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MARCH 11, 2020

FARGO, North Dakota, March 11, 2020 – NI Holdings, Inc. (NASDAQ: NODK) today reported its financial results for the quarter and year ended December 31, 2019.

 

The Company reported a 25.9 percent increase in net earned premiums for the year ended December 31, 2019 compared to 2018, although net income attributable to NI Holdings dropped to $26,401 compared to $31,081 a year ago.  The total equity for NI Holdings stood at $309,803 as of December 31, 2019.

 

NI Holdings 12M and Q4 2019 key financial details:

Dollars in thousands, except earnings per share (unaudited)

 

 

12M 2019

12M 2018

Change

 

Q4 2019

Q4 2018

Change

 

Net income (loss) attributable to NI Holdings

$26,401

$31,081

-15.1%

 

$17,129

$14,889

+15.1%

 

Direct written premiums (1)

$262,145

$225,223

+16.4%

 

$53,265

$51,149

+4.1%

 

Net earned premiums

$246,438

$195,720

+25.9%

 

$63,702

$54,795

+16.3%

 

Loss and LAE ratio (2)

68.9%

60.8%

+8.1 pts

 

52.9%

40.3%

+12.6 pts

 

Expense ratio (3)

27.3%

27.7%

-0.4 pts

 

25.6%

28.7%

-3.1 pts

 

Combined ratio (4)

96.2%

88.5%

+7.7 pts

 

78.6%

68.9%

+9.7 pts

 

Return on average equity

9.1%

11.8%

-2.7 pts

 

23.0%

22.1%

+0.9 pts

 

Basic earnings per share

$1.19

$1.39

-$0.20

 

$0.77

$0.67

+$0.10

 

Shareholders’ equity

$309,803

$275,753

+12.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Direct written premiums is a non-GAAP financial measure, representing the amount of insurance premiums purchased by policyholders during the period.

(2) Loss and LAE ratio is a non-GAAP financial measure.  It equals losses and loss adjustment expenses, divided by net premiums earned.

(3) Expense ratio is a non-GAAP financial measure.  It equals amortization of deferred policy acquisition costs and other underwriting and general expenses, divided by net premiums earned.

(4) Combined ratio is a non-GAAP financial measure.  It equals losses and loss adjustment expenses, amortization of deferred policy acquisition costs, and other underwriting and general expenses, divided by net premiums earned.

 

 

Fourth quarter highlights included:

·         Annualized return on equity of 23.0%.

·         Growth in direct written premiums of 4.1% primarily in our private passenger auto and home and farm segments.

·         For the quarter, earnings per share was $0.77, up $0.10 compared to the prior year.

·         Cooler and wetter weather extended into the fall harvest season causing an increase in the expected loss ratio for our multi-peril crop business.

·         Reported combined ratio of 78.6% for the quarter and 96.2% for the full year of 2019.

·         After-tax addition to our earnings of $2,595 due to the change in net unrealized gain in our equity securities portfolio.

 

“While we are pleased with our 2019 results, there are still segments of our business that are not performing up to our expectations”, said Michael J. Alexander, President and CEO.  “After a year-to-date combined ratio of 102.3% as of September 30, 2019, our combined ratio improved to a respectable 96.2% for the full year 2019, compared to a very favorable 88.5% for 2018.  While the overall level of our weather-related claims fell within our expectations, the cooler and wetter conditions throughout the entire year in North Dakota adversely impacted our crop business and was the primary cause for the deterioration in our combined ratio.  The fourth quarter net income attributable to NI Holdings was $17,129, which included an addition to earnings of $2,595 due to appreciation in our equity securities portfolio.”

 

“In the fourth quarter, losses moderated in our private passenger auto, home and farm, and all other segments as we experienced a typical low level of weather-related activity for this quarter.  In our crop segment, the cooler and wetter weather continued into the fall harvest season, resulting in a substantial number of claims being submitted just prior to the federal deadline to report claims.  The number of claims and the associated reserves increased the multi-peril crop loss ratio substantially.”

 

“In our non-standard auto business, rate increases implemented in Nevada to address the adverse claims experience resulting from the higher mandated liability limits seem to have moderated our loss ratios.  Those rate increases have reduced the number of vehicles we insure in Nevada, resulting in a decrease in Primero earned premium for the quarter compared to a year ago.  We believe this to be a short-term decrease and we expect to see the loss ratio improve during 2020.”

 

“The increase in our written premiums is a result of the continued growth in our policies inforce across our private passenger, home and farm, and all other segments, combined with rate adjustments implemented to ensure that we are getting the proper premiums for the risks we are insuring.  We continue to experience the highest rate of organic growth in South Dakota.”

 

Effective January 1, 2019, the market fluctuations attributable to equity securities are included in the Company’s results of operations.  The pre-tax market positive fluctuation in equity securities of $3,284 is included in net capital gain on investments in our statement of operations for fourth quarter 2019, and is now $11,537 for the year.  After-tax, this amount is $0.12 earnings per share for fourth quarter and $0.41 for the year.  Prior to adoption of this accounting pronouncement, the change in net unrealized gains on equity securities were recorded in accumulated other comprehensive income.  The change in net unrealized gains on fixed income securities continue to be recorded in accumulated other comprehensive income.

 

Shareholders’ equity increased $34,050 from December 31, 2018 to December 31, 2019.  Net income of $26,500 was joined by a substantial rebound in our accumulated other comprehensive income as the fixed income asset class experienced a strong rally due to declining U.S. interest rates.  The Company repurchased 116,034 shares of common stock for $2,006 during 2019.


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