Línea Directa Aseguradora S A : Non-Financial Information Statement

SNFI

2021

2021 CONSOLIDATED STATEMENT OF NON-FINANCIAL INFORMATION LÍNEA DIRECTA ASEGURADORA, S.A.

4 JANUARY - DECEMBER 2021

LÍNEA DIRECTA ASEGURADORA AND SUBSIDIARIES

Contents

6 LETTER FROM THE CHAIRMAN

10 INTERVIEW WITH THE CHIEF EXECUTIVE OFFICER

18 ABOUT THIS REPORT

20 LÍNEA DIRECTA GROUP

124 SUSTAINABILITY MANAGEMENT

140 ENVIRONMENTAL ISSUES

168 SOCIAL AND PERSONNEL ISSUES

240 RESPECT FOR HUMAN RIGHTS

248 FIGHT AGAINST CORRUPTION AND BRIBERY

254 SOCIETY

298 ANNEXES

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LÍNEA DIRECTA ASEGURADORA AND SUBSIDIARIES

Letter from the Chairman

For Línea Directa, the listing offers the possibility of an adequate capital structure and a dividend policy in line with demand, two advantages that will undoubtedly bring great benefits to the Company and its shareholders in the future.

The year 2021 has laid the foundation for the beginning of the economic recovery. Despite serious structural problems such as rising energy and fuel prices, in 2021 Spain has seen an increase in its Gross Domestic Product of +5%, according to advanced data from the INE, and the creation of 840,700 jobs. However, these figures, even if positive, barely compensate for the enormous economic collapse resulting from the COVID-19 pandemic, as Spain's GDP fell by 10.8% in 2020 compared to 2019, a figure unprecedented in our country's recent history. Nevertheless, the economic recovery has brought a sense of optimism to society, even though the necessary reforms need

to be implemented for this positive trend to continue and last in the long term.

In this environment of moderate economic recovery, the insurance sector has again performed well, consolidating its position as one of the most stable, respected and profitable sectors of the Spanish economy as a whole. In fact, the Non-Life line has managed to grow by 3.3% despite the decline experienced by the Motor line

(-0.9%), which in 2021 registered an increase in passenger car registrations of just 0.9%, a clearly insufficient figure considering account the great collapse in sales experienced during 2020

(-32.3%). This complex situation has further exacerbated the severe supply crisis in the automotive industry and indirectly impacted sales in the insurance business, as the used car market typically has more basic and lower premiums.

Home insurance, in turn, accelerated its growth in 2021 with very solid figures, achieving an increase in premium volumes of 4.9%. Health insurance also consolidated its strong growth rate seen in recent years, recording an increase in turnover of more than 4.9%. It thus consolidated its position as one of the driving forces of non-life insurance and as an asset that brings high profitability to the sector.

Línea Directa, a sure value

Against this backdrop, Línea Directa Aseguradora has successfully completed the path to listing on the stock exchange, a project that had been put on hold due to the measures taken by the European Central Bank in the wake of the health crisis.

For Línea Directa, the listing offers the possibility of an adequate capital structure and a dividend policy in line with demand, two advantages that will undoubtedly bring great benefits to the Company and its shareholders in the future.

In terms of financial results, Línea Directa Aseguradora closed 2021 with very positive figures. The volume of premiums written was over €907 million (+1%), with a significantly higher growth rate than that of the sector, except in the case of Motor line (-0.9%), whose fall, caused by a set of exogenous factors, is comparable to that of the industry. In the Home business, Línea Directa Aseguradora experienced an increase in the volume of premiums written

of +8.8%, compared to 4.9% for the sector, consolidating this line of business as a real growth driver. Of particular note is Vivaz, the Group's health insurance brand, which continues to perform extremely well thanks to its flexible, innovative and digital approach. By the end of 2021, this line of business had comfortably passed the 100,000 customer mark in just over 4 years, enabling an increase in portfolio volume to 3.34 million policyholders, 4% higher than the previous year.

In terms of profitability, Línea Directa Aseguradora achieved a profit before tax (PBT) of €145.2 million in 2021, an increase of 1.6% compared to 2019 and a decrease of -19.2% compared to 2020, a predictable result due to the decrease in claims incurred experienced in that year caused by the lockdown and mobility restrictions. Following the return to normality, the Group's net claims incurred ratio increased by 6.2 points against 2020 to 67.7%, a very positive figure compared with 2019 (-0.3 points). The Combinado Ratio experienced an increase of +4.9 points compared to 2020 (88.3%) and a slight worsening compared to 2019 (-0.38 pp), an indicator that, in the case of the Motor Line, is significantly lower than our competitors. These results consolidate Línea Directa as one of the most profitable Spanish insurance companies, with a ROE of 30.4%, in 2021, one of the highest in the industry.

For Línea Directa Aseguradora, sharing its good results and profitability with all its shareholders is a strategic priority. In

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LÍNEA DIRECTA ASEGURADORA AND SUBSIDIARIES

fact, since becoming a listed company, the company has distributed a dividend of

77.66 million euros charged to the first three quarters of the 2021 financial year, implying a payout of 90% and an annualised return of 5.45% in June and 5.53% in September; figures that undoubtedly make Línea Directa one of the most attractive and interesting stocks on the Spanish stock market.

Corporate governance, diversity and transparency

Last year, the Board of Directors of Línea Directa Aseguradora was due for renewal in order to comply with the recommendations for good corporate governance for listed companies published by the National Securities Market Commission (CNMV).

The new Board of Directors, composed of 7 members (compared to 10 in the previous period), is one of the most efficient, inclusive, independent and diverse of all listed companies, as it has 43% female members and 57% independent members, who also chair the Board's advisory committees. The renewal of the company's highest governing body, alongside a commitment to equality, transparency and inclusion, is a key tool for addressing the new challenges posed by Linea Directa's immediate future, which will continue to transform and revitalise the insurance industry in Spain.

The value of sustainability

Línea Directa Group's IV Sustainability Plan, in force until 2022, is guided by ESG criteria and seeks to respond to the three

major challenges facing the company today in these areas of action: environmental, by incorporating into its corporate governance objectives to promote environmental protection and the fight against climate change; social, by focusing on caring for groups at risk of exclusion and promoting equality and diversity, but also promoting health, road safety and security at home; and good governance, which affects the ethical management and correct performance of the company in an increasingly digital world and with emerging risks.

Línea Directa Aseguradora's IV Sustainability Plan, whose implementation is on schedule, underlines the company's commitment to the United Nations' Global Development Strategy, reflected in the SDGs and the 2030 Agenda, to which the Línea Directa Group has committed with 8 specific goals. To this end, up to 15 action areas have been identified and more than 70 actions have been planned in the environmental (18%), social (41%) and good governance (41%) areas, maintaining a balance between the three ESG dimensions.

Linea Directa is now a good example of diversity, inclusion and equality. At the end of 2021, the Group employed 2,576 people from 28 different countries, almost 57,4% of whom were women, who also occupy 50% of the management positions. Particularly noteworthy is the absence of a pay gap in the organisation, as the pay gap between men and women at the Linea Directa Group is only 2.6%, a percentage that is significantly better than the average for the Spanish labour market.

The company has its own policies on corporate governance (director selection and remuneration, dividends, corporate risks, taxation and related-party transactions) and sustainability (human rights, diversity and inclusion, gender equality and social contribution). These policies are formulated by the company's Sustainability and Reputation Committee and approved by the Board of Directors through the Appointments, Remuneration and Corporate Governance Committee, thus complying with the recommendations of the Good Governance Code of the Spanish Securities and Exchange Commission (CNMV). The primary goal

is to generate value for the company, its shareholders, customers, employees, and suppliers, as well as society as a whole.

The Sustainability Plan will enable the Group to consolidate its position as a true benchmark in an area in which it has extensive experience and in which it is included year after year in the country's main reputation monitors, such as MERCO Empresas, MERCO RSC and Corporate Governance, MERCO Talento and Top Employer, to name but a few. An achievement to which the Línea Directa Foundation, one of the most prestigious organisations in our country in the field of road safety, has also made a decisive contribution, thanks to the great research, awareness and training work it has been carrying out for years, which last year earned it the Silver Cross of the Order of Merit of the Guardia Civil, an accolade which fills us with satisfaction.

Línea Directa Aseguradora is optimistic about the future and firmly believes that in the coming years it will consolidate its position as one of the most profitable and respected names in the market. This is thanks to its great commercial capacity, potential and financial strength, which, together with its firm commitment to sustainability, have made it one of the largest companies in our country.

Alfonso Botín-Sanz de Sautuola

Chairman of Línea Directa Aseguradora

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LÍNEA DIRECTA ASEGURADORA AND SUBSIDIARIES

Interview with the Chief Executive Officer

Miguel Ángel Merino, CEO of Línea Directa Aseguradora, gives an overview of the main milestones reached by the company in 2021, a year marked by the company's IPO. He also addresses such important topics as the business goals for 2022, sustainability, transparency and corporate governance.

Miguel Ángel Merino

CEO of Línea Directa Aseguradora.

Línea Directa Aseguradora's IPO is another step forward in the company's development and growth".

The year 2021 is one of the most important milestones in the history of Línea Directa Aseguradora, as it was the year it became a listed company. How do you assess the company's IPO and what are the prospects for the future of the group?

Línea Directa's IPO is undoubtedly one of the biggest milestones in the company's history since it was founded in 1995. Since we entered the Spanish market, we have made a different, technological, flexible and high-quality offer that has dramatically changed the insurance sector. We were the first to operate without a branch network or agents; the first to democratise car and home insurance through very competitive prices and the first to reward health insurance customers for a healthy lifestyle. All this has made Línea Directa a different and innovative company, one that has revitalised the market, which has managed to transform outmoded services and products on the insurance market, the role technology plays in insurance or the customer experience, to name just a few areas.

Our IPO is another step in the Group's development and growth, as it gives it more autonomy and flexibility and highlights our true potential in the market. The transformation of Línea Directa into a listed company has been a real success, especially in the first months of our activity, as we have been very well received

by investors, which has allowed us to significantly increase our capitalisation and the value of our shares. But we still have a long way to go. We are not satisfied with just being an attractive value, but aspire to

become a benchmark for profitability and versatility in the Spanish economy - so we cannot set ourselves any limits.

RESULTS AND OUTLOOK

On the business front, Línea Directa posted very positive results in 2021. How do you rate them?

Overall, the results were excellent: the best ever in terms of revenue and portfolio and the second best in terms of profitability, which is very commendable given the complex environment in which we live. There is no doubt that the Spanish economy is still suffering the consequences of the pandemic, which was not only a great tragedy for many Spanish families, but also almost completely brought the Spanish economy, which is essentially based on services, to a standstill.

The decline in consumption has particularly affected the automotive industry, which continues to record very negative sales figures. In fact, new car sales data increased by only 0.9% compared to 2020, a clearly insufficient figure given the huge slump in the previous year, which reached -32.2%. This circumstance has weighed heavily on the motor line, as new vehicles are the main revenue drivers in the insurance sector, as they tend to have the most comprehensive products.

Despite this, Línea Directa achieved a revenue of over €907 million in 2021, with a growth rate of 1%, a profit before tax (PBT) of €145.2