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Related Party Transactions | 12 Months Ended
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Dec. 31, 2021
Related Party Transactions [Abstract] |
Related Party Transactions | 12.Related Party Transactions Intercompany Reinsurance Pooling Arrangement Effective January 1, 2020, all of our insurance subsidiary and affiliate companies entered into an intercompany reinsurance pooling agreement. This agreement was finalized, approved, and implemented during the fourth quarter of 2020, retroactive to the January 1 effective date. Nodak Insurance is the lead company of the pool, and assumes the net premiums, net losses, and underwriting expenses from each of the other five companies. Nodak Insurance then retrocedes balances back to each company, while retaining its own share of the pool’s net underwriting results, based on individual pool percentages established in the respective pooling agreement. This arrangement allows each insurance company to rely upon the capacity of the pool’s total statutory capital and surplus. As a result, they are evaluated by AM Best on a group basis and hold a single combined financial strength rating, long-term issuer credit rating, and financial size category. In connection with the pooling agreement, the quota share agreement between Battle Creek and Nodak Insurance was cancelled. As a result, the Company’s consolidated financial position and results of operations are impacted by the portion of Battle Creek’s underwriting results that are allocated to the policyholders of Battle Creek rather than the shareholders of NI Holdings. For the years ended December 31, 2021 and 2020, the pooling share percentages by insurance company were:
|  |  | Pool Percentage
Nodak Insurance Company |  |  |  | 66.0 | %
American West Insurance Company |  |  |  | 7.0 | %
Primero Insurance Company |  |  |  | 3.0 | %
Battle Creek Mutual Insurance Company |  |  |  | 2.0 | %
Direct Auto Insurance Company |  |  |  | 13.0 | %
Westminster American Insurance Company |  |  |  | 9.0 | %
Total |  |  |  | 100.0 | %
North Dakota Farm Bureau We were organized by the NDFB to provide insurance protection for its members. We have a royalty agreement with the NDFB that recognizes the use of their trademark and provides royalties to the NDFB based on the premiums written on Nodak Insurance’s insurance policies. Royalties paid to the NDFB were $1,369, $1,370, and $1,352 during the years ended December 31, 2021, 2020, and 2019 respectively. Royalty amounts payable of $113 and $113 were accrued as a liability to the NDFB at December 31, 2021 and 2020, respectively. During 2020, Nodak Insurance paid $1,129 of membership dues on behalf of its NDFB members in North Dakota in response to the COVID-19 pandemic. 85 Table of Contents Dividends State insurance laws require our insurance subsidiaries to maintain certain minimum capital and surplus amounts on a statutory basis. Our insurance subsidiaries are subject to regulations that restrict the payment of dividends from statutory surplus and may require prior approval from their domiciliary insurance regulatory authorities. Our insurance subsidiaries are also subject to risk-based capital (“RBC”) requirements that may further affect their ability to pay dividends. Our insurance subsidiaries statutory capital and surplus at December 31, 2021 exceeded the amount of statutory capital and surplus necessary to satisfy regulatory requirements, including the RBC requirements, by a significant margin. The amount available for payment of dividends from Nodak Insurance to NI Holdings during 2022 without the prior approval of the North Dakota Insurance Department is $21,493 based upon the surplus of Nodak Insurance at December 31, 2021. Prior to its payment of any dividend, Nodak Insurance will be required to provide notice of the dividend to the North Dakota Insurance Department. This notice must be provided to the North Dakota Insurance Department 30 days prior to the payment of an extraordinary dividend and 10 days prior to the payment of an ordinary dividend. The North Dakota Insurance Department has the power to limit or prohibit dividend payments if Nodak Insurance is in violation of any law or regulation. These restrictions or any subsequently imposed restrictions may affect our future liquidity. The Board of Directors of Nodak Insurance declared and paid a $6,000 dividend to NI Holdings during the year ended December 31, 2020. No dividends were declared or paid by Nodak Insurance during the years ended December 31, 2021 or 2019. Direct Auto was re-domesticated from Illinois to North Dakota during 2021, and is now subject to the same dividend restrictions as Nodak Insurance. The amount available for payment of dividends from Direct Auto to NI Holdings during 2022 without the prior approval of the North Dakota Insurance Department is $3,796 based upon the surplus of Direct Auto at December 31, 2021. No dividends were declared or paid by Direct Auto during the years ended December 31, 2021, 2020, or 2019. Westminster was re-domesticated from Maryland to North Dakota during 2021, and is now subject to the same dividend restrictions as Nodak Insurance. The amount available for payment of dividends from Westminster to NI Holdings during 2022 without the prior approval of the North Dakota Insurance Department is $2,471 based upon the surplus of Westminster at December 31, 2021. No dividends were declared or paid by Westminster during the years ended December 31, 2021 or 2020. 86 Table of Contents Battle Creek Mutual Insurance Company The following tables disclose the standalone balance sheets and statements of operations of Battle Creek, prior to intercompany eliminations, to illustrate the impact of including Battle Creek in our Consolidated Balance Sheets and Statements of Operations:
|  | December 31, |
|  | 2021 |  |  | 2020 |
Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 4,398 |  |  | $ | 6,055 |
Investments |  |  | 10,610 |  |  |  | 5,543 |
Premiums and agents’ balances receivable |  |  | 5,038 |  |  |  | 4,738 |
Deferred policy acquisition costs |  |  | 499 |  |  |  | 479 |
Pooling receivable (1) |  |  | - |  |  |  | 920 |
Reinsurance recoverables on losses (2) |  |  | 10,173 |  |  |  | 5,646 |
Accrued investment income |  |  | 51 |  |  |  | 27 |
Deferred income taxes |  |  | 142 |  |  |  | 101 |
Property and equipment |  |  | 325 |  |  |  | 337 |
Other assets |  |  | 52 |  |  |  | 49 |
Total assets |  | $ | 31,288 |  |  | $ | 23,895 |
Liabilities: |  |  |  |  |  |  |  |
Unpaid losses and LAE |  | $ | 2,937 |  |  | $ | 2,445 |
Unearned premiums |  |  | 2,544 |  |  |  | 2,381 |
Notes payable (1) |  |  | 3,000 |  |  |  | 3,000 |
Pooling payable (1) |  |  | 5,580 |  |  |  | - |
Reinsurance losses payable (2) |  |  | 12,754 |  |  |  | 11,221 |
Accrued expenses and other liabilities |  |  | 264 |  |  |  | 303 |
Total liabilities |  |  | 27,079 |  |  |  | 19,350 |
Equity: |  |  |  |  |  |  |  |
Non-controlling interest |  |  | 4,209 |  |  |  | 4,545 |
Total equity |  |  | 4,209 |  |  |  | 4,545 |
Total liabilities and equity |  | $ | 31,288 |  |  | $ | 23,895 |
(1) | Amount fully eliminated in consolidation.
(2) | Amount partly eliminated in consolidation.
|  |  | Year Ended December 31, |
|  |  | 2021 |  |  | 2020 |  |  | 2019 |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net premiums earned |  |  |  | $ | 5,992 |  |  | $ | 5,673 |  |  | $ | - |
Fee and other income |  |  |  |  | (11 | ) |  |  | (23 | ) |  |  | (9 | )
Net investment income |  |  |  |  | 49 |  |  |  | (3 | ) |  |  | 139 |
Net capital gain on investments |  |  |  |  | 2 |  |  |  | 1 |  |  |  | 3 |
Total revenues |  |  |  |  | 6,032 |  |  |  | 5,648 |  |  |  | 133 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Losses and loss adjustment expenses |  |  |  |  | 4,328 |  |  |  | 3,369 |  |  |  | - |
Amortization of deferred policy acquisition costs |  |  |  |  | 1,291 |  |  |  | 1,029 |  |  |  | - |
Other underwriting and general expenses |  |  |  |  | 470 |  |  |  | 77 |  |  |  | - |
Total expenses |  |  |  |  | 6,089 |  |  |  | 4,475 |  |  |  | - |
Income (loss) before income taxes |  |  |  |  | (57 | ) |  |  | 1,173 |  |  |  | 133 |
Income taxes |  |  |  |  | 27 |  |  |  | 218 |  |  |  | 34 |
Net income (loss) |  |  |  | $ | (84 | ) |  | $ | 955 |  |  | $ | 99 |

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- Definition The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39549-107864 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -URI http://asc.fasb.org/topic&trid=2122745 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 850 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6457730&loc=d3e39691-107864 + Details
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