Tower Limited HY 2021 Results for Announcement to Market

Tower Limited
Level 14, 45 Queen Street
Auckland 1142, New Zealand
ARBN 645 941 028
Incorporated in New Zealand
26 May 2021



Tower Limited Half Year 2021 Results Announcement

In accordance with NZX Listing Rule 3.5.1, please find enclosed the following for release to
the market in relation to Tower Limited’s (NZX/ASX: TWR) Half Year 2021 Results:

1 Media Release
2 Results Announcement
3 Interim Financial Statements (including Independent Review Report)
4 Results Announcement Presentation
5 Results Announcement Call Script
6 NZX Distribution Notice

Tower’s Chairman Michael Stiassny, Chief Executive Officer, Blair Turnbull and Chief Financial Officer,
Jeff Wright will discuss the half year results at 10:00am New Zealand time today.

For the purposes of ASX Listing Rule 1.15.3 Tower confirms that its primary listing is on the main board
of the New Zealand Stock Exchange and Tower therefore continues to comply with the NZX Listing
Rules.

ENDS

Authorised by the Board.

Rachael Watene
Company Secretary

For further information, please contact:

Emily Davies
Head of Corporate Affairs and Reputation
+64 21 815 149
emily.davies@tower.co.nz

---

Tower Limited
Level 14, 45 Queen Street
Auckland 1142, New Zealand
ARBN 645 941 028
Incorporated in New Zealand
Market Information Company Announcements Office
NZX Limited ASX Limited
Level 1, NZX Centre Exchange Centre
11 Cable Street Level 6, 20 Bridge Street
Wellington Sydney NSW 2000
New Zealand Australia


26 May, 2021

Tower records sound half year result, restarts dividend payments and reinforces positive long-term growth
Kiwi insurer, Tower Limited (NZX/ASX:TWR) has today reported half year profit of $12m, down from $14.9m for
the half year 2020. Underlying profit before large events was $18m, 5% lower than the prior year.

Positive growth and ongoing reduction in management expenses have been offset by several factors that Tower
has taken decisive action to address. These include an increase in large events and large house claims, rising
building costs, and lower investment income.

The large events comprise a $9.3m impact before tax, up from $2.8m in HY20, and included the large fire at Lake
Ōhau village and severe flooding in Napier in late 2020.

Recognising increasing house claims cost and reducing investment income, Tower has revised its underlying net
profit after tax FY21 guidance to a range of $25m to $27m, assuming large events of $9.7m.

Tower’s technology and distribution strategy continues to deliver growth with the insurer increasing gross written
premium (GWP) by 6% to $194m over the six months to 31 March. This was achieved despite the Pacific business
declining 16% primarily as a result of economic challenges related to Covid-19. Tower’s flagship Direct business
grew 14% and its Partnership business grew by 3% over the period. New Zealand personal lines market share
increased to 9.3% from 8.6% in HY20.

Disciplined cost control and improved efficiencies have seen Tower’s overall management expense ratio (MER)
improve to 36.5% versus 39% in HY20, with its Tower Direct business improving MER to 31%.

Tower is well capitalised and confirmed its first dividend in five years
Tower confirmed a dividend of 2.5 cents to be paid on 14 July, reflecting resolving legacy issues and consistent
growth. Under Tower’s dividend policy, the full year guidance would equate to an approximate full year dividend
payment in the range of 5 cents to 5.5 cents per share.

As at 31 March Tower’s (New Zealand Parent) solvency ratio was 309% and the company was holding $97m above
the regulatory solvency requirement.

A focus on claims and supply chain
Tower CEO Blair Turnbull says the company has performed well in a number of key areas and these will continue
to improve as Tower progresses its technology and distribution strategy. At the same time Tower is proactively
addressing factors that have impacted profits this half.
The frequency of large house claims (claims totalling more than $50,000) has doubled to 52 large house claims
totalling $9m in the first half compared to 26 large house claims worth $4.9m in the corresponding period of
FY20. Over the past year the average cost of house claims has risen 8% to $4,620 per claim reflecting rising
building costs.

Tower Limited
Level 14, 45 Queen Street
Auckland 1142, New Zealand
ARBN 645 941 028
Incorporated in New Zealand
Turnbull says, “Tower’s investments in technology mean we are well placed to respond rapidly with rating and
underwriting actions to address these challenges. We have commenced a review of our FY21 claims experience
and will also work with our supply chain to realise efficiencies and manage increases in claims costs.

“These actions will take time to gain traction, however we expect to begin realising benefits in the second half,”
he said.

Premium growth through new unique partnerships and product innovation
CEO Blair Turnbull says in the last six months Tower has announced a number of partners to diversify and grow
the business’ distribution footprint. These include new commercial relationships with New Zealand Defence Force
(NZDF) and Auckland Council, as well as CSC Buying Group and insurtech start-up, Sentro.

This week Tower announced it will underwrite Australian insurance start-up, Huddle’s entry to New Zealand to
bring scalable growth for the company along with a unique offering to Kiwis.

Tower has signed an agreement with one of the world’s largest insurers, Allianz Partners to introduce new
products including travel and pet insurance to our customers. This will support revenue growth and retention.
Tower also expanded its cover over the half to include growing markets such as electric vehicles, e-bikes and e-
scooters and is digitising its online boat experience.

MyTower driving customer engagement and efficiency
The MyTower digital platform has performed strongly during the half. More than 100,000 customers are now
registered on Tower’s flagship offering.

Turnbull says, “We have a technology advantage and a data focus which sets us apart from our competitors and
affords strong long-term growth prospects. Our cloud-based, digital platform enables us to scale quickly as we
acquire new business and migrate customers to our advanced technology.

“As a business we have shed our legacy issues and we are acting decisively to address emerging external
pressures. Tower ends this half year in a very solid capital and solvency position with a strategy to deliver
sustainable shareholder value.”


ENDS

This announcement has been authorised by the Tower Board.

TOWER
Blair Turnbull
Chief Executive Officer

For media enquiries, please contact in the first instance:
Emily Davies
Head of Corporate Affairs and Reputation
Tower Limited
Mobile: +64 21 815 149
Email: emily.davies@tower.co.nz

---

Results announcement


Results for announcement to the market
Name of issuer Tower Limited
Reporting Period 6 months to 31 March 2021
Previous Reporting Period 6 months to 31 March 2020
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$203,539 2%
Total Revenue $203,539 2%
Net profit/(loss) from
continuing operations
$11,501 (20)%
Total net profit/(loss) $11,501 (20)%
Interim/Final Dividend
Amount per Quoted Equity
Security
$0.02500000
Imputed amount per Quoted
Equity Security
Nil
Record Date 30 June 2021
Dividend Payment Date 14 July 2021
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.56 $0.56
A brief explanation of any of
the figures above necessary to
enable the figures to be
understood
Please refer to the attached investor presentation and media
release for commentary on the results.
Authority for this announcement
Name of person authorised to
make this announcement
Rachael Watene, Company Secretary
Contact person for this
announcement
Emily Davies, Head of Corporate Affairs and Reputation
Contact phone number +64 21 815 149
Contact email address emily.davies@tower.co.nz
Date of release through MAP 26 May 2021

Unaudited financial statements accompany this announcement.

---

Tower Limited
Consolidated
interim
financial
statements
for the half year ended 31 March 2021

Tower Limited
Consolidated interim financial statements
Financial Statements
Consolidated statement of comprehensive income2
Consolidated balance sheet3
Consolidated statement of changes in equity4
Consolidated statement of cash flows5
Notes to the interim financial statements
1Overview6
1.1About this report6
1.2Critical accounting judgements and estimates6
1.3Segmental reporting7
2Underwriting activities8
2.1Net claims expense8
2.2Net outstanding claims8
2.3Receivables9
3Investments10
3.1Investment income10
3.2Investment assets10
3.3Fair value hierarchy10
4Risk Management11
4.1Capital risk management11
5Capital structure12
5.1Contributed equity12
5.2Earnings per share12
6Other balance sheet items13
6.1Intangible assets13
7Other information14
7.1Notes to the consolidated cash flow statement14
7.2Contingent liabilities15
7.3Subsequent events15
7.4Capital commitments15
7.5Change in comparatives15
1

Tower Limited
Consolidated statement of comprehensive income
For the half year end 31 March 2021
$ thousandsNote31-Mar-2131-Mar-20
Gross written premium
194,563 183,627
Unearned premium movement
1,317 3,708
Gross earned premium
195,880 187,335
Outward reinsurance premium
(27,320)(28,271)
Movement in deferred reinsurance premium
(804)342
Outward reinsurance premium expense
(28,124)(27,929)
Net earned premium167,756 159,406
Claims expense(106,146)(94,509)
Less: Reinsurance and other recoveries revenue4,683 6,582
Net claims expense2.1(101,463)(87,927)
Gross commission expense(10,194)(10,402)
Commission revenue2,047 3,504
Net commission expense(8,147)(6,898)
Underwriting expenses(40,704)(43,995)
Underwriting profit17,442 20,586
Investment income3.1716 2,242
Investment expenses (241)(243)
Other income213 103
Other expenses(26)(29)
Financing and other costs(137)(591)
Profit before taxation17,967 22,068
Tax expense(5,936)(7,207)
Profit after taxation12,031 14,861
Items that may be reclassified to profit or loss
Currency translation differences(1,418)1,396
Items that will not be reclassified to profit or loss
Other reserves(6) -
Other comprehensive income net of tax(1,424)1,396
Total comprehensive income for the half year10,607 16,257
Earnings per share:
Basic and diluted profit per share (cents)
5.22.7 3.5
Profit after taxation attributed to:
Shareholders
11,501 14,410
Non-controlling interests
530 451
12,031 14,861
Total comprehensive income attributed to:
Shareholders
10,079 15,807
Non-controlling interests
528 450
10,607 16,257
The above statement should be read in conjunction with the accompanying notes.
2March balances unaudited, September audited

Tower Limited
Consolidated balance sheet
As at 31 March 2021
$ thousandsNote31-Mar-2130-Sep-20
Assets
Cash and cash equivalents
7.185,127 80,108
Investments3.2267,481 237,904
Receivables 2.3197,801 250,746
Current tax assets12,892 12,892
Deferred tax assets22,328 26,832
Deferred insurance costs30,854 34,667
Right-of-use assets6,161 7,211
Property, plant and equipment 9,385 10,041
Intangible assets6.197,284 84,954
Total assets729,313 745,355
Liabilities
Payables48,135 66,600
Unearned premiums201,319 203,452
Outstanding claims
2.2105,538 107,747
Lease liabilities7,515 8,695
Provisions6,761 9,531
Current tax liabilities908 821
Deferred tax liabilities1,367 1,346
Total liabilities371,543398,192
Net assets357,770347,163
Equity
Contributed equity5.1492,424 492,424
Accumulated losses(31,514)(42,990)
Reserves(105,828)(104,431)
Total equity attributed to shareholders355,082 345,003
Non-controlling interests2,688 2,160
Total equity357,770 347,163
The above statement should be read in conjunction with the accompanying notes.
The interim financial statements were approved for issue by the Board on 26 May 2021.
Michael P StiassnyGraham R Stuart
ChairmanDirector
3March balances unaudited, September audited
GrahamRRRRRRRRRRRRRRRRRRRRRSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSStututututututututtttutututututtuttutututuutututuututuuuttutuuuuuuuuararararararararaaarararararararararaaaraaaraararaaaaaaaaraaattttttttttttttttttMichael PPPPPPPPPPPPPPStiassny
Chairmannnnnnnnnnnnn

Tower Limited
Consolidated statement of changes in equity
As at 31 March 2021
$ thousands
Contributed
equity
(Accumulated losses) /
Retained earnings
Reserves
Non-controlling
interest
Total Equity
Half year ended 31 March 2021
Balance as at 30 September 2020
492,424 (42,990) (104,431) 2,160 347,163
Comprehensive income
Profit for the half year - 11,501 - 530 12,031
Currency translation differences - - (1,416)(2)(1,418)
Other - (25)19 - (6)
Total comprehensive income - 11,476 (1,397)528 10,607
Transactions with shareholders
Net proceeds of capital raise
- - - - -
Total transactions with shareholders - - - - -
At the end of the half year492,424(31,514) (105,828)2,688357,770
Half year ended 31 March 2020
Balance as at 30 September 2019
209,990 (36,101)9,808 1,801 185,498
Impact of amalgamation - 107,160 - - 107,160
Balance post amalgamation 209,990 71,059 9,808 1,801 292,658
Adjustment on initial application of NZIFRS16 - (1,333) - (4)(1,337)
Restated balance at beginning of the year 209,990 69,726 9,808 1,797 291,321
Comprehensive income
Profit for the half year - 14,410 - 451 14,861
Currency translation differences - - 1,399 (3)1,396
Total comprehensive income - 14,410 1,399 448 16,257
Transactions with shareholders
Net proceeds of capital raise45,001 - - - 45,001
Total transactions with shareholders45,001 - - - 45,001
At the end of the half year254,99184,13611,2072,245352,579
The above statement should be read in conjunction with the accompanying notes.
Attributed to Shareholders
Please note, Tower amalgamated its corporate structure on 30 September 2020. The impact of amalgamation and
how it has been treated by Tower in its financial statements is detailed in the 2020 Annual Report; specifically: note
1.2(c), 5.2, and 8.2.
4March balances unaudited, September audited

Tower Limited
Consolidated statement of cash flows
For the half year ended 31 March 2021
$ thousandsNote31-Mar-2131-Mar-20
Cash flows from operating activities
Premiums received 195,216 188,372
EQC settlement
receipt*42,142-
Interes
t received 2,555 4,015
Fee and other income received1,406 3,578
Reinsurance and other recoveries received10,716 5,982
Reinsurance paid(33,866)(29,090)
Claims paid(108,353)(112,473)
Employee and supplier payments(49,663)(55,534)
Income tax paid(1,325)(816)
Net cash inflow from operating activities 7.158,828 4,034
Cash flows from investing activities
Proceeds from sale of interest bearing investments66,010 27,032
Proceeds from sale of unlisted equity investments572 -
Payments for purchase of interest bearing investments(98,413)(24,208)
Payments for purchase of intangible assets (4,776)(4,660)
Payments for purchase of customer relationships**(14,000)(9,473)
Payments for purchase of property, plant & equipment(470)(1,799)
Net cash outflow from investing activities (51,077)(13,108)
Cash flows from financing activities
Proceeds from share capital issuance-47,299
Payments for cost of share capital issuance-(2,298)
Facility fees and interest paid(137)(581)
Payment relating to principal element of lease liabilities(1,190)(1,424)
Net cash (outflow)/inflow from financing activities (1,327)42,996
Net increase in cash and cash equivalents6,424 33,922
Effect of foreign exchange rate changes(1,405)487
Cash and cash equivalents at the beginning of the half year 80,108 67,018
Cash and cash equivalents at the end of the half year 85,127 101,427
The above statement should be read in conjunction with the accompanying notes.
** The 2021 balance represents the purchase of ANZ's rights and obligations relating to servicing a portfolio of
insurance underwritten by Tower. Please refer to note 6.1 for more information. The comparative 2020
balance reflects the net cashflow associated with the purchase of Youi NZ Pty Ltd's insurance portfolio.
* This represents the net proceeds (i.e. after distribution to reinsurers) received in settlement of the EQC
re
ceivable in respect of claims costs related to the 2010 and 2011 Christchurch earthquakes. Please refe
r to
note 2.3 for more in
formation.
5March balances unaudited, September audited

Tower Limited
Notes to the interim financial statements
1
1.1About this Report
a. Entities reporting
b. Statutory base
c. Basis of preparation
d. Accounting policies
1.2Critical accounting judgments and estimates
Net outstanding claimsNote 2.4, Annual Report (30 September 2020)
Intangible assets and goodwillNote 6.2, Annual Report (30 September 2020)
Deferred taxationNote 7.3, Annual Report (30 September 2020)
Overview
In preparing these interim financial statements management is required to make estimates and related
assumptions about the future. The estimates and related assumptions are based on experience and other factors
that are considered to be reasonable, and are reviewed on an ongoing basis. Revisions to the estimates are
recognised in the period in which they are revised, or future periods if relevant. The key areas in which estimates
and related assumptions are applied are as follows:
The interim financial statements for the six months ended 31 March 2021 are unaudited.
The principal accounting policies adopted in the preparation of the interim financial statements are consistent
with thos
e of the audited annual financial statements for the year ended 30 September 2020.
This section provides information that is helpful to an overall understanding of the interim financial statements
and the areas of critical accounting judgements and estimates included in the interim financial statements. It also
includes a summary of Tower's operating segments.
The interim financial statements presented are those of Tower Limited and all of its subsidiaries (the "Group").
T
he address of the Group's registered office is 45 Queen Street, Auckland, New Zealand.
Tower Limited (the "Parent") is a company incorporated in New Zealand under the Companies Act 1993 and listed
on the N
ZX Main Board and the Australian Securities Exchange. The Company is a reporting entity u
nder Part 7 of
the
Financial Markets Conduct Act 2013.
The interim financial statements of the Group have been prepared in accordance with New Zealand Generally
Accepted Accou
nting Practice (NZ GAAP), and for the purposes of NZ GAAP, the Group is a for-profit entity. Th
ey
comply with N
Z IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting and conseque
ntly
includ
e a lower level of disclosure than is required for annual financial statements
.
The interim financial statements should be read in conjunction with the annual financial statements for the year
ended 30 September 2020, which have b
een prepared in accordance with International Financial Reportin
g
Standards
and New Zealand Equivalents to International Financial Reporting Standards.
6March balances unaudited, September audited

Tower Limited
1.3Segmental reporting
a. Operating segments
b. Financial performance
$ thousands
New Zealand Pacific Islands OtherTotal
Half year ended 31 March 2021
Gross written premium169,189 25,374 - 194,563
Gross earned premium - external168,311 27,569 - 195,880
Outwards reinsurance expense(19,638)(8,486) - (28,124)
Net earned premium148,673 19,083 - 167,756
Net claims expense(98,236)(3,227) - (101,463)
Net commission expense(7,303)(844) - (8,147)
Underwriting expense(34,202)(6,502) - (40,704)
Underwriting profit8,932 8,510 - 17,442
Net investment income391 84 - 475
Other10 40 - 50
Profit before tax9,333 8,634 - 17,967
Profit after tax5,984 6,047 - 12,031
Half year ended 31 March 2020
Gross written premium153,590 30,037 - 183,627
Gross earned premium - external156,094 31,241 - 187,335
Outwards reinsurance expense(18,925)(9,004) - (27,929)
Net earned premium137,169 22,237 - 159,406
Net claims expense(81,011)(6,916) - (87,927)
Net commission expense(5,538)(1,360) - (6,898)
Underwriting expense(37,247)(6,748) - (43,995)
Underwriting profit13,373 7,213 - 20,586
Net investment income1,484 515 - 1,999
Other(540)23 - (517)
Profit before tax14,317 7,751 - 22,068
Profit after tax9,730 5,131 - 14,861
c. Financial position
Total assets 31 March 2021638,606 101,322 (10,615)729,313
Total assets 30 September 2020650,594 105,376 (10,615)745,355
Total liabilities 31 March 2021320,174 52,075 (706)371,543
Total liabilities 30 September 2020337,408 61,096 (312)398,192
Total equity 31 March 2021318,432 49,247 (9,909)357,770
Total equity 30 September 2020313,186 44,280 (10,303)347,163
Tower operates in two geographical segments, New Zealand and the Pacific region. New Zealand comprises the
general insurance business underwritten in New Zealand. Pacific Islands comprises the general insurance business
underwritten in the Pacific by Tower subsidiaries and branch operations. Other contains balances relating to Tower
Services Limited (management services entity), and also includes intercompany eliminations and group
diversification benefit. Tower does not derive revenue from any individual or entity that represents 10% or more of
total revenue.
7March balances unaudited, September audited

Tower Limited
2Underwriting activities
2.1Net claims expense
31-Mar-2131-Mar-2031-Mar-2131-Mar-2031-Mar-2131-Mar-20
Gross claims expense*105,817 92,333 329 1,809 106,146 94,509
Reinsurance and other recoveries revenue(4,089)(5,982)(594)(233)(4,683)(6,582)
Net claims expense101,728 86,351 (265)1,576 101,463 87,927
2.2Net outstanding claims
31-Mar-2130-Sep-2031-Mar-2130-Sep-2031-Mar-2130-Sep-20
Central estimate of future cash flows70,567 65,475 17,232 21,236 87,799 86,711
Claims handling expense4,288 4,151 1,619 1,908 5,907 6,059
Risk Margin*4,194 4,325 7,638 10,652 11,832 14,977
Gross outstanding claims79,049 73,951 26,489 33,796 105,538 107,747
Reinsurance recoveries(7,698)(9,643)(3,147)(3,246)(10,845)(12,889)
Net outstanding claims71,351 64,308 23,342 30,550 94,693 94,858
Canterbury earthquakeTotal
This section provides information on Tower's underwriting activities.
Tower collects premiums from customers in exchange for providing insurance coverage. These premiums are
recognised as revenue when they are earned by Tower, with a liability for unearned premiums recognised on the
balance sheet.
When customers suffer a loss that is covered by their policy, Tower will make payments to customers or suppliers,
which it recognises as claims expenses. To ensure that Tower’s obligations to customers are properly recorded
within the financial statements, Tower recognises provisions for outstanding claims.
To manage Tower’s risk and optimise its returns, Tower reinsures some of its exposure with reinsurance
companies. The premiums paid to reinsurers are recognised as an expense, while recoveries from reinsurers are
recognised as revenue.
* Includes additional $2.5m (Sept 2020: $5.0m) for the Canterbury earthquake over and above the provision of the
Appointed Actuary, which is set at the 75th percentile of sufficiency. The Board determined to release $2.5m of
this additional risk margin during the period to reflect the reducing risk in relation to Canterbury earthquake
claims. The remaining $2.5m additional risk margin will be reviewed at 30 September 2021.
$ thousands
Exc. Canterbury
earthquake
$ thousands
Exc. Canterbury
earthquake
Canterbury earthquakeTotal
* Includes $2.5m reduction in Canterbury earthquake additional risk margin. See note 2.2 for more information.
8March balances unaudited, September audited

Tower Limited
2.3 Receivables
$ thousands31-Mar-2130-Sep-20
Gross premium receivables169,072 171,041
Provision for impairment(1,558)(1,383)
Premium receivables167,514 169,658
Reinsurance recoveries (non Canterbury earthquake)15,957 15,105
Canterbury earthquake reinsurance recoveries3,147 3,246
Other recoveries5,286 5,262
Reinsurance and other recoveries24,390 23,613
Canterbury EQC earthquake receivables* - 52,883
Prepayments3,418 2,664
Miscellaneous receivables2,479 1,928
Receivables197,801250,746
*Tower received $52.9m (excluding GST) from the settlement agreement with EQC regarding the recovery of
claims costs related to the 2010 and 2011 Christchurch Earthquakes during the period. Tower fully reimbursed
amounts payable to reinsurers of $10.7m and settled other outstanding costs during the period. Tower's net
proceeds from this settlement were $42.1m.
9March balances unaudited, September audited

Tower Limited
3 Investments
3.1Investment income
$ thousands31-Mar-2131-Mar-20
Interest income2,695 4,016
Net realised loss(463)(514)
Net unrealised loss(1,516)(1,260)
Investment income716 2,242
3.2Investments
$ thousands31-Mar-2130-Sep-20
Fixed interest investments267,447 237,298
Equity investments - 572
Property investment34 34
Investments267,481 237,904
3.3Fair value hierarchy
$ thousandsLevel 1Level 2Level 3Total
As at 31 March 2021
Fixed interest investments - 267,447 - 267,447
Property investment - 34 - 34
Investments - 267,481 - 267,481
As at 30 September 2020
Fixed interest investments - 237,298 - 237,298
Equity investments - - 572 572
Property investment - 34 - 34
Investments - 237,332 572 237,904
Tower designates its investments at fair value through the statement of comprehensive income in accordance
with its Treasury policy.
Net realised losses relate to the maturity of fixed interest bonds, with interest coupon rates higher than market
rates, purchased at higher than face value. The corresponding higher interest received is reflected in the interest
income amount.
Tower sold its investment in the unlisted reinsurance company Pacific Re in November 2020. It was sold at its
carrying value as at 30 September 2020.
Tower invests funds collected as premiums and provided by shareholders to ensure it can meet its obligations to
pay claims and expenses and to generate a return to support its profitability. Tower has a low risk tolerance and
therefore the majority of its investments are in investment grade supranational and bank bonds.
10March balances unaudited, September audited

Tower Limited
4 Risk Management
4.1 Capital management risk
Regulatory solvency capital
$ thousands
ParentGroupParentGroup
Actual solvency capital180,443 214,441 150,451 181,214
Minimum solvency capital58,315 71,032 52,342 65,728
Solvency margin122,127 143,409 98,110 115,485
Solvency ratio309%302%287%276%
31-Mar-2130-Sep-20
The Reserve Bank of New Zealand ("RBNZ") reduced the minimum solvency margin required to be held by
Tower under its licence condition from $50m to $25m in March 2021.
Tower is exposed to multiple risks as it works to set things right for its customers and their communities
whilst maximising returns for its shareholders. Everyone across the organisation is responsible for ensuring
that Tower's risks are managed and controlled on a daily basis.
11March balances unaudited, September audited

Tower Limited
5 Capital Structure
5.1Contributed equity
$ thousands31-Mar-2130-Sep-20
Opening balance492,424 209,990
Issue of share capital - 45,000
Cancellation of shares on amalgamation - (254,990)
Recognition of shares on amalgamation - 492,424
Total contributed equity492,424492,424
Represented by:
Opening balance421,647,258 211,107,758
Issued shares - 45,000,000
Cancellation of shares on amalgamation - (256,107,758)
Recognition of shares on amalgamation - 421,647,258
Total shares on issue421,647,258421,647,258
5.2Earnings per share
31-Mar-2131-Mar-20
Profit attributable to shareholders ($ thousands)11,501 14,410
Weightedaverage number of ordinary shares for basic anddiluted
earnings per share (number of shares)
421,647,258 412,698,050
Basic and diluted earnings per share (cents)2.7 3.5
This section provides information about how Tower finances its operations to provide financial security to its
customers, employees and other stakeholders.
12March balances unaudited, September audited

Tower Limited
6 Other balance sheet items
6.1 Intangible assets
As at 31 March 2021
$ thousands
GoodwillSoftware
Customer
Relationships*
Total
Composition:
Cost17,744 103,127 28,222 149,093
Accumulated amortisation - (48,355)(3,454)(51,809)
Intangible Assets17,74454,77224,76897,284
Reconciliation:
Opening balance17,744 54,972 12,238 84,954
Amortisation - (4,976)(1,470)(6,446)
Additions - 5,402 14,000 19,402
Disposals - (237) - (237)
Transfers - (389) - (389)
Closing Balance17,74454,77224,76897,284
As at 30 September 2020
Composition:
Cost17,744 98,351 14,222 130,317
Accumulated amortisation - (43,379)(1,984)(45,363)
Intangible Assets17,74454,97212,23884,954
Reconciliation:
Opening balance17,744 56,467 - 74,211
Amortisation - (8,866)(1,984)(10,850)
Additions - 7,534 14,222 21,756
Disposals - (43) - (43)
Transfers - (120) - (120)
Closing Balance17,74454,97212,23884,954
*Tower acquired and assumed ANZ's rights and obligations relating to servicing a portfolio of insurance
underwritten by Tower. Tower provided insurance for ANZ and National Bank customers between 1990 and
2009 and continues to cover over 23,000 people under those policies. On completion of the acquisition of the
rights and obligations these customers will be insured directly by Tower under a Tower branded policy. The
amount capitalised includes the price paid for acquiring the portfolio outright and associated acquisition costs.
The asset will be amortised over a 5 to 10 year period, with the pattern of amortisation being aligned with
expected net cashflow benefits over this period.
This section provides information about assets and liabilities not included elsewhere.
13March balances unaudited, September audited

Tower Limited
7
7.1
Composition of Cash and cash equivalents
$ thousands31-Mar-2131-Mar-20
Cash at bank67,357 46,221
Deposits at call17,770 54,645
Restricted cash - 561
Cash and cash equivalents85,127 101,427
Reconciliation of profit for the half year to cash flows from operating activities
Profit for the half year12,031 14,861
Adjusted for non-cash items
Depreciation of property, plant and equipment1,052 1,004
Depreciation, impairment and disposals of right-of-use assets1,123 1,351
Amortisation of intangible assets6,446 4,869
Fair value losses on financial assets1,978 1,773
Change in deferred tax4,525 4,867
Change in receivables57,031 (483)
Change in payables(25,581)(25,561)
Change in taxation86 772
Facility fees and interest paid137 581
58,828 4,034
Adjusted for financing activities
Net cash inflows from operating activities
Other information
This section includes additional disclosures which are required by financial reporting standards.
Notes to the consolidated statement of cash flows
Adjusted for movements in working capital
14March balances unaudited, September audited

Tower Limited
7.2Contingent liabilities
Claims and disputes
Reinsurance programme
7.3Subsequent events
7.4Capital commitments
7.5Change in comparatives
Amalgamation Update
Tower amalgamated its corporate structure on 30 September 2020 and no longer has specific corporate
entities. The statement of comprehensive income has been updated to reflect this change. "Corporate and
other expenses" has been renamed "other expenses" and corporate expenses have been moved to
underwriting expenses (total $1.6m). "Corporate and other income" has been renamed "other income".
All income that was previously defined as corporate remains. In addition in note 1.3 the segment "Other"
has been updated to remove Corporate entities.
The Group has no other contingent liabilities.
The Group is occasionally subject to claims and disputes as a commercial outcome of conducting insurance
business. Provisions are recorded for these claims or disputes when it is probable that an outflow of
resources will be required to settle any obligations. Best estimates are included within claims reserves for
any litigation that has arisen in the usual course of business.
An interim dividend of 2.5 cents per share was declared on 26 May 2021, with the dividend being payable
on 14 July 2021. The anticipated cash impact of the interim dividend is approximately $10.5m.
As at 31 March 2021, Tower has entered into a new lease commitment for its Auckland premises. The lease
will be for a term of 10 years with commencement expected towards the end of the 2021 financial year.
Upon commencement, Tower estimates that it will recognise an initial right-of-use asset of approximately
$21.6m and an initial lease liability of approximately $30.6m with the difference primarily representing
lease incentives.
During preparation for the FY22 reinsurance programme, a review of the FY21 programme identified that a
number of policies were omitted in the original dataset provided to the reinsurers. This was caused by the
process of migration of policies to Tower’s new platform. Tower is working with its reinsurance advisor and
reinsurers to understand the consequences of the data omission, and the impact, if any, on the total FY21
reinsurance expense. At this stage, as any financial impact is both uncertain and cannot be reliably
measured, no provision has been made at this time.
15March balances unaudited, September audited

PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand
T: +64 9 355 8000, www.pwc.co.nz
Independent auditor’s review report
To the shareholders of Tower Limited


Report on the consolidated interim financial statements

Our conclusion
We have reviewed the consolidated interim financial statements of Tower Limited (the Company) and
its subsidiaries (the Group), which comprise the consolidated balance sheet as at 31 March 2021, and
the consolidated statement of comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the half year ended on that date, and selected
explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying consolidated interim financial statements of the Group do not present fairly, in all
material respects, the consolidated balance sheet of the Group as at 31 March 2021, and its financial
performance and cash flows for the half year then ended, in accordance with International Accounting
Standard 34 Interim Financial Reporting (IAS 34) and New Zealand Equivalent to International
Accounting Standard 34 Interim Financial Reporting (NZ IAS 34).
Basis for conclusion
We conducted our review in accordance with the New Zealand Standard on Review Engagements
2410 (Revised) Review of Financial Statements Performed by the Independent Auditor of the Entity
(NZ SRE 2410 (Revised)). Our responsibility is further described in the Auditor’s responsibility for the
review of the financial statements section of our report.
We are independent of the Group in accordance with the relevant ethical requirements in New
Zealand relating to the audit of the annual financial statements, and we have fulfilled our other ethical
responsibilities in accordance with these ethical requirements. In addition to our role as auditor, our
firm carries out other services for the Group in the areas of assurance over solvency and regulatory
insurance returns and agreed upon procedures in respect of voting at the Annual Shareholders
Meeting. In addition, certain partners and employees of our firm may deal with the Group on normal
terms within the ordinary course of trading activities of the Group. These matters have not impaired
our independence.
Directors’ responsibility for the financial statements
The Directors are responsible on behalf of the Company for the preparation and fair presentation of
these consolidated interim financial statements in accordance with IAS 34 and NZ IAS 34 and for such
internal control as the Directors determine is necessary to enable the preparation and fair presentation
of consolidated interim financial statements that are free from material misstatement, whether due to
fraud or error.
Auditor’s responsibility for the review of the financial statements
Our responsibility is to express a conclusion on the consolidated interim financial statements based on
our review. NZ SRE 2410 (Revised) requires us to conclude whether anything has come to our
attention that causes us to believe that the consolidated interim financial statements, taken as a
whole, are not prepared in all material respects, in accordance with IAS 34 and NZ IAS 34. A review of
consolidated interim financial statements in accordance with NZ SRE 2410 (Revised) is a limited
assurance engagement. We perform procedures, primarily consisting of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying analytical and other review
procedures.

PwC 2
The procedures performed in a review are substantially less than those performed in an audit
conducted in accordance with International Standards on Auditing and International Standards on
Auditing (New Zealand) and consequently does not enable us to obtain assurance that we might
identify in an audit. Accordingly, we do not express an audit opinion on these consolidated interim
financial statements.
Who we report to
This report is made solely to the Company’s Shareholders, as a body. Our review work has been
undertaken so that we might state to the Company’s Shareholders those matters which we are
required to state to them in our review report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the Shareholders, as a body,
for our review procedures, for this report, or for the conclusion we have formed.
The engagement partner on the review resulting in this independent auditor’s review report is Karen
Shires.

For and on behalf of:






Chartered Accountants
Auckland, New Zealand
26 May 2021

---

2021 half
year results
1 October 2020 to 31 March 2021
26 MAY 2021

2
Chairman’s update
Michael Stiassny, Chairman
1
Business update
Blair Turnbull, Chief Executive Officer
2
HY21 financial performance
Jeff Wright, Chief Financial Officer
3
Looking forward
Blair Turnbull, Chief Executive Officer
4
Agenda

SOUND BUSINESS PERFORMANCESTRONG AND WELL CAPITALISED
Chairman’s update – solid earnings with positive growth
3
POSITIONED FOR LONG-TERM GROWTH
•
Tower has shed its legacy issues - now
a quality business with very strong
capital position and solvency margin
•
Resilient in the Pacific where Covid has
significantly impacted the economy
•
Capital licensing condition reduced
from $50m to $25m
•
Capital investment – ANZ, Club Marine
•
Delivered solid earnings in 1H21
•
Focused on managing emerging challenges
•
GWP growth through digital and data
platform and unique distribution footprint
•
Continued efficiency improvements
•
Increased claims driven by large events and
higher large house claims frequency -
decisive action to address
•
Dividend - announcing a 2.5¢ dividend per
share – first time since 2016
•
Leading Tower Direct digital business
•
Unique Partnership distribution
capability & a strong pipeline
•
Digitising our Pacific business to
improve efficiency
•
Unique technology partnerships

Solid performance
with a strong platform
for growth

5
Solid performance with a strong platform for growth
vs $18.9m prior year
UNDERLYING NPAT
excl. large events
$18m
$97m above regulatory
requirements
SOLVENCY RATIO (NZ
PARENT)
309%
CUSTOMER NUMBERS
306,000
up 2.8% on prior year
$12m
vs $14.9m prior year
REPORTED PROFIT
incl. large events
$194m
TOWER GROSS WRITTEN
PREMIUM (GWP)
up 6% from $184m prior year
36.5%
MANAGEMENT EXPENSE
RATIO (MER)
-2.5% improvement
on prior year
MARKET SHARE
9.3%
up from 8.6% in Mar ‘20
COMBINED OPERATING
RATIO (COR)
90.3%
Increased +4.9% from
85.4% on prior year

6
2015–2019
TRANSFORMATION
AND RE-PLATFORM
Product rationalisation
Christchurch recovery
$47m investment in cloud-based,
EIS platform implementation
2020 - 2021
RESOLVING LEGACY
ISSUES
EQC settlement
RBNZ solvency condition reduced $25m
Tower entity amalgamation
Continuing customer migration to new
platform
STRENGTHENING THE BUSINESS
Addressing emerging claims inflation pressure through
automation, supply chain efficiency and process improvements
Responding rapidly with rating and underwriting actions to
address higher claims levels
Investigating the risks leading to large house fires through
data science
Understanding links between large events and climate change
2021 +
GROW, PA RTNER AND INNOVATE
Grow flagship Tower Direct
Unique Partnership model
Digitising Pacific to drive efficiency
Leading digital and data capability
A journey of continued focus and streamlining

7
Customer and premium growth
CUSTOMER ACQUISITION
COSTS (% of NEP)
12%
1% improvement on prior year
$194m
up 6% on HY20
TOWER GROSS WRITTEN
PREMIUM (GWP) HY21
$113m
TOWER DIRECT GWP HY21
up 14% on HY20
8.6%
8.9%
9.1%
9.2%
9.3%
Mar-20Jun-20Sep-20Dec-20Mar-21
G W P B Y B U S I N E S S U N I T
N Z P E R S O N A L L I N E S M A R K E T S H A R E
•
Tower Direct 14% year on year growth
•
Tower Partnership 3% year on year
growth
•
Pacific business declined 16%
primarily as a result of economic
challenges related to Covid-19
•
Last 12-month GWP $395m
•
Cost to acquire customers has
improved, partially through increased
sales to existing customers
•
Customer numbers grew 2.8% to
306,000
•
Market share grew to 9.3%
$89m
$100m
$113m
$52m
$54m
$55m
$28m
$30m
$25m
$170m
$184m
$194m
HY19HY20HY21
Tower DirectTower PartnersTower Pacific

•
Continuing track record of
decommissioning legacy
systems to improve efficiency.
Targeting to move from 6 to 2
by year end.
•
Future commission footprint
reduced through ANZ
acquisition. Full benefits flow
through H1FY22 onwards.
•
Youi fully complete with
retention in line with acquisition
expectations.
8
41.3%
39.0%
39.3%
36.5%
FY19 H2FY20 H1FY20 H2FY21 H1
31%
Youi complete
ANZ acquisition
Improved 4% on HY20
36.5%
TOWER MANAGEMENT
EXPENSE RATIO (MER)
2.5% improvement
on prior year
TOWER DIRECT MER
REALISING BENEFITS OF
DIGITAL SCALE
Continued improvement in cost efficiencies
M E R
M E R B Y B U S I N E S S U N I T
35%
43%
49%
39%
33%
48%
53%
39%
31%
44%
46%
37%
Tower DirectTower PartnersTower PacificTotal
FY20 H1FY20 H2FY21 H1

9
52%
45%
48%
48%
1%
2%
4%
6%
53%
46%
52%
54%
FY19 H2FY20 H1FY20 H2FY21 H1
C L A I M S R A T I O
BAU EventsLarge Events
Emerging claims inflation
Ōhau fire
Napier flood
$4,620
52
Up 8% on HY20Up from 26 in HY20
$9.3m impact
48%
CLAIMS RATIO EXCL. LARGE
EVENTS
3.6% higher than
prior year
LARGE EVENTS
AVERAGE HOUSE CLAIM
COST
LARGE HOUSE CLAIMS
H I S T O R I C A L L A R G E E V E N T S
$6.5m
$4.5m
$0.2m
$1.1m
$2.8m
$6.9m
$9.3m
FY18 H1FY18 H2FY19 H1FY19 H2 FY20 H1 FY20 H2 FY21 H1

Decisive action to address claims challenges
10
Supply chain optimisation
Research & analysis on
house fires
Automation to enhance
efficiencies
Rating and underwriting
actions
Working with supply chain to enhance efficiencies
and moderate increases in supply chain costs
Reviewing pricing and underwriting policies
Working with data science partners & multiple
stakeholders to analyse risks
Optimising digital claims management to improve
quality of claims assessment, repair and settlement
Ability to leverage digital & data capability to implement actions quickly
Priorities

11
$8.0m$16.9m$11.5m$11.3m
$0.8m
$2.0m
$4.3m
$6.7m
$8.8m
$18.9m
$15.8m
$18.0m
FY19 H2FY20 H1FY20 H2FY21 H1
Underlying NPATLarge events after tax
Core business solid and positioned for long term growth
U N D E R L Y I N G N P A T
•
Three focused businesses – Direct, Partnerships
and Pacific
•
Total HY21 premium of $194m underpinned by
scalable, efficient digital platform
•
Positive growth and ongoing reduction in
management expenses
•
Large events and large house claims have offset
premium growth and are being actively
addressed
$4.9m
$14.9m
-$2.6m
$12.0m
FY19 H2FY20 H1FY20 H2FY21 H1
R E P O R T E D P R O F I T

12*Cash earnings defined as Reported Full Year Net Profit After Tax adjusted for acquisition amortisation and unusual items
Delivering Shareholder Return
last dividend paid based on
the 31 March 2016 half year
$10.5m
5 years
5¢ – 5.5¢
based on achieving
FY21 guidance
ORDINARY
DIVIDEND POLICY
60-80%
of cash earnings* where
prudent to do so
TOTAL INTERIM DIVIDEND
PAYMENT
DIVIDEND RESUMPTIONINDICATIVE COMBINED FULL
AND HALF YEAR DIVIDEND
to be paid 14 July 2021
Interim dividend
confirmed
2.5¢per share

HY21 financial
performance

14
•
HY21 GWP of $193.9m. GWP growth $10.3m on HY20 (+6%)
•
BAU claims expense impacted by higher volume of large house
claims and emerging house claims inflation
•
Management expense ratio improves by 2.5%, realising benefits from
EIS platform
•
Underlying NPAT before large events of $18m is a decrease of 5% on
HY20
•
Profit impacted by lower investment income
•
Reported profit of $12m, decrease of 19% on HY20. Impacted by
$6.5m before tax increase in large events.
Key ratiosHY21HY20Change
Claims ratio excluding large events
48.2%44.6%3.6%
Large events claims ratio
5.6%1.8%3.8%
Expense ratio
36.5%39.0%(2.5%)
Combined ratio
90.3%85.4%4.9%
$ millionHY21 HY20 Change
Gross written premium
193.9 183.6 10.3
Unearned premium
1.33.7(2.4)
Gross earned premium
195.3 187.3 8.0
Reinsurance
(28.1) (27.9) (0.3)
Net earned premium
167.1 159.47.7
BAU claims expense
(80.5) (71.1) (9.4)
Large event claims expense
(9.3) (2.8) (6.5)
Management expenses
(52.9) (55.6) 2.7
Net commission expense
(8.1) (6.9) (1.2)
Underwriting profit
16.222.9(6.7)
Net investment income
0.72.2(1.5)
Other income
0.0 (0.4) 0.4
Tax
(5.6) (7.9)2.3
Underlying NPAT
11.316.9(5.6)
One-off Transactions (net of tax)
0.7 (2.0) 2.7
Reported profit after tax
12.014.9(2.8)
Group underlying financial performance
Note: 1) there has been minor reclassification between management expenses and “other income and expenses” in the comparative period. 2) refer to reconciliation between Underlying
NPAT and Reported profit on page 34.

Movement in underlying profit
15
M O V E M E N T I N U N D E R L Y I N G P R O F I T
•
Net earned premium higher due
to Youi acquisition, and growth in
Tower Direct and Tower
Partnerships
•
Management expenses reduced
following completion of EIS
platform build
•
Large event claims expense well
above HY20
•
BAU claims expenses impacted
by an increase in large house
claims
•
Investment income reduced as a
result of a lower interest rate
environment
$28m
$26m
$17m
$11m
$8m
$1m
$9m
$2m
$9m
$6m
HY20
Underlying
profit before tax
excluding large
events
Net earned
premium
Management
expenses/other
BAU Claims Investment
income
HY21
Underlying
profit before tax
excluding large
events
Large event
claims
HY21
Underlying
profit before tax
Income Tax
Expense
HY21
Underlying
profit after tax

44.6%
48.2%
53.8%
2.3%
1.1%
1.9%
5.6%
0.4%
1.4%
HY20 claims ratio,
excluding large
events
Higher large house Higher house Change in mix to
motor
Lower motorLower Pacific HY21 claims ratio,
excluding large
events
Large Events HY21 claims ratio,
including large
events
$7.8m
$8.1m
$5.6m
$11.6m
$4.9m
$5.5m
$9.0m
32
31
33
47
26
30
52
1H18 2H18 1H19 2H19 1H20 2H20 1H21
Incurred Count
CHANGE IN CLAIMS RATIO VS. PRIOR YEAR
16
Continued focus on improving claims ratio
L A R G E H O U S E C L A I M S
1
1
2
3
2
Large house claims are historically volatile, Tower is working
with data science partners to analyse latest experience and
to review rating and underwriting for house.
Early signs of building cost inflation in house claims are being
monitored and Tower is also working with supply chain to
minimise increases.
Review of end to end claims processes underway to ensure
optimal claims performance.
3
1

17
•
HY21 management expenses reduced $1.5m on
HY20 to $61m in HY21
•
MER improved 2.5% on HY20, down to 36.5%
•
Salary expenses reduced $4.9m following the
completion of the EIS project and May 2020
reorganisation
•
Net commission expenses increased due to the
inclusion of reinsurance profit share income in
HY20
•
Amortisation expense increased largely due to
additional Youi, ANZ & EIS amortisation
M O V E M E N T I N M A N A G E M E N T E X P E N S E S
Continued discipline on management expenses
$62.5m
$61.0m
$1.3m
$0.9m
$1.2m
$4.9m
HY20
Management
Expenses
AmortisationSalaryNon-SalaryNet
Commission
HY21
Management
Expenses

18
•
Continued reduction in open claims with
35 claims closed in HY20
•
16 new EQC overcaps in line with
expectations
•
Gross outstanding claims down to $26.5m
following strengthening of $2.2m due
to tribunal claims settling for more than
expected and increase in allowance for
future claims
•
Release of $2.5m in Additional Risk Margin
reflecting continued run-off of CEQ claims
OPEN CEQ CLAIMS
CEQ claims continue to reduce
CEQ RESERVING
$ millionMar-21 Sep-20 Mar-20 Sep-19 Mar-19 Sep-18
Case estimates
6.99.715.120.829.737.5
IBNR/IBNER
10.411.611.715.517.718.1
CHE
1.61.91.92.52.63.3
Risk margin
5.15.76.77.89.09.0
Additional risk margin
2.55.05.05.05.05.0
Additional provisions
19.624.225.330.834.335.4
Gross outstanding claims
26.533.840.451.664.072.9
59
43
19
35
Properties open as at 30
September 2020
New/reopenedClosedOpen properties 31 March
2021

19
from $50m to $25m
Strong capital and solvency structure
A-
$25m
43
down from 59 as at 30
September 2020
TOWER SOLVENCY RATIO
(PARENT)
309%
$97m capital above regulatory
minimums, following
settlement of EQC receivable
FINANCIAL STRENGTH
RATING RECONFIRMED
AM Best
RBNZ LOWERS LICENCE
CONDITION
CHRISTCHURCH
EARTHQUAKE OPEN CLAIMS
T O W E R S O L V E N C Y $ M ( N Z P A R E N T )
$52.3m
$58.3m
$50.0m
$25.0m
$48.1m
$97.1m
ASC = $150.4m
Ratio = 287%
ASC = $180.4m
Ratio = 309%
30-Sep-2031-Mar-21
TL's MSCTL's Licence ConditionTL's Surplus

•
Lake Ōhau and Napier Flood events resulted in event claims
increasing $6.5m on HY20, to $9.3m in HY21.
•
Aggregate cover applies from $14m of large events
•
Any increase to the H1 $9.3m for large events in H2 will reduce
NPAT by a rate of approximately $0.72m for each $1m until the
aggregate cover applies
•
Tower’s long term average for large events is $8m per annum
20
H I G H - L E V E L R E I N S U R A N C E S T R U C T U R E
O V E R V I E W
Robust reinsurance programme supports resilience
Extended Cat
Cover to $812m
First $10m Cat
and $14m Agg
covered by Tower
Amount of cover for a single
catastrophe event
Catastrophe
cover
(including
earthquakes) To
$767m
$767m
$10m
Aggregate cover
($7.5m per event)
Aggregate cover for multiple large events excluding NZ EQ
$14m
$34m
Dropdown cover $2.5m
(2
nd
and 3
rd
events only)
Prepaid
reinstatement
$10m excess
$767m Limit
Dropdown cover
$45m
(3
rd
event only)
$812m

FY20 Actual
FY21 Guidance
Based on FY20 large events ($9.7m)
Underlying NPAT$28.4m$25m to $27m
FY21 guidance
21
•
Recognising increasing house claims cost and reducing investment income, guidance has been revised from underlying
NPAT of greater than $29.8m to underlying NPAT of $25m to $27m for the year ended 30 September 2021.
•
This revision to guidance reflects (i) higher frequency of large house claims, (ii) emerging house claims inflation (iii) lower
investment income.
•
The revised guidance retains a large event assumption of the same as FY20 at $9.7m.
•
Further increase in claims expense is a potential risk to this guidance. A 1% increase in loss ratio above management
assumptions will result in an approximate $1.2m reduction in underlying NPAT.

Our plan for long term
growth & improvement

23
GROW AND INNOVATE
Relentless focus
on customer
relationships
Leverage digital &
data everywhere
Partner wherever
possible
BUILD FINANCIAL STRENGTH & CAPABILITY
Embracing agile
culture & talent
Maintain a strong
capital & solvency
structure
Clear strategy leveraging our technology, customer and
partnership advantage
Our core strategy for personal lines and small to medium sized commercial
segments, in the New Zealand and Pacific region.

24
MyTower platform improves growth and efficiency
of Tower Direct GWP sold
online
of Tower Direct customers on
MyTower
47% of Tower Direct customers
hold multiple products
100,000
MYTOWER REGISTRATIONS
at April 2021
NZ CUSTOMERS WITH
MULTIPLE PRODUCTS
DIGITAL SALES
BUILDING MYTOWER
MOMENTUM
60%
44%
M Y T O W E R R E G I S T E R E D C U S T O M E R S
8k
37k
82k
4k
13k
18k
13k
50k
100k
Mar-20Sep-20Apr-21
DirectPartners
40%
•
Longevity of a multi-product customer is
around twice that of a single product holder
•
Cost to acquire on MyTower is half that of
telephone service

25
•
Leading Australian insurtech
•
Tower to provide underwriting
•
Launching second half 2021
Unique partnerships distribution drives scalable growth
CSC Buying Group,
NZDF, Auckland
Council
L E A D I N G R E T A I L
P A R T N E R S H I P S
To r e n e w f o r f u r t h e r
f i v e y e a r s
N E W C O R P O R A T E
P A R T N E R S H I P S
L E A D I N G A D V I S O R Y
P A R T N E R S H I P S
NZFSG
TSB
N E W I N S U R T E C H
P A R T N E R S H I P S
leveraging cloud-based API
platform
TradeMe
Sentro
P A R T N E R S H I P S G W P
( e x c l u d e s c l o s e d b o o k s )
$23m
$26m
$29m
HY19HY20HY21
AdvisoryTMICorporate & Insurtech

26
Quality product mix to improve revenue and retention
Boat
insurance
going online
Pet, Travel,
Barracks,
Pacific motor
NEW PRODUCTSINNOVATING TRADITIONAL
PRODUCTS
MODERNISING OUR CORE
PRODUCTS
keeping pace with customer
lifestyles
Electric
vehicle, e-bike
and e-scooter
43% motor,
51% home &
contents
BALANCED NZ INFORCE
PRODUCT MIX
•
Tower partnering with one of the world’s largest insurers
•
New Pet and Travel products offered in 2H, 2021
60% of customers hold single products
only - opportunity through expanded
product range to deepen customer
relationships and increase revenue.

27
Supporting our Culture & Community
58%
of our workforce are
permanently working
from home
to understand and share
climate data
of our workforce
identify as non-European
Carbon audit
completed
NZ FOOTPRINT MEASURED
committed to long-term
improvements
CULTURAL DIVERSITY
FLEXIBLE WORKPLACEWORKING WITH DATA
SCIENCE PARTNERS ON
10%
S I X G R E E N S T A R A U C K L A N D
O F F I C E F R O M A U G U S T 2 0 2 1
Climate research
projects

28
Investing for long term growth
Core business
•
Digital & data cloud-based platform
•
EIS Pacific rollout
•
Customer experience innovation
New Distribution
•
Corporate partnerships
•
Insurtechs – Huddle, Sentro
Product Innovation
•
Boat, Travel, Pet
•
Risk-adjusted pricing
Acquisitions
•
ANZ
•
Club Marine referral
Total FY21
investment
$22m

29
Summary – solid business performance with a platform
for long term growth
•
Well capitalised with strong balance sheet and solvency margins.
•
Focus remains on driving shareholder value by accelerating growth and innovation through a
relentless focus on customers.
•
Taking decisive action to address emerging challenges with claims inflation.
•
Continue to invest in digital and data platform to drive efficiency and support growth.
•
Dividends resumed in HY21.
•
Guidance updated to underlying NPAT$25m to $27m assuming large events of
$9.7m.
•
Analyst day planned for September, 2021.

Questions?

G W P
14% growth on HY20
31
Tower Direct
$113m
C U S T O M E R S
6% growth on HY20
M E R
improvement of 4% on HY20
31%
A N Z B U Y - O U T
Customers to migrate to Tower
Direct
187,000
23,000
•
Second consecutive half of double digit GWP growth
•
Increased customer digital adoption
•
Launched GoCarma App in December 2020

G W P
3% growth on HY20
32
Tower Partnerships
$55m
C U S T O M E R S
1% growth on HY20
M E R
versus 43% in HY20
44%
C O R
up from 91% year on year
85,000
•
Five new partnerships secured in HY21
•
TradeMe in the process of renewing for a further
five years
•
Strong pipeline for growth in FY21
95%

33
C U S T O M E R S
8% decline on HY20
M E R
improvement of 3% on HY20
46%
G O I N G D I G I T A L I N
T H E P A C I F I C
1st online insurance offering in
the Pacific
34,000
•
Moving from bespoke, manual intensive legacy system and
operating model to digitised platform aligned to NZ businesses.
Aim to complete by end FY22
•
Product suite rationalised from 449 in HY20 to 347
•
GWP retention for HY21 in line with expectations
Fiji MyTower &
EIS motor
PAPUA NEW
GUINEA
SOLOMON
ISLANDS
VANUATU
FIJI
SAMOA &
AMERICAN SAMOA
NEW
ZEALAND
COOK
ISLANDS
TONGA
G W P
16% decline on HY20
$25m
Tower Pacific

Reconciliation between underlying profit after tax and
reported profit after tax
34
Underlying and reported profit:
•
“Underlying profit” does not have a
standardised meaning under Generally
Accepted Accounting Practice (GAAP).
Consequently it may not be comparable to
similar measures presented by other
reporting entities and is not subject to audit
or independent review.
•
Tower uses underlying profit as an internal
reporting measure as management
believes it provides a better measure of
Tower’s underlying performance than
reported profit, as it excludes large or non-
recurring items that may obscure trends in
Tower’s underlying performance, and is
useful to investors as it makes it easier to
compare Tower’s financial performance
between periods.
•
Tower has applied a consistent approach
to measuring underlying profit in the
current and comparative periods. Note:
there has been minor reclassification
between management expenses and
“other income and expenses” in the
comparative period.
•
“Reported profit after tax” is calculated and
presented in accordance with GAAP and is
taken from Tower Limited’s financial
statements for the half year ended 31
March 2021.
(1) Includes net impact of Canterbury earthquake valuation update and part release of the additional Canterbury
earthquake risk margin release.
(2) Release of customer remediation provision treated as non-underlying.
(3) Reclassification of claims handling expenses from management expenses to net claims expense; reclassification of
forex movements to management and sales expenses and other non-underlying transactions.
$ million
HY21
underlying
profit
CEQ
adjustments (1)
GWP
reclassifications
(2)
Other (3)
HY21 reported
profit
Gross written premium
193.9-0.6 -194.6
Gross earned premium
195.3-0.6 -195.9
Reinsurance expense
(28.1)---(28.1)
Net earned premium
167.1-0.6 -167.8
Net claims expense
(80.5)0.3 -(11.9)(92.1)
Large events claims expense
(9.3)---(9.3)
Management expenses
(52.9)--12.2 (40.7)
Net commission expense
(8.1)---(8.1)
Underwriting profit
16.20.3 0.6 0.3 17.4
Net investment income
0.7--(0.2)0.5
Other
0.0--0.1 0.1
Income tax expense
(5.6)(0.1)(0.2)(0.0)(5.9)
Underlying profit after tax
11.30.2 0.5 0.1 12.0
Canterbury impact on outstanding claims
(1.6)1.6 --0.0
Release of additional board risk margin for Canterbury
1.8(1.8)--0.0
Other non-underlying items
0.55-(0.5)(0.1)0.0
Reported profit after tax
12.0---12.0

35
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 31 March
2021 which is general in nature, and does not purport to contain all information a prospective investor should consider when
evaluating an investment. 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

---

1

Tower HY results script
26 May, 2021
Slide 3 – Chairman’s update
Michael Stiassny
Mōrena, good morning and thank you for making the time to join us for this
investor call and presentation of our half year results.
With me in Auckland is our Chief Executive Officer, Blair Turnbull and our Chief
Financial Officer, Jeff Wright who will take you through the results and answer
your questions.
Business performance
When presenting our full year 2020 results in November, I noted that no
company is immune to the ongoing challenges posed by the Covid pandemic.
Our digital-first strategy has positioned Tower well and is continuing to deliver
solid GWP growth and reduced management expenses. However, these
positive results have been offset by an increase in large event and large house
claims, and general claims increases due to rising building costs. There is no
question that the insurance industry – like all of New Zealand – is facing
inflationary pressures emerging as a result of supply chain and other
pandemic-induced challenges.
Tower has taken decisive action to address these factors which have impacted
profits in this half. Blair will take you through those comprehensive measures
shortly. Our strength in digital and data is assisting us to respond quickly and
we anticipate seeing some improvement in the second half – acknowledging
that it takes time for the mitigations to have full effect.

2

Accordingly, last week we revised our guidance on underlying profit for the
2021 financial year to between $25 and $27 million.
Capital position and dividend
Despite these unprecedented times, Tower remains a resilient, strong and well
capitalised business with a solid base for continued investment in growth. The
business is increasingly nimble, and we have acted swiftly when solid growth
opportunities have been identified including the purchase of the ANZ legacy
portfolio and Club Marine.
Following settlement of the EQC receivable, Tower now has a solvency ratio of
309%, $97million above regulatory minimums and the Reserve Bank has
lowered Tower’s solvency condition from $50 million to $25 million.
The business is in good heart and I am pleased to announce on behalf of the
Board, a resumption in dividend payments.
Based on Tower’s ordinary dividend policy of paying 60-80% of cash earnings
where it is prudent to do so, a dividend of 2.5 cents per share will be paid on
14 July.
This is a watershed moment and I’d like to acknowledge you, our shareholders,
who have supported Tower through five tough years. It is good to be able to
reward your patience.
Positioned for long term growth
Tower has successfully shed its legacy issues and has entered a new,
accelerated phase of innovation and growth. Blair has an exciting strategy –
that he will share with you – and is wasting no time in implementing it.
Innovation is at the heart of Tower in 2021, a far cry from where we sat a
decade ago.

3

I’d like to acknowledge the Tower team. Sustained premium growth and a
downward trend in management expenses is testament to a solid strategy and
the discipline and dedication of the people that implement it.
In short, despite the COVID-induced breeze, Tower continues to be well
positioned for sustainable, long term growth.
I’ll now hand over to Blair and Jeff, who will take you through the results and
outlook before we take questions.

Blair Turnbull
Slide 4 – Solid performance with a strong platform for growth
Kia ora, thank you Michael and good morning everyone.
I am delighted to be here sharing our half year results for 2021 which sees
Tower in a very solid capital and solvency position. We have a technology and
distribution advantage that sets us apart from our competitors and affords
strong long term customer and premium growth prospects.
Slide 5 – Sound performance
Tower has reported a sound result for the half year, although as indicated by
our updated guidance last week, we are facing emerging external factors, such
as claims inflation, which has impacted profits.
Underlying NPAT excluding large events was $18 million and reported profit for
the half year was $12 million, down from $14.9 million in the prior year.
Offering customers a simple and rewarding experience through our leading
technology platform has helped grow Tower’s Gross Written Premium for the
half year to 31 March to $194 million, up 6% on the same period last year. This

4

was a strong result, achieved despite the Pacific business declining 16%
primarily as a result of economic challenges related to Covid-19.
Disciplined cost control and further efficiencies have seen Tower’s overall
management expense ratio further improve by 2.5%, to 36.5%.
Customer numbers showed healthy growth, up 2.8% to 306,000 and market
share has now climbed from 8.6% to 9.3%.
Tower’s combined operating ratio has increased 4.9% over the prior year to
reach 90.3% reflecting inflationary pressure on claims and higher large events.
Our New Zealand parent solvency ratio is 309%, which is $97 million above
regulatory requirements and reflects our strong capital position.
Slide 6 – A journey
Tower’s journey of focus and streamlining our business has entered an exciting
new phase.
Following the process of transformation and re-platforming, we have made
positive progress in resolving legacy issues. In the past six months we reached
a $42.1 million settlement with EQC; the reserve bank reduced our licencing
condition from $50 million to $25 million; and we simplified our structure. This
has made Tower a far more robust and transparent business, one that is very
well placed to enter our exciting new phase of growth and innovation while
also strengthening our pricing, claims and underwriting insurance
fundamentals.
The key to our success is leveraging our new cloud-based, scalable digital and
data platform for our three businesses: our flagship Tower Direct business; our
unique Partnership business which includes leading retail brands, advisory

5

businesses and more recently the addition of Insurtechs; and the Pacific
business with operations in eight countries.
Strengthening the business remains a priority and this is particularly
heightened as we face claims inflation and wider environmental macro
pressures. Jeff and I will talk about this in more detail shortly.
We have a technology advantage and a data focus which sets us apart from
our competitors and affords strong long-term growth prospects. Our cloud-
based, digital platform enables us to scale quickly as we acquire new business
and migrate customers to our advanced technology.
As a business we have shed our legacy issues and we are acting decisively to
address emerging external pressures. Tower ends this half year in a very solid
capital and solvency position with attractive growth prospects and a clear
strategy to deliver sustainable shareholder value.
Slide 7 – Customer and premium growth
Over the last six months we have achieved Gross Written Premium of $194m,
up 6% year on year. This brings our total GWP for the past 12 months to
$395m.
Our flagship Tower Direct business has delivered very strong growth of 14%
year on year. This has been achieved by focusing on new and existing
customers with nearly half of these now holding multiple products. When
combined with digital marketing and automated campaigns we have also
reduced our cost to acquire new business to 12% of net earned premium.
Our Partnership business has delivered positive 3% growth. But the true value
is in the quality of the business where we have transformed our partnership
portfolio from a more traditional, higher commission portfolio to a new

6

generation of partnerships such as corporate, retail and advisory referral
partnerships and insurtechs. All of our key partners are now on our cloud-
based digital platform at more sustainable commission levels and we have a
strong partner pipeline.
Our Pacific business GWP declined by 16% primarily as a result of economic
challenges related to Covid-19, however we remain committed to the Pacific.
We have launched our digital platform in Fiji and we have a robust plan to
progressively roll it out to other countries over the coming 18 months, while
also simplifying and streamlining our product set to align our Pacific business
more closely with our New Zealand businesses.
Slide 8 – Continued improvement in cost efficiencies
Our flagship Tower Direct business continues to lead the way and highlights
the customer, financial benefits and efficiency afforded from a leading digital
and data technology platform. With a management expense ratio of 31% - a
4% improvement on half year 2020 - this compares favourably with Tower’s
overall combined expense ratio of 36.5%.
We remain very focused on decommissioning legacy systems and we are
targeting a move from six to two systems by the year end.
Commission is also reducing as a result of our ANZ acquisition. The full benefits
of this will flow through from the first half of the 2022 financial year.
The Youi portfolio acquisition is now complete and it is pleasing to note that
retention rates are in line with our initial expectations.
Slide 9 – Emerging claims inflation
In the latter stages of the first half, we have seen an increase in large events
and large house claims as well as rising building costs.

7

Large events in this half included the large fire at Lake Ōhau village and the
severe flooding in Napier in late 2020, resulting in a $9.3 million impact before
tax. This is a significant increase over the $2.8 million in large events claims in
the 2020 half year and should be viewed against historical data which reflects
that 2019 and 2020 had an unusually low incidence of large events.
The frequency of large house claims, which are those claims that total more
than $50,000, has doubled to 52 in this half compared with the same period
last year.
The average cost of all house claims has risen 8% to $4,620 per claim reflecting
the rising cost of building materials.
As a result of these factors, our claims ratio excluding large events is 4% higher
than the prior year, at 48%.
Slide 10 – Decisive action
In insurance, there will always be volatility in claims – it’s the nature of our
business. What sets Tower apart is our ability to identify emerging trends and
quickly address them utilising the digital and data technology we’ve invested
in.
We are working with our supply chain to enhance efficiencies and moderate
increases in claims costs.
We also are working with data science and risk partners to better understand
the links between large events, climate change and large house fires in order
to help mitigate and reduce such events in the future.
Automation and data management are at the forefront of our response
through optimising digital claims management to improve quality of claims
assessment, repair and settlement.

8

We also have the ability through our leading technology capability to act
swiftly to adjust ratings and underwriting if necessary.
These actions will take time to gain traction, however we expect to begin
realising benefits in the second half.
Slide 11 – Core business solid
The fundamentals of Tower’s performance are strong: we have three focused
and unique businesses – Tower Direct, Partnerships and Pacific.
We are growing ahead of the market thanks to investments in our scalable,
efficient digital and data technology platform. And we have steadily reduced
management expenses, with clear actions to further improve going forward.
While large events and large house claims have offset premium growth, this is
being actively addressed.
Our underlying NPAT before large events was $18 million and reported profit
after tax and large events was $12 million.
In short, Tower is a solid business and well positioned for long term growth.
Slide 12 – Delivering shareholder return
We are pleased to resume dividend payments after a five year hiatus. The
Board has confirmed an interim dividend payment of 2.5 cents per share. The
total interim dividend payment is $10.5 million and will be paid on 14 July
2021.
Subject to the ordinary dividend policy of paying 60-80% of cash earnings
where prudent to do so, and based on achieving FY2021 guidance of $25 - $27
million, the indicative combined full and half year dividend will be between 5
cents and 5.5 cents per share.

9

I will now hand over to Jeff Wright who will take you through our financial
results in more detail.

Slide 13 – HY21 financial performance title slide
Jeff Wright
Thank you, Blair, and good morning everyone.

Slide 14 – Group financial performance
Looking at the consolidated results, we can see that GWP growth continued to
be a positive feature in the first half, up $10.3 million on the same period last
year. This growth was offset by increasing BAU claims expense resulting from a
higher volume of large house claims and emerging house claims inflation.

Management expense ratio improved by 2.5%, as the benefits of the EIS
platform are realised.

Underlying NPAT before large events was $18 million, a decrease of 5% on the
first half of 2020. Profit was also impacted by lower investment
income. Reported profit of $12 million is a decrease of 19% on half year 2020.
This was primarily a result of the $6.5 million before tax increase in large
events.

Slide 15 – Movement in underlying profit
Slide 15 details the key drivers of underlying profit before tax
from half year 2020, to half year 2021.

10

Compared with the 2020 half year underlying profit before tax and large
events of $28 million, net earned premium increased $8 million in HY21
through the Youi acquisition and growth in Tower Direct and Tower
Partnerships.

Management expenses have reduced, but the increase in BAU claims, driven,
as we have said, by an increase in frequency of large house claims and
emerging house claims inflation, exceeded the growth in net earned premium.

In addition to the lower investment income, large events, as we have
previously noted, was $9.3 million, well above half year 2020.

Slide 16 – Continued focus on improving claims ratio
This slide provides additional detail on the impact of the previously mentioned
claims issues on Tower’s loss ratio.
The increase in frequency of large house claims added 2.3% to Tower’s loss
ratio, while emerging inflation on other house claims added 1.1%. While large
house claims are historically volatile, Tower is working with data science
partners to analyse this latest experience and will review rating and
underwriting for house policies.
Supply chain pressures resulting from Covid have contributed to increases in
building material costs. This led to the 1.1% increase in other house claims. We
continue to monitor the emerging signs of building cost inflation and are
working with the supply chain to minimise increases.
With 62% of New Zealand new business written being motor, there was an
expected impact of 1.9% on the loss ratio due to change in mix, offset partially
by 0.4% lower motor claims expenses.

11

Lower Pacific claims expenses reduced the overall loss ratio by 1.4%.
Finally, the higher large event experience added 5.6% to the first half 2020 loss
ratio, bringing the first half 2021 loss ratio to 53.8%.

Slide 17 – Continued discipline on management expenses
Tower’s management expenses reduced $1.5 million on the prior year to $61
million in half year 2021. Our management expense ratio has improved by
2.5% over the half year, down to 36.5%.

This improvement in management expenses is largely due to the completion of
the EIS project and the scalability of that platform to enable growth
without a corresponding increase in expenses.

This is reflected in the reduction of salary expenses by $4.9million following
the completion of the EIS project and the May 2020 reorganisation.

Net commission expenses increased due to the inclusion of reinsurance profit
share income in the corresponding period of 2020.

Amortisation expense increased due to the addition of Youi, ANZ and EIS.

Slide 18 – CEQ claims continue to reduce
Along with other insurers, Tower continues to deal with the tail of Canterbury
Earthquake claims. We reduced open claims from 59 properties open at 30
September 2020 to 43 as at 31 March 2021. We closed 35 claims during the
half and received 16 new overcaps from the EQC and reopened three other
claims. This was in line with expectations. While the pace of new over-caps and

12

reopened claims continues to slow, the remaining claims are the most
complex.

Gross outstanding claims are now down to $26.5 million following a
strengthening of $2.2 million due to tribunal claims settling for more than
expected and Tower prudently increasing the allowance for future claims.
We have been able to release $2.5 million in Additional Risk Margin reflecting
the continued run-off of Canterbury claims.

Slide 19 – Strong capital and solvency structure
Tower remains in a strong capital position with Actual Solvency Capital of
$180.4million and a solvency ratio of 309%. This is $97 million above
regulatory minimums. The Reserve Bank also lowered our licencing condition
from a minimum solvency ratio of $50 million to $25 million during the half,
reflecting the diminishing risks associated with CEQ.

AM Best has reconfirmed our financial strength rating at A-, excellent.

Slide 20 – Robust reinsurance programme
This slide provides an overview of our reinsurance programme.

The Lake Ōhau fire and Napier flood events resulted in a half year 2021 large
event claims increasing $6.5 million on the prior year to $9.3 million.
Tower’s aggregate cover takes effect from $14 million of large events.

Any increase in the second half to the first half year figure of $9.3 million for
large events will reduce NPAT by a rate of $0.72 million for each $1 million
until the aggregate cover applies.

13


Tower’s long term average for large events is $8 million per annum.

Slide 21 – FY21 guidance
As we announced on Monday 17 May, we have revised our guidance for
Tower’s underlying NPAT in FY21 to a range of between $25 and $27 million.
The change from the previous guidance of greater than $29.8 million
recognises increasing house claims cost and lower investment income.

The guidance assumes FY21 large events remain the same as FY20 at
$9.7million. We have maintained this assumption to allow more ready
comparison to the previous guidance.

While Tower is undertaking a number of actions to address
increasing house claims, it remains a potential risk to this guidance. A 1%
increase in loss ratio above Tower’s assumptions will result in an
approximately a $1.2 million reduction in underlying NPAT.

Slide 22 – Our plan for long term growth & improvement
Thank you. I will now hand back to Blair who will provide an update on our
strategy and outlook.

Blair Turnbull
Thank you Jeff.
Slide 23 – Clear strategy

14

Today’s results demonstrate the resilience of a customer and digitally-led
Tower business, even in the face of Covid and inflationary headwinds. We are
continuing to grow; to drive down expenses; and to respond quickly to the
changing economic environment.
You can be confident that we are very focused on addressing the challenges
we’ve identified, improving profitability and continuing to leverage our
technology, customer and partnership advantage for growth.
We have a clear and focused set of five strategic priorities.
We are relentlessly focused on our customers, deepening our relationships
with them through rewards, new products and other offerings that make sense
and drive value.
Our core strategy is around personal lines and small to medium sized
commercial in New Zealand and the Pacific region.
As you have seen today, we are leveraging the full capability of our cloud-
based platform by using data and digital to attract more customers and
partners to Tower.
We are finding the best people to partner with and to get their help to keep
innovating and delivering.
And importantly, we are committed to maintaining a strong capital and
solvency structure, demonstrating we are a strong and stable business that
delivers value for shareholders.
Slide 24 – MyTower digital platform
In today’s challenging world we’ve all learnt a critical success factor is being
able to quickly analyse challenges and opportunities, pivot and adapt.

15

To this end digital and data are central to Tower. Our flagship business, Tower
Direct, operates fully on our new platform. It’s paving the way for our other
businesses, Partnerships and the Pacific.
MyTower is at the centre of our digital platform. A full online sales and service
experience that now has over 100,000 registered users. My Tower allows us to
have a richer, deeper relationship with our customers.
Our Tower Direct business is growing strongly with 60% of Tower Direct new
business sold online. Around half of Tower Direct’s customers have two or
more risks with us. They also stay with Tower significantly longer on average,
around twice that of a single product holder. Furthermore, the cost to acquire
a customer online is around half that of the telephone.
Our telephony strategy is to support customers with more complicated claims
and service enquiries – ensuring the right enquiries and tasks are handled
through the right medium. However, we want to be available to customers
whenever and however they wish to connect with us, whether that’s online or
via the telephone.
The heart of the MyTower strategy is that customers are more engaged and
satisfied, buy more and stay longer.
Slide 25 – Unique partnerships distribution
A key element of our strategic focus has been on securing mutually beneficial
partnerships that drive significant growth.
In the half, we celebrated 30,000 insured risks with TradeMe Insurance
customers, and we are in the process of renewing our special retail partnership
with TradeMe for a further five years.

16

We are providing insurance for a range of new corporate partners including
CSC Buying Group, the New Zealand Defence Force and Auckland Council.
Today we also announced a partnership with a leading Australian insurtech,
Open which will see Tower underwrite their new personalised insurance
brand, Huddle which is due to market in late 2021.
We are building what we believe is a truly unique, new generation of insurance
partnership model, one that relies less on higher commission and more on our
technology capability, customer experience and more balanced and
complementary referral arrangements with our partners.
Slide 26 – Quality product mix
Core to our strategy is a quality, innovative, balanced product range which
enables us to deepen our relationships with customers, improve revenue and
increase retention.
Last year we acquired the referral rights for Club Marine, and we will shortly
launch an end-to-end online boat experience.
To keep pace with our customers’ lifestyles and expectations around
environmental concerns we have also innovated our current products to cover
electric vehicles, e-bikes and e-scooters.
We are also creating new products in conjunction with partners. We were
delighted to recently announce Tower is partnering with Allianz, one of the
world’s largest insurers, to launch our new pet and travel products in the
coming months.
Slide 27 – Supporting our culture & community

17

Continuing to grow, partner and innovate as a leading digital and data business
will only be possible with the support of our fantastic Tower team and the
communities we serve.
It’s particularly pleasing to see that cultural diversity across our business is
strong with well over half of our people identifying as non-European. We
continue to put measures in place to not only celebrate diversity, but also track
and measure our progress to ensure we are continually developing as a
business.
Our ongoing digitisation has enabled us to increase the flexibility and agility of
our workforce and 10% of our people now permanently work from home.
For those of us in Auckland, we will soon move to a new six-green-star rated
building from August 2021. The new space will promote more agile ways of
working, collaboration, creativity and a relentless focus on our customers.
We have made positive progress on measuring our New Zealand carbon
footprint and will measure our Pacific footprint over the coming months.
We will also develop and report on a carbon action plan with a view to
reducing our carbon footprint and developing transparent climate reporting.
As we have previously noted, our work with data science partners will help to
better understand risks and also increase transparency around the effects of
climate change. We look forward to sharing this information in the future.
Slide 28 – Investing for long term growth
Tower is continuing to invest in initiatives that will bring attractive long term
growth and a stronger fundamentals to deliver shareholder value. Year to date
we have committed investments totalling $22 million and we will continue to

18

seek opportunities to invest in the business and look for further sensible and
prudent investment opportunities.
Slide 29 – Summary
Tower is a well-capitalised business with a strong balance sheet and solvency
margins. We have delivered a sound result with above market premium
growth, we have further improved our management expenses and we are
delighted to have resumed dividends in this half.
However, Tower is far from the finished product and we know there is work to
be done.
Looking forward, our focus is on:
 Driving shareholder value by accelerating growth and innovation
through a relentless focus on customers
 Taking decisive action to address emerging challenges with claims
inflation, and;
 Continuing to invest in our digital and data platform to drive efficiency
and support growth.
We will be holding an analyst day in early September 2021 and we look
forward to talking to you in more detail about our strategy to accelerate
momentum.
Thank you for your time this morning, I will now hand back to the operator to
ask for questions.

---

Distribution Notice




Section 1: Issuer information
Name of issuer Tower Limited
Financial product name/description Ordinary Shares
NZX ticker code TWR
ISIN (If unknown, check on NZX
website)
NZTWRE0011S2
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies
Record date 30 June 2021
Ex-Date (one business day before the
Record Date)
29 June 2021
Payment date (and allotment date for
DRP)
14 July 2021
Total monies associated with the
distribution
1

$10,541,181
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.02500000
Gross taxable amount
3
$0.02500000
Total cash distribution
4
$0.02500000
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount $0.00000000
Section 3: Imputation credits and Resident Withholding Tax
5

Is the distribution imputed No imputation
If fully or partially imputed, please state
imputation rate as % applied
6

N/A
Imputation tax credits per financial
product
N/A
Resident Withholding Tax per financial
product
$0.00825000

1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3

“Gross taxable amount” is the gross distribution minus any excluded income.

4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not
constitute advice as to whether or not RWT needs to be withheld.

6

Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.

Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)

Start date and end date for
determining market price for DRP

Date strike price to be announced (if
not available at this time)

Specify source of financial products to
be issued under DRP programme (new
issue or to be bought on market)

DRP strike price per financial product

Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms

Section 5: Authority for this announcement
Name of person authorised to make
this announcement
Rachael Watene, Company Secretary
Contact person for this announcement Emily Davies, Head of Corporate Affairs and Reputation
Contact phone number +64 21 815 149
Contact email address emily.davies@tower.co.nz
Date of release through MAP 26 May 2021