Nippon Insure Co., Ltd.

Given the nature of the Guarantee Business, the Company holds a large volume of personal information, and in the event of an information leak, this could result in a serious loss of the Company's credibility and have a material impact on its financial position and business results (degree of impact: significant). The Company has obtained and renewed Privacy Mark certification, complies with the Personal Information Protection Act and related laws and regulations, has established internal rules, and provides information management training to employees; however, risks such as cyberattacks and internal misconduct cannot be completely eliminated.

If a serious failure occurs in the information systems due to natural disasters, accidents, computer viruses, unauthorized external intrusion, or other causes, this may impede business operations and affect the Company's financial position and business results (degree of impact: significant). The system management officer oversees information security, and a security promotion and incident response system has been established; however, risks associated with the increasing sophistication of cyber threats continue to exist.

In the event of natural disasters such as earthquakes or storm and flood damage, large-scale infectious disease outbreaks, or human-caused disasters such as terrorism or war, this may cause serious disruption to business operations through damage to or destruction of properties managed by real estate management companies acting as agents, disruption to the sales structure, and damage to the Company's head office, branch offices, and employees (degree of impact: significant). Specific disclosure regarding the state of business continuity planning (BCP) preparation in the securities report is limited, and the continued strengthening of the risk management system remains a challenge.

The Rent Guarantee Service (Smart Support, etc.), the Company's core service, is directly linked to rental real estate market conditions. If market conditions deteriorate due to a decline in the number of households accompanying population decline, falling rent levels, declining wage levels, or other factors, this may affect the Company's financial position and business results through a decrease in the number of guarantee contracts and guarantee fee revenue. The Company continuously monitors market trends and has established a system to reflect them in its budget, but structural demographic changes constitute a medium- to long-term risk factor.

The rent guarantee industry has few legal regulations and low barriers to entry, resulting in competition from a wide range of companies of various sizes, and real estate management companies are increasingly offering their own proprietary guarantee services. If the Company's competitive advantage is lost due to competitors offering new products or services or lowering prices, this may affect the Company's financial position and business results through a decline in its ability to acquire customers. The Company addresses this through service differentiation via tenant screening using personal credit information and accumulated know-how, as well as by strengthening its after-sales follow-up system.

The Company is pursuing new business development, such as the Nursing Care Fee Guarantee Service (Care Support) and Hospitalization Fee Guarantee Service, leveraging the know-how cultivated in the Rent Guarantee Service (Smart Support, etc.); however, if the Company is unable to achieve its initial business plans due to unpredictable risks, including sudden changes in the business environment, this may affect its financial position and business results. Uncertainty regarding regulations, competition, and demand trends specific to new markets is high, requiring the establishment of a risk management system that differs from that of existing businesses.

If tenants' ability to pay rent declines due to a significant deterioration in the economic or employment environment, this may lead to an increase in subrogated payment amounts, prolonged collection periods, and an increase in uncollectible receivables, which may affect the Company's financial position and business results. The Company conducts credit screening using JICC inquiries and the subrogated payment information database of the National Rent Guarantee Business Association, and has established a phased delinquency management system in which the call center and each branch office cooperate.

The Company records an allowance for doubtful accounts for subrogated payment advance rent and other items based on its accounting policies; however, if actual bad debts exceed estimates or if a change in the calculation method becomes necessary, additional provisions may expand losses, which may affect the Company's financial position and business results. The accuracy of these estimates is affected by changes in the economic environment, making it important to maintain a conservative level of provisions.

Although there are currently no laws or regulations that directly restrict the Rent Guarantee Service (Smart Support, etc.), if existing laws are amended or new regulations are introduced that constrain business operations, this may affect the Company's financial position and business results. The Company is registered under the Rent Guarantee Business Operator Registration System established by a 2017 notification of the Ministry of Land, Infrastructure, Transport and Tourism, and has formulated its own voluntary rules with reference to industry self-regulatory rules to prevent trouble before it occurs.

The Company has entered into a basic transaction agreement and business alliance agreement with Miyoshi Fudosan Co., Ltd., of which Osamu Miyoshi, a major shareholder, serves as Representative Director. In the fiscal year under review, guarantee fees through this company accounted for 6.76% of the Guarantee Business's net sales, and commission payments accounted for 5.58% of the total. If transactions were conducted on unfair terms, this could affect the Company's financial position and business results; however, the Company has established a governance system in which transaction terms are decided by resolution of the Board of Directors and their reasonableness is approved on a quarterly basis.