Tower Limited Annual Report 2022

Tower Limited
Annual Report 2022

2022 YEAR IN REVIEW02
UPDATE FROM CHAIR & CEO 04
MAKING INSURANCE EASY 06
• Innovating to make insurance easier for customers 12
• Creating beautifully simple and rewarding customer experiences 14
• Transparency & fairness at the heart of our customer experience 16
• Flood risk-based pricing 18
• Expanding our core product range 20
• Partnering everywhere 22
• Making insurance affordable and accessible 24
• Investing in the Pacific 26
CLIMATE CHANGE – TACKLING THE CHALLENGE OF A LIFETIME28
• Managing the impacts of climate change 32
• Supporting our communities through climate change 34
SUPPORTING CUSTOMERS THROUGH LARGE EVENTS AND EVERYDAY CLAIMS 40
• FY22 large events and everyday claims 42
• Transforming our claims experience 48
PUTTING OUR PEOPLE FIRST50
• Diverse and inclusive to the core 54
• Supporting our people 56
• Developing careers in the Pacific58
PROTECTING THE FUTURE 60
• Managing our ESG issues 62
• Our ESG strategy 63
BOARD OF DIRECTORS 64
CONSOLIDATED FINANCIAL STATEMENTS 66
• Financial Statements 66
• Notes to the consolidated financial statements 74
INDEPENDENT AUDITOR'S REPORT 113
APPOINTED ACTUARY'S REPORT 118
CORPORATE GOVERNANCE AT TOWER 122
GRI CONTENT INDEX 136
TOWER DIRECTORY 142
REGISTRAR 143
TOWER LIMITED
ANNUAL REPORT 2022
TOWER LIMITED ANNUAL REPORT 2022TOWER LIMITED ANNUAL REPORT 2022 01

13
%
$
27.3m
$
18.9m
319k
200k
2022 IN REVIEW
Underlying GWP growth
$457m vs $404m in FY21*
Underlying profit incl. large events
vs $20.8m in FY21*
*For a reconciliation of Tower’s underlying GWP and underlying profit, which are non-GAAP measures, to its reported GWP
and profit after taxation respectively, see Tower’s FY22 Investor Presentation, announced 23 November, 2022 via the NZX.
Profit after taxation
$19.3m in FY21
Customer growth
vs 304,000 in FY21
My Tower registrations
vs 132k in FY21
50
%
30
%
$
19
m
78
%
7.8
73
k
Of Tower customers hold
multiple products
Reduction in New Zealand electricity
emissions after moving to 6 Green Star
head office, vs 2020 baseline year
Large events
vs $13.9m in FY21
Employee NPS
vs 7.7 in FY21
Everyday claims paid
in New Zealand
Growth in EV policies - 4140 policies
in FY22 vs 2320 in FY21
02032022 YEAR IN REVIEW2022 YEAR IN REVIEW

UPDATE
FROM
CHAIR &
CEO
"At Tower, our purpose is to inspire, shape
and protect the future for the good of our
customers and communities."
Strong growth and
business performance
We are pleased to report that in the
year to 30 September 2022, our
underlying profit including large events
was $27.3m, up 31% from $20.8.m for
the full-year 2021. Underlying profit,
excluding large events, was $41m,
compared to $30.8m in the prior year.
Profit after taxation was $18.9m, versus
$19.3m at the end of FY21.
Tower’s focus on simple and rewarding
customer experiences combined
with our digital and data capability
have contributed to strong growth.
During the financial year we grew
customer numbers to 319,000, up 5%
on last financial year. We also grew our
underlying gross written premiums
(GWP) 13% year on year, up to $457m.
Reflecting these positive results and
based on Tower’s dividend policy, the
Board has declared a final dividend
of 4 cents per share. This will be
paid on 1 February 2023,bringing
total dividends for FY22 to 6.5 cents
per share.
We remain in a strong capital and
solvency position. As at 30 September
2022, Tower’s New Zealand parent
solvency ratio was 205% and the
company was holding $22m above
itstarget solvency margin.
In March, the Board returned $30.6m in
excess capital to shareholders by
way of a compulsory share buyback
under a court-sanctioned Scheme
of Arrangement.
In FY22 Tower successfully navigated
global and domestic challenges
including record inflation, supply
chain blockages, access to talent,
and increasing large events. We are
pleased that the actions we have taken
to address these challenges, combined
with consistent growth and strong
underlying business performance, are
delivering results for shareholders.
Delivering on innovation and growth
Our flagship Tower Direct business
continues to go from strength to
strength, growing GWP by 17% to
$320m as we innovate to build
rewarding and engaging
relationships with customers.
Our digitisation strategy has seen us
make the process of purchasing and
managing insurance policies and
making a claim even easier on one
simple online platform. We have
also enhanced transparency
of pricing and individual property risk
with the introduction of our flood
and earthquake risk rating tool.
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.
Similarly, our partnerships business
has attracted new partners such as
Ray White, and our flagship Trade
Me offering has increased by 38% to
45,000 policies. During the year we
were pleased to complete our strategy
of acquiring legacy insurance books
from banks and migrating them to
Tower Direct, reducing commission
payments by around $11m per year.
Our technology partnerships
are enabling the business to be
increasingly nimble in responding
to challenges and capitalising on
opportunities.
In the financial year we were
particularly pleased to win a number
of industry awards for our leading
customer experience, including the
Insurance Business Awards New
Zealand General Insurer of the Year,
MICHAEL
STIASSNY
Chairman
BLAIR
TURNBULL
CEO
and the top Canstar Car Insurer of
the Year and Outstanding Value Car
Insurance Awards for the second
year running.
Recognising our people
Our 2022 financial year result is a credit
to Tower’s management and people
who focused on delivering our strategy
and the resulting customer benefits.
We were pleased to have further
bolstered our leadership team and
Board this financial year. In January,
we welcomed both our Chief Financial
Officer, Paul Johnston, and Chief Claims
Officer, Steve Wilson, and in June,
Greg Moore joined as Chief Digital
and Data Officer.
In February we farewelled Steve Smith
who had been a Director of Tower since
2012. On 30 November, Warren Lee
retired following seven years' service
to Tower. We sincerely thank Steve
and Warren for their considerable
contribution towards Tower’s
transformation over the years.
Just after the close of the financial year,
the Board was pleased to welcome
Geraldine McBride as a Director on
1 October. Geraldine brings extensive
governance and technology industry
experience both internationally and in
New Zealand.
Managing the impacts of
climate change
It’s clear that the biggest challenge
we collectively face is the threat of
climate change.
Tower is committed to navigating the
changing climate in support of our
customers and communities in
New Zealand and the Pacific, and in the
long-term interests of our shareholders.
That’s why we have introduced flood
risk-based pricing and a parametric
insurance pilot, to better inform and
prepare our customers and business
for the future.
Increasing the large event limit in our
financial plans and the successful
renewal of Tower’s reinsurance
programme also provide important
protection from this volatility.
In the coming financial year, we will
respond to the Government’s new,
mandatory Climate-related Disclosures
reporting regime by sharing the risks
and opportunities we anticipate from
a range of potential climate change
scenarios. We see this regime as a
positive opportunity to inform our
business strategy and support
future resilience.
Environmental, social and
governance commitments
This year, for the first time, we are
pleased to integrate environmental,
social and governance (ESG)
commentary throughout our annual
report, in accordance with the
Global Reporting Initiative (GRI) 2021
Standards. This approach reflects our
commitment to transparency and
providing shareholders with the widest
possible view of our activities.
Tower has identified and prioritised its
most relevant ESG impacts and has
initiatives in place to address them.
These are highlighted throughout the
report with a list of our material topics
summarised on page 62.
We welcome feedback on this report
from our shareholders and look forward
to sharing our progress as we continue
our sustainability journey, in tandem
with our other strategic priorities.
0504UPDATE FROM CHAIR & CEOUPDATE FROM CHAIR & CEO

MAKING
INSURANCE EASY
0607MAKING INSURANCE EASYMAKING INSURANCE EASY

Key to our strategy is a
relentless focus on our
customers, deepening
our relationships with
them through rewards,
new products and other
offerings that make
sense and create value.
0809MAKING INSURANCE EASYMAKING INSURANCE EASY

DON’T JUST TAKE
OUR WORD FOR IT
“The My Tower login
is super easy to use
to update and change
policies.”
– Pradeep, Tower customer, August 2022
“Just great service,
easily accessible
and right first time!!”
– Davina, Tower customer, March 2022
“Incredible friendliness,
so engaging and
explained everything.”
– Carolyn, Tower customer, December 2021
NEW ZEALAND INSURTECH INITIATIVE
OF THE YEAR AWARD
Insurance Asia Awards 2022 – Quick Quote,
Awarded in June
CELENT CUSTOMER EXPERIENCE
TRANSFORMATION
Celent Model Insurer Awards 2022,
Awarded in March
Awarded in September
Awarded in September
NEW ZEALAND GENERAL INSURER
OF THE YEAR
Insurance Business Awards NZ 2022,
Awarded in February
CANSTAR CAR INSURER
OF THE YEAR
CANSTAR 2022 OUTSTANDING VALUE
CAR INSURANCE AWARD
1110MAKING INSURANCE EASYMAKING INSURANCE EASY

INNOVATING TO MAKE INSURANCE
EASIER FOR CUSTOMERS
Throughout the year we’ve continued
to enhance our unique My Tower
offering. In addition to purchasing
insurance, making a claim, and
updating and keeping track of policies
on one simple online platform,
customers can also:
• View a personalised comparison
of pricing changes at renewal time
• View their property’s individual
risk profile for flooding and
earthquakes
• Adjust their sum insured
• Update their personal details
and payment methods
• View discounts and promotions.
In FY22 Tower continued
to invest in and develop
industry-leading
technology and tools to
deliver beautifully simple
customer experiences.
This digital focus has
contributed to our flagship
Tower Direct business
performing well in FY22,
with GWP up 17% to $320m.
Customers are increasingly engaging with us online.
Customers now registered for My Tower NZ, vs 132k in FY21
200k
Of Tower Direct sales now digital
66
%
Increase in Tower Direct online quotes from FY21
17
%
Of service tasks and transactions completed digitally in NZ
50
%
Of claims now lodged online in NZ
48
%
1213INNOVATING TO MAKE INSURANCE EASIER FOR CUSTOMERSINNOVATING TO MAKE INSURANCE EASIER FOR CUSTOMERS

CREATING
BEAUTIFULLY
SIMPLE AND
REWARDING
CUSTOMER
EXPERIENCES
Charlie the chatbot
Charlie the chatbot handled more than 92,000
customer queries in FY22. Through clever use of
artificial intelligence, Charlie can answer more than
10,000 unique questions and is learning more every
day. Charlie is available to customers 24/7.
Quick Quote
Making it quicker to get a quote has increased the
number of quotes we’ve provided. Quick Quote uses
big data and automation to make the insurance
quotation process as simple as possible for
customers. A quote from Tower now only requires
responses to between five and nine questions,
depending on the policy.
1415CREATING BEAUTIFULLY SIMPLE AND REWARDING CUSTOMER EXPERIENCESCREATING BEAUTIFULLY SIMPLE AND REWARDING CUSTOMER EXPERIENCES

TRANSPARENCY & FAIRNESS AT
THE HEART OF OUR CUSTOMER
EXPERIENCE
We are focused on building trust, through fair and transparent insurance services.
Our customer research tells us that
insurers traditionally do not make
things easy for customers; only a
quarter of Kiwis told us they are
confident they have the right cover
for all their risks*. Three-quarters of
people surveyed also told us that
transparency of information is one
of the most important factors when
deciding on an insurance provider.
We recognise the need for clearly
worded and simple descriptions
of insurance products that ensure
customers understand what they’re
covered for.
Easy to understand insurance
In addition to ensuring our policies
achieve the WriteMark plain English
standard, we progressed several
important initiatives in FY22 aimed at
increasing transparency and fairness.
These include our approach to risk-
based pricing for flooding which
launched in November 2021,
and continually simplifying and
improving our customer self-service
offering through digitisation.
We enhanced our digital platform to
provide customers with transparent
pricing. We also challenged industry
norms by making it easier for
customers to cancel their insurance
online without needing to call the
contact centre.
With 82% of customers surveyed
saying they are likely or very likely
to insure with Tower again in the
future, this approach has removed an
unnecessary pain point for customers.
Toka Tū Ake – EQC levy change
A substantial change to premiums in
2022 was driven by the Government’s
decision to double the amount Toka
Tū Ake – EQC will pay out in certain
types of natural disasters, to $300k
per household.
With most customers seeing a
resulting increase in premiums,
Tower proactively explained the
change in premiums to customers,
including producing an easy-to-
understand video which received
positive customer feedback.
*From Tower research commissioned in September 2021, which surveyed 1,000 New Zealanders
Putting things right for our customers
An important part of being fair and
transparent is fronting up and fixing
things when we don’t get them right.
In the 2023 financial year, Tower will
put things right for customers whose
discounts weren’t calculated correctly.
Following an internal review, we
identified that some customers who
hold multiple policies with Tower
have not received the multi-policy
discount they were entitled to. After
we identified the issue, we proactively
advised the Financial Markets
Authority (FMA). We are identifying
affected customers and calculating
refunds due. Customers will not need
to take any action as we will make
contact directly as appropriate. We
sincerely apologise to customers who
have been affected by this error. We
have put new processes in place to
ensure that customers always receive
their correct discounts.
1716TRANSPARENCY & FAIRNESS AT THE HEART OF OUR CUSTOMER EXPERIENCETRANSPARENCY & FAIRNESS AT THE HEART OF OUR CUSTOMER EXPERIENCE

FLOOD
RISK-BASED
PRICING
In November 2021, Tower introduced
flood risk-based pricing and a new
online tool to help all Kiwis better
understand and prepare for the
risks their properties face, and to
ensure we keep premiums fair
and transparent.
The tool was developed in
partnership with Risk Management
Solutions (RMS, a global risk-
modelling company). It’s the first fully
probabilistic flood model for
New Zealand and allows a low,
medium or high rating for every
residential address in the country.
We also use this data to help
customers understand their
premiums. Through My Tower
we have raised the benchmark
around open and transparent
pricing for customers, by presenting
visual breakdowns of customer
premiums in a simple chart, where
they can easily compare year-on-
year changes for the various
pricing elements.
Throughout 2022, all home
insurance customers who have
held Tower policies prior to
November 2021 have been
transitioned to our new flood-risk
rating model, with nearly 90%
receiving a reduction in the flood-
risk portion of their premiums.
Looking forward, Tower will expand
its risk-based pricing approach to
include coastal erosion and coastal
flooding risk by the end of 2023,
with windstorm to follow.
1918FLOOD RISK-BASED PRICINGFLOOD RISK-BASED PRICING

Injured dogs recovered
55
Of travel insurance policies were
for trips to Australia - our most
popular destination
19
%
Sick cats nursed back
to health
18
EXPANDING OUR CORE
PRODUCT RANGE
At Tower, we’re all about solving our customers’
problems before they even know they have them.
This enables us to build deeper relationships with
customers who then stay with us longer.
In FY22, Tower developed a new
renovation insurance product. We also
partnered with Allianz Partners to offer
travel and pet insurance.
Travel cover
Tower launched travel insurance in
October 2021. Once borders opened
fully in March, Kiwis left the country in
earnest with 19% of travel insurance
policies purchased for trips to
Australia, followed by New Zealand
at 14%, the UK at 12%, and Fiji and the
US at 9%.
Pet insurance
We launched pet insurance in
December 2021. From home and
contents to canines and cats,
customers are now able to insure
their most precious possessions
and furry friends with Tower.
Contract Works –
Renovation cover
Kiwis took out more than 30,000
renovation consents for their houses
last year. But our research* shows
many people aren’t aware home
insurance doesn’t cover everything
related to renovating.
In August 2022, Tower launched
Contract Works – Renovation cover.
It’s separate from house insurance
and builders’ insurance, and covers
damage while work is being done, as
well as theft of construction materials.
Disciplined, data-driven underwriting
improving risk accuracy
We are staying ahead of inflationary
pressures by ensuring accurate sum
insured amounts for our customers’
homes. Now almost 100% of our house
customers’ sums insured are updated
automatically on their policies, either
by the consumer price index or the
Cordell calculator, compared to only
77% a year ago.
Our underwriting capability is
becoming increasingly automated,
with 95% of risks in New Zealand
now sold without requiring a manual
underwriting review.
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.
*From Tower research commissioned in July 2022, which surveyed 1,005 New Zealanders
20
21EXPANDING OUR CORE PRODUCT RANGEEXPANDING OUR CORE PRODUCT RANGE

PARTNERING EVERYWHERE
Bringing Kiwis home safe
We’re proud to celebrate one
year of partnering with Coastguard
New Zealand. New Tower Boat
customers are eligible for a discounted
Coastguard membership.
Coastguard volunteers and staff are
also eligible for insurance discounts.
These discounted rates help drive
Coastguard memberships and
ultimately, keep more Kiwis
water safe.
Smart, meaningful
partnerships have been
key to unlocking growth
amid a rapidly changing
insurance landscape.
In FY22 Tower’s
Partnerships business
increased GWP from
active partners by 35%
to $54m and Tower has
attracted a number of new
partners over the year.
Ray White Concierge
Unlike any other service in the New
Zealand property industry, Ray White
launched Concierge in partnership
with Tower in October 2022.
Our partnership with Ray White makes
it even easier for people to insure their
home during a seamless property
purchase process experience, with
access to our entire product range and
My Tower platform.
Kiwi Adviser Network
In September 2022, Tower partnered
with the Kiwi Adviser Network
(KAN). KAN has relationships with
200 advisors and 20 New Zealand
mortgage lenders across NZ.
This partnership helps simplify
insurance referrals for advisers and
is another positive step forward for
Tower’s partnerships advisory model,
helping to accelerate the growth of
our network by 35% to 1,500 active
advisors throughout FY22.
Flagship Trade Me Partnership
Our flagship Trade Me partnership
has gone from strength to strength
this financial year, growing 38% to
$25m GWP and helping Tower reach
a range of customers through Trade
Me Insurance (TMI). In March, TMI
extended its offering to include our
Boat insurance product. With more
than 3,000 boats for sale on Trade Me
at any one time, we're continuing to
provide insurance cover for products
on Trade Me with our online journey.
TSB
In May we announced a new five-year
referral agreement with TSB, providing
the opportunity for further growth.
Tower has underwritten TSB-branded
insurance products since 2004.
Legacy insurance book
acquisitions complete
In September we completed our
strategy of acquiring legacy insurance
books and migrating them to Tower
Direct. We announced we would
acquire and assume Kiwibank’s rights
and obligations relating to servicing
a portfolio of insurance policies
underwritten by Tower.
Since February 2021, Tower has
purchased books for a total price
of $26m from ANZ, Westpac, TSB
and Kiwibank, ending commission
payments and enabling us to have
a direct relationship with these
customers, who hold more than
88,000 assets and contents policies.
Previously, Tower paid total
commission to these partners
of around $11m per annum.
Reducing commissions
The transformation of our Partnerships
business to a lower commission model
and our legacy book acquisitions have
resulted in commission payments
reducing to 2.2% of gross earned
premiums in FY22.
2223PARTNERING EVERYWHEREPARTNERING EVERYWHERE

MAKING INSURANCE
AFFORDABLE AND ACCESSIBLE
Providing affordable and accessible insurance is a priority for Tower, including in
our Pacific markets, where most people are either not insured or are underinsured.
Low rates of insurance in the Pacific
are due to a range of issues, including
the insurability of many Pacific homes,
the unique ownership structures of
properties within families, affordability,
a lack of insurance products to suit
their needs, or a lack of available
internet or transportation to access
insurance products.
We know that not having the right
cover makes people, communities, and
economies reliant on aid, which creates
unnecessary uncertainty and can mean
it takes more time to recover when the
worst happens.
As a Kiwi and Pacific insurer, we have
a responsibility to ensure insurance
remains accessible and affordable.
This is a challenge given the current
inflationary environment and
increasing risks from large events
and climate change.
We are committed to providing
products that meet our customers’
needs, offering insurance services that
are as affordable and accessible as
possible, and increasing the number
of people with appropriate insurance.
We continuously monitor our
pricing and benefits to ensure we are
competitive and offer value for money.
We have also formed an affordability
focus group to ensure our team have
all the right skills necessary to help
customers navigate affordability issues.
In the Pacific, Tower has advocated
strongly for higher penetration of
insurance.
This year we made a submission to
the Fiji National Financial Inclusion
Strategy, calling for fast and affordable
internet access. We participated in an
industry initiative to develop a financial
literacy programme for insurance
with the United Nations Development
Programme (UNDP). And in February
we announced a partnership with
Business Link Pacific to increase
insurance knowledge in the
South Pacific.
Cyclone Response Cover
We see the Pacific as an excellent
test bed for new technology and
product development. With weather
events becoming more extreme,
it’s important for insurers to look at
different insurance models to help
communities recover more quickly
from widespread damage.
Parametric insurance provides a
rapid cash pay-out when a
customer is impacted by a weather
event, regardless of damage and
without the need for an insurance
assessor’s signoff.
In October 2022, Tower launched
Cyclone Response Cover, a parametric
insurance pilot in Fiji, ahead of the
2022/2023 cyclone season. Cyclone
Response Cover automatically pays
customers following cyclone events,
based on windspeed and proximity.
It aims to help communities recover
more quickly from a large event and
offers financial security and peace
of mind to customers who may not
benefit from traditional insurance.
It’s an affordable, lower-cost, lower
total cover approach and nimbler
than the assessment-based insurance
models we have now. It isn’t a silver
bullet and won’t replace assessment-
based insurance, but it’s part of the
solution – importantly, it’s a step
forward in increasing insurance
accessibility across the Pacific.
Following the pilot phase, Cyclone
Response Cover will be available
to all Tower customers in Fiji for the
2023/2024 cyclone season. From
there, Tower will begin to expand
the product into our other Pacific
Island markets.
“Cyclones bring a lot of damage to our
village. This type of insurance will help
us buy food and replace or repair our
damaged possessions. It just costs
a few bundles of fish to pay for the
premiums for the whole year.”
– Ledua, Tower Fiji Cyclone Response Cover pilot customer.
2524MAKING INSURANCE AFFORDABLE AND ACCESSIBLEMAKING INSURANCE AFFORDABLE AND ACCESSIBLE

Tower’s core platform has now
been rolled out across seven Pacific
countries, supporting a return to
growth for our Pacific business with
GWP up 8% to $58m.
In this time, Tower has been able to
tap into local talent, expertise and
important perspectives on issues
like product development and more
recently, climate change.
Our Pacific team has been
instrumental in the development of
our parametric insurance pilot and
in understanding climate change
impacts on our Pacific customers.
Our operations hub in Suva is the heart
of our Pacific arm. In the last two years
alone, we’ve celebrated significant
growth in Fiji, creating more than 50
new jobs for local people, and we
now have staff in Suva working across
every Tower business unit.
This growth both bolsters the local
economy and safeguards overall
Tower has been helping to protect Pacific Island customers and communities with
insurance for more than 140 years.
business continuity and resilience.
Having people across different regions
means our team in Fiji can support our
Pacific customers as well as peaks
and troughs in customer service calls
across the Tower Group.
Beyond investing in talent, we’re also
investing heavily in digital and data
technologies to increase insurance
accessibility and bring a more modern,
streamlined insurance experience to
the Pacific region.
We’ve invested nearly NZ$7m into our
Pacific digital transformation, and our
digital platform is now live in every
Pacific market we operate in.
In March 2022, we launched Fiji and
the Pacific’s first ever online quote-to
buy insurance experience, and this is
INVESTING IN THE PACIFIC
Of all Fiji new business purchased
via new digital platform
88
%
Core NZ and Pacific personal
lines platform now live
1
Of all new business in
the Pacific purchased via
new platform
45
%
Increase in Fiji new
business vs FY21
71
%
now also live in Vanuatu and Tonga.
In April 2022, we launched our
signature My Tower platform in Fiji,
followed by My Tower Vanuatu in
November 2022.
My Tower means our Fiji customers
no longer need to make the trip to
one of our branches to make a claim,
purchase insurance, change their sum
insured or pay their premiums – all of
this can now be done online via
My Tower.
We plan to launch online quote to buy
and My Tower across all our Pacific
territories by the end of FY23.
Simplifying our Pacific business
In December 2021, Tower completed
the acquisition of its subsidiary
National Pacific Insurance Limited
(NPI) which operates across Tonga,
American Samoa and Samoa. Tower
has begun the process of rebranding
NPI to Tower.
In June 2022, Tower announced the
conditional sale of all its shares in
its Papua New Guinea subsidiary to
Alpha Insurance Limited. The sale
was completed in October 2022. It
delivers good value to shareholders
and will enable Tower to accelerate
streamlining and modernising our
Pacific business operation.
2627INVESTING IN THE PACIFICINVESTING IN THE PACIFIC

CLIMATE CHANGE – TACKLING THE
CHALLENGE OF A LIFETIME
2829CLIMATE CHANGE – TACKLING THE CHALLENGE OF A LIFETIMECLIMATE CHANGE – TACKLING THE CHALLENGE OF A LIFETIME

Tower is focused on managing
the impacts of climate change,
both within our business and
for the communities we serve.
We recognise that we have a
responsibility to make a positive
contribution to mitigating
climate change through our own
operations, and through our
influence as a committed Kiwi
and Pacific business.
3031CLIMATE CHANGE – TACKLING THE CHALLENGE OF A LIFETIMECLIMATE CHANGE – TACKLING THE CHALLENGE OF A LIFETIME

Continuing to expand our risk-based
pricing strategy to include more
climate-related hazards.
Budgeting for increasing large
events in our planning to manage
financial impacts.
1 2
Implementing a robust reinsurance
programme to provide protection
from volatility.
Working towards a more sustainable
future by supporting communities
through climate change and reducing
emissions through every aspect of our
value chain.
3 4
Robust reinsurance programme
In October 2022, we successfully
renewed 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.
Tower increased the catastrophe
upper limit to $934m to reflect
business growth. The catastrophe
cover excess is $11.9m, up from
$11.3m in FY22.
Reinsurers are attracted to Tower’s
robust risk management capabilities,
strong underwriting, including our
approach to risk-based pricing, and
our dynamic rating capability.
Climate-related Disclosures
The New Zealand Government's
new Climate-related Disclosures
reporting regime will come into effect
for accounting periods starting after
1 January 2023 and will therefore
apply to Tower’s FY24 reporting.
We see this reporting regime as a
positive opportunity to inform our
business strategy and are planning
to make some early Climate-related
Disclosures in our FY23 reporting.
Lifting awareness & education
To help raise awareness of risks
and climate change issues we
are sharing useful data with New
Zealand customers via our flood and
earthquake hazard model. We also
support scientific research, education
and innovation through our partnership
with Waikato University’s Bachelor of
Climate Change Studies.
MANAGING THE IMPACTS
OF CLIMATE CHANGE
Tower has four main strategies for managing climate change impacts:
We are committed to championing informed and
pragmatic dialogue on climate change impacts
and responses. Throughout the year, Tower
has been vocal on these issues with a range of
stakeholders and media in New Zealand and in
the Pacific. We are clear about what’s needed.
Insurers need to develop new products and models.
1
Local and central government need to invest
in mitigation solutions for suburbs and cities.
2
We need urgent changes to building codes and to
take weather events into consideration as we plan
new housing developments.
3
3332MANAGING THE IMPACTS OF CLIMATE CHANGEMANAGING THE IMPACTS OF CLIMATE CHANGE
Managing the impacts of climate
change

Tower is committed to helping New Zealand and the
Pacific’s transition to a more sustainable future.
SUPPORTING COMMUNITIES
THROUGH CLIMATE CHANGE
Our greatest opportunity to support
this aim is by positively influencing and
supporting our customers through the
services and products we provide.
Ensuring our product development
and innovation supports climate
change resilience and action is a
priority for Tower. We know traditional
insurance products fail to adequately
support many Pacific people who
either do not have insurance or are
underinsured. To help build future
resilience in the face of climate
change in the Pacific, we are piloting
parametric insurance with Cyclone
Response Cover and improving the
accessibility of insurance products
through digital investments.
In New Zealand, Tower is supporting
more sustainable forms of transport
with innovative insurance offerings
including policies that cover electric
and hybrid vehicles, e-bikes and
e-scooters.
Decarbonising transport
Since broadening the range of EVs
we insure in 2021 and the introduction
of government schemes to incentivise
uptake of EV and hybrid vehicles,
sales of EV policies continued to soar,
with the number of Tower EV policies
increasing by 78% during 2022.
Sustainability benefit
Our $15,000 sustainability payment,
on top of the sum insured, provides
an incentive to choose sustainable
building materials and features when
building a new home following a total
loss from fire or flood.
Growth in EV cover
Growth in hybrid vehicle cover
78
%
65
%
3435SUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGESUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGE

GoCarma carbon feature
This year, we updated our GoCarma
app to present customers’
personalised carbon emissions from
driving and give feedback on how to
improve driving to reduce emissions.
Carbon emissions target
Tower has set a science-based
reduction target of 21% over five
years from our 2020 base year.
We first calculated our carbon
footprint for two financial years in
2021 in accordance with the
requirements of the Greenhouse
Gas Protocol and ISO 14064-1:2018.
We have ambitiously elected to
use FY20 (1 October 2019 – 30
September 2020) as our first year of
measurement, which includes multiple
lockdowns in all the markets we
operate in. While this base year does
not reflect our pre-Covid footprint, we
are aiming to incorporate the lessons
of three years of working remotely and
travelling less.
We take measuring and reducing our
emissions seriously as we recognise
that every effort to reduce emissions
helps to mitigate global warming.
Our carbon impacts reach well beyond
the boundaries of our own operational
activities and include the activities of
our whole value chain, including the
suppliers we work with.
Our emissions profile
Our emissions temporarily reduced in
FY21 due to the substantial reduction
in travel and energy use experienced
by many office-based companies
throughout the pandemic. As
expected, our ambitious targets are
proving challenging as we continue
to grow and increase customer
interactions, particularly in the
Pacific islands.
This return to normal activities has
seen our overall carbon footprint
increase 12% to 617 tCo2e against
our FY20 baseline year (551 tCo2e).
This is largely driven by our Pacific
fleet of 18 vehicles which have
doubled emissions compared to our
FY20 base year contributing to a 78%
increase in our Scope 1 emissions.
We are committed to reducing our
fleet emissions and have already
taken actions to curb these, such
as replacing our New Zealand fleet
with plug-in hybrid vehicles. This has
helped manage increases to our New
Zealand mobile combustion emissions
in FY22 and we expect to see the full
benefit of this change in FY23.
We will transition four of our Pacific
fleet vehicles to hybrids in FY23.
Some 62% of Tower’s greenhouse
gas (GHG) emissions come from our
Pacific operations. While this is largely
due to vehicle use, it also reflects the
energy supply in the Pacific compared
to mostly renewable sources in New
Zealand. In our Pacific premises we
rely on generators when the local
electricity grids regularly fail. In FY23
we will investigate how we can
implement more sustainable electricity
sources for our Pacific properties.
The move to our new 6 Green Star-
rated building in Auckland has
helped reduce our corporate office
emissions and waste in New Zealand,
contributing to a 30% reduction
in Scope 2 emissions and an 80%
decrease in emissions from our
Auckland premises versus our
base year.
Air travel accounted for 12% of our
emissions in FY22. While this was up
63% from FY21 as we reconnected
with our people in the Pacific after
two years of restrictions, it is down
42% compared to the FY20 base year,
contributing to a 5% reduction in Scope
3 emissions. In FY22 we implemented
a new Sustainable Business Travel
Policy, which requires staff to first
consider alternatives to travelling such
as use of video conference, as well as
more sustainable ways to travel.
Paper use and waste were minor
contributors to our carbon footprint
in FY22.
In FY22 we also developed a Supplier
Code of Conduct, which sets out our
environmental, social and governance
expectations for all our suppliers. In
FY23 we will work proactively with
suppliers to understand and reduce
our broader emissions profile.
In taking responsibility for our
emissions, our preferred approach
is to invest in initiatives that reduce
gross emissions as much as possible.
Therefore, we have elected not to
offset our FY22 emissions.
SCOPEFY20 (TCO2E)FY21 (TCO2E)FY22 (TCO2E)
SCOPE 1169115
300
SCOPE 2180165126
SCOPE 320298
191
Emissions by scope
3637SUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGESUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGE

NEW 6 GREEN STAR
HEAD OFFICE
Tower’s new home at 136 Fanshawe Street was designed,
developed, and constructed with sustainability in mind.
The building is equipped with cutting-edge technology aimed
at saving energy and cutting waste, and features a 6 Green Star
rating, using the Green Star NZ – Office Built V3 tool.
3839SUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGESUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGE

SUPPORTING CUSTOMERS
THROUGH LARGE EVENTS
AND EVERYDAY CLAIMS
4041SUPPORTING CUSTOMERS THROUGH LARGE EVENTS AND EVERYDAY CLAIMSSUPPORTING CUSTOMERS THROUGH LARGE EVENTS AND EVERYDAY CLAIMS

FY22 LARGE EVENTS
AND EVERYDAY CLAIMS
OCT 21
JAN 22
FEB 22
JUN-JUL 22
FEB 22
MAR 22
AUG 22
Hunga Tonga -
Hunga Ha’apai
volcanic eruption
& tsunami
Cyclone Dovi
Nationwide storms
North & South Island
floods (incl Westport
and West Coast)
North Island
rainstorms
Nelson-Tasman
floods
SEP 22
359
%
$7.7m
68
17.5
k
31.3k
11.2k
Increase in mask-related claims,
mainly for broken or lost hearing aids
and glasses
In claims related to damage caused
by children*
Lightning strikes resulting
in claims
*Parents and caregivers at Tower were unsurprised by this statistic
Car windscreens replaced or repaired
Vehicles fixed or replaced (in addition
to windscreen claims)
Claims for Kiwi and Pacific homes
4243FY22 LARGE EVENTS AND EVERYDAY CLAIMS FY22 LARGE EVENTS AND EVERYDAY CLAIMS

HUNGA TONGA–
HUNGA HA'APAI
VOLCANIC
ERUPTION
AND TSUNAMI
Since then, Tower’s goal has been to
help the people of Tonga recover as
quickly as possible, so they can focus
on rebuilding their lives.
Initial response
The force of the eruption severed
Tonga’s internet and communications
cable, with international
communications not restored until
five weeks later. However, Tower’s
operational resilience meant we were
able to communicate immediately
with our people to ensure their safety
and begin to help customers. It also
meant that our in-country claims
partner networks could be deployed
almost immediately to begin assessing
damage and assisting customers.
Lodging claims and fast
Simultaneously, we ran radio ads
letting all people in Tonga, including
our customers, know how to protect
their homes and cars from further
damage and how to make a claim.
January 2022 saw a one in a thousand year event;
the Hunga Tonga–Hunga Ha'apai volcanic eruption
and subsequent tsunami in Tonga. The event was
seen and felt around the globe and was an incredibly
challenging time for the people of Tonga, including
our Tower team and customers.
Our locally based staff proactively
contacted customers to lodge claims,
and within three weeks almost all
customers had been contacted and
the status of their homes and cars
was known.
We are proud to say that due to our
planning for in-country resource in
case of large events, Tower paid its
first claim within a month of the event
as soon as the banking networks were
re-established. Within two months,
we had lodged every claim, settled
many and understood the likely cost
to Tower. All our customers had a
settlement pathway in place. At the
end of the financial year Tower had
settled 93% of all claims related to
the event.
Tower is incredibly proud of the
courage and dedication displayed
by our teams to do what’s right for
our customers and really make a
difference in their lives, during such
a difficult and traumatic time.
"One thing that stands
out for us is honesty.
Thank you very much
for always being there
for us in the bad times,
during Cyclone Harold
and the Tsunami.”
– Marian, Tower Tonga Customer
4445FY22 LARGE EVENTS AND EVERYDAY CLAIMS FY22 LARGE EVENTS AND EVERYDAY CLAIMS

LAKE
ŌHAU FIRE,
TWO
YEARS ON
October 2020
“You don’t think it will happen to
you but having gone through
something like this, you wouldn’t
go without insurance.”
– Nyree Schaar, Tower customer & Lake Ōhau resident
October 2022 marked
the two year anniversary
of the Lake Ōhau fire, one
of New Zealand’s largest
wildfires on record.
October 2022
Tower customers Nyree and Pieter
Schaar, along with their children Josh
and Emily, cat Whiskers and dog Rex,
lost their family home of 10 years in the
fire, alongside nearly 50 other houses.
We caught up with the Schaars in
their new home, completely rebuilt
by Tower, amongst one of the most
stunning landscapes in the country.
Meeting with the Schaars reminded
us of how important our role is to
make things easier on people’s
journey to recovery.
“We knew driving away that it was
gone. You can’t have flames that
close to the house and still have a
home,” says Nyree.
“I wasn’t sure what we were insured for,
and I had an awful feeling we weren’t
insured for enough. I had just been
burying my head in the sand in a bit of
a daze. We’d paid to build our home,
friends and family helped with labour
and we’d done a lot ourselves. We
couldn’t afford to replace it.
“By lunch time that day our house
was gone, and I thought ‘okay this is
serious now’. I called Tower and they
were incredibly helpful, they paid us
$1,000 upfront to buy necessities and
confirmed we had enough cover to
rebuild. My reaction was ‘oh thank God’.
“We’ve still got a mortgage. We’d
probably be living on site right now in a
caravan if we didn’t have insurance.”
Over the next week a Tower
representative checked in daily with
the family. Within a week they’d been
assigned a Claims Manager.
“He was in contact pretty quickly and
organised the removal of everything
from the site. Overall, we’ve been happy
with the service provided.”
The Schaar family was “so relieved”
when they got the keys to their new
home in June 2022.
“We rebuilt the same house with some
minor changes. We were sitting there
the first night and all said it felt exactly
the same, even the cat only took about
20 minutes before she was settled.”
474746FY22 LARGE EVENTS AND EVERYDAY CLAIMS FY22 LARGE EVENTS AND EVERYDAY CLAIMS

Inflation impacts all facets
of life, including how far
your insurance cover will
stretch. 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.
TRANSFORMING
OUR CLAIMS
EXPERIENCE
Tower’s unique advantage is
our ability to identify and quickly
address emerging trends, Thanks to
our investments in digital and data
technology, Tower is able to quickly
identify and address emerging trends,
In the financial year, we continued
to take decisive actions to deliver
improvements, including:
• Working with our supply chain to
enhance efficiencies and improve
our customer experience
• Launching a new feature that will
allow us to further automate the
process of detecting genuine and
suspicious claims in real time
• Continuing to improve our digital
capability to streamline the claims
lodgement process, which has seen
the proportion of New Zealand
claims lodged online increase from
31% to 48%.
Our increasing scale is also continuing
to deliver efficiencies, with Tower’s
BAU loss ratio being brought back to a
more normal level of 48.9%, compared
to 50.2% in the 2021 financial year.
Our new Repair Partners
In June 2022, Tower announced that
we would reassess our motor repairer
relationships across the country,
to evolve to a model that prioritises
strong partnerships, innovation
and streamlined experiences for
customers.
As part of the process, we issued a
Request for Proposal (RFP) to suppliers
in Auckland, Hamilton, Tauranga,
Wellington, Christchurch and Dunedin
to create a new repair network.
In October 2022, the network for
the six main centres was finalised,
consisting of 12 motor Repair Partners
across 19 locations, who are investing
in their businesses, looking to innovate,
and are keen to grow alongside us.
Each Repair Partner now provides
a new and improved repair
experience, where Tower customers
are pre-authorised.
Tower will commence an RFP for the
rest of New Zealand and strategically
source a new Repair Partner network
in Fiji, in FY23.
Enhancing the customer
experience with new remote
assessing innovation
To help speed up motor claims
processing and repairs and get
customers back on the road sooner,
Tower trialled a remote assessment
tool with a small group of motor
repairers during 2021.
In October 2022, the tool went live
with our Repair Partners, as part of
our new repair experience offering.
Our remote assessment tool operates
via a smartphone app that allows
customers to talk to repairers in real
time and submit video and images of
vehicle damage. The same information
submitted to the repairer during the
remote assessment is also passed
via the app to Tower, decreasing
administration time for repairers and
making the claims approval process
faster.
The tool saves customers an extra
drive to the workshop and associated
carbon emissions.
Detecting potential fraud via AI
In April 2022, Tower implemented
an AI-based technology which
automates the process of detecting
genuine and suspicious claims in real
time, to allow for a faster process for
customers in need.
By putting claims with low risk of
fraud on a fast track, this new
technology is standardising and
further speeding up claims
screening with greater accuracy.
While it is early days, the results
are promising. Tower's detection
rate of potentially unjustified claims
has improved by 300%, which has
led to a greater proportion of
claims either being withdrawn or
appropriately declined.
4948TRANSFORMING OUR CLAIMS EXPERIENCETRANSFORMING OUR CLAIMS EXPERIENCE

PUTTING OUR
PEOPLE FIRST
5051PUTTING OUR PEOPLE FIRSTPUTTING OUR PEOPLE FIRST

We believe that
genuinely caring
for our people’s
wellbeing is
fundamental to

a healthy and
agile culture.
5253PUTTING OUR PEOPLE FIRSTPUTTING OUR PEOPLE FIRST

v
The Tower team comes from all walks
of life and cares for one another.
We recognise that a lack of diversity
excludes minority groups which
limits diverse thinking and impacts
mental health and emotional
wellbeing. Diversity is an important
part of customer innovation. We
are committed to having a diverse
and inclusive workplace that builds
people’s physical and emotional
wellbeing.
Investing in a positive business culture
that prioritises the personal growth of
our people impacts our attractiveness
‘Inspire’ and ‘shape’ because our innovative and disruptive thinking is driving
New Zealand and Pacific insurance forward, at a pace nobody else is used to.
And ‘protect,’ of course, because that is our fundamental role as an insurer.
DIVERSE AND INCLUSIVE
TO THE CORE
In the 2022 financial year, Tower undertook a programme
of cultural change and improvement. From November
2021 to February 2022, we collaborated with diverse
groups of people from across the business to get a
shared understanding of who we are now and who we
want to be in the years to come. The result was a new
company purpose, values and employee proposition.
as an employer and retention of
talented employees.
Tower has policies and processes in
place to ensure equal opportunities for
roles at Tower. Our recruitment policy
incorporates cultural considerations for
conducting interviews and outlines a
process to ensure all interview panels
are balanced culturally and by gender.
Tower offers unconscious bias training
to all staff.
In FY22 we commenced an emerging
talent programme, with a focus on
identifying diverse future leaders.
Our purpose
Our values
“To inspire, shape and protect the future for the good
of customers and communities.”
N
S
E
We do what's rightOur people come first
Progress boldlyOur customers are our compass
These are in addition to our existing benefits
which include group insurances, discounts
on insurance, retail partner discounts,
contemporary parental leave entitlements,
eyesight testing, study assistance and more.
Our new employee benefits
In today’s competitive market for talent, we know
that people want to work for a company that has
a strong purpose and whose values align with
their own. It was important to us that our company
benefits reflect this, and we introduced a new set of
employee benefits for all our people in June 2022.
1
2
3
4
Birthday day off
An additional paid day off work.
The ability to purchase eight extra
annual leave days each year.
The use of our sick leave allowance
(up to 10 days a year) has now
been expanded to include time for
proactively managing personal or
family wellness.
New guidance which empowers
leaders and teams to determine
the best approach for them while
balancing customer, company,
team and individual priorities.
Eight extra leave days
Wellbeing leave
Flexible working
5554DIVERSE AND INCLUSIVE TO THE COREDIVERSE AND INCLUSIVE TO THE CORE

SUPPORTING
OUR PEOPLE
Our approach is working
Across 2021, our employee engagement score improved from 7.1 in the first
quarter to 7.7 in the last quarter. Employee engagement continued to improve to
7.8 at the end of FY22.
Hosted mental health first aid training
seminars
Achieved Rainbow Tick recertification
Provided staff with onsite Flu vaccinations
and time off to receive Covid-19
vaccinations and boosters
Provided free and anonymous EAP
counselling sessions
Started the Tower Kapa Haka Rōpū
Hosted webinars sharing practical tips to
manage stress and anxiety
Introduced meeting-free
Friday afternoons
Celebrate Diwali, Ramadan, Matariki, Pacific
Language Weeks, Lunar New Year, Pink
Shirt Day and International Women’s Day
Received DVFREE tick certification
and participated in Shine awareness
programmes and fundraisers.
To support our diverse people, we:
To support our people’s wellbeing, we:
MIND
THE GAP
In March 2022, Tower joined the Mind the Gap register as one of the first 50
businesses in New Zealand to publicly report its gender pay gap.
While our results aren’t unique to Tower, we are committed to doing everything
we can to support women to progress in their careers, as they choose. This
includes using this data to make positive changes across our business where
needed, starting with our emerging talent programme formed at the end of
FY22, and by committing to targets to increase gender and ethnic diversity
across Tower’s leadership population.
Gender pay equity gap
Leadership gender pay gap
Gender pay gap
Comparing our senior leadership population
and the average pay gap between men and
women, our leadership pay gap is 2.2% (men
are paid 2.2% more than women).
CELEBRATING OUR PEOPLE
In recognition of Tower as a great place to work, Tower was named an Insurance
Business New Zealand Top Insurance Employer for 2022
Head of Portfolio Performance, Oliver Bale, Head of Underwriting, Nick Meister,
and Customer Experience Owner, Krutika Chikara, named on the Insurance
Business New Zealand Rising Stars 2022 list
0.1
2.2
25.9
%
%
%
When we compare like-for-like roles for
women and men at Tower in New Zealand,
our pay equity gap is –0.1% (women are paid
.1% more than men for the same role).
When we take the total salary for all women and divide
that by the number of women, and the total salary of all
men and divide that by the number of men, we have a
gap of 25.9%.
For the most part, this is because we have a larger
proportion of women in some our New Zealand frontline
roles, and a greater proportion of men in senior roles.
Head of Customer Partnerships and Relationships, Sarah-Jane Wild, named on
the Insurance Business New Zealand Elite Women 2022 list
Head of Pacific Operations, Ali Wilkinson, winner of the 2022 ANZIIF Making a
Difference Awards, Claims Award
-
5657SUPPORTING OUR PEOPLESUPPORTING OUR PEOPLE

DEVELOPING
CAREERS IN
THE PACIFIC
As a major insurer in the Pacific
and New Zealand, we’re investing
in the economic future of the
communities that our people live,
play and work in.
We do this by creating meaningful job opportunities
and fostering career development ‘at home’ in the
Pacific Island nations we operate in.
Our operations hub in Suva is the heart of our Pacific
arm. In the last two years alone, we’ve created 50
new jobs in Fiji and now employ more than 100
people across the Pacific, with the vast majority
being local women. Our roles in Fiji comprise the
full range of corporate positions, including, finance,
technology, human resources, marketing and
customer service.
Partnering with our Pacific family adds value to
both the Pacific and New Zealand economies.
It also enhances the cultural ties of all countries
and as the largest insurer in the region, creates
great, localised experiences for our more than
30,000 Pacific customers.
5859DEVELOPING CAREERS IN THE PACIFICDEVELOPING CAREERS IN THE PACIFIC

PROTECTING
THE FUTURE
6061PROTECTING THE FUTUREPROTECTING THE FUTURE

MANAGING OUR ENVIRONMENTAL,
SOCIAL AND GOVERNANCE
(ESG) ISSUES
As the largest Kiwi insurer, Tower plays a crucial role in protecting New Zealand
and the Pacific, contributing to their prosperity for future generations.
Walking the talk authentically on
sustainability is vital to ensure integrity
and credibility. That means making sure
the right foundations are in place and
ensuring we are always thinking ahead.
In 2022 we were pleased to launch
Tower’s first ESG strategy, which
guides how we manage relevant
environmental, social and governance
issues. This annual report is Tower’s
first step into sustainability reporting
with the aim of continuing to improve
our disclosures and performance.
This report has been prepared in
accordance with the Global Reporting
Initiative (GRI) 2021 standards.
Tower has been part of Kiwi and Pacific
communities for more than 150 years,
supporting customers to protect
the things they love and need. This
strategy and report provide us with the
opportunity to be more transparent
about our broader business activities.
Our approach to identifying
material impacts
In 2021, we identified a range of
topics and impacts through research
and engagement which included
interviewing a range of stakeholder
representatives and relevant experts.
We spoke to our Board, shareholders
and partners, representatives from
the wider insurance industry and
financial markets, as well as experts in
sustainable finance and climate change.
We undertook employee workshops
involving senior management and a
diverse range of people and roles from
across the business.
In 2022, we assessed and prioritised
the full range of Tower’s sustainability
impacts using the GRI 3: 2021
methodology. The full results are listed
below with relevant impacts identified
and addressed throughout the report.
The impacts reflect Tower’s business
operations in both New Zealand and
the Pacific Islands.
These material issues have
been reviewed and approved by
our leadership.
• Affordable and accessible
insurance
• Transparent and fair insurance
• Managing the impacts of
climate change
• Carbon emissions
• Product development and
innovation
• Diversity and inclusion
• Employee wellbeing
• Corporate governance
• Data protection
• Corporate community citizenship
• Environmental footprint
• Responsible investment
ESG Governance
Tower’s Board provides the highest
level of ESG governance at Tower. The
Board approves our ESG reporting and
monitors our performance through
periodic updates from management.
ESG Governance is formalised through
an executive level steering committee
which has responsibility for overseeing
progress on our initiatives and monitors
environmental and social risks. Our
ESG performance is coordinated by
the Head of Corporate Affairs and
Sustainability, reporting to the CEO.
The Board and management will
continue their focus on ESG governance
and climate risks and opportunities by
developing new policies and enhancing
our governance framework in FY23.
Our ESG targets
We are continuing to develop our
ESG targets and measures. We have
identified targets for the following
material impacts:
Fair and transparent insurance:
• 80% of all products are WriteMark
certified by end of FY23, 95% by
end of FY25.
Affordable & accessible insurance:
• 40% of transactions in the Pacific
are completed via digital platform
by end of FY25.
• Consistent digital offerings in
place across New Zealand and our
Pacific markets by end of FY23.
• 1,000 parametric policies in place
in the Pacific by the end of FY23.
Carbon emissions target:
• Tower has set a target, grounded
in science, of a 21% reduction over
five years from our 2020 base year.
Diversity & inclusion,
and wellbeing targets:
• Safety – Tower’s safety target is
zero harm. Tower is committed
to creating a culture where
incidents, near misses, hazards and
discomfort are reported.
• Diversity – Drive practices and
outcomes that will result in Tower's
leadership reflecting the diversity
(gender and ethnicity) of our
customers and communities -
100% of hiring panels, candidate
shortlists and succession plans
consist of one woman candidate
and one ethnically diverse
candidate. Attrition of diverse talent
is kept below the level of gender
and ethnic representation.
OUR ESG
STRATEGY
6263MANAGING OUR ESG ISSUESOUR ESG STRATEGY

WENDY THORPE
BA (French), BBus (Accounting), Grad Dip,
Applied Fin & Inv, Harvard AMP, FFin, GAICD
Non-Executive Director
Independent
Director from: 1 March 2018
Wendy had an extensive executive
career in financial services, leading
technology and operations in
insurance and wealth management.
Her most recent executive role was
as Group Executive, Operations for
AMP Ltd, and she was previously
Chief Operations Officer and Chief
Information Officer for AXA
in Australia.
Wendy is Chair of Online Education
Services, Chair of Epworth Healthcare,
and a Non-Executive Director of
People's Choice Credit Union and
Data Action. Wendy has a Bachelor
of Arts from LaTrobe University, a
Bachelor of Business from Swinburne
University and a Graduate Diploma
in Applied Finance and Investment
from the Securities Institute of
Australia. She completed the
Advanced Management Program at
Harvard Business School, is a Fellow
of the Financial Services Institute of
Australasia and a Graduate member
of the Australian Institute of
Company Directors.
Wendy resides in Melbourne
—Australia.
GRAHAM STUART
BCom (Hons), MS, FCA

Non-Executive Director
Independent
Director from: 24 May 2012
With over 30 years of senior
management experience, Graham
has held senior leadership roles
with several major corporates, in
New Zealand and overseas, the latest
being the Sealord Group of which he
was Chief Executive Officer for
seven years.
Graham has a Bachelor of
Commerce (First Class Hons) from
the University of Otago, a Master of
Science from Massachusetts Institute
of Technology and is a Fellow of
Chartered Accountants Australia and
New Zealand. Graham has served
on a number of government bodies
including the Food & Beverage
Taskforce and the Māori Economic
Development Panel.
Graham resides in Auckland
—New Zealand.
MICHAEL STIASSNY
LLB, BCom, CFInstD
Chairman
Non-Executive Director
Independent
Director from: 12 October 2012
Michael is a Chartered Fellow and
past President of the Institute of
Directors. He has both a Commerce
and Law degree from the University
of Auckland. He is Chairman of Ngāti
Whātua Ōrākei Whai Rawa Limited
and New Zealand Automotive
Industries Ltd, and is a director of a
number of other companies including
Tegel Group Holdings Ltd, and New
Talisman Gold Mines Ltd.
Michael resides in Auckland
—New Zealand.
GERALDINE MCBRIDE
BSc

Non-Executive Director
Independent
Appointed Director: 1 October 2022
Geraldine has extensive governance
and technology industry experience,
having performed Board and senior
leadership roles both in New Zealand
and internationally, with Sky Network
Television Limited, SAP, Dell and IBM.
Geraldine is the founder and CEO of
MyWave.
Geraldine holds a Bachelor of Science
from Victoria University and is a
Chartered Member of the NZIOD.
Geraldine was appointed to fill a
casual vacancy on the Board. She will
retire at the 2023 Annual Shareholder
Meeting and will be eligible to stand
for re-election.
Geraldine resides in Christchurch
—New Zealand.
WARREN LEE
BCom, CA

Non-Executive Director
Independent
Director from: 26 May 2015
Warren has extensive experience in
the international financial services
industry. Warren's two most recent
executive positions were Chief
Executive Officer of the Victorian
Funds Management Corporation and
Chief Executive Officer, Australia and
New Zealand for AXA Asia Pacific
Holdings Limited. Warren is currently
a non-executive director of MetLife
Limited, MyState Limited, and Avenue
Hold Limited. He has a Bachelor
of Commerce from the University
of Melbourne and is a member of
Chartered Accountants Australia and
New Zealand. Warren retired from the
board on 30 November 2022.
Warren resides in Melbourne
—Australia.
BOARD
OF DIRECTORS
MARCUS NAGEL
MBA (International Management),
MBA (Banking and Finance)
Non-Executive Director
Not Independent
Director from: 14 January 2019
Marcus has significant insurance
industry experience.
For a decade he has performed
senior leadership roles for Zurich in
Europe and globally. In his last role
at Zurich, he served as the Chief
Executive Officer of Zurich Germany
managing both life insurance and
general insurance businesses. He
has also held the position of Vice
Chairman of the joint venture with
ADAC, Germany’s largest Automotive
Club, Chairman of the direct insurer,
DA Direct, and Chairman of the life
insurer, Zurich Deutscher Herold.
Prior to that, he also managed the
independent financial adviser/broker
business for Zurich Global Life.
Marcus holds a Master’s Degree in
Banking and Finance from Goethe
University in Frankfurt, Germany and
Master of International Management
from the Arizona State University
Thunderbird School of Global
Management in Arizona, United States
of America. Marcus was nominated by
Bain Capital Credit LP (Bain Capital) to
represent Bain Capital’s stake in Tower
(Bain Capital hold 19.99% of Tower’s
ordinary shares) and his appointment
was supported by the Tower Board.
Marcus resides in Schindellegi
—Switzerland.
6465BOARD OF DIRECTORSBOARD OF DIRECTORS

CONSOLIDATED
FINANCIAL STATEMENTS
6667CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED FINANCIAL STATEMENTS

Notes to the consolidated financial statements
1Overview74
1.1About this report74
1.2Consolidation74
1.3Critical accounting judgements and estimates76
1.4Segmental reporting76
2Underwriting activities78
2.1Underwriting revenue78
2.2Net claims expense79
2.3Underwriting expense79
2.4Net outstanding claims80
2.5Unearned premium liability84
2.6Deferred insurance costs85
2.7Receivables85
2.8Payables86
2.9Provisions87
2.10Assets backing insurance liabilities87
3Investments87
3.1Investment income87
3.2Investments88
3.3Fair value hierarchy88
4Risk management89
4.1Risk management overview89
4.2Strategic risk89
4.3Insurance risk89
4.4Credit risk91
4.5Market risk92
4.6Liquidity risk93
4.7Capital management risk94
4.8Operational risk95
4.9Regulatory and compliance risk95
4.10Conduct risk95
4.11Cyber risk95
4.12Climate change risk95
5Capital structure96
5.1Contributed equity96
5.2Reserves96
5.3Net tangible assets per share97
5.4Earnings per share97
5.5Dividends97
6Other balance sheet items98
6.1Property, plant and equipment98
6.2Intangible assets99
6.3Leases102
7Tax 104
7.1Tax expense104
7.2Current tax104
7.3Deferred tax105
7.4Imputation credits107
8Other information107
8.1Notes to the consolidated statement of cash flows107
8.2Related party disclosures108
8.3Auditor's remuneration108
8.4Discontinued operation and asset held for sale109
8.5Contingent liabilities110
8.6Subsequent events110
8.7Capital commitments111
8.8Impact of new accounting standards and changes in
interpretation of current standards111
Independent Auditor's report, and Appointed Actuary's report
Independent Auditor's report113
Appointed Actuary's report118
Financial Statements
Consolidated statement of comprehensive income70
Consolidated balance sheet71
Consolidated statement of changes in equity72
Consolidated statement of cash flows73
6869CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of comprehensive income
FOR THE YEAR ENDED 30 SEPTEMBER 2022
NOTE
2022
$000
RE-PRESENTED
2021
$000
Gross written premium 445,580 396,003
Unearned premium movement(27,258)(9,383)
Gross earned premium 2.1 418,322 386,620
Outward reinsurance premium(66,116)(60,341)
Movement in deferred reinsurance premium(152)1,586
Outward reinsurance premium expense(66,268)(58,755)
Net earned premium 352,054 327,865
Claims expense(240,147)(226,920)
Less: Reinsurance and other recoveries revenue2.115,243 24,601
Net claims expense2.2(224,904)(202,319)
Gross commission expense(14,390)(17,667)
Commission revenue2.1 5,105 6,461
Net commission expense(9,285)(11,206)
Underwriting expense2.3(94,220)(87,160)
Underwriting profit23,645 27,180
Investment income3.1 1,498 559
Investment expense(338)(384)
Other income1,355 707
Other expenses(63)(52)
Financing and other costs(897)(363)
Profit before taxation from continuing operations25,200 27,647
Tax expense7.1(7,526)(9,245)
Profit after taxation from continuing operations17,674 18,402
Profit after taxation from discontinued operation8.41,181 913
Profit after taxation for the year18,855 19,315
Items that may be reclassified to profit or loss
Currency translation differences3,948 (1,213)
Items that will not be reclassified to profit or loss
Gain on asset revaluation5.2 – 159
Deferred income tax relating to asset revaluation5.2 – (16)
Other comprehensive loss net of tax3,948 (1,070)
Total comprehensive profit for the year22,803 18,245
Earnings per share:
Basic and diluted earnings per share (cents) for continuing operations5.44.43 4.21
Basic and diluted earnings per share (cents)5.44.734.43
Profit after taxation attributed to:
Shareholders18,803 18,683
Non-controlling interests52 632
18,855 19,315
Total comprehensive profit attributed to:
Shareholders 22,737 17,729
Non-controlling interests66 516
22,803 18,245
The above statement should be read in conjunction with the accompanying notes.
Consolidated balance sheet
AS AT 30 SEPTEMBER 2022
NOTE
2022
$000

2021
$000
Assets
Cash and cash equivalents8.184,502116,129
Investments3.2258,634 277,470
Receivables 2.7242,089216,925
Current tax asset7.2a13,069 12,901
Assets classified as held for sale8.420,811 –
Deferred tax asset7.3a23,893 24,450
Deferred insurance costs2.637,819 31,967
Right of use assets6.3a(i)23,326 25,577
Property, plant and equipment 6.15,417 9,374
Intangible assets6.294,653 88,592
Total assets804,213 803,385
Liabilities
Payables2.858,911 69,977
Unearned premiums2.5238,116 212,275
Outstanding claims2.4124,531 122,338
Lease liabilities6.3a(ii)35,054 39,421
Provisions2.911,873 6,709
Current tax liabilities7.2b136 170
Liabilities classified as held for sale8.49,258 –
Deferred tax liabilities7.3b8,806 2,775
Total liabilities486,685 453,665
Net assets317,528 349,720
Equity
Contributed equity5.1460,191 492,424
Accumulated losses(41,212)(39,995)
Reserves5.2(101,451)(105,385)
Total equity attributed to shareholders317,528 347,044
Non-controlling interests – 2,676
Total equity317,528 349,720
The above statement should be read in conjunction with the accompanying notes.
The financial statements were approved for issue by the Board on 23 November 2022.

Michael P Stiassny Graham R Stuart
Chairman Director
7071CONSOLIDATED BALANCE SHEETCONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Consolidated statement of changes in equity
YEAR ENDED 30 SEPTEMBER 2022
ATTRIBUTED TO SHAREHOLDERS
CONTRIBUTED
EQUITY
$000
ACCUMULATED
LOSSES
$000
RESERVES
$000
NON-CONTROLLING
INTEREST
$000
TOTAL EQUITY
$000
Year Ended 30 September 202
Balance as at 30 September 2021492,424 (39,995)(105,385)2,676 349,720
Comprehensive income
Profit for the year – 18,803 – 52 18,855
Currency translation differences – – 3,934 14 3,948
Total comprehensive income – 18,803 3,934 66 22,803
Transactions with shareholders
Capital return to shareholders(30,634) – – – (30,634)
Purchase of non-controlling interests(1,599) – – (2,742)(4,341)
Dividends paid – (20,028) – – (20,028)
Other – 8 – – 8
Total transactions with shareholders(32,233)(20,020) – (2,742)(54,995)
At the end of the year460,191 (41,212)(101,451) – 317,528
Year Ended 30 September 2021
Balance as at 30 September 2020 492,424 (48,107)(104,431) 2,160 342.046
Comprehensive income
Profit for the year – 18,683 – 632 19,315
Currency translation differences – – (1,097)(116)(1,213)
Gain on asset revaluation – – 159 – 159
Deferred income tax relating to asset revaluation – – (16) – (16)
Total comprehensive income
– 18,683 (954)516 18,245
Transactions with shareholders
Dividends Paid
– (10,541) – – (10,541)
Other
– (30) – – (30)
Total transactions with shareholders
– (10,571) – – (10,571)
At the end of the year
492,424 (39,995)(105,385)2,676 349,720
The above statement should be read in conjunction with the accompanying notes.
Consolidated statement of cash flows
FOR THE YEAR ENDED 30 SEPTEMBER 2022
2022
$000
RE-PRESENTED
2021
$000
Cash flows from operating activities
Premiums received 425,677 389,236
Interest received 6,519 5,268
Fee and other income received4,063 6,212
Reinsurance and other recoveries received11,745 17,668
EQC settlement receipt – 52,883
Motor premium refund payments – (1,351)
Reinsurance paid(57,256)(54,288)
Reinsurance paid in relation to settlement of EQC receivable – (10,741)
Claims paid(238,483)(213,756)
Employee and supplier payments(90,191)(92,384)
Income tax paid(1,768)(1,928)
Operating activities cashflow from discontinued operations(522)1,276
Net cash inflow from operating activities59,784 98,095
Cash flows from investing activities
Proceeds from sale of interest bearing investments181,412 156,544
Proceeds from sale of unlisted equity investments – 25
Payments for purchase of interest bearing investments(181,578)(190,548)
Payments for purchase of intangible assets (14,695)(8,866)
Payments for purchase of customer relationships
(6,089)(14,434)
Payments for purchase of property, plant & equipment(2,617)(3,163)
Investing activities cashflow from discontinued operations(103)1,220
Net cash outflow from investing activities(23,670)(59,222)
Cash flows from financing activities
Payments for capital return to shareholders(30,634) –
Purchase of non-controlling interests(4,341) –
Received from lessor on signing of new lease – 10,944
Dividends paid(20,028)(8,866)
Facility fees and interest paid(897)(378)
Payments relating to lease liabilities(6,044)(2,684)
Financing activities cashflow from discontinued operations(1,766)(1,287)
Net cash outflow from financing activities(63,710)(2,271)
Net (decrease)/increase in cash and cash equivalents(27,596)36,602
Effect of foreign exchange rate changes3,765 (581)
Cash and cash equivalents at the beginning of the year 116,129 80,108
Cash and cash equivalents at the end of the year 92,298 116,129
Cash from discontinued operations 8.4 (7,796) –
Cash and cash equivalents at the end of the year from continuing operations84,502 116,129
The above statement should be read in conjunction with the accompanying notes.
The 2022 balance represents the purchase of Westpac and TSB's rights and obligations relating to servicing a portfolio of insurance underwritten by Tower. 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 6.2 for more information.
7273CONSOLIDATED STATEMENT OF CASH FLOWSCONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 SEPTEMBER 2022
OVERVIEW
This section provides information that is helpful to an overall understanding of the financial statements and the areas of critical accounting
judgements and estimates included in the financial statements. It also includes a summary of Tower's operating segments.
1.1 About this Report
a. Entities reporting
The financial statements presented are those of Tower Limited (the Company) and its subsidiaries. The Company and its subsidiaries together are referred
to in this financial report as Tower or the Group. The address of the Company's registered office is 136 Fanshawe Street, Auckland, New Zealand.
During the periods presented, the principal activity of the Group was the provision of general insurance. The Group predominantly operates in New
Zealand with some of its operations based in the Pacific Islands region.
The financial statements were authorised for issue by the Board of Directors on 23 November 2022. The entity’s owners or others do not have the power
to amend the financial statements after issue.
b. Statutory base
Tower Limited is a company incorporated in New Zealand under the Companies Act 1993 and listed on the NZX Main Board and the Australian Securities
Exchange. The Company is a reporting entity under Part 7 of the Financial Markets Conduct Act 2013.
c. Basis of preparation
The Company is a for-profit entity and the financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting
Practice (NZ GAAP). They comply with International Financial Reporting Standards (IFRS), New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and other applicable financial reporting standards, as appropriate for Tier 1 for-profit entities.
The financial statements of the Group have been prepared in accordance with the requirements of Part 7 of the Financial Markets Conduct Act 2013 and
the NZX Main Board Listing Rules.
The Group financial statements are presented in New Zealand dollars and rounded to the nearest thousand dollars. They have been prepared in
accordance with the historical cost basis except for certain financial instruments that are stated at their fair value.
d. Re-presentation of comparatives
The Group's Papua New Guinea Operations ("disposal group") constitutes a discontinued operation and is classified as held for sale as at 30 September
2022. Profit or loss information for the current period is prepared on a continuing basis with net results from discontinued operations presented
separately. Profit or loss information for 2021 has been re-presented for comparability. Refer to note 8.4 for further details.
Where necessary, comparative information has been reclassified for consistency with the current year presentation.
1.2 Consolidation
a. Principles of consolidation
The Group financial statements incorporate the assets and liabilities of all subsidiaries of the Company at balance date and the results of all subsidiaries
for the year.
Subsidiaries are those entities over which the consolidated entity has control, being power over the investee; exposure, or rights to variable returns from
its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor’s returns.
The results of any subsidiaries acquired during the year are consolidated from the date on which control was transferred to the consolidated entity and
the results of any subsidiaries disposed of during the year are consolidated up to the date control ceased. During the year ended 30 September 2022,
Tower Limited acquired the minority shareholding of National Pacific Insurance Limited. This is now 100% owned by Tower Limited.
The acquisition of controlled entities from external parties is accounted for using the acquisition method of accounting. Non-controlling interests in the
results and equity of subsidiaries are shown separately in the statement of comprehensive income, statement of changes in equity and balance sheet
respectively. Acquisition related costs are expensed as incurred.
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change
in carrying amount recognised in profit or loss.
Intercompany transactions and balances between Group entities are eliminated on consolidation.
1.2 Consolidation (continued)
b. Foreign currency
(i) Functional and presentation currencies
The financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates. The
Group financial statements are presented in New Zealand dollars and rounded to the nearest thousand dollars unless stated otherwise.
(ii) Transactions and balances
In preparing the financial statements of the individual entities, transactions denominated in foreign currencies are translated into the entities
functional and reporting currency using the exchange rates in effect at the transaction dates. Monetary items receivable or payable in a foreign
currency are translated at reporting date at the closing exchange rate.
Translation differences on non-monetary items such as financial assets held at fair value through profit or loss are reported as part of their fair value
gain or loss.
Exchange differences arising on the settlement or retranslation of monetary items at year end exchange rates impact profit after tax in the
consolidated statement of comprehensive income unless the items form part of a net investment in a foreign operation. In this case, exchange
differences are taken to the Foreign Currency Translation Reserve and recognised (as part of comprehensive profit) in the statement of
comprehensive income and the statement of changes in equity.
(iii) Consolidation
For the purpose of preparing consolidated financial statements the assets and liabilities of subsidiaries with a functional currency different to the
Company are translated at the closing rate at the balance date. Income and expense items for each subsidiary are translated at a weighted average
of exchange rates over the period, as a surrogate for the spot rates at transaction dates. Foreign currency translation differences are taken to the
Foreign Currency Translation Reserve and recognised in the statement of comprehensive income and the statement of changes in equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and
are translated at the closing rate with movements recorded through the Foreign Currency Translation Reserve in the statement of changes in equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the
statement of comprehensive income.
c. Subsidiaries
The table below lists Tower Limited's principal subsidiary companies and controlled entities. All entities have a balance date of 30 September.
HOLDINGS
NAME OF COMPANYINCORPORATION20222021
Parent Company
New Zealand general insurance operations
Tower LimitedNZParentParent
Subsidiaries
Overseas general insurance operations
Tower Insurance (Cook Islands) LimitedCook Islands100%100%
Tower Insurance (Fiji) LimitedFiji100%100%
Tower Insurance (PNG) Limited (refer Note 8.4)PNG100%100%
National Pacific Insurance Limited ("NPI") (refer Note 5.1)Samoa100%71%
National Pacific Insurance (Tonga) Limited (refer Note 5.1)Tonga100%71%
National Pacific Insurance (American Samoa) Limited (refer Note 5.1)American Samoa100%71%
Tower Insurance (Vanuatu) LimitedVanuatu100%100%
Management service operations
Tower Services LimitedNZ100%100%
7475NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.3 Critical accounting judgements and estimates
In preparing these 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:
—Net outstanding claims note 2.4
—Liability adequacy test note 2.5
—Intangible assets note 6.2
—Lease liabilities (incremental borrowing rate) note 6.3a(ii)
—Deferred tax note 7.3
1.4 Segmental reporting
a. Operating segments
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 benefits.
The Group does not derive revenue from any individual or entity that represents 10% or more of the Group's total revenue.
The Pacific Islands operating segment excludes the disposal group and assets and liabilities held for sale. The prior year comparatives have been
re-presented accordingly. Intercompany transactions with the disposal group are eliminated within continuing operations, refer note 8.4.
1.4 Segmental reporting (continued)
b. Financial performance of continuing operations
NEW ZEALAND
$000
PACIFIC ISLANDS
$000
OTHER
$000
TOTAL
$000
Year Ended 30 September 2022
Gross written premium395,490 50,090 – 445,580
Gross earned premium369,871 48,451 – 418,322
Outward reinsurance premium(51,026)(15,242) – (66,268)
Net earned premium318,845 33,209 – 352,054
Net claims expense(207,184)(18,066)346 (224,904)
Net commission expense(8,048)(1,237) – (9,285)
Underwriting expense(76,089)(18,131) – (94,220)
Underwriting profit/(loss)27,524 (4,225)346 23,645
Net investment income1,023 137 – 1,160
Other expenses192 203 – 395
Profit before tax from continuing operations28,739 (3,885)346 25,200
Profit after tax from continuing operations21,642 (4,314)346 17,674
Year Ended 30 September 2021 (Re-presented)
Gross written premium351,058 44,945 – 396,003
Gross earned premium340,568 46,052 – 386,620
Outward reinsurance premium(44,918)(13,837) – (58,755)
Net earned premium295,650 32,215 – 327,865
Net claims expense(195,343)(6,888)(88)(202,319)
Net commission expense(9,762)(1,444) – (11,206)
Underwriting expense(76,519)(10,641) – (87,160)
Underwriting profit14,026 13,242 (88)27,180
Net investment income43 132 – 175
Other expenses182 110 – 292
Profit before tax from continuing operations14,251 13,484 (88)27,647
Profit after tax from continuing operations8,855 9,620 (73)18,402
c. Financial position of continuing operations
NEW ZEALAND
$000
PACIFIC ISLANDS
$000
OTHER
$000
TOTAL
$000
Additions to non-current assets
30 September 2022
29,547 883 (4,327)26,103
Additions to non-current assets
30 September 2021
51,970 430 – 52,400
Total assets 30 September 2022723,805 74,539 (14,942)783,402
Total assets 30 September 2021708,527 92,843 (10,615)790,755
Total liabilities 30 September 2022426,930 51,462 (965)477,427
Total liabilities 30 September 2021405,058 43,660 (617)448,101
Additions to non-current assets include additions to property, plant and equipment, right of use assets, intangible assets and investments in subsidiaries.
7677NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.4 Segmental reporting (continued)
Definition
An operating segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are
different to those of other operating segments. Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker (the Chief Executive Officer) who reviews the operating results on a regular basis and makes decisions on resource
allocation and assessing performance.
2. UNDERWRITING ACTIVITIES
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 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.
2.1 Underwriting Revenue
Composition
2022
$000
2021
$000
Gross written premium 445,580 396,003
Movement in unearned premium liability(27,258)(9,383)
Gross earned premium 418,322 386,620
Reinsurance and other recoveries revenue 15,243 24,601
Reinsurance commission 3,971 5,343
Insurance administration services commission 1,134 1,118
Commission revenue 5,105 6,461
Underwriting revenue 438,670 417,682
Recognition and measurement
Gross earned premium is recognised in the period in which the premiums are earned during the term of the contract, excluding taxes and levies
collected on behalf of third parties. It includes a provision for expected future premium cancellations (which is offset against gross premium
receivables, see note 2.7), and customer remediation (see note 2.9). The proportion of premiums not earned in the consolidated statement of
comprehensive income at reporting date is recognised in the consolidated balance sheet as unearned premiums.
Reinsurance and other recoveries on paid claims, reported claims not yet paid, claims incurred but not reported and claims incurred but not
enough reported are recognised as revenue. Recoveries are measured as the expected future receipts and recognised when the claim is incurred.
Reinsurance commission revenue includes reimbursements by reinsurers to cover part of Tower 's management and sales expense over the term
of the reinsurance agreements. Reinsurance commission income can also include a proportion of expected profitability of business ceded to the
reinsurer. The final value of the variable commission is based on the achievement of a hurdle rate over time. This revenue is recognised over the
term of the reinsurance agreements dependent on the profitability of proportional arrangement which is reassessed at each reporting date.
Insurance administration services commission includes a percentage of levies collected on behalf of third parties and is recognised at the point
the levy is collected.
2.2 Net claims expense
Composition
EXC. CANTERBURY EARTHQUAKECANTERBURY EARTHQUAKETOTAL
2022
$000
2021
$000
2022
$000
2021
$000
2022
$000
2021
$000
Gross claims expense231,034 226,611 9,113 309 240,147 226,920
Reinsurance and other recoveries revenue(13,613)(23,396)(1,630)(1,205)(15,243)(24,601)
Net claims expense217,421 203,215 7,483 (896)224,904 202,319
Recognition and measurement
Net claims expense is measured as the difference between net outstanding claims liability at the beginning and end of the financial year plus any
claims payments made net of reinsurance and other recoveries received during the financial year. Please refer to note 2.4 for more information.
Additional disclosures related to the Canterbury earthquake events in 2010 and 2011 are provided in note 2.4..
2.3 Underwriting expense
Composition
2022
$000
2021
$000
People costs84,160 64,626
People costs capitalised during the year(7,557)(3,569)
Technology 14,556 14,320
Amortisation 14,723 12,556
Depreciation
4,992 4,440
External fees10,594 10,300
Marketing11,757 8,477
Communications3,039 3,829
Miscellaneous3,258 4,319
Movement in deferred acquisition costs
(6,511)877
Claims related management expenses reclassified to claims expense(37,085)(31,320)
Service fees charged to discontinued operations
(1,706)(1,695)
Underwriting expenses94,220 87,160
Includes $2.7m (2021: $2.3m) of depreciation on right of use assets. See note 6.3b for further information.
2021 included a writedown for a deficiency on the liability adequacy test of $2.5m, refer note 2.6. This resulted in a lower amortisation expense of deferred acquisition costs in 2022.
Refer note 8.4 for further detail.
7879NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.4 Net outstanding claims
a. Composition
EXC. CANTERBURY EARTHQUAKECANTERBURY EARTHQUAKETOTAL
2022
$000
2021
$000
2022
$000
2021
$000
2022
$000
2021
$000
Central estimate of future cash flows89,404 87,535 18,056 16,402 107,460 103,937
Claims handling expense5,564 5,430 772 1,314 6,336 6,744
Risk Margin5,051 6,724 5,684 4,933 10,735 11,657
Gross outstanding claims100,019 99,689 24,512 22,649 124,531 122,338
Reinsurance recoveries(10,293)(18,970)(3,787)(3,880)(14,080)(22,850)
Net outstanding claims89,726 80,719 20,725 18,769 110,451 99,488
Net claim payments within 12 months76,422 69,687 8,497 7,508 84,919 77,195
Net claim payments after 12 months13,304 11,032 12,228 11,261 25,532 22,293
Net outstanding claims89,726 80,719 20,725 18,769 110,451 99,488
Recognition and measurement
Gross outstanding claims liability comprises a central estimate of future cash outflows and a risk margin for uncertainty.
The outstanding claims liability is measured at the central estimate of future cash outflows relating to claims incurred prior to the reporting date
including direct and indirect claims handling costs. The liability is measured based on the advice of the Appointed Actuary or on valuations which
have been peer reviewed by the Appointed Actuary. It is intended to include no deliberate or unconscious bias toward over or under-estimation.
Given the uncertainty in establishing the liability, it is likely the final outcome will differ from the original liability established. Changes in the claim
estimates are recognised in profit or loss in the reporting period in which the estimates are changed.
The gross outstanding claim liabilities also include a risk margin that relates to the inherent uncertainty in the central estimate of the future
payments. The risk margin represents the amount by which the liability recognised in the financial statements is greater than the actuarial estimate.
Tower currently applies a 75% probability of adequacy to the outstanding claims liability which means there is a 1-in-4 chance all future claim
payments will exceed the overall reserve held.
Discounting has been applied to the provision for outstanding claims relating to the Canterbury earthquakes, using spot rates derived from
government issued bonds. The overall discount, at 30 September 2022, is equivalent to using a uniform discount rate of 4.2% per annum. At the
previous valuation of the Canterbury earthquakes liability, discounting was not applied as it was considered immaterial in a lower interest rate
environment. Discounting has also not been allowed for on other outstanding claims as the expected timeframe for paying these claims is short,
and the impact of discounting is considered to be immaterial.
Uncertainties surrounding the liability estimation process include those relating to the available data, actuarial models and assumptions, the
statistical uncertainty associated with the general insurance run-off process and external risks.
Net outstanding claims liability is calculated by deducting reinsurance and other recoveries from gross outstanding claims. Reinsurance and other
recoveries on outstanding claims are recognised as income with the corresponding asset being recognised on the balance sheet.
2.4. Net outstanding claims (continued)
b. Reconciliation of movements in net outstanding claims liability
2022
$000
2021
$000
GROSSREINSURANCENETGROSSREINSURANCENET
Balance brought forward122,338 (22,850)99,488107,747(12,889)94,858
Claims expense – current year248,024 (20,429)227,595234,675(22,171)212,504
Claims expense – prior year(5,970)4,491 (1,479)(5,772)(2,464)(8,236)
Incurred claims recognised in profit or loss
from continuing operations
240,147 (15,243)224,904 226,920(24,601)202,319
Incurred claims recognised in profit or loss
from discontinued operations
1,907 (695)1,2121,983 (34)1,949
Claims paid and reinsurance and other
recoveries raised from continuing and
discontinued operations
(239,706)24,604 (215,102)(213,350)14,397 (198,953)
Foreign exchange1,826 (347)1,479(962)277 (685)
Liabilities reclassified as held for sale
(1,981)451 (1,530) – – –
Outstanding claims124,531 (14,080)110,451 122,338(22,850)99,488
Refer note 8.4.
c. Development of claims
The following table shows the development of net outstanding claims relative to the current estimate of ultimate claims costs for the five most recent years.
ULTIMATE CLAIMS COST ESTIMATE
PRIOR
$000
2018
$000
2019
$000
2020
$000
2021
$000
2022
$000
TOTAL
$000
At end of incident year147,806 147,073 158,309 183,003 200,370
One year later146,214 144,041 154,825 181,656 –
Two years later146,234 143,209 153,470 – –
Three years later145,752 143,233 – – –
Four years later146,157 – – – –
Ultimate claims cost146,157 143,233 153,470 181,656 200,370
Cumulative payments(145,627)(142,612)(150,821)(173,193)(134,491)
Central estimate15,237530 621 2,649 8,463 65,879 93,379
Claims handling expense6,337
Risk margin10,735
Net outstanding claim liabilities110,451
Reinsurance recoveries14,080
Gross outstanding claim liabilities124,531
All amounts in this note exclude discontinued operations, consistent with other profit or loss disclosures.
Prior year numbers have been restated at current year exchange rates to reflect the underlying development of claims.
d. Actuarial information
The estimation of outstanding claims as at 30 September 2022 has been carried out by:
(i) Geoff Atkins, BA (ActuarDc), FIAA, FIAL, FANZIIF, Appointed Actuary – Canterbury earthquake claims; and
(ii) John Feyter, B.Sc., FNZSA – all other outstanding claims
The New Zealand actuarial assessments are undertaken in accordance with the standards of the New Zealand Society of Actuaries, in particular
Professional Standard No. 30 "Valuations of General Insurance Claims". The Actuaries were satisfied as to the nature, sufficiency and accuracy of the data
used to determine the outstanding claims liability. The outstanding claims liability is set by the Actuaries at a level that is appropriate and sustainable to
cover the Group's claims obligations after having regard to the prevailing market environment and prudent industry practice.
8081NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.4. Net outstanding claims (continued)
e. Canterbury earthquakes
Cumulative impact of Canterbury earthquakes
As at 30 September 2022, Tower has 36 claims remaining to settle (2021: 33) as a result of the earthquakes impacting the Canterbury region during 2010
and 2011. The following table presents the cumulative impact of the four main Canterbury earthquake events on the consolidated statement of
comprehensive income.
2022
$000
2021
$000
Earthquake claims estimate net of EQC payments(953,531)(944,418)
Reinsurance recoveries733,720 732,090
Claim expense net of reinsurance recoveries(219,811)(212,328)
Reinsurance expense(25,045)(25,045)
Cumulative impact of Canterbury earthquakes before tax(244,856)(237,373)
Income tax68,560 66,464
Cumulative impact of Canterbury earthquakes after tax(176,296)(170,909)
Canterbury earthquake impact on profit or loss before tax
2022
$000
2021
$000
Net claims (gain)/expense 7,483 (896)
Critical accounting estimates and judgements
Outstanding claims liability (excluding Canterbury Earthquakes)
The estimation of the outstanding claims liability involves a number of key assumptions. Tower 's estimation uses Company specific data, relevant industry
data and general economic data for each major class of business. The estimation process factors in a number of considerations including the risks to
which the business is exposed to at a point in time, claim frequency and severity, historical trends in the development of claims as well as legal, social
and economic factors that may affect each class of business.
ASSUMPTION
2022
$000
2021
$000
Expected future claims development proportion20.3%19.7%
Claims handling expense ratio6.6%6.7%
Risk margin6.0%9.1%
Expected future claims development proportion
This is the proportion of additional claims cost that is expected to be recognised in the future for claims that have already been reported. The assumption
is expressed as a proportion of current case estimates for open claims and the resulting amount is recognised in the balance sheet as an outstanding
claims liability.
Claims handling expense ratio
This reflects the expected cost to administer current open and future claims. The ratio is calculated based on historical experience of claims handling costs.
Risk margin
Risk margins are calculated for outstanding claims in each country separately and a diversification benefit is calculated taking into account the
uncorrelated effect of random risk. The total risk margin percentage shown is calculated on a weighted average basis. The decrease in the risk margin
this year reflects the reassessment of uncertainty on claim outcomes as a result of the COVID-19 pandemic.
2.4. Net outstanding claims (continued)
Canterbury Earthquake outstanding claims liability
Assumptions are made for the estimation of outstanding claims related to the Canterbury earthquakes. The key assumptions are estimated ultimate
costs (including building costs) for settling open claims, and the numbers of new overcap claims, litigated claims, re-opened claims and their associated
costs. Other elements of judgement include the apportionment of claim costs between the four main earthquake events, future claim management
expenses and assessment of the risk margin.
ASSUMPTION
2022
$000
2021
$000
Number of future new overcap and new litigated claims 46 38
Average cost of new overcap or new litigated claim 114,000 121,000
Provision for re-opened claims 1,070,000 2,400,000
Additional portfolio-level provision for incurred but not enough reported2,355,0001,274,000
New overcap and new litigated claims
New overcap claims are typically for properties that have previously been managed by EQC but where damage is now assessed as being more extensive
than previously thought and there is now an insurance claim payable.
New litigated claims are existing or future new claims that are referred to either the Insurance Tribunal or the High Court for resolution. Costs for new
litigated claims are assumed to be substantially higher than costs for other overcap claims. Only a small number of new litigated claims is now expected.
Provision for re-opened claims
Re-opened claims arise where additional liability arises for additional scope not previously identified or where a repair has failed or where another
expense is payable for a claim that is currently closed.
f. Sensitivity Analysis
The impact on profit or loss of changes in key assumptions used in the calculation of the outstanding claims liabilities is summarised below. Each change
has been calculated in isolation from the other variables and is stated before income tax.
Outstanding claims excluding Canterbury earthquake
MOVEMENT IN
ASSUMPTION
IMPACT ON PROFIT OR (LOSS)
2022
$000
2021
$000
Expected future claims development + 10%(1,419) (1,339)
- 10%1,4191,339
Claims handling expense ratio + 10%(556) (543)
- 10%556543
Risk margin + 10%(505) (672)
- 10%505672
Canterbury earthquake outstanding claims
MOVEMENT IN
ASSUMPTION
IMPACT ON PROFIT OR (LOSS)
2022
$000
2021
$000
Number of new overcap or new litigated claims + 35%(1,817)(1,610)
- 35%1,817 1,610
Change in average cost of a new overcap or new litigated claim+ 20%(1,038)(920)
- 20%1,038 920
Number of reopened claims + 35%(375)(840)
- 35%375 840
Change in average cost of a reopened claim + 20%(214)(480)
- 20%214 480
8283NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.5 Unearned premium liability
Reconciliation
2022
$000
2021
$000
Opening balance 212,275 203,452
Premiums written during the year from continuing operations 445,580 396,003
Premiums earned during the year from continuing operations(418,322)(386,620)
Unearned premium movement from continuing operations27,2589,383
Premiums written during the year from discontinued operations8,0558,678
Premiums earned during the year from discontinued operations(8,684)(8,910)
Unearned premium movement from discontinued operations
(629)(232)
Foreign exchange movements3,957(328)
Liabilities reclassified as held for sale(4,745)–
Unearned premium liability from continuing operations 238,116 212,275
All unearned premiums will be earned in the 12 months after 30 September 2022 and therefore are current liabilities. The unearned premium liability is
presented net of cancellation provisions.
Recognition and measurement
Unearned premium liability is the portion of premiums written that are yet to be earned in the consolidated statement of comprehensive income.
It is calculated based on the term of the risk and in accordance with the expected pattern of the incidence of risk underwritten using an appropriate
pro-rated method.
Adequacy of unearned premium liability
Tower undertakes a liability adequacy test ("LAT") to determine whether the unearned premium liability is sufficient to pay future claims net of
reinsurance recoveries.
If the present value of expected future net cash flows relating to current insurance contracts, plus a risk margin, exceeds the unearned premium
liabilities less related deferred acquisition costs and intangible assets, then the unearned premium liability is deemed deficient. This deficiency is
immediately recognised in profit or loss. In recognising the deficiency, Tower will first write down any related deferred acquisition costs or intangible
assets before recognising an unexpired risk liability.
The unearned premium liability as at 30 September 2022 was sufficient for the New Zealand business (2021: $2.0m deficiency). The unearned
premium liabilities as at 30 September 2022 for each Pacific entity was also sufficient (2021: all sufficient with the exception of Fiji and Vanuatu where a
total deficiency of $0.5m was recognised).
%20222021
Central estimate net claims as a % of unearned premium liability45.5%45.2%
Risk margin as a % of net claims11.2%11.0%
Critical accounting estimates and judgements
The LAT is conducted using a central estimate of premium liability adjusted for risk margin and it is carried out on an individual country basis. The
test is based on prospective information and so is heavily dependent on assumptions and judgements.
2.6 Deferred insurance costs
Reconciliation
DEFERRED ACQUISITION COSTS
DEFERRED OUTWARDS
REINSURANCE EXPENSEDEFERRED INSURANCE COSTS
2022
$000
2021
$000
2022
$000
2021
$000
2022
$000
2021
$000
Balance bought forward21,11625,22010,8519,44731,96734,667
Costs deferred48,19240,32317,28317,96865,47558,291
Amortisation expense(42,765)(41,897)(17,073)(16,428)(59,838)(58,325)
Writedown due to LAT deficiency – (2,534) – – – (2,534)
Foreign exchange movements24741,303(136)1,550(132)
Asset reclassified as held for sale(248)_(1,087)_(1,335)–
Closing balance26,54221,11611,27710,85137,81931,967
Deferred insurance costs are expected to be amortised within 12 months from reporting date.
Recognition and measurement
Acquisition costs comprises costs incurred in obtaining and recording general insurance contracts such as advertising expenses, sales expenses
and other underwriting expenses. These costs are initially capitalised and then expensed in line with the earning pattern of the related premium.
Deferred acquisition costs at the reporting date represent the acquisition costs related to unearned premium.
Outwards reinsurance expense reflects premiums ceded to reinsurers and is recognised as an expense in accordance with the pattern of
reinsurance service received. Deferred outwards reinsurance expense at the reporting date represents outwards reinsurance expenses related to
unearned premium.
2.7 Receivables
Composition
2022
$000
2021
$000
Gross premium receivables200,715178,213
Provision for expected future premium cancellations(651)(655)
Premium receivable200,064177,558
Reinsurance recoveries 15,847 20,326
Canterbury earthquake reinsurance recoveries3,787 3,880
Other recoveries11,3785,207
Reinsurance and other recoveries31,01229,413
Finance lease receivables2,375 4,278
Prepayments4,411 3,279
Other receivables 2,4012,397
Receivable from discontinued operations
1,826–
Receivables242,089 216,925
Receivable within 12 months241,742 214,504
Receivable in greater than 12 months347 2,421
Receivables242,089 216,925
Refer note 8.4 for further detail.
8485NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2.7 Receivables (continued)
Recognition and measurement
Receivables (inclusive of GST) are recognised at fair value and are subsequently measured at cost less any impairment.
Tower 's premium receivables and reinsurance and other recoveries arise from insurance contracts. These receivables are impaired if there is
objective evidence that Tower will not be able to collect all amounts due according to the original terms of the receivable.
The remainder of Tower 's receivables are assessed for impairment based on expected credit losses.
Finance lease receivables
Tower entered into a sub-lease for its previous Auckland premises. The sub-lease is for the remaining non-cancellable term of the head lease and
therefore is classified as a finance lease. The profile of the net receipts is illustrated in the table below:
2022
$000
2021
$000
Less than one year 2,074 2,019
Between one and five years 347 2,421
Total undiscounted finance lease receivable 2,421 4,440
Unearned finance income(46)(162)
Net investment in the finance lease 2,375 4,278
2.8 Payables
Composition
2022
$000
2021
$000
Trade payables 14,672 11,452
GST payable 25,951 23,264
EQC & Fire and Emergency New Zealand levies payable 11,583 10,857
Reinsurance premium payable 3,696 6,343
Unsettled investment purchases – 11,456
Other 3,009 6,605
Payables 58,911 69,977
Payable within 12 months 58,911 69,977
Payable in greater than 12 months – –
Payables 58,911 69,977
Recognition and measurement
Payables are recognised where goods or services that have been received or supplied and have been invoiced or formally agreed with the
supplier. Payables are stated at the fair value of the consideration to be paid in the future inclusive of GST. GST payable represents the net amount
payable to the respective tax authorities.
2.9 Provisions
Composition
2022
$000
2021
$000
Annual leave and other employee benefits 8,219 6,709
Customer remediation 3,654 –
Provisions 11,873 6,709
Payable within 12 months 10,7166,235
Payable in greater than 12 months1,157474
Provisions 11,873 6,709
This is a one-off provision for customer remediation arising from an error in the calculation of multi-policy discounts.
Recognition and measurement
Tower recognises a provision when it has a present obligation as a result of a past event and it is more likely than not that an outflow of resources
will be required to settle the obligation. Tower 's provision represents the best estimate of the expenditure required to settle the present obligation
at the end of the reporting period.
2.10 Assets backing insurance liabilities
Tower has determined that all assets within its insurance companies are held to back insurance liabilities, with the exception of: (i) property, plant and
equipment; (ii) right of use assets, (iii) intangible assets; and (iv) investments in operating subsidiaries. Assets backing insurance liabilities are managed in
accordance with approved investment mandate agreements on a fair value basis and are reported to the Board on that basis.
3. INVESTMENTS
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 government bonds, and term deposits.
3.1 Investment income
2022
$000
2021
$000
Interest income6,835 5,127
Net realised loss(2,028)(2,152)
Net unrealised loss(3,309)(2,416)
Investment income 1,498 559
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.
Recognition and measurement
Tower 's investment income is primarily made up of realised and unrealised interest income on fixed interest investments and fair value gains or
losses on its investment assets. Both are recognised in the period that they are earned through profit or loss.
8687NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3.2 Investments
2022
$000
2021
$000
Fixed interest investments258,600 277,436
Property investment34 34
Investments258,634 277,470
Recognition and measurement
Tower 's investment assets are designated at fair value through profit or loss. Investment assets are initially recognised at fair value and are remeasured to
fair value through profit or loss at each reporting date. Tower 's approach to measuring the fair value of these assets is covered in the note 3.3.
Purchases and sales of investments are recognised at the date which Tower commits to buy or sell the assets (i.e. trade date). Investments are
derecognised when the rights to receive future cash flows from the assets have expired, or have been transferred, and substantially all the risks and
rewards of ownership have transferred.
3.3 Fair value hierarchy
Tower designates its investments at fair value through profit or loss in accordance with its Treasury policy. It categorises its investments into three levels
based on the inputs available to measure fair value:
Level 1 Fair value is calculated using quoted prices in active markets. Tower currently does not have any Level 1 investments.
Level 2 Investment valuations are based on direct or indirect observable data other than quoted prices included in Level 1. Level 2 inputs include: (1)
quoted prices for similar assets or liabilities; (2) quoted prices for assets or liabilities that are not traded in an active market; or (3) other
observable market data that can be used for valuation purposes. Tower investments included in this category include government and
corporate debt, where the market is considered to be lacking sufficient depth to be considered active, and part ownership of a property that
is rented out to staff.
Level 3 Investment valuation is based on unobservable market data. Tower currently does not have any Level 3 investments.
LEVEL 1
$000
LEVEL 2
$000
LEVEL 3
$000
TOTAL
$000
As at 30 September 2022
Fixed interest investments – 258,600 – 258,600
Property investment – 34 – 34
Investments – 258,634 – 258,634
As at 30 September 2021
Fixed interest investments – 277,436 – 277,436
Property investment – 34 – 34
Investments – 277,470 – 277,470
There have been no transfers between levels of the fair value hierarchy during the current financial period (2021: nil).
4. RISK MANAGEMENT
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 day-to-day basis.
4.1 Risk management overview
Tower ’s approach to achieving effective risk management is to embed a risk-aware culture where everyone across the organisation (including contractors
and third parties) is responsible for managing risk.
Tower ’s Board expresses its appetite for risk in a Risk Appetite Statement, which:
(i) Gives clear concise guidance to management of parameters for risk taking.
(ii) Embeds risk management into strategic and decision-making processes.
(iii) Facilitates risk to be managed at all levels of the organisation through a structured process to identify risk, and the allocation of clear, personal
responsibility for management of identified risks by assigned risk owners.
The Board then approves and adopts: (i) the Risk Management Framework (RMF) which is the central document that explains how Tower effectively
manages risk within the business; and (ii) the Reinsurance Management Strategy (ReMS) which describes the systems, structures, and processes which
collectively ensures Tower 's reinsurance arrangements and operations are prudently managed. These documents are approved annually by the Board.
The Board has delegated its responsibility to the Risk Committee to provide oversight of risk management practices and provide advice to the Board and
management when required. In addition, the Risk Committee also monitors the effectiveness of Tower ’s risk management function which is overseen by
the Chief Risk Officer (CRO). The CRO provides regular reports to the Risk Committee on the operation of the RMF.
Tower has embedded the RMF with clear accountabilities and risk ownership to ensure that Tower identifies, manages, mitigates and reports on all key
risks and controls through the three lines of defence model.
(i) First line: Operational management has ownership, responsibility and accountability for directly identifying, assessing, controlling and mitigating key
risks which prevent them from achieving business objectives.
(ii) Second Line: Tower ’s Risk, Compliance and Conduct Function is responsible for developing and implementing effective risk, compliance and conduct
management processes; providing advisory support to the first line of defence and constructively challenging operational management and risk and
obligation owners to ensure positive assurance.
(iii) Third line: Internal Audit is responsible and accountable for providing an independent and objective view of the adequacy and effectiveness of the
Group’s risk management, governance and internal control framework. Internal audit, along with other groups such as external audit, report
independently to the Board and/or the Audit Committee.
The RMF is supported by a suite of policies that address the risks and compliance obligations covered in this section.
4.2 Strategic risk
Strategic risk is the risk that internal or external factors compromise Tower 's ability to execute its strategy or achieve its strategic objectives. Strategic risk
is managed through:
(i) Monitoring and managing performance against Board approved plan and targets.
(ii) Board leading an annual strategy and planning process which considers our performance, competitor positioning and strategic opportunities.
(iii) Identifying and managing emerging risks using established governance processes and forums.
4.3 Insurance risk
Insurance risk is the risk that for any class of risk insured, the present value of actual claims payable will exceed the present value of actual premium
revenues generated (net of reinsurance). This risk is inherent in Tower 's operations and arises and manifests through underwriting, insurance
concentration and reserving risk.
8889NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4.3 Insurance risk (continued)
a. Underwriting risk
Underwriting risk refers to the risk that claims arising are higher (or lower) than assumed in pricing due to bad experience including catastrophes,
weakness in controls over underwriting or portfolio management, or claims management issues. Tower has established the following key controls to
mitigate this risk:
(i) Use of comprehensive management information systems and actuarial models to price products based on historical claims frequencies and claims
severity averages, adjusted for inflation and modelled catastrophes, trended forward to recognise anticipated changes in claims patterns after
making allowance for other costs incurred by the Group.
(ii) Passing elements of insurance risk to reinsurers. Tower 's Board determines a maximum level of risk to be retained by the Group as a whole.
Tower 's reinsurance programme is structured to adequately protect the solvency and capital positions of the insurance business. The adequacy of
reinsurance cover is modelled by assessing Tower 's exposure under a range of scenarios. The plausible scenario that has the most financial
significance for Tower is a major Wellington earthquake. Each year, as part of setting the coming year's reinsurance cover, comprehensive modelling
of the event probability and amount of the Group's exposure is undertaken.
(iii) Underwriting limits are in place to enforce appropriate risk selection criteria and pricing with specific underwriting authorities that set clear
parameters for the business acceptance.
b. Concentration risk
Concentration risk refers to the risk of underwriting a number of like risks, where the same or similar loss events have the potential to produce claims
from many of Tower 's customers at the same time. Tower is particularly subject to concentration risks in the following variety of forms:
(i) Geographic concentration risk – Tower purchases a catastrophe reinsurance programme to protect against a modelled 1-in-1000 years whole of
portfolio catastrophe loss.
(ii) Product concentration risk – Tower 's business is weighted towards the NZ general insurance market where its risks are concentrated in house
insurance (Home & Contents) and motor insurance. Tower limits its exposure through proportionate reinsurance arrangements. The table below
illustrates the diversity of Tower 's operations.
GROSS WRITTEN PREMIUM (%)
20222021
NZPACIFIC TOTALNZPACIFIC TOTAL
Home & Contents51%3%54%52%4%56%
Motor35%3%38%34%3%37%
Commercial1%5%6%1%4%5%
Liability1%0%1%1%0%1%
Workers compensation0%1%1%0%0%0%
Other0%0%0%1%0%1%
Total88%12%100%89%11%100%
The Pacific Islands operating segment excludes the disposal group and the prior year comparatives have been re-presented accordingly.
Tower has limited exposure to long-tail classes (which comprises part of "liability" and "workers compensation"). Long-tail classes have increased
uncertainty of the ultimate cost of claims due to the additional period of time to settlement.
c. Reserving risk
Reserving risk is managed through the actuarial valuation of insurance liabilities and monitoring of the probability of adequacy booked reserves. The
valuation of the net central estimate is performed by qualified and experienced actuaries. The central estimate is subject to a comprehensive review at
least annually.
4.4 Credit risk
Credit risk is the risk of loss that arises when a counterparty fails to meet their financial obligations to Tower in accordance with the agreed terms. Tower 's
exposure to credit risk primarily results from transactions with security issuers, reinsurers and policyholders and is set out below.
a. Investment and treasury
Tower manages its investment and treasury credit risks in line with limits set by the Board:
(i) New Zealand cash deposits that are internally managed are limited to banks with a minimum Standard & Poor's (S&P) AA- credit rating.
(ii) Cash deposits and investments that are managed by external investment managers are limited to counterparties with a minimum S&P A- credit rating.
(iii) Tower holds deposits and invests in Pacific regional investment markets through its Pacific Island operations to comply with local statutory
requirements and in accordance with Tower investment policies. These deposits and investments generally have low credit ratings representing the
majority of the value included in the 'Below BBB' and 'not rated' categories in the table below. This includes deposits and investments with Australian
bank subsidiaries that comprise 55% (2021: 88%) of the 'not rated' category.
CASH AND CASH EQUIVALENTSFIXED INTEREST INVESTMENTSTOTAL
2022
$000
2021
$000
2022
$000
2021
$000
2022
$000
2021
$000
AAA – – 119,198 94,430 119,198 94,430
AA66,228 83,614 110,957 143,548 177,185 227,162
A – – 24,399 33,100 24,399 33,100
BBB – – – – – –
Below BBB 1,614 9,173 2,009 2,226 3,623 11,399
Not rated 16,660 23,342 2,071 4,166 18,731 27,508
Total84,502 116,129 258,634 277,470 343,136 393,599
b. Reinsurance
Tower manages its reinsurance programme in line with the ReMS. Tower seeks to manage the quantum and volatility of insurance risk in order to reduce
exposure and overall cost.
Tower 's policy is to only deal with reinsurers with a credit rating of S&P A- or better unless local statutory requirements dictate otherwise. Additional
requirements of the policy are for no individual reinsurer to have more than 25% share of the overall programme and Tower is prohibited from offering
inwards reinsurance to external entities. The following table provides details on Tower 's exposure to reinsurance recoveries:
REINSURANCE ON:
OUTSTANDING CLAIMSPAID CLAIMSTOTAL
2022
$000
2021
$000
2022
$000
2021
$000
2022
$000
2021
$000
AAA – – – – – –
AA5,830 12,005 2,929 1,028 8,759 13,033
A8,319 10,805 2,220 320 10,539 11,125
BBB 9 – – – 9 –
Below BBB 102 – 3 – 105 –
Not rated 220 40 2 4 222 44
Total14,480 22,850 5,154 1,352 19,634 24,202
9091NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4.4 Credit risk (continued)
The following table provides further information regarding the ageing of reinsurance recoveries on paid claims at the balance date.
PAST DUE
NOT DUE
$000
1 MONTH
$000
1 TO 2 MONTHS
$000
2 TO 3 MONTHS
$000
OVER 3 MONTHS
$000
TOTAL
$000
As at 30 September 2022
Reinsurance recoveries on paid claims5,154 – – – – 5,154
As at 30 September 2021
Reinsurance recoveries on paid claims 1,352 – – – – 1,352
c. Premium receivable
Tower 's premium receivable balance primarily relates to policies which are paid on either a fortnightly or monthly basis. Payment default or policy
cancellation – subject to the terms of the policyholder's contract – will result in the termination of the insurance contract eliminating both the credit risk
and the insurance risk.
PAST DUE
NOT DUE
$000
1 MONTH
$000
1 TO 2 MONTHS
$000
2 TO 3 MONTHS
$000
OVER 3 MONTHS
$000
TOTAL
$000
As at 30 September 2022
Net premium receivable192,464 5,933 1,188 384 95200,064
As at 30 September 2021
Net premium receivable 169,915 5,514 1,484 562 83 177,558

This includes premiums that are less than 30 days outstanding (which are owed but not past due) of $4.0m (2021: $5.5m).
4.5 Market risk
Market risk is the risk of adverse impacts on investment earnings resulting from changes in market factors. Tower 's market risk is predominately as a
result of changes in the value of the New Zealand dollar (currency risk) and interest rate movements. Tower 's approach to managing market risk is
underpinned by its Treasury Policy as approved by the Board.
a. Currency risk
Tower 's currency exposure arises from the translation of foreign operations into Tower 's functional currency (currency translation risk) or due to
transactions denominated in a currency other than the functional currency of a controlled entity (operational currency risk). The currencies giving rise to
this risk are primarily the US dollar, Fijian dollar and Papua New Guinea (PNG) kina.
Tower 's principal currency risk is currency translation (where movement impacts equity). Tower generally elects not to hedge this risk as it is difficult
given the size and nature of the currency markets in the Pacific. Tower seeks to minimise its net exposure to foreign operational risk by actively seeking to
return surplus cash and capital to the parent company.
Operational currency risk impacts profit and generally arises from:
(i) Procurement of goods and services denominated in foreign currencies. Tower may enter into hedges for future transactions, using authorised
instruments, provided that the timing and amount of those future transactions can be estimated with a reasonable degree of certainty.
(ii) Investment assets managed by the external investment manager that are denominated in foreign currencies. Tower 's Board set limits for the
management of currency risk based on prudent asset management practice. Regular reviews are conducted to ensure that these limits are
adhered to.
4.5 Market risk (continued)
The following table demonstrates the impact of the New Zealand dollar weakening or strengthening against the most significant currencies for which
Tower has foreign exchange exposure holding all other variables constant.
DIRECT IMPACT ON EQUITYIMPACT ON PROFIT OR (LOSS)
2022
$000
2021
$000
2022
$000
2021
$000
New Zealand Dollar – USD
Currency strengthens by 10%(793)(581)11323
Currency weakens by 10%969710(138)(28)
New Zealand Dollar – Fijian Dollar
Currency strengthens by 10%(854)(1,667)(74)(38)
Currency weakens by 10%1,0442,0379047
New Zealand Dollar – PNG Kina
Currency strengthens by 10%(629)(743)4430
Currency weakens by 10%769908(54)(36)
b. Interest rate risk
Tower is exposed to interest rate risk through its holdings in interest-bearing assets. Interest-bearing assets with a floating interest rate expose Tower to
cash flow interest rate risk, whereas fixed interest investments expose Tower to fair value interest rate risk.
Tower 's interest rate risk primarily arises from fluctuations in the valuation of fixed-interest investments recognised at fair value and from the underwriting
of general insurance contracts, which have interest rate exposure due to the use of discount rates in calculating the value of insurance liabilities.
Fixed-interest investments are measured at fair value through profit or loss. Movements in interest rates impact the fair value of interest-bearing financial
assets and therefore impact profit or loss (there is no direct impact on equity). The impact of a 1% increase or decrease in interest rates on fixed interest
investments is shown below (holding everything else constant).
IMPACT ON PROFIT OR (LOSS)
2022
$000
2021
$000
Interest rates increase by 1% (2021: 0.5%)(1,617)(988)
Interest rates decrease by 1% (2021: 0.5%)1,690960
Tower manages its interest rate risk through Board approved investment management guidelines that give regard to policyholder expectations and risks,
and to target surplus for solvency as advised by the Appointed Actuary.
4.6 Liquidity risk
Liquidity risk arises where liabilities cannot be met as they fall due as a result of insufficient funds and/or illiquid asset portfolios. Tower mitigates this risk
through maintaining sufficient liquid assets to ensure that it can meet all obligations on a timely basis.
Tower is primarily exposed to liquidity risk through its obligations to make payment for claims of unknown amounts on unknown dates. Fixed-interest
investments can generally be readily sold or exchanged for cash to settle claims and are managed in accordance with the policy of broadly matching the
overall maturity profile to the estimated pattern of claim payments. This is illustrated in the table below:
NET OUTSTANDING CLAIMS LIABILITYCASH AND INVESTMENTS
2022
$000
2021
$000
2022
$000
2021
$000
Floating interest rate (at call) – – 84,649 116,217
Within 3 months 45,224 42,949 28,181 75,129
3 to 6 months 20,726 17,070 44,940 31,890
6 to 12 months 18,969 17,176 55,407 47,381
After 12 months 25,532 22,293 129,959 122,982
Total 110,451 99,488 343,136 393,599
9293NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

4.7 Capital management risk
Capital risk is the risk that capital is insufficient or not of the best form to provide a buffer against losses arising from unanticipated events, while also
maximising the efficient use of capital with a view to enhancing growth and returns, and adding long-term value to Tower 's shareholders.
Tower has a documented description of its capital management process which sets out Tower 's principles, approaches, and processes in relation to
capital management that enables it to operate at an appropriate level of target solvency capital which is within the bounds of Tower 's risk appetite.
The capital management process allows the Board, management, rating agencies and the regulator to understand Tower 's approach to capital
management, including requirements for formulating capital targets, and monitoring, reporting and remediating capital as required.
The operation of the capital management process is reported annually to the Board together with a forward-looking estimate of expected capital
utilisation and capital resilience. In addition, Tower carries out stress, reverse stress and scenario testing to ensure the level of capital is appropriate given
its risk appetite.
a. Regulatory solvency capital
The Reserve Bank of New Zealand (RBNZ) is the prudential regulator and supervisor of all insurers carrying on insurance business in New Zealand, and is
responsible for administering the Insurance (Prudential Supervision) Act 2010. Tower measures the adequacy of capital against the Solvency Standards
for Non-life Insurance Business published by the RBNZ alongside additional capital held to meet RBNZ minimum requirements and any further capital as
determined by the Board.
Foreign operations are subject to regulatory oversight in the relevant jurisdiction. It is Tower 's policy to ensure that each of the licenced insurers in the
Group maintain an adequate capital position within the requirements of the relevant regulator.
During the year ended 30 September 2022 the Group complied with all externally imposed capital requirements (2021: complied).
Tower Limited's Group and Parent solvency margin are illustrated in the table below.
2022
$000
2021
$000
PARENTGROUPPARENTGROUP
Actual solvency capital136,423171,647 179,439 214,128
Minimum solvency capital66,53079,018 66,252 79,927
Solvency margin
69,89392,629 113,187 134,201
Solvency ratio205%217%271%268%

Tower is required to maintain a solvency margin of at least $15m (2021: $25m), due to a license condition issued by the RBNZ.
In October 2020, the RBNZ commenced consultation on a review of the Insurance (Prudential Supervision) Act 2010. As part of the overall process, the
RBNZ issued an exposure draft on an interim solvency standard (ISS) in July 2021 which anticipated the introduction of IFRS 17. The final ISS was issued in
October 2022.
Tower will apply the new ISS from 1 October 2023. The ISS: combines requirements for life and non-life insurers, which were previously separate
standards; proposes enhancements to the transparency of solvency reporting; provides for increased prudential supervision for insurers operating close
to their minimum solvency margin; and imposes some changes that will impact solvency margins. The change in the ISS which is expected to have the
largest impact on Tower 's solvency margin, the introduction of the operational risk capital charge, will be phased in over the four years to 2026. While
Tower is still assessing the ISS in its final form, Tower expects to maintain an appropriate capital position under the ISS.
b. Capital composition
The balance sheet capital mix at reporting date is shown in the table below:
2022
$000
2021
$000
Total equity attributed to shareholders 317,528 347,044
c. Financial strength rating
Tower Limited has an insurer financial strength rating of "A- (Excellent)" and a long-term issuer credit rating of "a-" as affirmed by international rating
agency AM Best Company Inc. in April 2022.
4.8 Operational risk
Operational risk is the risk of loss due to inadequate or failed internal processes or systems, human error or from external events.
Tower 's approach is to proactively manage our operational risks to mitigate potential customer detriment, regulatory or legal censure, financial and
reputational impacts.
Tower has in place appropriate operational processes and systems, including prevention and detection measures. These include processes which seek
to ensure Tower can absorb and/or adapt to internal or external occurrences that could disrupt business operations.
Management and staff are responsible for identifying, assessing, recording and managing operational risks in accordance with their roles and
responsibilities. Associated controls for identified risks are recorded and then actively monitored and managed through our enterprise risk management
system (ERMS). Incidents are managed by the first line of defence and overseen by the second line of defence, with ongoing reporting to management
and the Board Risk Committee.
Tower also maintains and regularly updates its Crisis Management, Business Continuity and Disaster Recovery Plans to minimise the impact of material
incidents or crisis events and to support continuity of critical systems and processes.
4.9 Regulatory and compliance risk
Regulatory and compliance risk is defined as the risk of legal, regulatory or reputational impacts arising from failure to manage compliance obligations, or
failure to anticipate and prepare for changes in the regulatory environment.
Tower , via its ERMS, has in place an obligations management framework. The framework provides operational and managerial oversight of applicable
and relevant regulatory compliance obligations to Tower and supports Tower in discharging its obligations under legislation across NZ & the Pacific.
Tower engages with regulators and regularly monitors developments in regulatory requirements to support ongoing compliance.
4.10 Conduct risk
Conduct risk is defined as the risk that conduct may contribute to poor outcomes for customers.
Tower manages Conduct risk through a number of measures including undertaking ongoing product reviews to ensure products are delivering good
customer outcomes, reviewing customer feedback to identify conduct trends or issues, completing quality assurance reviews, managing vulnerable
customers, holding workshops with frontline staff to identify potential conduct issues and embedding and monitoring controls across the business to
deliver fair customer outcomes.
Tower 's approach to managing conduct risk is set out in its Conduct Governance Framework. The framework is a collation of policies, frameworks and
processes and ensures there's robust governance in place to oversee Tower 's conduct risk profile including reporting to the Management and Board
Committees.
4.11 Cyber risk
Cyber risk is any risk associated with financial loss, disruption or damage to the reputation of Tower resulting from either the failure, or unauthorised or
erroneous use of its information systems.
Tower ’s approach to Cyber risk is to proactively protect against, monitor for and respond to those cyber threats seen to be targeting the organisation.
Tower continues to monitor evolving key cyber risks, which are being discussed and reviewed on a monthly basis through our Management Risk and
Conduct Committee and on a quarterly basis with the Risk Committee. Risk mitigation is achieved through ongoing investment in Tower ’s Security
programme and Tower ’s dedicated security function.
4.12 Climate change risk
Climate change risk is the risk associated with the unpredictable nature and impacts of weather events which may increase in frequency and severity
over time due to changes in climate.
Tower ’s RMF considers environmental and emerging risks, which are regularly reported to the Board. Tower 's approach to managing climate change risk
includes leading the market by continuing to expand our risk-based pricing strategy for climate-related hazards, maintaining a robust reinsurance
programme to provide protection from volatility in weather events, planning for increasing large events over time in our budget process to limit financial
impacts, and supporting communities through climate change via product development and education of customers.
Tower considers that climate change risk does not impact the valuation of the majority of Tower 's assets and liabilities, where these assets are expected
to be realised in one year or less. For non-current assets, Tower has looked to its short-medium term forecasting, which implicitly includes allowances for
the risk of climate change in forecasts of the severity and frequency of future claims, including large events. These forecasts show continued profitability
for Tower , which supports the carrying value of non-current assets. Accordingly, Tower does not consider that climate change risk has a material impact
on the assets and liabilities recorded in these financial statements, as at 30 September 2022.
9495NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

5. CAPITAL STRUCTURE
This section provides information about how Tower finances its operations through equity. Tower 's capital position provides financial security to its
customers, employees and other stakeholders whilst operating within the capital requirements set by regulators.
5.1 Contributed equity
2022
$000
2021
$000
Opening balance492,424 492,424
Return of share capital to shareholders
(30,634) –
Purchase of non-controlling interests (1,599) –
Total contributed equity460,191 492,424
Represented by:
Opening balance421,647,258 421,647,258
Cancellation of shares on return of capital
(42,163,271) –
Total shares on issue379,483,987 421,647,258
On 9 March 2022 the Group completed its ordinary share buy-back for a consideration of $30.6m (including transaction costs). This resulted in 42.2m shares being cancelled during the year
ended 30 September 2022.
On 14 October 2021 Tower Limited reached an agreement to increase its shareholding in National Pacific Insurance Limited from 71.39% to 93.88% for a consideration of $3.4m. Tower Limited
subsequently commenced a process to acquire the remaining 6.12% shareholding which completed on 17 December 2021 for a consideration of $0.9m.
Ordinary shares issued by the Company are classified as equity and are recognised at fair value less direct issue costs. All shares rank equally with one
vote attached to each share. There is no par value for each share.
5.2 Reserves
2022
$000
2021
$000
Opening balance(6,082)(4,985)
Currency translation differences arising during the year3,934 (1,097)
Foreign currency translation reserve(2,148)(6,082)
Opening balance1,707 1,564
Gain on revaluation – 159
Deferred tax on revaluation – (16)
Asset revaluation reserve1,707 1,707
Capital reserve11,990 11,990
Separation reserve
(113,000)(113,000)
Reserves(101,451)(105,385)
The separation reserve was created in 2007 at the time of the demerger of the New Zealand and Australian businesses in accordance with a ruling provided by the Australian Tax Office (ATO). It
will be carried forward indefinitely as a non-equity reserve to meet the requirements of the ATO.
5.2 Reserves (continued)
Recognition and measurement
The assets and liabilities of entities whose functional currency is not the New Zealand dollar are translated at the exchange rates ruling at balance
date. Income and expense items are translated at a weighted average of exchange rates over the period approximating spot rates at the
transaction dates. Exchange rate differences are taken to the foreign currency translation reserve.
Tower 's land and buildings are valued at fair value less accumulated depreciation. Any surplus on revaluation of these items is transferred directly
to the asset revaluation reserve unless it offsets a previous decrease in value recognised in profit or loss in which case it is recognised in the
consolidated statement of comprehensive income.
5.3 Net tangible assets per share
2022
$000
2021
$000
Net tangible assets per share 0.55 0.57
Net tangible assets per share have been calculated using the net assets as per the balance sheet adjusted for intangible assets (including goodwill) and
deferred tax assets divided by total shares on issue.
5.4 Earnings per share
20222021
Profit from continuing operations attributable to shareholders ($ thousands)17,622 17,770
Profit from discontinued operations attributable to shareholders ($ thousands)1,181913
Weighted average number of ordinary shares for basic and diluted earnings per share (number of shares)397,851,001 421,647,258
Basic and diluted earnings per share (cents) for continuing operations4.434.21
Basic and diluted earnings per share (cents)4.734.43
The basic and diluted average numbers of ordinary shares shown above are used for calculating all earnings per share measures including those for
profit after tax from discontinued operations (note 8.4).
5.5 Dividends
On 30 June 2022, Tower paid an interim dividend of 2.5 cents per share (2021: 2.5 cents per share), with the cash impact of $9.5m (2021: $10.5m).
On 23 November 2022, the Board approved a final dividend of 4 cents per share (2021: 2.5 cents per share), with the dividend being payable on 1
February 2023. The anticipated cash impact of the final dividend is approximately $15.2m (2021: $10.5m).
9697NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6. OTHER BALANCE SHEET ITEMS
This section provides information about assets and liabilities not included elsewhere.
6.1 Property, plant and equipment
Composition:
30 September 2022
LAND AND
BUILDINGS
$000
OFFICE EQUIPMENT
AND FURNITURE
$000
MOTOR VEHICLES
$000
COMPUTER
EQUIPMENT
$000
TOTAL
$000
Composition:
Cost
– 4,547 1,949 5,237 11,733
Accumulated depreciation
– (2,303)(979)(3,034)(6,316)
Property, plant and equipment – 2,244 970 2,203 5,417
Reconciliation:
Opening balance4,102 1,968 769 2,535 9,374
Depreciation – (422)(288)(1,577)(2,287)
Additions – 814 500 1,277 2,591
Disposals – (85) – (4)(89)
Foreign exchange movements456 (23)15 (23)425
Assets reclassified as held for sale
(4,558)(8)(26)(5)(4,597)
Closing Balance – 2,244 970 2,203 5,417
Assets reclassified as held for sale include the Suva building ($4.5m) and the assets of discontinued operations. Refer to Note 8.4.
During the year, and following the decommissioning of several legacy ‘on premise’ IT systems, a review of property, plant & equipment with zero book values was completed. As a consequence,
property, plant and equipment with a total cost and accumulated depreciation of $12.6m were written off as they are no longer in use. As the assets had zero book values, there was no impact
on profit or loss from these write-offs.
30 September 2021
Composition:
Cost4,102 4,257 1,616 17,292 27,267
Accumulated depreciation – (2,289)(847)(14,757)(17,893)
Property, plant and equipment4,102 1,968 769 2,535 9,374
Reconciliation:
Opening balance4,035 2,989 1,083 1,934 10,041
Depreciation for continuing operations – (838)(242)(1,104)(2,184)
Depreciation for discontinued operations – (90)(18)(2)(110)
Additions – 1,437 – 1,654 3,091
Revaluations159 – – – 159
Disposals – (1,527)(34)56 (1,505)
Foreign exchange movements(92)(3)(20)(3)(118)
Closing Balance4,102 1,968 769 2,535 9,374
6.1 Property, plant and equipment (continued)
Recognition and measurement
Property, plant and equipment is initially recorded at cost including transaction costs and subsequently measured at cost less any accumulated
depreciation and impairment losses.
Depreciation is calculated using the straight line method to allocate the asset's cost or revalued amounts, net of any residual amounts, over their
useful lives. The assets' useful lives are reviewed and adjusted if appropriate at each balance date. An asset's carrying amount is written down
immediately to its recoverable amount if it is considered that the carrying amount is greater than its recoverable amount.
Furniture & fittings 5-9 years
Leasehold property improvements 3-12 years
Motor vehicles 5 years
Computer equipment 3-5 years
Land and buildings are shown at fair value, based on periodic valuations by external independent appraisers less subsequent depreciation for
buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount
is restated to the revalued amount of the asset.
6.2 Intangible assets
a. Amounts recognised in the balance sheet
30 September 2022
GOODWILL
$000
SOFTWARE
$000
CUSTOMER
RELATIONSHIPS

$000
TOTAL
$000
Composition:
Cost
17,744 79,259 34,745 131,748
Accumulated amortisation
– (25,801)(11,294)(37,095)
Intangible Assets17,744 53,458 23,451 94,653
Reconciliation:
Opening balance17,744 48,527 22,321 88,592
Amortisation – (9,764)(4,959)(14,723)
Additions – 16,934 6,089 23,023
Disposals – (184) – (184)
Transfers to property, plant and equipment – (2,055) – (2,055)
Closing Balance17,744 53,458 23,451 94,653

During the year, and following the decommissioning of several legacy IT systems, a review of intangible assets with zero book values was completed. As a consequence, intangible assets with a
total cost and accumulated amortisation of $32.8m were written off as they are no longer in use. As the assets had zero book values, there was no impact on profit or loss from these write-offs.
9899NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6.2a Amounts recognised in the balance sheet (continued)
30 September 2021
GOODWILL
$000
SOFTWARE
$000
CUSTOMER
RELATIONSHIPS

$000
TOTAL
$000
Composition:
Cost17,744 98,850 28,656 145,250
Accumulated amortisation – (50,323)(6,335)(56,658)
Intangible Assets17,744 48,527 22,321 88,592
Reconciliation:
Opening balance17,744 47,866 12,238 77,848
Amortisation – (8,205)(4,351)(12,556)
Additions – 10,528 14,434 24,962
Disposals – (237) – (237)
Transfers to property, plant and equipment – (1,425) – (1,425)
Closing Balance17,74448,52722,32188,592
In the year ended 30 September 2021, Tower acquired and assumed ANZ's rights and obligations related to servicing the insurance polices of a group of customers already underwritten by Tower,
and entered into a non-compete agreement for a period of 5 years. In the year ended 30 September 2022, Tower acquired and assumed Westpac's and TSB Bank's rights and obligations relating
to servicing the insurance polices of two further groups of customers already underwritten by Tower. The amounts capitalised includes the price paid and associated acquisition/migration
costs. The assets will be amortised over 5 year (the ANZ non-compete agreement) or 10 years (for other customer relationships), with the pattern of amortisation being aligned with expected net
cashflow benefits over this period.
Recognition and measurement
Intangible assets are assets without physical substance. They are recognised as an asset if it is probable that expected future economic benefits
attributable to the asset will flow to Tower and that costs can be measured reliably.
Application software and customer relationships are recorded at cost less accumulated amortisation and impairment. Application software is
amortised on a straight line basis over the estimated useful life of the software. Customer relationships are amortised over the estimated useful life
in accordance with the pattern of economic benefit consumption.
Internally generated intangible assets are recorded at cost which comprise all directly attributable costs necessary to create, produce and prepare
the asset to be capable of operating in the manner intended by management. Amortisation of internally generated intangible assets begins when
the asset is available for use and is amortised on a straight line basis over the estimated useful life.
The useful lives for each category of intangible assets with a finite life are as follows:
—capitalised software: 3-5 years for general use computer software and 3-10 years for core operating system software
—customer relationships: 5-10 years
Goodwill (i.e. assets with an indefinite useful life) generated as a result of business acquisition is initially measured as the excess of the purchase
consideration over the fair value of the net identifiable assets and liabilities acquired. Goodwill is not subject to amortisation but is tested for
impairment annually or more frequently where there are indicators of impairment.
Critical accounting estimates and judgements
The customer relationships asset predominantly consists of customer relationship asset with a useful life equivalent to the customer base’s
expected lifespan of ten years with the exception of one asset with an additional non-compete component that has a contracted useful live of
five years.
Where applicable the estimated capitalised cost related to the customer relationships asset has been apportioned between the two asset
components by valuing the non-compete at the differential in net present value of the asset from improved customer retention over the non-
compete period, pro-rated over the full asset value. This valuation is calculated with reference to cash flow forecasts that combine past experience
with future expectations based on prevailing and anticipated market factors, expected retention rates (86-94%) and a discount rate of 12.5% for
each customer relationship asset.
6.2a Amounts recognised in the balance sheet (continued)
b. Impairment testing
An impairment charge is recognised in profit or loss when the carrying value of the asset, or cash-generating unit (CGU), exceeds the calculated
recoverable amount.
(i) Software and customer relationships
Software and customer relationships are reviewed at each reporting date by determining whether there is an indication that the carrying values may
be impaired. If an indication exists, the asset is tested for impairment. A loss is recognised for the amount by which the carrying value exceeds the
asset's recoverable value.
There were no indications of impairment during the year and therefore these assets were not tested for impairment (2021: no indications).
Critical accounting estimates and judgements
The recoverable amount for software and customer relationships is determined by reference to a value in use calculation based on (i) cash flow
forecasts that combine past experience with future expectations based on prevailing and anticipated market factors; and (ii) a discount rate that
appropriately reflects the time value of money and the specific risks associated with the assets.
Value-in-use calculations involve the use of accounting estimates and assumptions to determine the projected net cash flows, which are
discounted using an appropriate discount rate to reflect current market assessment of the risks associated with the assets. An impairment charge
for capitalised software is incurred where there is evidence that the economic performance of the asset is not as intended by management.
Customer relationships represent the present value of future benefits expected to arise from existing customer relationships. The assumptions for
the useful life are based on historical information.
(ii) Goodwill
Goodwill is deemed to have an indefinite useful life and is tested annually for impairment or more frequently where there is an indication that the
carrying value may not be recoverable.
Goodwill is allocated to cash generating units (CGUs) expected from synergies arising from the acquisition giving rise to goodwill. Tower 's goodwill is
allocated to the New Zealand general insurance CGU.
Tower undertook an annual impairment review and no loss has been recognised in 2022 as a result (2021: nil). COVID-19 impacts were again taken
into account when performing the review.
Critical accounting estimates and judgements
The recoverable amount of the New Zealand general insurance business is assessed by determining its value in use by discounting the future
cash flows generated from the continuing use of the unit (2021: the recoverable amount was assessed with reference to appraisal value
techniques, which is a common practice for insurance companies). A base discount rate of 14.5% was used in the calculation (2021: 12.0%). The
cash flows are based on management's plans and forecasted profits for FY23 -FY25 (2021: FY22 -FY24). The projected cash flows are determined
based on past performance and management's expectations for market developments with a terminal growth rate of 3% (2021: 2.5%).
The overall valuation is sensitive to a range of assumptions including the discount rate and the terminal growth rate. Reasonable changes to these
assumptions will not result in an impairment.
100101NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

6.3 Leases
a. Amounts recognised in the Balance Sheet
(ii) Right of use assets
30 September 2022
OFFICE SPACE
$000
MOTOR
VEHICLES
$000
TOTAL
$000
Composition:
Cost26,977 – 26,977
Accumulated depreciation(3,651) – (3,651)
Right of use assets23,326 –23,326
Reconciliation:
Opening balance25,569 8 25,577
Depreciation(2,702)(3)(2,705)
Additions438 – 438
Disposals(37)(5)(42)
Revaluations968 – 968
Net foreign exchange movements(347) – (347)
Assets reclassified as held for sale(563) – (563)
Right of use assets23,326 –23,326
30 September 2021
OFFICE SPACE
$000
MOTOR
VEHICLES
$000
TOTAL
$000
Composition:
Cost26,901 25 26,926
Accumulated depreciation(1,332)(17)(1,349)
Right of use assets25,569 8 25,577
Reconciliation:
Opening balance7,189 22 7,211
Depreciation for continuing operations(2,242)(14)(2,256)
Depreciation for discontinued operations(162) – (162)
Additions
24,332 – 24,332
Disposals(3,308) – (3,308)
Revaluations(3) – (3)
Net foreign exchange movements(237) – (237)
Right of use assets25,569 8 25,577

In August 2021 Tower entered into a new lease with a 10 year term for its Auckland premises. Tower recognised an initial right of use asset of $24.0m and an initial lease liability of $33.3m with
the difference primarily representing lease incentives. Tower has assumed no renewals of the lease past the initial 10 year term for the right of use asset and lease liability.
Recognition and measurement
Right of use assets are recognised when Tower has the right to use the corresponding assets. Right of use assets are measured at cost comprising
the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives
received; and indirect costs; and restoration costs. Right of use assets are generally depreciated over the shorter of the asset's useful life and the
lease term on a straight line basis.
6.3a. Amounts recognised in the Balance Sheet (continued)
(ii) Lease liabilities
2022
$000
2021
$000
Composition:
Current6,237 6,082
Non-current28,817 33,339
Lease liabilities35,054 39,421
Due within 1 year6,237 6,082
Due within 1 to 2 years4,440 6,041
Due within 2 to 5 years11,990 12,055
Due after 5 years15,876 19,514
Discount(3,489)(4,271)
Lease liabilities35,054 39,421
Recognition and measurement
Lease liabilities are recognised at the date Tower has the right to use the corresponding asset. Lease liabilities are initially measured as the present
value of expected lease payments under lease arrangements. Lease liability will include any option to extend where it is reasonably certain that the
option will be exercised. The lease payments are discounted using the incremental borrowing rate as the interest rate in the lease cannot be readily
determined. The incremental borrowing rate is the rate of interest that Tower would have to pay to borrow over a similar term, and with a similar
security, the funds necessary to obtain an asset of a similar value to the right of use asset in a similar economic environment. Tower 's incremental
borrowing rate is based on bonds issued by financial institutions with similar credit rating and maturity profile. Incremental borrowing rates used
during the year ranged between 1.9% and 5.0% (2021: between 1.9% and 3.6%).
Subsequent repayments are split between principal and interest cost where the finance cost represents the time value of money and is charged to
the profit or loss over the lease period. The discount rate applied is unchanged from that applied at the initial recognition of the lease, unless there
are material changes to the lease.
b. Amounts recognised in the consolidated statement of comprehensive income
CLASSIFICATION
2022
$000
2021
$000
Depreciation and impairmentUnderwriting expense & corporate and other expenses(2,705)(2,252)
Interest expenseFinance costs(897)(363)
Gain on disposalOther Income12 1,179
Lease expense(3,590)(1,436)
c. Amounts recognised in the consolidated statement of cash flows
2022
$000
2021
$000
Total cash outflow for lease principal payments(6,044)(2,684)
102103NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7. TAX
This section provides information on Tower 's tax expense during the year and its position at balance date.
7.1 Tax expense
Composition
2022
$000
2021
$000
Current tax 1,1593,745
Deferred tax6,5935,785
Adjustments in respect of prior years292 (395)
Tax expense8,0449,135
Tax expense from continuing operations7,5269,245
Tax expense from discontinued operations518(110)
Reconciliation of prima facie tax to income tax expense
2022
$000
2021
$000
Profit before tax from continuing operations25,200 27,647
Profit before tax from discontinued operations1,699803
Profit before taxation26,89928,450
Prima facie tax expense at 28% (2021: 28%)7,5327,966
Adjustments in respect of prior years293 (395)
Tax effect of non-deductible expenses and non-taxable income(732) 796
Foreign tax credits written off371 861
Other580(93)
Tax expense8,0449,135
Recognition and measurement
Tax expense is calculated on the basis of the applicable tax rates that have been enacted or substantively enacted at the end of the reporting
period in the jurisdictions Tower operates in. There have been no tax rate changes during the year in these jurisdictions. Current tax expense
relates to tax payable for the current financial reporting period while deferred tax will be payable in future periods.
7.2 Current tax
a. Current tax asset
2022
$000
2021
$000
Excess tax payments related to prior periods 12,038 12,038
Excess tax payments related to current period
1,031 863
Current tax assets13,069 12,901
Expected to be recovered from 2024 as per the Board approved operational plan for 2023 to 2025.
Excess tax payment made in the Pacific Islands during the reporting period.
7.2 Current tax (continued)
b. Current tax liability
The current tax liability balance of $136k (2021: $170k) relates to taxes payable to offshore tax authorities in the Pacific Islands.
Recognition and measurement
Overpayment of tax in the current and prior periods is recognised as a current tax asset. Current tax assets are measured at the amount expected
to be recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the
reporting period.
7.3 Deferred tax
a. Deferred tax asset
Composition
2022
$000
2021
$000
Tax losses recognised23,71624,116
Software, property, plant and equipment1.9892,834
Leases352373
Provisions and accruals5,2584,165
Recognised in profit or loss31,31531,488
Impact through other comprehensive income – –
Recognised in comprehensive profit or loss31.31531,488
Set-off of deferred tax liabilities pursuant to NZ IAS 12(7,278)(7,038)
Deferred tax asset24,03724,450
Deferred tax asset from continuing operations23,89324,450
Deferred tax asset from discontinued operations144–
Reconciliation of movements
2022
$000
2021
$000
Opening balance31,488 35,397
Movements recognised in profit or loss(173)(3,909)
Deferred tax asset pre NZ IAS 12 set off31,31531,488
104105NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

7.3 Deferred tax (continued)
b. Deferred tax liability
Composition
2022
$000
2021
$000
Deferred acquisition costs(7,016)(5,481)
Customer relationships(4,412)(3,433)
Software, property, plant and equipment(4,163)–
Other
(203)(461)
Recognised in profit or loss(15,794)(9,375)
Asset revaluation(290)(438)
Recognised in comprehensive profit or loss(16,084)(9,813)
Set-off of deferred tax liabilities pursuant to NZ IAS 127,278 7,038
Deferred tax liability(8,806)(2,775)
Primarily relates to withholding tax on undistributed profit from the Pacific Islands.
Reconciliation of movements
2022
$000
2021
$000
Opening balance(9,813)(7,921)
Movements recognised in other comprehensive income148(16)
Movements recognised in profit or loss(6,419) (1,876)
Deferred tax liability pre NZ IAS 12 set off(16,084)(9,813)
Recognition and measurement
Deferred tax is income tax which is expected to be payable or recoverable in the future as a result of the unwinding of temporary differences.
These arise from differences in the recognition of assets and liabilities for financial reporting and from the filing of income tax returns. Deferred tax
is recognised on all temporary differences, other than those arising from (i) goodwill or (ii) from the initial recognition of assets and liabilities in a
transaction (other than in a business combination) that affects neither the accounting nor taxable profit or loss.
At the reporting date, the Group has recognised a deferred tax asset in respect of its unused tax losses of $84.7m (2021: $86.1m).
Deferred tax is calculated at the tax rates that are expected to apply to the year when the liability is settled or the asset realised, based on tax rates
and tax laws that have been enacted or substantively enacted at balance date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when
they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Critical accounting judgements and estimates
Deferred tax assets are recognised for all unused tax losses to the extent it is probable that taxable profits will be available against which the losses
can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised based on
the likely timing and quantum of future taxable profits.
This assessment is completed on the basis of the approved strategic plans of Tower Limited and subsidiaries. Tower 's ability to utilise these tax
losses depends on the future profitability, shareholder continuity and no major change in Tower 's business. The enactment of the new business
continuity test in the Income Tax Act 2007 on 30 March 2021 for carrying forward tax losses means that Tower is able to carry forward its tax losses
even if there is a significant shareholding change, as long as the business continuity test is met.
7.4 Imputation credits
The Group imputation credit account reflects the imputation credits held by the Company as the representative member of the Group.
2022
$000
2021
$000
Imputation credits available for use in subsequent reporting periods271271
8. OTHER INFORMATION
This section includes additional disclosures which are required by financial reporting standards.
8.1 Notes to the consolidated statement of cash flow
Composition
2022
$000
2021
$000
Cash at bank54,422 88,740
Deposits at call30,080 27,389
Cash and cash equivalents84,502 116,129
The average interest rate at 30 September 2022 for deposits at call is 2.89% (2021: 0.25%).
Reconciliation of profit for the year to cash flows from operating activities
2022
$000
2021
$000
Profit after taxation from continuing operations17,67418,402
Adjusted for non-cash items
Depreciation of property, plant and equipment2,287 2,182
Depreciation, impairment and disposals of right of use assets2,705 2,252
Amortisation of intangible assets14,723 12,556
Financing costs897 363
Fair value losses on financial assets5,337 4,568
Gain on disposal of fixed assets(24)319
Change in deferred tax6,452 5,731
Adjusted for movements in working capital
Change in receivables(30,495)41,957
Change in payables41,4456,888
Change in taxation(695)1,601
Net cash inflows from operating activities from continuing operations60,306 96,819
Cashflows from operating activities from discontinued operations(522)1,276
Net cash inflows from operating activities59,78498,095
106107NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8.2 Related party disclosures
Tower considers key management personnel to consist of the Board of Directors, Chief Executive Officer and executive leadership team. Information
regarding individual director and executive compensation is provided in the Corporate Governance section of the annual report.
2022
$000
2021
$000
Salaries and other short term employee benefits paid4,4664,799
Long term benefits773260
Termination benefits748486
Director fees676723
Related party remuneration6,6636,268
Tower insurance products are available to all key management personnel on the same terms as available to other employees. In addition, Tower
purchases indemnity insurance for all directors both past and present covering liabilities and legal expenses incurred whilst in office.
The Board has decided to implement a share based long term incentive scheme with effect from 1 October 2022.
During the year ended 30 September 2022, Tower Limited acquired the minority shareholding of National Pacific Insurance Limited. Refer Note 5.1.
Definition
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity,
directly or indirectly, including any director (whether executive or otherwise) of that entity.
8.3 Auditor's remuneration
2022
$000
2021
$000
Audit of financial statements 612599
Other assurance services
6360
Total fees paid to Group's auditors675659
Fees paid to subsidiaries' auditors different to Group auditors:
Audit of financial statements
1614
Auditors remuneration691673

Audit of financial statements includes fees for both the audit of annual financial statements and the review of the interim financial statements. PwC Fiji performs the audits of all overseas
incorporated subsidiaries with the support of PwC New Zealand and other PwC network firms. $129.6k is paid to other PwC network firms (non New Zealand) for their audit services.



Other assurance services includes annual solvency return assurance and Pacific Island regulatory return audits. The other assurance services for the year ended 30 September 2021 were
completed during the year ended 30 September 2022.





The audit of Tower Insurance (Vanuatu) Limited was performed by Law Partners (2021: Law Partners).
8.4 Discontinued operation and asset held for sale
On 10 June 2022 Tower announced the conditional sale of all of its shares in its Papua New Guinea subsidiary to Alpha Insurance Limited for a sale price
of AUD 7.9m, subject to settlement adjustments. The sale was still conditional as at 30 September 2022 and so the Group's Papua New Guinea
Operations constitutes a discontinued operation and is classified as held for sale as at 30 September 2022. Subsequently, the sale became
unconditional and was completed on 28 October 2022, for a revised price of PGK 22m, subject to settlement adjustments and transaction costs. The
estimated gain on sale that will be included in profit or loss after tax, including reclassifications of amounts in the foreign currency translation reserve, is
approximately $2.1m, however at the time these financial statements were prepared a final calculation of the gain on sale had not been completed
At 30 September 2022, Tower was actively marketing the Suva building for sale. The recoverable amount of the building of $4.5m is included in the
property, plant and equipment disclosed below. The sale is expected to be completed within a year from the reporting date.
The sale of the Suva building was approved by the Board on 3 November 2022. Refer note 8.6.
Assets and liabilities classified as held for sale
2022
$000
Assets classified as held for sale
Cash and cash equivalents7,796
Investments3,580
Receivables2,565
Current tax assets315
Deferred tax assets144
Deferred insurance costs1,335
Right of use assets479
Property, plant and equipment
4,597
Total assets classified as held for sale 20,811
Liabilities classified as held for sale
Payables 1,965
Unearned premiums4,745
Outstanding claims1,981
Lease liabilities519
Provisions48
Total liabilities classified as held for sale 9,258
Net assets classified as held for sale 11,553

Property, plant and equipment disclosed above includes the Suva building carrying value of $4.5m.



As at 30 September 2022, Tower PNG owed other members of the Tower Group of $1.8m.. The liabilities from discontinued operations disclosed above are stated without adjustment for these
intercompany transactions.
The cumulative currency translation losses recognised in other comprehensive income in relation to the discontinued operation as at 30 September
2022 were $2.7m.
108109NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8.4 Discontinued operation and asset held for sale (continued)
Profit from discontinued operation
2022
$000
2021
$000
Gross written premium 8,055 8,678
Unearned premium movement 629 232
Gross earned premium 8,684 8,910
Outward reinsurance premium(3,187)(3,426)
Movement in deferred reinsurance premium(58)(46)
Outward reinsurance premium expense
(3,245)(3,472)
Net earned premium 5,439 5,438
Claims expense(1,907)(1,983)
Less: Reinsurance and other recoveries revenue695 34
Net claims expense(1,212)(1,949)
Gross commission expense(310)(391)
Commission revenue288 292
Net commission expense(22)(99)
Underwriting expense
(2,559)(2,591)
Underwriting profit 1,646 799
Investment income50 21
Other income/(expense)15 (2)
Financing and other costs(12)(15)
Profit before taxation 1,699 803
Tax expense(518)110
Profit after taxation from discontinued operation 1,181 913

Tower PNG paid fees to other members of the Tower Group of $2.4m during the financial year ended 30 September 2022 (2021: $2.5m), relating to the provision or reinsurance, management
and other services. These amounts are included within the reinsurance premium expense and underwriting expense lines above, and are then eliminated within continuing operations.
Earnings per share
20222021
Basic and diluted earnings per share (cents) for discontinued operations 0.30 0.22
The currency translation differences recognised in other comprehensive income during the period ending 30 September 2022 in relation to the
discontinued operation were $1.1m.
8.5 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.
The Group has no other contingent liabilities.
8.6 Subsequent events
On 6 October 2022, Tower entered an agreement with Kiwibank to purchase the rights and obligations relating to servicing the insurance polices of a
group of customers underwritten by Tower for $5.9m payable on 1 December 2022.
On 28 October 2022, Tower completed the sale of Tower Insurance (PNG) Limited, refer note 8.4 for more information.
On 3 November 2022, the Board approved the sale of Suva building at a price of FJD 8.2m which, after allowing for transaction costs and taxes, is greater
than the book value of this asset recorded in these financial statements. The estimated gain on sale to be recognised in profit or loss after tax is
approximately $1.1m, however at the time these financial statements were prepared a final calculation of the gain on sale had not been completed.
On 23 November 2022, the Board approved a full year dividend of 4 cents per share, with the dividend being payable on 1 February 2023 as specified by
Note 5.5. The anticipated cash impact of the final dividend is approximately $15.2m.
8.7 Capital commitments
As at 30 September 2022, Tower has nil capital commitments (2021: nil).
8.8 Impact of new accounting standards and changes in interpretation of current accounting standards
New accounting standards
No new accounting standards were implemented during the year with a material effect on Tower .
Issued and effective
The only new or revised accounting standard that is expected to have a material impact on Tower ’s financial statements is NZ IFRS 17 Insurance Contracts
(“IFRS 17”).  Other new or revised accounting standards that will be mandatory in future financial years are not expected to have a material impact.
IFRS 17
IFRS 17 is effective for periods beginning on or after 1 January 2023. Tower will apply the standard for the year ending 30 September 2024, with the
comparative period for the year ending 30 September 2023.  Tower expects to apply the standard using the full retrospective approach.
IFRS 17 replaces the current guidance in NZ IFRS 4 Insurance Contracts (“IFRS 4”), and establishes principles for the recognition, measurement,
presentation and disclosure of insurance contracts. The standard introduces substantial changes in the presentation of financial statements and
disclosures, introducing new balance sheet and income statement line items and increased disclosure requirements compared with existing reporting.
IFRS 17 contains three new measurement models. The general model measures insurance contracts based on the fulfilment cash flows (the present
value of estimated future cash flows with an explicit risk adjustment for non-financial risk) and the contractual service margin (the unearned profit that
will be recognised as services are provided over the coverage period). A modified version of the general model (the variable fee approach) is applied to
insurance contracts with direct participation features, and a simplified measurement model (the premium allocation approach, or “PAA”) is permitted in
certain circumstances. The PAA is similar to the current measurement model used for general insurance. Tower expects all its current insurance contracts
and reinsurance contracts will meet the requirements of the PAA.
Under the PAA, insurance and reinsurance contracts will be aggregated together into portfolios based on the contracts having similar risks and being
managed together, and then divided into groups based on the expected profitability of contracts and the periods in which the contracts are
written. Insurance contracts and reinsurance contracts are measured separately. Under the aggregation requirements, the identification and
measurement of contracts that are expected to be loss making will be performed at a lower granularity than occurs for the liability adequacy test under
current accounting standards, with any loss component recognised on initial recognition.
IFRS 17 makes changes to the way that discount rates are applied to future cash flows, with discount rates required to reflect the time value of money,
the characteristics of the cash flows and the liquidity characteristics of the insurance contracts. Tower has determined that it will not discount insurance
assets and liabilities for remaining coverage unless the time between the provision of the services and the premiums received will be more than one year.
Insurance assets and liabilities for incurred claims will be discounted to reflect the time value of money. The methodology for deriving the discount rate is
currently being finalised, with Tower expecting to apply the bottom-up approach, whereby a risk-free yield curve is adjusted through the addition of an
illiquidity premium.
IFRS 17 allows a choice between expensing acquisition costs related to the fulfilment cash flows immediately, or deferring them. Tower expects to defer
acquisition costs and amortise them over the coverage period of the related insurance contracts.
IFRS 17 requires a risk adjustment for non-financial risk to be applied to reflect the compensation an entity requires for bearing uncertainty about the
amount and timing of cash flows. This differs from the risk margin used under IFRS 4, which reflects the inherent uncertainty in the central estimate of
future claims cash flows. Tower is developing its framework for determining the risk adjustment and expects to use a confidence level approach.
110111NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

8.8 Impact of new accounting standards and changes in interpretation of current accounting standards (continued)
IFRS 17 also introduces significant changes to the presentation of insurance contracts. Assets and liabilities related to portfolios of insurance contracts
and reinsurance contracts will be shown separately on the balance sheet, replacing current insurance related line such as premium receivables, deferred
insurance costs and unearned premiums. In the consolidated statement of comprehensive income Tower will present income and expenses related to
insurance contracts gross of reinsurance, which will be disclosed separately.
Tower has a programme to assess the impact of adopting NZ IFRS 17 and to project manage the transition to the new standard including system
development. Tower has completed a proposed accounting policy framework under NZ IFRS 17, subject to approval by the Board, and systems
development work is in the implementation phase.
IFRS 17 is not expected the change the underlying economics or cash flows of Tower ’s business, although it may impact how profit emerges on a
year-to-year basis, and it will change the presentation in the financial statements. Due to the complexity of the requirements within the standard and with
global interpretations continuing to change, some material judgements and accounting policy choices are still under consideration by Tower , and
therefore a full assessment of the financial impact of IFRS 17 has not yet been completed.


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 report
To the shareholders of Tower Limited

Our opinion
In our opinion, the accompanying consolidated financial statements of Tower Limited (the Company),
including its subsidiaries (the Group), present fairly, in all material respects, the financial position of the
Group as at 30 September 2022, its financial performance and its cash flows for the year then ended
in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS)
and International Financial Reporting Standards (IFRS).
What we have audited
The Group's consolidated financial statements comprise:
● the consolidated balance sheet as at 30 September 2022;
● the consolidated statement of comprehensive income for the year then ended;
● the consolidated statement of changes in equity for the year then ended;
● the consolidated statement of cash flows for the year then ended; and
● the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the consolidated financial statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other assurance services for the Group over solvency and regulatory insurance
returns. 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. The provision of these other
services and relationships have not impaired our independence as auditor of the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current year. These matters were addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.





112113INDEPENDENT AUDITORS REPORTNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS