Tesco Underwriting Gender Pay Report 2020.Proud to champion and celebrate gender diversity across every level of our business.

Gender Pay Gap Report 20202

Everyone is welcome at Tesco Underwriting and I’m extremely proud to be part of a business where everyone can be themselves. Since we first reported our gender pay gap data in March 2018, we have made real progress in our journey to creating a more inclusive workplace that reflects the customers we serve.

The pay gap referenced in this report reflects the gender balance within Tesco Underwriting as at April 2020. It measures the difference between the average earnings of all male and female colleagues, irrespective of their role, length of service or seniority.

Our fourth gender pay gap report shows an increase for the mean and median figures since last year. Our median gender pay gap increased from 10.3% to 12.7% which is below the UK national average of 15.5%. The mean increased from 38.1% to 40.2%.

Our analysis confirms that, regardless of gender, our colleagues are paid the same for equivalent roles. The actions we have put in place over the last four years have helped us focus and make progress. However, in common with the UK financial services sector, Tesco Underwriting’s gender pay gap continues to be driven by the higher proportion of men we have in senior roles within the company. This is also reflected when we recruit, where there are far fewer women applicants in the labour market for technical insurance roles.

Our progress to address the proportion of women in senior roles across Tesco Underwriting has continued:

• At the end of 2019, we announced that we had reached our goal of achieving 40% of women in senior roles as part of our commitment to HM Treasury’s Women in Finance Charter. We’re delighted to have maintained that goal for a second year.

• We have seen a number of talented women progress through the talent pipeline, achieving a promotion or greater responsibility as a result of our focused talent development and succession planning.

• Our focus on flexible working has accelerated hugely as a result of the Covid pandemic and we are now committed to establishing a future workplace that helps support inclusivity for all colleagues. We also supported the ABI initiative to be transparent about our parental leave policies to promote and attract colleagues returning to work.

• During the pandemic we have worked with all colleagues to understand their situation and make policy decisions regarding pay and flexibility that do not inadvertently disadvantage colleagues regardless of role or gender.

In what has been an incredibly challenging year, colleague engagement at Tesco Underwriting remains high. Our colleagues tell us that they feel valued for the contribution that they make and are confident to be themselves at work. We will continue to deliver and refine our actions and remain committed to seeing improvement in 2021.

Creating a more inclusive workplace that reflects the customers we serve.

*Office of National Statistics

“

Steve KingshottChief Executive, Tesco Underwriting

3 Gender Pay Gap Report 2020

Our Gender Pay Gap.This report shares our gender pay gap data for the 12 months to April 2020, calculated using the pay data for 367 Tesco Underwriting colleagues.What is the gender pay gap? The gender pay gap measures the difference between men and women’s average pay within an organisation, regardless of their role or work level. Gender pay is different to equal pay, which compares the pay of men and women who perform the same role, or roles of equal value.

Our gender pay gapThe figures opposite show our gender pay gap as a percentage in both median and mean pay for 2019 and 2020.

From our analysis we know that the decline in our median and mean gender pay gap, to 12.7% and 40.2% respectively, is driven primarily by a higher proportion of men in more senior roles.

Our pay quartilesThe figures opposite show the gender balance within each of our pay quartiles for 2020. Within each of the quartiles there is an equal number of colleagues ranging from Quartile 1 which includes the highest paid colleagues to Quartile 4 which includes the lowest paid colleagues.

This year we have seen an increase in the number of women in Quartiles 1 and 3, which provides supporting evidence of our progression of talented women and of a more even pay distribution.

Q1 Q2 Q4

Proportion of men and women in each quartile pay band

Gender Pay Gap - Median Gender Pay Gap - Mean

2020 20202019 201912.7% 10.3% 40.2% 38.1%

Women 41.2% Women 60.9% Women 51.8% Women 61.2%Men 58.8% Men 39.1%Men 48.2% Men 38.8%

Q3

Gender Pay Gap Report 20204

We believe that every colleague should be recognised and rewarded for the success of our business. In 2020, all eligible colleagues who were part of Tesco Underwriting between 1 January 2019 and 31 December 2019 received a bonus payment. The figures opposite show the percentage of men and women who received a bonus payment for the year ending 5 April 2020, as well as the percentage difference in bonus amount.

The mean bonus pay gap has declined slightly from 67.1% to 68.5%. However, we have seen a big improvement in the median bonus pay gap from 22.8% to 14.5%. This indicates that more women attracted higher bonus payments in this reporting period than the previous year.

Our Gender Bonus Gap.

Gender Bonus Gap - Median Gender Bonus Gap - Mean

2020 20192020 2019

Men and Women who received a bonus

92.3% Men

94.4% Women

88.7% Men

93.9% Women

68.5% 67.1%14.5% 22.8%

2020 2019

Gender Pay Gap Report 20205

At Tesco Underwriting, we’re committed to creating a truly inclusive workplace where everyone is welcome. Our previous plans focused on three core pillars of inclusion: attracting and retaining an inclusive workforce, celebrating the inclusive culture that we have, and addressing any barriers to inclusion. We intend to sustain the progress we have made in these areas. However, from May 2021, Tesco Underwriting will become wholly owned by Tesco Bank. We believe that being part of a larger organisation will give us even more opportunities to accelerate our progress, offer more career mobility and that Tesco Underwriting will be able to benefit from Tesco Bank’s focus in the three areas of their action plan:

Our Actions.

Gender Pay Gap Report 20206

Equip and empower our leaders • An Extended Leadership Team The Tesco Bank Extended Leadership Team encourages diversity of thought and gives women the opportunity to raise their profile across their peers, directors and the Executive Committee. We will ensure that female colleagues in Tesco Underwriting are represented in this group.

• Inclusive leadership We will continue our focus on leadership development and introduce the Tesco inclusive leadership behaviours. We will expect all our leaders to display these behaviours which will also be used when assessing how leaders are performing in their role.

• Executive sponsorship for inclusion Dave Thompson, our Claims Director, continues to be the Executive sponsor for inclusion, supported by the Tesco Underwriting Executive team. We look forward to bringing our inclusion plans together with Tesco Bank, where Gerry Mallon, Chief Executive, sponsors the inclusion agenda, ensuring advocacy for the inclusion networks is overseen and conducted at the highest level of the business.

Support and attract talented women • Recruitment policies We will continue to seek a more diverse range of candidates and work towards gender balanced shortlists. With Tesco Bank as our recruitment partner, our vacancies will be advertised on job boards that attract more women, including the Women in Banking and Finance website and Vercida. Technology will also support us in ensuring that our job posts are inclusive and free from inadvertent gender bias. Finally, we will use the opportunity of becoming a part of the Tesco family to enhance our employer brand and deliver a compelling and inclusive employee proposition.

• Supporting our talented women We will continue to support the development of talented women within Tesco Underwriting through our talent programmes, mentoring opportunities and taking advantage of increased access to internal and external networks as a result of being wholly owned by Tesco Bank.

• Talent reviews We have a well-established talent and succession process in place, with the Executive Committee reviewing the insights bi-annually to drive the talent and succession agenda forward. This will move to quarterly reviews as we join the Tesco Underwriting talent pool with Tesco Bank, which should provide more opportunities for development and progression of talented women. We have a strong pipeline of talented women and we will increase our focus on strengthening succession and improving the diversity in senior appointments, at the same time as seeking capability for the role.

Sustaining an inclusive culture • Our future operating model There is a clear link between a business that embraces flexible working and a more diverse organisation. We are keen to build on the experience of 2020 and reimagine a future workplace for an even more diverse workforce. Flexibility of hours and location provide opportunities to do this as we reposition our employer brand as part of Tesco Bank.

• Established colleague networks Tesco Bank has well established colleague networks which have continued to drive colleague engagement with their inclusion agenda. Tesco Underwriting will have increased access and representation in these networks, including Women at Tesco which has a strong membership and provides a support channel for colleagues across all levels of Tesco Bank. We will have further opportunities to ensure the lived experience of our female colleagues is in line with our overall inclusion aims.

Gender Pay Gap Report 20207

Understanding how we calculate our gender pay and bonus gap

What is the gender pay gap?The gender pay gap measures the difference between men and women’s average pay within a business or organisation, regardless of their role or work level. This is different to equal pay, which compares the pay of men and women who perform the same role or roles of equal value.

There are two ways we must report and calculate our gender pay gap - as a median percentage and as a mean percentage.

Median:The median is the figure that falls in the middle of a range when all hourly pay is stacked from lowest to highest. The median gender gap is the difference between the middle figure for all women’s hourly pay and the middle figure for all men’s hourly pay.

Mean:The mean is the average figure when you consider the hourly pay for all men and all women. The mean gender pay gap is the difference between the average hourly pay for all women and the average hourly pay for all men.

Appendix.

Calculating our pay quartilesThe pay quartiles measure how many men and women are represented in each quarter of the business when all men and women’s hourly pay is stacked from lowest in Quartile 1 to highest in Quartile 4. Each quartile shown contains an equal number of colleagues.

Calculating the gender bonus gapThe gender bonus gap measures the difference in total bonus payments between all women in a business and all men in a business. There are two ways we must report this, as a median percentage and a mean percentage. We also must report the proportion of men and women who received a bonus payment.

Proportion of colleagues to receive a bonus:The proportion of women who received a bonus is shown as a percentage of all women in the business and the proportion of men who received a bonus is shown as a percentage of all men in the business.

Median:The median is the figure that falls in the middle of a range when all bonus payments are stacked from lowest to highest. The median gender bonus gap is the difference between the middle figure for all women’s bonus payments and the middle figure for all men’s bonus payments.

Mean:The mean is the average figure when you consider the bonus payments for all men and all women. The mean gender bonus gap is the difference between the average bonus payment for all women and the average bonus payment for all men.

It is important to note that colleagues who work part-time receive their bonus on a pro-rata basis, but we are required to report our gender bonus gap calculation without adjusting these to the full time equivalent payment.

More information on these calculations can be found on the government website.