XML 24 R10.htm IDEA: XBRL DOCUMENT
v3.22.0.1

Acquisition of Westminster American Insurance Company | 12 Months Ended
--- | ---
Dec. 31, 2021
Business Combinations [Abstract] |
Acquisition of Westminster American Insurance Company | 3.Acquisition of Westminster American Insurance Company On January 1, 2020, the Company completed the acquisition of 100% of the common stock of Westminster from the private shareholder of Westminster, and Westminster became a consolidated subsidiary of the Company. Westminster is a property and casualty insurance company specializing in multi-peril commercial insurance in nine states and the District of Columbia. Westminster is headquartered in Owings Mills, Maryland, and continues to be led by its president and other key management in place at the time of the acquisition. The financial results of Westminster have been included in the Consolidated Financial Statements and the Company’s commercial business segment following the acquisition close date. We account for business acquisitions in accordance with the acquisition method of accounting, which requires that most assets acquired, liabilities assumed, and contingent consideration be recognized at their fair values as of the acquisition date, which is the closing date for the Westminster transaction. During the measurement period, adjustments to provisional purchase price allocations are recognized if new information is obtained about the facts and circumstances that existed as of the acquisition date that, if known, would have resulted in the recognition of those assets and liabilities as of that date. The measurement period ends as soon as it is determined that no more information is obtainable, but in no case shall the measurement period exceed one year from the acquisition date. The measurement period for the Westminster acquisition ended December 31, 2020. The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2019:
|  | Pro Forma Year Ended December 31, |
|  | 2019 |
Revenues |  | $ | 292,858 |
Net income attributable to NI Holdings, Inc. |  |  | 24,394 |
Basic earnings per common share attributable to NI Holdings, Inc. |  |  | 1.10 |
The Company did not reflect any material, non-recurring pro forma adjustments directly attributable to the business combination in the above pro forma revenue and earnings. These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting Westminster’s results to reflect the deferral and amortization of policy acquisition costs and the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from January 1, 2019, with the related income tax effects. The Company incurred acquisition-related costs of $828 and $83 during the years ended December 31, 2020 and 2019, respectively. These expenses were reclassified into first quarter 2019 in the pro forma amounts presented above. The Company paid $20,000 in cash consideration to the private shareholder of Westminster as of the closing date, and an additional $20,000 to be paid in three equal annual installments. The acquisition of Westminster did not include any contingent consideration other than a provision regarding future changes to federal income tax rates. The first two installments were paid in January 2021 and January 2022. The final installment is due to be paid in December 2022. 64 Table of Contents The following table summarizes the consideration transferred to acquire Westminster and the amounts of identified assets acquired and liabilities assumed at the acquisition date:
Fair Value of Consideration:
Cash consideration transferred |  | $ | 20,000 |
Present value of future cash consideration |  |  | 18,787 |
Total cash consideration |  | $ | 38,787 |
Fair Value of Identifiable Assets Acquired and Liabilities Assumed: |  |  |  |
Identifiable net assets: |  |  |  |
Cash and cash equivalents |  | $ | 19,297 |
Fixed income securities |  |  | 12,073 |
Equity securities |  |  | 2,705 |
Other investments |  |  | 735 |
Premiums and agents' balances receivable |  |  | 8,507 |
Reinsurance recoverables on losses |  |  | 763 |
Accrued investment income |  |  | 70 |
Property and equipment |  |  | 2,376 |
Federal income tax recoverable |  |  | 138 |
State insurance licenses (included in goodwill and other intangibles) |  |  | 1,800 |
Distribution network (included in goodwill and other intangibles) |  |  | 6,700 |
Trade name (included in goodwill and other intangibles) |  |  | 500 |
Value of business acquired (included in goodwill and other intangibles) |  |  | 4,750 |
Other assets |  |  | 76 |
Unpaid losses and loss adjustment expenses |  |  | (8,568 | )
Unearned premiums |  |  | (16,611 | )
Deferred income taxes, net |  |  | (1,583 | )
Reinsurance premiums payable |  |  | (565 | )
Accrued expenses and other liabilities |  |  | (1,132 | )
Total identifiable net assets |  | $ | 32,031 |
Goodwill |  | $ | 6,756 |
The fair value of the assets acquired included premiums and agents’ balances receivable of $8,507 and reinsurance recoverables on losses of $763. These are the gross amounts due from policyholders and reinsurers, respectively, none of which were anticipated to be uncollectible. The Company did not acquire any other material receivables as a result of the acquisition of Westminster. The fair values of the acquired distribution network, state insurance licenses, Westminster trade name, and VOBA intangible assets were $6,700, $1,800, $500, and $4,750, respectively. The state insurance license intangible has an indefinite life, while the other intangible assets are being amortized over their useful lives of up to twenty years. The goodwill is not deductible for income tax purposes.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration