NI Holdings, Inc. Reports Fourth Quarter and Full Year 2025 Financial Results

Key Highlights

• Significant Decline in Premiums: Direct written premiums fell 26% in Q4 and 15.3% for the full year, primarily due to the strategic reduction in the Non-Standard Auto segment as NI Holdings exited markets in Illinois, Arizona, and South Dakota.
• Offset by Growth in Home and Farm Segment: Premium declines were partially balanced by growth in the Home and Farm segment, fueled by new business, rate increases, and higher property values in North Dakota, South Dakota, and Nebraska. However, retention rates in South Dakota lagged expectations.
• Poor Underwriting Results: The combined ratio surged to 109.6% in Q4 (up 29.6 points YoY) and 109.9% for the year (up 9.2 points), reflecting reserve strengthening, higher severity in liability claims, and the adverse impact of a catastrophic weather event in North Dakota.
• Net Losses Reported: NI Holdings posted a net loss attributable to shareholders of \$(3.2) million in Q4 and \$(10.4) million for the year, compared to profits in the previous year. Loss per share was \$(0.15) for Q4 and \$(0.50) for the year, versus earnings per share of \$0.47 and \$0.31, respectively, in 2024.
• Improved Investment Income: Net investment income increased 6.9% for the year to \$11.7 million, bolstered by higher average fixed income balances and a favorable interest rate environment.
• Return on Average Equity: Dropped to (5.2%) in Q4 and (4.3%) for FY2025, indicating negative returns for shareholders.

Detailed Financial Review

Management Commentary and Strategic Decisions

Cindy Launer, President and CEO, emphasized that 2025 was a year of returning to core strengths and refocusing on core markets in North Dakota, South Dakota, and Nebraska. The company made a strategic decision to exit the Non-Standard Auto business in Illinois, Arizona, and South Dakota. This move, while causing premium declines and reserve-driven losses in the short term, is expected to improve the quality and profitability of the business going forward.

The company was notably impacted by a historic catastrophe event in North Dakota, which triggered reinsurance and related reinstatement premiums, negatively affecting results. Despite this, the Home and Farm segment demonstrated resilience, with improved weather experience in South Dakota and Nebraska helping offset losses.

Management remains optimistic, citing strong investment income and a profitable core business as a foundation for future growth. Investments are being made in business operations, employees, technology, and product offerings to support a return to profitability and enhance shareholder value.

Risks and Forward-Looking Statements

• Unfavorable reserve development and catastrophic events significantly impacted results and may continue to do so.
• The company’s exit from the Non-Standard Auto segment could improve future profitability but introduces short-term volatility.
• Return to profitability will depend on loss reserve adequacy, weather events, interest rates, competition, regulatory changes, and other macroeconomic factors.
• Shareholders should closely monitor ongoing strategic execution and future quarterly results for evidence of turnaround progress.

Shareholder Considerations and Potential Price-Sensitive Information

• Strategic exits and reserve adjustments: The withdrawal from unprofitable states and the associated reserve build-up have negatively affected earnings in 2025 but may allow for improved results in future periods.
• Catastrophe exposure: The impact of the large catastrophe event and the company’s reinsurance program effectiveness are key watchpoints.
• Profitability metrics: The sharp decline in net income, negative return on equity, and increased combined ratio are red flags for investors, and the company’s ability to reverse these trends will be crucial for future share price performance.
• Management outlook: Leadership remains confident in the core franchise and is investing for long-term growth, but investors should remain cautious until results show a clear turnaround.

Additional Information

For full details, investors may refer to the company’s Annual Report on Form 10-K and other SEC filings, available on the NI Holdings website or at the SEC’s site.

Investor Relations Contact: Matt Maki, Executive Vice President, Treasurer and Chief Financial Officer, 701-212-5976, [email protected]

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. Investors should consult the company’s official filings and their financial advisor for a comprehensive assessment of risks.

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