Tower announces positive FY22 result

23 November 2022

Tower Limited
FY22 Full Year Results for Announcement to Market
In accordance with NZX Listing Rule 3.5.1 we enclose the following for release to the market
in relation to Tower Limited’s (NZX/ASX: TWR) FY22 Full Year Results:

1 Media Release
2 Results Announcement
3 Financial Statements (including Independent Auditor’s 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 Paul Johnston will discuss the full year results at 10:00am New Zealand time today.
Tower’s Board confirms for the purposes of ASX Listing Rule 1.15.3 that Tower continues to
comply with the NZX Main Board Listing Rules.

ENDS

This announcement has been authorised by the Tower Board.

Blair Turnbull
Chief Executive Officer
Tower Limited

For media enquiries, please contact in the first instance:
Emily Davies
Head of Corporate Affairs and Sustainability
+64 21 815 149
emily.davies@tower.co.nz
Market Information
NZX Limited
Level 1, NZX Centre
11 Cable Street
Wellington
Company Announcements Office
ASX Limited
Exchange Centre
Level 6, 20 Bridge Street
Sydney NSW 2000
Australia

---

Level 5, 136 Fanshawe Street
Auckland 1142, New Zealand
ARBN 645 941 028


23 November, 2022

Strong business performance drives positive result for Tower
Kiwi insurer, Tower Limited (NZX/ASX:TWR) has today announced full-year underlying profit including large events
was $27.3m, up 31% from $20.8.m for the full-year 2021. Reported profit was $18.9m, compared to $19.3m in
the prior year.

Summary of key underlying results: (See note 1 below)
• Gross written premium (GWP) $457m, up 13% on FY21
• Customer numbers increased 5% to 319,000
• Management expense ratio (MER) improved to 36% vs 37% in FY21
• Large event costs $19m vs $13.9m in FY21
• Combined operating ratio (COR) 90.1% vs 91.4% in FY21
• Underlying net profit after tax (NPAT) excluding large events $41m vs $30.8m in FY21
• Underlying NPAT including large events $27.3m vs $20.8m in FY21
• Reported profit including large events $18.9m vs $19.3m in FY21
Reported profit was impacted by a $5.5m after tax additional strengthening of the residual Canterbury
earthquake provision and a provision of $2.6m after tax for customer remediation.

Reflecting the positive FY22 results and based on Tower’s ordinary dividend policy, the Board has declared a final
dividend of 4 cents per share. This brings total dividends for FY22 to 6.5 cents per share, compared to 5 cents in
FY21.

Strong growth and business performance
Tower CEO, Blair Turnbull says, “This strong result is underpinned by our strategy of delivering simple and
rewarding customer experiences combined with our advanced technology and digital and data capability.

“The decisive actions taken to combat record inflation, global supply change blockages, and increasing frequency
and severity of large events together with consistent growth and strong underlying business performance, have
delivered a strong result for shareholders.”

Growth in both premium and customer numbers has continued in FY22 with GWP increasing 13% year on year to
$457m, customer numbers rising 5% to 319,000, and retention rates improving.

The flagship Tower Direct business has also performed well with GWP up 17% to $320m as Tower continues to
innovate to build rewarding and engaging relationships with customers.

Mr Turnbull says, “Our digitisation strategy is delivering on its promise. It has simplified purchasing and managing
insurance policies and making a claim on one user-friendly online platform.”

My Tower registrations are up 51% to 200,000 customers.

Tower’s core platform has now been rolled out across seven Pacific countries, supporting a return to growth with
GWP up 8% to $58m.

Tower’s Partnerships business also increased GWP from active partners by 35% to $54m. Tower has attracted
new partners over the year securing agreements with Ray White and Kiwi Advisor Network. Fair and transparent

Level 5, 136 Fanshawe Street
Auckland 1142, New Zealand
ARBN 645 941 028
commission terms and legacy book acquisitions have resulted in commission payments reducing to 2.2% of gross
earned premiums.

Disciplined cost control and improved efficiencies through increasing scale saw overall MER improve to 36%
versus 37% in FY21. The company’s actions to address claims inflation have seen the BAU claims ratio reduce to
48.9% compared to 50.2% in FY21.

Supporting customers through climate change and large events
Mr Turnbull says, “It’s clear that supporting customers and communities through the increasing impacts of
climate change is our most important challenge as a New Zealand and Pacific insurer.”

Large events comprised $19m in claims costs for the 2022 financial year compared to $13.9m in FY21. These
included the one-in-a thousand-year Tongan volcanic eruption and subsequent tsunami, and multiple storms and
floods across New Zealand.

Tower continues to take decisive action to address the increasing severity and frequency of extreme weather
events. This includes future proofing its underwriting capability by expanding risk-based pricing to inland flooding
in FY22 and coastal hazards in FY23. For the 2023 financial year Tower has increased its perils allowance by 50%
to $30 million. The successful renewal of Tower’s reinsurance programme with $934m of catastrophe cover will
also provide important protection from this volatility.

1. A reconciliation of underlying results to Tower’s reported profit after tax, as prepared in accordance with Generally Accepted Accounting
Practice (GAAP), is shown in the Company’s FY22 Investor Presentation (slide 28).



ENDS

This announcement has been authorised by Tower CEO, Blair Turnbull.

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

---

Template
Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 17 October 2019


Results for announcement to the market
Name of issuer Tower Limited
Reporting Period 12 months to 30 September 2022
Previous Reporting Period 12 months to 30 September 2021
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$441,522 5%
Total Revenue $452,254 5%
Net profit/(loss) from
continuing operations
$17,622 -1%
Total net profit/(loss) $18,803 1%
Interim/Final Dividend
Amount per Quoted Equity
Security
4.00 cents
Imputed amount per Quoted
Equity Security
N/A
Record Date 18 January 2023
Dividend Payment Date 1 February 2023
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.55 $0.57
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Revenues increased 5% year-on-year through growth in both
premium and customer numbers and retention rates improving,
partly offset by a one-off provision for customer remediation.

Total net profit attributed to shareholders increased by 1% year-
on-year as a result of an increase in revenue and improved
operating margins which were offset by additional strengthening
of the residual Canterbury earthquake provision and a one-off
provision for customer remediation.

Please refer to the 2022 annual results presentation for further
information.
Authority for this announcement
Name of person

authorised
to make this announcement
Tania Pearson, General Counsel & Company Secretary
Contact person for this
announcement
Emily Davies, Head of Corporate Affairs and Sustainability
Contact phone number +64 21 815 149

Contact email address emily.davies@tower.co.nz
Date of release through MAP

23 November 2022

Audited financial statements accompany this announcement.

---

Tower
2022
FullYear
Results
1 October,2021 to 30 September,2022
23 November,2022

2
Chairman’s update
Michael Stiassny, Chairman
Business update
Blair Turnbull, Chief Executive Officer
FY22 financial performance
Paul Johnston, Chief Financial Officer
Looking forward
Blair Turnbull, Chief Executive Officer
Agenda

3
Chairman’s update
Positive growth and strong underlying business performance, delivering dividends
RESILIENTTO
CHALLENGES
•Managing
inflationarypressures
•Proactively managing
climate change risks
•Successful placement of
FY23reinsurance
programme
STRONG &
WELLCAPITALISED
•6.5¢FY22 dividend
•$30.6m capital returned to
shareholders
•AM Best reaffirmed A-
financial strength rating
•RBNZlicencecondition
reducedfrom$25m to $15m
•Value accretive acquisitions
CONTINUED
LONG-TERM GROWTH
•Strong performance oncore
business platform
•Flagship Tower Direct
digitalbusiness growing
•Leveraging unique
partnership distribution
capability
•Digitising Pacific business
improving efficiency &
growth

4
Business
update
Blair Turnbull
Chief Executive Officer

48.9%
vs 50.2% in FY21
Our performance
Solid growth and increased efficiencies underpin strong underlying business performance
GWP growth
(Gross written premium)
13% | $457m
vs $404m in FY21
BAU claims ratio
MER
(Management expense ratio)
36.0%
vs 37.0% in FY21
Customer growth
319,000
vs 304,000 in FY21
$27.3m
vs $20.8m in FY21
Underlying profit
Large events
Net of reinsurance and recoveries
$19m
vs $13.9m in FY21
Reported profit
$18.9m
vs $19.3m in FY21
90.1%
vs 91.4% in FY21
COR
(Combined operating ratio)
5

6
Strong core business performance
v s $ 3 0 . 8 mF Y 2 1
U N D E RLY I N G N P A T
e xc l . l a r g e e ve nt s
$41m
$27.3m
U N D E RLY I N G N P A T
i nc l . l a r g e e ve nt s
v s $ 2 0 . 8 m F Y 2 1
U N D E R L Y I N G N P A T E X C L . L A R G E E V E N T S
•Double digit growth
•Effective management of
inflation & claims costs
•Platform delivering scale
& efficiencies, reducing
MER
•Investment income
substantially below
historical average
•Reported profit of $18.9m
impacted by Canterbury
earthquake (CEQ)
valuation and customer
remediation

7
Strong growth in customers and premium
u p 5 % o n F Y 2 1
C U S T O M E R G RO W T H
319,000
G W P G RO W T H
13%
M U LT I P LE P RO D U C T
H O LD I N G
50%
o f N Z c u s t o m e r s h a v e
t w o o r m o r e p o l i c i e s
( 5 0 % i n F Y 2 1 )
t o $ 4 5 7 m i n F Y 2 2
D o w n f r o m 1 2 . 6 % i n
F Y 2 1
C O S T T O A C Q U I RE
12%
G W P B Y B U S I N E S S U N I T ( $ m )
T O W E R D I R E C T
D I G I T A L Q U O T E S & S A L E S
Note 1: Cost to acquire is calculated as deferred acquisition cost amortisationdivided by net earned premium
1

8
Growth and improvements across all three businesses
•1 7 % g r o w t h t o $ 3 2 0 m
•2 0 0 k M y T o w e r r e g i s t r a t i o n s , u p 5 1 %
•O v e r 5 0 0 k l o g i n s i n F Y 2 2 , u p 5 6 %
•8 5 % l e g a c y b o o k p o l i c y r e t e n t i o n
•O n l i n e p u r c h a s e j o u r n e y N P S 6 1 % ,
u p f r o m 5 7 % S e p 2 1
•3 8 % T r a d e M eg r o wt ht o $ 2 5 m G W P
•A d v i s o r n e t w o r k g r e w 3 5 % t o 1 , 5 0 0
•N e w p a r t n e r s ; R a y W h i t e , K A N
•C o m m i s s i o n r e d u c e d f r o m 2 . 9 % t o
2 . 2 % o f G E P
•P a c i f i c m i g r a t e d t o T o we r p l a t f o r m
•I nd ust r y-f i r st o nl i nep a y m e nt s
•M y T o we r i n F i j i a nd V a nua t u
•G W P up 8%, r e t ur n t o g r o wt h
•S i m p l i f i c a t i o n -N P I a c q ui si t i o n &
PNG sa le
PARTNERSHIPSTOWER DIRECTPACIFIC
Note: 1:Legacy partnership portfolios have been transferred from the Partnerships business unit to Tower Direct after purchase, comprising ANZ in FY21, and TSB and Westpacin FY22
1

9
Enhanced underwriting accuracy,and expanded product range
o f N Z c u s t o m e r s
u p d a t e d v i a C P I o r
C o r d e l l v s 7 7 % i n F Y 2 1
A U T O M A T E D H O U S E S U M
I N S U RE D
97%
RI S K B A S E D P RI C I N G
145k
S T RA I G H T T H RO U G H
U N D E RW RI T I N G
95%
N Z r i s k s s o l d w i t h o u t
a s s i s t e d u n d e r w r i t i n g
v s 9 2 % i n F Y 2 1
N Z h o u s e c u s t o m e r s
t r a n s i t i o n e d t o f l o o d
r i s k p r i c i n g
P r i c i n g a d j u s t m e n t s i n
F Y 2 2
A G I LE RA T I N G
C A P A B I LI T Y ,M I T I G A T I N G
I NF LA T I ON I M PA C T S
140+
E V s U N D E R W R I T T E N
Pet
N E W P R O D U C T S L A U N C H E D
Renovation
Travel
Cyclone

10
Improving claims ratio while managing inflation and weather events
S U P P LY C H A I N
O P T I M I S A T I O N
77%
N Z W E A T H E R E V E N T S
( i nc l l a r g e a nd o t he r
e ve nt s)
$18m
D I G I T A L I M P RO V I N G
C LA I M S E F F I C I E N C Y
48%
o f N Z m o t o r r e p a i r s b y
p r e f e r r e d s u p p l i e r s v s
7 5 % i n F Y 2 1
v s f i v e-y e a r a v e r a g e o f
$ 1 1 m
v s 5 0 . 2 % i n F Y 2 1
B A U C LA I M S RA T I O
48.9%
B A U C L A I M S R A T I O
C l a i m s l o d g e d o n l i n e
v s 3 1 % i n F Y 2 1
NZ C L A I M V O L U M E S

11
Improving MER through simplification & platform efficiency
C o m m i s s i o n s s a v e d
$ 2 6m LE G A C Y
B A C KB O O KA C Q U I S I T I O N S
C O M P LE T E
$11m
N Z S E RV I C E T A S KS
C O M P LE T E D D I G I T A LLY
50%
M E R
36%
LE G A C Y S Y S T E M S
RE M A I N I N G
v s 3 7 % i n F Y 2 1
v s 4 6 % i n F Y 2 1
D o w n f r o m 4 i n F Y 2 1
2
M A N A G E M E N T E X P E N S E R A T I O ( % N E P )
C O M M I S S I O N ( % G E P )
Note 1: Digital service tasks are 50% for the full year FY22 vs 46% for full year FY21. Previously this metric has been reported on as asix monthly figure
Note 2: Commission of $11m saved is the annualisedamount of commission paid prior to purchase of all legacy books
1
2

Financial
performance
Paul Johnston
Chief Financial Officer

13
Group underlying financial performance
•Strong GWP growth of 13% to $457.3m
•Management expense ratio improved 1%, reflecting
scale platform efficiencies
•Lower commission expense through legacy portfolio
acquisitions
•Underlying NPAT of $27.3m, an increase of 31% on
FY21
•Reported profit impacted by CEQ valuation increase of
$5.5m after tax and provision for customer
remediationof $2.6m after tax
Note 1:BAU claims defined asbusiness as usualclaims expenses that are not a large event
Note 2: Large event defined as a single event impacting more than 1 risk with an ultimate estimate of $2m or greater (FY21 $1m or greater)
Note 3: Refer to reconciliation between Underlying NPAT and Reported profit on page 28
Reported profit after tax
​
​​
19.3(0.5)18.9
One-off transactions (net of tax)
​
​​
(1.5)(7.0)(8.5)
Underlying net profit after tax (NPAT)
​
​​
20.86.527.3
Tax
​
​​
(9.5)(1.5)(10.9)
Other income
​
​​
1.4(0.0)1.3
Net investment income
​
​​
0.21.01.2
Underwriting profit
​
​​
28.77.035.7
Net commission expense
​
​​
(11.3)2.0(9.3)
Management expenses
​
​​
(112.0)(8.7)(120.6)
Large event claims expense
​
​​
(13.9)(5.1)(19.0)
BAU claims expense
​
​​
(166.8)(9.6)(176.5)
Net earned premium
​
(NEP)
​​
332.728.5361.1
Reinsurance
​
​​
(62.2)(7.3)(69.5)
Gross earned premium
​
(GEP)
​​
394.935.8430.7
$ million
​​​
FY22FY21Change
​
Unearned premium
​
​​
(9.2)(17.5)(26.6)
Gross written premium
​
​​
404.153.2457.3
3
Key ratios (% of NEP)
FY22FY21Change
Claims ratio excluding large events
48.9%50.2%(1.3)%
Large events claims ratio
5.3%4.2%1.1%
Expense ratio
36.0%37.0%(1.0)%
Combined ratio
C

C
90.1%91.4%(1.3)%
1
2

14
Business growth drives strong underlying NPAT
M O V E M E N T I N N P A T
•Underlying NPAT of $27.3m is $6.5m above FY21, reported NPAT
$0.4m below FY21
•Business growth underpinned by 13% GWP growth
•Reduction in commission of $1.4m after tax reflects legacy books
purchase, partially offset by lower reinsurance commission
•Increase in large events of $5.1m ($3.7m after tax)
•Increase in expenses includes legacy back book purchase
amortisationand increase in staffing levels
•CEQ valuation increase as a result of inflation, new overcaps
and complexity of existing claims
•Provision for customer remediation includes expected payment
to customers including compensation, as a result of multi policy
discounts not correctly applied

15
Steady BAU claims ratio in a challenging environment
N Z M O T O R S E V E R I T Y & F R E Q U E N C Y
•Improving BAU loss ratio despite high inflation period
and increasing weather events
•Leveraging targeted rating changes and supply chain
optimisationto manage economic challenges
•Covid reduced the frequency of motor claims in H1 FY22,
however there have been supply chain pressures for all
products with associated cost increases
•New unjustified claims tool live in FY22
Note 1: Severity is defined as the cost of claims (excluding large events, large house, windscreen) divided by the count of claims. In prior years this definition excluded negative or zero incurred claim
volumes and was based only on closed claims. The updated definition is deemed more affective in understanding claims and aligns to the actuarial valuation of outstanding claims
Note 2: Frequency is defined as the number of claims (same exclusions as above) divided by risks in force
N Z H O U S E S E V E R I T Y & F R E Q U E N C Y
T O T A L C L A I M S R A T I O
1
2

16
Continued improvement in management expense ratio
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 R A T I O
•Management expense ratio (MER) reduced 1% to
36%
•GWP growth contributes a 2.9% reduction in MER
•Net commission expenses decreased due to the
purchase of legacy back books
•Unwind of prior year’s Liability Adequacy Test (LAT)
deficiency
•Investing in people, technology and marketing as
well as increasing compliance and regulatory
capability
•Other includes an increase in deferral of acquisition
costs due to higher acquisition spend
Note 1: Management expense ratio is defined as Management Expenses (including net acquisition expenses, commission, claims lodgement, and other overhead costs) divided by net earned
premium
1

17
•Net investment income was $1.2m vs $0.2min FY21
•Increasing interest rates resulted in subdued investment
income as the portfolio was revalued to market values
•Maintaining conservative investment strategy, with a
focus on liquidity and high credit quality, and a target
duration for the core investment portfolio of six months
•Our strategy has minimisedprofit impact from
macroeconomic factors and market movements, and we
are now set to benefit from higher interest rates
Investment strategy limits impact of market volatility
Note 1: Core investment portfolio refers to Tower’s fixed income investment portfolio in NZ.It excludes cash held for operational purposes in NZ, and cash and short-term deposits held in Tower’s
Pacific subsidiaries.
C O R E I N V E S T M E N T P O R T F O L I O R U N N I N G Y I E L D
1

18
Increasing reserves to support Canterbury earthquake claims
Note 1: Refer to pg29 for reserving table and graph of open/closed claims in the period
O P E N & N E W C E Q C L A I M S
•FY22 has seen an adverse CEQ charge of $7.5m ($5.5m after
tax) in non-underlying items
•$5.4m new overcaps(including allowance for future new
overcaps)
•$4.3m increase in existing open claims
•$2.2m reduction for partial reinsurance cover relatingto
these increases
•The EQC fixed cap level is not inflation indexed, contributing
to additional new overcapclaims. We are working with EQC
to mitigate additional costs
•Existing claims assessed as increasingly complex to resolve,
provisions have been increased to address this
•Dedicated CEQ teamactively working to finaliseclaims as
efficiently as possible
1

19
Robust reinsurance programmeprovides protection
R E I N S U R A N C E P R O G R A M M E O V E R V I E W
FY22 large events
•$21.1m large events incurred in FY22; Tonga volcanic eruption
($6.8m), Cyclone Dovi($3.6m), North Island Rainstorms ($6.4m), and
Nelson Floods ($4.3m)
•$19m net cost to Tower from FY22 $20m aggregate cover excess
and $1m recovery of prior period event
FY23 reinsurance cover
•Catastrophe cover: $934m limit with retention of $11.9m
•Aggregate cover removed –provision in FY23 guidance of $30m
large events
•Overall reinsurance spend for FY23 is 13.6% of premium income,
down from 15.9% for FY22 (14.5% excluding the FY22 aggregate)
HI S T O R I C A L L A R G E E V E N T S
$16m
$13m
Note 1: Overall FY22 gross reinsurance spend as % of premium income (subject to the reinsurance programme) was 14.3% when FY23 programmeplaced. As a result of FY22 finalisationthis
increased to 14.5%
1

20
66.3
65.7
66.5
25.0
25.0
15.0
31.5
31.4
32.9
18.9
15.8
19.7
7.3
2.3
30-Sep-21 post dividend and
capital return
31-Mar-22 post dividend30-Sep-22 post dividend
Tower Limited Parent Solvency
Surplus to operating range
Operating range
Target solvency margin
License condition
Minimum solvency capital
Strong capital & solvency, delivering shareholder returns
4 c f i n a l d i v i d e n d
( F Y 2 1 f u l l y e a r 5 c )
A-
6.5c
C A P I T A L R E T U R N &
D I V I D E N D S
$55.3m
r e t u r n e d t o
s h a r e h o l d e r s f r o m
F Y 2 2
A M B E S T
F I N A N C I A L S T R E N G T H
R A T I N G
F U L L Y E A R D I V I D E N D
a f f i r m e d i n
A p r i l 2 0 2 2
205%
T O W E R P A R E N T
S O L V E N C Y
a f t e r c a p i t a l r e t u r n
a n d f i n a l d i v i d e n d
T O W E R S O L V E N C Y -N Z P A R E N T ( $ m )
Note 1: Tower’s ordinary dividend policy is to pay a stable annual dividend to shareholders that aims to be in the range between 60-80% of “adjusted earnings” (defined as the reported full year Net Profit
After Tax (NPAT) plus acquisition amortisationand unusual items) for the Tower consolidated group, where prudent to do so.
1

21
FY23 guidance
FY22 ActualFY23 Guidance
GWP growth
13%
10% -15%
(excluding Tower PNG)
Large events allowance
$19m
(net of reinsurance)
$30m
Underlying NPAT
(including large events)
$27.3m$27-32m
Dividend
6.5 cents per share6.5 cents per share
Note 1: Tower’s ordinary dividend policy is to pay a stable annual dividend to shareholders that aims to be in the range between 60-80% of “adjusted earnings” (defined as the reported full year Net Profit
After Tax (NPAT) plus acquisition amortisationand unusual items) for the Tower consolidated group, where prudent to do so.
1

Looking
forward
Blair Turnbull
Chief Executive Officer

23
S e l f-s e r v i c e f e a t u r e s
t o l a u n c h i n H 1 F Y 2 3
M Y T O W E R C A P A B I LI T Y
Car replacement
journey, ways to save,
personal details
Leveraging scalable platform to continue growth and efficiencies
A U T O M A T E D M A R K E T I N G
5 million
S E RV I C E E F F I C I E N C I E S
P L A N N E D F O R F Y 2 3
16%
C LA I M S E F F I C I E NC I E S
P LA N N E D F O R F Y 2 3
r e d u c t i o n i n c o s t t o
s e r v e ( d o w n t o $ 8 )
S a v i n g i n t o t a l c l a i m s
c o s t s
3%
INITIATIVE INVESTMENT
P e r s o n a l i s e dm e s s a g e s
p l a n n e d f o r F Y 2 3

24
F Y 2 2 e n g a g e m e n t s c o r e
u p f r o m 7 . 7 F Y 2 1
C O N T I N U A LLY I M P RO V E
S T A F F E N G A G E M E N T
7.8
Tackling resourcing gap via digital service and unique footprint
D I G I T A L I N V E S T M E N T
30%
RE S O U RC I N G H A S
I M P A C T E DNPS
20%
F I J I H U B I N V E S T M E N T
I n S e p 2 2 , d o w n f r o m
4 3 % i n S e p 2 1
O f F Y 2 3 i n v e s t m e n t o n
c u s t o m e r e x p e r i e n c e &
f r o n t l i n e e n h a n c e m e n t s
A d d i t i o n a l p l a n n e d
T o w e r s t a f f w o r k i n g i n
S u v a o f f i c e i n F Y 2 3
+100
TOWER STAFF BY LOCATION
FY23 NPS PATHWAY
FY22
FY23
Career pathway
launched
My Tower
features added
Frontline user
improvements
Straight
through claims
processing
Automate post
call work
Fiji hub
expansion
Note 1: NPS = Net Promoter Score
1

25
F o c u s o n s u p p l y c h a i n
a n d c u s t o m e r e d u c a t i o n
S U S T A I N A B LE P RO D U C T
D E V E LO P M E N T
$15K sustainability
benefit, e-mobility
Protecting the future for our customers & communities
S U P P O RT I N G C O M M U N I T I E S
T H RO U G H C LI M A T E
C H A N G E
Parametric
cyclone cover
P RO P E RT Y RI S K RA T I N G S
Coastal erosion
&inundation
2 0 2 5 E M I S S I O N S
RE D U C T I O N T A RG E T O F
P l a n n e d f o r F Y 2 3
P i l o t l a u n c h e d i n F i j i
F Y 2 2 e m i s s i o n s u p 1 2 %
t o 6 1 7 t C 0 2 e v s F Y 2 0
b a s e y e a r
21%
OUR ENVIRONMENT, SOCIAL AND GOVERNANCE
STRATEGY

26
CONTINUING TO
DELIVER
DIVIDENDSAND
GROWTH
✓Strong underlying operating performance
✓Positive customer outcomes and growth
✓Mitigating inflation headwinds and
implementing process enhancements
✓Driving efficiencies through scalable
platform and focus on expenses
✓Delivering positive shareholder returns:
dividends and accelerating growth

Questions?

28
Reconciliation between underlying profit after tax and reported profit after tax
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.
•“Reported profit after tax” is calculated and presented in
accordance with GAAP and is taken from Tower Limited’s
financial statements for the full year ended 30 September
2022
(1)Non-underlying items include net impact of Canterbury earthquake valuation update, provision for multipolicy discount
customer remediation, regulatory and compliance projects (such as the adoption of IFRS-17), and a prior period tax adjustment
(2)Reclassification of claims handling expenses from management expenses to net claims expense and FX gain/loss from other
income to management expenses
(3)Tower Insurance (PNG) Ltd was sold after balance date however for statutory reporting the full P&L of this business is
reclassified as a discontinued operation for the full 2022 financial year

29
Canterbury earthquake reserving and open claims
Note 1: IBNR = Incurred but not reported; IBNER = Incurred but not enough reported.
O P E N C E Q C L A I M SC E Q R E S E R V I N G

30
Disclaimer
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 2022 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.

---

1

Tower FY22 Results Announcement Investor Presentation Script
Slide 1 – 2022 Full Year Results
Michael Stiassny
Mōrena, good morning and thank you for making the time to join us for this
investor call and presentation of our 2022 full year results.
Slide 2 - Agenda
With me in Auckland is our Chief Executive Officer, Blair Turnbull and our Chief
Financial Officer, Paul Johnston who will take you through the results and
answer your questions.
Slide 3 – Chairman’s update
This has been a positive year for Tower. The business has experienced solid
growth, delivered a strong underlying business performance and continues to
be well capitalised.
Importantly, despite the inflationary headwinds and pandemic-induced
difficulties that all business are struggling with, Tower has proven resilient in
2022 and remains well positioned for long-term growth.
Strong and well capitalised
As a result, I am pleased to announce that the Board has declared a final
dividend of 4 cents per share, to be paid on the 1
st
of February 2023. This
brings total dividends for FY22 to 6.5 cents per share.
In late 2021, the Board announced a share buyback as a result of the Reserve
Bank lowering Tower’s solvency condition. This was completed in February
2022, with $30.6 million being returned to shareholders.

2

In June, in recognition of our strong financial position, the Reserve Bank once
again reduced Tower’s licence condition from $25 million to $15 million and
ratings agency, AM Best reaffirmed our A-, excellent rating in April.
We continue to look for investments that will deliver strong shareholder value.
To that end, over the year we completed our purchase of the minority
interests in National Pacific Insurance and also completed our programme of
acquiring legacy books and migrating them to Tower Direct. This has resulted
in further efficiencies and growth benefits which Blair will expand on shortly.
Resilient to challenges
It has been gratifying to see that the actions Tower has taken to address
challenges including record inflation, supply chain issues, access to talent, and
increasing large events, are having the desired effect.
However, there is no room for complacency, and we remain tightly focused on
continuing to manage the inflationary pressures that are likely to be prevalent
for some time.
Climate change is the defining challenge of our lifetime. Proactively managing
the risks posed by climate change is fundamental to protecting our customers’,
our communities’ and our shareholders’ interests.
In the last year, we introduced flood risk-based pricing and parametric
insurance, to better inform and prepare our customers - and our business - for
the future. Increasing the large event limit in our financial plans and Tower’s
reinsurance programme also provide necessary protection from this volatility.
In the coming financial year, we will respond to the Government’s new
Climate-related Disclosures reporting regime by beginning to share the risks

3

and opportunities we anticipate from a range of potential climate change
scenarios.
We see this regime as a positive opportunity to further inform our business
strategy and support future resilience.
Continued long term growth
This year’s strong performance reflects the investments we have made in our
core technology platform and distribution footprint which have positioned
Tower well to continue delivering GWP growth.
Our flagship Tower Direct business and unique partnership distribution
capability continue to go from strength to strength. Digitisation of our Pacific
business continues at pace, and we are now operating on one core platform
across New Zealand and the Pacific, leading to further improvements in
efficiency and competitiveness.
[pause]
There have been some significant changes to the Board this year. I’d like to
publicly acknowledge and thank Steve Smith and Warren Lee, both of whom
made considerable contributions to Tower’s transformation over many years.
I would also like to welcome Geraldine McBride who has recently joined the
Board. Geraldine brings extensive New Zealand and international governance
and technology industry experience that will be invaluable as Tower continues
to evolve.
In closing, I’d like to thank the Tower team. It’s a good result – we’re paying a
dividend, the business remains strong and well capitalised, and has achieved

4

sustained premium growth. None of this would be possible without the vision,
dedication and commitment of our people.
I’ll now hand over to Blair and Paul, who will take you through the results and
outlook before we take questions.
Blair Turnbull
Slide 4 – Business update
Kia ora, thank you Michael and good morning, everyone.
I am delighted to be here sharing our 2022 financial results which see Tower in
a very positive position.
Today’s results demonstrate the resilience of our customer and digitally led
strategy. We are continuing to grow; to drive down expenses; and to innovate
our customer experience.
Our technology and direct distribution advantage sets us apart from our
competitors and affords strong long-term customer and premium growth
prospects.
Slide 5 – Our performance - Solid growth and increased efficiencies underpin
strong underlying business performance
I am pleased to report positive business performance for the year which has
been achieved through strong growth and efficiencies.
Offering our customers a simple and rewarding experience through our leading
technology platform has helped grow Tower’s Gross Written Premium for the
year to 30 September to $457 million, up 13% on the same period last year.
Good customer growth was a key contributor to this, with Tower welcoming
15,000 new customers in the past 12 months, increasing to 319,000 customers.

5

As the Chair referenced, we are managing external headwinds well with
Tower’s BAU claims ratio dropping to 48.9% from 50.2% in the 2021 financial
year.
We are pleased to have seen our management expense ratio (MER) improve
again to 36% versus 37% in FY21, thanks to our disciplined cost control and
further efficiencies.
Tower planned for $20m of large events costs for the FY22 year, and these
came in at a $19m net impact, up from $13.9m net in FY21.
Pleasingly, our combined operating ratio decreased to 90.1% from 91.4% in the
FY21.
Reflecting our positive business performance, underlying NPAT including large
events was $27.3 million, up 31% from $20.8m in FY21.
Reported profit was down 2% at $18.9m versus $19.3m in FY21.
Slide 6 – Strong core business performance
Our business fundamentals continue to improve as we drive double digit
growth and our investments in our core technology platform and actions to
control inflationary pressures continue to deliver efficiencies.
Our core business performance has improved substantially, with underlying
NPAT excluding large events increasing 33% year on year to $41m.
As we disclosed in our guidance update on the 17
th
of October, our reported
profit was impacted by additional strengthening of the residual Canterbury
earthquake provision, which Paul will talk through in more detail shortly.
Additionally, we have made a provision of $2.6m after tax for customer
remediation arising from an error in the calculation of multi-policy discounts.

6

After we identified the issue, we proactively advised the Financial Markets
Authority. We are in the process of identifying affected customers and expect
to begin processing refunds in December.
Slide 7 – Strong growth in customers and premium
Tower’s focus on simple and rewarding customer experiences combined with
our digital and data capability have contributed to strong growth in both
premium and customers.
During the financial year we grew our gross written premiums 13% year on
year, up to $457m. We also grew customer numbers to 319,000, up 5% on the
last financial year.
Our digitisation strategy is driving deeper customer engagement and growth,
with the number of Tower Direct quotes online increasing to 292,000 leading
to 66% of sales now taking place on digital channels.
These new customers are being brought on board at a lower cost to acquire, at
12% of net earned premium, versus 12.6% in FY21.
However, it’s not just about attracting new customers. Half of our New Zealand
customers have two or more products with Tower which shows we are
continuing to sell more to existing customers as we grow.
Two achievements we are particularly proud of this year are winning Canstar’s
top Car Insurer of the Year Award, and also the Outstanding Value Award for
the second year running.
Slide 8 – Growth and improvements across all three businesses
All three of our business units are growing and improving performance.
Tower Direct

7

Our flagship Tower Direct business is going from strength to strength growing
GWP by 17% to $320m as we innovate to build rewarding and engaging
relationships with customers.
And our leading digital platform continues to perform strongly and increase
customer engagement. In FY22 we recorded a milestone 200,000 My Tower
registrations, up 51% on FY21 which has contributed to a record 500,000 logins
in FY22, up 56% on FY21.
Contributing to this success is our strong, 85% retention of the customers we
transitioned to Tower Direct via our legacy book acquisitions.
We are pleased that an important aspect of our digital self-service experience
is valued by customers with our online purchase journey achieving a customer
net promoter score of 61%, up from 57% in FY21.
Partnerships
Our Partnership business is continuing to deliver positive growth with GWP
from active partners increasing by 35% to $54m. Our flagship Trade Me
partner contributed strongly to this growth, growing by 38% to $25m GWP.
The number of advisors referring customers to Tower has also expanded,
increasing by 35% over the year to 1,500 active advisors. This growth will be
further bolstered by our new agreement with advisory firm Kiwi Advisor
Network.
We continue to attract new retail partners and in September were pleased to
enter a significant partnership with leading real estate agency, Ray White
which sells 20,000 houses a year across New Zealand. We look forward to
welcoming Ray White’s customers to Tower as part of its successful Concierge
insurance and moving solutions offering.

8

This year we completed the delivery of our strategy of acquiring legacy
insurance books and migrating them to Tower Direct. Between February 2021
and October 2022 we purchased books for a total price of $26m from ANZ,
Westpac, TSB and Kiwibank, ending commission payments of around $11m per
annum and enabling us to have a direct relationship with these customers,
who represent more than 88,000 risks.
This strategy has contributed to commission payments further reducing to just
2.2% of gross earned premium.
Pacific
FY22 was a milestone year for our Pacific business which has returned to
growth after the challenges of Covid, growing GWP by 8% to $58m in the year.
We are continuing to digitise our Pacific offering, aligning our New Zealand and
Pacific activities more closely to deliver growth and efficiencies.
Our core operating platform is now live across all our markets, we have
launched a Pacific industry-first online payments capability and the full My
Tower experience is now available across Fiji and Vanuatu.
We are continuing the simplification of our Pacific business and to this end sold
our Papua New Guinea subsidiary in October and have now begun operating
under the Tower brand following our acquisition of the minority interest in
National Pacific Insurance.
Slide 9 – Enhanced underwriting accuracy, and expanded product range
Our strategy of leading with an innovative product range which enables us to
deepen our customer relationships, improve revenue and increase retention
has further progressed in FY22. Early in the year we launched new pet and

9

travel offerings and in August began supporting customers with their home
renovations by launching contract works cover.
In a particularly innovative approach, we have now begun piloting a cyclone
parametric insurance product in Fiji. Cyclone Response Cover provides a rapid
cash pay-out when a customer is impacted by a high wind speed cyclone event,
regardless of damage and without the need for an insurance assessor’s signoff.
With less than 10% of Pacific families having home insurance, we hope this will
address a much-needed gap in the market and help provide economic
resilience following a cyclone event.
Since broadening the range of EVs we insure in 2021 and Government schemes
to incentivise uptake of EV and hybrid vehicles, the number of EVs we
underwrite has continued to soar, increasing 78% to more than 4,000 electric
vehicles during FY22.
Underpinning our rapid and targeted product development capability is our
disciplined and agile approach to underwriting, enhanced through our use of
data analytics.
This sophisticated underwriting approach saw us quickly implement risk-based
pricing for flooding in November last year which has enabled us to transition
145,000 customers to this new pricing model as their house insurance policies
have come up for renewal. In FY23 we will add coastal inundation and erosion,
and windstorm risks to our ratings tool, offering customers greater insights
into their homes’ risks and giving Tower even better rating accuracy.
Ensuring accurate sum insured amounts for our customers’ homes is one tool
that’s allowing us to stay ahead of inflation. In FY22 97% of our home
insurance customers’ policies were updated automatically either by the

10

consumer price index or the Cordell calculator, compared to only 77% a year
ago.
We are continuously monitoring our pricing to ensure we stay both
competitive and profitable. Our agility and data-driven capabilities have
enabled us to make more than 140 pricing and underwriting adjustments in
the year.
And our underwriting capability is becoming increasingly automated with 95%
of risks in New Zealand now sold without requiring a manual underwriting
review.
Slide 10 – Improving claims ratio while managing inflation and weather
events
Inflation impacts all facets of our lives, including how far our insurance cover
will stretch at claims time. Due to the sharp increase in inflation over the
previous 12 months, in FY22 it became more expensive to repair and rebuild
homes, and repair or replace cars and contents.
But Tower’s advantage is our ability to identify and quickly address emerging
trends, thanks to our investments in digital and data technology and the
decisive actions we’ve taken over the past 18 months to deliver improvements.
Our increasing scale is also continuing to deliver efficiencies, with Tower’s BAU
claims ratio being brought back to a very strong level of 48.9%, compared to
50.2% in the 2021 financial year.
This is despite the stormy weather across New Zealand this year resulting in
total claims costs of $18m compared to the five-year average of $11m and
New Zealand claims volumes overall increasing to almost 73,000 individual
claims over the year.

11

By working with suppliers to optimise our supply chain we are seeing
efficiencies with 77% of New Zealand motor repairs now being completed by
our preferred supplier network.
And our work to streamline the claims lodgement process has seen the
number of New Zealand claims lodged online increase from 31% to 48%.
Slide 11 – Improving MER through simplification and platform efficiency
By global standards, a 1% reduction in management expense ratio is a good
result in any year for an insurer. So, in this highly inflationary environment, we
are particularly pleased to have achieved yet another improvement in MER to
36% this year.
With half of all tasks and transactions in New Zealand now completed digitally
versus 46% in FY21, the customer and efficiency benefits from our leading
digital and data technology platform are being realised.
Two key drivers of our reducing expenses are the commissions saved through
the transformation of our Partnerships business to a lower commission model
and the legacy book acquisition programme.
We are on track with decommissioning legacy systems and now have just two
remaining, down from 4 in FY21. I will now hand over to Paul Johnston to
present our detailed financial performance.
Slide 12 – Financial performance title slide – Paul Johnston
Thank you, Blair and good morning, everyone.
Slide 13 – Group underlying financial performance
Looking at the consolidated results, we can see that growth in GWP continued
to be a highlight, up $53.2m, or 13%, on FY21. As Blair just highlighted,

12

management expenses improved 1% as benefits of the EIS platform and our
increasing scale continue to be realised along with lower commissions through
our legacy portfolio acquisitions.
Underlying NPAT including large events increased 31% to $27.3m,
demonstrating strong business performance.
Reported NPAT was $18.9m, down 2% on FY21. Contributing to this was a
Canterbury Earthquake valuation increase of $5.5m after tax and a provision
for customer remediation of $2.6m after tax.
Slide 14 – Business growth drives strong underlying NPAT
As this chart demonstrates business growth contributed a strong $13.6m
increase to Tower’s underlying NPAT of $27.3m in the year, which is $6.5m
above FY21.
As we have previously noted, reduced commissions provided a $1.4m benefit
to the result.
FY22 saw a $5.1m increase in large events costs compared to FY21 which
reduced underlying NPAT by $3.7m after tax. Large event costs were $19m net
of reinsurance and a prior period recovery, up from $13.9m in FY21.
A $6.3m after tax increase in expenses includes amortisation of the legacy back
book purchases and an increase in staffing costs due to wage inflation and an
increase in both growth and regulatory compliance spend.
As we have previously noted, reported profit has been impacted by a $5.5m
after tax Canterbury earthquake valuation increase across FY22 as a result of
new claims valued more than the historic $100,000 EQC cap, the complexity of
existing claims and inflation.

13

We have also made a provision for customer remediation which includes
compensation payments as a result of discounts for taking out more than one
policy being incorrectly applied.
Slide 15 – Steady BAU claims ratio in a challenging environment
The positive actions we have taken in the past 18 months to address the
rapidly increasing inflationary pressures and an increased number of severe
weather events are seeing results as evidenced by our BAU loss ratio improving
to 48.9%.
Frequency and severity are the two key components of total claims costs.
The charts show average motor claims severity is following a rising trend up to
$2,713 while frequency of motor claims is flat due to the lockdown we saw at
the start of the financial year.
House claims have continued to increase year on year and are up 7.1% largely
as a result of the wettest winter on record in New Zealand, while severity has
dropped slightly back to pre-Covid levels.
Tower has applied targeted premium increases across motor and home to
offset inflation and continues to work closely with supply chain partners to
moderate the impact on customers as much as possible.
Our new artificial intelligence-based tool that identifies potentially unjustified
claims went live in FY22. While it is early days, the results are promising. Since
implementation began in April, we have improved our detection rate of
potentially unjustified claims by 300%, which has led to a greater proportion of
claims resulting in customers either withdrawing their claims or Tower
declining the claims.

14

Slide 16 - Continued improvement in management expenses
We are pleased to see our management expense ratio continue to reduce with
an improvement over the year of 1% to 36%.
Pleasingly business growth has enabled scale efficiencies and a 2.9% reduction
in MER with a further 0.4% decrease in net commission expenses due to the
legacy back book portfolio purchases.
In addition, we reduced our expectations of future policy administration costs
which allowed us to unwind the liability adequacy test deficiency recognised at
30 September 2021, resulting in a 1.4% benefit. We elected to reinvest this LAT
release in people, marketing and technology as we prioritise growth and
regulatory compliance activities.
Other MER impacts include more deferred acquisition costs due to higher
acquisition spend which helped drive our growth.
Slide 17 – Investment strategy limits impact of market volatility
Net investment income in FY22 increased to $1.2m before tax compared with
income of $0.2m before tax in FY21.
This subdued income was the result of increases in interest rates revaluing
Tower’s portfolio to market values, however these losses are expected to be
recovered through higher yields as the portfolio matures in the future. This is
evidenced by the running yield on the core investment portfolio increasing to
4.12% at the end of September 2022 (from 1.32% at 30 September 2021).
Tower maintains a conservative investment policy with a focus on high credit
quality and liquidity bonds, and a target duration for the core investment
portfolio of six months.

15

Our strategy has mitigated the impact on our profit from macroeconomic
factors and market movements and we expect to benefit from higher rates
going forward.
Slide 18 - Increasing reserves to support Canterbury earthquake claims
We continue to settle open Canterbury earthquake claims with 40 closed over
the year.
However we received an additional 43 new overcaps and reopened claims,
bringing the total number of open claims at the year end to 36. This was a net
increase of 3 from a total of 33 as at the end of September 2021.
As a consequence, FY22 has seen an adverse Canterbury earthquake P&L
charge of $7.5m before tax in non-underlying Items, reflecting these increases
in expected claims costs. Contributing to this is:
• $5.4m in new overcaps, which includes an allowance for future new
overcaps, and;
• a $4.3m increase in provision for existing open claims.
Remaining reinsurance cover partially mitigates these two factors by $2.2m.
A contributing factor to the additional new overcap claims is that the $100K
cap is not inflation adjusted so the cost of the same repair is now higher. We
will work with EQC to help mitigate these additional costs.
Some of our open CEQ claims are complex and long-term. The expected cost
for several of these has increased in FY22, driven by both inflation and more
costly rectification approaches and we have increased our provisions to
address this.

16

We continue to closely manage these outstanding claims and our dedicated
CEQ team is actively working to finalise claims as efficiently as possible.
Slide 19 - Robust reinsurance programme provides protection
In September we were pleased to successfully renew our reinsurance
programme for the 2023 financial year, obtaining comprehensive cover with
very competitive rates for our home, motor, boat and commercial portfolios,
across New Zealand and the Pacific.
Tower’s reinsurance strategy provides protection from volatility caused by
large events and maintains financial flexibility to support growth, while
underpinning strong solvency.
Under this new arrangement we have increased our catastrophe upper limit
from $873m to $934m in FY23 to reflect business growth. The catastrophe
cover excess is $11.9m, in line with previous years.
In FY23 we will be paying proportionally less for reinsurance cover at 13.6% of
total income, compared to 15.9% of premium income in FY22 (including the
previous aggregate programme). This proportional reduction reflects
reinsurers’ confidence in Tower’s positive business performance.
To manage the impact of large events volatility on our results, we have
budgeted for $30m of large events in our FY23 plan. For context, this is almost
$9m more than ultimate estimate of large events costs for FY22 and more than
double the 10-year average of $13m and well above the five-year average of
$16m.
FY22 large events of $21.1m comprised $6.8m for the Tonga volcanic eruption
and tsunami, $3.6m for Cyclone Dovi, $6.4m for the North Island Rainstorms,
and $4.3m for the Nelson Floods.

17

The expense recorded in Tower’s profit and loss was reduced to $19m after
reinsurance recoveries under the FY22 $20m aggregate cover excess and a
$1m recovery on a prior period event.
Slide 20 - Strong capital and solvency, delivering shareholder returns
In the last 12 months Tower has returned $55.3m to shareholders in the form
of dividends and a capital return. As a result of these payments to
shareholders, Tower’s surplus capital has decreased.
However, with a solvency ratio of 205% as at 30 September, after the capital
return and final dividend, it is clear that Tower remains in a strong capital and
solvency position. As the Chair announced we will be paying a final dividend of
4 cents on the 1
st
of February, 2023, bringing the full year dividend to a total of
6.5 cents per share.
Slide 21 – FY23 guidance
In FY23 Tower anticipates underlying NPAT of between $27m and $32m.
This range is based on further growth of between 10% and 15% as well as the
allowance for large events of $30m. It represents a $8m after tax increase in
the impact of large events when compared to FY22.
Consistently with FY22, we will measure large events as those which have a
total cost of more than $2m.
In line with Tower’s ordinary dividend policy to pay a sustainable annual
dividend in the range of between 60-80% of adjusted earnings where prudent
to do so, Tower anticipates FY23 dividends to be 6.5 cents per share.
Slide 22 – Looking forward

18

Thank you. I will now hand back to Blair who will provide an update on our
outlook.
Blair Turnbull
Thank you, Paul.
Slide 23 – Leveraging scalable platform to continue growth and efficiencies
Tower is continuing to leverage investments in our scalable platform to deliver
shareholder value via attractive long-term growth and greater efficiencies.
Two areas where we are targeting efficiencies are in our customer service and
claims processes and in FY23 we expect to see significant improvements
through further digital and process optimisation.
New My Tower improvements to enhance customer experience and further
reduce telephony interactions include our car replacement journey. We know
that customers predominantly cancel their motor insurance when they have
bought a new car. Our new feature coming soon aims to capture these
customers with the option to replace their car policy rather than cancel.
We are also offering customers information at their fingertips on ways to save
on their insurance and enhancing the ability to update personal details on the
go.
We are further investing in our enhanced sales capability with our automated
marketing platform set to send out 5 million targeted and personalised
messages in FY23.
Following the completion of our digital transformation, the mix of our spend
has moved from focusing on our technology platform, systems and regulatory

19

compliance towards customer relationships and growth, reflecting the
maturity of our technology transformation.
Slide 24 - Tackling resourcing gap via digital service and unique footprint
It's no secret that a key challenge for New Zealand businesses today is the tight
labour market. And for many businesses with active contact centres this
struggle to fill seats has resulted in long wait times and frustrations for
customers.
Tower has not been immune to these challenges which have disappointingly
seen our net promoter score (NPS) drop to 20% from 43% in September 2021.
However, we have some clear unique advantages that will allow us to tackle
this challenge via a pathway for NPS improvement in FY23. This includes:
Firstly, leveraging our digital self-service platform. In FY23 digital will comprise
30% of our investment on customer experience and frontline enhancements
and will include new My Tower features, further automation and enhanced
straight through claims processing.
Secondly, we will make further improvements to our fantastic staff culture and
engagement through promoting and developing career pathways for frontline
staff and leveraging digital technology to improve the frontline user
experience.
Thirdly and excitingly, we will invest in our Fiji hub by adding an additional 100
Tower people in Suva in FY23. This will see the mix of staff more evenly spread
between our operational centres in Auckland, Rotorua and Suva, and our
people permanently working from home.

20

Our investments in digital technology are increasingly enabling us to move
workflows across our Suva, Rotorua and Auckland operations centres. Having a
physical presence in these locations also gives us access to talent in these
markets.
In Suva particularly we are offering high quality roles where our people there
appreciate the opportunity to progress their careers into senior positions
without having to leave their countries. Tower roles in Fiji comprise a wide
range of corporate functions, including, finance, technology, human resources,
marketing and customer service.
Our recent recruitment drives in Fiji have seen strong interest from highly
educated, experienced and professional candidates who are excited about
becoming part of the Tower team and providing high quality service to our
customers.
Slide 25 – Protecting the future for our customers and communities
Last year we began our sustainability journey with the development of a
strategy that guides how Tower manages its environment, social and
governance issues under the following focus areas:
Firstly, a diverse and inclusive workplace that builds people’s physical and
emotional wellbeing.
Secondly, ensuring we are thinking ahead for our planet by moving all aspects
of our business towards zero-carbon and zero-waste and having a positive
impact on New Zealand and the Pacific.
Thirdly, helping communities navigate climate change by championing
informed dialogue and supporting research and education on climate change
issues.

21

And finally, being people’s go-to trusted insurance partner by providing fair
and transparent insurance that is accessible and affordable.
In FY23 we will progress on these commitments by adding coastal erosion and
inundation risks to our customer facing risk ratings tool, educating
homeowners transparently about the risks that may impact their properties.
And we are excited about the potential for parametric cyclone cover to
improve the economic resilience of Pacific communities in the future.
We are also committed to further innovating our products to influence our
customers to reduce their carbon footprints. We currently offer a home
insurance sustainability benefit which contributes $15,000 to sustainable
products for a total rebuild; our policies support a range of e-mobility vehicles;
and we have updated our GoCarma app to give people real time feedback on
their driving emissions, based on their car’s make and model, and their driving
behaviour.
We take measuring and reducing our emissions seriously as we recognise that
every effort to reduce emissions helps to mitigate global warming. Tower has
set an ambitious target, grounded in science, of a 21% reduction over five
years using FY20 as our base year, which as we all know was subject to Covid
restrictions.
We will present full details of our sustainability reporting in this year’s annual
report which has been prepared in accordance with the Global Reporting
Initiative 2021 standard.
And as the Chair noted, we are currently preparing for the introduction of the
External Reporting Board’s Climate-related Disclosures regime and are
planning an early partial disclosure in FY23.

22

Slide 26 – Continuing to deliver dividends and growth
It’s clear that Tower’s business performance has been strong. And we have
delivered customer and premium growth while further improving our
management expenses.
Tower is a well-capitalised business with a strong balance sheet and solvency
margins and we are delighted to have returned $55.3m to shareholders in the
form of dividends and a capital return.
In the coming year, our focus is on continuing our solid underlying operating
performance and achieving positive customer outcomes and growth.
We continue to focus on claims inflation and enhancing claims processes while
driving efficiencies through our scalable digital platform and focus on
expenses.
We remain committed to delivering positive returns to our shareholders
through continued dividends and accelerating growth.
Thank you for your time this morning, I will now hand back to the operator to
ask for questions.

---

Template
Distribution Notice

Updated as at June 2022



Please note: all cash amounts in this form should be provided to 8 decimal places, including zeros (ie 0.01001000)

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 X Quarterly
Half Year Special
DRP applies
Record date 18/01/2023
Ex-Date (one business day before the
Record Date)
17/01/2023
Payment date (and allotment date for
DRP)
01/02/2023
Total monies associated with the
distribution
1

$15,179,359

Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.04000000
Gross taxable amount
3
$0.04000000
Total cash distribution
4
$0.04000000
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

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.

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
$0.01320000
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP
N/A N/A
Date strike price to be announced (if
not available at this time)
N/A
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
N/A
DRP strike price per financial product
N/A
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
N/A
Section 5: Authority for this announcement
Name of person

authorised to make
this announcement
Blair Turnbull
Contact person for this
announcement
Emily Davies
Contact phone number +64 21 815 149
Contact email address emily.davies@tower.co.nz
Date of release through MAP

23/11/2022






6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.