TOWER LIMITED — AGM Information 2011

Feb 1, 2011

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2 February 2011

Market Information Company Announcements Office NZX Limited Australian Stock Exchange Limited Level 2, NZX Centre Exchange Centre 11 Cable Street Level 6, 20 Bridge Street Wellington Sydney NSW 2000 New Zealand Australia

TOWER Limited: Chairman’s address to Annual Meeting

Attached is a copy of the Chairman’s address to the annual meeting of shareholders.

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Bronwyn Walsh Company Secretary & Compliance Manager TOWER Limited ARBN 088 481 234 Incorporated in New Zealand

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CHAIRMAN’S ADDRESS TO THE TOWER ANNUAL MEETING

2 FEBRUARY 2011

Ladies and Gentlemen

TOWER’s performance for the year to September 2010 has consolidated the Group’s reputation as a New Zealand institution that delivers value to shareholders year after year. The Group reported net profit after tax of $58.1 million, an increase of 16% from the prior year.

This includes $6 million arising from movements in the discount rate following changes in investments markets, which are outside the company’s control. Underlying profit was $52.1 million, an increase of 11% from 2009. With the global rise in interest rates, the discount rate gains of previous years are now reversing.

During the year the Board approved an interim dividend of 4 cents per share – the first since 2002 – which was paid in July. And given TOWER’s solid business performance and strong financial position at year end, a final dividend of 6 cents per share has been paid to our shareholders. This brings the total dividend for the year to 10 cents, an 11% increase on last year.

We continue to enjoy strong support for our Dividend Reinvestment Plan, with half our eligible shareholders electing to reinvest their dividend in TOWER.

Both the economy and investment market conditions continued to be challenging last year, with TOWER needing to manage delivery of returns to shareholders in a competitive market place. The Company’s financial results and share price performance demonstrate our ability to meet these challenges. TOWER does remain focused on growth.

As announced prior to Christmas, we have changed our business model to facilitate growth. Now that the new senior management team is in place, TOWER is updating its business strategy across our current business lines. Over the next two months, the Board will review the implications of this strategy on the Company’s capital structure, also taking into account the impact of legislative changes and the possibility of returning capital to shareholders.

The financial services and insurance sector in New Zealand is subject to an unprecedented degree of regulatory change. Last year we saw changes to the taxation of life insurance come into effect, and the detail of regulation of financial advisers clarified. TOWER is also now working through the details of the prudential supervision of insurance businesses by the Reserve Bank and best practice anti-money laundering regulations. TOWER welcomes these changes, which affect all industry participants, and will continue to develop plans to respond to the changes in business practices and reporting that is required by regulation of this nature.

I will shortly hand over to Rob Flannagan, who will talk about TOWER’s business model changes in more detail. But before doing this, I will briefly comment on TOWER’s trading so far this year. Without going into details, I can say that for the first 3 months of the year to 31 December, underlying profit, that is, excluding the effect of the discount rate, is tracking in line with the same period last year.

I would also like to take this opportunity to thank the management team and staff for their efforts during the year. In particular I am very proud of how staff responded to the impact of the Christchurch earthquake. Without their motivation, team spirit and attention to detail, the Group could not perform up to the level that it does.

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And I wish to acknowledge the commitment of my fellow Board colleagues. This is a Board that works very well together. The Company’s desire to grow is clear and we will ensure the strategy to achieve this is well executed.

I will now hand over to Rob Flannagan who will take us through last year’s results .

Thank you Tony. Good morning Ladies and Gentlemen,

The 2010 financial year produced a good financial result reflecting a satisfactory operating performance in difficult market conditions.

As the Chairman mentioned, the Christchurch earthquake has had a material impact on the people of Christchurch, including TOWER’s own Christchurch based staff. Operationally service levels have been impacted and we continue to address our customer’s needs relating to this event.

I would like to start by commenting on the returns to shareholders over the last couple of years. TOWER’s share price as at the end of last week was $1.96. Since September 2009 when the Company raised $81 million of equity via a 5 for 16 rights issue at $1.34 per share, the Company has also paid total dividends to shareholders of 19 cents per share. For shareholders who have re-invested their dividends, the closing share price of $1.96 represents an annualised return to shareholders of 24% since September 2009.

These returns are something we are proud of.

However, the market continues to be difficult and while the 2010 result is satisfactory, TOWER has not achieved the growth that we would have liked.

TOWER remains firmly committed to getting the basics right, with management’s focus very much on profitable growth.

Implementation of the new computer system is progressing satisfactorily as we move into the final stages - costs are ahead of the original budget due to expansion of scope, and slippage in some of the areas being developed. We are expecting completion towards the end of the year .

Last year we carried out a comprehensive, strategic review of our operations. The clear conclusion was that TOWER has all the right ingredients for future success - a powerful New Zealand brand, loyal customer base, product and channel breadth, and strong balance sheet. Strategically, we want to leverage the combined strengths of each of our existing business lines to grow in our chosen markets.

To support the implementation of the strategy, we have made changes to our operating model which was based around three quite separate business units: Health & Life, General Insurance and Investments.

While this structure was appropriate in getting the fundamentals right within TOWER, we believe a change away from a separate business unit model to an integrated functional model will both enhance our customer service and provide the opportunity to grow the business.

We have now welcomed on board most of the new members of our Group Executive team, whom Tony Gibbs introduced to you at the start of the meeting. The focus of the team from a strategic perspective is a review of our business plans to identify the growth opportunities we are best placed to pursue.

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Also, as previously noted, there is substantial change in the regulatory environment for insurance and financial services companies. TOWER welcomes these changes and the Group Executive team’s focus at an operational level includes updating business processes to move towards full implementation of the core regulation that is reshaping the industry.

I will now hand over to Eric O'Sullivan to cover the financial results.

Thank you Rob.

I would like to share with you some of the key financial measures reflected in the Group results for the 2010 financial year.

As the Chairman noted, the Group’s net profit after tax for the year to September 2010 was $58.1m – up by 16% from $50.1m achieved in 2009.

The 2010 net profit included the non-cash effect of movements in the discount rate which is used to value life insurance policy liabilities. These rates further declined during the year, generating a net gain to TOWER of $6.0m. The impact of the discount rate in the same period last year was a gain of $3.2m. As the Chairman has noted, the discount rate gains of previous years have recently started to reverse.

Earnings per share were 22.3 cents, a reduction of 1.98 cents from the previous year. This reflects the additional capital raised in September 2009, which did not have any significant impact in that financial year.

Return on shareholders funds was 13.7%, a small reduction from the 14.3% in 2009, again reflecting the impact of the additional capital.

Gearing (or debt to debt plus equity) was 15.4% which is an improvement from 16.5% at the end of 2009.

And net asset backing at 30 September 2010 was $1.69 per share – up 10 cents.

As the Chairman has already noted, the total dividend for the year was 10 cents - up from 9 cents in 2009 – and was paid via an interim dividend - the first since 2002 - of 4 cents in July 2010 and a final dividend of 6 cents paid last week.

Profit has consistently improved over the last four years.

At a high level:

The Health & Life business grew its underlying profit after tax by 5% to $33.2m.

The General Insurance business provided increased profit after tax of $21.9m, up 27% despite the Christchurch earthquake in September 2010, which caused a $5m claims cost after reinsurance. This was fully provided for in the 2010 result.

The Investments business profit after tax declined from $5.8m to $2.8m due to significant restructuring costs to prepare for future growth. Funds under management grew 8% to reach $3.9b at year end. TOWER’s KiwiSaver business at September 2010 had close to 88,000 members, an increase of 14%

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over the past year. Funds under Management in KiwiSaver grew by 55% over the year and were $505.3m at the end of September 2010.

After finance and corporate expenses, which were $5.8m for the year, underlying profit after tax was $52.1m – up by 11% on the previous year and by almost 36% over the last two years.

And after including the $6m gain from changes to the discount rate as described earlier, the 2010 Group net profit after tax was $58.1m.

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