2025 compared to 2024 was largely attributable to higher unfavorable prior year loss reserve development for Non-Standard Auto and ahigher expenses associated with investments in human capital and technology, partially offset by higher net lossinvestment ofincome and $38,685lower forgoodwill theimpairment year ended December 31, 2022.charges. The year-over-year decrease in 2024 compared to 2023 was largely attributable to higher loss severity and non-catastrophe weather-related losses for Home and Farm in the states of North Dakota and Nebraska, unfavorable prior year loss reserve development for Non-Standard Auto, a goodwill impairment charge for Non-Standard Auto, and expenses incurred related to the separation agreements with our former Chief Executive Officer and former Senior Vice President of Operations, partially offset by net earned premium growth, improved loss experience for Private Passenger Auto, and higher net investment income. The year-over-year improvement in 2023 compared to 2022 was largely attributable to the significant catastrophe losses and significantly higher investment losses during 2022.

For the year ended December 31, 2024,2025, we had annualized return on average average equity, after non-controlling interest,equity of 2.8%,(4.3%), compared to annualized return on average equity, after non-controlling interest, of 7.9%2.8% and (13.6)%7.9% for the years ended December 31, 20232024 and 2022,2023, respectively.

When a claim is reported to one of the insurance companies, its claims claimspersonnel personnelor assigned external parties establish a case reserve for the estimated amount of the ultimate payment to the extent it can be determined or estimated, inestimated. In many cases a default reserve is utilized until the claims personnel can determine a more claim specific amount. The amount of the loss reserve for the reported claim is based primarily upon an evaluation of coverage, liability, damages suffered, and any other information considered pertinent to estimating the exposure presented by the claim. Each claim is contested or settled individually based upon its merits, and some property and casualty claims may take years to resolve, especially in situations where legal action may be involved. Case reserves are reviewed on a regular basis and are updated as new information becomes available.

When a catastrophe occurs, which in our case usually involves the weather weather perils of wind and hail, we utilize mapping technology, through geographic coding of our property risks, to overlay the path of the storm. This enables us to establish estimated damage amounts based on the wind speed and size of the hail for case or per claim loss amounts. amounts. This process allows us to determine within a reasonable time (5-7 days) an estimated number of claims and estimated losses from the storm. We have also begun reviewing the results of the predicted cost of the claim generated by the catastrophe models as a reasonability check check on the anticipated cost of the storm. If we estimate the damages to be in excess of half of the retained catastrophe amount, reinsurers are notified immediately of a potential loss so that we can quickly recover reinsurance payments once the retention is exceeded.

We estimate multi-peril crop insurance losses on a quarterly basis based upon historical loss patterns, current crop conditions, current weather patterns, and input from crop loss adjusters.adjusters, and other factors. These estimates have proven to be reasonably accurate indicators of our anticipated losses for this line of business.

Our actuaries assist with the estimation of the liability for unpaid losses and loss adjustment expenses. The actuaries prepare estimates by first deriving an actuarially based estimate of the ultimate cost cost of total losses and loss adjustment expenses incurred as of the financial statement date based on established actuarial methods as described below. below or other appropriate methods. We then reduce the estimated ultimate loss and loss adjustment expenses by loss and loss adjustment expenses payments and case reserves carried as of the financial statement date.date to determine the appropriate IBNR amount. The actuarially determined estimate is based upon indications from various actuarial methodologies including paid chain-ladder, incurred chain-ladder, Bornhuetter-Ferguson, weighted averages of the methods, and judgment. The specific method used to estimate the ultimate losses varies depending on the judgment of the actuaries as to what is the 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.

For the year ended December 31, 2024,2025, net cash providedused by operating activities activities totaled $38,506$15,272 compared to $51,028$38,506 net cash provided by operating activities a year ago. This change was primarily driven by thereductions in severancecash paymentsreceived due to ourstrategic formerdecisions Chiefto Executivestop Officerwriting andnon-standard former Senior Vice President of Operationsauto in the current year as welland asgreater cash received in the receiptprior year offrom aWestminster’s significantoperations incomeprior taxto refundthe during 2023.sale.

For the year ended December 31, 2024,2025, net cash usedprovided by investing activities totaled $4,541$18,839 compared to $8,813$4,541 net cash used by investing activities a year ago. This change was primarily attributable to the proceeds from the sale of Westminster as well as a decrease in the net cash outflows for fixed income securities in the current year, partially offset by aproceeds decreasefrom the sale of Westminster in the cash inflows from equity securities in the currentprior year.

For the year ended December 31, 2023,2025, net cash used by financing activities activities totaled $7,466$2,782 compared to $18,281$3,643 duringa 2022.year ago. This decrease in cash used was attributable to installmentthe paymentsfinal onpooling settlement between Nodak Insurance and Westminster in the Westminster considerationprior payable during 2022,year, partially offset by anthe increaseresumption inof share repurchases duringin 2023the comparedcurrent to 2022.year.

The amount available for payment of dividends from DirectNodak AutoInsurance to to NI Holdings during 20252026 without the prior approval of the North Dakota Insurance Department is approximately $3,146$6,730 as of December 31, 31, 2024.2025. No dividends were declared or paid by DirectNodak AutoInsurance during the years ended December 31, 2024,2024 2023,and or 2022.2023.

Westminster was sold on June 30, 2024, and therefore no dividends are are available to be paid to NI Holdings subsequent to that date. No dividends were declared or paid by Westminster during the years ended December 31, 2024,2024 2023and or 2022.2023. See Part II, Item 8, Note 20 “Discontinued Operations” for additional information.

2026 FirstSecond Quarter Consolidated Results of Operations

2026 FirstSecond Quarter Consolidated Financial Condition

Our consolidated net income (loss) was $12,508$146 and $6,460($12,051) for the three months months ended MarchJune 31,30, 2026 and 2025, respectively. Our consolidated net income (loss) was $12,654 and ($5,591) for the six months ended June 30, 2026 and 2025, respectively.

The major components of our revenues and net incomeloss for the two periods are shown below:

Net premiums earned for the three months ended MarchJune 31,30, 2026, decreased $12,384,$7,988, or 18.3%,10.9%, compared to the three months ended MarchJune 31,30, 2025. Net premiums earned for the six months ended June 30, 2026, decreased 20,372, or 14.5%, compared to the six months ended June 30, 2025.

Private Passenger Auto – Net premiums earned for the threesecond monthsquarter endedof March 31, 2026,2026 decreased $362,$829, or 1.6%,3.6%, compared to the same period in 2025. Net premiums earned for the first six months of 2026 decreased $1,191, or 2.6% from the first six months of 2025. Results were driven by lower new business and renewal premiums in South Dakota and Nebraska as a result of underwriting actions taken in recent periods,Nebraska, partially offset by new business growth in North Dakota.

Non-Standard Auto – Net premiums earned for the threesecond monthsquarter endedof March 31, 2026,2026 decreased $15,649,$13,563, or 85.7%,93.5%, compared to the same period in 2025. ThisNet decreasepremiums wasearned for the first six months of 2026 decreased $29,212, or 89.2% from the first six months of 2025. These decreases were driven by the strategic decision during the third quarter of 2025 to stop writing non-standard auto business in Illinois, Arizona, and South Dakota, with existing policies being non-renewed. We anticipate further reductions in net premiums earned premiums in the near term as a result of the decisions to run off these non-standard auto operations.

All Other – Net premiums earned for the threesecond quarter months ended March 31,of 2026, increased $1,948,$1,801, or 60.1%,50.7%, compared to the same period in 20252025. Net premiums earned for the first six months of 2026 increased $3,748, or 55.1%, from the first six months of 2025. Results were primarily driven by the Company’s decision to participate on the catastrophe reinsurance programs of certain farm bureau insurance companies.

Our net losses and loss adjustment expenses for the three months ended MarchJune 31,30, 2026, decreased $15,169,$18,190, or 39.4%,27.3%, compared to the three months ended MarchJune 31,30, 2025. Our net losses and loss adjustment expenses for the six months ended June 30, 2026, decreased $33,359, or 31.7%, compared to the six months ended June 30, 2025.

Private Passenger Auto – The net loss and loss adjustment expense ratio decreased 13.42.4 percentage points and 7.9 percentage points in the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, 2026,respectively, compared to the same period periods in 2025. ThisThe decrease in the three-month period was driven by lower weather-related losses in North Dakota due to the significant catastrophe event in North Dakota during the second quarter of 2025. The decrease over the six-month period also benefited from lower frequency of losses as well as favorable prior year development on loss reserves induring the currentfirst quarter of the year. yearBoth quarter.periods were partially offset by lower net premiums earned.

HomeNon-Standard and FarmAuto – The net loss and loss adjustment expense ratio decreased 1.0278.0 percentage pointpoints and 66.0 percentage points in the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared to the same period in 2025. This decreaseThese indecreases thewere current year quarter wasprimarily driven by favorable prior year development on loss reserves andin ratethe current increases impacting net premiums earned.year.

AllHome Otherand Farm – The net loss and loss adjustment expense expense ratio decreased 21.418.2 percentage points and 7.0 percentage points in the three-monththree- periodand six-month periods ended MarchJune 31,30, 2026, respectively, compared to the same periodperiods in 2025. ThisThese decrease wasdecreases were primarily driven by thelower strongcatastrophe resultslosses and corresponding ceded premiums earned, favorable prior year development on loss reserves in the current yearyear, quarterand relatedgrowth toin thenet Company’spremiums decisionearned, topartially participateoffset onby increased thenon-catastrophe catastrophe reinsuranceweather-related programs of certain farm bureau insurance companies.losses.

The expense ratio is calculated by dividing other underwriting and general expenses and amortization of deferred policy acquisition costs by net premiums earned. The expense ratio measures a company’s operational efficiency in producing, underwriting, and administering its insurance business. The overall expense ratio remaineddecreased consistent0.7 percentage points and decreased 0.4 percentage points in the three-monththree-and periodsix-month periods ended MarchJune 31,30, 2026, respectively, compared to the same period periods in 2025. The decrease in the amortization of deferred policy acquisition costs is due to lower deferrable costs resulting from the strategic reduction in premium for the Non-Standard Auto segment, which generally pays higher agent commissions than our other segments. Other underwriting and general expenses wereincreased consistentyear-over-year, withprimarily the priordue year quarter and reflectto strategic investments in human capital and technology during the current year.business.

The total underwriting gainloss increaseddecreased $7,409 to a gain of $11,221 for the three-month period ended March 31, 2026, from a gain of $3,812$13,389 for the three-month period ended June 30, 2026, compared to the same period in 2025. The total underwriting income increased $20,798 for the six-month period ended June March30, 31,2026, compared to the same period in 2025. These results were driven by the factors discussed in the Net Premiums Earned, Loss and Loss Adjustment Expenses Expenses,as andwell as the Underwriting and General Expenses and Expense Ratio sections above.

The overall combined ratio decreased 14.717.4 percentage points in the three-month period ended MarchJune 31,30, 2026, compared to the same period in 2025. The overall combined ratio decreased 15.5 percentage points in the six-month period ended June 30, 2026, compared to the same period in 2025. These results were driven by the factors discussed in the Net Premiums Earned, Loss and Loss Adjustment Expenses,Expenses andas well as the Underwriting and General Expenses and Expense Ratio sections above.

Net investment income decreased $183$336 for the three months ended MarchJune 31,30, 2026, compared to the three months ended MarchJune 31,30, 2025. ThisNet investment income decreased $519 for the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These decreases were primarily the result of a lower averaged fixed income asset base and a small decrease was primarily driven by earning slightly lower yields on a lower average invested assets in the current year, partially offset by lower investment expenses.yield.

Gross return on average cash and invested assets decreased year-over-year and net return on average cash and invested assets decreased year-over-year,was flat, primarily driven by consistent yields on a lower average fixed income securities balance (measured at fair value) and lower returns on cash and other short-term investments, partially offset by lower investment expenses. The decrease in average cash and invested assets was driven by a decrease in the fixed income securities balance in 2026 as proceeds from maturities and sales were used to fund operating cash needs.

We had net realized gains of $141$1,530 and $1,671 for the three and six months ended March 31,June 30, 2026, respectively, compared to net realized gains of $326$107 and $433 for the three and six months ended MarchJune 31, 30, 2025, whichrespectively. The elevated net realized gains in the six months ended June 30, 2026, were thedriven resultby sales of routinefixed portfolioincome securities managementthat decisions.were executed to raise cash for operational liquidity related to claim payments in the Non-Standard Auto segment. No credit impairment losses were reported during any of the periods presented.

We experienced an increase of $533 and $2,096 in net unrealized gains on equity securities of $1,563 and $543 during the three and six months ended MarchJune 31,30, 20262026, respectively. We experienced a decrease of net unrealized gains on equity securities of $517 and an increase of $26 during the three and six months ended June 30, 2025, respectively,respectively. These results were driven by the impact of changes in fair value attributable to overall favorable equity markets during thesethose periods.

Our fixed income securities are classified as available for sale because we will, from time to time, execute sales of securities that are not impaired, consistent with our investment goals and policies. The fixed income portion of the portfolio experienced net unrealized gains of $141 and net unrealized losses of $2,411$2,270 during the three and six months ended MarchJune 31,30, 2026, respectively, compared to net unrealized gains of $3,313$1,469 and $4,782 during the three and six months ended June March30, 31,2025, 2025.respectively. The changechanges waswere primarily the result of changes in U.S. interest rates. The change in the fair value of fixed income securities is not reflected in net income; rather it is reflected as a separate component (net of income taxes) of other comprehensive income.

We had fee and other income of $130$344 and $474 for the three and six months ended March 31,June 30, 2026, respectively, compared to $230$316 and $546 for the three and six months ended MarchJune 31,30, 2025.2025, Therespectively. decreaseThese decreases in the current year waswere driven by strategic reductions in non-standard autothe premiums that typically generate thefee majorityincome and write-offs of theuncollectable feepremiums income.receivable.

Income (Loss) before Income Taxes

Income Tax Expense (Benefit)

We recorded income tax expense of $3,202$84 for the three months ended June March 31,30, 2026, compared to income tax expensebenefit of $1,289$3,273 for the three months ended MarchJune 31,30, 2025. Our effective tax rate for the threesecond quarter monthsof ended March 31, 2026,2026 was 20.4%,36.5% whichcompared reflectsto an effective tax rate of 21.4% for the impactsecond quarter of tax-exempt investment income on the calculation of the Company’s income tax provision.2025. The current quarter effective tax rate was 16.6% for the three months ended March 31, 2025, which was impacted by a changeslight increase in the recorded valuationyear-to-date allowance.effective tax rate.

Net Income (Loss)

For the three months ended MarchJune 31,30, 2026, we had annualized return on average equity of 20.4%0.2% compared to 10.4%(19.4)% for the three months ended MarchJune 31,30, 2025.

We also have a $3,000 line of credit with Wells Fargo Bank, N.A. The terms of the line of credit include a floating interest rate of 2.25% above the daily simple secured overnight financing rate. There were no outstanding amounts during the threesix months ended MarchJune 31,30, 2026, or the year ended December 31, 2025. This line of credit is scheduled to expire on December 11, 2026.

The change in cash and cash equivalents for the threesix months ended June March 31,30, 2026 and 2025, were as follows:

For the threesix months ended MarchJune 31,30, 2026, net cash used by operating activities totaled $1,867$955 compared to net cash provided of $9,888$16,289 in the priora year quarter.ago. This change was primarily driven by lower levels of cash received for premiumspremium collections in the current yearyear, quarterpartially dueoffset toby higher levels of net investment gains in the strategiccurrent decision during the third quarter of 2025 to stop writing non-standard auto business in Illinois, Arizona, and South Dakota.year.

For the threesix months ended MarchJune 31,30, 2026, net cash usedprovided by financinginvesting activities totaled $1,065$3,362 compared to $157net cash used of $10,246 a year ago. ThisThe increase innet cash usedprovided was attributable to an increase in share repurchases in the current year quarter.was driven by cash inflows from net sales of equity securities. The net cash used in the prior year was attributable to cash outflows for net purchases of fixed income securities.

The amount available for payment of dividends from Nodak Insurance to NI Holdings during 2026 without the prior approval of the North Dakota Insurance Department is approximately $6,730 as of December 31, 2025. No dividends were declared or paid by Nodak Insurance during the threesix months ended MarchJune 31,30, 2026, or the year ended December 31, 2025.

The amount available for payment of dividends from Direct Auto to NI Holdings during 2026 without the prior approval of the North Dakota Insurance Department is approximately $3,829 as of December 31, 2025. No dividends were declared or paid by Direct Auto during the threesix months ended MarchJune 31,30, 2026, or the year ended December 31, 2025.