Chairman’s Annual Shareholder Meeting Address

TOWER LIMITED – ANNUAL MEETING ADDRESS
Attached is a copy of the address and presentation to Tower’s annual meeting of shareholders, held
today at 2.30pm.
ENDS
19 February 2019
Insurance
Market Information
NZX Limited
Level 1, NZX Centre
11 Cable Street
Wellington
New Zealand
Company Announcements Office
Australian Stock Exchange Limited
Exchange Centre
Level 6, 20 Bridge Street
Sydney NSW 2000
Australia
David Callanan
Company Secretary
Tower Limited
ARBN 088 481 234 Incorporated in New Zealand
For media queries, please contact:
Nicholas Meseldzija
Head of Corporate Communications
Mobile: +64 21 531 869
Email: Nicholas.meseldzija@tower.co.nz

1
ADDRESSES TO THE TOWER LIMITED SHAREHOLDER MEETING
19 FEBRUARY 2019
MICHAEL STIASSNY
Good afternoon ladies and gentlemen.

My name is Michael Stiassny. As it’s now 2.30pm, as Chairman of Tower
Limited I am pleased to declare open Tower’s Annual Meeting of
shareholders.

On behalf of my fellow Directors, welcome to our shareholders and
guests here at the Ellerslie Event Centre as well as those who have
joined us via webcast. This is your meeting and we appreciate you
making the effort to be here.

With me today are your directors, Warren Lee, Steve Smith, Graham
Stuart, Wendy Thorpe, Marcus Nagel, along with out Chief Executive
Officer, Richard Harding and Chief Financial Officer, Jeff Wright. Also in
attendance today, seated in the front row, is the Tower Executive
Leadership Team and our Auditors.

As you may know, Marcus is here representing our largest shareholder,
Bain, and I’d like to welcome Marcus to our Board and thank Bain for
their support of both our business and our transformation agenda.

Today’s agenda is on the screen behind me.

2
We will provide you with an update on last year’s performance, our
strategy and the work we have underway to keep transforming Tower,
as well as the progress we’ve made in recent months.

Following Richard’s presentation, we will move to the formal resolutions
set out in the Notice of Meeting.

Shareholders are welcome to ask general questions following the
presentations and to ask specific questions on the resolutions to be
considered as each is put forward.

I remind any media present that, while you are welcome, this is a
meeting for shareholders. Richard and I will be happy to talk to you after
the meeting.

Before we start the presentations, there are a few housekeeping matters
to cover off.
• If you have a cell phone, please switch it off.
• If we need to evacuate this room for any reason, there are exits
through the doors to my right and also the entrance you came
through.
• In the event of an emergency, please listen to the instructions from
the Ellerslie staff.
• Bathroom facilities are located along the corridor towards the lifts.
• If you are feeling unwell, please advise one of our Tower team who
will assist you

3
• Finally, we hope that you will join us for refreshments at the
conclusion of the meeting.

Let’s now move on to the formal part of the meeting.

Formalities

Apologies
Are there any apologies?

Quorum
The Company’s constitution specifies a quorum of 25 shareholders. As
you can see, and as confirmed by Computershare, this requirement has
been met.

Proxies
In addition to those attending in person today, 594 shareholders, holding
a total of 123,849,058 shares, have appointed proxies (including proxies
instructed to abstain). The appointed proxies are represented by 10
proxy holders.

In my capacity as Chairman of the meeting and in my own name I hold
proxies for 518 shareholders, representing 122,564,653 shares.

I intend to vote all undirected proxies I have received in favour of
resolutions 1, 2, 3 and 4.

4
Annual Report and Notice of Meeting
The annual report was made available on Tower’s website on 24
December 2018. Spare hard copies of the annual report are available in
the registration area.

I propose that we take the Annual Report and Notice of Meeting as read.

2019 sees Tower celebrate 150 years of insuring New Zealanders.
Naturally, over the course of those years, the company has changed
considerably.

Just over two years ago, Tower embarked on its latest – and arguably
most difficult – transformation to reposition itself as a contemporary,
challenger brand underpinned by a customer-focused, digital-first
strategy to successfully compete in the 21st century insurance market
place.

Richard and his team have created, and are now driving, an ambitious
plan to have New Zealanders and Pacific Islanders see Tower in a new
light, and set the bar for how insurance “should” be.

In the past few years, we have talked a lot about how the
implementation of new technology will accelerate growth. Today, the
significant uplift in customers using our digital channels to engage with
and purchase Tower products is proof that our confidence in user-
friendly technology is well placed.

5
And it is pleasing to have the support of our largest investor, Bain, who
support our transformation strategy and are bringing their significant
experience to benefit our business.

However, just as important – perhaps even more so – is the trust
customers place in Tower. Our customers tell us this is driven by our
open and transparent approach: They like our plain English policies
which they can understand, and they appreciated our honesty when
launching our new risk-based pricing.

Interestingly, recent research we conducted shows that 70% of people
think risk-based pricing is fair.

We led the way on risk-based pricing because we believe it IS fairer.
But we also realised that it was going to be really tough for a handful of
customers, so we did the right thing – we communicated openly and
spent time and effort explaining our rationale. In the process, we also
ignited a much needed national conversation around risk management.

In a nutshell, we treated people how we would like to be treated and it
resonates, not because we feel good but because it makes good
business sense. Genuine customer focus engenders trust and loyalty
which makes a strong foundation for any business.

Our customers’ trust is gold, particularly at a time when trust and
confidence in financial services and banking institutions is at an all-time
low. In the wake of the FMA and RBNZ report on life insurer conduct and

6
culture, the Australian banking Royal Commission and a seemingly
constant stream of debatable business practice revelations, our
approach sets us apart.

Tower’s job – day in and day out – is to continue to earn and keep that
trust and we can’t afford to be complacent.

Tower is distinctly different from other insurers, both in terms of being
New Zealand’s only listed and based general insurer, and the way we
operate and conduct business:
• We sell insurance directly to customers here in New Zealand
• We sell online, and provide all the information our customers need
to make an informed choice
• Our frontline employees are rewarded for achieving customer
experience targets, not just sales
• We don’t pay big agency commissions and take people on
overseas trips to sell insurance
• And lastly, our strategy is centred on our customers – it’s all about
delivering on our promise to set things right for them, and Richard
will update you on this shortly.

I think it’s also important to mention here that while we have made
significant progress in Canterbury, it has been a long road for
customers, insurers and the community and we have long maintained
that the current system is broken.

7
So, while it is disappointing to have reported a loss of $6.7 million, due
to the impacts of the well signalled Peak Re settlement, severe weather
and Canterbury earthquake provisions, the fundamentals of the
underlying business are solid.

Tower’s FY18 results demonstrate a continuation and expansion of the
positive trends we’ve spoken about over the past two years and as a
shareholder, you should have confidence that the transformation of the
business is delivering continued growth, reduced claims costs and
steady management expenses.

Tower is now in a stronger capital position and Tower’s Board and
management team remain strongly committed to paying dividends and
to the efficient management of capital.

In FY16, we made the prudent decision to suspend payment of
dividends as we managed the effects of the Canterbury Earthquake
legacy.

This was only ever intended to be a short-term measure. The Board has
signalled its intent to recommence dividends at the end of FY19. Where
prudent to do so, the Board will pay a dividend of 50% - 70% of NPAT.

Over the past year, Richard and his team have remained totally
dedicated to advancing our transformation strategy and ensuring the
positive trends seen in our underlying business results continue to gain
momentum.

As a shareholder, it’s great to know that Tower’s future is in the hands of
people who can be trusted, are committed and who have the skills to
complete the digital transformation.

8
In closing, I’d like to acknowledge and thank them for their work.
I’ll now hand over to Richard, who will take you through the results and
our plans for the business, before we take questions.
RICHARD HARDING
Thank you Michael and good afternoon everyone.
The 2018 Financial Year saw us continue to deliver against our strategy
to transform Tower. Our focus was clearly on simplifying and improving
all aspects of our business to differentiate ourselves, drive growth and
reduce costs.
It was pleasing to see positive results in the core business, despite
experiencing a number of distractions throughout the year.
The 2018 financial year saw us continue to drive our transformation with
a focus on our customers, operating excellently, pricing risk accurately
and commencing our major technology upgrade.
It was pleasing to see these efforts being noticed by customers, with
more people choosing to insure with us.
Our continued focus on customers grew GWP in the core New Zealand
portfolio by 11.9% and an additional 18,000 risks added to the book.
This saw total GWP reach $336 million across New Zealand and the
Pacific.
Throughout the year we invested to drive long-term sustainability,
building capability to enable growth. We achieved this while reducing our
expense ratio almost 1%, to 39%.

9
Encouraging trends in policy and premium growth and expense
reduction was achieved against the backdrop of an unprecedented
number of natural events which have affected the underlying result.
With claims costs increasing from $132 million to $152 million, i t is clear
that this had the largest impact on our underlying results. Weather in the
Pacific had the most significant impact, along with some prior year
development in New Zealand and other costs. Importantly, each of these
factors is well understood and pricing and underwriting responses either
already implemented or in train and we are already seeing improved
results in the current year.
Our reported loss of $6.7 million was a slight improvement on the prior
year. This was a result of storm activity, higher claims costs, the
resolution of the Peak Re dispute as well as some increase in ultimate
incurred claims for Canterbury.
In particular, achieving settlement with Peak Re has resulted in a $16.2
million after-tax impact on profit, while severe and unprecedented storm
activity resulted in an $11 million before-tax impact to our underlying
profit, $3.6m higher than 2017.
The legacy of the Canterbury earthquakes saw a $5 million increase in
provisions, resulting in a $3.6 million after tax impact. However,
pleasingly, we made strong progress through the remaining Canterbury
earthquake claims during FY18, with outstanding claims reducing by
almost 50%, from 323 to 163.

10
Another focus during the year was the replacement of our core
technology system. We are well progressed with this and I will update
you further shortly.
There are positive signals in our results that show our business has
turned the corner and this positive momentum should not be
overshadowed by short-term increases to claims costs and the removal
of legacy risks.
If you look back over the past two years, it is clear that we have built
solid foundations, and we are now creating an exciting customer
propositio n that is delivering growth.
In 2017, Tower’s Board determined that additional capital of $70.8
million was required to address the inherent uncertainty faced by the
business, to repay the BNZ facility, and enable ongoing reinvestment in
Tower. We also committed to addressing legacy risks arising from the
Canterbury earthquakes.
Since then, in addition to the continued strong rate of finalisation of
outstanding claims, Tower settled the Peak Re dispute, receiving $22
million of the $43.75 million claimed, resulting in a write-off of the
residual amount plus associated costs of $16.2 million after-tax.
Despite the impact of this write-off, Tower Insurance remains in a strong
capital position.
As at September 2018, Tower Insurance Limited held $136 million of
actual solvency capital - $78 million above, or 234% of, RBNZ minimum

11
solvency capital, and $28m above RBNZ minimum solvency capital and
$50m licence condition.
Since September, Tower Insurance Limited’s solvency margin has
improved by $13 million, with a solvency ratio of 256% at 31 January
2019 and corporate cash reducing to $10 million due to expenditure on
IT investment.
Over the past two years I’ve spoken about the significant opportunity
that exists in the Tower business and while it’s good that we have
delivered improving results, we now want to kick this progress up a gear
and fully realise the opportunity.
With the recent capital raise I spoke to you about accelerating our
transformation, by removing the legacy risks and investing in the
business to create a company that delivers value for you.
What we’re creating here at Tower is a company that challenges the
norms of the traditional insurance market and uses this differentiation
and challenger positioning to drive substantial growth.
There is a huge amount of room in the New Zealand insurance market
for a company to shake things up and give customers what they want.
We know this because we’ve been speaking to customers in detail to
understand what they think about insurance.
Our customers told us that the majority of people across New Zealand
are dissatisfied with insurers. They put us all in the same basket, the
“too hard” one – and this is where our opportunity lies.

12
Customers buy a promise from insurers – to set things right when they
go wrong, and traditionally insurers have made it a complex process for
people to make a claim and fulfil that promise.
From complex policy wording and terms, confusing pricing and discount
structures, and creating an employee culture that looks for ways to
decline claims.
Tower believes that customers deserve better, and our refreshed
strategy is centred on that belief.
We’re going to deliver customer value by turning industry norms on their
head. It means we’ll be unpopular with the big guys, who send all their
profits overseas and take direction from people headquartered in other
countries, not here in New Zealand.
Our belief that customers deserve better is going to drive industry wide
change and deliver growth for Tower. We’ll achieve this by creating
products, systems and processes that enable amazing claims
experiences.
We’ll continue to refine our underwriting and operations and are
replacing our core IT platform which will enable us to reach our
challenger brand aspiration faster.
You have already seen and heard great evidence of this:
• Our stunningly simple policies have won plain English awards, so
customers can now easily understand what they’re covered for

13
• We implemented a fairer way to price insurance – so you pay fairly
for the specific level of risk your property faces
• We’ve entered into a major new national partnership with
Paralympics New Zealand – aligning ourselves with an
organisation that we aspire to be like, high performance,
empathetic, and proud to be Kiwi
• And internally we’ve seen significant shifts in our culture and
engagement – our people are passionate about doing things
differently and that is delivering these good outcomes
And this is just the start.
This time next year, Tower will be radically different because our
priorities over the coming twelve months all drive us forward in a way
that’s significantly better than the norm.
We will grow the business and deliver shareholder value by challenging
the traditional insurance industry, and we believe that delivering against
our strategy will enable us to achieve our medium-term operating
targets.
Our plan is already driving change and transforming the business. Our
four key priorities for the coming year will see us keep growing and
continue to position ourselves differently.
The key to accelerating our transformation and delivering a differentiated
customer offering is a new IT platform that enables the simplification of
our products and processes.

14
Completion of our technology upgrade and our digital transformation will
accelerate our growth opportunities, improve customer experience, and
combined with our push to move 50 - 70% of all transactions online, will
deliver significant cost savings and productivity gains.
Our new platform and the culture we’re building at Tower will allow us to
keep challenging those industry norms.
We believe that customers deserve better and we have refined our
customer proposition to start offering customers a genuinely better
choice for insurance.
We will build on the past five consecutive halves of growth by continuing
to price more fairly, delivering amazing claims experiences and
improving efficiency and profitability.
In the Pacific, our new operations centre will support local teams through
improved product, pricing and underwriting capability to ensure we grow
and reduce claims leakage.
What we’re building will be unique and will continue to attract more
customers to Tower and drive strong growth.
Managing risk is at the very heart of what we do. How we manage that
risk, through pricing and underwriting, is an important measure of the
performance of our business and links directly through to profitability.
One of the most important things we will do this coming year is to start
the 12 month migration of customers from our existing platforms onto
our new, single core platform.

15
Customers will benefit from new, simpler policies and amazing claims
experiences and this will lead to improved profitability.
Ongoing investment in our business has driven strong growth and we
will continue investing in initiatives that improve performance.
A focus on automation and grassroots innovation will improve efficiency
by removing duplication and repetitious tasks, allowing our teams to
focus on adding value.
We are committed to driving culture change across the business. We are
creating a team of people who are passionate about doing things
differently and have customer focus built into their DNA.
As Michael mentioned earlier, we cannot be complacent when it comes
to conduct and we recognise the importance of this in all aspects of our
business. Pleasingly, a recent employee survey showed that good
conduct is well understood and practiced here at Tower, but there is
always more to do and we remain focussed on this.
The importance of engaging and empowering our workforce cannot be
understated and will be vital to our success.
Our refreshed strategy is already driving positive results and while only
four months into this financial year, we are pleased that momentum is
continuing.
Our ongoing push to differentiate ourselves has seen positive
momentum in GWP, with core New Zealand GWP up 7.9 per cent, a
result of customer growth and pricing improvements.

16
We continue to enhance our underwriting and pricing which has
improved both the mix of business and our claims ratio. Improvements
are offsetting inflation and our total claims ratio excluding large events
has reduced to 43.8%, down from 52.3% in the 2018 financial year.
However, it should be noted we are only four months into the year and
an uplift in claims can occur during severe winters.
In the Pacific, we continue to see growth in core markets and claims
costs reducing, with the Pacific’s contribution now returning to historic
levels.
Management expenses remain in line with our expectations, and our
focus on controlling operational costs continues.
In Canterbury, we continue to make progress closing claims, with claim
numbers reducing from 163 to 138. Following a period of weaker than
expected performance in Canterbury claims in the second half of 2018,
results for the first few months of 2019 are more in line with
expectations.
There is no change to Tower’s FY19 guidance of underlying NPAT in
excess of $22m.
While we have been fortunate to suffer no large weather events so far
this year, there always remains a risk of weather causing significant
adverse impacts to our customers in the remainder of the year.
Therefore, our guidance continues to assume we will fully utilise the $10
million excess on our aggregate reinsurance cover.

17
These results demonstrate that the strategy, plan and team we have in
place is delivering and the future looks bright.
The key enabler for our strategy is a technology platform that allows us
to deliver something genuinely better to customers. This new technology
will accelerate our momentum and deliver a step change in results.
I am pleased to let you know that we have now completed over 70 per
cent of our technology build, with development and build of phase one of
the new platform complete.
This progress includes development of our new business platform, the
digital interface and a new telephone and customer communications
system.
We are currently undertaking system integration testing which is, so far,
indicating positive outcomes and we remain confident that phase 1,
including new business will be on sale on the new platform towards the
end of the first half of this calendar year.
Thanks to the success achieved to date, we have extended our scope
so that a number of our key partners can also take advantage of this
technology.
Over the past two months, we have reviewed the progress made and
reassessed our delivery timeframe, making the prudent decision to
minimise the risk associated with concurrently delivering multiple phases
of work at the same time.

18
Previously, we had planned to deliver both phase 1 and phase 2 in the
first half of the calendar year to achieve efficiencies and realise benefits
faster. As I just mentioned, Phase 1 will still go live in the first half,
although slightly later than originally planned.
Delivery of Phase 2 components has now been pushed out to the
second half of the 2019 calendar year. Delivery of phase 2 includes:
1. Rationalisation of our products
2. Commencing the 12 months migration of our customers to the new
platform
3. Launching a customer self-service portal, allowing customers to
manage their insurance online, just like you do with online banking;
and
4. Implementing streamlined claims management modules
The most significant impact will be migrating all of our customers to our
new platform and our new products.
Moving hundreds of thousands of customers currently on over 400
products, to a core set of just 12 will deliver significant benefits to our
customers and efficiencies in our business.
A migration of this size can pose risk if not properly managed. Therefore,
through our phased delivery approach we will increase the focus on
managing and retaining our customers through the change to minimise
this risk.

19
Delivery of the programme through this phased approach, as well as the
additional components in the extended scope will be achieved before the
end of the 2019 calendar year.
Total costs are currently estimated to be $45 million. This is a 17%
increase on the Board’s approved investment of $38.5 million, including
contingency. However, it is important to note that we have reduced risk,
increased testing and will be delivering an extended scope.
We continue to tightly manage the programme through robust
governance controls, with a focus on managing delivery risk and cost
trade-off. We expect benefits to start being realised in the first half of
FY20, with a step change expected as we finalise customer migration
and decommission existing legacy systems.
You can be confident that we are focussed on delivering this technology
upgrade and it will lead to the transformation of Tower. The work we are
doing will deliver you significant long-term value.
Before I hand back to Michael, I want to thank the Tower executive and
wider team. There has been a lot of effort and a relentless focus on
working together to drive change and transform this business.
Thank you.
MICHAEL STIASSNY
Thank you, Richard.

20
Are there any questions or comments anyone would like to make in
regard to the presentation, the Annual Report or the Financial
Statements?

If you wish to speak, please raise your hand, and a microphone will be
brought to you.

We would appreciate it if you could please introduce yourself when you
begin your remarks.

I remind you that this is a shareholders’ meeting, and only shareholders
and proxy holders may speak. Also, a reminder that this meeting is
being webcast, so an audience outside of this room will hear you too.

Are there any questions or comments?

If there are no further questions, I now propose that we move to the next
item of business, which is the first resolution before the meeting.

All voting will be by poll to be conducted at the end of the meeting, once
all resolutions have been moved and discussed.

RESOLUTION 1 - Appointment and remuneration of auditor

Section 207T of the Companies Act provides that a company’s auditor is
automatically re-appointed unless there is a resolution or other reason
for the auditor not to be re-appointed. The Company wishes

21
PricewaterhouseCoopers to continue as the company’s auditor and
PricewaterhouseCoopers has indicated its willingness to do so.

Section 207S of the Companies Act provides that the fees and expenses
of the auditors are to be fixed in such manner as the company
determines at the Annual Meeting. The Board proposes that, consistent
with past practice, the auditor’s fees be fixed by the directors.

I therefore:
• Record that the auditors, PricewaterhouseCoopers, are re-
appointed as auditors; and
• Move that the directors be authorised to fix the auditor’s
remuneration for the coming year.

Is there any discussion?

RESOLUTION 2 - Re-elect Warren Lee as a director

I now move to the re-election and the election of directors.
The next resolution concerns the re-election of Warren Lee. Warren
retires by rotation and is also offering himself for re-election.
I invite Warren to address this meeting.

Thank you, Warren.I will now move that Warren be re-elected as a
director of Tower Limited.

Is there any discussion?

22
RESOLUTION 3 - Re-elect Graham Stuart as a director

I now move to the re-election and the election of directors.
The next resolution concerns the re-election of Graham Stuart. Graham
retires by rotation and is also offering himself for re-election.
I invite Graham to address this meeting.

Thank you, Graham. I will now move that Graham be re-elected as a
director of Tower Limited.

Is there any discussion?

RESOLUTION 4 - Elect Marcus Nagel as a director

The next resolution concerns the election of Marcus Nagel. The
Directors put forward Marcus Nagel for election on the basis described
in the explanatory notes in the notice of meeting. I now invite Marcus to
address this meeting.

Thank you, Marcus. I will now move that Marcus be elected as a director
of Tower Limited.

Is there any discussion?

We will now undertake a formal vote on the resolutions. If you wish to
vote you will have either the Voting/Proxy Form sent to you with the

23
notice of meeting, or a voting form given to you by Computershare when
you entered the meeting.

When you cast your vote please tick one box, either for, against, or to
abstain alongside each resolution.
In all cases, please ensure that you
sign the form once your vote has been cast.

If you are here as a proxy on behalf of a shareholder you will need to
cast that shareholder’s votes in order for them to be counted.

If you do not have a voting form please go to the registration desk at the
entrance to this room to as k for help.

So, if you haven’t already done so, please cast your votes. I will then ask
Computershare to collect the voting papers.
The votes will then be
counted under the scrutiny of our auditor.

Right, let’s move on. The final item on our agenda is General Business:

Are there any matters of General Business? Or any further questions?

The Directors will also be happy to answer questions from shareholders
while refreshments are served at the end of the meeting. Any person
wishing to speak should move to the microphone nearest to them and
please introduce yourself.

Thank you.

24

That brings us to the conclusion of our business today and it remains for
me first, to thank you for your participation in today’s meeting, and
secondly to invite you to join the Board, Executive Leadership Team and
Auditors for refreshments next door.

I declare the meeting closed. Thank you.

Meeting agenda
2
•Chairman’s address
•C E O ’s address and performance overview
•Q ues tio ns
•Board resolutions
•General business

Transformation of iconic NZ brand is driving growth
•Strategic focus on customers is delivering s tro ng growth
•Im ple m e ntatio n of leading technology will accelerate growth
•Reported F Y 18 r e s u lt reflects impacts of Peak Re settlement, severe weather and Canterbury
Earthquake provisions
•To we r ’s Board has signalled its intent to recommence dividends at the end of FY19. Where
prudent to do so, Tower’s Board will pay a dividend of 50% - 70% of NPAT

Consumer trust and confidence has never been more important
•FMA, RBNZ and Australian banking Royal Commission have shone a spotlight on financial services
conduct
•Tower’s high customer trust is driven by an ethical and transparent approach to change
•
Tower is proudly Kiwi, 150 years old, listed on the New Zealand stock exchange, strong ethical
business practices and is independent from any Australian owner


Chairman's update
3

Performance to September 2018
5
•S ignificant N Z growth
•S tro ng digital s ales co ntinue
•Pacific remediation has positioned us for future growth
•Moved to risk-based pricing fo r all New Zealanders
Strong growth achieved
Key metrics FY18 FY17
G ro s s writte n premium (GWP)
$336m $ 3 12 m
Growth in GWP
7. 6 % 3.0%
Growth in GWP in core
1
NZ portfolio
11.9 % 6.0%
Increase in risks
2
in core NZ portfolio
18 , 19 2 11, 4 10
Claims expenses
$ 15 2 m $ 13 2 m
Claims expense ratio
56.4% 5 1.2 %
Open Canterbury earthquake claims
16 3 323
Management expense ratio
39.0% 39.9%
U nde rly ing profit afte r tax
$ 13 .6 m $ 18 .0 m
Re po rte d lo s s afte r tax
$6 .7m $8.0m



•Pacific claims ratio significantly impacted by severe weather
•F Y18 claims ratio impacted by development of prior year claims
•NZ claims ratio impacted by industry wide inflation
•Reinsurance secured on favourable terms to reduce impacts

Increases to claims costs

•M anagement expense ratio reduced
•Major technology upgrade progressing well
•Continued resolution of Canterbury E arthquake claims


Other achievements




1.Following the end to Tower’s distribution relationship with Kiwibank on 4 A pril 2 0 18 , th e
‘core’ portfolio now refers to the NZ business excluding the ANZ Bank and Kiwibank
portfolios. The FY17 comparative has been restated to be consistent with this approach.
2.In prior years Tower has reported volumes using policy numbers as the relevant metric.
Tower has changed to using risk numbers as the key metric in FY18 to align with internal
management reporting and to better illustrate risk exposures, e.g., where one policy might
cover several risks.

Capital raise successfully completed with over 88%
of shareholders taking up rights
At 30 September 2018, $78m of solvency margin
was held in Tower Insurance Limited (TIL); $28m
above RBNZ requirements and equivalent to 234%
of minimum solvency capital
Since 30 September 2018, TIL’s solvency margin
has improved by $13m, with a solvency ratio of
256% at 31 January 2019
Net corporate cash has reduced to $10m due to
expenditure on IT investment
Strong capital base supports growth while
providing a buffer against legacy risks. Remaining
IT investment to be funded from debt where
appropriate.
A robust solvency position
6
TOWER INSURANCE LIMITED SOLVENCY POSITION
PLUS CORPORATE CASH ($m)
200%
180%
100%
•Strong capital position has been maintained
•Funding in place to support continuing investment

Strategy to challenge the market
7
Medium-term operating targets:
•GWP growth of 8-10%
•Combined Operating Ratio < 85%
•Return on equity of 14 – 16%
•Digital challenger positioning enables us to achieve
medium-term targets
Operational
Excellence
Underwriting
Excellence
Amazing Claims
Experiences
Stunningly Simple
Products
Great
Value for Money
Challenger
Value
Proposition
Company
purpose
Setting
it right
for customers
and their
communities

FY19 priorities
8
1. Drive digital transformation 2. Keep driving growth
3. Improve profitability 4. Continue controlling expenses

Trading update to 31 January 2019
9
•Continued momentum in GWP, with core N Z GWP up 7. 9 %
•C ontinued underwriting and pricing enhancements driving improved mix and
addressing inflation, with claims ratio excluding large events reducing to 43.8%, from
5 2 . 3 % in F Y 18
•P acific contribution returning to his toric levels
•M aintained a steady management expense ratio
•C ontinued progress closing Canterbury Earthquake claims
•No change to Tower’s FY19 guidanc e o f underlying NPAT in excess of $22m, noting that
this guidance continues to assume the $10m aggregate reinsurance excess for large
events will be fully utilis ed

•While only four months into the financial year, we are pleased that
momentum is continuing

Update on major tech upgrade
10
Development and build of phase 1 complete, testing has commenced
•70% of technology build complete, with development and build of phase 1 now achieved, which includes:
•New business platform
•Digital interface
•New telephony and customer communication system
•P has e 1 sys tem integration tes ting underway , with new business to be live from first half of 2019 calendar year

Phased delivery approach
•Review of implementation approach undertaken with decision made to reduce risk associated with concurrent
delivery of multiple phases
•Phase 2 will now be delivered in second half of 2019 calendar year, with total programme costs estimated at
$45m
•This is a 17% increase on the Board’s approved investment of $38.5m (including contingency)
•Programme delivery has been de-risked through phased implementation approach and increased testing
•Scope of programme extended to incorporate partner business, based on success achieved to date

•Focused on delivering IT transformation and achievement of benefits
•New platform will drive growth and reduce costs

Board resolutions
13
Resolution 1
•Appointment and remuneration of auditor

Resolution 2
•Re-elect Warren Lee as a dire cto r

Resolution 3
•Re-elect Graham Stuart as a dire cto r

Resolution 4
•Elect M arcus N agel as a dire cto r

This presentation has been prepared by Tower Limited to provide shareholders with information on Tower’s business. This document is part of, and
should be read in conjunction with an oral briefing to be given by Tower. A copy of this webcast of the briefing is available at
http://www.tower.co.nz/investor-centre/ It contains summary information about Tower as at 30 September 2018 and 31 January 2019, which is general
in nature, and does not purport to contain all information a prospective investor should consider when evaluating an investment. Solvency information is
estimated for the period 1 October 2018 to 31 January 2019. It is not an offer or invitation to buy Tower shares. Investors must rely on their own enquiries
and seek appropriate professional advice in relation to the information and statements in relation to the proposed prospects, business and operations of
Tower. The data contained in this document is for illustrative purposes only. Past performance is not a guarantee of future performance and must not be
relied on as such. The information in this presentation does not constitute financial advice.
Forward looking statements
This document contains certain forward-looking statements. Such statements relate to events and depend on circumstances that will occur in the future
and are subject to risks, uncertainties and assumptions. There are a number of factors which could cause actual results and developments to differ
materially from those expressed or implied by such forward-looking statements, including, among others: the enactment of legislation or regulation that
may impose costs or restrict activities; the re-negotiation of contracts; fluctuations in demand and pricing in the industry; fluctuations in exchange
controls; changes in government policy and taxation; industrial disputes; and war and terrorism. These forward-looking statements speak only as at the
date of this document.
Disclaimer
Neither Tower nor any of its advisers or any of their respective affiliates, related bodies corporate, directors, officers, partners, employees and agents
(other persons) makes any representation or warranty as to the currency, accuracy, reliability or completeness of information in this presentation. To the
maximum extent permitted by law, Tower and the other persons expressly disclaim any liability incurred as a result of the information in this Presentation
being inaccurate or incomplete in any way. The statements made in this presentation are made only as at the date of this presentation. The accuracy of
the information in this presentation remains subject to change without notice.

Disclaimer
15