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Related Party Transactions

6 Months Ended

Jun. 30, 2018

12.

Related Party Transactions

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 $375 and $357 during the three months ended June 30, 2018 and 2017, respectively. Royalties paid to the NDFB were $682 and $651 during the six months ended June 30, 2018 and 2017, respectively. Royalty amounts payable of $166 and $99 were accrued as a liability to the NDFB at June 30, 2018 and December 31, 2017, respectively.

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, 2017 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 after the conversion without the prior approval of the North Dakota Insurance Department is $15,654 based upon the policyholders’ surplus of Nodak Insurance at December 31, 2017. Prior to its payment of any extraordinary 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. No dividends were declared or paid by Nodak Insurance during the six months ended June 30, 2018 or the year ended December 31, 2017.

The following table illustrates the impact of including Battle Creek in our Consolidated Balance Sheets prior to intercompany eliminations:

	June 30, 2018		December 31, 2017
Assets:
Cash and cash equivalents (overdraft)	$	606	$	(726	)
Investments		4,395		4,364
Premiums and agents’ balances receivable		4,522		4,055
Reinsurance recoverables on losses ⁽¹⁾		24,279		20,932
Accrued investment income		32		29
Deferred income tax asset, net		395		389
Property and equipment		363		370
Other assets		41		54
Total assets	$	34,633	$	29,467

Liabilities:
Unpaid losses and loss adjustment expenses	$	9,575	$	7,995
Unearned premiums		14,731		12,937
Notes payable ⁽¹⁾		3,000		3,000
Reinsurance payable ⁽¹⁾		3,263		965
Accrued expenses and other liabilities		910		1,392
Total liabilities		31,479		26,289

Equity:
Non-controlling interest		3,154		3,178
Total equity		3,154		3,178

Total liabilities and equity	$	34,633	$	29,467

(1) Amount eliminated in consolidation.

Total statutory revenues and expenses of Battle Creek after intercompany eliminations, which is limited to net investment income and certain miscellaneous other income and expenses, were $34 and $0, respectively, during the three months ended June 30, 2018, and $11 and $0, respectively, during the three months ended June 30, 2017.

Total statutory revenues and expenses of Battle Creek after intercompany eliminations, which is limited to net investment income and certain miscellaneous other income and expenses, were $76 and $0, respectively, during the six months ended June 30, 2018, and $69 and $0, respectively, during the six months ended June 30, 2017.