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Royalties, Dividends, and Affiliations

12 Months Ended

Dec. 31, 2023

Royalties, Dividends, and Affiliations [Abstract]

11.

Royalties, Dividends, and Affiliations

North Dakota Farm Bureau

Nodak Insurance was 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 policies. Royalties paid to the NDFB were $1,603, $1,453, and $1,369 during the years ended December 31, 2023, 2022, and 2021, respectively. Royalty amounts payable of $131 and $119 were accrued as a liability to the NDFB at December 31, 2023 and 2022, respectively.

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 requirements that may further affect their ability to pay dividends. Our insurance subsidiaries statutory capital and surplus at

December 31, 2023, exceeded the amount of statutory capital and surplus necessary to satisfy risk-based capital requirements by a significant margin.

There is no amount available for payment of dividends from Nodak Insurance to NI Holdings during 2024 without the prior approval of the North Dakota Insurance Department. 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 an insurance company is in violation of any law or regulation. These restrictions or any subsequently imposed restrictions may affect our future liquidity. The Nodak Insurance Board of Directors declared and paid dividends of $3,000 to NI Holdings during the year ended December 31, 2022. No dividends were declared or paid by Nodak Insurance during the years ended December 31, 2023 and 2021.

Direct Auto 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 2024 without the prior approval of the North Dakota Insurance Department is approximately $90 as of December 31, 2023. No dividends were declared or paid by Direct Auto during the years ended December 31, 2023, 2022, or 2021.

Westminster 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 2024 without the prior approval of the North Dakota Insurance Department is approximately $1,200 as of December 31, 2023. No dividends were declared or paid by Westminster during the years ended December 31, 2023, 2022 or 2021.

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 Consolidated Statements of Operations:

	December 31,
	2023		2022
Assets:
Cash and cash equivalents	$	2,621	$	5,008
Investments		15,394		13,350
Premiums and agents’ balances receivable		5,953		5,422
Deferred policy acquisition costs		682		595
Reinsurance recoverables on losses ⁽²⁾		6,918		12,597
Accrued investment income		85		59
Income tax recoverable		225		225
Deferred income taxes		706		780
Property and equipment		306		319
Other assets		97		52
Total assets	$	32,987	$	38,407

Liabilities:
Unpaid losses and loss adjustment expenses	$	4,276	$	6,453
Unearned premiums		3,269		2,959
Notes payable ⁽¹⁾		3,000		3,000
Pooling payable ⁽¹⁾		5,932		8,337
Reinsurance losses payable ⁽²⁾		13,275		13,125
Accrued expenses and other liabilities		477		2,303
Total liabilities		30,229		36,177

Equity:
Non-controlling interest		2,758		2,230
Total equity		2,758		2,230

Total liabilities and equity	$	32,987	$	38,407

⁽¹⁾	Amount fully eliminated in consolidation.

⁽²⁾	Amount partly eliminated in consolidation.

	Year Ended December 31,
	2023			2022			2021
Revenues:
Net premiums earned	$	7,023		$	6,566		$	5,992
Fee and other income (expense)		37			(30	)		(11	)
Net investment income		320			113			49
Net investment gains (losses)		1			(20	)		2
Total revenues		7,381			6,629			6,032

Expenses:
Losses and loss adjustment expenses		4,888			5,889			4,328
Amortization of deferred policy acquisition costs		1,660			1,336			1,291
Other underwriting and general expenses		588			564			470
Total expenses		7,136			7,789			6,089

Income (loss) before income taxes		245			(1,160	)		(57	)
Income tax expense (benefit)		(5	)		(481	)		27
Net income (loss)	$	250		$	(679	)	$	(84	)