Línea Directa Aseguradora S A : Annual Report on Remuneration of the members of the Board of Directors for the 2021 financial year

ANNUAL REPORT ON REMUNERATION OF DIRECTORS

OF LISTED PUBLIC LIMITED COMPANIES

IDENTIFICATION DATA OF THE ISSUER

YEAR END-DATE31/12/2021

TAX ID (CIF): A-80871031

Company name:

LÍNEA DIRECTA ASEGURADORA, S.A. COMPAÑÍA DE SEGUROS Y REASEGUROS

Registered office:

Tres Cantos (Madrid), Calle Isaac Newton, 7.

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ANNUAL REPORT ON REMUNERATION OF DIRECTORS OF LISTED

PUBLIC LIMITED COMPANIES

A COMPANY REMUNERATION POLICY FOR THE CURRENT FINANCIAL YEAR

A.1.1 Explain the current policy of director remuneration applicable to the current year. To the extent that it is relevant, certain information may be included by reference to the remuneration policy approved by the general shareholders's meeting, provided that the incorporation is clear, specific and concrete.

The specific determinations for the current financial year must be described, both of the remuneration of the directors for their status as such and for the performance of executive functions, which would have been carried out by the board in accordance with the provisions of the contracts signed with the executive directors and with the remuneration policy approved by the general meeting.

In any case, at least the following aspects must be reported:

1. Description of the procedures and bodies of the company involved in the determination, approval and application of the remuneration policy and its conditions.
2. Indicate and, where appropriate, explain whether comparable companies have been taken into account in establishing the company's remuneration policy.
3. Information on whether any external advisor has participated and, where appropriate, their identity.
4. Procedures contemplated in the current director remuneration policy to apply temporary exceptions to the policy, conditions in which these exceptions can be used and components that may be subject to exception according to the policy.

Directors' Remuneration Policy in force for the current financial year

At its meeting held on 17 February 2022, the Board of Directors of Línea Directa Aseguradora, S.A. Compañía de Seguros y Reaseguros (hereinafter, "Línea Directa", the "Company" or the "Entity") has proposed to submit the approval of a new directors' remuneration policy to the next General Shareholders' Meeting, which in case of approval, would be the current policy for the current year, from the date of approval by the General Shareholders' Meeting, and the following three years (2023, 2024 and 2025), (hereinafter, the "Policy" or the "Remuneration Policy"). Therefore, until the general shareholders' meeting is held, the remuneration policy for Company directors approved on 18 March 2021 will remain in force.

The Remuneration Policy that is submitted for approval at the 2022 General Shareholders' Meeting, the text of which is published on the corporate website www.lineadirectaaseguradora.com, together with the rest of the documentation available for the General Meeting, is fully in accordance with the previous remuneration policy approved on 18 March 2021 (in force since 15 April 2021 when the CNMV registered the Company's IPO prospectus). This Policy regulates the following aspects:

i. General principles on which the Policy is based.

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1. Process of determining, reviewing and applying the Remuneration Policy.
2. Remuneration system for directors in their capacity as such.
3. Remuneration system of the CEO for her executive functions.
4. Main terms and conditions of the contract of the executive director.
5. Relationship of the Policy with the remuneration conditions of employees.
6. Contribution of the Policy to the strategy, interests and long-term sustainability.
7. Temporary exceptions.
8. Validity.

In particular, as will be detailed in section A.2 of this report, the Policy for the current financial year is proposed for approval by the next General Meeting in accordance with the Transitional Provision of Law 5/2021 amending the Spanish Corporate Enterprises Act. The main adjustments are as follows:

• Complete adaptation of the wording to the current Corporate Enterprises Act, after the amendments introduced by Law 5/2021.
• Deletion of references to the 2019-2021Long-Term Incentive Plan due to being completed.
• Setting the remuneration conditions of the new executive director and CEO, Ms. Patricia Ayuela de Rueda, as of her appointment on 17 February 2022, in accordance with the provisions of her contract.
• Correction of minor errors.

In its session held on 15 February 2022, the Appointments, Remuneration and Corporate Governance Committee (hereinafter, the "CNRGC") issued a report favourable to said approval, with the details of the amendments, which has been published on the corporate website along with the documents related to the agenda of the next General Meeting.

If approved by the General Shareholders' Meeting, the new policy will enter into force on the date on which it is approved by the General Shareholders' Meeting of 2022 until 31 December 2025, annulling the directors' remuneration policy that is currently in force.

Description of the procedures and bodies of the company involved in the determination, approval and application of the remuneration policy and its conditions.

With regard to the procedures and bodies of the company involved in the determination, approval and application of the remuneration policy and its conditions, in accordance with the provisions of the Rules and Regulations of the Board of Directors, the Board is empowered to adopt decisions regarding the remuneration of directors, within the statutory framework and, where applicable, the remuneration policy approved by the General Meeting.

On the basis of the maximum annual amount fixed and approved by the General Meeting for the remuneration of directors in their condition as such, the Board of Directors is responsible for setting the individual remuneration, frequency and method of payment of each director, at the proposal of and following a report by the CNRGC. To do this, it shall take into account the positions held by

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each director in the Board of Directors itself, their membership of and attendance at the various Committee meetings and any other objective circumstances deemed appropriate.

The Board of Directors is also responsible for determining the individual remuneration of each director for the performance of the executive functions assigned to them, in accordance with the provisions of their contract and remuneration policy, at the proposal of and following a report by the CNRGC, as well as the approval of their contracts with the Company.

Furthermore, the CNRGC is responsible for monitoring the degree of implementation of remuneration policy in general during the financial year, and ensure its enforcement.

Information on whether any external advisor has participated and, where appropriate, their identity.

The renowned firm, J&A Garrigues, participated in determining the directors' remuneration policy as an independent external advisor.

Indicate and, where appropriate, explain whether comparable companies have been taken into account in establishing the company's remuneration policy.

As for comparable companies, the data published by the regulator in its annual reports on the average remuneration of the directors of listed companies have been taken into account, taking into account in particular the data of the other two insurance companies listed on the Spanish market, as well as the average remuneration of directors of companies that are comparable by market capitalisation.

Procedures contemplated in the current director remuneration policy to apply temporary exceptions to the policy, conditions in which these exceptions can be used and components that may be subject to exception according to the policy.

The Línea Directa Board of Directors, following a proposal from the CNRGC, may approve the application of temporary exceptions to the Remuneration Policy which will, in any event, be limited to exceptional situations in which the lack of implementation of the Policy is necessary to serve the long-term interests and sustainability of the Company as a whole or to ensure its viability.

Only the remuneration components set out in paragraph 4 of the Remuneration Policy shall be without exception, avoiding the allocation of guaranteed extraordinary remuneration.

In any event, the Company shall take into account the principles of paragraph 1 of the Policy and shall adequately inform in the corresponding Annual Report on Directors' Remuneration of the exceptional situation which has led the Board of Directors to approve the application of the temporary exception, as well as the component(s) subject to that exception.

A.1.2 Relative importance of variable remuneration concepts with respect to fixed remuneration (remuneration mix) and what criteria and objectives have been taken into account in their determination and to ensure an adequate balance between the fixed and variable components of remuneration. In particular, indicate the actions taken by the company in relation to the remuneration system in order to reduce exposure to excessive risks and to align it with the long- term objectives, values and interests of the company, including, where appropriate, a reference to the measures envisaged to ensure that the remuneration policy takes into account the long- term results of the company, the measures taken in relation to those categories of staff whose professional activities have a material impact on the risk profile of the institution, and measures envisaged to avoid conflicts of interest.

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Likewise, indicate whether the company has established any period of accrual or consolidation of certain variable remuneration concepts, in cash, shares or other financial instruments, a period of deferral in the payment of amounts or delivery of financial instruments already accrued and consolidated, or if any clause has been agreed to reduce the deferred remuneration not yet consolidated or that obliges the director to return the remuneration received, where such remuneration has been based on information whose inaccuracy has since been manifestly demonstrated.

Appropriate balance between fixed and variable components of remuneration

In accordance with the Director's Remuneration Policy, the remuneration accrued by the members of the Board of Directors in their role as such (for their supervisory functions and collective decision) shall consist of a fixed annual amount and allowances for attending each session of the Board of Directors and its committees. Therefore, directors in their capacity as such do not receive variable remuneration.

In addition to the remuneration referred to in the previous paragraph, the executive director shall be entitled to receive an annual remuneration for the exercise of her executive powers and in the context of the commercial administrative contract that associates her with the Entity, which has a fixed and a variable part depending on the fulfilment of previously established objectives, aligned with prudent risk management and adjusted to the long-term interests of the Entity. The executive director also has the right to participate in the long-term variable remuneration systems that the Company decides to implement at all times.

Therefore, the references to the remuneration mix in this report are made in relation to the remuneration of the executive director, whose remuneration system is composed of fixed and variable elements. The particular details of the short- and long-term incentive schemes in force in the current financial year are described in the following sections of this Report.

One of the principles underlying the Directors' Remuneration Policy is the appropriate ratio between the fixed and variable components, expressly establishing that, in order to avoid excessive risk-taking, variable remuneration in relation to fixed remuneration will not, as a general rule, acquire a significant proportion without there being a guaranteed variable remuneration. On that basis, in order to ensure an appropriate balance between the fixed and variable components of the remuneration of the executive director, the director's remuneration policy has been based on the remuneration system in general, which establishes a system whereby the fixed remuneration is sufficient and adequate to remunerate the functions performed without depending excessively on the variable components, since the latter are based on a completely flexible incentive policy, which includes the possibility of not paying any variable component. Along this line, the directors' remuneration policy establishes that an appropriate balance between fixed and variable remuneration shall be deemed to exist when the variable component does not exceed 100% of the fixed component of the total remuneration, or that provided for by the Supervisor at any given time. In this regard, Línea Directa will make its best efforts to maintain an adequate balance between the fixed and variable components of the total remuneration of the executive director.

Based on the foregoing, the relative importance of the executive director's variable remuneration means that, combined with annual variable remuneration and long-term variable remuneration, and depending on the personal performance of the executive director and the degree of fulfilment of the objectives set for accrual, there is a balance between the fixed and variable components of the remuneration, without this leading to a high dependency on the variable remuneration.

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