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22/Feb/2023 – Presentation to ZENKOKU HOSHO Co., Ltd.

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On 22 February 2023, Hibiki Path Advisors (“Hibiki”) made a presentation (see link below) to one of the core portfolio companies, Zenkoku Hosho (referred to as “Zenkoku”), a leading mortgage guarantee company in Japan.

Previously, we delivered this letter to the management on August 26 last year, and since then, we have continued to engage in constructive dialogue with Zenkoku. During this time, we have also been exchanging views on overseas comparable businesses such as Essent Group and MGIC in the US. One of the topics that we discuss regularly is how to convey to the market that the business model of Zenkoku is fundamentally different from companies such as MGIC and Essent Group.

Companies such as Essent Group in the US guarantees the portion above loan-to-value (“LTV”) of 80% or more. Furthermore, mortgage loans in the U.S. are non-recourse loans where the borrower can walk away from its obligation after collateral has been liquidated. Zenkoku guarantees the whole loan and the default rate of those loans are usually 1/5 to 1/10 of US level as in Japan those loans are full recourse loan. With even such differences in place, US companies still run their business with great dynamism to maximize the enterprise value which Zenkoku can actually learn from at the same time.

We will continue to exchange views with the management of Zenkoku on the ways to properly convey to the market, especially to foreign investors, on how business model of Zenkoku is fundamentally different from its US peers, and also continue to improvise with them on what can still be learned from the strategies and tactics of those US loan guarantee companies.

This presentation does not constitute a solicitation of an offer to acquire or recommend the purchase or sale of specific securities, or advice on investment, legal, tax, accounting or any other matter.

Presentation to ZENKOKU HOSHO Co., Ltd.

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