Interim Results

10 TAKING THE RIGHT STEPS TO POSITION INSURANCE FOR THE FUTURE Market context Very competitive motor market as pricing adjusts to regulatory changes that require equalisation of pricing between motor and home new business and renewals High levels of claims inflation (estimated at 13%) is not fully being reflected in market pricing Our response . Maintained pricing discipline, particularly in relation to three-year fixed-price policies which represent a significant proportion of our business Launched new one-year standard motor product, alongside multi-car and electric vehicle policies, aimed at providing customers with greater choice and allowing us to improve our competitive positioning Outcome Motor and home policy sales for the first half were 8% lower than the prior period Limited PBT impact to the current year as new business acquisition costs lead to a low year-one contribution; but, left unchecked and extrapolated, would lead to a significant reduction in future profits as renewal volumes decline Response actions will help us return to growth over time, but at a lower margin than previously anticipated, reducing PBT by c.£20m per annum Lower PBT leads to goodwill impairment, calculated on a prudent view of future cash flows Looking ahead Shift towards more standard one-year policies, alongside other changes, will allow us to return to growth over time Changes in business mix, including a growing proportion of standard policies, alongside price equalisation, likely to lead to lower future margins (estimated for 2023/24 at around £60 per policy for motor and home per our July Trading Update) Interim results for the six months ended 31 July 2022 SAGA

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