Tesco Underwriting Gender Pay Report 2017.We’re committed to creating a truly inclusive workforce at Tesco Underwriting.

Underwriting

IntroductionAt Tesco Underwriting, we recognise our part in serving Tesco customers a little better every day through the insurance products we provide and the claims support we offer to them when they need it. We value and respect our colleagues as individuals, and recognise that supporting a diverse and inclusive team in the workplace that reflects the customers and communities we work with is an important part of who we are.

This year, for the first time, all employers in the UK with 250 or more employees have to report on their gender pay gap, explain any differences that exist and outline what they are doing to address them.

The pay gap referenced here reflects the gender balance at different levels of our business in April 2017. It measures the difference between the average earnings of all male and female colleagues, irrespective of their role, length of service or seniority.

At 36.2%, Tesco Underwriting’s mean gender pay gap is typical of those in financial services where the gender pay gap anticipated by a 2017 PwC report* is 34%,

and higher than that of the UK average of 18.4%. Our median gender pay gap is lower at 10.1%. This is an important indicator that tells us that we need to pay attention to our diversity and inclusion agenda, and there are things that we need to do to improve as we develop our business.

We are confident that our gender pay gap is not an equal pay issue. Our reward practices ensure that women and men are paid equally for doing equivalent jobs. We know our existing pay gap is driven by a higher proportion of men in senior roles in TU and that we must continue to work to both promote and attract more women into our most senior roles.

* PwC Women at Work Index 2017

Gender Pay GapThe graphic below shows our overall mean and median gender pay gap data as of April 2017.

Median (middle) Mean (average)

Pay QuartilesHighest Q2 Q3 Lowest

Male 60.2% 41.9% 48.4% 38.7%

Female 39.8% 58.1% 51.6% 61.3%

The data shows that our gender pay gap is driven by a higher percentage of men in senior roles and further increased by the number of women in less well paid roles. These influences are also the primary driver behind our bonus gender pay gap.

We see better representation and progression for women already in professional and operational areas, within Tesco Underwriting, but see fewer join and progress in more technical and specialist roles within Actuarial or Underwriting.

Bonus Gap91.6% of men received a bonus compared with 91.9% of women.

Median (middle) Mean (average)

Our analysis shows a mean bonus pay gap which is driven by a higher proportion of men in senior roles, which typically attract higher bonus opportunities.

Colin AnthonyExecutive sponsor for diversity and inclusion.

36.2%10.1%60.8%17.6%

How will Tesco Underwriting close its gender pay gap?We know from our most recent engagement survey that we have built a good foundation on creating a culture which embraces Diversity and Inclusion, enabling people to bring the best of themselves to work and achieve their potential.

However, we know there is still more we can do in rebalancing the gender mix in our most senior roles.

We have set up a Diversity and Inclusion group and its initial focus is on gender. The group is supported by the Tesco Underwriting Board and sponsored by an Executive Committee Director.

In our most recent Board meeting, we agreed that we will sign the HM Treasury Women in Finance Charter in April 2018.

As part of this commitment, we will agree targets to improve female representation – this will include that by the end of 2020, 40% of our senior roles will be held by women – and that this will be achieved by identifying more high potential women to include in our succession plans.

We will review our HR Policies and practices, including recruitment and flexible working, to ensure that we create an environment that enables women to fulfill their potential.

We will continue to ensure that high potential women receive the opportunity to attend the Women In Insurance development programme and are provided with formal mentoring opportunities to help them with their career progression and development.

We will continue to create opportunities for female colleagues within Tesco Underwriting to take advantage of networking and learning and development opportunities that exist within both of our shareholders.

I confirm that the data in this report is accurate.

Steve Kingshott, CEO 23 March 2018

Tesco Underwriting Gender Pay Report 2017.

Underwriting