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Market Information NZX Limited Level 1, NZX Centre 11 Cable Street Wellington

Company Announcements Office ASX Limited Exchange Centre Level 6, 20 Bridge Street Sydney NSW 2000 Australia

28 November 2024

Tower Limited

FY24 Full Year Results for Announcement to Market

In accordance with NZX Listing Rule 3.5.1 we enclose the following for release to the market in relation to Tower Limited’s (NZX/ASX: TWR) FY24 Full Year Results:

1 Media Release 2 Results Announcement 3 Annual Report (including Financial Statements) 4 Results Announcement Presentation 5 Results Announcement Call Script 6 NZX Distribution Notice 7 Climate Statement

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

Tower’s Board confirms for the purposes of ASX Listing Rule 1.15.3 that Tower continues to comply with the NZX Main Board Listing Rules.

ENDS

This announcement has been authorised by the Tower Board.

Blair Turnbull Chief Executive Officer Tower Limited

For media enquiries, please contact in the first instance: Emily Davies Head of Corporate Affairs and Sustainability +64 21 815 149 [email protected]

For investor queries, please contact in the first instance: James Silcock Head of Strategy, Planning and Investor Relations +64 22 395 9327 [email protected]

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

28 November 2024

Tower Delivers Strong FY24 Result

Kiwi insurer, Tower Limited (NZX/ASX: TWR) today reported its result for the year to 30 September 2024, recording an underlying net profit after tax (underlying NPAT) of $83.5m and a reported profit of $74.3m.

The strong results were due to Tower experiencing no large events in the financial year, year-on-year improvements in business-as-usual (BAU) claims performance, premium growth, and operational and digital efficiencies. This was a significant improvement compared to the $1m[1] reported loss in FY23, which was primarily due to catastrophe events.

Summary of FY24:

Underlying profit $83.5m vs $7.1m in FY23
Reported profit $74.3m vs $1m loss in FY23
Gross written premium (GWP) $595m, up 15% on FY23
Business as usual (BAU) claims ratio 48.1% vs 55.1% in FY23
Management expense ratio (MER) improved to 31.4% vs 32% in FY23
Large event costs -$2.3m vs $55.6m in FY23, due to Tower experiencing no large events in the financial year and a favourable revision to prior year large events costs
Customer numbers were down 2% to 305,000 vs 311,000[2] in FY23 partly due to tightened risk appetite for high-theft motor vehicle models

Reflecting the positive FY24 results and based on Tower's ordinary dividend policy, the Board has declared a final dividend of 6.5 cents per share. This brings total dividends for FY24 to 9.5 cents per share.

The Board has also conditionally approved a return of NZ$45m of excess capital to shareholders, by way of mandatory share buyback[3] . The return of capital is expected to deliver meaningful earnings per share accretion to Tower’s shareholders.

Strong business performance

Tower CEO, Blair Turnbull says, “Continued improvements in claims performance, sustained GWP growth and enhanced business efficiencies along with unusually benign weather in New Zealand and the Pacific, have delivered a positive result for shareholders.

“This strong result is underpinned by our strategy of delivering simple and rewarding customer experiences combined with our use of digital technology and data.”

The BAU claims ratio has reduced to 48.1% compared to 55.1% in FY23. This improvement was driven by a combination of rating increases, enhanced processes, a reduction in motor theft claims due to targeted underwriting actions and lower crime, and calmer weather, which flattened the frequency of house claims in the year.

1 All prior year metrics have been restated to align with the new accounting standard, IFRS 17, for consistent comparisons.

2 Prior year customer numbers have been adjusted to exclude sold and held for sale portfolios which include the Solomon Islands business and Vanuatu subsidiary, and the New Zealand commercial rural portfolio.

3 The return of capital will be conducted as a scheme of arrangement. It is subject to receipt of High Court approval of the arrangement and shareholder approval, as well as Tower continuing to satisfy solvency and prudential capital requirements, and the Tower Board remaining satisfied that it remains prudent to undertake the capital return, in each case up to the time the capital return is give effect.

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

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As at 31 October 2024, Tower had closed 99% of both the Auckland Anniversary and Cyclone Gabrielle FY23 catastrophe event claims.

Premium growth continued in FY24 with GWP increasing 15% year on year to $595m. This was mainly due to prior period rating increases aimed at mitigating the impacts of inflation, crime and higher reinsurance costs following the 2023 catastrophe events.

Mr Turnbull says, “We recognise the impact of premium increases for customers. As inflation settled later in the financial year we moved to moderate premium increases, particularly for low-risk assets. With inflation now easing, we expect premium increases to stabilise further.”

GWP from house insurance policies grew by 18% in the year, reflecting a stronger focus on the home insurance market.

Delivering operational efficiencies

Tower’s GWP growth, along with disciplined cost control has led to another improvement in MER, with it reducing to 31.4% from 32% in FY23. Tower is continuing to further improve business efficiency through investments in digitisation and streamlining operations.

Tower’s Suva hub, which was expanded in FY24, is now answering more than half (55%) of all New Zealand customer sales and service calls.

No large events recorded in FY24

Tower’s conservative large events allowance of $45m for FY24 was unused as no large events were recorded in the financial year. The unused allowance increased underlying NPAT by $32m ($45m less tax).

FY25 guidance

Tower's FY25 full year guidance is for underlying NPAT to be between $50m and $60m. This assumes full utilisation of a large events allowance which has prudently been set at $50m, reflecting growth in the house portfolio, and inflation-based increases to sums insured. GWP growth in FY25 is expected to be between 10% and 15% reflecting a balance of rating and organic growth. Digitisation and efficiency initiatives are expected to improve MER to less than 29%.

ENDS

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

For media enquiries, please contact: Emily Davies Head of Corporate Affairs and Sustainability +64 21 815 149 [email protected]

For investor enquiries, please contact: James Silcock Head of Strategy, Planning and Investor Relations +64 22 395 9327 [email protected]

Template Results announcement

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(for Equity Security issuer/Equity and Debt Security issuer)

Updated as at June 2023

Please do not amend or delete individual rows. As this template relates to prescribed content, changes to content should only be made where it is clearly indicated that this is permitted, otherwise, if an Issuer considers a particular element does not apply, mark the row as N/A, Any other changes to this prescribed form must first be approved by NZX as required under NZX Listing Rule 3.26.1.

Results for announcement to the market	Results for announcement to the market	Results for announcement to the market	Results for announcement to the market
Name of issuer	Tower Limited
Reporting Period	12 months to September 2024
Previous Reporting Period	12 months to September 2023
Currency	NZD
	Amount (000s)	Percentage change
Revenue from continuing operations	$555,818	18%
Total Revenue	$562,409	17%
Net profit/(loss) from continuing operations	$70,884	2640%
Total net profit/(loss)	$74,285	N/a – prior year was a loss
Interim/Final Dividend
Amount per Quoted Equity Security	6.5 cents
Imputed amount per Quoted Equity Security	Not Applicable.
Record Date	16 January 2025
Dividend Payment Date	30 January 2025
	Current period		Prior comparable period
Net tangible assets per Quoted Equity Security	$0.73		$0.48
A brief explanation of any of the figures above necessary to enable the figures to be understood	Growth in revenue from continuing operations was predominantly driven by prior period rating increases designed to mitigate the impacts of inflation, crime and increased reinsurance costs following the 2023 catastrophe events. The growth in profit reflected premium growth and improvements in the management expense ratio; improvements in claims performance; along with the absence of large events, which had impacted the prior year’s profit. Please refer to the 2024 full year results announcement presentation for further information.

Authority for this announcement	Authority for this announcement
Name of person authorised to make this announcement	Tania Pearson, General Counsel & Company Secretary
Contact person for this announcement	Emily Davies, Head of Corporate Affairs and Sustainability
Contact phone number	+64 21 815 149
Contact email address	[email protected]
Date of release through MAP	28 November 2024

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Tower Limited Annual Report 2024

Consolidated financial statements

2024 in review

Sustainability

GRI content index

Corporate governance

Contents

2024 In review	2
2024 snapshot	3
Update from the Chair and CEO	5
Deliveringon our strategy	9
Our purpose, vision and strategy	10
Leading customer experience	11
Operationally efficient	22
Resilient	29
Effective & distinctive culture	34
Environmental, social andgovernanceperformance	41
Board of Directors	50
Consolidated financial statements	52
Financial statements	53
Notes to the consolidated financial statements	58
Independent auditor’s report	99
Appointed actuary’s report	103
Corporategovernance at Tower	104
Global ReportingInitiative content index	115
Tower directory	121
Registrydetails	122

Contents

Consolidated financial statements

2024 in review

Sustainability

GRI content index

ANNUAL REPORT 2024

Our strategy

Corporate governance

Contents

2024 snapshot

Performance

$ m 83.5 $ m 595

48[%]

Shareholders

9.5[C]

Reported profit after Underlying profit $ m taxation vs. $1m vs. $7.1m in FY23[1] 74.3 loss in FY23 Management Gross written premium (GWP)[1] , up 15%[2] from 31.4[%] expense ratio $527m in FY23[1] (MER)[1] down from 32% in FY23 Combined Business as usual (BAU) claims ratio[1] vs operating ratio[1] 79[%] (COR) vs 100.4% 55% in FY23 in FY23 Total FY24 dividends $ m Capital return per share declared[3] 45 declared

$ m 45

1 Underlying Profit, GWP, MER, BAU claims ratio and COR are non-GAAP financial information. Consequently, they may not be comparable to similar measures presented by other reporting entities and are not subject to audit or independent review. GWP is a component of Insurance Service Revenue. MER is the ratio of underlying management expenses, including claims handling expenses, to underlying Insurance Service Revenue. BAU Claims Ratio is the ratio of underlying claims expense, excluding large events, to underlying Insurance Service Revenue. Underlying Profit includes large events but excludes certain large or non-recurring items. Tower uses Underlying Profit, and related measures, as internal reporting measures because management believes they provide a better measure of Tower’s underlying performance than Reported Profit and are useful to investors as they make it easier to compare Tower’s underlying financial performance between periods. A reconciliation of these items to GAAP financial information can be found in the appendix of Tower’s FY24 Results Announcement Presentation released on 28 November 2024 via the NZX and, for FY23 comparatives, in the appendix of the IFRS 17 transition update released on 15 May 2024 via the NZX. 2 Excluding divested portfolios.

3 HY24 dividend 3c, FY24 dividend 6.5c.

Consolidated financial statements

2024 in review

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GRI content index

ANNUAL REPORT 2024

Our strategy

Corporate governance

Contents

People

8.1

Employee engagement score[1] vs. 7.8 in FY23

8.9

Employee diversity and inclusion score[1] vs. 8.6 in FY23

Customers

305,000

Customers vs. 311,000 in FY23[2]

67,500

Reported claims across NZ and the Pacific vs. 87,500 in FY23[3]

Community

2,300

Volunteer hours in our communities in FY24 5 vs. 390 in FY23

Tower scholarships awarded to university students[4]

1 As at 13 September 2024, based on Tower’s latest staff engagement survey. Employee diversity and inclusion score in the top 10% of the global finance sector. 2 Prior year customer numbers have been adjusted to exclude sold and held for sale portfolios which include the Solomon Islands business and Vanuatu subsidiary, and the New Zealand commercial farm portfolio. FY24 customer numbers decreased 2% partly due to tightened risk appetite for high-theft motor vehicle models.

3 FY23 reported claims includes large events, there were no large events in FY24.

4 Two Tower Climate Change Scholarships awarded to University of Waikato students (NZ) and three Tower Vunilagi Scholarships awarded to University of the South Pacific students (Fiji).

Consolidated financial statements

2024 in review

Sustainability

GRI content index

ANNUAL REPORT 2024

Our strategy

Corporate governance

Contents

Update from the Chair and CEO

Tower has a strong purpose, clear strategy and is focused on fostering a distinctive culture. We are pleased to report on the progress we made in FY24.

FY24 was a year of milestones for Tower: from celebrating our 150-year anniversary in Fiji; to opening our new Suva hub operational centre; ringing in 25 years of being listed on NZX; and it was followed by entry into the NZX 50 just after year end.

All the while we have remained focused on progressing our strategy to be the leading direct personal lines and SME insurer in New Zealand (NZ) and our chosen Pacific markets.

We continue to strive towards delivering beautifully simple and rewarding experiences that our people and customers rave about. And our investments in technology continue to improve Tower’s customer experience and operational efficiency.

Strong business performance

For the year to 30 September 2024, underlying profit was $83.5m, up from $7.1m in FY23. Reported profit was $74.3m, compared to a $1m loss in FY23.

Premium growth, excluding divested portfolios, continued in FY24 with gross written premium (GWP) increasing 15% year on year to $595m. This was predominantly driven by prior period rating increases designed to mitigate the impacts of inflation, crime and reinsurance cost hikes following the 2023 catastrophe events.

Tower’s GWP growth, combined with disciplined cost control has seen management expense ratio (MER) further improve, reducing from 32% in FY23 to 31.4%.

Targeted underwriting actions, stronger-than-expected business performance, particularly in claims, and unusually, no large events occurring in the financial year, have been key drivers of this year’s results.

Tower’s FY24 market guidance assumed full utilisation of a $45m large events allowance. However, as no large events occurred, net profit after tax (NPAT) was $32m higher than initially indicated, reflecting the tax-adjusted $45m allowance that was not used.

We have a robust reinsurance programme to help manage large events and adequately protect Tower’s solvency and capital positions.

Tower’s NZ parent solvency margin improved from $79.8m at 30 September 2023 to $171.4m at September 30 2024. As at 30 September 2024, Tower’s NZ parent solvency ratio was 212%.

During the year Tower began reporting against NZ IFRS 17 Insurance Contracts (IFRS 17), a new accounting standard applicable to all insurance companies. Tower’s strategy, profitability and dividend policy are unaffected by the new standards.

In accordance with Tower’s ordinary dividend policy to pay 60-80% of adjusted earnings, where prudent to do so, Tower’s Board has declared a final dividend of 6.5 cents per share, bringing total dividends to 9.5 cents per share in FY24.

The Board also approved a return of NZ$45m of excess capital to shareholders, by way of a mandatory share buyback, subject to shareholder approval at Tower’s annual shareholder meeting (ASM) in early 2025 and fulfilment of other conditions. The return of capital is expected to deliver meaningful earnings per share accretion to Tower’s shareholders.

Leading customer experience

Central to Tower’s strategy is delivering a consistent, easy-to-understand insurance experience for all our customers.

This is facilitated by our core, cloud-based technology platform and our ongoing investment in My Tower, our sales and service platform. This enables us to provide customers with a consistent, online insurance buying and management experience while reducing our costto-serve.

Our online journeys continue to resonate with customers, boosting GWP growth, with 63% of this year's NZ sales coming through our online channels.

Consolidated financial statements

2024 in review

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ANNUAL REPORT 2024

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Contents

Our partners enable us to reach more Kiwi and Pacific customers. In FY24, Trade Me GWP increased by 16%, comprising 37% of Partnerships’ GWP. Additionally, we were proud to launch new partnerships with Kiwibank and HealthCare Plus and expanded further in the mortgage broker market.

We ended FY24 with a three-month average customer net promoter score of +38, up from +28 in FY23. We continue to invest in digitisation, data and process excellence to further enhance our customer experience.

One example of this is ‘ways to save’. Throughout the year, 29,000 customers used our ways to save feature in My Tower, which offers useful tips and options to reduce premiums. By providing these tools, we empower our customers to manage their insurance more effectively and reduce while also reducing the workload for our customer care team.

We were particularly proud to be named Canstar's Home & Contents Insurer of the Year for 2024. The award acknowledged our customer service, commitment to affordability and the overall value we deliver to Kiwi households.

While we value this recognition, we are also committed to fixing things when we don’t get them right. In FY24, we made significant progress towards remediating customers identified as being owed a premium refund due to errors in applying our multipolicy discount. As at 30 September 2024, we had identified refunds of around $12m (including GST and interest) owed to 66,000 customers and had repaid over $11m. We are also actively addressing premium overcharges resulting

from separate promotions and policy discounts and other policy errors, ensuring all affected customers are fairly compensated.

Fixing issues that have required customer remediations is important to us. In FY24 we launched Foundations First, a strategic programme focused on strengthening our business fundamentals. Two of its key initiatives involve improving data management across Tower and investigating the root causes of incidents that lead to remediations, enabling us to develop strategies to tackle these underlying issues. Ultimately, Foundations First aims to bolster business resilience, promote positive customer outcomes and foster sustainable growth.

Tower also initiated a comprehensive programme to align its conduct framework with the upcoming Conduct of Financial Institutions (CoFI) regime, which comes into force on 1 April 2025. This is a key priority for Tower and supports our strategic commitment to delivering fair outcomes for our customers.

Targeted growth through risk-based pricing and disciplined underwriting

Tower’s adoption of risk-based pricing and underwriting has given us a competitive advantage by enabling more accurate risk selection and pricing. We believe it’s fairer for customers to only pay for the risks that apply to their property. We also believe in transparency, so we provide customers with a detailed premium breakdown that shows the impact of their risk ratings on their premiums and offer comparison at renewal.

Consolidated financial statements

2024 in review

Sustainability

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ANNUAL REPORT 2024

Our strategy

Corporate governance

Contents

During the financial year we expanded our risk-based pricing model by introducing automated underwriting rules for landslide risks across NZ. This follows the implementation of similar rules for sea surge risks in FY23.

In the coming year, our customers will be able to see their home’s risk ratings for landslide and sea surge on their property – alongside those for earthquake and flood hazard – and the impact those risks have on their premiums.

We are particularly pleased to see new business house policies increase by 18%, compared to FY23, as we focus more on the home insurance market.

Enhanced claims management

Following record claims volumes in FY23 due to catastrophe events, we improved processes and implemented new technology to deliver faster and more efficient claims management.

In FY24 we continued investing in our home and motor claims journey, resulting in significantly reduced claims processing times and improved end-to-end claims management.

Since May 2024, two-thirds of customers who submitted weather, accidental damage or escape of water claims through My Tower had their claims automatically accepted and or referred to an assessor or house supplier, bypassing manual processing or review.

Delivering operational excellence

This year, we celebrated 150 years of operation in Fiji and continued to streamline our wider Pacific operations.

As part of this effort, we completed the sale of our Solomon Islands business and Vanuatu subsidiary in FY24, following the divestment of our Papua New Guinea subsidiary in FY23.

Additionally, we opened our new operational hub in Suva, which now handles over half of our NZ customer service calls, significantly improving call answer times.

With around 300 local employees in Fiji, this enhances our ability to allocate resources flexibly across locations and functions, bolstering business resilience.

Fostering a more sustainable future

Witnessing the impacts of climate change firsthand in the communities we serve has driven us to implement changes in our business operations, support customers with innovative products, and fund scholarships to deepen understanding of climate change.

In 2022, we launched Cyclone Response Cover, our first parametric product designed for Pacific communities and small businesses. After introducing this innovative product in Samoa in FY24, it is now available in three Pacific countries. In FY25 we plan to introduce a new parametric rainfall product.

For the fourth consecutive year, we supported the University of Waikato’s Bachelor of Climate Change degree by providing scholarships for second and thirdyear students.

As a Kiwi and Pacific insurer, we are acutely aware of the climate risks faced by island nations and are particularly pleased to award this year’s scholarships to students focused on mitigating climate change impacts on Māori and Pasifika communities.

Additionally, we piloted initiatives to reduce our Scope three emissions. We are committed to reducing our Scope 1, 2 and 3 emissions and have achieved a 20% reduction in Scope 1 and 2 greenhouse gas emissions compared to our FY20 baseline year.

More details can be found in our first Climate Statement, released alongside this annual report. Our teams also dedicated 2,300 hours to volunteering in our communities, a pleasing and very worthwhile effort.

Investing in our people and culture

This year’s results are a testament to the entire Tower team. We remain committed to supporting our people, enabling us to attract, develop, and retain the best talent.

In FY24 we continued to enhance the Tower experience for our people. We now have seven well-established employee representation groups (ERGs), with one in three staff actively participating.

A key metric we focus on are our employee engagement scores. Our latest staff survey in September 2024 showed an employee engagement score of 8.1, up from 7.8 in September 2023.

Encouragingly, our focus on company culture has resulted in a diversity and inclusion score of 8.9, placing us in the top 10% of the finance sector globally.

Consolidated financial statements

2024 in review

Sustainability

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ANNUAL REPORT 2024

Our strategy

Corporate governance

The year ahead

Insurance plays a vital role in supporting economic and community resilience. This is increasingly important in a world where the impacts of climate change are not a matter of if, but when and how much?

We aim to maintain affordable premiums, and with Tower’s risk-based pricing strategy, we anticipate that premium increases will continue to level off in certain areas, while some premiums reduce. Together with the digitisation and operational performance efficiency gains achieved this year, we are well-positioned for FY25.

In November, Tower shared with the market that Blair will step down as CEO, following the 2025 annual shareholder meeting in February.

On behalf of the board, I would like to thank Blair and acknowledge his leadership which has driven significant progress in Tower’s journey to become the leading direct personal lines and SME insurer in New Zealand and our chosen Pacific markets.

Tower is committed to continuing to serve our customers and communities. With a strong business platform and a robust strategy, we are well positioned to deliver sustainable premium growth and attractive long-term shareholder returns.

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Michael Stiassny Chair

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Blair Turnbull CEO

"In my view, Tower is a really unique business, and I am very proud to have played a part in its long history.

"Together, we have significantly transformed Tower’s customer experience by leveraging digitisation and realised marked operational efficiencies through our cloud-based platform. Our business is now sharply focused and streamlined in our chosen markets, and we continue to innovate with risk-based pricing and new offerings like parametric insurance.

"I believe the platform is solid and as such it’s an ideal juncture to pass the baton.

"A sincere thank you to our people for always showing up for our customers over the past four and half years, particularly the executive team, who have truly lived up to our core values; we do what’s right, our people come first, our customers are our compass and progress boldly.

"Put simply, it has been a privilege and a pleasure."

- Blair Turnbull

Contents

Our values

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We do what’s right

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Our people
come first
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Our customers are our compass

Progress boldly

Our strategic pillars

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LEADING EFFECTIVE &
OPERATIONALLY
CUSTOMER DISTINCTIVE RESILIENT
EFFICIENT
EXPERIENCE CULTURE
Our strategy
To be the best direct personal lines and
SME insurer in our selected markets differentiated
Succinct, easy Digitise and An inclusive, Manage volatility
through digital and data, fair and transparent, customer automate core diverse and risk and deliver
and with customer care in everything we do. experiences processes and aware culture. sustainable
across the leverage Empower our outcomes for all
lifecycle geographical people to stakeholders
footprint achieve
great things
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Consolidated financial statements

2024 in review

Corporate governance GRI content index Contents 11

ANNUAL REPORT 2024

Our strategy Sustainability

Leading customer experience

Consolidated financial statements

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My Tower

Tower customers benefit from an easy-to-understand insurance buying and management process, that also reduces our service costs.

Launched in 2019, our self-service digital platform, My Tower, is an online sales and service portal.

Features include the ability to lodge a claim, check claims progress, and automated referrals to some suppliers.

In line with our focus on transparency, customers can view their premium breakdown and a premium comparison at renewal, as well as their property’s flood and earthquake risk ratings.

$446m

Tower direct GWP, up 16%[1] from FY23

NZ My Tower users, up 5% in FY24

164,000

Customer NPS for My Tower, up from +28 in FY23

+ 35

1 Adjusted to exclude divested portfolios which includes the New Zealand commercial rural portfolio.

FY24 marked the first full financial year during which My Tower and our online quote-to-buy journey were available across all Tower’s Pacific markets.

Customers increasingly seek an online experience, but also value the opportunity to call someone if they need help or support. In FY24, our average call wait time was 2 minutes and 10 seconds, contributing to a drop in our sales and service abandonment rate to 8% compared to 13% in FY23.

This is a positive step forward in increasing insurance accessibility, penetration and awareness in the Pacific. In the coming year we’ll continue to grow our presence in-region.

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Tower’s Fiji digital
retail branch.
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Consolidated financial statements

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Contents
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Ways to save

To help our customers manage their insurance and affordability, we introduced ways to save.

Ways to save is a My Tower feature for our New Zealand customers that offers useful tips and options to reduce premiums. For example, customers can explore how their premiums would change by increasing or decreasing their excess.

2,400

$122

Customers accessed ways to save on average per month in FY24

Decrease in annual premium per customer via ways to save in FY24[1]

Like our wider My Tower offering, ways to save empowers customers to manage their insurance, without the need to call our contact centre team, helping to create a more efficient experience for our customers and teams.

In FY24, 16% of customers who interacted with ways to save made changes to their cover that resulted in lower premiums.

1 Average amount saved by customers who decreased their premiums via ways to save.

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Products to suit our customers and communities

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House
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Contents

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Motor
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Motorbike
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Pet Motorhome
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Travel
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Business

Caravan

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Landlord
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Boat Parametric cover
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Canstar Outstanding Value Trans-Tasman Travel Insurance – 2023
Canstar Outstanding Value South Pacific Cruise Travel Insurance – 2023

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Market-leading risk-based pricing

In FY24, we expanded our risk-based pricing model by introducing automated underwriting rules for landslide risks across NZ. This followed the implementation of automated underwriting rules for sea surge risks across NZ in FY23.

Through our award-winning and market-leading approach to risk-based pricing, customers can already see their home’s risk ratings for floods and earthquakes[1] .

We believe risk-based pricing is a fairer way to price insurance as customers only pay for the risks that apply to their properties.

In the coming year, we will include pricing and customer-facing landslide and sea surge risk ratings for our customers’ homes.

Kiwi think risk-based pricing is a fair way to price insurance[2]

87[%]

1 Risk ratings may not be immediately available for customers if the address is not in our address database (for example, the property is a new build).
2 Independent research conducted by the Octopus Group in April 2023, with a sample size of 1,000 representative of NZ’s population.

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Increasing insurance accessibility with parametric insurance

Tower’s work to increase insurance awareness, accessibility and uptake in the Pacific through parametric insurance, continued in FY24.

Parametric insurance offers a lower-cost alternative that provides a level of cover for Pacific communities that may not benefit from traditional insurance.

2023

Nov - Announced partnership with global Insurtech CelsiusPro to upgrade our Cyclone Response Cover IT platform.

Oct - In partnership with the the United Nations Capital Development Fund (UNCDF), Tower featured on the world stage via a panel talking about parametric insurance in Ghana, at the International Conference for Inclusive Insurance 2023.

Dec - Launched parametric Cyclone Response Cover in Samoa in collaboration with the United Nations Capital Development Fund (UNCDF), under its flagship Pacific Insurance and Climate Adaptation Programme.

2024

Jul - Tower Parametric Product Manager Felichya Khan represented Tower as part of a UNCDF delegation that attended the 20th Asia NAT CAT and Climate Change Summit 2024, in the Philippines.

Aug - Reserve Bank of Fiji announced a collaboration with the InsuResilience Solutions Fund, and the local insurance sector, including Tower, to have 5,000 new parametric policies in place across Fiji by the end of 2025.

Sep - Launched new parametric platform for customers in Fiji and Tonga, with CelsiusPro, aiming to make it simpler for Tower customers to access and manage their parametric cover.

Oct - Tower Tonga Country Manager Manase Tafea, presented on parametric insurance at the 53rd Pacific Islands Forum Leaders Meeting, in Tonga.

Looking ahead

In the coming financial year, we plan to launch Cyclone Response Cover in the Cook Islands and add a new parametric rainfall product to our suite, for our Fiji market. Tower is also looking into opportunities to launch a parametric insurance product in NZ.

We look forward to continuing to partner with our communities in the other Pacific territories we operate in, all with the goal of increasing the uptake of insurance in the Pacific.

Promoting parametric at the Commonwealth Heads of Government Meeting 2024 (CHOGM), Business Forum

As an opportunity to expand the reach of our parametric offering, in October 2024, Tower was proud to partner with the Commonwealth Enterprise and Investment Committee, to attend CHOGM 2024 in Apia, Samoa.

Tower CEO Blair Turnbull featured on a tech and innovation panel, Tower Chief Underwriting Officer Ronald Mudaliar and Head of Pacific Retail Distribution Joanne Rasmussen, took part in roundtable discussions on unlocking green investment and risk mitigation, and leadership in island nations.

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Tower delegation at CHOGM 2024.
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Award winning Tower experience

Our product range is designed for the lifestyles of Kiwi and Pacific customers.

In recent years, we’ve added new products such as parametric, pet, travel, boat and contract works - renovation cover to our product suite.

At the same time, we’ve continued to phase out products that are not compatible with our digital customer experience.

That’s why, from February 2024 we stopped offering insurance for commercial farms. However, we continue to offer cover for lifestyle blocks under our strategy.

In FY24, our customer net promoter score (NPS) increased. The majority of NZ direct sales continue to come through our online channels.

Customer NPS[1] , up from +28 in FY23

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Members of Tower's product and marketing teams and Canstar
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18[%]

NZ sales online vs. 70% in FY23

Increase in new business house policies in FY24

63[%]

1 Three-month average as at 30 September 2024.

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Proud to partner

Our corporate, retail and advisory referral partnerships help us to scale efficiently, and deliver products in better ways for Kiwi and Pacific customers.

Our advisor referral model accounted for 42% of partnerships' GWP in FY24, with a 19% increase in risks sold through our advisor network.

TradeMe GWP grew 16% in FY24, accounting for 37% of partnerships’ GWP.

Building on the success of our partnership model, in FY24, we welcomed new partners Kiwibank and HealthCarePlus.

Tower also has referral agreements in place with New Zealand Financial Services Group, Kiwi Adviser Network, New Zealand Home Loans, Ray White Concierge, the New Zealand Defence Force and TSB.

These and other relationships have contributed to 24% increase in GWP from partnerships against FY23.

This year, we’re proud to mark three years of supporting Coastguard New Zealand to help bring Kiwi home safe.

19[%]

32[%]

$102m

Increase in new risks sold through our advisor network vs. FY23

Growth in advisor network to 3,300 vs. FY23

Partnerships' GWP, up 24% from FY23

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Kiwibank

We welcomed our first Kiwibank customers to Tower in early September. This partnership presents a strategic opportunity for Tower, aligning with our focus on growing our home insurance portfolio.

Our initial five-year referral agreement with Kiwibank allows their customers to insure their assets directly with Tower under Tower branded policies.

Supreme Award for Retention – First Place

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Most Outstanding Outbound Representative –
T ower Partnership Sales Consultant Molly Stokes
Outbound Business to Consumer Gold Award – Second Place

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Outbound Business to Business Silver Award – Third Place

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HealthCarePlus

HealthCarePlus is jointly owned by the five education unions and the Public Service Association, supporting more than 180,000 members across the teaching, tertiary and public service sectors.

Our partnership with HealthCarePlus provides its members with access to Tower’s products via the HealthCarePlus website and member platform.

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Welcoming the Kiwibank team to Tower.
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Using data driven decision-making to manage premiums and our business

Our commitment to careful risk selection and robust underwriting supports a strong core business, enabling us to offer tailored pricing to customers with lower risks.

Key to our resilience is our ability to monitor and adjust our pricing and underwriting to remain competitive and responsive to macroeconomic conditions.

As part of this, in FY23 and FY24, we tightened our risk appetite for vehicles with high theft-risks. This contributed to a reduction in customer numbers from 311,000[1] in FY23 to 305,000 in FY24, as Tower reduced high theft-risk motor policies by over 5,000 throughout the year.

As claims cost performance improved in certain customer segments, we were able to reduce some premiums.

Pricing and underwriting adjustments made across FY24

1 FY23 customer numbers have been adjusted to exclude sold and held for sale portfolios which include Papua New Guinea and Solomon Islands businesses, Vanuatu subsidiary, and exit of NZ rural commercial portfolio.

For our customers, this meant that as inflation began to settle later in the year, we moved quickly to moderate premium increases, particularly for low-risk assets.

A range of factors have influenced premium increases over recent years including; inflation, crime rates, weather events, reinsurance costs, and supply chain pressures.

This included a review of motor pricing performance for the 100 most common makes and models (including all years and specifications), representing 70% of Tower’s motor portfolio. The review led to a reduction in premiums of varying levels for 71% of the models reviewed.

While it costs more now to cover our customers and their assets, we continue to manage the impact of some increases in claims costs through business efficiencies, risk-based pricing, our claims transformation project and underwriting automation.

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Putting things right for our customers

An important part of delivering a positive customer experience is fixing things when we don’t get them right. We continue to focus on putting things right for customers who had not received the discounts or benefits they were entitled to.

Remediation activities are carried out by our Foundations First taskforce. You can read more about Foundations First on page 32 of this report.

This year, the FMA issued proceedings against Tower in respect of overcharges related to the application of its multi-policy discount. We continue to engage with the FMA in relation to our multi-policy discount remediation.

We’re pleased to have made significant progress towards remediating customers identified as being owed a premium refund, due to errors in applying our multi-policy discount.

As of 30 September 2024, we have identified refunds of around $12 million (including GST and interest) owed to 66,000 customers and have repaid over $11m.

Other remediations we have in progress relate to premium overcharges in connection with the application of promotions and policy discounts, and other policy errors. For all current customer remediations, we’ve provisioned $9.2m as at the end of FY24.

Tower's customer care centre.

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Operationally efficient

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Efficient and effective

In line with our strategy, throughout FY24 Tower continued to digitise and automate core processes, and leverage our geographical footprint to become more operationally efficient and effective.

The number of times customers made manual payments in My Tower, our top digital customer transaction in FY24

Management expense ratio (MER) down from 32% in FY23

31.4[%]

142,000

Combined operating ratio (COR) vs. 100.4% in FY23[1]

Sales and service calls answered in FY24, down from 380,000 in FY23

79[%]

329,000

Service tasks and transactions completed digitally in NZ, in line with FY23[2]

Hours, our average email response time in FY24 vs. 45 hours in FY23

45[%]

Decrease in NZ sales and service abandonment 2 rate, now at 8%

Minutes and 10 seconds, our average phone wait time in FY24 vs. 3 minutes and 33 seconds in FY23

5[%]

1 COR impacted by higher large event costs in FY23 (Auckland floods and Cyclone Gabrielle), and no large events in FY24.

2 Digital service tasks are any policy adjustments made through the My Tower portal divided by the total number of policy adjustments made. In prior years, multiple tasks completed on the same call were reported as one assisted transaction, which are now reported individually. Digital claims tasks refer to claim lodgement only.

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Claims transformation

Our claims transformation programme aims to harness data and technology to deliver straight through claims and repair experiences.

The programme began in FY23, with the ultimate goals of transforming and improving our claims experience, increasing transparency for customers and operating more efficiently and effectively.

In FY24, we continued to deliver on this ambition, automating key manual processes in our motor and home claims’ journeys.

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Continuing to automate the claims journey

In FY24, we continued to automate the claims journey for house customers in My Tower, using technology to deliver faster and more efficient claims management.

In March, we updated customers’ claims information in My Tower to include contact details for their claims manager. Claims managers are now automatically assigned at lodgment for house, motor and contents. This has helped lessen calls to our frontline teams and made things easier for our customers, with one clear point of contact for the duration of their claim.

In May, we automated the acceptance of house claims for our most common types of house claims: weather, accidental damage and escape of water claims (for example, water damage from a burst pipe). At the same time, we automated referrals to assessors or repairers for these types of claims. This means that claims of this type, that meet set criteria, are automatically accepted and or referred to an assessor or supplier for the next step in the settlement journey, without the need for manual review.

Since then, two thirds of customers who lodged a weather, accidental damage or escape of water claim in My Tower, have had their claim automatically accepted and or referred to an assessor or house supplier, without the need for manual processing or review.

While we experienced no large weather events in FY24, these changes will improve our efficiency and the customer experience during future events.

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Members of Tower's claims and assessing
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House claims lodged via My Tower automatically accepted and or referred to an assessor or supplier[1]

65[%]

Customers accessed their claims manager’s name and contact details via My Tower[2]

25,000

1 Applies to claims for weather, accidental damage or escape of water (collectively, our most common claims), since new system launched in May 2024.

2 Since feature launched in March 2024.

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Streamlining the motor repair journey

In April, we announced that we had partnered with Hello Claims to integrate their assessing and repair management platform into our online systems, starting in June.

64[%]

Claims now lodged online vs. 59% in FY23

48[%]

BAU claims ratio vs. 55% in FY23

Previously, it took up to four days on average to accept a claim, allocate an assessor, process a quote and authorise work for panel repairs.

Since integrating the new platform into our internal referral process, when customers lodge a claim in My Tower and use our Repair Partner Network, our repair partners automatically receive a referral as soon as the claim is accepted.

They are then able to make contact and organise assessments or repairs, without Tower needing to manually refer customers or sign off repair quotes.

We have been working closely with repairers, as we embed this new assessing and repair platform into our systems. Full integration will be completed in early 2025 and will enable customers to view their motor claims status at every point of the claims journey via My Tower.

Members of Tower's claims and assessing team with a member of our Repair Partner Network.

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Delivering operational efficiencies

This year, Tower was proud to mark 150 years of operation in Fiji and open our new Suva hub.

Our Suva hub is a modern work environment that presents a strategic advantage for Tower. A range of business units from finance and human resources to marketing and claims are represented in Fiji.

Our core platform unifies our operations, allowing us to function as one Tower across all markets we serve. Over the year, this saw an increase in the volume of sales and service tasks handled by our Fiji team, for our New Zealand customers.

The ability to flex resources across locations and departments to meet demand helps us deliver a consistent experience for all our customers, while increasing business resilience.

“We are opening doors to opportunity, growth and prosperity...Tower, over the years, has shown a steadfast commitment to enhancing the landscape of Fiji. I also acknowledge Tower’s continuous efforts to enhance efficiency, productivity, and employee development.”

- The Hon. Professor Biman Prasad, Deputy Prime Minister of Fiji, at the opening of Tower’s Suva hub, in February.

150

100[%]

80[%]

300[+]

94[%]

55[%]

Years in operation

Of Tower Fiji staff are locals

Of Tower Fiji’s leadership team are women

Team members across all multiple business functions

Of staff have previous experience in international businesses

Of NZ sales and service calls answered by Suva hub vs. 16% in FY23

The Hon. Professor Biman Prasad, Deputy Prime Minister of Fiji.

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Doing business in Fiji makes good business sense

In June, the Rt. Hon. Christopher Luxon, Prime Minister of New Zealand visited our Suva hub, as part of the New Zealand government’s Pacific trade visit.

The visit was a chance for Tower to showcase our people, the benefits of our Suva hub, and our parametric cyclone product.

“To see an incredible business like we saw this morning with Tower actually, that is trailblazing a world class organisation here in Suva.”

- The Rt. Hon. Christopher Luxon, Prime Minister of New Zealand, The Fiji Times, June 7 2024.

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The Rt. Hon. Christopher Luxon, Prime Minister of New Zealand at our Suva hub.
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Streamlining and strengthening our Pacific operations

In FY24 we completed the sales of our Solomon Islands business and Vanuatu subsidiary.

This follows the sale of the Papua New Guinea subsidiary in FY23. The establishment of our new Suva hub and these sales reinforce the actions Tower has taken over the last three years to streamline our Pacific operations, refine our risk appetite, and enhance our digital and operational proposition in key Pacific markets.

Our remaining Pacific businesses in Fiji, Tonga, Samoa, American Samoa and the Cook Islands have the infrastructure required to successfully operate and upgrade My Tower.

These capabilities are crucial to our strategy to deliver a leading customer experience for personal lines and small to medium enterprises (SMEs) in the Pacific.

Pacific markets; Fiji, Tonga, Samoa, American Samoa, and the Cook Islands

$ m 48

Pacific GWP, a 2%[1] decrease from FY23

1 Adjusted to exclude divested portfolios which include the Solomon Islands business and Vanuatu subsidiary.

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Team members at Tower’s Suva hub.
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Here for our customers at claims time

We’re committed to helping customers recover from a loss at claims time – it’s what we are here for.

While we experienced no large weather or natural hazard events in New Zealand or across the Pacific in FY24, we still helped our customers protect the things that matter to them, reporting 67,500 everyday claims*.

12,200 4,000 1.5[%] 219

NZ motor claims for damage that occurred while stopped or parked

Travel insurance policies for trips to Australia, our most popular destination

Boat claims were for mishaps while fishing on jet skis

New couches supplied to living rooms throughout NZ

1,100

14[%] 8.5[%] 2,200

Kiwi house claims for garages, mostly due to damage by a vehicle or trailer

Of travel claims were for baggage and personal effects in FY24

Boat claims happened on the way to or after leaving the boat ramp

Claims for new glasses, mostly due to sitting on them

While there were no large weather events in FY24, our everyday claims figure still includes claims for weather related damage.

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13,300

1,700

1,600

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Claims for Pacific homes

Claims for Kiwi homes

Smashed window claims for Kiwi homes

Pacific motor claims

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Strengthening the foundations of our business

We launched Foundations First, in April 2024, a strategically important programme for our business.

Key projects under Foundations First include:

Carrying out all customer remediations
Investigating root causes of various incidents with a view to developing strategies to address those root causes
Enhancing delivery and project execution
Improving end-to-end customer data management at Tower.

The Foundations First programme will ultimately drive outcomes that will help increase business resilience to support good customer experiences and sustainable growth in a competitive market.

Our Foundations First programme is complemented by Tower's process excellence initiative, which focuses on end-to-end process simplification and risk reduction opportunities.

Tower's customer care centre.

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Robust reinsurance to support growth and strong solvency

Tower’s reinsurance arrangements limit Tower’s exposure to the impacts of large events and maintain financial flexibility to support growth, while underpinning strong solvency.

We renewed our reinsurance programme for FY25, with comprehensive reinsurance cover at competitive rates for our home, motor, boat and commercial portfolios across New Zealand and our Pacific markets.

To support growth and align with our prudent risk appetite, Tower’s FY25 reinsurance programme includes:

Increased catastrophe upper limit of $800m for the first two events, up from $750m in FY24
Increased cover for a third catastrophe event up to $85m, up from $75m in FY24
Reinsurance excess of $18.75m for the first two events, up from $16.9m in FY24, due to expiring multi-year arrangements

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$20m excess for a third event, unchanged from FY24.

Tower’s focus on risk-based pricing combined with our dynamic rating ability helped us secure favourable terms for our FY25 reinsurance. We’ve further strengthened relationships with global reinsurers, with several agreeing to new multi-year arrangements, providing greater long-term certainty of reinsurance costs and catastrophe excesses.

Securing a programme with stable excesses and pricing helps us to maintain competitive pricing for customers.

$ m 800

$ m 85

Cover in place for first two catastrophe losses in FY25

Cover in place for a third catastrophe event in FY25

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Our people come first

Twice a year we ‘check in’ via employee engagement surveys, which have shown increasing levels of engagement and connection to Tower.

We’re committed to making Tower an even better place to work, enabling us to attract and retain talented individuals and empower our teams to do great things.

We know that diversity is essential for a business to thrive, innovate and succeed in a competitive market so we’re proud to share that all our employee diversity and inclusion (D&I) scores, have continued to increase.

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Tower head office celebrating being announced as a finalist in the 2024 ANZIIF
New Zealand Insurance Industry Awards’ Excellence in Workplace DE&I category.
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In our latest survey* our overall D&I score was 8.9, up from 8.6 in FY23, placing Tower in the top 10% of the global finance sector. Inclusiveness, feeling valued and belonging all received scores of 8.4, marking an increase of 0.1-0.4 compared to FY23.

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Employee engagement score*

8.1

Employees are non-European, based on the 92% of staff who chose to disclose their ethnicity

68[%]

[As at 13 September 2024, based on Tower’s latest staff engagement survey]

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Quarterly staff awards for living our values.
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Committed to our people

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Looking after our people

We know that by taking care of our people, we enable them to show up in the best way possible for our customers.

In FY24 we continued to enhance the Tower experience for our people. We offer a range of benefits and flexible working options, including the ability to use discretionary leave and purchase up to eight additional days beyond the initial four-week entitlement, to help employees proactively manage their personal and family wellness. In the year we also ran 18 financial and emotional wellbeing sessions for our teams.

All of these actions contributed to our high employee health and wellbeing score, at 8.5*, in the top 25% of the global finance sector.

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Fiji Human Resources Institute Awards, Silver Award for HR Practicing Leader 2024 – Monish Chand

*[As at 13 September 2024, based on Tower’s latest staff engagement survey]

Weeks full pay parental leave for primary carers

Weeks full pay for partners (all parental leave also applied to adoptions)

Days wellbeing leave

Day of volunteer leave per year

Paid day off on or near your birthday

Gender affirmation leave

The Tower American Samoa team.

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The Tower Tonga team.
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Tower became one of the first 50 businesses to join New Zealand’s Mind the Gap register in 2022, to publicly report on pay gap data.

Our FY24 pay equity data is below.

20.2[%]

0.9[%]

-4.6[%]

0.1[%]

Gender pay gap

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 20.2% for our workforce in New Zealand, and a gap of 9.5% for our work workforce in Fiji. For the most part, this is because we have a larger proportion of of women in frontline roles.

Gender pay equity gap

When we compare like-for-like roles for women and men, our pay equity gap is 0.9% for our workforce in New Zealand, and 1.9% for our workforce in Fiji (men are paid 0.9% more than women for the same role in New Zealand and 1.9% more in Fiji).

Leadership gender pay gap

Comparing our senior leadership population and the average pay gap between men and women, our New Zealand leadership pay gap is -4.6% (women are paid 4.6% more than men, this is because our lower level leadership roles have a higher proportion of men, which impacts the overall weighted average).

Leadership gender pay equity gap

When we compare like-for-like roles for our leadership population at Tower in New Zealand, our leadership pay equity gap is [0.1%] (men are paid 0.1% more than women for the same role).

Staff at Tower's head office.

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For Tower, by Tower people

Our employee representation groups (ERGs) champion the unique backgrounds and perspectives of our teams.

They work to enhance, celebrate and continuously improve diversity, equity and inclusion in our organisation, and regularly contribute to our fortnightly all staff meetings.

In FY24 our ERGs led events, among others, for Matariki, Diwali, Lunar New Year, Te Wiki o te Reo Māori, other language weeks for our Pacific operations, and raised over $10,800 for Sweat with Pride 2024 (one of the top 10 highest contributions by a workplace in New Zealand).

30[%]

of Tower staff are members of an ERG

ERGs at Tower

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1 2 3
4 5 6
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Rainbow Network (LGBTIQ+).
We@Tower Group (celebrates cultural diversity).
Mana Wahine Toa (women’s network).
Mera Hanua (celebrates cultural diversity in Fiji).
Ahi Kā (Māori roopu).
Tower Bula Fiji (focused on staff wellbeing).
SPARK (supporting physical and neurodiversity, advocacy, respect and knowledge) Network.

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Strengthening our culture of risk awareness

Risk management is central to Tower’s strategic and operational activities and is underpinned by Tower’s enterprise-wide Risk Management Framework (RMF).

The RMF sets out guiding principles to enable Tower to identify, assess, monitor and mitigate risk to support the achievement of our strategic objectives.

Part of this strategy in FY24, was to enhance Tower’s culture of risk awareness. During the year, this included strengthened risk assessment and incident management practices and a dedicated focus on process excellence. Tower’s work on conduct through the Conduct of Financial Institutions (CoFI) lens will further advance fair customer outcomes. Through Foundations First, root cause analysis was also undertaken to understand and address key issues and causes of incidents across people, processes, systems, and culture.

Pleasingly, in FY24 we saw an uplift in all employee scores for risk culture and awareness*.

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Staff at Tower's head office.
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8.3

Employee score for ‘managing risks across our business is a part of Tower’s culture’, up 0.2 in FY24*

Risk Culture employee score, up 0.2 in FY24* 8.6

Employee engagement surveys are run twice yearly, in March and September, scores are compared from our March 2024 survey and our latest survey, completed September 13 2024.

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Fostering a more sustainable business for our customers, communities and planet

Our sustainability strategy guides how we manage relevant environmental, social and governance issues and provides a framework for managing our most material impacts. It was developed to enable us to deliver on our company purpose:

To inspire, shape and protect the future for our customers and communities.

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DIVERSE AND THINKING AHEAD
INCLUSIVE TO THE CORE FOR OUR PLANET
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A diverse and inclusive workplace that builds Moving all aspects of our business towards
people’s physical and emotional wellbeing. zero-carbon and zero waste, and ensuring we
have a positive impact on Aotearoa and the
Pacific, now and in the future.
PEOPLE’S GO-TO TRUSTED HELPING COMMUNITIES NAVIGATE
INSURANCE PARTNER CLIMATE CHANGE
Providing no-surprises, easy to understand Championing informed dialogue about
insurance that is accessible and affordable. climate change and pursuing win-win
outcomes that tackle sustainability issues.
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ANNUAL REPORT 2024

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ESG Governance

Tower’s Board promotes the development of Tower’s ESG practices, monitoring performance via periodic management updates.

ESG governance is formalised through an executive-level steering committee, chaired by our CEO, which oversees progress on our initiatives and monitors environmental and social risks. Our ESG performance is coordinated by the Head of Corporate Affairs and Sustainability and supported by our Sustainability Manager.

In FY24 Tower delivered its first Climate Related Financial Disclosures (CRD). This work included the development of a new governance framework which covers ESG and climate change issues. You can find detailed information about our governance of climate change and ESG issues in our 2024 Climate Statement, in the sustainability section of our website.

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Bringing our people on the sustainability journey

This year we focused on upskilling our people on sustainability issues to further embed a culture of sustainability across our business activities.

During the year, senior leaders and other team members took part in training focused on the fundamentals of sustainability, climate change and relevant legislative and regulatory requirements.

Staff attended Sustainability Foundations Training. The sessions provided participants with a clear understanding of key sustainability concepts.

Staff completed Climate Fresk training. Delivered to more than 1.7m people globally, Climate Fresk teaches the basics of climate science in a fun and interactive workshop that explores the causes and effects of climate change and empowers people to take high impact actions. During the year, Tower also hosted two community Fresk workshops, at our head office.

Executive and Senior Leadership team members completed training on climate disclosures and Tower’s Climate-Related Disclosure obligations.

We hosted four virtual all-staff lunch-and-learn sessions for Plastic Free July, focusing on the uses and types of plastics, as well as strategies to eliminate single-use plastics from our home and work environments. These sessions aimed to encourage our staff to make more sustainable choices.

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Staff at Tower's head office.
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Tower Climate Change Scholarship

We're proud to support the next generation of climate leaders.

Tower has supported students studying the University of Waikato’s (UoW) world-first Bachelor of Climate Change degree since its inception in 2021, offering three $5,000 scholarships annually to assist students in their studies.

In FY24 we were pleased to announce Maia Waudby and Hannah Dagger as the 2024 Tower Climate Change Scholarship recipients. Both Maia and Hannah are aiming to use their studies to mitigate the adverse effects of climate change on Māori and Pacific communities.

As a Kiwi and Pacific insurer, we’re acutely aware of the climate risks faced by island communities and are inspired by Maia and Hannah’s passion for helping our communities navigate the impacts of climate change.

In the year, Maia and other third-year UoW students worked on a project for Tower, to identify initiatives to reduce Scope 3 insured emissions related to customer assets.

During a briefing at our Auckland office, students learned about insurance fundamentals, Tower’s current methodology for calculating insured emissions, and reviewed relevant international case studies.

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UoW student briefing for emissions reduction project.
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In FY25, we will evaluate the students’ proposals to identify the most impactful opportunities for decarbonisation, while considering the needs of our communities, customers, other stakeholders and business.

“The scholarship is definitely a big help. It’s nice to know that there’s a big insurance company out there in Tower, that supports what you do.”

– Maia Waudby,

Tower Climate Change Scholarship recipient.

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Tower Vunilagi Scholarship

During celebrations to mark 150 years in operation in Fiji, we launched the Tower Vunilagi Scholarship.

Launched in June, each year the Tower Vunilagi Scholarship will be awarded to students who demostrate potential to be future Tower leaders, helping us build an even better business and create a more equitable, resilient and sustainable future for all Fijians.

Reflecting the purpose of the scholarship, the word ‘vunilagi’ means ‘new horizons’.

The scholarship covers a full year of tuition fees for three students in their final year of bachelor’s degree study at The University of the South Pacific (USP).

Recipients will also complete paid internships with Tower.

This year’s successful applicants; Shaunil Chand (Bachelor of Commerce, Accounting and Finance), Shayal S Gosai (Bachelor of Commerce, Accounting and Finance) and Saula Baleinubu (Bachelor of Arts in Social Work and Sociology), will begin their internships with Tower Fiji in the first half of FY25.

Tower leadership team members with the 2024 Tower Vunilagi Scholarship recipients.

“This scholarship serves as a catalyst for personal growth, equipping me with essential skills while fostering connections that will enhance my capacity as a future leader in my home country.”

- Saula Baleinubu, Tower Vunilagi Scholarship recipient.

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2,300 hours of volunteering by our people

At Tower, permanent, full-time employees receive one annual volunteer leave day to support a cause they are passionate about.

Teams can decide on projects together, or individual staff members choose a cause close to their hearts to support.

We relaunched our volunteer leave programme in Q4 of FY23, with a target of 1,000 volunteer hours spent in our communities for FY24.

In line with our purpose, we’re proud to report that our teams recorded 2,300 hours of volunteer leave in FY24, up from 390 hours in FY23.

We look forward to building on our volunteer efforts in FY25 and have set a target of 2,500 hours.

“We’ve been receiving food from Fair Food since our programme began, and we remain so incredibly grateful. Fair Food is part of helping our women succeed.”

– Helen,

Fair Food Young Mums Programme.

Mural painting at the National Council for Persons with Disabilities' school, Fiji.

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Fair Food, New Zealand.
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Volunteering at Papatoetoe Central School, NZ.

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Beach cleanup, American Samoa.
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Future focused for our planet

FY24 is our first year of mandatory disclosure, under the Climate-Related Disclosure regime.

Tower has tracked Scope 1, 2 and selected Scope 3 emissions for our operations across New Zealand and the Pacific since 2020.

In FY24 we reduced our Scope 1 and 2 emissions by 20% from our 2020 baseline and by 9% compared to FY23. Our full greenhouse gas emissions report is provided in our Climate Statement 2024, which is in the sustainability section of our website. The Statement contains our Scope 1, Scope 2 and operational Scope 3 emissions data, as well as information about our work to identify and assess our climate related risks, opportunities and business impacts.

In FY25, we will also assess material Scope 3 emissions related to the assets we insure and our supply chain. This will help us better understand our upstream and downstream carbon footprint, including contributions from our partners and customers, and support a low emission, climate resilient future.

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Material impacts

Each financial year, we review the material impacts identified in our baseline FY21 Materiality Assessment, which serves as the foundation of our 2020-2025 Sustainability Strategy.

Our priority impacts remained unchanged in FY24. However, given New Zealand’s cost of living crisis, there is a greater need to support affordable and accessible insurance products for our communities. Our ways to save and pricing and underwriting features on pages 13 and 20 outline some of the actions we are taking to manage this challenge.

B Corp

In FY24, work continued towards obtaining B Corp certification. Tower completed the B Corp Business Impact Assessment and has submitted its application for certification. We are currently in the evaluation stage, working with B Corp to advance to the verification stage. We look forward to sharing more information with the market as our application progresses.

Our 12 most material topics are;

affordable and accessible insurance,
diversity and inclusion,
employee wellbeing,
transparent insurance,
product development and innovation,
data protection,
managing the impacts of climate change,
corporate and community citizenship,
carbon emissions,
corporate governance,
environmental footprint,
responsible investment.

The details of Tower’s material impacts including the actions we are taking to manage these, and our targets are available in our material impacts table, which can be found in the sustainability section of our website.

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Board of Directors

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Michael Stiassny

LLB, BCom, CFInstD Independent Chairman Director from: 12 October 2012 Non-Executive Director

Michael holds both a Commerce and Law degree from the University of Auckland and is a Chartered Fellow and past President of the Institute of Directors. Michael has enjoyed a high-profile governance career and is currently Chairman of 2 Cheap Cars Group Limited, and director of Momentum Life Insurance Limited, Tegel Group Holdings Limited, and New Talisman Gold Mines Limited.

With a keen interest in fostering successful next generation New Zealand businesses, Michael also dedicates significant time to start ups and championing entrepreneurship through his involvement in Founders Advisory.

Michael resides in Auckland — New Zealand.

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Graham Stuart

BCom (Hons), MS, FCA Independent Non-Executive Director Director from: 24 May 2012

Graham is an experienced Director, with over 30 years’ experience in governance roles in New Zealand and internationally. He is currently the Chair of NorthWest Healthcare Property Management Limited and Comhla Vet Limited and a Director of VinPro Limited. Previous executive roles include Sealord Group CEO, Fonterra Co-operative Group CFO and Director of Strategy and, Lion Nathan International Managing Director.

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. He has served on multiple Government bodies including the Food & Beverage Taskforce, Māori Economic Development Panel and as Chair of the Lincoln Hub Establishment Board.

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Geraldine McBride

BSc Independent Non-Executive Director Director from: 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, IBM, National Australia Bank and Fisher & Paykel Healthcare. 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 resides in Christchurch — New Zealand.

Graham resides in Auckland — New Zealand.

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Marcus Nagel

MBA (International Management), Non-independent MBA (Banking and Finance) Director from: Non-Executive Director 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. 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 20.00% of Tower’s ordinary shares) and his appointment was supported by the Tower Board. Marcus resides in Schindellegi — Switzerland.

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Mike Cutter

Independent Director from: 17 November 2023

BSc (Hons) GAICD Non Executive Director

Mike has significant experience in a range of financial services businesses in Australia, New Zealand, Asia and Europe. He is the Chair of Arteva Funding and Fairway Group Limited, and a Non-Executive Director of Pepper Money. He is the co-founder of Kadre, a credit risk management consultancy.

Mike has recently served as interim Managing Director for Bambora Aus and was previously the Group Managing Director for Equifax ANZ. Before this he held various senior roles with GE, ANZ, Wesfarmers/OAMPS Insurance Brokers, Halifax/BankOne and NAB.

Mike is a Senior Fellow of Financial Services Institute of Australia. He has served on the Boards of the Women’s Cancer Foundation, Ovarian Cancer Institute, the Australian Finance Congress, the National Insurance Brokers Association and the Australian Retail Credit Association.

Mike resides in Melbourne – Australia.

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Financial Statements

Financial Statements
Consolidated statement of comprehensive income	54
Consolidated balance sheet	55
Consolidated statement of changes in equity	56
Consolidated statement of cash flows	57

Notes to the consolidated financial statements

1	Overview	58
1.1	About this report	58
1.2	Consolidation	58
1.3	Critical accounting judgements and estimates	60
1.4	Changes in accounting policies and disclosures	60
1.5	Segmental reporting	61
2	Insurance and reinsurance contracts	63
2.1	Insurance and reinsurance contracts accounting policies	63
2.2	Insurance service expense and other operating expenses	65
2.3	Net insurance finance expense	66
2.4	Insurance and reinsurance assets and liabilities	66
2.5	Receivables	73
2.6	Payables	74
2.7	Provisions	74
3	Investments and other income	75
3.1	Investment income	75
3.2	Investments	75
3.3	Other income	76
4	Risk management	76
4.1	Risk management overview	76
4.2	Strategic risk	77
4.3	Insurance risk	77
4.4	Credit risk	78
4.5	Market risk	80
4.6	Liquidity risk	81
4.7	Capital management risk	82
4.8	Operational risk	83
4.9	Regulatory and compliance risk	83

4.10	Conduct risk	83
4.11	Cyber risk	83
4.12	Environment, Social and Governance (ESG) risk	84
5	Capital structure	84
5.1	Contributed equity	84
5.2	Reserves	85
5.3	Net tangible assets per share	85
5.4	Earnings per share	85
5.5	Dividends	85
6	Other balance sheet items	86
6.1	Property, plant and equipment	86
6.2	Intangible assets	87
6.3	Leases	89
7	Tax	91
7.1	Tax expense	91
7.2	Current tax	91
7.3	Deferred tax	92
7.4	Imputation credits	93
8	Other information	94
8.1	Notes to the consolidated statement of cash flows	94
8.2	Related party disclosures	95
8.3	Auditor's remuneration	95
8.4	Discontinued operations	96
8.5	Tower Long-Term Incentive Plan	97
8.6	Contingent liabilities	98
8.7	Capital commitments	98
8.8	Subsequent events	98

Independent Auditor's report, and Appointed Actuary's report

Independent Auditor's report	99
Appointed Actuary's report	103

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Consolidated statement of comprehensive income

FOR THE YEAR ENDED 30 SEPTEMBER 2024

			RESTATED
		2024	2023
	NOTE	$000	$000
Insurance revenue		555,818	472,611
Insurance service expense	2.2	(381,608)	(604,851)
Insurance service result before reinsurance contracts held		174,210	(132,240)
Net (expense)/income from reinsurance contracts held		(91,364)	124,360
Insurance service result		82,846	(7,880)
Investment income	3.1	21,800	14,627
Investment expense		(250)	(298)
Net investment income		21,550	14,329
Finance expense from insurance contracts issued	2.3	(5,592)	(1,510)
Finance income from reinsurance contracts held	2.3	3,020	162
Net insurance finance expense		(2,572)	(1,348)
Net insurance and investment result		101,824	5,101
Other income		4,064	5,727
Other operating expenses	2.2	(2,348)	(2,145)
Finance costs		(882)	(920)
Profit before taxation from continuing operations		102,658	7,763
Tax expense from continuingoperations	7.1	(31,774)	(5,176)
Profit after taxation from continuing operations		70,884	2,587
Profit/(loss) after taxation from discontinued operations	8.4	3,401	(3,609)
Profit/(loss) after taxation for theyear		74,285	(1,022)

	NOTE	2024 $000 RESTATED 2023 $000
Items that may be reclassified to profit or loss
Currency translation differences		(1,308) (1,494)
Reclassification of the foreign currencytranslation reserve	8.4	410 544
Other comprehensive loss net of taxation		(898) (950)
Total comprehensiveprofit/(loss) for theyear		73,387 (1,972)
Earnings per share:
Basic earnings per share (cents) for continuing operations	5.4	18.7 0.7
Basic earnings per share (cents) for profit attributable to
shareholders	5.4	19.6 (0.3)
Profit/(loss) after taxation attributed to shareholders		74,285 (1,022)
Total comprehensiveprofit/(loss) attributed to shareholders		73,387 (1,972)

Refer to note 1.1d for further details of the restatement of the comparative period. The above statement should be read in conjunction with the accompanying notes.

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Consolidated balance sheet

AS AT 30 SEPTEMBER 2024

			RESTATED
	2024	2023	2022
	NOTE $000	$000	$000
Assets
Cash and cash equivalents	8.1 75,390	64,009	84,502
Investments	3.2 367,506	258,798	258,634
Receivables	2.5 19,799	16,797	13,408
Current tax assets	7.2a 13,222	12,917	13,069
Assets classified as held for sale	8.4 –	11,505	16,673
Reinsurance contract assets	2.4 35,503	147,236	26,918
Deferred tax assets	7.3a 382	16,074	16,492
Right-of-use assets	6.3a 19,990	23,204	23,326
Property, plant and equipment	6.1 6,735	6,280	5,417
Intangible assets	6.2 96,621	98,524	94,653
Total assets	635,148	655,344	553,092
Liabilities
Payables	2.6 32,287	18,378	20,861
Insurance contract liabilities	2.4 177,569	285,809	164,912
Current tax liabilities	7.2b 606	198	136
Liabilities classified as held for sale	8.4 –	7,609	5,119
Provisions	2.7 21,959	12,823	11,873
Lease liabilities	6.3a 28,855	32,615	35,054
Deferred tax liabilities	7.3b 13,716	178	339
Total liabilities	274,992	357,610	238,294
Net assets	360,156	297,734	314,798

			RESTATED
		2024 2023	2022
	NOTE	$000 $000	$000
Equity
Contributed equity	5.1	460,734 460,315	460,191
Retained earnings/(losses)		4,428 (58,473)	(43,942)
Reserves	5.2	(105,006) (104,108)	(101,451)
Total equity		360,156 297,734	314,798

Refer to note 1.1d for further details of the restatement of the comparative periods. The above statement should be read in conjunction with the accompanying notes.

The financial statements were approved for issue by the Board on 28 November 2024.

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Graham R Stuart

Michael P Stiassny Chairman

Director

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Consolidated statement of changes in equity

YEAR ENDED 30 SEPTEMBER 2024

ATTRIBUTED TO SHAREHOLDERS

			RETAINED
		CONTRIBUTED	EARNINGS/
		EQUITY	(LOSSES)	RESERVES	TOTAL EQUITY
	NOTE	$000	$000	$000	$000
*Year Ended 30 September 2024*
Balance as at 30 September 2023 (restated)		460,315	(58,473)	(104,108)	297,734
*Comprehensive income*
Profit for the year		–	74,285	–	74,285
Currency translation differences		–	–	(1,308)	(1,308)
Reclassification of foreign currencytranslation reserve toprofit or loss	8.4	–	–	410	410
Total comprehensive income		–	74,285	(898)	73,387
*Transactions with shareholders*
Dividends paid	5.5	–	(11,384)	–	(11,384)
Share rights issued under Tower Long-Term Incentive Plan	8.5	419	–	–	419
Total transactions with shareholders		419	(11,384)	–	(10,965)
At the end of theyear		460,734	4,428	(105,006)	360,156
Year Ended 30 September 2023
Balance as at 30 September 2022 originally reported		460,191	(41,212)	(101,451)	317,528
Adjustment on initial application of NZ IFRS 17 on 1 October 2022	1.4	–	(2,730)	–	(2,730)
Restated balance at beginning of the year		460,191	(43,942)	(101,451)	314,798
Comprehensive loss (restated)
Loss for the year		–	(1,022)	–	(1,022)
Currency translation differences		–	–	(1,494)	(1,494)
Reclassification of foreign currency translation reserve to profit or loss	8.4	–	–	544	544
Revaluation surplus transferred to retained earnings	5.2	–	1,707	(1,707)	–
Total comprehensive loss (restated)		–	685	(2,657)	(1,972)
Transactions with shareholders
Dividends paid		–	(15,216)	–	(15,216)
Share rights issued under Tower Long-Term Incentive Plan	8.5	124	–	–	124
Total transactions with shareholders		124	(15,216)	–	(15,092)
At the end of theyear (restated)		460,315	(58,473)	(104,108)	297,734

Refer to note 1.1d for further details of the restatement of the comparative period.

The above statement should be read in conjunction with the accompanying notes.

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Consolidated statement of cash flows

FOR THE YEAR ENDED 30 SEPTEMBER 2024

			RESTATED
		2024	2023
	NOTE	$000	$000
Cash flows from operating activities
Premiums received for insurance contracts issued		560,514	482,701
Insurance acquisition costs paid		(68,119)	(58,441)
Reinsurance paid		(72,944)	(69,508)
Interest received		17,606	11,611
Fee and other income received		2,857	2,920
Insurance claims paid and other insurance service expenses		(386,791)	(420,279)
Reinsurance recoveries received		91,551	78,487
Other operating payments		(2,348)	(2,145)
Income tax paid		(1,011)	(1,805)
Operatingactivities cash flow from discontinued operations		3,872	(15,276)
Net cash inflow from operating activities	8.1	145,187	8,265
Cash flows from investing activities
Proceeds from sale of interest bearing investments		404,097	256,607
Payments for purchase of interest bearing investments		(503,035)	(255,111)
Payments for purchase of intangible assets		(17,395)	(15,299)
Payments for purchase of customer relationships	6.2	–	(5,900)
Proceeds from sale of property, plant & equipment		30	5,746
Payments for purchase of property, plant & equipment		(2,360)	(2,557)
Net proceeds from sale of discontinued operations		2,019	2,658
Investingactivities cash flow from discontinued operations		76	1,427
Net cash outflow from investing activities		(116,568)	(12,429)

	NOTE	2024 $000 RESTATED 2023 $000
Cash flows from financing activities
Dividends paid		(11,384) (15,213)
Payments relating to lease liabilities	6.3	(5,064) (6,980)
Financingactivities cash flow from discontinued operations		(25) (56)
Net cash outflow from financing activities		(16,473) (22,249)
Net increase/(decrease) in cash and cash equivalents		12,146 (26,413)
Effect of foreign exchange rate changes		(2,067) (575)
Cash and cash equivalents at the beginningof theyear		65,311 92,299
Cash and cash equivalents at the end of theyear		75,390 65,311
Cash from discontinued operations	8.4	– 1,302
Cash and cash equivalents at the end of the year
from continuing operations		75,390 64,009

Refer to note 1.1d for further details of the restatement and re-presentation of the comparative period. The above statement should be read in conjunction with the accompanying notes.

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Notes to the consolidated financial statements

1 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 28 November 2024. 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 Accounting Standards (IFRS Accounting Standards), 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. Restatement and re-presentation of comparatives

As a result of the adoption of NZ IFRS 17 Insurance Contracts (NZ IFRS 17), there have been restatements made to the comparatives as at 30 September 2023. There are also changes in presentation of the consolidated statement of comprehensive income, consolidated balance sheet and consolidated statement of cash flows. Refer to note 1.4a for further details.

In addition to the restatements due to the adoption of NZ IFRS 17 there has been certain reclassifications in the cash flow statement to ensure the consistency in the presentation in the current year.

e. Discontinued operations

The Group's Solomon Islands Operations (disposal group), and Vanuatu Operations (disposal group) were disposed in the year ended 30 September 2024.

All disposal groups together form the "discontinued operations". Profit or loss information for the current period is prepared on a continuing basis with net results from discontinued operations presented separately. Refer to note 8.4 for further details.

The activities of the businesses have been reported in the current period, and as at 30 September 2023, as a discontinued operation.

1.2 Consolidation

a. Principles of consolidation

The Group financial statements incorporate the assets and liabilities of all subsidiaries of the Company at reporting 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.

Intercompany transactions and balances between Group entities are eliminated on consolidation.

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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 (FCTR) 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 reporting 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 FCTR and recognised in the statement of comprehensive income and the statement of changes in equity.

c. Subsidiaries

The table below lists Tower Limited’s principal subsidiary companies and controlled entities. All entities have a balance date of 30 September.

balance date of 30 September.
NAME OF COMPANY INCORPORATION	HOLDINGS
	2024 2023
Parent Company *New Zealand general insurance operations* Tower Limited NZ Subsidiaries *Overseas general insurance operations* Tower Insurance (Cook Islands) Limited Cook Islands Tower Insurance (Fiji) Limited Fiji Tower Insurance (PNG) Limited PNG National Pacific Insurance Limited Samoa National Pacific Insurance (Tonga) Limited Tonga National Pacific Insurance (American Samoa) Limited American Samoa Tower Insurance (Vanuatu) Limited Vanuatu *Management service operations* Tower Services Limited NZ Tower GroupServices (Fiji) Pte Limited Fiji	Parent Parent 100% 100% 100% 100% 0% 0% 100% 100% 100% 100% 100% 100% 0% 100% 100% 100% 100% 100%

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 FCTR 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.

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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:

Insurance and reinsurance contracts

Premium allocation approach (PAA) eligibility note 2.1 Identification of groups of onerous contracts note 2.1

Liability for incurred claims and reinsurance asset for incurred claims, including risk adjustment and the confidence level used
including risk adjustment and the confidence level used note 2.4
— Compliance and remediation provision note 2.7 — Intangible assets note 6.2 — Lease liabilities (incremental borrowing rate) note 6.3a(ii) — Deferred tax note 7.3
Compliance and remediation provision

1.4 Changes in accounting policies and disclosures

a. New standards and interpretations

Tower adopted NZ IFRS 17 Insurance Contracts (NZ IFRS 17) from 1 October 2023. NZ IFRS 17 replaces the guidance in NZ IFRS 4 Insurance Contracts (NZ IFRS 4) and establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. There has been no material impact to Tower's profitability or strategies, with the main impact being on the disclosure and presentation of financial information. Tower has not adopted any other standard, amendment or interpretation with a material effect on Tower.

Accounting policy change

Tower has applied the PAA to the measurement of all insurance contracts issued and reinsurance contracts held by Tower. The PAA is a simplified measurement model in comparison with the general model under NZ IFRS 17, it is similar to the previous measurement model used for general insurance under NZ IFRS 4.

NZ IFRS 17 introduces several new concepts, including:

Measuring insurance contract assets and liabilities separately from reinsurance contract assets and liabilities.
Onerous contracts, where losses from unprofitable contracts are recognised when onerous contract testing shows that the fulfilment cash flows of a group of insurance contracts is likely to be greater than the carrying value of the liability for remaining coverage (LRC).
LRC, which reflects the insurance coverage expected to be provided by Tower after the reporting date.
Liability for incurred claims, which reflects the remaining liability for insurance claims that occurred prior to the reporting date, adjusted for the time value of money. The liability also includes an explicit risk adjustment for non-financial risks.
Reinsurance asset for remaining coverage, which reflects Tower’s reinsurance coverage, adjusted to include a loss-recovery component for expected recoveries over underlying contracts that are considered to be onerous.
Reinsurance asset for incurred claims, which reflects reinsurance recoveries on claims that occurred prior to the reporting date, adjusted for the time value of money. The asset also includes an explicit risk adjustment for non-financial risks.

Tower’s accounting policy for recognition, classification, measurement, and derecognition of insurance and reinsurance contracts is explained in note 2.1.

Impact of accounting policy change

NZ IFRS 17 requires insurers to retrospectively apply the standard as if it had always been in effect, unless it is impracticable to do so. Tower has determined that reasonable and supportable information was available for all contracts in force at the transition date. NZ IFRS 17 has been applied using the full retrospective approach in accordance with Appendix C of the standard, and the comparative information for the year ended 30 September 2023 has been restated.

As a result of the adoption of NZ IFRS 17, Tower has identified, recognised, and measured each group of insurance contracts as if NZ IFRS 17 had always applied. Premium receivable, reinsurance recoveries, deferred insurance costs, unearned premiums, and outstanding claims are no longer presented on the face of the balance sheet or in the notes. These are now replaced by insurance contract liabilities and reinsurance contract assets.

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1.4 New standards and interpretations (continued)

Impact of accounting policy change (continued)

Tower has applied the transitional provisions under NZ IFRS 17 and has not disclosed the impact to each financial statement line item and earnings per share. The impact on equity for transitioning to NZ IFRS 17 is shown in the table below.

	CONTRIBUTED	ACCUMULATED	OTHER	TOTAL
	EQUITY	LOSSES	RESERVES	EQUITY
	$000	$000	$000	$000
Closing balance (30 September 2022)	460,191	(41,212)	(101,451)	317,528
Risk adjustment1	–	(4,761)	–	(4,761)
Changes in discounting2	–	1,120	–	1,120
Changes in deferred IACF3	–	(155)	–	(155)
Tax impact4	–	1,066	–	1,066
Opening balance under NZ IFRS 17 (1 October 2022)	460,191	(43,942)	(101,451)	314,798

The impact to opening total equity is driven by the following:

1 The net impact from the derecognition of risk margin under NZ IFRS 4 and the recognition of risk adjustment on liability for incurred claims and reinsurance asset for incurred claims under NZ IFRS 17.
2 The impact of discounting certain liabilities for incurred claims and reinsurance assets for incurred claims under NZ IFRS 17 which Tower opted not to discount under NZ IFRS 4.
3 The exclusion of non-attributable expenses under NZ IFRS 17 from the deferral of insurance acquisition cash flows (IACF).

4 The tax impact of the above adjustments against deferred tax assets and liabilities.

There are other standards, amendments and interpretations which have been approved but are not yet effective. The Group expects to adopt other standards when they become mandatory. NZ IFRS 18 Presentation and Disclosure in Financial Statements (NZ IFRS 18) will replace NZ IAS 1 Presentation of Financial Statements and may have a material impact on Tower's disclosures. NZ IFRS 18 has been issued but is not effective for Tower until 1 October 2027. Tower has not yet completed an assessment of the impact of adopting NZ IFRS 18.

1.5 Segmental reporting

a. Operating segments

Information is provided by operating segment to assist an understanding of the Group's performance.

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 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 financial performance for Pacific Islands operating segment excludes the disposal groups. Intercompany transactions with the disposal group are eliminated within continuing operations, refer note 8.4.

b. Financial performance of continuing operations

	NEW ZEALAND $000 PACIFIC ISLANDS $000 OTHER $000 TOTAL $000
Year Ended 30 September 2024
Insurance revenue	513,566 42,252 – 555,818
Insurance service expense	(356,693) (24,553) (362) (381,608)
Net (expense)/income from reinsurance contracts held	(86,029) (5,398) 63 (91,364)
Insurance service result	70,844 12,301 (299) 82,846
Net investment income	20,666 884 – 21,550
Net insurance finance expense	(2,572) – – (2,572)
Net insurance and investment result	88,938 13,185 (299) 101,824
Other income	3,873 191 – 4,064
Other operating expenses	(2,307) (41) – (2,348)
Finance costs	(722) (160) – (882)
Profit/(loss) before taxation from
continuing operations	89,782 13,175 (299) 102,658
Tax (expense)/benefit	(25,716) (6,101) 43 (31,774)
Profit/(loss) after taxation from
continuing operations	64,066 7,074 (256) 70,884

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1.5 Segmental reporting (continued)

b. Financial performance of continuing operations (continued)

	NEW ZEALAND	PACIFIC ISLANDS	OTHER	TOTAL
	$000	$000	$000	$000
Year Ended 30 September 2023 (Restated)
Insurance revenue	429,706	42,905	-	472,611
Insurance service expense	(586,730)	(18,146)	25	(604,851)
Net income/(expense) from reinsurance contracts held	140,371	(16,250)	239	124,360
Insurance service result	(16,653)	8,509	264	(7,880)
Net investment income	13,622	707	-	14,329
Net insurance finance expense	(1,348)	-	-	(1,348)
Net insurance and investment result	(4,379)	9,216	264	5,101
Other income	4,338	761	628	5,727
Other operating expenses	(2,106)	(39)	-	(2,145)
Finance costs	(734)	(186)	-	(920)
(Loss)/profit before taxation from continuing
operations	(2,881)	9,752	892	7,763
Tax expense	(2,437)	(2,567)	(172)	(5,176)
(Loss)/profit after taxation from continuing
operations	(5,318)	7,185	720	2,587

c. Financial position of continuing operations

	NEW ZEALAND	PACIFIC ISLANDS	OTHER	TOTAL
	$000	$000	$000	$000
Additions to non-current assets 30 September 2024 Additions to non-current assets 30 September 2023 Total assets 30 September 2024 Total assets 30 September 2023 (restated) Total liabilities 30 September 2024	18,702 24,081 589,793 618,213 250,337	2,175 6,319 56,580 50,975 25,478	– – (11,225) (25,349) (823)	20,877 30,400 635,148 643,839 274,992
Total liabilities 30 September 2023
(restated)	333,896	27,704	(11,599)	350,001

Additions to non-current assets include additions to property, plant and equipment, right-of-use assets and intangible assets.

Total assets and liabilities exclude assets and liabilities held for sale.

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.

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Notes to the consolidated financial statements (continued)

2 Insurance and reinsurance contracts

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 insurance revenue when they are earned by Tower, reducing the liability for remaining coverage 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 insurance expenses. To ensure that Tower’s obligations to customers are properly recorded within the financial statements, Tower recognises a liability for incurred claims on the balance sheet.

To manage Tower’s risk and optimise its returns, Tower reinsures some of its exposure with reinsurance companies. Net expense from reinsurance contracts is measured as an allocation of reinsurance premiums paid plus any other directly attributable expenses, less amounts recovered from reinsurers and any change in risk from reinsurer non-performance.

2.1 Insurance and reinsurance contracts accounting policies

a. Recognition

Tower recognises insurance contracts at the earlier of the commencement of the coverage period, or when the first premium for a group of insurance contracts is due. At inception of insurance contracts, Tower analyses and identifies any distinct contract components that may need to be accounted for under another NZ IFRS instead of NZ IFRS 17. Currently, Tower does not have any product groups that include distinct components that require separation.

Insurance revenue is recognised based on passage of time over the coverage period of the contract, resulting in a linear allocation of revenue for each contract across its coverage period. Revenue earned excludes taxes and levies collected on behalf of third parties.

Insurance service expenses arising from insurance contracts are generally recognised in profit or loss as they are incurred, except for insurance acquisition cash flows.

Insurance finance income and expenses comprise changes in the carrying amounts of groups of insurance and reinsurance contracts arising from the effects of, and changes in, the time value of money and financial risk. Tower has elected to present all insurance finance income and expenses in profit or loss.

b. Measurement Model - Insurance Contracts

NZ IFRS 17 contains three measurement models:

1) The general measurement model (GMM) 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)

2) A modified version of the general model (the variable fee approach, or VFA) is applied to insurance contracts with direct participation features
3) A simplified measurement model (the PAA) is permitted in certain circumstances.

The majority of Tower's insurance portfolios have a coverage period of one year or less, which allows for application of the PAA. The coverage period, or contract boundary, is the period during which Tower has a substantive obligation to provide customers with insurance contract services. The substantive obligation ends when Tower can reprice insurance contracts to reflect reassessed risk.

For any insurance groups with coverage periods greater than one year, Tower has assessed that the resulting liability for remaining coverage as measured under the PAA would not differ materially from the result of applying the GMM. Therefore Tower has applied the PAA to all its insurance groups. Refer to note 2.1(i) for discussion around reinsurance PAA eligibility assessment.

Tower does not issue any insurance contracts that provide an investment return, or have direct participating contracts, therefore the VFA does not apply to Tower.

c. Level of aggregation

Tower manages insurance contracts issued by aggregating them into portfolios. Insurance contracts for product lines with similar risks that are within the same geographical area, and managed together, are considered to be in the same portfolio. The geographical areas for portfolio purposes are New Zealand and the Pacific, and within each geographical area there are a number of separate portfolios based on product type. Each portfolio will contain annual cohorts which contain contracts that are issued within a financial year. Annual cohorts can be further disaggregated into three groups at inception: onerous contracts, contracts with no significant risk of becoming onerous, and the remainder.

d. Onerous contracts

The profitability of groups of contracts is assessed by actuarial valuation models. All insurance contracts are measured under the PAA, and therefore Tower assumes that no contracts in a group are onerous at initial recognition unless facts and circumstances indicate otherwise.

To determine which facts and circumstances are indicative of onerous contracts management considers future profitability for a group of contracts, as well as factors that may be internal to Tower (e.g., pricing decisions) or external (e.g., sudden and unexpected changes to the economic or regulatory environments). When facts and circumstances indicate a set of contracts may be onerous, Tower will perform an additional assessment to distinguish onerous contracts from non-onerous contracts. Onerous contract testing will involve determining the estimation of the fulfilment cash flows in relation to that group of onerous contracts.

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2.1 Insurance and reinsurance contracts accounting policies (continued)

d. Onerous contracts (continued)

Tower will recognise a loss in profit or loss for onerous contracts, which is measured as the difference between fulfilment cash flows related to the remaining coverage of the group using the general model, and liability for the remaining coverage using the PAA. The increase to the liability for remaining coverage resulting from the recognition of onerous contracts will be tracked separately as a loss component. In subsequent periods, Tower will reassess previously onerous contracts then remeasure fulfilment cash flows. The impact from changes in fulfilment cash flows will be recorded in profit or loss, and the liability for remaining coverage will reflect the remeasured fulfilment cash flows. When fulfilment cash flows are incurred, they are allocated systematically between the loss component and the liability for remaining coverage. The systematic allocation is based on the loss component relative to the total estimated present value of future cash outflows.

e. Liability for remaining coverage

The LRC reflects insurance coverage expected to be provided by Tower after the reporting date. This is measured inclusive of any taxes and levies collected on behalf of third parties. On initial recognition of each group of contracts, the carrying amount of the LRC is measured as the premiums received less any insurance acquisition cash flows allocated to the group at that date, and adjusted for any amount arising from the derecognition of any assets or liabilities previously recognised for cash flows related to the group.

Subsequent measurement of the carrying amount of the LRC is increased by any premiums received and the amortisation of insurance acquisition cash flows recognised as expenses, and decreased by the amount recognised as insurance revenue for services provided and any additional insurance acquisition cash flows allocated after initial recognition.

On initial recognition of each group of contracts, Tower expects that the time between providing each part of the services and the related premium due date is no more than a year. Accordingly, Tower has chosen not to adjust the LRC to reflect the time value of money and the effect of financial risk.

f. Insurance acquisition cash flows

Insurance acquisition cash flows (IACF) comprise the costs of selling, underwriting and starting a group of insurance contracts (which are issued or expected to be issued) that are directly attributable to portfolios of insurance contracts.

Tower has elected to defer IACF and recognise as insurance expenses across the coverage period of contracts issued, rather than to expense them when incurred. The amortisation period for IACF begins at the later of when the costs are incurred or when the underlying insurance contracts are recognised, and are expected to be amortised within 12 months on a straight-line basis. All IACF are allocated to groups of insurance contracts.

g. Liability for incurred claims

Liability for incurred claims (LIC) relate to claims that have occurred prior to reporting date but have not been paid. This is measured as the present value of the estimated future cash outflows plus a specific risk adjustment (RA) factor to account for non-financial risks. Tower has elected to discount the LIC to reflect the time value of money.

Tower does not disaggregate changes in the RA between the insurance service result and insurance finance income or expenses. All changes in the RA are included in the insurance service result.

h. Insurance modification and derecognition

Tower derecognises insurance contracts when rights and obligations relating to the contract are extinguished, or when the contract is modified in a way that would have changed the accounting for the contract significantly had the new terms been included at contract inception. In such a case a new contract based on the modified terms is recognised.

i. Measurement Model - Reinsurance Contracts

Some reinsurance contracts held by Tower have a three year contract boundary, however the result of applying the PAA model does not result in a material difference from applying the GMM model. Therefore all reinsurance contracts held by Tower are measured using the PAA measurement model.

Quantitative PAA eligibility testing has been performed over these contracts, where the following key assumptions and estimates are modelled:

Expected future cash flows
Risk adjustment
Contractual service margin (CSM), the balancing component to result in nil profit or loss impact at inception.The CSM represents the net cost of purchasing reinsurance, which will be released over the coverage period.
Expected variability in assumptions used, such as changes in discount rates

Tower measures its reinsurance assets on the same basis as insurance contracts issued, however these are adapted to reflect the features of reinsurance contracts held that differ from insurance contracts held.

j. Reinsurance contracts - level of aggregation

Tower manages all reinsurance contracts held together and the contracts held provide coverage for similar risks. All reinsurance contracts held by Tower are considered as a single portfolio.

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2.1 Insurance and reinsurance contracts accounting policies (continued)

k. Reinsurance contract assets - recognition and measurement

A reinsurance asset for remaining coverage (RI ARC) is recognised at the start of the coverage period of the reinsurance contract where the contract provided non-proportionate coverage, or when the underlying insurance contract is recognised where the contract provides proportionate coverage. The asset is measured as premiums paid, adjusted for any acquisition cash flows.

A loss-recovery component is established within the RI ARC for the gain recognised in profit or loss when the Group has recognised a loss on underlying groups of onerous contracts that are covered by reinsurance contracts held. The gain is calculated by multiplying the loss recognised on underlying insurance contracts by the percentage of claims on underlying insurance contracts that the Group expects to recover from the reinsurance contracts held that are entered into before or at the same time as the loss is recognised on the underlying insurance contracts.

This loss-recovery component is adjusted to reflect changes in the loss component of the onerous group of underlying contracts and is further adjusted, if required, to ensure that it does not exceed the portion of the carrying amount of the loss component of the onerous group of underlying insurance contracts that Tower expects to recover from the reinsurance contracts held.

Reinsurance asset for incurred claims (RI AIC) is recognised when a claim is made on an underlying contract and a reinsurance contract was held to cover the risks on the underlying insurance contract. This is measured based on estimated future cash flows, adjusted to reflect the time value of money, and a RA factor for any nonfinancial risks.

Net (expense)/income from reinsurance contracts held is measured as an allocation of reinsurance premiums paid plus any other directly attributable expenses, less amounts recovered from reinsurers, and any change in risk from reinsurer non-performance.

Reinsurance premiums paid reflect premiums ceded to reinsurers and are recognised as an expense in accordance with the pattern of reinsurance service received. Commission revenue from reinsurance contracts held by Tower that are not contingent on claims for underlying insurance contracts is treated as a reduction in premiums paid.

Tower also has profit-share commission arrangements for some proportional reinsurance contracts, where the commission is contingent on claims. Commission from the profit-share arrangements will offset against RI claims recoveries in RI AIC.

Amounts recovered from reinsurers are recognised when a claim has been incurred and the basis for measurement is the expected future cash inflows.

l. Discount rates

Tower discounts future cash flows related to insurance liabilities for incurred claims and reinsurance assets for incurred claims to recognise the impact of the time value of money. Tower has adopted a 'bottom-up' approach to derive the discount rate. The risk-free yield is derived from observable secondary market prices for NZ government bonds. Nil illiquidity premium has been assumed on the basis that it would not have a material impact.

2.2 Insurance service expense and other operating expenses

Composition	2024 $000 2023 $000
Claims expenses	245,048 489,021
(Reversals)/losses on onerous insurance contracts	(223) 607
Commission expenses amortised	13,022 12,342
Management expenses:
People costs	92,671 84,408
People costs capitalised during the year	(10,824) (9,562)
Technology	17,189 16,372
Amortisation	19,269 17,327
Depreciation	5,962 5,836
External fees	20,128 10,687
Marketing	14,792 13,128
Communications	3,852 3,361
Miscellaneous	3,605 3,814
Movement in non-commission deferred insurance acquisition cash flows	(6,011) (4,540)
Claims related management expenses reclassified to claims expense	(35,756) (36,208)
Service fees charged to discontinued operations	(1,116) (1,742)
Total insurance service expense	381,608 604,851
Other operating expenses	2,348 2,145
Total insurance service expense and other
operating expenses	383,956 606,996

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2.3 Net insurance finance expense

2.3 Net insurance finance expense
	2024 $000 2023 $000
Interest accreted	(5,314) (1,804)
Effect of changes in interest rates and other financial assumptions	(278) 294
Finance expense from insurance contracts issued	(5,592) (1,510)
Interest accreted	2,877 212
Effect of changes in interest rates and other financial assumptions	143 (50)
Finance income from reinsurance contracts held	3,020 162
Net insurance finance expense	(2,572) (1,348)

2.4 Insurance and reinsurance assets and liabilities

a. Insurance and reinsurance contracts

	2024 $000
	ASSETS LIABILITIES CURRENT PORTION NON- CURRENT PORTION TOTAL
Liabilityfor remainingcoverage
	– 42,042 42,042 – 42,042
Liabilityfor incurred claims	– 135,527 110,169 25,358 135,527
Total insurance contracts issued	– 177,569 152,211 25,358 177,569
Total reinsurance contracts held	35,503 – 28,854 6,649 35,503

	2023 $000
	ASSETS LIABILITIES CURRENT PORTION NON- CURRENT PORTION TOTAL
Liabilityfor remainingcoverage	– 44,614 44,614 – 44,614
Liabilityfor incurred claims	– 241,195 198,860 42,335 241,195
Total insurance contracts issued	– 285,809 243,474 42,335 285,809
Total reinsurance contracts held	147,236 – 125,567 21,669 147,236

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2.4 Insurance and reinsurance assets and liabilities (continued)

b. Reconciliation of insurance assets and liabilities

	2024 $000
	LIABILITIES FOR REMAINING COVERAGE LIABILITIES FOR INCURRED CLAIMS TOTAL
	EXCLUDING LOSS COMPONENT LOSS COMPONENT ESTIMATES OF THE PRESENT VALUE OF FUTURE CASH FLOWS RISK ADJUSTMENT
Opening insurance contract liabilities Insurance revenue Insurance service expense: Incurred claims and other insurance service expenses* Amortisation of IACF Changes relating to past service Reversals on onerous contracts Finance expense from insurance contracts issued Effect of movements in exchange rates
	43,994 620 223,565 17,630 285,809
	(555,818) - - - (555,818)

	- - 314,130 3,666 317,796
	62,835 - - - 62,835
	- - (15,950) (8,117) (24,067)
	- (223) - - (223)
	- - 5,592 - 5,592
	(272) (13) (348) - (633)
Amounts included in statement of comprehensive income	(493,255) (236) 303,424 (4,451) (194,518)
Cash flows: Premiums received Claims and other insurance service expenses paid Insurance acquisition cashflows
	559,383 - - - 559,383
	- - (404,641) - (404,641)
	(68,119) - - - (68,119)
Amounts included in statement of cash flow Pre-recognition cash flows derecognised and other changes	491,264 - (404,641) - 86,623
	(345) - - - (345)
Insurance contract liabilities at 30 September 2024	41,658 384 122,348 13,179 177,569

Excludes $25m of insurance service expenses for depreciation and amortisation, which do not form part of insurance contract liabilities on the balance sheet.

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2.4 Insurance and reinsurance assets and liabilities (continued)

b. Reconciliation of insurance assets and liabilities (continued)

	2023 $000
	LIABILITIES FOR REMAINING COVERAGE LIABILITIES FOR INCURRED CLAIMS TOTAL
	EXCLUDING LOSS COMPONENT LOSS COMPONENT ESTIMATES OF THE PRESENT VALUE OF FUTURE CASH FLOWS RISK ADJUSTMENT
Opening insurance contract liabilities Insurance revenue Insurance service expense: Incurred claims and other insurance service expenses* Amortisation of IACF Changes relating to past service Losses and reversals on onerous contracts Finance expense from insurance contracts issued Effect of movements in exchange rates	43,343 - 105,321 16,247 164,911 (472,611) - - - (472,611) - - 516,677 8,064 524,741 54,000 - - - 54,000 - - 8,887 (6,546) 2,341 - 607 - - 607 - - 1,511 - 1,511 265 13 444 - 722
Amounts included in statement of comprehensive income	(418,346) 620 527,519 1,518 111,311
Cash flows: Premiums received Claims and other insurance service expenses paid Insurance acquisition cashflows	482,701 - - - 482,701 - - (408,546) - (408,546) (58,441) - - - (58,441)
Amounts included in statement of cash flow Pre-recognition cash flows derecognised and other changes	424,260 - (408,546) - 15,714 (5,263) - (728) (136) (6,127)
Insurance contract liabilities at 30 September 2024	43,994 620 223,566 17,629 285,809

Excludes $23m of insurance service expenses for depreciation and amortisation, which do not form part of insurance contract liabilities on the balance sheet.

Certain cash flows presented above may be on a deemed basis in respect of movements through the insurance contract liabilities, and certain amounts may be recognised in other receivable, payable and provision balances, so they may differ from the actual cash flow amounts reported in the consolidated statement of cash flows. Pre-recognition cash flows derecognised and other changes also includes the derecognition of liabilities that moved to liabilities held for sale during the period.

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Notes to the consolidated financial statements (continued)

2.4 Insurance and reinsurance assets and liabilities (continued)

c. Reconciliation of reinsurance assets and liabilities

	2024 $000
	ASSETS FOR REMAINING COVERAGE ASSET FOR INCURRED CLAIMS TOTAL
	EXCLUDING LOSS RECOVERY COMPONENT LOSS RECOVERY COMPONENT ESTIMATES OF THE PRESENT VALUE OF FUTURE CASH FLOWS RISK ADJUSTMENT
Year ended 30 September 2024 Opening reinsurance contract assets Reinsurance premiums Amounts recoverable from reinsurers: Amounts recoverable for incurred claims Changes relating to past service Finance income from reinsurance contracts held Effect of movements in exchange rates

	(4,229) – 146,327 5,138 147,236
	(79,587) – – – (79,587)

	– – 6,527 642 7,169
	– – (15,812) (3,134) (18,946)
	– – 3,020 – 3,020
	101 – 25 – 126
Amounts included in statement of comprehensive income	(79,486) – (6,240) (2,492) (88,218)
Cash flows: Premiums paid net of ceding commissions Reinsurance recoveries (net of profit share commissions)
	72,025 – – – 72,025
	– – (95,540) – (95,540)
Amounts included in statement of cash flow	72,025 – (95,540) – (23,515)
Reinsurance contract assets at 30 September 2024	(11,690) – 44,547 2,646 35,503

Certain cash flows presented above may be on a deemed basis in respect of movements through the reinsurance contract assets, and certain amounts may be recognised in other receivable, and payable balances, so they may differ from the actual cash flow amounts reported in the consolidated statement of cash flows.

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Notes to the consolidated financial statements (continued)

2.4 Insurance and reinsurance assets and liabilities (continued)

c. Reconciliation of reinsurance assets and liabilities (continued)

	2023 $000
	ASSETS FOR REMAINING COVERAGE ASSET FOR INCURRED CLAIMS TOTAL
	EXCLUDING LOSS RECOVERY COMPONENT LOSS RECOVERY COMPONENT ESTIMATES OF THE PRESENT VALUE OF FUTURE CASH FLOWS RISK ADJUSTMENT
Year ended 30 September 2023 Opening reinsurance contract assets Reinsurance premiums Amounts recoverable from reinsurers: Amounts recoverable for incurred claims Changes relating to past service Finance income from reinsurance contracts held Effect of movements in exchange rates	4,917 - 21,805 196 26,918 (79,746) - - - (79,746) - - 201,356 5,815 207,171 - - (2,198) (866) (3,064) - - 162 - 162 (139) - (66) - (205)
Amounts included in statement of comprehensive income	(79,885) - 199,254 4,949 124,318
Cash flows: Premiums paid net of ceding commissions Reinsurance recoveries (net of profit share commissions)	72,080 - - - 72,080 - - (74,693) - (74,693)
Amounts included in statement of cash flow Assets reclassified to assets held for sale	72,080 - (74,693) - (2,613) (1,341) - (39) (7) (1,387)
Reinsurance contract assets at 30 September 2023	(4,229) - 146,327 5,138 147,236

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Notes to the consolidated financial statements (continued)

2.4 Insurance and reinsurance assets and liabilities (continued)

d. Development of claims

The following table shows how estimates of cumulative claims have developed over time on a net of reinsurance basis.

Tower considers the probability and magnitude of future experience being more adverse than assumed. This uncertainty is reflected in the risk adjustment. In general, the uncertainty associated with the ultimate cost of settling claims is greatest when the claim is at an early stage of development. As claims develop, the ultimate cost of claims becomes more certain.

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|||||||||
|---|---|---|---|---|---|---|---|
|PRIOR|2020|2021|2022|2023|2024|TOTAL|
|ULTIMATE CLAIMS COST ESTIMATE|$000|$000|$000|$000|$000|$000|$000|
|At end of incident year|155,506|181,849|197,830|262,858|230,703|
|One year later|152,143|180,386|204,450|253,812|-|
|Two years later|150,830|181,928|206,682|-|-|
|Three years later|150,684|181,609|-|-|-|
|Four years later|151,748|-|-|-|-|
|Ultimate claims cost|151,748|181,609|206,682|253,812|230,703|
|Cumulative payments|(151,629)|(179,513)|(205,232)|(245,729)|(161,805)|
|Net estimates of the undiscounted amount of the claims|11,112|119|2,096|1,450|8,083|68,898|91,758|
|Third party recoveries outstanding|(8,372)|
|Claims handling expense|8,538|
|Effect from discounting|(1,601)|
|Effect from risk adjustment|10,533|
|Reinsurance outstanding on paid claims|(12,522)|
|Total net liabilities for incurred claims|88,334|

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Notes to the consolidated financial statements (continued)

2.4 Insurance and reinsurance assets and liabilities (continued)

d. Development of claims (continued)

		ESTIMATES OF
		THE PRESENT
		VALUE OF FUTURE	RISK
		CASH FLOWS	ADJUSTMENT	TOTAL
	NOTE	$000	$000	$000
Insurance contract liabilities	2.4b	122,348	13,179	135,527
Total gross liabilities for incurred claims		122,348	13,179	135,527
Reinsurance contract assets	2.4c	(44,547)	(2,646)	(47,193)
Total net liabilities for incurred claims		77,801	10,533	88,334

Tower has limited exposure to long-tail classes of business. Long-tail classes have increased uncertainty of the ultimate cost of claims due to the additional period of time to settlement.

Prior year numbers have been restated at current year exchange rates to reflect the underlying development of claims.

e. Liability for incurred claims

Future cash outflows are estimated using data specific to each portfolio, relevant industry data and general economic data. The estimation process factors in 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 Tower.

economic factors that may affect Tower.
Assumption	2024 2023
Expected future claims development	64.0% 45.5%
Claims handling expense ratio	7.9% 5.6%
Risk adjustment	10.7% 7.8%
Discount rate	4.4% 5.7%
Future CanterburyEarthquakes overcap propertyclaims	$5.2m $3.5m

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 a liability for incurred claims. The ratio in 2024 has increased due to the settlement of the bulk of the claims from the 2023 storm events and the corresponding change in the mix of outstanding claims at September 2024 compared to the previous year.

Claims handling expense ratio

This reflects the expected cost to administer future claims. The ratio is calculated based on historical experience of claims handling expenses. The increase in 2024 is due to the reclassification of certain external assessment costs as claims handling expenses.

Discount rate

The discount rates determined for 30 September 2024 were between 3.8 and 5% (2023: 5.3 and 5.8%). The table below summarises the yield curves used to discount Tower's liability for incurred claims.

As at 30 September 2024

%	1year	2years	3years	4years	5+years
New Zealand	4.2%	3.7%	3.6%	3.7%	3.8%
As at 30 September 2022
%	1year	2years	3years	4years	5+years
New Zealand	5.8%	5.5%	5.4%	5.3%	5.3%

Risk adjustment (RA)

The risk adjustment is the compensation Tower requires for bearing uncertainty about the amount and timing of the cash flows that arises from non-financial risk related to a group of insurance contracts.

The determination of the appropriate level of risk adjustment takes into account:

the level of economic capital that Tower requires to support the insurance business and the weighted average cost of servicing that capital;
the run-off profile and term to settlement of the net discounted cash flows;
class of business; and
the benefit of diversification between geographic locations.

The Group determines the risk adjustment for non-financial risk at the Group level and allocates it to groups of insurance and reinsurance contracts in a systematic and rational way.

Tower uses the cost of capital method to derive the overall risk adjustment for non-financial risk. In the cost of capital method, the risk adjustment is determined by applying a cost rate to the value of projected capital relating to non-financial risk. A required return of capital of 12.5%, net of reinsurance, has been used for assessing risk adjustment for LIC and LRC balances. The resulting risk adjustment corresponds to outcomes expected with a confidence level of 72.5% for New Zealand (excluding Canterbury earthquakes), 75% for Pacific and 90% for Canterbury earthquakes. A diversification benefit is included to reflect the diversification of risk across countries, reflecting the compensation that the entity requires.

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Notes to the consolidated financial statements (continued)

2.4 Insurance and reinsurance assets and liabilities (continued)

f. Sensitivity Analysis

The impact on profit or loss before tax, and the impact on equity for any reasonable changes at period end have been summarised below. Each change has been calculated in isolation from the other variables.

Liability for incurred claims

*Liability for incurred claims*
MOVEMENT IN ASSUMPTION	IMPACT ON PROFIT OR LOSS GROSS OF REINSURANCE IMPACT ON PROFIT OR LOSS NET OF REINSURANCE
	2024 $000 2023 $000 2024 $000 2023 $000
Expected future claims development + 10% - 10% Claims handling expense ratio + 10% - 10% Risk adjustment + 10% - 10% Discount rate + 1.75% - 1.75% Number of future Canterbury + 50% Earthquake overcapclaims - 50%	(4,805) (7,177) (3,434) (3,251) 4,805 7,177 3,434 3,251 (970) (1,243) (854) (677) 970 1,243 854 677 (1,318) (1,414) (1,053) (900) 1,318 1,414 1,053 900 1,128 1,939 806 905 (1,128) (2,009) (806) (937) (4,100) (2,800) (4,100) (2,800) 4,100 2,800 4,100 2,800

2.5 Receivables

2.5 Receivables
Composition	2024 $000 2023 $000
Prepayments	13,969 5,417
Finance lease receivables	– 344
Other receivables	5,830 11,036
Receivables	19,799 16,797
Receivable within 12 months	16,168 16,797
Receivable ingreater than 12 months	3,631 –
Receivables	19,799 16,797

Recognition and measurement

Receivables (inclusive of GST) are recognised at fair value and are subsequently measured at amortised cost, less any expected credit loss (ECL). Tower applies the simplified approach in calculating ECL. The ECL calculation is based on a provision matrix which is based on historical credit loss experience, adjusted for forward looking factors specific to the receivables and the economic environment.

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Notes to the consolidated financial statements (continued)

2.6 Payables

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||||
|---|---|---|
|Composition|2024|2023|
|$000|$000|
|Trade payables|16,747|10,833|
|Pre-coverage liability|2,035|1,930|
|GST payable|3,497|(1,511)|
|Unsettled investment purchases|5,400|-|
|Other|4,608|3,899|
|Payable to discontinued operations|-|3,227|
|Payables|32,287|18,378|
|Payable within 12 months|32,287|18,378|
|Payable in greater than 12 months|-|-|
|Payables|32,287|18,378|

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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.

Tower receives some premiums in advance of the initial recognition date of an insurance contract. For these premiums received in advance Tower recognises a separate pre-coverage liability (PCL). When the coverage period for the contract starts, the PCL is reduced and the value of the premiums is transferred to the liability for remaining coverage.

2.7 Provisions

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||||
|---|---|---|
|Composition|2024|2023|
|$000|$000|
|Annual leave and other employee benefits|12,771|5,737|
|Compliance and remediation|9,188|7,086|
|Provisions|21,959|12,823|
|Payable within 12 months|20,926|11,762|
|Payable in greater than 12 months|1,033|1,061|
|Provisions|21,959|12,823|

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The annual leave and other employee benefits provision has increased by $14.2m during the period, offset by payments to employees of $7.2m.

A compliance and remediation provision has been recognised and is reassessed at each reporting period. A range of possible outcomes is considered, and the re-assessment has resulted in an additional $7.5m being recognised in the current period, which has been offset by payments made during the period. The resulting provision allows for amounts to be repaid to customers and costs associated with any potential regulatory action.

The Financial Markets Authority (FMA) is seeking a declaration from the court that Tower contravened the Financial Markets Conduct Act (2013) and that a pecuniary penalty is paid to the Crown. Any eventual penalty to be determined by the High Court may be in excess or lower than the provision recognised in these financial statements. The timing of any penalty payable by Tower is also uncertain.

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.

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Notes to the consolidated financial statements (continued)

3 Investments and other income

3.2 Investments

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:

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 for investment and credit risk and therefore the majority of its investments are in investment grade supranational and government bonds, and term deposits.

3.1 Investment income

3.1 Investment income
	2024	2023
	$000	$000
Interest income	17,767	12,871
Net realised gain	1,626	1,173
Net unrealised gain	2,407	583
Investment income	21,800	14,627

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.

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	LEVEL 2	LEVEL 3	TOTAL
	$000	$000	$000	$000
As at 30 September 2024
Fixed interest investments	–	367,472	–	367,472
Propertyinvestment	–	34	–	34
Investments	–	367,506	–	367,506
As at 30 September 2023
Fixed interest investments	–	258,764	–	258,764
Propertyinvestment	–	34	–	34
Investments	–	258,798	–	258,798

There have been no transfers between levels of the fair value hierarchy during the current period (2023: nil).

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Notes to the consolidated financial statements (continued)

3.2 Investments (continued)

4 Risk Management

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 above.

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.

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:

3.3 Other income

3.3 Other income
	2024	2023
	$000	$000
Agency fees*	1,705	3,574
Gain on disposal of property, plant and equipment	30	1,243
Other	2,329	910
Other income	4,064	5,727

Agency fees include fees received for managing claims on behalf of the Natural Hazards Commission.
(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, Advice and Assurance 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.

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4.1 Risk management overview (continued)

(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.

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:

The plausible scenario that has the most financial significance for Tower is a major 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.

Tower has not experienced significant changes in exposure to underwriting risk during the period, and no significant changes to underwriting risk management have been implemented in the current period.

Refer to note 2.4a for exposure of underwriting risk at reporting date. Liability for incurred claims (LIC) is the key component of insurance liability sensitive to possible changes in underwriting risk, and we have performed sensitivity analysis over all variables that could reasonably change and impact the measurement of LIC in note 2.4f.

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 proportional reinsurance arrangements, where Tower transfers its exposure on any single insured asset (for example, a house) above a set amount, in exchange for ceding portion of the premium to reinsurers.

Tower has not experienced significant changes in exposure to concentration risk during the period, and no significant changes to concentration risk management have been implemented in the current period. The following table illustrates the diversity of Tower’s operations.

(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 position of the insurance business. The adequacy of reinsurance cover is modelled by assessing Tower's exposure under a range of scenarios.

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4.3 Insurance risk (continued)

% of Insurance Revenue	2024 2023
	NZ PACIFIC TOTAL NZ PACIFIC TOTAL
Home Contents Motor Other	38% 2% 40% 37% 3% 40% 14% 0% 14% 14% 0% 14% 38% 2% 40% 37% 3% 40% 3% 3% 6% 3% 3% 6%
Total	93% 7% 100% 91% 9% 100%

The Pacific operating segment excludes the disposal groups.

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 liability for incurred claims is performed by qualified and experienced actuaries. The liability for incurred claims is subject to a comprehensive review at least annually.

Tower has not experienced significant changes in exposure to reserving risk, and no significant changes to reserving risk management have been implemented in the current period.

Refer to note 2.4a for exposure of reserving risk at reporting date. Liability for incurred claims (LIC) is the key component of insurance liability sensitive to possible changes in reserving risk, and we have performed sensitivity analysis over all variables that could reasonably change and impact the measurement of LIC in note 2.4f.

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 33% (2023: 45%) of the 'not rated' category.

	CASH AND CASH EQUIVALENTS FIXED INTEREST INVESTMENTS TOTAL
	2024 $000 2023 $000 2024 $000 2023 $000 2024 $000 2023 $000
AAA AA A Below BBB Not rated	– – 121,497 104,646 121,497 104,646 62,106 47,992 188,655 113,971 250,761 161,963 – – 55,240 38,137 55,240 38,137 10,466 11,917 1,948 1,322 12,414 13,239 2,818 4,100 166 722 2,984 4,822
Total	75,390 64,009 367,506 258,798 442,896 322,807

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4.4 Credit risk (continued)

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.

Tower has not experienced significant changes in exposure to reinsurance risk during the period, and no significant changes to reinsurance risk management have been implemented in the current period.

	REINSURANCE AIC
	2024 $000 2023 $000
AA A BBB Below BBB Not rated	34,592 80,489 11,768 70,862 – 9 70 81 763 24
Total	47,193 151,465

c. Insurance and other credit risk

Tower's receivables for insurance contracts 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.

The following table provides details on Tower's maximum exposure to credit risk for insurance contracts and other receivables:

NOT DUE* $000	PAST DUE
	1 MONTH $000 1 TO 2 MONTHS $000 2 TO 3 MONTHS $000 OVER 3 MONTHS $000 TOTAL $000
As at 30 September 2024 Net premiums receivable 270,422 Other receivables 5,830

	4,559 1,665 683 257 277,586
	– – – – 5,830
As at 30 September 2023 Net premium receivable 237,736 Other receivables 11,036	4,375 270 844 50 243,275 – – – – 11,036

This includes premiums that are less than 30 days outstanding (which are owed but not past due) of $5.2m (2023: $4.3m). The remaining balance is related to the provision of future insurance services to customers.

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Notes to the consolidated financial statements (continued)

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.

Tower has not experienced significant changes in exposure to currency risk during the period, and no significant changes to currency risk management have been implemented in the current period.

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 before tax, holding all other variables constant.

	DIRECT IMPACT ON EQUITY THROUGH CURRENCY TRANSLATION RESERVE IMPACT ON PROFIT OR (LOSS)
	2024 $000 2023 $000 2024 $000 2023 $000
New Zealand Dollar - USD Currency strengthens by 10% Currency weakens by 10% New Zealand Dollar - Fijian Dollar Currency strengthens by 10% Currency weakens by 10% New Zealand Dollar - PNG Kina Currency strengthens by 10% Currencyweakens by10%	(619) (1,025) 905 1,378 756 1,253 (1,106) (1,684) (1,182) (887) (8) (74) 1,445 1,084 9 91 – – (674) (805) – – 822 984

The impact on profit or loss for New Zealand Dollar - USD in the 2023 comparative has been updated for consistency with 2024 sensitivity.

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Notes to the consolidated financial statements (continued)

4.5 Market risk (continued)

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, after tax, is shown below (holding everything else constant).

	IMPACT ON PROFIT OR (LOSS)
	2024 $000 2023 $000
Interest rates increase by 1% Interest rates decrease by1%	(1,287) (1,652) 1,267 1,726

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. Tower has not experienced significant changes in exposure to interest rate risk during the period, and no significant changes to interest rate risk management have been implemented in the current period.

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.

Tower has not experienced significant changes in exposure to liquidity risk during the period, and no significant changes to liquidity risk management have been implemented in the current period.

The following table presents the estimated amount and timing of the remaining contractual discounted cash flows arising from investment assets and insurance liabilities.

	LIABILITY FOR INCURRED CLAIMS CASH AND INVESTMENTS
	2024 $000 2023 $000 2024 $000 2023 $000
Floating interest rate (at call) Within 3 months 3 to 6 months 6 to 12 months 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years 5+years	- - 75,446 89,909 62,412 105,702 124,629 28,682 25,556 44,944 46,598 30,231 22,201 40,147 81,257 61,661 14,623 29,066 48,178 29,977 5,083 10,102 19,025 47,145 4,471 8,886 19,671 8,663 616 1,225 13,977 12,435 565 1,123 14,115 14,104
Total	135,527 241,195 442,896 322,807

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Notes to the consolidated financial statements (continued)

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 forwardlooking 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 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 2024 the Group complied with all externally imposed capital requirements (2023: complied).

	2024 $000 2023 $000
	PREPARED UNDER ISS PREPARED UNDER NLSS
	PARENT GROUP PARENT GROUP
Solvency capital (2023: Actual solvency capital) Adjusted prescribed capital requirement (2023: Minimum solvencycapital)	323,834 339,139 145,421 174,734 152,474 148,547 91,634 99,729
Adjusted solvency margin (2023: Solvency margin)	171,360 190,592 53,787 75,005
Adjusted solvency ratio (2023: Solvency ratio)	212% 228% 159% 175%

Tower is required to maintain a solvency margin of at least $0m (2023: $15m), due to a license condition issued by the RBNZ.

The 30 September 2023 comparative is per the prior period audited financial statements in accordance with the RBNZ's Non-Life Solvency Standard (NLSS) which was applicable until 30 September 2023.

b. 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 2024.

Tower has applied the RBNZ’s new Interim Solvency Standard (ISS) from 1 October 2023.

Tower has calculated the below solvency position in accordance with the current published ISS. This is the mandatory regulatory solvency position required until any amendments are issued and effective. A second amendment to the ISS is proposed by RBNZ and is not expected to be issued and effective until 1 March 2025.

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Notes to the consolidated financial statements (continued)

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.

4.10 Conduct risk

Conduct risk is defined as the risk of not meeting customers' reasonable expectations.

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. From 31 March 2025, this framework will be superseded by Towers Fair Conduct Programme, developed in accordance with requirements in the Financial Markets (Conduct of Institutions) Amendment Act 2022.

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 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.

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.

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Notes to the consolidated financial statements (continued)

4.12 Environment, Social and Governance (ESG) risk

Tower Limited’s ESG risks and opportunities are identified and prioritized through our Materiality Assessment and Risk Management Framework (RMF). They form the basis for Tower’s Sustainability Framework and include climate-related risk outlined below.

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.

a. Climate-related risk

Climate- related risk relates to the physical and transitional impacts of climate change. Physical risks are associated with an increasing frequency and severity of severe weather events, sea level rise and coastal inundation. Transitional risks are related to potential social, political and economic changes as New Zealand and the world transition to low emission and climate resilient economies.

As a listed, licensed New Zealand insurer Tower qualifies as a climate reporting entity (CRE) under the Financial Markets Conduct Act 2013 and the Aotearoa New Zealand Climate Standards (NZ CS 1, NZ CS 2 and NZ CS 3) published by the XRB in December 2022 (CRD Regime). Our first group climate statement has been prepared alongside our financial statements and annual report, and Tower will make these disclosures available on Tower’s website, the New Zealand Stock Exchange (NZX) and Australian Stock Exchange (ASX). The climate statement covers our New Zealand and Pacific operations and outlines the steps we are taking to address climate-related risks and opportunities.

Tower’s RMF considers climate-related risks, which are regularly reported to the Board. Tower's approach to managing climate-related risk includes 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.

Other than the impact on liability for incurred claims, Tower considers that climate change risk does not materially impact the valuation of Tower's assets and liabilities, where these assets or liabilities 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 2024.

5.1 Contributed equity

5.1 Contributed equity
		2024	2023
	NOTE	$000	$000
Opening balance		460,315	460,191
Share rights issued under Tower Long-Term Incentive Plan	8.5	419	124
Total contributed equity		460,734	460,315
Represented by:
Openingbalance		379,483,987	379,483,987
Total shares on issue		379,483,987	379,483,987

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.

On 9 September 2024, the Board approved $45m capital return by way of a compulsory share buyback. The capital return remains conditional on shareholder approval at Tower’s Annual Shareholder Meeting in early 2025; the receipt of High Court approval of the arrangement; Tower continuing to satisfy solvency and prudential capital requirements and the Tower Board remaining satisfied that the capital return is prudent to undertake. Subject to these conditions being fulfilled, the capital return is likely to occur in March 2025.

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Notes to the consolidated financial statements (continued)

5.2 Reserves

5.2 Reserves
	2024	2023
	$000	$000
Opening balance	(3,098)	(2,148)
Currencytranslation differences arisingduringtheyear	(898)	(950)
Foreign currency translation reserve	(3,996)	(3,098)
Opening balance	–	1,707
Revaluation surplus transferred to retained earnings	–	(1,707)
Asset revaluation reserve	–	–
Capital reserve	11,990	11,990
Separation reserve*	(113,000)	(113,000)
Reserves	(105,006)	(104,108)

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.

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 reporting 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

5.3 Net tangible assets per share
	2024	2023
	CENTS	CENTS
Net tangible assetsper share	73	48

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 divided by total shares on issue.

5.4 Earnings per share

5.4 Earnings per share
	2024	2023
Profit from continuing operations attributable to shareholders ($ thousands)	70,884	2,587
Profit/(loss) from discontinued operations attributable to shareholders ($ thousands)	3,401	(3,609)
Total profit/(loss) attributable to shareholders ($ thousands)	74,285	(1,022)
Weighted average number of ordinary shares for basic earnings per share (number of shares)	379,483,987	379,483,987
Basic earnings per share (cents) for continuing operations	18.7	0.7
Basic earnings per share (cents)	19.6	(0.3)

The basic 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).

Tower has assessed if the future potential instruments have a dilutive impact on earnings. The long-term incentive plan will not have a dilutive impact on earnings because shares are not expected to be issued, rather purchased from the market.

5.5 Dividends

On 27 June 2024, Tower paid an interim dividend of 3.0 cents per share, totalling $11.4m .

On 28 November 2024, the Board approved a final dividend of 6.5 cents per share, with the dividend being payable on 30 January 2025 for approximately $24.7m.

No dividends were paid during 2024 in respect of the 2023 financial year.

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Notes to the consolidated financial statements (continued)

6 Other balance sheet items

This section provides information about assets and liabilities not included elsewhere.

6.1 Property, plant and equipment

30 September 2024	OFFICE EQUIPMENT & FURNITURE $000 MOTOR VEHICLES $000 COMPUTER EQUIPMENT $000 TOTAL $000
Composition:
Cost	7,261 1,524 4,646 13,431
Accumulated depreciation	(2,491) (1,198) (3,007) (6,696)
Property, plant and equipment	4,770 326 1,639 6,735
Reconciliation:
Opening balance	4,123 608 1,549 6,280
Depreciation	(623) (241) (1,002) (1,866)
Additions	1,360 33 1,092 2,485
Disposals	(1) (26) – (27)
Foreign exchange movements	(89) (48) – (137)
Closing Balance	4,770 326 1,639 6,735

	OFFICE
	EQUIPMENT &	MOTOR	COMPUTER
	FURNITURE	VEHICLES	EQUIPMENT	TOTAL
30 September 2023	$000	$000	$000	$000
Composition:
Cost	6,052	1,702	3,587	11,341
Accumulated depreciation	(1,929)	(1,094)	(2,038)	(5,061)
Property,plant and equipment	4,123	608	1,549	6,280
Reconciliation:
Opening balance	2,244	970	2,203	5,417
Depreciation	(496)	(316)	(1,102)	(1,914)
Additions	2,489	–	480	2,969
Disposals	(71)	–	(16)	(87)
Foreign exchange movements	14	(18)	(10)	(14)
Assets reclassified as held for sale*	(57)	(28)	(6)	(91)
ClosingBalance	4,123	608	1,549	6,280

Assets reclassified as held for sale include the assets of discontinued operations. Refer to note 8.4.

Recognition and measurement

Property, plant and equipment (PPE) 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 reporting 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

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Notes to the consolidated financial statements (continued)

6.2 Intangible assets

a. Amounts recognised in the balance sheet

==> picture [360 x 181] intentionally omitted <==

----- Start of picture text -----

||||||
|---|---|---|---|---|
|SOFTWARE AND|CUSTOMER|
|GOODWILL|WORK IN PROGRESS|RELATIONSHIPS|TOTAL|
|30 September 2024|$000|$000|$000|$000|
|Composition:|
|Cost|17,744|107,977|40,674|166,395|
|Accumulated amortisation|–|(47,122)|(22,652)|(69,774)|
|Intangible Assets|17,744|60,855|18,022|96,621|
|Reconciliation:|
|Opening balance|17,744|57,326|23,454|98,524|
|Amortisation|–|(13,837)|(5,432)|(19,269)|
|Additions*|–|18,392|–|18,392|
|Disposals|–|(47)|–|(47)|
|Transfers to property,|–|(979)|–|(979)|
|plant and equipment|
|Closing Balance|17,744|60,855|18,022|96,621|

----- End of picture text -----

During the year ended 30 September 2024, additions to software assets primarily related to continued investment in Tower’s core insurance platform and website, and digitisation of claims processes. Total software additions in the year ended 30 September 2024 includes $10.8m (2023: $9.6m) of internally generated assets.

==> picture [360 x 174] intentionally omitted <==

----- Start of picture text -----

||||||
|---|---|---|---|---|
|SOFTWARE AND|CUSTOMER|
|GOODWILL|WORK IN PROGRESS|RELATIONSHIPS|TOTAL|
|30 September 2023|$000|$000|$000|$000|
|Composition:|
|Cost|17,744|94,215|40,645|152,604|
|Accumulated amortisation|–|(36,889)|(17,191)|(54,080)|
|Intangible Assets|17,744|57,326|23,454|98,524|
|Reconciliation:|
|Opening balance|17,744|53,458|23,451|94,653|
|Amortisation|–|(11,430)|(5,897)|(17,327)|
|Additions*|–|17,526|5,900|23,426|
|Disposals|–|(256)|–|(256)|
|Transfers to property,|–|(1,972)|–|(1,972)|
|plant and equipment|
|Closing Balance|17,744|57,326|23,454|98,524|

----- End of picture text -----

During the year ended 30 September 2023, additions to software assets primarily related to continued investment in Tower’s core insurance platform, while additions to customer relationships related to the acquisition of Kiwibank’s rights and obligations relating to servicing a portfolio of insurance policies underwritten by Tower.

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Notes to the consolidated financial statements (continued)

6.2 Intangible assets (continued)

a. Amounts recognised in the balance sheet (continued)

Critical accounting estimates and judgements

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 customer relationships asset predominantly consists of customer relationship assets with a useful life equivalent to the customer base’s expected lifespan of ten years with the exception of one asset (acquired in 2021) with an additional non-compete component that has a contracted useful life 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.

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.

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.

(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 (2023: no indications).

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Notes to the consolidated financial statements (continued)

6.2 Intangible assets (continued)

b. Impairment testing (continued)

(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 impairment has been recognised as a result (2023: nil).

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 CGU . A discount rate of 11.9% was used in the calculation (2023: 13.1%). The cash flows are based on Boardapproved management plans and forecasted profits for FY25 - FY27 (2023: FY24 - FY26). The projected cash flows are determined based on past performance and management's expectations for market developments with a terminal growth rate of 2.5% (2023: 2.5%).

The overall valuation is sensitive to a range of assumptions including management's forecasted profits, the discount rate and the terminal growth rate. Reasonable changes to these assumptions will not result in an impairment.

6.3 Leases

a. Amounts recognised in the balance sheet

(i) Right-of-use assets

	OFFICE SPACE
	2024	2023
	$000	$000
Composition:
Cost	29,814	30,267
Accumulated depreciation	(9,824)	(7,063)
Right-of-use assets	19,990	23,204
Reconciliation:
Opening balance	23,204	23,326
Depreciation	(4,096)	(4,209)
Additions	65	4,162
Disposals	(89)	–
Revaluations	518	(204)
Net foreign exchange movements	388	239
Assets reclassified as held for sale	–	(110)
Right-of-use assets	19,990	23,204

Recognition and measurement

Right-of-use assets are recognised when Tower has the right to use the corresponding assets. Rightof-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.

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Notes to the consolidated financial statements (continued)

6.3 Leases (continued)

a. Amounts recognised in the balance sheet (continued)

(ii) Lease liabilities

	2024	2023
	$000	$000
Composition:
Current	4,909	5,477
Non-current	23,946	27,138
Lease liabilities	28,855	32,615
Due within 1 year	4,909	5,477
Due within 1 to 2 years	4,782	5,921
Due within 2 to 5 years	13,309	12,483
Due after 5 years	8,114	11,865
Discount	(2,259)	(3,131)
Lease liabilities	28,855	32,615

b. Amounts recognised in the consolidated statement of comprehensive income

		2024	2023
	CLASSIFICATION	$000	$000
Depreciation and impairment	Insurance service expense	(4,096)	(4,027)
Interest expense	Finance costs	(882)	(920)
Lease expense		(4,978)	(4,947)

c. Amounts recognised in the consolidated statement of cash flows

	2024	2023
	$000	$000
Total cash outflow for leaseprincipalpayments	(5,064)	(6,980)

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 5.9% (2023: between 1.9% and 5.0%).

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.

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Notes to the consolidated financial statements (continued)

7 Tax

Recognition and measurement

This section provides information on Tower's tax expense during the year and its position at reporting date.

7.1 Tax expense

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|---|---|---|
|Composition|RESTATED|
|2024|2023|
|$000|$000|
|Current tax|2,948|2,525|
|Deferred tax|29,274|(419)|
|Adjustments in respect of prior years|11|1,152|
|Tax expense|32,233|3,258|
|Tax expense from continuing operations|31,774|5,176|
|Tax expense/(benefit) from discontinued operations|459|(1,918)|

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|---|---|---|
|Reconciliation of prima facie tax to income tax expense|RESTATED|
|2024|2023|
|$000|$000|
|Profit before tax from continuing operations|102,658|7,763|
|Profit/(loss) before tax from discontinued operations|3,860|(5,527)|
|Profit before taxation|106,518|2,236|
|Prima facie tax expense at 28% (2023: 28%)|29,825|626|
|Adjustments in respect of prior years|11|1,152|
|Tax effect of non-deductible expenses and non-taxable|1,641|679|
|income|
|Foreign tax credits written off|218|492|
|Other|538|309|
|Tax expense|32,233|3,258|

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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

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|---|---|---|
|RESTATED|
|2024|2023|
|$000|$000|
|Excess tax payments related to prior periods|11,766|12,038|
|Excess tax payments/tax payable related to current period*|1,456|879|
|Current tax asset|13,222|12,917|

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Expected to be recovered from 2025 as per the Board-approved operational plan for 2025 to 2027.
** Excess tax payment made in the Pacific Islands during the reporting period.

b. Current tax liability

The current tax liabilities balance of $606k (2023: $198k) 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 tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.

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Notes to the consolidated financial statements (continued)

7.3 Deferred tax

a. Deferred tax asset

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|---|---|---|
|Composition|RESTATED|
|2024|2023|
|$000|$000|
|Tax losses recognised|1,079|29,411|
|IFRS 17 restatements, software, PPE and other|1,041|1,165|
|Leases|8,080|9,166|
|Provisions and accruals|3,828|3,206|
|Recognised in profit or loss|14,028|42,948|
|Impact through other comprehensive income|–|–|
|Recognised in comprehensive profit or loss|14,028|42,948|
|Set-off of deferred tax liabilities pursuant to NZ IAS 12|(13,646)|(26,830)|
|Deferred tax asset|382|16,118|
|Deferred tax asset from continuing operations|382|16,074|
|Deferred tax asset from discontinued operations|–|44|

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|---|---|---|
|Reconciliation of movements|RESTATED|
|2024|2023|
|$000|$000|
|Opening balance|42,948|31,315|
|Movements recognised in profit or loss|(28,920)|11,633|
|Deferred tax asset pre NZ IAS 12 set off|14,028|42,948|

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b. Deferred tax liability

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|---|---|---|
|Composition|RESTATED|
|2024|2023|
|$000|$000|
|Insurance acquisition cash flows|(9,211)|(7,848)|
|Customer relationships|(4,002)|(5,001)|
|Software, property, plant and equipment|(6,079)|(5,447)|
|Leases|(7,362)|(8,664)|
|Other*|(708)|(48)|
|Recognised in profit or loss|(27,362)|(27,008)|
|Set-off of deferred tax liabilities pursuant to NZ IAS 12|13,646|26,830|
|Deferred tax liability|(13,716)|(178)|

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Primarily relates to deferred tax items in the Pacific islands.

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|---|---|---|---|
|Reconciliation of movements|RESTATED|
|2024|2023|
|$000|$000|
|Opening balance|(27,008)|(16,084)|
|Movements recognised in other comprehensive income|–|290|
|Movements recognised in profit or loss|(354)|(11,214)|
|Deferred tax liability|pre NZ IAS 12 set off|(27,362)|(27,008)|

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Notes to the consolidated financial statements (continued)

7.3 Deferred tax (continued)

Recognition and measurement

Critical accounting estimates and judgements

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 deferred tax assets in respect of its unused tax losses of $3.8m (2023: $105.0m).

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 reporting 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 tax authority and the Group intends to settle its current tax assets and liabilities on a net basis.

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. Management expects the tax losses to be utilised within the foreseeable future.

This assessment is completed on the basis of Board-approved management plans and forecasted profits for Tower Limited and subsidiaries. Tower's ability to utilise these tax losses depends on 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.

member of the Group.
	2024	2023
	$000	$000
Imputation credits available for use in subsequent reporting periods	–	271

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Notes to the consolidated financial statements (continued)

8 Other information

This section includes additional required disclosures.

8.1 Notes to the consolidated statement of cash flows

Composition	2024	2023
	$000	$000
Cash at bank	51,931	42,068
Deposits at call*	23,459	21,941
Cash and cash equivalents	75,390	64,009

The average interest rate at 30 September 2024 for deposits at call is 4.24% (2023: 4.65%).

Tower operates in countries in the Pacific Islands that are subject to foreign exchange restrictions, which may restrict the ability for immediate use of cash by the parent or other subsidiaries. As at 30 September 2024, this included NZD 7.4m held in Papua New Guinea and NZD 3.3m held in the Solomon Islands following the sales of the disposal groups (2023: NZD 8.9m held in Papua New Guinea). This cash is not currently available for use by the Group.

Reconciliation of profit/(loss) for the year to cash flows	RE-PRESENTED
from operating activities 2024 $000	2023 $000
Profit/(loss) after taxation 74,285	(1,022)
Adjusted for non-cash items Depreciation of property, plant and equipment 1,866	1,855
Depreciation and disposals of right-of-use assets 4,096	4,209
Amortisation of intangible assets 19,269	17,327
Financing costs 885	928
Fair value losses on financial assets (4,034)	(1,756)
Share rights issued under Tower Long-Term Incentive Plan 419	124
Change in deferred tax 29,280	222
Change in foreign exchange 759	(967)
Adjusted for investing activities Loss on disposal of fixed assets (30)	(1,243)
Gain on disposal of discontinued operation (1,988)	(2,165)
Impairment loss recognised for disposal group –	563
Investment expenses 250	298
Adjusted for movements in working capital Change in receivables (4,379)	(7,076)
Change in payables and provisions 19,613	(5,735)
Change in insurance contract liabilities (113,363)	127,475
Change in reinsurance contract assets 116,317	(125,902)
Change in taxationpayable 1,942	1,130
Net cash inflow from operating activities 145,187	8,265
Net cash inflow from operating activities from continuing operations 141,315	23,541
Net cash inflow/(outflow) from operating activities from discontinued operations 3,872	(15,276)

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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.

the Corporate Governance section of the annual report.
	2024 $000 2023 $000
Salaries and other short term employee benefits	4,974 5,511
Long term benefits	428 536
Termination benefits	215 -
Director fees	648 613
Relatedparty remuneration	6,265 6,660

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 implemented a share-based long-term incentive plan with effect from 7 December 2022. Refer note 8.5.

8.3 Auditor’s remuneration

8.3 Auditor’s remuneration
	2024 $000 2023 $000
Audit of financial statements*	997 748
Audit or review related services**	23 32
Other assurance services**	55 35
Assurance related services**	30 –
Total fees paid to Group's auditors	1,105 815
Fees paid to subsidiaries' auditors different to Group auditors:
Audit of financial statements***	– 15
Auditors remuneration	1,105 830

Audit of financial statements includes fees for both the audit of annual financial statements and the review of the interim financial statements. It also includes fees for the transition to NZ IFRS 17. PwC Fiji performs the audits of all overseas incorporated subsidiaries with the support of PwC New Zealand and other PwC network firms. $122k is paid to other PwC network firms (non New Zealand) for their audit services.
** Audit or review related services includes the audit of the Pacific Islands regulatory returns (Solomon Islands Branch and Tower Insurance (Fiji) Limited), other assurance services includes annual solvency return assurance, and assurance related services includes Greenhouse gas emissions pre-condition assessment for assurance. The other assurance services for the year ended 30 September 2023 were completed during the year ended 30 September 2024.
*** The audit of Tower Insurance (Vanuatu) Limited was performed by Law Partners in 2023.

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8.4 Discontinued operations

On 29 January 2024 Tower completed the sale of its Solomon Islands business to Trans Pacific Assurance Limited for a sale price of SBD 18.2m (NZD 3.3m). On 30 August 2024 Tower completed the sale of all of its shares in its Vanuatu subsidiary to Capital Insurance Group of Papua New Guinea for a sale price of NZD2.4m, subject to finalisation of completion accounts.

The following assets and liabilities were reclassified as held for sale in relation to the discontinued operations in the comparative period.

sares n ts anuatu susary to apta nsurance roup o apua ew unea or a sae prce o .m, subject to finalisation of completion accounts. The activities of the businesses have been reported in the current period, and as at 30 September 2023, as a discontinued operation. Financial information on these disposals are set out below. The gain on sale in the table below is subject to finalisation of completion accounting in the year ended 30 September 2025. Details of the sale of the subsidiary SOLOMON ISLANDS $000 VANUATU $000 Cash and cash equivalents – 1,888 Receivables – 1,182 Reinsurance contract assets 16 1,035 Right of use assets 34 19 Property,plant and equipment 64 7	Assets and liabilities classified as held for sale 2024 $000 2023 $000
	Cash and cash equivalents – 1,302 Investments – 820 Receivables – 3,356 Current tax assets – 147 Reinsurance contract assets – 5,635 Deferred tax assets – 44 Right of use assets – 110 Property,plant and equipment – 91
	Total assets at the date of disposal – 11,505
	Payables – 160 Liability for remaining coverage – 2,054 Liability for incurred claims – 5,121 Lease liabilities – 119 Provisions – 155
Total assets at the date of disposal 114 4,131
Payables 237 311 Liability for remaining coverage 220 952 Liability for incurred claims 131 749 Lease liabilities 34 23 Provisions 11 68 Total liabilities at the date of disposal 633 2,103 Net (liabilities)/assets at the date of disposal (519) 2,028 Net cash consideration received less costs of disposal 1,706 2,201 Gain on sale before income tax and reclassification of foreign currency translation reserve 2,225 173 Reclassification of foreign currencytranslation reserve toprofit or loss – (410) Gain/(loss) on sale 2,225 (237)
	Total liabilities at the date of disposal – 7,609
	Net assets classified as held for sale – 3,896
	* As at 30 September 2023, the Tower Group owed disposal groups $3.2m. The assets and liabilities from discontinued operations disclosed above are stated without adjustment for these intercompany transactions. The currency translation reserve in relation to the discontinued operations as at 30 September 2023 was $219k.

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8.4 Discontinued operations (continued)

The comparatives presented in the table below include the profit or losses of the Solomon Islands business, the Vanuatu subsidiary and the Papua New Guinea subsidiary (sale completed during the year ended 30 September 2023).

September 2023).
Profit from discontinued operations	2024	2023
	$000	$000
Insurance revenue	6,591	9,970
Insurance service expense	363	(25,384)
Insurance result before reinsurance contracts held	6,954	(15,414)
Net (expense)/income from reinsurance contracts held	(5,054)	8,247
Insurance service result	1,900	(7,167)
Net investment income	23	20
Net insurance and investment result	1,923	(7,147)
Other income	6	64
Other operating expenses	(54)	(38)
Finance costs	(3)	(8)
Gain on sale of the subsidiaries	1,988	2,165
Impairment loss recognised for disposalgroup	-	(563)
Profit/(loss) before taxation from discontinued operations	3,860	(5,527)
Tax expense/(income)	(459)	1,918
Profit/(loss) after taxation from discontinued operations	3,401	(3,609)

Disposal groups paid fees to other members of the Tower Group of $1.6m during the financial year ended 30 September 2024 (2023: $2.6m), relating to the provision of reinsurance, management and other services. These amounts are included within the net expense from reinsurance contracts held and insurance service expense lines above, and are then eliminated within continuing operations.

Insurance service expense includes ($1.5m) (2023: $7.1m) of claims expense incurred by the parent company under an internal reinsurance treaty with its Vanuatu subsidiary.

Earnings per share 2024	2023
Basic earningsper share (cents) for discontinued operations 0.9	(1.0)

The currency translation differences recognised in other comprehensive income during the year ended 30 September 2024 in relation to the discontinued operations, including reclassification adjustment, were $0.2m (2023: nil).

8.5 Tower Long-Term Incentive Plan

The Group has a long-term incentive plan which is intended to align the interests of management and shareholders.

Recognition and measurement

The Tower Long-Term Incentive Plan is considered to be an equity settled scheme under NZ IFRS 2 Share-based Payments and the vesting conditions for the scheme include both service and performance conditions.

The costs associated with this plan are measured at fair value at grant date and are recognised as an expense in profit or loss over the vesting period, with a corresponding entry to a reserve in equity. The estimate of the number of rights for which the service conditions are expected to be satisfied is revised at each reporting date, with any cumulative catch-up adjustment recognised in profit or loss in the period that the change in estimate occurred. Any rights not vested after the expiry date are cancelled.

The plan provides selected eligible employees with Restricted Share Rights (RSR's), which ‘vest’ over a threeyear period, during which participants must remain employed by the Group and performance conditions must be met as follows.

Share Rights vest if Tower’s Total Shareholder Return (TSR) sits at or above the 50th percentile of the NZX 50 index ranked by TSR over the same period:

(i) Where the company TSR equals the 50th percentile TSR of the index companies over the performance period, 50% of the share rights will vest.
(ii) Where the company TSR equals or exceeds the 75th percentile TSR of the index companies over the performance period, 100% of the share rights will vest
(iii) Where the company TSR over the performance period exceeds the 50th percentile TSR of the index companies but does not reach the 75th percentile, then between 50% and 100% of the share rights will vest as determined on a straight line progression basis.

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8.5 Tower Long-Term Incentive Plan (continued)

During the year the following movements of rights to shares occurred in accordance with the rules of the plan:

	2024 2023
	NUMBER OF SHARE RIGHTS (RSR’S) NUMBER OF SHARE RIGHTS (RSR’S)
Share Rights outstanding at the beginning of the period Share Rights granted during the period Share Rights forfeited during the period Share Rights vested and settled during the period Share Rights outstandingat the end of theperiod	1,946,557 – 2,612,452 1,946,557 (147,429) – – – 4,411,580 1,946,557

The weighted average remaining contractual life for share rights outstanding under the plan is 1.8 years (2023: 2.2 years).

8.6 Contingent liabilities

Claims and disputes

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.

8.7 Capital commitments

As at 30 September 2024, Tower has nil capital commitments (2023: nil).

8.8 Subsequent events

On 28 November 2024, the Board approved a final dividend of 6.5 cents per share, with the dividend being payable on 30 January 2025 for approximately $24.7m. There were no other subsequent events.

The assessed fair value of the rights granted during the year was 40 cents (2023: 23 cents). This was calculated using a Monte Carlo share price simulation model by Deloitte Limited. The significant inputs into the model for rights granted during the period are in the table below:

model for rights granted during the period are in the table below:
Assumptions	2024	2023
Share price at grant date (cents)	69	70
10 Day VWAP (cents)	59	70
Exercise Price	Nil	Nil
Option life	3 years	3 years
Risk-free rate	4.51%	4.36%
Expected volatility	20%	23%

The expected price volatility is based on annualised price volatility for the four years prior to the grant date. The total share-based payment expense during the year was $419k (2023: $124k).

There were no liabilities arising from share-based payment transactions at reporting date (2023: nil). The plan allows participants to request a PAYE Election, under which they may ask Tower to make payment to the IRD to settle their PAYE liability subject to Tower being reimbursed by the participant. Tower is not required to accept any participant’s request for a PAYE Election. Tower has not entered into any agreed PAYE Election arrangements during the year.

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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 2024, 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 Accounting Standards (IFRS Accounting Standards).

What we have audited

The Group's consolidated financial statements comprise:

the consolidated balance sheet as at 30 September 2024;
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, comprising material accounting policy information 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 I nternational 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 services for the Group. These services are a) audit or review related: audit of the insurance regulatory returns; b) other assurance: reasonable assurance on the Company’s solvency return; and c) assurance related: assessment of whether the preconditions for assurance exist in preparation for the assurance over greenhouse gas emissions. 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. The provision of these other services and relationships have not impaired our independence as auditor of the Group.

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Independent auditor’s report (continued)

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.

Description of the key audit matter	How our audit addressed the key audit matter
Valuation of the liability for incurred claims (2024: $135,527,000; 2023:	Our audit procedures included obtaining an understanding of key claims and actuarial processes and
$241,195,000 (restated))	controls, including key data reconciliations and the Group’s review of the actuarial estimates of the
We considered the valuation of the liability for incurred claims a key audit matter as it	liability for incurred claims related to past services.

We considered the valuation of the liability for incurred claims a key audit matter as it involves an estimation process combined with significant judgements and assumptions, made by the Group, to determine the balance.

Claims data is the key input to the actuarial estimate. Accordingly we:

evaluated the design effectiveness and tested key controls over claims processing;

The liability for incurred claims relates to claims incurred under groups of insurance contracts, as at and prior to reporting date, which have not been paid. The liability includes:

assessed a sample of claim case estimates at the year end to check that they were supported by an appropriate management assessment and documentation, and classified appropriately to relevant claim type;
• assessed, on a sample basis, the accuracy of the previous claim case estimates by comparing to the actual amount settled during the year and assessed the changes in the claim case estimate to determine whether such change was based on new information available during the year;
• inspected a sample of claims paid during the year to confirm that they are supported by appropriate documentation;
• agreed, on a sample basis, key attributes of insurance contract information to each underlying contract to determine the level of aggregation and groups used for valuation purposes; and
• tested the integrity of data used in the actuarial models by agreeing relevant model inputs, such as claims data, to source, on a sample basis.
Together with our actuarial experts, we:
an estimate of the present value of future cash outflows to settle claims; and
a risk adjustment for non-financial risk.

There is uncertainty over the amount that reported claims, and claims incurred at the reporting date but not yet reported to the Group, will ultimately be settled at. The estimation process relies on the quality of underlying claims data and the use of informed estimates to determine the quantum of the ultimate future cash flows.

Key actuarial assumptions applied in the valuation of future cash flows include:

expected future claims development;
claims handling expense ratios;
future Canterbury Earthquake overcap property claims; and
discount rate.
considered the work and findings of the Group’s Actuaries;

Changes in assumptions can lead to significant movements in the liability for incurred claims.

evaluated the actuarial models and methodologies used, by comparing to generally accepted models and methodologies applied in the sector and to the prior year, seeking justification for any variances;

A risk adjustment allows for the inherent uncertainty in the amount and timing of the cash flows that arise from non-financial risk related to a group of insurance contracts. In determining the risk adjustment, the Group makes judgements about the level of required capital to support the insurance business, claims experience of business classes, volatility of each class of business written and the correlation between different geographical locations. Refer to note 2.4 to the consolidated financial statements.

assessed key actuarial judgements and assumptions and challenged them by comparing with our expectations based on the Group’s historical claims experience, our own sector knowledge and independently observable industry trends (where applicable);

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Description of the key audit matter

How our audit addressed the key audit matter

tested on a sample basis, the underlying calculations in certain valuation models;
evaluated the relevant underlying calculation used to derive the risk adjustment, including the significant assumptions, against our own knowledge of the Group’s business and independently observable market inputs (where applicable); and
assessed the appropriateness of presentation and disclosures in the financial statements against the requirement of accounting standards.

The Group adopted NZ IFRS 17 Insurance Contracts from 1 October 2023. We have also considered the extent to which the procedures above are relevant in the context of the comparative restated number and executed those procedures accordingly, including confirming that disclosures meet the requirements of accounting standards.

Our audit approach

Overview

Overall group materiality: $5.5 million, which represents approximately 1% of insurance revenue.

We chose insurance revenue as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is a generally accepted benchmark for insurance companies. The application of approximately 1% is based on our professional judgement, noting that it is also within the range of commonly accepted revenue related thresholds.

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Materiality
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Group scoping
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A full scope audit was performed for the Company based on its financial significance to the Group. Specified audit procedures were performed on financial statement line items of certain subsidiaries and analytical review procedures were performed on remaining Group entities. As reported above, we have one key audit matter, being:

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Key audit
matters
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Valuation of the liability for incurred claims

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the consolidated financial statements as a whole as set out above. These, together with qualitative considerations, helped us to determine the scope of our audit, the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the consolidated financial statements as a whole.

Consolidated financial statements

2024 in review

Sustainability

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Our strategy

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Contents

Independent auditor’s report (continued)

How we tailored our group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

Other information

The Directors are responsible for the other information. The other information comprises the information included in the Annual report, but does not include the consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the consolidated financial statements

The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of the consolidated financial statements in accordance with NZ IFRS and IFRS Accounting Standards, and for such internal control as the Directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the Directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements, as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

A further description of our responsibilities for the audit of the consolidated financial statements is located at the External Reporting Board’s website at:

https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/ This description forms part of our auditor’s report.

Who we report to

This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that we might state those matters which we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our audit work, for this report or for the opinions we have formed.

The engagement partner on the audit resulting in this independent auditor’s report is Lisa Crooke.

For and on behalf of:

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PricewaterhouseCoopers 28 November 2024

Auckland

Consolidated financial statements

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Appointed Actuary’s report

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28 November 2024

The Directors Tower Limited 136 Fanshawe Street Auckland 1010

Dear Directors

Review of Actuarial Information contained in the financial statements

Finity Consulting Pty Limited (Finity) has been asked by Tower Limited (Tower) to carry out a review of the 30 September 2024 Actuarial Information contained in the financial statements and used in their preparation and to provide an opinion as to the appropriateness of this information. This letter sets out the findings of our review, as required under Section 78 of the Insurance (Prudential Supervision) Act 2010 (the Act).

Geoff Atkins is an employee of Finity and is the Appointed Actuary to Tower. Finity has no relationship with Tower apart from being a provider of actuarial services.

We prepared the actuarial valuation of liabilities remaining from the Canterbury Earthquakes and reviewed the actuarial valuations of insurance liabilities for the New Zealand business and the Pacific Islands businesses. The scope of our review was as required by Section 77 of the Act.

Having carried out the review, nothing has come to our attention that would lead us to believe that the Actuarial Information used in the financial statements or their preparation, or the determination of the solvency position for Tower as at 30 September 2024 is inappropriate.

In our opinion the company has maintained a solvency margin in excess of the minimum required as at 30 September 2024.

No limitations were placed on us in performing our review and all data and information requested was provided

The report is being provided for the sole use of Tower for the purpose stated above. It is not intended, nor necessarily suitable, for any other purpose and should only be relied on for the purpose for which it is intended.

Yours sincerely

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Geoff Atkins (Appointed Actuary) Fellow of the New Zealand Society of Actuaries

Anagha Pasche Fellow of the New Zealand Society of Actuaries

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Contents

Consolidated financial statements

2024 in review

Sustainability

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ANNUAL REPORT 2024

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Our strategy

Corporate governance

Contents

This section of the Annual Report provides an overview of the corporate governance principles, policies and processes adopted and followed by Tower’s Board (Board) during the year ending 30 September 2024 ( FY24 ).

The Board is committed to achieving high standards of corporate governance, ethical behaviour, and accountability. When there are developments in corporate governance practices, the Board reviews these against Tower’s practices and updates them where appropriate, including seeking external advice to encourage an environment of continuous improvement in Board performance.

For the reporting period to 30 September 2024, the Board considers that Tower’s corporate governance practices have materially adhered to the NZX Corporate Governance Code ( NZX Code ). Further information about the extent to which Tower has complied with each of the NZX Code recommendations is set out in Tower’s corporate governance statement, available on Tower’s website at tower.co.nz/investor-centre.

Statutory disclosures

Diversity

Gender Diversity

The below table provides a quantitative breakdown as to the gender composition of Tower’s Directors and Officers, and other employee groups as at 30 September 2024, compared to 30 September 2023, including subsidiaries. The Executive Leadership team includes the Chief Executive Officer and those employees who report directly to the Chief Executive Officer. The Senior Leadership Team refers to employees in remuneration band 8 and above. Total company figures exclude the Board of Directors, and include permanent and fixed term employees, and the employees of Tower’s Pacific Island subsidiaries:

Island subsidiaries:
GROUP	30 SEPTEMBER 2024 30 SEPTEMBER 2023
	% GROUP NUMBER % GROUP NUMBER
Board of Directors Males Females Gender Diverse	80% 4 80% 4 20% 1 20% 1 0% 0 0% 0
Executive Leadership team Males Females Gender Diverse	50% 5 70% 7 50% 5 30% 3 0% 0 0% 0
Senior Leadership team Males Females Gender Diverse Prefer not to disclose	60% 29 57% 23 33% 16 43% 17 0% 0 0% 0 6% 3 Data not collected
Employees Males Females Gender Diverse Prefer not to disclose	34% 294 35% 281 62% 532 64% 513 1% 5 1% 6 3% 25 Data not collected
Total company Males Females Gender Diverse Prefer not to disclose	36% 328 39% 311 60% 553 61% 533 1% 6 1% 6 3% 28 Data not collected
Total employees	915 850

Consolidated financial statements

2024 in review

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Evaluation from the Board on Tower’s performance with respect to diversity, equity and inclusion

Tower has a Diversity Equity and Inclusion Policy, which outlines Tower’s commitment to diversity, equity and inclusion, and provides principles and approaches to cultivate a respectful and inclusive environment.

The Policy notes that the Company actively seeks to increase diversity in all its forms, including but not limited to race, ethnicity, gender identity, experience, education, sexual orientation, age, disability, neurodiversity, socio-economic status and cultural background.

The Board has delegated to its People, Remuneration and Appointments Committee the responsiblity to review the Company’s performance against measurable objectives for achieving diversity and inclusion, pursuant to the Diversity, Equity and Inclusion policy.

In furtherance of those goals, in FY24, the Company increased senior leadership accountability, by including performance objectives attached to inclusion, equity and diversity goals.

Employee Resource Groups have been refreshed, to increase employee engagement, and to provide additional opportunities to share diverse perspectives. Tower aimed to:

Increase diversity and inclusion engagement results to 8.8 for both ethnic and gender diverse populations (from 8.6). The Company achieved an engagement result of 8.9 for the year ended 30 September 2024.
Have 25% of employees engaged in at least one employee representation groups. 30% of employees are engaged in Tower’s employee representation source groups.
Maintain our 0.0% (+/- 0.9%) Pay Equity gap. Tower has maintained its 0.0%(+/-0.9%) Pay Equity gap.
Reduce overall pay gap by 2% (from 20.2%). This goal was not achieved.
Add new reporting and analysis of Māori and Pacific pay equity analysis for New Zealand based employees. This analysis is now undertaken and provided to the People, Remuneration and Appointment Committee.
Improve retention of diverse talent. 30% of the participants in the Emerging Talent Programme and Talent Acceleration Programme are Māori or Pasifika. 73% of participants identify as female. Overall retention of participants in the talent programmes is 85%, compared to 82% in FY23.

The Board considers that in FY24, the Company has met all but one if its targets in respect of diversity and inclusion and has continued to increase diversity in all its forms across the business.

Board and Committee Composition

During FY24 the Board comprised the following members:

Michael Stiassny (Chair) Graham Stuart Marcus Nagel Geraldine McBride Mike Cutter (from 17 November 2023) Blair Turnbull (retired 17 November 2023)

Director Independence

The Board has determined, based on information provided by directors regarding their interests, and criteria for independence benchmarked against the FMA, RBNZ and NZX independence requirements, that at 30 September 2024 Mr Stiassny, Mr Stuart, Ms McBride and Mr Cutter were independent. The Board determined that Mr Nagel was not independent due to his relationship with Tower’s largest shareholder. The Board does not consider that the tenures of Mr Stiassny or Mr Stuart alter their status as independent directors.

Board Committees

During FY24 the Board had the following Committees:

Audit Committee

Members: Graham Stuart (Chair), Michael Stiassny, Marcus Nagel, Geraldine McBride, Mike Cutter (from 17 November 2023) .

Risk Committee

Members: Geraldine McBride (Chair), Michael Stiassny, Graham Stuart, Marcus Nagel, Mike Cutter (from 17 November 2023) .

People, Remuneration and Appointment Committee

Members: Michael Stiassny (Chair), Graham Stuart, Marcus Nagel, Geraldine McBride, Mike Cutter (from 17 November 2023) .

Other Committees

Tower’s Board may establish sub-committees from time to time. In 2024, a Results SubCommittee was convened on two occasions.

Consolidated financial statements

2024 in review

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Board and Committee meeting attendance

Director attendance at Board and Committee meetings held from 1 October 2023 to 30 September 2024 is set out below:

				REMUNERATION
		AUDIT	RISK	AND APPOINTMENTS	RESULTS SUB-
	BOARD	COMMITTEE	COMMITTEE	COMMITTEE	COMMITTEE
Meetings held	15	4	4	4	2
Michael Stiassny	15	4	4	4	2
Graham Stuart	14	4	4	4	2
Marcus Nagel	15	4	4	4	–
Geraldine McBride	15	4	4	4	–
Mike Cutter	15	4	4	4	–
Blair Turnbull*	1	–	–	–	–

Mr Turnbull retired as an executive director on 17 November 2023. As an executive director, he was not a member of any Board Committees.

In addition to meetings, the Board held a two-day strategy session in July, attended by Directors, members of the Executive Leadership Team and various speakers and experts.

Remuneration

Director Remuneration

The Board’s approach is to remunerate directors at a similar level to comparable Australasian companies, with a small premium to reflect the complexity of the insurance and financial services sector. At the Annual Shareholders’ Meeting in February 2004 shareholders approved a maximum payment of NZ$900,000 per annum for director fees.

Tower seeks external advice when reviewing Board remuneration. The People, Remuneration and Appointments Committee is responsible for assisting directors with the review of directors’ fees. Remuneration is considered through the lens of the Director and Executive Remuneration Policy to ensure that directors and executives are remunerated in a fair and reasonable manner, and that such remuneration is transparently communicated to relevant stakeholders.

Annual fees as approved by the Board with effect from 1 October 2020 are:

TOWER LIMITED BOARD/COMMITTEE FEES	CHAIR (NZ$)	MEMBER (NZ$)
Base fee – Board of directors	180,000	100,000
Audit Committee	10,000	(included in base Director fee)
Risk Committee	10,000	(included in base Director fee)
Remuneration and Appointments Committee	–	–

The total remuneration received by each director for the year ended 30 September 2024 is set out below (NZ$, and exclusive of GST, if any):

REMUNERATION AND BENEFITS RECEIVED BY TOWER LIMITED DIRECTORS IN THE YEAR ENDED 30 SEPTEMBER 2024 (NZD)

IN THE YEAR ENDED 30 SEPTEMBER 2024 (NZD)
Michael Stiassny	180,000
Graham Stuart	110,000
Geraldine McBride*	114,166
Marcus Nagel	100,000
Mike Cutter	87,222

Ms McBride received an additional payment during the year to reflect her role as Acting Chair of the Risk Committee from April 2023.

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REMUNERATION AND BENEFITS RECEIVED BY TOWER SUBSIDIARY DIRECTORS IN THE YEAR ENDED 30 SEPTEMBER 2024

Isikeli Tikoduadua, Director Tower Insurance (Fiji) Limited and
Southern Pacific Insurance Company (Fiji) Limited	18,000 Fijian Dollars
Barry Whiteside, Director Tower Insurance (Fiji) Limited and Southern
Pacific Insurance Company (Fiji) Limited, Chair of Audit & Risk Committee,
Tower Insurance (Fiji) Limited	20,000 Fijian Dollars

Directors of Tower Limited and its subsidiaries are reimbursed for out of pocket expenses incurred in the course of their activities as directors, including travel and other expenses. As these expenses are not in the nature of remuneration or benefits, they are not listed here. No employee of Tower Limited or its subsidiaries who acts as a director of a subsidiary receives any remuneration for their role as a director of that subsidiary. The number of employees who receive remuneration of more than $100,000 is included in the remuneration table on page 109. Auditor fees paid on behalf of Tower and its subsidiaries are disclosed in the financial statements.

CEO and senior executive remuneration

The Board’s approach to remunerating the Chief Executive Officer and other key executives is to provide market based remuneration packages comprising a blend of fixed and variable remuneration, with clear links between individual and company performance, and reward.

This approach is intended to encourage Tower’s executives to meet the Company’s short and long term objectives. The People, Remuneration and Appointments Committee reviews the remuneration packages of the Chief Executive Officer and the Chief Executive Officer’s direct reports at least annually.

Fixed remuneration

During FY24 the Chief Executive Officer, Mr Blair Turnbull, received a base salary of $681,575, plus a 3% employer Kiwisaver contribution. In addition, Mr Turnbull receives Life Insurance and Income Protection Insurance as part of Tower’s group scheme available to all permanent employees working at least 15 hours a week.

In FY24, we received external and independent advice from EY on the CEO’s remuneration, including market benchmarking against comparable New Zealand companies. EY’s advice was sought in order to gauge actual and forecast movements within the market, and to assess the levels of fixed and target total remuneration to pay its CEO. EY reported to the board on this advice.

Variable Remuneration

In FY24, the CEO’s variable remuneration consists of a Short Term Incentive (STI) of up to 50% of base salary and a Long Term Incentive (LTI) of up to 100% of base salary.

The maximum STI for FY24 is $340,788 based on performance against a company scorecard that includes financial targets, customer metrics and employee engagement (the FY24 scorecard is set out in the Corporate Governance Statement). In FY24, Mr Turnbull was awarded an STI payment of $276,038 based on a company scorecard against targets of 81%, as detailed below:

PILLAR	MEASURE % FY24 ACTUAL SCORECARD OUTCOME
Financial (75%)	Underlying NPAT 45% 83.5m 45%
	GWP 10% 595m 6.8%
	MER 10% 30.7%1 6.0%
	BAU Claims Ratio 10% 48% 10%
Customer (20%)	NPS 20% +38 8.2%
People (5%)	Engagement 5% 8.1 5.0%
Company Outcome	81.0%

As disclosed in the FY23 Annual Report, no STI was earned in respect of FY23.

The maximum LTI grant per annum is currently $681,575 (total) of share rights as well as an LTI payment of $260,000 in respect of the FY21 LTI scheme, which vested in full.

The FY21 LTI scheme was a cash-based scheme granted at the end of FY21. The scheme had a maximum award amount of $975,000 in cash (being 150% of the CEO’s then base salary), with the award amount based on the performance of Tower’s Total Shareholder Return against the NZX50 at the end of the financial year, which translated to an award equal to 40% of the CEO’s FY21 base salary. Vesting is dependent on the CEO remaining employed with Tower and not subject to any disciplinary action or performance management process as at the end of FY24. The Board exercised its discretion to approve full vesting of the FY21 LTI payment in October 2024[2] .

1 The actual MER used for this scorecard does not include additional Short Term incentive payments accrued for all staff in FY24.

2 STI payments are paid in first quarter of the financial year following the year for which they are earned.

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Mr Turnbull received 1,155,509 unvested share rights pursuant to the FY24 long term incentive plan that vests based on Tower’s Total Shareholder Return performance relative to the performance of companies within the NZX50 index. The details of the LTI scheme are included in the Corporate Governance Statement.

Given the resignation of Mr Turnbull, no further LTI grants will be made to the CEO.

CEO’s Long Term Incentives

			SHARE	NUMBER OF SHARE	VALUE OF SHARE
GRANT			RIGHTS	RIGHTS ISSUED ON	RIGHTS ON GRANT
YEAR		PERFORMANCE PERIOD	ISSUED DATE	GRANT DATE	DATE ($)	STATUS
FY24	7	December 2023 to	26 March	1,155,509	681,575	Unvested
	6	December 2026	2024
FY23	7	December 2022 to	13 January	939,840	657,888	Unvested
	6	December 2025	2023

The value of share rights on grant date is calculated using the volume weighted average price of Tower Limited’s shares over the 10 trading days preceding the commencement date of the performance period.

CEO’s Remuneration History

The CEO’s remuneration for the last two years is set out in the table below.

YEAR	FIXED REMUNERATION STI LTI TOTAL
	BASE SALARY OTHER BENEFITS EARNED AMOUNT EARNED AS % OF MAXIMUM AWARD LTI VESTED FIXED REM + STI EARNED + LTI VESTED
FY2024	681,575 23,195 276,038 81% 260,000* 1,240,808
FY2023	657,888 22,485 - 0% - 680,373

*STI payments are paid in first quarter of the financial year following the year for which they are earned.

Employee remuneration

The table below sets out the number of employees or former employees of Tower and its subsidiaries (excluding directors and former directors) who received remuneration and other benefits valued at or exceeding $100,000 for the years ended 30 September 2023 and 2024. Tower has not previously included its subsidiaries in this reporting. Remuneration includes base salary, performance payments and redundancy or other termination payments. The 2024 figures include company contributions of 3% of gross earnings for those individuals who are members of a KiwiSaver scheme. The remuneration bands are expressed in New Zealand Dollars:

FROM TO 2024 2023 100,000 109,999 36 26 110,000 119,999 31 24 120,000 129,999 35 34 130,000 139,999 31 25 140,000 149,999 29 15 150,000 159,999 28 26 160,000 169,999 14 11 170,000 179,999 4 4 180,000 189,999 8 6 190,000 199,999 5 3 200,000 209,999 4 6 210,000 219,999 5 5 220,000 229,999 3 3 230,000 239,999 2 6 240,000 249,999 2 3 250,000 259,999 0 1 260,000 269,999 4 0 270,000 279,999 4 2 280,000 289,999 3 3 290,000 299,999 1 0 300,000 309,999 1 1	FROM TO 2024 2023
	320,000 329,999 1 1
	330,000 339,999 1 1
	340,000 349,999 0 1
	350,000 359,999 1 1
	360,000 369,999 0 1
	370,000 379,999 0 1
	410,000 419,999 2 0
	420000 429,999 1 0
	430,000 439,999 0 1
	440,000 449,999 2 0
	450,000 459,999 1 0
	460,000 469,999 0 1
	470,000 479,999 1 1
	490,000 499,999 0 1
	530,000 539,999 0 1
	610,000 619,999 1 0
	650,000 659,999 1 0
	670,000 679,999 0 1
	680,000 689,999 1 0
	700,000 709,999 0 1
	850,000 859,999 0 1
310,000 319,999 1 2	Total 264 220

Consolidated financial statements

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Security Holder Information

Substantial product holders (as at 30 September 2024)

The names and holdings of Tower’s substantial product holders based on notices filed with Tower under the Financial Markets Conduct Act 2013 at 30 September 2024 are:

NAME	TOTAL ORDINARY SHARES
Bain Capital Credit LP, Bain Capital Investments (Europe Limited and Dent
Issuer Designated Activity Company	67,464,858
Salt Funds Management Limited	26,454,673
Accident Compensation Corporation	36,239,113
New Zealand Funds Management Limited on behalf of itself and its wholly
owned subsidiary New Zealand Funds Superannuation Limited	26,615,216
Pacific International Insurance Pty Limited	22,072,615

These totals may differ from the shareholdings described in other sections on this report.

Largest shareholders (as at 30 September 2024)

The names and holdings of the 20 largest registered Tower shareholders as at 30 September 2024 were:

		UNITS	% UNITS
1.	Dent Issuer Designated Activity Company	75,896,447	20.00
2.	Accident Compensation Corporation - NZCSD	34,040,321	8.97
3.	Citibank Nominees (New Zealand) Limited - NZCSD	47,507,398	12.52
4.	Pacific International Insurance Pty Limited	22,072,615	5.82
5.	Lennon Holdings Limited	16,200,000	4.27
6.	HSBC Nominees (New Zealand) Limited - NZCSD	11,714,723	3.09
7.	Masfen Securities Limited	13,430,197	3.54
8.	HSBC Custody Nominees (Australia) Limited	9,430,160	2.48
9.	Forsyth Barr Custodians Limited <1-Custody>	8,857,241	2.33
10.	MMC – Queen Street Nominees Limited ACF Salt Long Short Fund –	8,296,928	2.19
	NZCSD
11.	JBWere (NZ) Nominees Limited	7,921,421	2.09
12.	BNP Paribas Nominees (NZ) Limited - NZCSD	2,536,016	0.67
13.	MMC- Queen Street Nominees Ltd ACF Salt Funds Management <Salt	6,192,201	1.63
	Funds Management>
14.	Public Trust - NZCSD	4,725,000	1.25
15.	Investment Custodial Services Limited	5,415,647	1.43
16.	Custodial Services Limited	1,623,315	0.43
17.	New Zealand Depository Nominee Limited	2,185,275	0.58
18.	Tea Custodians Limited Client Property Trust Account - NZCSD	2,988,997	0.79

19.	JP Morgan Chase Bank NA NZ Branch-Segregated Clients ACCT -	3,778,374	1.00
	NZCSD
20.	JBWere (NZ) Nominees Limited	1,343,344	0.35
	Totals: top 20 holders of ordinary shares	278,727,999	73.45
	Total remaining holders balance	100,755,988	26.55

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Securities held by Directors

Until Tower’s shareholders adopted a revised constitution at the annual shareholder meeting held in February 2024, directors were required to hold shares in the Company. At 30 September 2024, directors, or entities related to them held relevant interests (as defined in the Financial Markets Conduct Act 2013) in Tower Limited shares as follows:

Ordinary shares

Ordinary shares
DIRECTOR	BENEFICIAL
Wongaling Pty Limited (Geraldine McBride)	5,477
Marcus Nagel	62
Michael Stiassny	624,897
Graham Stuart	202,500
Mike Cutter	34,726

Director trading in Tower securities

On 15 December 2023 Mike Cutter disclosed his purchase of 34,726 shares in Tower Limited.

Shareholder analysis

Tower’s shares are quoted on both the NZSX and ASX. At 30 September 2024, 10,992 Tower shareholders held less than A$500 of Tower shares (i.e., less than a marketable parcel as defined in the ASX Listing Rules), amounting to a total of 2,825,689 of the Tower shares on issue.

In comparison, a ‘minimum holding’ under the NZX Listing Rules means a holding of shares having a value of at least NZ$1,000. At 30 September 2024, 15,611 Tower shareholders held less than NZ$1,000 of Tower Shares (being, a parcel size of 741 at $1.35 per share), amounting to a total of 5,355,099 of the Tower shares on issue.

Total voting securities

			ORDINARY SHARES	NUMBER OF HOLDERS
30	September	2024	379,483,987	22,934

Tower’s ordinary shares each carry a right to vote on any resolution on a poll at a meeting of shareholders. Holders of ordinary shares may vote at a meeting in person, or by proxy, representative or attorney.

The address and telephone number of the office at which the register of Tower securities is kept is set out in the directory at the back of this Annual Report.

Spread of Shareholders (as at 30 September 2024)

HOLDING RANGE	TOTAL HOLDERS	UNITS	% UNITS
1 - 1,000	17,205	6.733,222	1.77%
1,001 - 5,000	3,949	8,128,710	2.14%
5,001 - 10,000	606	4,359,466	1.15%
10,001 - 100,000	969	29,969,312	7.90%
100,001 and over	205	330,293,277	87.04%
Total	22,934	379,483,987	100%

Indemnity and insurance

In accordance with section 162 of the Companies Act 1993 and Tower’s constitution, Tower has provided insurance for and indemnities to, directors and employees of Tower for losses from actions undertaken in the course of their duties. The insurance includes indemnity costs and expenses incurred to defend an action that falls outside the scope of the indemnity. Particulars have been entered in the Interests Register pursuant to section 162 of the Companies Act 1993.

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Interests register

Tower and its subsidiaries are required to maintain an interests register in which the particulars of certain transactions and matters involving the directors must be recorded. The interests register for Tower Limited is available for inspection on request by shareholders. Tower’s constitution provides that an ‘interested’ director may not vote on a matter in which he or she is interested unless the director is required to sign a certificate in relation to that vote pursuant to the Companies Act 1993, or the matter relates to a grant of an indemnity pursuant to section 162 of the Companies Act 1993.

During the year to 30 September 2024, pursuant to section 140 of the Companies Act 1993 Tower’s directors disclosed new interests and cessations of interest as noted in the table below:

Mike Cutter

Mike Cutter
Pepper Money	Director
Sezzle Inc (until 26 July 2024)	Director
Arteva Premium Funding	Chair
Kadre Consulting	Principal
Graham Stuart
Dairy Goat Co-operative NZ Limited (from 24 May 2024)	Director
Ravensdown Co-operative Limited (from 27 May 2024)	Director

Subsidiary Company Directors’ Interests

Directors of Tower’s subsidiary companies made the following new entries into the interests register.

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Michael Yee Joy
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Natadola Bay Resorts Limited	Director
Momi Bay Resort Limited	Director
Rosie Holidays Limited	Chair, Local Advisory
	Board and Chair of the Audit
	& Risk Committee
Westpac Banking Corporation, Fiji Branch	Member, Local Advisory Board
Chanel Home of Compassion	Chair, Advisory Board
Fiji Museum	Deputy Chair, Board of Trustees
University of South Pacific	Chair, University Grants
	Committee
Archdiocese of Suva Roman Catholic Church	Deputy Chair, Finance Council

Specific disclosures of interest

Directors also disclosed the monetary value of dividends received during the year.

	NATURE OF INTEREST	MONETARY VALUE
Michael Stiassny	Shareholder of 624,897 shares in Tower Limited	$18,746.91
Graham Stuart	Shareholder of 225,000 shares in Tower Limited	$6,075.00
Marcus Nagel	Shareholder of 62 shares in Tower Limited	$1.68
Mike Cutter	Shareholder of 34,726 shares in Tower Limited	$1,041.78
Wongaling Pty Limited	Shareholder of 5,477 shares in Tower Limited	$164.31
(Geraldine McBride)

Based on a Dividend of NZ$0.030 per share (declared on 28 May 2024).

** Mr Nagel was nominated by Bain Capital Credit LP (Bain Capital) to represent Bain Capital’s stake in Tower and his appointment was supported by the Tower Board.

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Tower subsidiary company directors

Directors of Tower’s subsidiary companies during the year to 30 September 2024 were:

TOWER SUBSIDIARY COMPANY DIRECTORS

Tower Services Limited	Tower Insurance (Fiji) Limited	Blair Turnbull
		Isikeli Tikoduadua
		Paul Johnston
		Barry Whiteside
The National Insurance Company of New Zealand Limited
		Ronald Mudaliar
	Tower Insurance (Cook Islands) Limited	Blair Turnbull
		Paul Johnston
Tower Group Services (Fiji) Pte Limited
		Ronald Mudaliar
	TOWER SUBSIDIARY COMPANY DIRECTORS National Pacific Insurance Limited	Blair Turnbull
		Paul Johnston
		Ronald Mudaliar
	National Pacific Insurance (Tonga) Limited	Blair Turnbull
		Paul Johnston
		Ronald Mudaliar
	Tower Insurance (Vanuatu) Limited (ceased to be a subsidiary on 30 August 2024)	Blair Turnbull
		Paul Johnston
		Stephen Grant Ives_(until 20 December 2023)_
Southern Pacific Insurance Company (Fiji) Limited
		Ronald Mudaliar
		Tania Laloyer_(from 20 December 2023)_
	National Pacific Insurance (American Samoa)	Blair Turnbull
		Ronald Mudaliar
		Paul Johnston

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Other matters

Donations

During the financial year ended 30 September 2024, donations made by Tower Limited, and its subsidiaries totalled $600.00.

Credit rating

In April 2024, global rating organisation A.M. Best Company affirmed Tower Limited’s financial strength rating of A- (Excellent).

Waivers

Tower Limited did not rely on, or make any applications for, waivers from the NZX Listing Rules or the ASX Listing Rules in the financial year ending on 30 September 2024.

The New Zealand Commerce Act 1986 is likely to prevent a person from acquiring Tower shares if the acquisition would, or would be likely to, substantially lessen competition in a market.

Tower is incorporated in New Zealand and therefore not subject to Chapters 6, 6A, 6B or 6C of the Corporations Act 2001 (Australia) dealing with the acquisition of shares (such as substantial holdings and takeovers).

The Annual Report is signed on behalf of the Board by:

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Michael Stiassny Graham Stuart Chair Director

Limits on acquisition of securities

Tower undertook to the ASX, at the time it granted Tower a full listing in July 2002 to include the following information in its annual report. Except for the limitations detailed below, Tower securities are freely transferable under New Zealand law.

The New Zealand Takeovers’ Code prohibits a person (including associates) from increasing their shareholding to more than 20% of the voting rights in Tower except in accordance with the Takeovers Code. The exceptions include a full or partial takeover offer in accordance with the Takeovers Code, a scheme of arrangement (under the Companies Act 1993), an acquisition or an allotment approved by an ordinary resolution of shareholders, a creeping acquisition (in defined circumstances) and a compulsory acquisition once a shareholder owns or controls 90% or more of the voting rights in Tower.

The New Zealand Overseas Investment Act 2005 and related regulations determine certain investments in New Zealand by overseas persons. Generally, the Overseas Investment Office’s consent is required if an ‘overseas person’ acquires Tower shares or an interest in Tower shares of 25% or more of the shares on issue or, if the overseas person already holds 25% or more, the acquisition increases that holding.

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Global Reporting Initiative (GRI) content index

Statement of use: Tower has reported the information cited in this GRI content index for the period 1 October 2023 to 30 September 2024, in accordance with the GRI Standards.

GRI 1 used:

GRI 1: Foundation 2021

DISCLOSURE LOCATION/INFORMATION

GRI 2: General Disclosures 2021

2-1	Organisational details	Pg 121 Tower Directory.
2-2	Entities included in the	See pg 121 Tower Directory, as well as our FY24 Pacific operations
	organisation’s sustainability	in Fiji, Tonga, Samoa, American Samoa, the Cook Islands. Solomon
	reporting	Islands and Vanuatu operations included up until sales finalised in the
		financial year.
2-3	Reporting period,	Tower reports sustainability information annually. This report covers
	frequency and contact	the period 1 October 2023 – 30 September 2024. This report was
	point	published on 28 November, 2024. Questions about this report can be
		directed [email protected]
2-4	Restatements of	This is Tower’s third report in accordance with the GRI Standard.
	information
2-5	External assurance	External assurance approach is covered in our Corporate Governance
		Statement which can be found in this link:https://www.tower.co.nz/
		investor-centre/corporate-governance/policies/
		Our External Audit Independence Policy can also be found in this link:
		https://www.tower.co.nz/investor-centre/corporate-governance/
		policies/
		We have not sought external assurance on our sustainability
		information.
2-6	Activities, value chain	https://www.tower.co.nz/about-us/
	and other business
	relationships	Note, sale of Solomon Islands and Vanuatu operations during the financial year.
2-7	Employees	Tower has 915 employees across New Zealand and the Pacific,
		62% of whom are women, 37% are men, 1% are gender diverse,
		non- binary, or transgender. This is based on the 98% of staff who
		chose to disclose their gender. Out of the 62% population of women,
		96% are permanent full-time employees, 3% are permanent part-
		time employees, 1% are fixed term employees and <1% are casual
		employees. Out of the 37% population of men, 94% are permanent
		full-time employees, 2% are permanent part-time employees and 4%
		are fixed term employees. Out of the 1% gender diverse, non- binary,
		or transgender employees, 86% are permanent full-time employee
		and 14% are fixed term employees.

DISCLOSURE	DISCLOSURE	LOCATION/INFORMATION
2-8	Workers who are not	As at 30 September 2024, Tower had 54 contingent workers who are
	employees	predominantly independent contractors on either direct or agency
		contracts engaged in technology, finance or project-based work.
		There were no significant fluctuations in this number during the
		reporting period.
2-9	Governance structure	Our Governance structure and composition, along with a list of
	and composition	committees of the highest governance body, and our Corporate
		Governance Statement can be found in this link:https://www.tower.
		co.nz/investor-centre/corporate-governance/policies/
2-10	Nomination and selection	Tower’s Constitution and Board Renewal Policy can be found in
	of the highest governance	this linkhttps://www.tower.co.nz/investor-centre/corporate-
	body	governance/policies/
2-11	Chair of the highest	Pg 50.
	governance body
2-12	Role of the highest	Pg 50-51.
	governance body
	in overseeing the
	management of impacts
2-13	Delegation of responsibility	The board delegates day-to-day management of the company to
	for managing impacts	the CEO and does not currently provide for any additional specific
		delegation of ESG impacts.
2-14	Role of the highest	Pg 50-51.
	governance body in
	sustainability reporting
2-15	Conflicts of interest	Our Code of Conduct Policy and Conflict of Interest Policy can
		be found in this link:https://www.tower.co.nz/investor-centre/
		corporate-governance/policies/
2-16	Communication of critical	See Corporate Governance Statement in this link:https://www.tower.
	concerns	co.nz/investor-centre/corporate-governance/policies/
		Communication of critical concerns regarding ESG topics is
		unavailable.
		See Corporate Disclosure Policy in this link:https://www.tower.co.nz/
		investor-centre/corporate-governance/policies/

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DISCLOSURE LOCATION/INFORMATION 2-17 Collective knowledge of the highest governance body See Corporate Governance Statement in this link:https://www.tower. co.nz/investor-centre/corporate-governance/policies/ Actions to advance the collective knowledge, skills, and experience of the highest governance body on sustainable development will continue to be undertaken in FY25. Tower’s 2024 Climate Statement can be found in the investor section of our website, here:https://www.tower.co.nz/investor- centre/reports/ 2-18 Evaluation of the performance of the highest governance body See Corporate Governance Statement in this link:https://www.tower. co.nz/investor-centre/corporate-governance/policies/ 2-19 Remuneration policies See Corporate Governance Statement in this link:https://www.tower. co.nz/investor-centre/corporate-governance/policies/ 2-20 Process to determine remuneration See Director and Remuneration and Appointment Committee Terms of Reference in this link:https://www.tower.co.nz/investor-centre/ corporate-governance/policies/ Pg 107. 2-21 Annual total compensation ratio Not disclosed: information on annual compensation ratio is not reported externally. 2-22 Statement on sustainable development strategy Pg 42. 2-23 Policy commitments Relevant policies currently in place can be found here:https://www. tower.co.nz/investor-centre/corporate-governance/policies/ Tower also has an Internal Procurement Policy and a Procurement Engagement Framework, a Supplier Relationship Management Framework and a Supplier Code of Conduct. 2-24 Embedding policy commitments See Corporate Governance Statement in this link:https://www.tower. co.nz/investor-centre/corporate-governance/policies/ 2-25 Processes to remediate negative impacts https://www.tower.co.nz/contact-us/complaints-and-compliments/ Our material impacts table can be found here:https://www.tower. co.nz/about-us/sustainability/ Remediation process for our material impacts is covered under the relevant topics.	DISCLOSURE LOCATION/INFORMATION
	2-26 Mechanisms for seeking advice and raising concerns See Code of Conduct Policy in this link:https://www.tower.co.nz/ investor-centre/corporate-governance/policies/ Through our internal Whistleblower Policy, staff are encouraged to raise concerns with their manager, or a senior leader. Tower’s whistle blower service provides a confidential avenue to report any serious concerns.
	2-27 Compliance with laws and regulations During the reporting period the Financial Markets Authority (FMA) filed proceedings regarding the Company’s self-reported failure to correctly apply multi-policy discounts. Other remediations we have in progress relate to premium overcharges in connection with the application of promotions and policy discounts and other policy errors. Further information about Tower’s remediation programme can be found on page 21 of this report. In this reporting period, Tower has not been fined, nor has it incurred any non-monetary sanctions for breaches or non-compliance with laws and regulations during the reporting period, or in any previous reporting period.
	2-28 Membership associations Tower is a member of Insurance Council of New Zealand and is active in ICNZ’s Climate Change committee. Tower is also a member of the Sustainable Business Council, a signatory of the Climate Leaders Coalition and associate partner of the Centre for Sustainable Finance: Toitū Tahua.
	2-29 Approach to stakeholder engagement Tower takes a collaborative approach to stakeholder engagement. Our company purpose and values consider stakeholder interests, see page 10. Similarly, our Southern Star drives outcomes for customers and our people, see ‘our vision’ page 10. Our ESG strategy was developed in consultation with a range of stakeholders and considers our impacts on various stakeholder groups.
	2-30 Collective bargaining agreements None.

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Global Reporting Initiative (GRI) content index

DISCLOSURE LOCATION/INFORMATION GRI 3: Material Topics 2021 3-1 Process to determine material topics Pg 49. 3-2 List of material topics Pg 49. 3-3 Management of material topics See our material impacts table via our website for all: https://www.tower.co.nz/about-us/sustainability/ GRI 305: Emissions 2016 305-1 Direct (Scope 1) GHG emissions Pg 48. Scope 1 emissions include distributed natural gas in New Zealand and vehicle fleet fuel in New Zealand and the Pacific. FY20 chosen as the baseline year as this was the first year Tower measured emissions. New Zealand emissions factors used were sourced from Ministry for the Environment’s (MfE) 2024 Measuring Emissions: A Guide for Organisations. Emissions for Pacific Island electricity use were sourced from emissionfactors.com and were derived from UN 2021 and IPCC 2006. Quantities of each greenhouse gas are converted to tonnes CO2e using the global warming potential from the Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4). The time horizon is 100 years. Further information on methodology and assumptions is unavailable. Our full greenhouse gas emissions report is provided in our 2024 Climate Statement, which is in the investor section of our website, here:https://www.tower.co.nz/investor-centre/reports/ The Statement contains our Scope 1, Scope 2 and operational Scope 3 emissions data, as well as information about our work to identify and assess our climate related risks, opportunities and business impacts.	DISCLOSURE LOCATION/INFORMATION
	305-2 Energy indirect (Scope 2) GHG emissions Pg 48. Scope 2 emissions include electricity consumption from all business premises. See 305-1 for relevant disclosures on baseline year, emissions factors and methodology and assumptions. Our full greenhouse gas emissions report is provided in our 2024 Climate Statement, which is in the investor section of our website, here:https://www.tower.co.nz/investor-centre/reports/
	305-3 Other indirect (Scope 3) GHG emissions Pg 48. Scope 3 emissions include in our FY24 disclosure are transmission & distribution losses for electricity & gas, air travel, hotel stays, rental cars, taxi travel, employee commute, working from home, paper purchased (NZ only), waste to landfill (NZ only) and water (NZ and some Pacific locations). The following Scope 3 emissions sources that have been excluded from our reporting: HFC emissions from refrigeration or HVAC (NZ and Pacific); employee vehicle claims NZ; transmission & distribution losses for Pacific electricity; waste generated in Pacific operations; value chain emissions from purchased goods & services, capital goods, transportation & distribution – upstream and downstream, use of sold products, investment portfolio. Tower will expand its measurement and reporting of scope 3 emissions in FY25. See 305-1 for relevant disclosures on baseline year, emissions factors, methodology and assumptions.
	305-5 Reduction of GHG emissions Pg 48. Our full greenhouse gas emissions report is provided in our 2024 Climate Statement, which is in the investor section of our website, here:https://www.tower.co.nz/investor-centre/reports/ The Statement contains our Scope 1, Scope 2 and operational Scope 3 emissions data, as well as information about our work to identify and assess our climate related risks, opportunities and business impacts.

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DISCLOSURE LOCATION/INFORMATION
2016 GRI 401: Employment 2016
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401-1	New employee hires and	In FY24 Tower hired 194 new employees to address growth and
	employee turnover	attrition. These comprised permanent, fixed term and casual new
		hires. New hires by Gender: Female: 113, Male: 75, Not disclosed: 7.
		New hires by region: New Zealand: 82, Pacific: 113. Number and rate
		of new employees by age is currently unavailable.
		Over the period employee numbers increased by 27 full-time
		equivalent staff, from 845 in FY23 to 872 in FY24, with our total head
		count of 915 staff, due to continuous development of our Suva hub
		in Fiji.
		Employee attrition was 18.7% in FY24, reflecting a softening of the
		employment market in New Zealand and our decision to expand
		our Customer Hub in Fiji, which typically experiences lower level of
		employee movement.
401-2	Benefits provided to full-	Benefits are offered to both full-time and part-time permanent
	time employees that are	employees. Tower benefits include Group Insurances, parental leave,
	not provided to temporary	ability to buy additional leave, birthday leave, domestic violence
	or part-time employees	leave, gender affirmation leave, volunteer leave, discretionary leave,
		free flu vaccinations, Tower insurance discounts, health insurance
		discounts, partner discounts, eyesight testing, and study assistance.
401-3	Parental leave	From July 2023, all Tower employees have enjoyed 16 weeks paid
		leave for primary carer leave (or maternity leave as it’s referred to
		in the Pacific), or four weeks paid partner’s leave for partners of
		primary carers.
		We also offer all employees compassionate leave and flexible
		working on return. Additionally, any annual leave taken on the
		employee’s return from parental leave will be paid at their usual rate.
		This is more generous than the current Holidays Act legislation and
		means take home pay is not affected when the employee takes paid
		annual leave.
		In In FY24: 35 employees took parental leave (27 female and 8 Male)
		versus 22 in FY23. All 35 employees returned to work from parental
		leave during FY24 (27 female and 8 Male); of these 33 are still
		employed (26 female and 7 Male).

DISCLOSURE	DISCLOSURE	LOCATION/INFORMATION
GRI 403:	Occupational Health and	Safety 2018
403-1	Occupational health	See Health and Safety Policy in this link:
	and safety management	https://www.tower.co.nz/investor-centre/corporate-governance/
	system	policies/
403-2	Hazard identification, risk	Tower’s H&S Management System has an incident register where
	assessment, and incident	incidents are reported. When reporting, it is mandatory that all
	investigation	incidents are assessed and each incident must have corrective
		actions identified and implemented before being closed. Once
		reported, incidents are then reviewed by the Health and Safety
		Officer, who investigates all incidents.
		Workers are encouraged to report hazards and hazardous situations
		through the H&S system. Tower’s H&S Policy is in line with New
		Zealand’s Health and Safety at Work Act 2015. All workers have
		access to the Health and Safety Policy on Tower’s intranet.
403-3	Occupational health	Tower workers have access to Employee Assistance Programme
	services	EAP counselling sessions provided by external trained counsellors.
		These sessions are arranged by workers independently. If employees
		choose to use counselling or health and wellbeing services via EAP,
		these services are strictly confidential between the worker and
		healthcare provider.
403-4	Worker participation,	As per the NZ Health and Safety at Work Act 2015, Tower has a
	consultation, and	team of Health and Safety Committee Members from across the
	communication on	NZ business. In the Pacific we have also have Health and Safety
	occupational health and	committee members in each country. These Committee Members
	safety	engage and consult with workers regularly and report any concerns
		to the Health and Safety Officer and/or at the regular Health and
		Safety meeting. Tower’s H&S Management system is continuously
		reviewed by the Health and Safety Officer to ensure risks are kept up
		to date.
		Tower has several Health and Safety committees that meet monthly.
		Committee members are allocated specific time each month to
		undertake their responsibilities. Their responsibilities include but
		are not limited to; office inspections, disseminating H&S updates
		from the meetings to relative teams, ensuring H&S is on the agenda
		at team meetings and promotion of health, safety and wellbeing
		education and activities.

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DISCLOSURE	DISCLOSURE	LOCATION/INFORMATION
403-5	Worker training on	Tower offers training to workers who volunteer to be First Aiders, Fire
	occupational health and	Wardens, Mental Health First Aiders and Domestic Violence First
	safety	Responders. Building Assessors are asbestos awareness trained.
403-6	Promotion of worker health	Tower supports its employees that have non-work-related accidents
		by offering workstation assessments to ensure they have the
		necessary equipment to undertake their job. Where a return-to-
		work plan is required, Tower will work alongside ACC to facilitate a
		satisfactory solution for the employee. Health checks in the Pacific
		are done through a local General Practitioner, and the results are
		confidential and not shared with Tower.
		Tower offers employees access to several health promotion services
		including; EAP (online and in person), discounted flu vaccinations,
		access to trained Mental Health First Aiders and trained Domestic
		Violence first responders (online and in-person).

Tower promotes prevention of communicable diseases in the Pacific through education on symptoms, prevention and treatment. Our Rainbow network supports education on AIDS awareness and prevention.

DISCLOSURE	DISCLOSURE	LOCATION/INFORMATION
GRI 405:	Diversity and Equal Opportunity 2016
405-1	Diversity of governance bodies and employees	Pg 105-106.
405-2	Ratio of basic salary and remuneration of women to men	Pg 38.
GRI 418:	Customer Privacy 2016
418-1	Substantiated complaints	In the reporting period, two substantiated breaches concerning
	concerning breaches of	customer privacy were identified. These were considered to be
	customer privacy and	one-off breaches, rather than systemic and did not result in serious
	losses of customer data.	harm. We remain committed to maintaining the highest standards of
		data protection and continuously improving our practices to prevent
		future occurrences.

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Tower Directory

Enquiries

For customer enquiries, call Tower on 0800 808 808 or visit www.tower.co.nz For investor enquires: Telephone: +64 9 369 2000 Email: [email protected] Website: www.tower.co.nz

Board of Directors

Michael Stiassny (Chair) Graham Stuart Marcus Nagel Geraldine McBride Mike Cutter (from 17 November 2023) Blair Turnbull (until 17 November 2023)

Chief Executive Officer

Blair Turnbull

Company Secretary

Tania Pearson

Executive Leadership Team (at 30 September 2024)

Blair Turnbull, Chief Executive Officer Paul Johnston, Chief Financial Officer Sharyn Reichstein, Chief Risk Officer Michelle Finch, Chief Revenue, Marketing and Brand Officer Andrew Hambleton, Chief Administrative Officer Anna Kooperberg, Chief Customer Experience Officer Ronald Mudaliar, Chief Underwriting Officer Steven Wilson, Chief Claims Officer Liz Cawson, Co Chief Data Digital Officer (Acting) Johannah Benton, Co Chief Data Digital Officer (Acting)

Registered Office

New Zealand

Level 5, 136 Fanshawe Street, Auckland

PO Box 90347 Auckland Telephone: +64 9 369 2000 Facsimile: +64 9 369 2245

Australia

c/- Peter Davison 18 Korinya Road Castle Cove Sydney NSW 2069 Australia

Auditor

PricewaterhouseCoopers

Lawyers

MinterEllisonRuddWatts

Banker

Westpac New Zealand Limited

Company numbers

Tower Limited (Incorporated in New Zealand) NZ Incorporation 143050 NZBN 9429040323299 ARBN 645 941 028

Stock Exchanges

The Company’s ordinary shares are listed on the NZSX and the ASX. On Wednesday 18 May 2016, Tower’s ASX admission category changed to “ASX Foreign Exempt Listing”.

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Registry details

Shareholders should make enquiries in respect of their shareholdings, notify changes of details or address administrative queries to Tower’s Share Registrar.

Direct payment to a bank account is the only way in which dividend payments are made. Shareholders are strongly encouraged to ensure that the Registrar has up to date bank account details.

Tower also encourages shareholders to receive communications electronically, to minimise cost, ensure quicker communication, and to reduce environmental impacts.

New Zealand

Computershare Investor Services Limited Level 2, 159 Hurstmere Road Takapuna, Auckland Private Bag 92119 Auckland 1142

Freephone within New Zealand: 0800 222 065 Telephone New Zealand: +64 9 488 8777

Australia

Computershare Investor Services Pty Limited Yarra Falls, 452 Johnston Street Abbotsford VIC 3067 GPO Box 3329 Melbourne Vic 3000

Freephone within Australia: 1800 501 366 Telephone Australia: +61 3 9415 4083

Email: [email protected] Website: www.computershare.com/nz

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tower.co.nz

Tower 2024 Full Year Results 1 October 2023 to 30 September 2024

28 November 2024

Agenda

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Chairman’s update Michael Stiassny, Chairman Business update Blair Turnbull, Chief Executive Officer FY24 financial performance Paul Johnston, Chief Financial Officer Looking forward Blair Turnbull, Chief Executive Officer

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Chairman’s update

Strong business performance driven by focus on strategy and operational delivery

Delivering shareholder value

Final dividend of 6.5 cents per share declared; FY24 total dividends declared of 9.5 cents per share
Capital return of $45m declared, subject to high court approval and shareholder vote at Annual Shareholder Meeting[1]
Tower entered NZX 50 Portfolio Index and MidCap Index

Tower is well positioned

Strategy is delivering operational results; improvements in customer experience and business performance
Risk-based pricing and enhanced underwriting capability underpin competitive positioning
Continued improvements in digital and operational efficiencies

Blair Turnbull, Chief Executive Officer

Results summary

Continued targeted premium growth
Continued improvement in MER, achieved through premium growth, and operational & digital efficiencies
Claims ratio improved due to actions to mitigate cost increases from inflation, reinsurance, and motor crime
No large events; robust reinsurance programme
Capital return of $45m declared, subject to conditions
6.5 cents per share final dividend, FY24 total dividend 9.5 cents per share[1]

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Our performance Positive operational and business performance

1 Customers

GWP growth (Gross written premium) 1 15% | $595m vs $527m in FY23

305,000 vs 311,000 in FY23

2 Underlying profit 3 $83.5m vs $7.1m in FY23

Large event costs (including reinsurance reinstatement)

-$2.3m vs $55.6m in FY23

BAU claims ratio (Business as usual)

48% vs 55% in FY23 Reported profit $74.3m vs $1.0m loss in FY23

MER (Management expense ratio)

31.4% vs 32.0% in FY23

Dividend Total FY24 declared dividends

9.5 cents per share vs no dividend in FY23

Prior year metrics have been restated to align to IFRS 17 for consistent comparisons Note 1: Excluding divested portfolios. Prior year customer numbers have been adjusted to exclude sold and held for sale portfolios which include the Solomon Islands business and Vanuatu subsidiary, and the New

Continued premium growth

15% underlying GWP growth[1]

Targeted growth

G R O S S W R I T T E N P R E M I U M ($m)

House GWP growth 18%; 72% rate, 28% volume
Motor GWP growth 13%; off-risking of high theft vehicles reduces number of motor policies
Risk-based pricing improving exposure; 91% of policies rated ‘Low’ or ‘Very Low’ flood risk (FY23: 90%)

Addressing customer affordability

NZ retention at 77% (FY23: 77%)[2]
53% of customers have multiple policies

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3
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29k customers accessed ‘Ways to Save’ feature

Customer experience improves

Net promoter score improved to +38

N E T P R O M O T E R S C O R E

Digital journey

New Zealand digital tasks[1] – 63% sales, 45% service; 64% claims
Active users of My Tower increased by 5% to 164k

Assisted journey

Sales & service contact centre abandonment rate reduced to 8% (FY23: 13%)
Award winning service - 1[st] place Supreme Award for Retention in the CRM Contact Centre Awards (NZ)

Customer remediation

$11.5m multi-policy discount customer remediation payments made by 31 Oct (excl GST)

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Continued improvement in MER

Management expense ratio (MER) improved to 31.4%

Operational efficiencies

MANAGEMENT EXPENSE RATIO[1]

Achieving scale with targeted premium growth
Suva hub answering 55% of NZ sales and service calls (FY23: 16%)

Streamlining the business

Sale of Solomon Islands, Vanuatu and NZ commercial rural portfolio
Commission ratio[2] at 1.5%; down from 2.1%, partly due to legacy portfolio purchases and transition to referral arrangements

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26% reduction in Tower’s on-premise data centre footprint (71 virtual servers decommissioned)

BAU claims ratio significantly improves

Business as usual claims ratio improved to 48.1%

BAU CLAIMS RATIO[1]

Effective pricing and underwriting

Targeted rating has reduced high-risk policies
Rating for inflation, reinsurance, high motor theft

Faster and more efficient claims management

Digital evolution: new motor assessing tool live, auto allocation of online motor and house claims to repairers
Number of open BAU claims down by 50%

OPEN CLAIMS NZ

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Turn around time decreased by 30%

External factors improved performance

Calmer weather, easing inflationary pressures, and lower motor theft frequency

Underlying business performance improving consistently

Underlying NPAT excluding large events was $81.9m in FY24

U N D E R L Y I N G N P A T[1] E X C L U D I N G L A R G E E V E N T S ( $ m )

Underlying business improving half-on-half
Reduction in BAU claims ratio from targeted rate increases and high-risk vehicle off-risking
Management expense efficiencies improved profit
Investment income benefiting from higher interest rates

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Financial performance Paul Johnston, Chief Financial Officer

Group underlying financial performance

Premium growth of 15%[1]
BAU claims ratio reduced to 48.1% due to targeted rate increases and operational improvements
No large events in FY24; favourable release of $2.3m from FY23 Vanuatu Cyclones
Management expense ratio improved to 31.4% as a result of business growth and expense efficiencies
Net investment income increased $7.2m due to higher investment balances and higher yields
Underlying NPAT including large events of $83.5m[2]
Reported profit of $74.3m impacted by customer remediation and CEQ strengthening

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Movement in underlying NPAT

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Underlying NPAT[1] of $83.5m vs $7.1m in FY23
No new large events in FY24 vs $55.6m of large event costs in FY23
Business growth includes higher net earned premium and expense growth
BAU claims ratio improved from rating and underwriting actions, reduction in open BAU claims, and lower motor theft frequency
Non-underlying items include customer remediation costs (remediating 66k customers) and CEQ strengthening, partially offset by the gain on sale of divested portfolios

BAU claims ratio reduced

N Z M O T O R S E V E R I T Y[1] & F R E Q U E N C Y[2]

Targeted rate increases and high-risk vehicle off-risking
Inflationary pressures easing
Motor theft frequency reduced from peak in FY23
Risk-based pricing – improved house exposure reduces frequency of house claims
Calmer weather in comparison to prior years

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N Z H O U S E S E V E R I T Y & F R E Q U E N C Y

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T O T A L C L A I M S R A T I O
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Continued improvement in management expense ratio

M O V E M E N T I N M A N A G E M E N T E X P E N S E R A T I O ( M E R )

MER reduced 0.6% to 31.4%
Business growth contributes 4.2% reduction in MER
Net commission contributes 0.3% reduction in MER driven by an increase in reinsurance profit share commission income
Increase in project spend incurred to deliver key strategic initiatives
Staff and other costs impacted by inflation and staff incentives (none paid in FY23) partially offset by cost efficiencies

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Higher investment returns

Net investment income $21.6m in FY24, $7.2m higher than FY23
Running yield on the core investment portfolio is 4.9% as at 30 September 2024
Conservative investment strategy with low duration (target of 0.5 years)
Now past the peak of the rating cycle, with yields expected to continue decreasing through FY25

C O R E I N V E S T M E N T P O R T F O L I O[1] Y I E L D

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I N V E S T M E N T A S S E T P R O F I L E

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Reinsurance programme

FY24

No large events; $2.3m release from FY23 Vanuatu Cyclones

FY25

Catastrophe reinsurance of up to $800m for two events, up from $750m in FY24
Additional prepaid third event catastrophe cover up to $85m with $20m retention
FY25 retention change mitigated by 3-year rolling contracts, and expected to benefit future years
Full utilisation of $50m large event allowance for FY25 events assumed in guidance
FY25 large events - Dunedin flooding event in October 2024 estimated at $3m[1]

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$800m
Reinsurance Reinsurance
coverage of coverage of
$781.2m $781.2m
$85m
Reinsurance
coverage of
$65m
3rd Cat loss
1st Cat loss1st Cat Loss 2nd Cat loss 2nd Cat Loss 3rd Cat Loss
(retention $20m)
(retention $16.9m)(reten $18.8m) (retention $16.9m)(retentio $18.8m) (retention $20m)
1st Cat event 2nd Cat event 3rd Cat event
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Capital and solvency position

Solvency ratio[1] of 212% (139% as at 30 Sep 23)
Adjusted solvency margin is $171.4m, an increase from $79.8m as at 30 Sep 23
Adjusted solvency margin at 30 Sep 24 is net of final dividend of 6.5 cents per share.[2] The planned capital return of $45m is not yet taken into account and is expected to be deducted from solvency in FY25
Tower’s regulatory solvency position is now calculated under the new Interim Solvency Standard (ISS) effective 1 Oct 23
The RBNZ is consulting on a further amendment to the ISS, expected to be issued and effective this financial year
The proposed changes to the ISS, if implemented, are likely to have a material impact on Tower’s regulatory solvency position, and will reduce the solvency margin

T O W E R S O L V E N C Y[1] N Z P A R E N T ( $ m )

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$15m RBNZ licence condition reduced to $0
A- financial strength rating reaffirmed in April 2024 by AM Best

Looking forward Blair Turnbull, Chief Executive Officer

Focus on customer experience and targeted growth

Enhancing risk-based pricing – landslide and sea surge applied to renewal book and included in purchase journey
New partnerships for further growth
Motor policy growth through targeted risk approach
Renewal journey uplift to increase retention
Targeting annual underlying GWP growth of 10%-15% to FY27

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Continuous efficiency & process improvements

M A N A G E M E N T E X P E N S E R A T I O ( % N E P )

Targeting 80% of all NZ sales, service, and claim lodgement tasks to be digital by end FY27 (FY24: 45%)
New house assessing system planned, reducing assessment time and repair costs
New contact centre platform planned to deliver frontline efficiencies
Remediation lessons applied to processes and systems
Streamlining the business - NZ commercial rural portfolio completes migration in Jan-25
Targeting MER of < 26% in FY27

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Targets
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Fostering sustainability

Our people

Staff engagement score 8.1
Gender pay equity gap 0.9%[1]
Tower staff spent 2,300 hours volunteering in our communities
30% of Tower staff are members of representation groups[2]
Winner 2024 ANZIIF NZ Insurance Industry Awards Excellence in Workplace Diversity, Equity & Inclusion

Climate

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Parametric partnership with CelsiusPro, global insurtech, targeting 10K+ parametric policies by end of FY25
FY24 Scope 1 and 2 emissions 20% below FY20 baseline year
Supporting climate change education & future sustainability with university scholarships in New Zealand and Fiji

FY25 guidance and future targets

	FY24	FY25	FY27
	Actual	Guidance	Target
GWP growth (excluding operations sold)	15%	10% - 15%	10% - 15%
Large events cost/allowance	-$2.3m	$50m
Management expense ratio	31.4%	< 29%	< 26%
Combined operating ratio	79%	87% - 89%	< 86%
Underlying NPAT (assuming full utilisation of large events allowance)	$83.5m	$50m - $60m
Return on equity1	23%	13% - 17%	> 18%

FY25 priorities

Customer experience
Customer remediations, FMA proceedings and implementing lessons
Conduct of Financial Institutions (CoFI)
End-to-end customer data management
Risk-based pricing - landslips and sea surge
Efficiency, digitisation, and process improvements

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Questions?

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Appendices

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Business unit distribution

TOWER DIRECT

Underlying growth of 16%[1]
House new risks sold +14% vs FY23
55% of Tower Direct customers hold multiple policies (FY23: 54%)

T O W E R D I R E C T G W P ($m) T O W E R D I R E C T G W P ( $ m )

PARTNERSHIPS

Underlying growth of 24%
Total in force risks increased 6% to 109,000
Advisor network grew 32% to 3,300

P A R T N E R S H I P S G W P ($m)1 P A R T N E R S H I P S G W P ( $ m )

PACIFIC

Underlying growth of -2%[1]
Solomon Islands & Vanuatu businesses sold in FY24; PNG in FY23
Tightening risk appetite in American Samoa

P A C I F I C G W P ($m) P A C I F I C G W P ( $ m )

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Reconciliation between underlying profit after tax and reported profit after tax

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Underlying and reported profit/(loss):

“Net insurance revenue”, “net insurance service expense” and “underlying profit” do not have a standardised meaning under Generally Accepted Accounting Practice (GAAP). Consequently, they may not be comparable to similar measures presented by other reporting entities and are not subject to audit or independent review.
Tower uses underlying profit as an internal reporting measure as management believes it provides a better measure of Tower’s underlying performance than reported profit/(loss), as it excludes large or non-recurring items that may obscure trends in Tower’s underlying performance, and is useful to investors as it makes it easier to compare Tower’s financial performance between periods.
Tower has applied a consistent approach to measuring which items are excluded from underlying profit in the current and comparative periods.
“Reported profit/(loss) after tax” is calculated and presented in accordance with GAAP
(1) Non-underlying items include net impact of customer remediation provision increase and related costs, Canterbury earthquake valuation update, regulatory and compliance projects (such as the adoption of IFRS-17), and gain on sale of operations
(2) Reclassification of claims handling expenses from management expenses to claims expense; and FX gains/losses from other income to management expenses
(3) Operations sold during FY24 are treated as discontinued operations for statutory purposes
(4) Reclassification of reinsurance expenses to present as net income from reinsurance contracts held for statutory purposes
(5) Reclassification of reinsurance and other recoveries to present as net income from reinsurance contracts held for statutory purposes

Disclaimer

This presentation has been prepared by Tower Limited to provide shareholders with information on Tower’s business. This document is part of, and should be read in conjunction with an oral briefing to be given by Tower. A copy of this webcast of the briefing is available at http://www.tower.co.nz/investor-centre/ It contains summary information about Tower as at 30 September 2024 which is general in nature, and does not purport to contain all information a prospective investor should consider when evaluating an investment. It is not an offer or invitation to buy Tower shares. Investors must rely on their own enquiries and seek appropriate professional advice in relation to the information and statements in relation to the proposed prospects, business and operations of Tower. The data contained in this document is for illustrative purposes only. Past performance is not a guarantee of future performance and must not be relied on as such. The information in this presentation does not constitute financial advice.

Forward looking statements

This document contains certain forward-looking statements. Such statements relate to events and depend on circumstances that will occur in the future and are subject to risks, uncertainties and assumptions. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements, including, among others: the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts; fluctuations in demand and pricing in the industry; fluctuations in exchange controls; changes in government policy and taxation; industrial disputes; and war and terrorism. These forwardlooking statements speak only as at the date of this document.

Disclaimer

Neither Tower nor any of its advisers or any of their respective affiliates, related bodies corporate, directors, officers, partners, employees and agents (other persons) makes any representation or warranty as to the currency, accuracy, reliability or completeness of information in this presentation. To the maximum extent permitted by law, Tower and the other persons expressly disclaim any liability incurred as a result of the information in this presentation being inaccurate or incomplete in any way. The statements made in this presentation are made only as at the date of this presentation. The accuracy of the information in this presentation remains subject to change without notice.

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Tower FY24 Results Announcement Investor Presentation Script

Slide 1 – 2024 Full Year Results

Michael Stiassny

Mōrena, good morning and thank you for making the time to join us for this investor call and presentation of our 2024 full year results.

Slide 2 - Agenda

With me in Auckland is our Chief Executive Officer, Blair Turnbull and our Chief Financial Officer, Paul Johnston who will take you through the results and answer your questions.

Slide 3 – Chairman’s update

The 2024 financial year has been a strong one for Tower. Following an extremely challenging previous year, it is particularly pleasing to be recording underlying net profit after tax of $83.5m and reported profit of $74.3m.

Delivering shareholder value

These results have been hard won. While significantly aided by the absence of large events in the period, more importantly the business has achieved yearon-year improvements in business as usual claims, premium growth and operational and digital efficiencies. These are the measures that ensure Tower remains well positioned to deliver value to shareholders.

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I am pleased to announce that we have declared a final dividend of 6.5 cents per share. This brings our total dividends for the fiscal year to 9.5 cents per share.

And, while still subject to high court approval and shareholder vote at the Tower Annual Shareholder Meeting on 11 February, the Board has also approved a return of $45 million of excess capital by way of a scheme of arrangement. This capital return is expected to deliver meaningful earnings per share accretion, further demonstrating our commitment to returning value to our shareholders.

Tower has entered the NZX50 portfolio index, a significant milestone that recognises our company's growth and stability. This achievement is a testament to our strategic initiatives, which have led to improvements in customer experience and overall business performance.

Tower is well positioned

We are acutely aware that the current, sustained economic downturn is affecting almost everyone, including many of our customers. Ensuring insurance remains affordable and premiums stabilise is a priority. Blair will talk about how Tower began moderating premium increases – particularly for lowrisk assets – as inflation settled in the second half. Those efforts are continuing to ensure Tower can remain competitive and profitable, while providing good value and a great customer experience.

Tower’s competitive positioning has for some time been underpinned by riskbased pricing. We continue to believe that this is the fairest way to address

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both affordability and the impacts of climate change, ensuring that our pricing models are transparent, sustainable and equitable.

By setting premiums that reflect actual environmental risks, we are incentivising our communities and policyholders to adopt sustainable practices and invest in resilience measures.

This approach helps to reduce overall risk and financial burden but importantly, promotes fairness and encourages community-wide preparedness and adaptation.

And, from a cost perspective our customers who take proactive steps to mitigate risks are rewarded with lower premiums, while those with higher risks pay accordingly. This differentiation encourages responsible behaviour and brings transparency to our pricing structure, allowing customers to see a direct correlation between their actions and their insurance costs.

By doing so, we foster a more equitable and resilient market, ultimately driving our company's success and sustainability in the long run.

[pause]

In closing, I’d like to thank the Tower team. It’s a very good result – we’re paying a dividend, the business remains strong and well capitalised, and has achieved sustained premium growth. None of this would be possible without the vision, dedication and commitment of our people.

As you will be aware, Blair is stepping down as CEO in February after the ASM. The Board joins me in thanking him for the strong contribution he has made to Tower during his tenure.

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I’ll now hand over to Blair and Paul, who will take you through the results and

outlook before we take questions.

Blair Turnbull

Slide 4 – Business update

Kia ora, and good morning, everyone.

Thank you for joining us for our 2024 financial results.

And thank you Michael for those kind words.

Slide 5 - Results summary

Here is a summary of our results, which demonstrate Tower’s positive operational and business performance.

Sustained GWP growth and enhanced business efficiencies, continued improvements in claims performance along with unusually benign weather in New Zealand and the Pacific, have delivered a positive result for shareholders.

This strong result is underpinned by our strategy of delivering simple and rewarding customer experiences combined with our use of digital technology and data.

It has been enabled by the more than $150m we’ve invested in the past five years in digitisation and data, operational capability such as our Suva hub and streamlining our business. Investments that are now supporting growth and efficiency and continuing to build our business resilience.

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I will talk through these points in more detail shortly, but first, an overview of our performance this year.

Slide 6 – Our performance - positive operational and business performance

Gross written premium for the year to 30 September 2024 increased to $595 million, up 15% on FY23, excluding divested portfolios. This was predominantly driven by prior period rating increases designed to mitigate the impacts of inflation, crime and increased reinsurance costs following the 2023 catastrophe events.

Customer numbers decreased by 2% to 305,000, partly due to our tightened risk appetite for high-theft motor vehicle models. Tower reduced high-risk motor policies by 5,000 in the year.

We expect to see growth in customer numbers in FY25, as we target higher quality risks, enabled in part, by our risk-based pricing capability to target customers with lower risks.

Rating increases, enhanced processes, a reduction in motor theft claims due to targeted underwriting actions and lower crime, as well as calmer weather in comparison to prior years have led to an improvement in the BAU claims ratio to 48%.

We are pleased to see our management expense ratio improve to 31.4%, thanks to our GWP growth combined with disciplined cost control and improved efficiencies from investments in digitisation and streamlining the business.

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Tower experienced no large events incurred during the financial year, which is rare. Looking back over the past 20 years, there have only been two years where no large events costs have been incurred.

Large event costs for FY24 were negative $2.3 million, due to the absence of large events and a favourable revision of prior year large event costs. This is a reduction from $55.6m of large event costs in FY23.

Reflecting our positive operational and business performance we are reporting an underlying profit after tax of $83.5m, up from $7.1m in FY23.

Reported FY24 profit is $74.3m compared to a loss of $1m in FY23.

On the basis of these results Tower will pay a full year dividend of 6.5 cents per share, bringing the total FY24 dividend to 9.5 cents per share.

Slide 7 – Continued premium growth

Premium growth continued in FY24, increasing 15%.

The prior period rating increases that were designed to mitigate the impacts of inflation, crime and increased reinsurance costs following the 2023 catastrophe events have taken effect and were the predominant driver of the GWP growth in the year.

In FY24 we were particularly pleased to see our proportion of house policies increase as we focused more on the home insurance market. Nearly a third of our house insurance GWP growth came from volume.

In line with risk-based pricing, we offer more favourable pricing to lower risk vehicles and apply higher premiums to those that our data shows will

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potentially incur higher claims costs. In FY24 this approach, led to a reduction of motor policies while GWP from our motor portfolio grew by 13%.

Tower’s adoption of risk-based pricing and underwriting continues to give us a competitive advantage by enabling more accurate risk selection and pricing. At the end of FY24 91% of house policies rated low or very low for flood risk, a 1% improvement from FY23.

We continually review premiums to ensure we provide good value and competitive prices for our customers, while ensuring that the premiums we collect cover the costs of the claims we pay out.

As we signaled at the half year, we began to moderate premium increases, particularly for low-risk assets, in the second half of FY24 as inflation began to settle.

Our retention rate for our New Zealand risk portfolio remains stable at 77% with just over half of our customers holding multiple policies with us.

To help our customers manage their insurance and affordability, we introduced Ways to Save, a My Tower feature for our New Zealand customers that offers useful tips and options to reduce premiums.

In FY24, 29,000 customers used Ways to Save, with 16% of them making changes to their cover that resulted in lower premiums. On average, those who adjusted their premiums through Ways to Save in the year saved $122.

A range of factors have influenced premium increases over recent years including inflation, crime rates, weather events, reinsurance costs, and supply chain pressures. While it costs more now to cover our customers’ assets, we

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continue to manage these impacts through risk-based pricing, and business efficiencies, which we cover later in this presentation.

Slide 8 – Customer experience improves

Our focus on customer experience combined with our use of digital technology and data has increased our overall net promoter score to plus 38, up from plus 28 in FY23.

Customer experience improvements have been seen across both our digital and our contact centre agent assisted customer journeys.

In FY24 in New Zealand, 63% of sales tasks, 45% of service tasks and 64% of claims tasks were completed digitally.

And active My Tower users increased by 5% to 164,000, demonstrating that our online journeys continue to resonate with customers.

The benefits of our core platform (now live across the Tower group) and our 300-strong Suva Hub team continue to be realised, contributing to a pleasing reduction in our sales and service contact centre abandonment rate, now at 8%.

We were pleased to win the first place Supreme Award for Customer Retention in the New Zealand CRM Contact Centre Awards.

This year Canstar also announced Tower as the winner of its Home and Contents Insurer of the Year Award. The independent research panel noted the outstanding value offered by Tower’s insurance products, especially its Standard and Plus policy options, which Canstar stated, feature comprehensive insurance cover at affordable prices.

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An important part of delivering a positive customer experience is fixing things when we don’t get them right. We have made significant progress in remediating customers identified as being owed a premium refund, due to errors in applying our multi-policy discount.

We have identified multi-policy discount refunds of around $12 million (including GST and interest) owed to 66,000 customers and had repaid $11.5m by 31 October.

While addressing outstanding remediations, we are also identifying and developing strategies to tackle the root causes of these incidents. This approach aims to increase business resilience, support positive customer experiences and promote sustainable growth.

Slide 9 – Continued improvement in MER

We are pleased to have achieved a further reduction in MER to 31.4% in FY24, down from 32% in FY23.

It’s clear that the $150m Tower has invested in the past five years is realising benefits in targeted growth and operational efficiency.

The expansion of our Suva hub has delivered well in this respect. In the year our Suva team answered 55% of all New Zealand sales and service calls to Tower; an increase from 16% in FY23.

In FY24 we completed the sales of our Solomon Islands business and Vanuatu subsidiary. Tower stopped offering commercial rural insurance in November 2023. The planned exit of existing customers at renewal will be completed at the end of January 2025.

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Our commission ratio continues to improve, reducing to 1.5% in the year from 2.1% in FY23 partly due to legacy portfolio purchases and referral arrangements that have reduced total commission.

By decommissioning 71 virtual servers in the year and moving more of our services to the cloud, we have continued to streamline and modernise our technology delivery.

Slide 10 – BAU claims ratio significantly improves

In FY24 our BAU claims ratio has significantly improved from 55% in FY23 to 48.1%, thanks to effective pricing and underwriting, efficient claims management and external factors.

Targeted rating, across our house and motor portfolios have reduced claims from higher risk policies. General rating increases implemented to offset inflation and increased reinsurance costs are also continuing to earn through.

Tower’s efforts to improve processes and implement new technology to deliver faster and more efficient claims management include a new digital motor assessing tool. Online motor and house claims are also now automatically being allocated to repairers.

Among others, these initiatives have seen the number of open BAU claims in New Zealand halve and claims turnaround times decrease by a third.

External factors have also played a part with calmer weather reducing the frequency of claims in New Zealand and the Pacific region. Motor vehicle crime also reduced in the year.

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Slide 11 – Underlying business performance improving consistently

Underlying NPAT excluding large events was $81.9m in FY24.

As you can see from this chart, we are steadily improving our underlying business performance and improving half on half.

The fundamentals of our business are performing well, and investment income is also benefiting from higher interest rates.

Slide 12 - Financial performance title slide – Paul Johnston

I will now hand you over to our Chief Financial Officer, Paul Johnston who will talk you through the details of our financial performance this year.

Slide 13 – Group underlying financial performance

Thank you, Blair.

Looking at the consolidated results, we can see that GWP has increased by $68.5m, or 15% - excluding divested portfolios - compared to FY23. This growth was driven by an appropriate mix of rating and underwriting actions, alongside modest volume growth in the house portfolio.

Rating and underwriting actions have significantly improved the BAU claims ratio to 48.1%.

The absence of large weather events in the year, combined with a favourable release from the FY23 Vanuatu cyclones has contributed another $2.3m to the result.

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Pleasingly, the MER improved to 31.4% as a result of expense efficiencies and scale.

Higher investment balances and yields have seen net investment income increase by $7.2m to $21.6m.

Underlying NPAT including large events is $83.5m up from $7.1m, reflecting Tower’s resilience and agility following catastrophic weather events experienced in FY23.

Towers’ FY24 reported profit after tax is $74.3m, up from a loss of $1m in FY23. Reported profit was impacted by an increase to customer remediation costs and a strengthening of the Canterbury Earthquake provision.

Slide 14 – Movement in underlying NPAT

Here is the bridge between underlying NPAT in FY23 of $7.1m and underlying NPAT of $83.5m in FY24.

You can see that calmer weather with no large event costs, business growth, improving BAU loss ratio, and higher investment income have driven this result.

Reported profit was impacted by a strengthening of the Canterbury Earthquake provision, an increase to customer remediation costs and

provisions, and other non-underlying costs partially offset by the gain on the sale of the Solomon Islands business.

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Slide 15 – BAU claims ratio reduced

Our BAU claims ratio has significantly improved to 48.1%, driven by Tower’s prior period rating increases and efficient claims management. Additional external factors including inflation easing, lower crime and relatively benign weather have also contributed to this improvement.

As shown in these graphs, inflation has impacted the insurance industry in recent years, but it began to level off in late FY24. For example, the severity (or cost) of motor claims went up 4% in FY24, compared to 12% in FY23.

Our rating ability allows us to respond quickly to external factors. For our customers, as inflation began to stabilise later in the year, we implemented more moderate premium increases, particularly for low-risk assets.

Risk-based pricing predominantly helps protect Tower from large events. However, we’re also seeing it contribute to the improved BAU claims ratio. Each year, Tower pays out on claims for weather events that don’t meet our $2m threshold for a large event, and these are reflected in BAU claims.

Our efforts to attract lower-risk properties have contributed to house frequency flattening in FY24 and severity increasing at a slower rate.

As previously mentioned, external factors, including calmer weather, have also played a role.

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Slide 16 – Continued improvement in management expense ratio

We are pleased to see our management expense ratio continue to reduce with a 0.6% improvement over the year to 31.4%.

Increased scale from business growth and efficiencies enabled a 4.2% reduction in MER with a further 0.3% decrease in net commission expenses

which was mainly driven by an increase in reinsurance profit share commission income.

A 0.4% increase in amortisation was due to prior year technology capital investments while continued spend on investments to deliver key strategic initiatives drove a 1.4% rise.

Staff and other costs increased by 2%, partly driven by inflation. This year-onyear increase also reflects the payment of staff incentives in FY24. These were not paid in FY23 due to the company missing nominated NPAT targets

following the catastrophe events that year. This increase was partially offset by cost efficiencies.

Slide 17 – Higher investment returns

In FY24 net investment income increased to $21.6m before tax, this was $7.2m higher than the same period last year.

This increased income is due to a larger investment balance and high interest rates in FY24.

Tower maintains a conservative investment policy with a focus on high credit quality and liquidity, and a target duration for the core investment portfolio of six months.

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Our strategy has mitigated the impact on our profit from macroeconomic factors and mark-to-market movements in the past. This allowed us to benefit from higher interest rates through FY23, and up to HY24, when the running yield on the core investment portfolio began to decrease, finishing the year at 4.9%.

The outlook is for interest rates to continue decreasing through FY25.

Slide 18 – Reinsurance programme

Tower’s reinsurance strategy shields against the volatility of major events, ensuring financial flexibility to support growth and robust solvency.

Our reinsurance arrangements for FY25 include catastrophe reinsurance of up to $800m for two events. This was increased from $750m in FY24 due to business growth. The excess for each event would be $18.8m.

We have also purchased coverage for a third event of up to $85m with a $20m excess.

Our FY25 retention limits and programme premium increases were mitigated by our three-year rolling contracts. And we were pleased to sign a significant multi-year contract with a global reinsurer that will help to mitigate future increases.

Tower’s FY25 large event allowance is $50m. Full utilisation of the large events allowance is assumed in our guidance for the year.

We have recorded one large event in FY25 so far - the Dunedin flooding event in October, which has an estimated cost of around $3m.

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Slide 19 - Capital and solvency position

Our increased profits, along with the progress made in settling catastrophe event claims and collecting the recoveries from reinsurers this year, have further strengthened our solvency position. As a result, our parent solvency ratio has improved to 212%, compared to 139% in FY23.

Tower’s regulatory solvency position is calculated under the new Reserve Bank of New Zealand (RBNZ) Interim Solvency Standard (ISS), which applied from the start of this financial year.

We note that the RBNZ is consulting on a further amendment to the ISS, which is expected to be issued and effective this financial year.

The proposed changes to the ISS are likely to have a material impact on Tower’s regulatory solvency position and will reduce the solvency margin.

Accounting for the final dividend, we are now holding $171.4m above the regulatory minimum capital required for solvency. This is an increase from $79.8m as at 30 September 2023.

In accordance with the ISS, the planned capital return of $45m is not yet taken into account in the solvency position and is expected to be deducted from solvency in FY25.

We were pleased that the RBNZ reduced Tower’s licence condition from $15m to $0 in the year and Tower’s A- credit rating was reaffirmed by AM Best.

The Board has declared a final dividend of 6.5 cents per share, bringing total dividends for FY24 to 9.5 cents per share.

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The Board has also conditionally approved a return of NZ$45m of excess capital to shareholders, by way of mandatory share buyback. These conditions are noted in our market announcement.

Slide 20 – Looking forward

Thank you. I will now hand back to Blair who will provide an update on our guidance and priorities for FY25.

Blair Turnbull

Thank you, Paul.

Slide 21 – Focus on customer experience and targeted growth

In the year ahead Tower will continue to invest in creating leading customer experiences, while targeting the right risks at the right price.

This includes applying landslide and sea surge risk ratings to policy renewals and adding these perils to our automated customer-facing quote-to-buy tool, where customers can already see their home’s risk ratings for earthquake and flood hazards.

We will continue our focus on increasing new business from home insurance policy sales by targeting high quality risks, and at the same time we expect our motor book to grow as our pricing becomes more attractive for lower risk vehicles.

And we will continue to grow through new partnerships including Kiwibank, homes.co.nz and HealthCare Plus who joined us in FY24.

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In the coming year we are looking to further increase customer retention by improving our online policy renewal experience.

Through these initiatives and more, we are targeting annual underlying GWP growth of 10%-15% out to FY27.

Slide 22 – Continuous efficiency & process improvements

In FY25, we will continue to focus on delivering efficiency and process improvements.

We are aiming for 80% of all New Zealand service tasks to be completed via digital channels by the end of FY27, up from 45% in FY24.

Following the launch of our new motor assessing system in the year, we plan to launch a new house assessing system in FY25. This is all about continuing to drive down assessment times and repair costs.

We also intend to implement a new contact centre platform in FY25 designed to deliver greater frontline efficiencies and improved customer experience.

As we examine and improve our systems and processes, we are committed to addressing the root causes and applying lessons from the errors that led to customer remediations.

Our work to streamline the business continues with the New Zealand commercial rural portfolio due to complete migration from Tower in January, another step towards decommissioning our last legacy technology system in New Zealand.

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This graph shows the journey Tower has taken to steadily improve our efficiency over the years. This work will continue with Tower targeting an MER of less than 26% in FY27.

Slide 23 – Fostering sustainability

Ultimately, we want to have a positive impact on people and the environment so we will continue to invest in initiatives and products that foster sustainability and future climate change resilience.

An important part of our business strategy is to build an effective and distinctive staff culture across our New Zealand and Pacific locations.

We’re committed to making Tower an even better place to work, enabling us to attract and retain talented people and empower our teams to show up in the best way possible for our customers.

This slide shows some of our FY24 people-related metrics that we are proud of, and we are continually working to further improve. These highlight our staff engagement and gender pay equity scores and our people’s growing participation in our community volunteering initiatives and our various cultural representation groups.

Last week we were particularly pleased to win the Excellence in Workplace Diversity, Equity & Inclusion award at the 2024 ANZIIF New Zealand Insurance Industry Awards.

You can read more about some of these achievements in our annual report released today alongside our results materials.

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We also released our inaugural climate statement today. This covers in detail the climate change risks and opportunities we’ve identified, along with our strategic responses aimed at supporting a low-emissions and resilient future.

Innovation is key to our ongoing success. One cost-effective alternative to traditional insurance is parametric insurance, which we have now implemented in three Pacific nations. In FY24, we partnered with global insurtech, CelsiusPro, to offer this product on a digital platform.

Our goal is to reach 10,000 parametric insurance policies by the end of FY25.

Tower has set an absolute, science-aligned reduction target of 21% for our Scope 1 and 2 emissions by the end of the 2025 financial year, using FY20 as the base year. Our FY24 Scope 1 and 2 emissions show a 20% reduction on FY20 levels and a 9% reduction on FY23.

We continue to support education that addresses climate change and promotes a more equitable, resilient, and sustainable future by awarding five university scholarships in New Zealand and Fiji in FY24.

Slide 24 – FY25 guidance and future targets

In FY25 Tower expects GWP growth - excluding revenue from sales of subsidiary operations - of between 10% and 15%.

We have set a prudent large events allowance of $50m.

We expect further improvements to our management expense ratio which we anticipate will be less than 29%.

We are targeting a combined operating ratio of between 87% and 89%.

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Assuming full utilisation of the $50m large events allowance Tower anticipates underlying NPAT to be between $50m and $60m.

We are targeting a return on equity of between 13% and 17%.

You can see we have also disclosed a range of medium-term targets for FY27.

Slide 25 – FY25 priorities

Here are our priorities for FY25 which have a key focus on enhancing our customer experience.

We will continue to work through customer remediations and associated proceedings, while implementing the lessons learnt from these experiences. We are also focused on the Conduct of Financial Institutions (CoFI) regime which comes into force in March 2025, to further advance fair customer outcomes.

This year we are implementing a new end-to-end customer management solution to further enhance the customer experience, increase efficiency and reduce risk by being a single source of the truth.

And we will expand risk-based pricing and offer greater transparency of customers’ landslip and sea surge risks.

And, importantly, we will continue to pursue efficiency, digitisation, and process improvements that deliver benefits to our customers and drive value for our shareholders.

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These priorities aim to continually enhance our customer experience,

positioning us to deliver sustainable premium growth and attractive long-term shareholder returns.

Thank you for your time this morning, I will now hand back to the operator to ask for questions.

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Distribution Notice

Section 1: Issuer information
Name of issuer	Tower Limited
Financial product name/description	Ordinary Shares
NZX ticker code	TWR
ISIN (If unknown, check on NZX website)	NZTWRE0011S2
Type of distribution (Please mark with an X in the relevant box/es)	Full Year	X	Quarterly
	Half Year		Special
	DRP applies
Record date	16/01/2025
Ex-Date (one business day before the Record Date)	15/01/2025
Payment date (and allotment date for DRP)	30/01/2025
Total monies associated with the distribution1	$24,666,459
Source of distribution (for example, retained earnings)	Retained earnings
Currency	NZD
Section 2: Distribution amounts per financial product
Gross distribution2	$0.06500000
Gross taxable amount3	$0.06500000
Total cash distribution4	$0.06500000
Excluded amount (applicable to listed PIEs)	N/A
Supplementary distribution amount	$0.00000000
Section 3: Imputation credits and Resident Withholding Tax5
Is the distribution imputed	No imputation

1 Continuous issuers should indicate that this is based on the number of units on issue at the date of the form

2 “Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of

Resident Withholding Tax ( RWT ).

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

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

Classification: Sensitive

If fully or partially imputed, please state imputation rate as % applied6	N/A	N/A
Imputation tax credits per financial product	N/A
Resident Withholding Tax per financial product	$0.02145000
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
Start date and end date for determining market price for DRP
Date strike price to be announced (if not available at this time)
Specify source of financial products to be issued under DRP programme (new issue or to be bought on market)
DRP strike price per financial product
Last date to submit a participation notice for this distribution in accordance with DRP participation terms
Section 5: Authority for this announcement
Name of person authorised to make this announcement	Blair Turnbull
Contact person for this announcement	Emily Davies
Contact phone number	+64 21 815 149
Contact email address	[email protected]
Date of release through MAP	28/11/2024

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

Classification: Sensitive

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Tower Limited Climate Statement 2024

Contents 1

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CLIMATE STATEMENT 2024
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Introduction	2
Tower’s business model and strategy	5
Tower’s value chain	7
Tower’s FY24 operational footprint	8
Tower’s approach to climate change	9
Current climate-related impacts	10
Understandingourpossible futures	12
Tower’s climate change scenarios	14
Climate-related risks and opportunities	17
Climate-related risks	18
Climate-related opportunities	23
Anticipated impacts	24
Ourgreenhousegas (GHG) emissions	25
GHG emissions	27
GHG emissions target	28
Our emissions reductions initiatives	29
Measuringourperformance	30
Risk management	31
Integration of climate risks in Tower’s Risk Management Framework	32
Governance	34
Governance framework	34
Climate-related skills and capabilities	39
Appendices	40

CLIMATE STATEMENT 2024

Contents

Introduction

Climate change is not just an environmental issue; it is a fundamental challenge to Tower’s operations as a general insurer.

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Michael Stiassny Graham Stuart Chair Audit Committee Chair

More than any other industry, insurance is particularly exposed to the direct financial and operational consequences of climate-related changes, affecting both our business and the communities we serve. From rising sea levels and increased frequency of extreme weather events to shifts in temperature patterns, ecosystem disruptions and societal shifts, these changes directly affect the risks we underwrite and the claims we manage. This increasingly necessitates that climaterelated issues are not peripheral concerns, but integral to our day-to-day business operations.

As a result, climate-related risks and opportunities are important to our operations, from underwriting and risk management to claims handling and corporate governance.

Tower’s stated purpose is to inspire, shape, and protect the future for the good of our customers and communities. As we confront the realities of climate change and take decisive actions that we consider are in the best interests of our customers, shareholders, and stakeholders, this purpose takes on even greater significance.

Managing climate-related risks and opportunities

For more than 150 years, Tower has operated across New Zealand and the Pacific. We have weathered catastrophic storms, innovated our technology and evolved our products to support customers through challenges. Managing climate-related risks and seizing opportunities, as illustrated by our climate change scenarios, will be increasingly important to our business as a general insurer.

In 2021, Tower was New Zealand’s first insurer to announce the implementation of risk-based pricing for inland flooding. Since then, we have refined and expanded our modelling to encompass other climaterelated risks. We have also empowered our customers by sharing hazard ratings, helping Kiwis understand the risks their homes face. In FY25, we will introduce ratings for landslide and coastal risks, further arming our customers with knowledge they need to prepare.

As we plan for the future, we budget for an increasing number of large weather events to manage their financial impacts with $45m set aside in Financial Year 2024 (FY24). Although FY24 was unusual with Tower recording no large weather events, we understand that a future shaped by climate change will bring a range of extremes, including periods of deceptive calm. Tower remains steadfast in our conservative approach to managing these risks.

Our reinsurance programme is designed to shield us from the volatility of large events. In 2024, we secured comprehensive cover at competitive rates for our home, motor, boat, and commercial portfolios across New Zealand and the Pacific, backed by some of the world’s largest reinsurers.

Innovation is key to our continued resilience. We are developing cost-effective alternatives to traditional insurance, including parametric insurance, which we have already successfully implemented in three Pacific nations. Beyond managing climate-related risks, Tower is committed to advancing our sustainability strategy, as detailed in our 2024 annual report, addressing our broader environmental, social, and governance (ESG) impacts.

CLIMATE STATEMENT 2024

Contents 3

While Tower has made significant strides in managing climate-related risks and opportunities, we are at the beginning of our climate reporting journey. We recognise we have much work to do as we embark on transition planning.

Understanding our risks and opportunities

As Tower continues to implement our current climaterelated strategies, we have taken significant steps over the past two years to deepen our understanding of the climate-related risks and opportunities that lie ahead.

The External Reporting Board (XRB) requires Tower to describe the scenario analysis we have undertaken to help identify these risks and opportunities and to stress-test our strategy’s resilience. Tower has developed scenarios that allow us to rigorously examine our business model and strategy. Through this process, we have identified a comprehensive set of climate-related risks—both physical and transitional— and opportunities. Our analysis has revealed that the most pressing climate-related impacts for Tower are the financial and operational consequences of increasingly frequent and severe weather events. Alongside this, ensuring the continued availability of affordable insurance products is a critical focus area. We have also delved into the potential impacts of government interventions in the insurance market, keeping a watchful eye on developments in international markets. Tower is committed to providing expert advice to government representatives on the likely impacts of such interventions in New Zealand and the Pacific. We advocate for sensible actions that safeguard our customers and communities.

Supporting a low-emissions and climate-resilient future

At Tower, we are committed to managing our climaterelated risks and opportunities, with the objective of ensuring our business remains resilient for generations to come.

In the years ahead, we intend to expand risk-based pricing to help navigate the impacts of severe weather events. We will innovate our products to tackle affordability issues and address insurance retreat, while advancing our data and technology capabilities to enhance pricing, underwriting, and operational efficiencies during large events. Crucially, we recognise that earning the trust and support of our stakeholders in an uncertain world is vital to our resilience. We are committed to upholding strong relationships by delivering fair and transparent insurance services. A key challenge before us will be aligning our products and services with the transition to a low-emissions future while bolstering our resilience to climate change. In FY24, Tower took the first steps towards measuring emissions from our underwriting portfolios and parts of our supply chain. Over the coming year, we will further develop our emissions measurement and reduction plans as we embark on our transition journey.

Strong governance and risk management underpin our climate change responses

Our Board of Directors provides Tower’s highest level of climate change governance. Beyond ensuring compliance with the Climate Standards, the Board steers our response to climate-related risks and opportunities, setting appropriate metrics and targets. Tower’s Board

and Management are 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. We look forward to sharing our progress with you in future climate statements.

Scope of the Climate Statement and Statement of Compliance

As a listed, licensed New Zealand insurer Tower qualifies as a climate reporting entity (CRE). This report is Tower Limited’s first group climate statement and is prepared in accordance with section 461ZA of the Financial Markets Conduct Act 2013 and the Aotearoa New Zealand Climate Standards (NZ CS 1, NZ CS 2 and NZ CS 3) published by the XRB in December 2022 (CRD Regime). It covers our New Zealand and Pacific operations and outlines the steps we are taking in support of a lowemissions and climate-resilient business for the future.

This climate statement has been prepared for our primary users, who we have identified as primarily being potential and existing shareholders and asset managers. All financial information is provided in NZD. Our corporate structure is further explained under the Governance Section on page 34.

CLIMATE STATEMENT 2024

Contents

Tower has chosen to use the following adoption provisions in this first Climate Statement

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Adoption provision Rationale
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1. Current financial impacts	This adoption provision has been used to provide additional time to
	develop a methodology linking financial impacts with climate-related
	risks and opportunities. Financial impacts information regarding 2023
	weather events is included in this disclosure to help illustrate climate-
	related risks associated with future large weather events.
2. Anticipated financial impacts	As set out above.
3. Transition planning	Tower will provide a Transition Plan in its second-year Climate Statement
	based on work undertaken in FY24 and FY25.
4. Scope 3 greenhouse gas (GHG) emissions	Selected operational Scope 3 emissions have been included to maintain
	consistency with previous Annual Report inclusions,
5. Comparatives for Scope 3 GHG emissions	As described above, our material Scope 3 inclusions are in development.
6. Comparatives for metrics	Comparatives for all relevant metrics will be developed alongside our
	work on current and anticipated financial impacts and the development of
	our Transition Plan.
7. Analysis for trends	Trend analysis will be conducted as part of the ongoing development
	of metrics.

Statement of Compliance

These climate-related disclosures comply with Aotearoa New Zealand Climate Standards issued by the XRB. This Climate Statement is dated 28 November 2024 and is signed on behalf of Tower by:

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Chair, Audit Committee Chair, Michael Stiassny Graham Stuart

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CLIMATE STATEMENT 2024

Contents

Tower’s business model and strategy

Tower’s business model is customer-focused. We deliver general insurance products and services directly to customers via digital platforms and phone, using data to enhance customer service and streamline processes. Our commitment is to provide fair and transparent services, with customer care at the heart of everything we do.

Operationally Tower is structured around the ways our customers interact with our business: via claims, service (renewal, payments and queries) and new business (new and existing customers), both via our digital channels and our phone lines.

Tower provides general insurance products to customers in New Zealand, Fiji, Cook Islands, Samoa, American Samoa and Tonga.

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Tower’s products cover:
House Contents Motor Motorbike Pet Motorhome
Travel Business Caravan Landlord Boat Parametric cover
(for cyclone and rainfall -
only in the Pacific)
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Our values

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We do what’s right

Our people come first

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Our customers
are our compass
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Progress boldly

Our strategic pillars

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CLIMATE STATEMENT 2024

Contents

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OUR CUSTOMERS
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Tower’s value chain

Tower’s full value chain is depicted in the diagram below. Content within our Climate Statement related to our scenario analysis, assessment of climate-related risks and opportunities, and governance encompasses all aspects of our value chain, across our New Zealand and Pacific operations. Content relating to GHG emissions excludes partners, reinsurers and shareholders.

Customers pay We pay claims directly premiums to to customers or pay protect their risks suppliers to fulfil or assets customers’ claims. We provide our people with a positive culture, attractive benefits and career development. Inspire, shape and protect the future for the good Our people enable of our customers and us with their skills, communities. expertise and commitment. Our reinsurers latf

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OUR PEOPLE & EXPERTISE

Our reinsurers compensate us when large risks occur.

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REINSURERS
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Our shareholders Shareholders provide capital, receive shares enabling us to in the company grow and operate. and Tower aims to provide an appropriate return on investment.

Partnerships enable new products and services and drive service, efficiency and quality gains.

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OUR PARTNERS
& SUPPLIERS
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We build mutually beneficial partnerships with data, technology, servicing and banking partners.

We invest premiums (less costs) to hold in reserve for potential future claims.

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INVESTMENTS
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SHAREHOLDERS
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CLIMATE STATEMENT 2024

Contents

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Tower’s FY24 operational footprint [1]
Vanuatu
Pacific Fiji
$48m 35,000 Samoa &
American
GWP [2] policies
Samoa
22,000 322 175
Tonga
customers staff tCO2e [3] Cook
Islands
New Zealand
$547m 575,000
New Zealand
GWP [2] policies
283,000 593 127
customers staff tCO2e [3]
1 All figures are as at 30 September 2024.
2 Gross Written Premium (GWP) includes all operations during the year.
3 Scope 1 and 2 greenhouse gas emissions tonnes of carbon dioxide equivalent (tCO2e). Map not to scale
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CLIMATE STATEMENT 2024

Contents

Tower’s approach to climate change

As the global and domestic economy transitions towards a low-emissions, climate-resilient future, Tower recognises the need to develop a climate resilient business for the long term.

Our strategy for managing climate-related risks and leveraging opportunities aligns with our broader business strategy and builds on our existing sustainability strategy.

It centres on four main approaches:

Risk-based pricing – managing risk at an increasingly granular level.

Product innovation –

developing new products to help address affordability challenges and support the transition to lower emissions assets.

Data and technology – investing in enhanced data and technology to continually improve our underwriting and pricing and to better support customers through large events.

Maintaining our social licence

to operate – upholding strong relationships with our shareholders, reinsurers, government representatives and industry stakeholders, and keeping pace with the changing expectations of customers and communities.

Reducing our emissions is an important aspect of our sustainability strategy and our operational emissions have reduced by 20% from our 2020 baseline year. Further details are provided in the Measuring our performance section on page 30. We will disclose further details in our FY25 transition plan and Climate Statement.

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CLIMATE STATEMENT 2024

Contents

Current climate-related impacts

Physical impacts

Over the past 10 years Tower has experienced an increasing frequency and severity of large weather events that may be linked to a changing climate. As shown in the graph, the five-year rolling average of large event costs for Tower up to the financial year ending 30 September 2024 increased by $4.2m, compared to the ten-year average.

In a departure from recent norms, no large weather events were recorded in FY24 and Tower is reporting a profit of $74.3m. This volatility related to climate change presents challenges for Tower in our modelling and financial planning. We continue to take a conservative approach to these to support our financial resilience.

Reinsurance costs increased following the events of 2023 due to the need to purchase additional reinsurance and price increases by reinsurers in response to the changed risk environment.

Catastrophic and large weather events

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$222m
Net costs
Gross costs
5-yr average – net cost
$37m
10-yr average – net cost
$25m
$19m
$18m
$14m $13m $14m
$10m $10m $10m $12m $9m $10m $14.7m
$10.5m
$7m $7m $7m
$5m
$0m $0m $0m $0m
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24
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NB Tower measures large events as those which have a net cost to Tower of more than $2m. Division of net and gross values are approximate, based on internal records.

Similarly, Tower reviewed its risk appetite in affected areas, resulting in more properties being deemed to have high flood risk in our model. Combined with rising inflation, these impacts contributed to insurance pricing increases in FY23 and FY24 for customers with higher flood risks as policies renewed.

CLIMATE STATEMENT 2024

Contents

2023 Catastrophe event impacts

In 2023 New Zealand and the Pacific experienced several catastrophic weather events consistent with climate change projections. These were North Island weather events, Cyclone Gabrielle, Cyclones Judy and Kevin in Vanuatu, and the Auckland floods. The impacts on Tower were:

$38m net impact to Tower, excluding reinsurance reinstatement.
$1m loss after taxation, versus a profit of $18.9m in the previous financial year.
10,057 claims of $208 million from the Auckland and upper North Island weather event and Cyclone Gabrielle alone.
Five years’ worth of large house claims received in two weeks (Auckland floods and Cyclone Gabrielle).

These combined weather events put significant demand on our frontline claims teams and assessors, with flow on effects to other business units supporting the claims response. Tower demonstrated resilience by leveraging our geographically dispersed workforce, redeploying our Fiji and Rotorua employees to phone lines and utilising key supplier relationships. As of June 2024, 97% of all these claims were settled.

These events are detailed in our 2023 Annual report (page 12-14). The experience underscores how climate-related risks are already impacting our business and our customers.

Transition impacts

An early indicator of the transition to a low emission, resilient economy is the development of the climate-related disclosure regime with mandatory requirements for climate reporting entities including Tower. While not currently material, Tower’s resourcing and compliance costs have increased to meet the climate-related disclosure requirements.

Opportunities have also arisen from the increased focus on transparency on climate-related issues. These include a growth in the support services available to businesses such as GHG emissions calculation tools, climate adaptation solutions and collaboration opportunities.

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CLIMATE STATEMENT 2024

Contents 12

Understanding our possible futures

The NZ CS requires disclosure of the scenario analysis process Tower has undertaken to identify climate-related risks and opportunities. Scenario-based analysis explores how uncertain, forward-looking variables might logically interact to create plausible future states. The purpose of Tower’s scenarios is not to predict the future, but to identify and interrogate the assumptions underlying critical decisions.

Tower’s climate scenarios are based on the Insurance Council of New Zealand’s (ICNZ) shared climate scenarios for the insurance sector. In 2022, Tower participated in a New Zealand insurance industry initiative to co-design these industry scenarios.

Scenario development

In 2023 Tower engaged KPMG to facilitate the entitylevel scenario development and analysis process with a cross functional working group of executives and senior leaders. Through a series of workshops, this group translated the ICNZ climate change scenarios to Tower’s business, strategy and operations in New Zealand and our Pacific markets in line with XRB guidance.

Tower’s climate change scenarios use, as a base, the same framework architecture, quantitative and qualitative parameters, and narrative storylines as the ICNZ scenarios. However, they were adapted to better reflect our business operations, focusing on:

The potential physical impacts of climate change in the Pacific, given our geographic distribution.
Navigating financial markets during disruption to highlight possible impacts on our investment portfolio.

Analysis undertaken

These scenarios were analysed in a series of workshops by a selected cross-functional group of Tower executives and senior leaders. The group assessed Tower’s strategy and operations against the three climate change scenarios, identifying a range of physical and transitional impacts. These impacts were then assessed against the three identified time horizons and prioritised by likelihood and potential impact.

Through this process, Tower identified a long list of 42 impacts and implications, which were further assessed via our climate-related risk management and strategy processes to develop the climate-related risks and opportunities outlined later in this section.

Tower’s climate change scenarios and climate-related opportunities were reviewed by the Sustainability and Climate Change Steering Committee and approved by the Tower Board. Tower’s climate-related risks were reviewed by the executive-level Management Risk and Compliance Committee (MRCC) and the Board Risk Committee.

The scenario analysis was a standalone process designed specifically to address the CRD Regime requirements. As our approach to climate reporting matures, Tower will consider integrating climate change scenario analysis into our business strategy development processes.

Summary of scenario development process

2022

1.

ICNZ collaboration to develop Insurance Sector scenarios for NZ

2023

2.

Tower senior leader workshops to develop Tower-specific scenarios

3.

Workshops with Senior leaders to test scenarios

4.

Scenario analysis to identify climate-related risks and opportunities

5.

Management level and Board approvals of scenarios and climate-related risks and opportunities

2024

CLIMATE STATEMENT 2024

Contents

Scenario architecture, socioeconomic pathways and rationale for selection

Tower’s climate change scenarios build upon the ICNZ scenarios which were based, in turn, on the Network for Greening the Financial System (NGFS) scenarios. The below table sets out Tower’s scenario architecture, how Tower’s scenarios align with relevant local and international socioeconomic pathway parameters and the rationale for selection.

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Tower’s scenario architecture
Parameters Orderly 1.5ºC Disorderly >2ºC Hothouse >3ºC
Global emissions and Representative Concentration Pathway RCP4.5 RCP7.0
socioeconomic pathway (RCP) 2.6
IPCC SSP2-4.5 IPCC SSP3-7.0
parameters
Intergovernmental Panel on Climate Change
(IPCC) Shared Socioeconomic Pathway
(SSP) 1-2.6
Global physical risk Network for Greening the Financial System NGFS Delayed Transition NGFS Current Policies
pathway parameters (NGFS) Net Zero 2050
New Zealand-specific NZ Treasury Shadow Price ‘High’ Pathway NZ Treasury Shadow Price ‘Medium’ NZ Treasury Shadow Price ‘Low’ Pathway
emissions, transition and Pathway
Climate Change Commission (CCC) ‘Tailwinds’ CCC ‘Current Policy Reference’
socioeconomic pathway
CCC ‘Headwinds’
parameters Shared Policy Assumptions for New Zealand SPANZ ‘Homo Economicus’
(SPANZ) ‘100% Smart’ SPANZ ‘Kicking, screaming’
Rationale for selection Most commonly used scenario by financial Commonly used scenario by financial Commonly used scenario by financial
institutions globally. institutions globally. institutions globally.
Aligned with scenarios already selected by Aligned with scenarios already selected by Aligned with scenarios already selected by
ICNZ for the General Insurance Sector (and ICNZ for the General Insurance Sector (and ICNZ for the General Insurance Sector (and
other sectors). other sectors). other sectors).
Meets XRB’s requirement for a 1.5ºC Meets XRB’s requirements for a third Meets XRB’s requirements for a
aligned scenario. climate-related scenario. >3ºC scenario.
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Tower’s climate change scenarios

Our climate change scenarios are summarised in the high-level data points and narratives below.

Orderly scenario – Net Zero 2050

International and domestic policy settings aim to limit total warming by end-of-century to less than 1.5°C.

Policy ambition: 2050 warming: <1.5°C 1.6°C NZ Pacific Mean annual temperature 1.6°C 1.8°C change 2050 Mean sea level rise 22cm 20.4cm

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Severity of physical risk Low
Severity of transition risk Moderate
Policy reaction Immediate & smooth
Regional policy variation Medium
Technology change Fast
Carbon dioxide removal Medium
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This scenario explores Tower’s readiness to rapidly transform its business in the short term towards a lowemissions and climate-resilient future, and envisions that by 2050…

New Zealand has invested in adapting to climate change, building the country’s resilience. As a result, reinsurers remain in the region and view the growing population as a growth opportunity.

The requirement to decarbonise and build resilience rapidly put strain on some customers, resulting in financial challenges. However, governments and the financial sector helped to educate the general public on climate change, coupling innovative products and services with transparency around pricing increases. This meant most were open to new products that reflected different risks, and social policies were in place to support those who struggled to afford them.

The Pacific has benefitted from international support and funding to improve its resilience, but sea level rise and extreme weather events have impacted most nations. Migration has meant that new talent with regional knowledge has entered New Zealand’s workforce. Collaboration across the Pacific region has been an important driver of action against climate change by government and businesses, as has emerging technology.

Across the region, offerings like parametric insurance and risk-based pricing emerged quickly, allowing insurers to better cost their risk and provide realistic cover to customers. New Zealand’s substantiated ‘clean, green’ reputation, alongside its embrace of new technology such as AI, helped attract international and domestic talent.

Organisations that were early, vocal actors in the transition to a net zero economy benefitted from positive sentiment from customers, communities and stakeholders. Those that were able to fulfil and substantiate their commitments enjoyed increased market share. However, the window was small; those that didn’t move quickly had to work harder to catch up and transition.

While capital markets underwent a sharp-but-short period of volatility and loss, organisations that prioritised climate-smart resilience in their investment portfolios were well-positioned to ride the post-transition wave. Organisations that stepped into the challenge of climate change and diversified their offerings early were attractive for investors.

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Disorderly scenario – delayed transition

Global emissions peak in 2030, then drop sharply. As a result of delayed action, deeply destabilising policies are required to keep total warming below potentially catastrophic levels.

Policy ambition: 2050 warming:

<2.0°C

1.8°C

NZ Pacific Mean annual temperature 1.8°C 2.0°C change 2050 Mean sea level rise 25cm 22cm

The disorderly, delayed transition scenario explores Tower’s resilience to an especially condensed and disruptive transition in the medium term and depicts a future whereby 2050…

The region (New Zealand and Pacific) is just starting to recover from a costly, painful and profoundly disruptive global transition to our low emissions, climate-resilient economy.

General Insurers were deeply bruised by the scope and scale of extreme flooding in 2037. However, most business models cope with the physical impacts of climate change.

Without leadership from, and timely investment by government, small insurers struggle to compete with more innovative peers with global backing, in terms of products, pricing models, regulatory compliance, or reputation.

Some organisations were slower than others to acknowledge or address the enterprise level risks that climate change posed to their business model and strategy. Where different countries moved at different speeds, those taking a compliance-led approach found their response fragmented. Most organisations took several years to understand the full potential of transition plans and failed to achieve any first-mover (or even fast-follower) advantage. This also meant customers struggled to compare providers and understand how to improve the resilience of their assets until later in the transition.

Difficult decisions had to be made by organisations that suffered reputational damage during the transition. Streamlining business models and focusing on larger markets meant insuring higher risk areas like the Pacific became less feasible.

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Severity of physical risk High
Severity of transition risk Low
Continuation of
Policy reaction current policies
Climate technology change Slow change
Carbon dioxide removal Low use
Regional policy variation Low variation
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Hot house scenario – current policies

Current climate policies in New Zealand and abroad are sporadic and weak. Any policy changes are insufficient to limit total warming to 2.0°C.

Policy ambition:

2050 warming:

+3.0°C

+2.0°C

NZ Pacific Mean annual temperature 2.0°C 2.0°C change 2050 Mean sea level rise 39cm 23cm

The hot house, current policies scenario was designed to explore how the collective failure to cut emissions might steadily erode value in the long term. This scenario depicts that by 2050…

Startling new technologies (enabled by advances in AI) have benefited insurers, their customers, and the global economy. However, this formidable ‘tailwind’ has been overpowered by the cumulative impact of increasingly intense and frequent natural disasters and has not always been used for good.

Some assets have become stranded due to global changes to climate policies and insurers that were slow to capitalise on the opportunities that presented themselves during the climate transition are responsible for underwriting these with expensive insurance products.

General Insurers have been particularly hard hit – though less so in countries like New Zealand that benefit from a relatively benign climate (as compared, for example, to Australia). New Zealand also benefitted from the way in which its government facilitated early adaptation to the physical impacts of climate change.

Customer needs are more bespoke due to the changed environment with a greater need for specialist advice and specialist policies. Offerings in regional markets differ across insurance providers as the market for insurance becomes increasingly unprofitable and unaffordable for the average family. Data has become a commodity and has increased drastically in price.

Insurers withdrew early on from high-risk areas in New Zealand, leaving some communities stranded. After some time and concurrent natural disasters, the same approach is taken with the Pacific nations as they become less viable and the long-term outlook is poor.

Severity of physical risk High Severity of transition risk Low Continuation of Policy reaction current policies Climate technology change Slow change Carbon dioxide removal Low use Regional policy variation Low variation

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Climate-related risks and opportunities

Our work to identify potential climate-related risks and opportunities that may affect Tower commenced in 2023 and was further refined in 2024. These risks were assessed under the three climate-related scenarios outlined in the previous section.

Alongside the development of our three scenarios, Tower selected three time horizons to assess the related risks and opportunities. These time horizons were selected to align with the ICNZ scenarios and are independent of our business strategy and planning cycles, which are based on a three-year forward-looking view and reviewed annually.

Time horizon	Period
Short	2023-2025
Medium	2026-2035
Long	2036-2050

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Climate-related risks

In total, 26 climate-related risks were identified. Of these, five inherently high risks identified during our risk assessment process (see page 31 Risk management) are considered material and included in the table below on page 19.

Physical and transition risks

Physical risks, as defined in NZ CS 1, relate to the physical impacts of climate change. These risks can be:

Acute, such as those related to extreme weather events like Cyclone Gabrielle, or
Chronic, due to longer-term shifts in weather patterns, such as changes in precipitation, temperature, or sea level at a regional or national level.

Tower does not directly own or lease assets that are materially vulnerable to acute or chronic climate-related physical risks. However, our customers do, and the potential risks to their assets – and the subsequent risks to our business – have been identified and assessed for disclosure. These risks comprise the largest proportion of Tower’s material risks.

As New Zealand and the world transitions to a low emission, climate-resilient economy, the context for insurance will likely alter and present new challenges. These challenges, defined as transition risks, include changes in government policy, legislation, markets, technology and societal behaviours and expectations. Transition risks make up a larger proportion of Tower’s climate risks than physical risks (69%). However only one transition risk has been assessed with a high inherent severity and therefore is considered material.

Tower recognises that transition risks may increase in severity over time. Tower will continue to monitor these and reassess their materiality in line with our Risk Management Framework. We also recognise that some risks can be categorised as both physical and transition and this is reflected in the material risks table below.

The following graph shows the distribution of risks according to risk type and severity.

Distribution of risks

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High
Medium
11
Low
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6
3
2
1 1 1 1
Physical Transitional Physical
& Transitional
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Identified climate-related risks and associated anticipated impacts

A description of our inherently high risks, their risk type, anticipated impact, existing mitigations and assessed magnitude against each scenario and time horizon are detailed in the table below.

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Time horizons
Anticipated Regions
Risk Risk type Description Current strategies Scenario
business impact affected
Short Med Long
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Risk Risk type Description Anticipated business impact Current strategies Regions affected	Scenario Time horizons Short Med Long
Operational stress from climate impacts. Physical Increasing extreme weather events subject Tower to substantial operational stress that reduces its ability to adapt. Operational stress due to volume and complexity of claims. Reputational damage. Lack of specialist resource may affect operational response. Prioritising events responses over progressing business strategy. Claims transformation programme to automate and streamline claims processes. Resource diversification via Suva Hub and strategic partners. Development of large event response plan. New Zealand Pacific	Orderly
	Disorderly
	Hothouse
Significantly larger scale extreme weather events in the Pacific region. Physical Extreme weather resulting in repeated large loss events. Providing comprehensive insurance in Pacific markets becomes unviable. Parametric insurance to diversify offering Efficient digital operations to manage costs. Divestment of Pacific subsidiaries at high risk from weather related large events. Pacific	Orderly
	Disorderly
	Hothouse

Risk remains the same

Legend:

Risk increases

Continuing to assess change

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Time horizons
Anticipated Regions
Risk Risk type Description Current strategies Scenario
business impact affected
Short Med Long
Financial stress Physical Repeated large-scale Accumulated financial Enhanced hazard data New
from climate extreme weather losses. and risk selection, risk- Zealand
Orderly
impacts. events subject based pricing to minimise
Insufficient reinsurance. Pacific
Tower to substantial exposure to high-risk
financial stress due Insufficient resources. assets and communication
to high volume and with reinsurers regarding
Higher costs of capital. Disorderly
costs of claims. improvements to risk profile.
Reduced investor
Increasing large events
support.
budget in financial planning.
Increasing reinsurance
cover.
Hothouse
Product innovation
such as parametric to
diversify offering.
Affordability Transition Reduced access to Increased reinsurance Risk based pricing – New
of reinsurance reinsurance for all premiums. as above. Zealand
Orderly
diminishes perils (or certain)
Increased product Pacific
perils and at short
development costs to
notice leads to
offer alternative cover.
price increases.
Disorderly
Hothouse
Legend: Risk remains the same Risk increases Continuing to assess change
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Time horizons
Anticipated Regions
Risk Risk type Description Current strategies Scenario
business impact affected
Short Med Long
Scope, speed and Physical/ New Zealand and the Diminished customer Geographical distribution New
scale of climate Transition Pacific experience experience leads of operations. Zealand
change physical multiple large to brand and
Digitisation to automate Pacific Orderly
and/or transition weather events in reputational impacts.
processes and improve
impacts outpaces quick succession,
Difficulty retaining customer experience.
Tower’s ability flood risks and
staff due to increased
to adapt. coastal hazards Developing an agile culture.
workloads.
become frequent
Robust strategic and
occurrences Financial impacts
financial planning to
in increasing resulting from claims Disorderly
mitigate financial risks.
geographies. errors and/or reduced
customer growth.
Substantial increase
in operational costs for
data and technology,
models.
Hothouse
Capital shortages pose
challenges in optimising
opportunities.
Legend: Risk remains the same Risk increases Continuing to assess change
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Transition
Time horizons
risks currently Anticipated Regions
Risk type Description Current strategies Scenario
assessed as business impact affected
medium Short Med Long
Government Medium High levels of Reputational damage Closely monitor New All
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Government	Medium	High levels of	Reputational damage	Closely monitor	New All
intervention and/	Transition	government	from unintended	societal trends.	Zealand
or societal shifts in behaviour.		intervention. Attraction and	consequences of interventions.	Product innovation/ customer propositions.	Pacific
		attrition of skilled employees. Changes in technology. Changing motor vehicle ownership trends.	Customer needs/ expectations outpace product design as NZ transitions to net zero. Comprehensive insurance cover becomes unviable leading to customer	Participate in submissions on government proposals. Engagement with local and central government representatives directly and via ICNZ. Pricing transparency.
		Changes in banks’	impacts. Increased
		lending criteria.	regulatory pressure
			adding to financial
			and human resource
			constraints.

Legend:

Risk remains the same Risk increases Continuing to assess change

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Climate-related opportunities

While climate-related risks are front of mind when developing climate strategy and mitigation, the scenario analysis process also identified potential opportunities for Tower. The highest priority identified opportunities are outlined below. These apply to all Tower’s climate change scenarios, across all time horizons in New Zealand and our Pacific markets.

Our strategy to innovate will be increasingly important as the transition to a low emission, climate resilient economy presents the need for new products that

reflect societal and economic shifts. One example of our innovation is parametric insurance in the Pacific, which aims to enhance insurance affordability and accessibility in this market. While parametric insurance is currently only a small part of our business and revenue, Tower sees an opportunity to expand its market share in the future, both in New Zealand and the Pacific.

In the coming year, our transition planning will focus on refining our product innovation approach to bolster resilience and accelerate the move towards loweremissions assets.

We have also identified the opportunity to develop industry partnerships that benefit customers and other stakeholders, which could strengthen the insurance industry’s future resilience. Examples of this include:

ICNZ’s collaboration on government proposal responses for climate change adaptation and resilience.
ICNZ’s collaboration to estimate emissions from motor repairers, reducing the reporting burden on these suppliers.

Tower FY24 climate-related opportunities

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Opportunity Opportunity type Description Business impact Current strategies Time horizons
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Enhanced brand	Transition	New products and	Supports growth	Parametric insurance	Short
and reputation.		attractive pricing that address affordability issues and / or support	Enhanced brand reputation	Risk-based pricing. Working towards B-Corp certification.	Medium Long
		the transition to lower emissions assets.		Contributing to public discourse on climate change impacts directly and via sustainability and climate-
				change focused corporate memberships.
				Product innovation.
A more resilient	Transition	Industry partnerships that	Supports efficiency for	ICNZ collaboration on responses to Government	Short
insurance industry.		benefit customers.	insurers, ability to offer improved pricing.	proposals i.e. Climate Adaptation Framework. ICNZ pilot to estimate emissions from motor repairers.	Medium Long

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Anticipated impacts

Tower used scenario analysis to model the expected impacts on its future business.

The modelling used a ‘top down’ approach, taking external data and trends from Tower’s climate change scenarios and applying these to Tower’s business with assumptions spanning out to 2050 relating to:

Population growth
Dwelling growth
Transition to Electric Vehicles (EVs) and vehicle ownership rate assumptions
Tower’s expected market share of target markets
Claims estimates
Proportion of dwellings in high hazard risk areas
Growth of multi-unit dwellings
Stormwater infrastructure investments
Potential public interventions in the general insurance market.

Tower notes there is significant uncertainty in assumptions spanning out to 2050. The benefit of using a top-down modelling approach is to identify the factors most likely to significantly impact Tower’s business performance over the period. This model presented a practical solution, considering available data, extended time horizons, and systemic variables. This analysis was applied across the three Tower scenarios.

The potential impacts for Tower to monitor are summarised below:

Customer affordability challenges due to increasing insurance costs (through increased weather events, BAU frequency, increasing return on investments costs).
Government intervention to mitigate affordability and/ or insurance retreat.
Societal shift in demand for products through changing transportation trends such as increased use of public transportation and uptake of EVs.

Tower has begun working with data suppliers to scientifically estimate the anticipated increase in climate change-related claims costs through to 2050.

Our approach to transition planning

A key climate-related priority for 2025 is to develop a transition plan for Tower. Our preparation has commenced with actions to upskill key staff on transition planning, measure emissions from scope 3 sources and consider appropriate metrics and targets.

We have opted to apply Adoption Provision 3 under NZ CS 2 for the transition planning aspects of our strategy. We intend to integrate climate change transition planning into our 2025 business strategy and financial planning processes.

Capital expenditure and investment

As a general insurer, managing climate-related risk is a core component of Tower’s business as usual activities. Tower invests in enhancing our natural hazard modelling and pricing capabilities annually.

During Tower’s annual strategic planning process, executive leaders evaluate material risks and opportunities, and strategic decisions. These are then escalated to the Board for oversight, guidance and investment decisions. This process includes assessing climate-related risks and opportunities, which in recent years has led to investments in parametric insurance and risk-based pricing. The Board approves funding for further proposition, investigation and development, and considers initiatives for inclusion in the business strategy and annual business plan.

The annual purchase of reinsurance to manage the financial impacts of large events, including potential climate-related events, is considered under Tower’s reinsurance strategy and approved by the Board.

Tower’s capital level is influenced by loss history, which in turn can be influenced by climate related risks and impacts. Capital requirements are determined by the products we develop and sell, and the risk levels associated with those assets. For instance, a house insurance policy requires Tower to hold more capital than a motor insurance policy, due to higher replacement costs. As the industry transitions to a low-emissions, climate resilient future, expanding into different asset classes, will result in different capital requirements. These decisions are made in accordance with Tower’s capital management process.

Tower has an annual operational budget for sustainability initiatives and compliance with the Climate-related Disclosures (CRD) regime. This includes the costs of measuring emissions, consultancy support, and climate change and sustainability training.

Financial and operational impacts from increased frequency and severity of weather events across NZ and the Pacific.

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Contents 25

Our greenhouse gas (GHG) emissions

Tower has been calculating its GHG emissions since 2020, in accordance with the requirements of the Greenhouse Gas Protocol. We used an operational control consolidation approach to account for emissions reported by both location and market-based emission factors. Total emissions are reported using the locationbased approach.

To date our GHG inventory has included Scope 1 and 2 emissions for New Zealand and Pacific operations and selected Scope 3 emissions as detailed below. Our base year is 2020, the first year of our five-year Sustainability Strategy. Restatements made are provided in Appendix 4.

In our first year of climate-related reporting we have elected to apply adoption provision 4 of NZ CS 2 which exempts Tower from disclosing all or some of its Scope 3 GHG emissions. Tower has chosen to disclose a subset of Scope 3 emissions in line with previous annual report inclusions, please see Appendix 4 for the sources that have been excluded this year. The methods, assumptions and estimations used in calculating our GHG emissions are also included in Appendix 4.

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The following illustration summarises relevant emissions sources for Tower’s operations (it does not depict all potential emissions sources and includes sources that may be reported in future years).

Scope 3 Scope 1 & 2 Scope 3 Upstream Direct Emissions Downstream Indirect Emissions & Electricity Indirect Emissions

Legend for icons provided in following tables.

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Scope 3 sources disclosed for FY24 are detailed in Appendix 4 and include:

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Emissions source

Business travel: flights and accommodation – NZ and Pacific, taxis and rental vehicles – NZ only

Employee commute – NZ and Pacific

Work from home – NZ and Pacific

Waste – NZ only

Purchased goods and services: paper use – NZ only Water supply – NZ and Pacific

All other relevant Scope 3 emissions from our upstream and downstream value chain will be assessed for materiality in FY25.

In 2024, we began assessing Scope 3 emissions related to our wider upstream and downstream business activities, focusing on emissions sources material to our business. Tower is currently working on four areas to prepare for disclosing material Scope 3 emissions in future disclosures:

Calculation of emissions relating to our underwriting portfolio

Purchased goods and services – ICNZ collaboration to pilot the assessment of motor repair provisions related to claims

Assessment of investment emissions

Purchased goods and services – assessment of supply chain emissions

ICNZ/Cogo pilot for motor repair emissions

Tower is participating in an industry working group coordinated by the ICNZ, involving four other insurers. This group has launched a pilot programme to calculate claims emissions from motor repair services, in partnership with sustainability fintech Cogo. The pilot provides motor repair suppliers with free access to Cogo’s Carbon accounting software, Carbon Manager, for a five-month period. Using supplier spend and activity data, the software generates emissions intensity figures for each participant. This enables insurers to calculate their share of emissions based on their spend with motor repair suppliers for customer claims.

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The aim of the pilot is to evaluate:

How effective is a carbon accounting tool in reporting supply chain emissions?

What are the benefits of adopting a collaborative approach within the insurance industry?

What opportunities exist to scale the pilot into a permanent collaboration across the wider claims supply chain?

The initiative seeks to simplify emissions reporting for collision repair businesses as businesses in the claims supply chain, as they will face increased pressure to measure and report their emissions footprint in response to climate-related legislation.

At the date of this climate statement, the pilot is ongoing, with participants set to evaluate the approach’s feasibility for future disclosures in FY25.

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Contents 27

GHG emissions

The following table summarises Tower’s emissions from our FY20 baseline year to the FY24 reporting period

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FY20 (tCO2e) FY21 (tCO2e) FY22 (tCO2e) FY23 (tCO2e) FY24 (tCO2e)
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Scope 1	169	115	300	165	160
Scope 2	207	179	146	166	142
Selected Scope 3	209	295	202	183	859
Total	585	399	649	514	1,161

Footnote: Tonnes of Carbon Dioxide equivalent (tCO2e) = unit of measurement for combined GHG emissions represented as carbon dioxide. FY20-23 no employee commute emissions, work from home, Pacific water, Pacific T&D losses reported.

The chart below shows the breakdown of Tower’s GHG emissions by source.

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Employee commute Business travel Vehicle fleet

Electricity

Working from home

Waste and water Paper

The largest proportion of Tower’s GHG emissions come from travel. In FY24 14% of total emissions were from the operation of our vehicle fleets in New Zealand and the Pacific, while 17% came from business travel, including flights, accommodation, taxis and rental cars.

In our first year of undertaking an employee commute survey (FY24) we calculated associated emissions at 43% of our total footprint. This addition has resulted in a clear increase in our overall Scope 3 values along with work from home emissions.

Our fleet vehicles are crucial for our claims and assessing teams to meet the needs of our customers. Our business travel enables us to remain connected across our geographical locations with colleagues and business partners and our employee commute emissions reflect our people’s journeys to work. As a result our approach to emissions reduction needs to maintain our service value in these areas. Initiatives to reduce emissions associated with these sources are provided in the table on page 29.

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Scope 1 and 2 emissions are also calculated as an intensity figure using our total risk numbers as the key indicators1. The intensity results from our base year (FY20) to FY24 are outlined in the table below. The total emissions intensity per policy show a consistent value before decreasing for FY24. The decrease is related to maintaining policy numbers whilst reducing emissions.

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Emissions intensity in tCO2e/risks insured (000s) FY20 FY21 FY22 FY23 FY24
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NZ intensity	0.21	0.24	0.13	0.19	0.22
Pacific intensity	6.14	3.86	8.55	5.07	4.55
Total intensity	0.67	0.51	0.74	0.53	0.48

1 Calculated as Scope 1 & 2 emissions divided by average risk count for the year. In this context risk refers to the specific addressable property or risk covered by an insurance policy, e.g., the house, the motor vehicle, or a period of overseas travel. The Pacific intensity figures include emissions for the Suva hub which provides services in relation to NZ policies.

GHG emissions target

Tower has set an absolute, science-aligned reduction target of 21% for our Scope 1 and 2 emissions by the end of the 2025 financial year, using 2020 as the base year. Our FY24 Scope 1 and 2 emissions show a 20% reduction on 2020 levels and a 9% reduction on FY23.

This target was established based on the Paris Agreement goal to limit global warming to 1.5°C. The Paris Agreement goal (UNFCCC 2015) requires emissions to peak before 2025 at the latest and decline 43% by 2030. Tower calculated our reduction trajectory to 2025 on the basis of this ambition.

During FY25 we will revise our target against a 1.5°C global warming ambition using a science-based methodology and extend it to include our Scope 3 emissions. Assurance of the target will be obtained through the mandatory FY25 GHG emission disclosures, and we will explore the viability of an intensity-based metric and target as our understanding of our material Scope 3 emissions improves.

In taking responsibility for our emissions, our preferred approach is to invest in initiatives to reduce gross emissions as much as possible. Therefore, there are no offsets applied to our target.

Current GHG target and tracking scopes 1 & 2

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450
400
350
300
250
200
150
100
50
0
2020 2021 2022 2023 2024 2025
Scope 1 & 2 target Actual emissions
tCOe2
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Our emissions reductions initiatives

Tower has continued working towards reducing our Scope 1 & 2 emissions. Since 2022, Tower has had a policy commitment to purchasing only EVs or hybrid vehicles. In New Zealand our fleet was fully transitioned by 2023. In our Pacific locations, our fleet remains primarily internal combustion engine (ICE) vehicles.

We recognise that electricity generation in the Pacific Islands is primarily fossil fuel-based and therefore conversion to hybrid or EVs is unlikely to generate the same emission reductions as our New Zealand fleet. However, there are parallel benefits to moving away from petrol or diesel vehicles in all locations, including lower running costs and supporting improvements in local air quality.

The table below outlines completed or ongoing emissions calculation and reductions initiatives for FY23 and FY24. Initiatives slated for completion in financial year FY25 and disclosure in our second climate statement are highlighted in cyan.

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Scope Inventory item Detail 2023 2024 to date
1 Vehicle fleet fuel Tower Policy to only purchase hybrid, plug in hybrid or fully electric Vehicles. 165 tCO2e 160 tCO2e
NZ vehicles transitioned, Pacific Island vehicles to follow.
2 Electricity Greenstar Auckland office, Suva meter recently installed. 166 tCO2e 142 tCO2e
3 Business travel Tower’s Sustainable Travel Policy includes an intention (without a target) to 148 tCO2e 203 tCO2e
reduce air travel. Tower’s increased presence in Suva has required additional
travel in FY24.
Waste (landfill) Employee initiatives such as Plastic Free July to encourage waste
minimalisation. Waste volumes have increased in line with increased staff 6 tCO2e 7 tCO2e
numbers and office attendance.
2nd year employee To be developed. Employee commute 501 tCO2e
commute/WFH
Second survey to be completed. WFH 29 tCO2e
2nd year supply chain Review of existing ESG supplier requirements to include material
emissions reporting.
2nd year underwriting Current Generate Zero project.
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Measuring our performance

Tower uses various metrics and tools to manage our business risk indicators, including those relevant to climate-related risks and opportunities and our GHG emissions. As we developed our scenarios, risks and opportunities, strategy and GHG emissions profile, we assessed the availability of relevant and appropriate metrics.

The following table describes key metrics related to the financial impacts of our physical and transition risks and opportunities, as well as capital deployment.

In our first reporting period we have focused on identifying the key physical and transition risks and opportunities and associated metrics. We did not

identify any relevant industry-based metrics in FY24. Targets related to GHG emissions are provided in Section 5 above.

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Type Description Metric FY24 estimates
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Transition risks	Amount or % of assets or business activities vulnerable to transition risks	% of vehicles insured that are internal combustion	91%
		engines (ICEs)
Physical risks	Amount or % of assets or business activities vulnerable to physical risks.	% of homes insured that are high flood risk1	3%
Opportunities –	Amount or percentage of assets, or business activities aligned with	% of electric vehicle (EV) and plug-in hybrid (PHV)	9%
Current	climate-related opportunities.	vehicles covered
Capital	Amount of capital expenditure, financing, or investment deployed toward	Capital or operating expenditure deployed towards:	Approx $769K
deployment	climate-related risks and opportunities.	• Risk Based Pricing
		• Parametric
		• Sustainability
		• CRD
		• Fleet transition
Internal emissions	Price per metric tonne of CO2e used internally by an entity.	Tower does not currently set an internal emissions price. To be considered
price		in FY25.
Remuneration	Management remuneration linked to climate-related risks and	Tower has not set any management remuneration linked to climate-related risks
	opportunities in the current period – %, weighting, description or amount	and opportunities. To be considered in FY25.
	of overall management remuneration.

1 Limitation for use of flood risk ratings - the definition of “High Flood Risk” is Tower’s own definition and not necessarily a consistent definition with any other public source. Specifically, it relates to insurance risk and cost to repair or replace property relative to the risk of flooding and not just the chances of flooding happening alone. It also relates to Tower’s own risk appetite and what we consider is “High”, which may differ to others risk appetites or interpretation of the level of risk.

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Risk management

Risk management is central to Tower’s strategic and operational activities and is underpinned by Tower’s enterprise-wide Risk Management Framework (RMF). The RMF is approved by the Tower Board and applies to all Tower employees and operations.

The RMF sets out guiding principles to enable Tower to identify, assess, monitor and manage its risk exposures to pursue its strategic objectives. The RMF and its key components are depicted below:

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Primary risk
framework enablers: Risk appetite statement Risk governance Capital management process
Secondary risk
Risk & control Risk Incident reporting Obligations Fraud risk Operational
framework enablers:
assessments registers & remediation management management resilience
Risk management
Identify risk Measure risk Assess risk
process:
Monitor, assure, Respond to risk
escalate
Enabling foundations:
People Processes Systems
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Fundamental to the application of the RMF is Tower’s Risk Appetite Statement (RAS), which outlines the Board’s risk appetite against key categories defined in the RMF. Tower’s Board Risk Committee is responsible for monitoring the adequacy of the RMF, receiving reports on key risks, exposures and their management against the RAS.

The primary executive governance forum for the RMF is the Tower Management Risk and Compliance Committee (MRCC) which meets monthly and is governed by an annually reviewed Charter overseen by the Chief Risk Officer (CRO).

The RMF is implemented through risk, compliance, conduct and internal audit processes across each business function. The executive, senior management and staff must demonstrate that reasonable steps have been taken to effectively manage Tower’s risks in line with the RMF. Responsibilities are assigned to individuals to manage identified risks, and material changes to Tower’s risk profile are monitored.

Each business unit within Tower maintains a risk register that records the likelihood and consequence of risks, actively identifying, assessing and monitoring the risks and associated controls. These risks are recorded, maintained and managed within our Protecht risk management software platform with clear identification of the risk owner, inherent risk, risk mitigation(s) and residual risk scores.

Risk owners are responsible for updating their risks whenever changes occur that may alter the inherent or residual risk score. To ensure regular reviews, each risk is assigned an agreed time period for review. These time periods may range between 6-monthly and 2-yearly.

The Protecht platform also enables the prioritisation of all risks, ensuring appropriate escalation in a timely manner. Risks are prioritized as Low, Medium or High residual risk status. High residual risks are given priority for suitable mitigation and raised to the Board for acceptance or deployment of capital if the risk cannot be effectively mitigated, and then closely monitored.

Integration of climate risks in Tower’s Risk Management Framework

Tower revised its RMF in February 2024 to include climate-related physical and transition risks as a specific risk category along with the other key risks facing Tower across its full value chain. Tower also introduced a dedicated Climate Risk Forum to regularly review and monitor its climate risk profile. The Climate Risk Forum meets quarterly. Additionally, Tower revised its risk assessment matrix to enable a more focused approach to risk assessment across the business.

The process undertaken by Tower to assess climaterelated risks followed the approach outlined under the RMF, as follows:

Identify
Measure and Assess
Respond
Monitor, assure and escalate

Identify

Tower conducted a cross-functional workshop to consider the climate risks and opportunities as part of the climate change scenario development and analysis. The workshop and subsequent internal analysis included all material elements of Tower’s value chain, covering both New Zealand and Pacific-based operations, as well as our core supply chain. Some 42 climate related risks and opportunities were identified during this exercise.

Measure and assess

The identified risks served as the basis for further internal stakeholder meetings to:

Refine the risks
Assign ownership
Identify key impacted business units
Complete initial risk and control assessments across the short, medium and long-term time horizons with the same duration outlined in the Strategy section.
Agree appropriate controls against each risk to mitigate the impact of the risks occurring

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The data was also divided into specific areas to illustrate Tower’s overall climate risk profile across each scenario and time horizon (as detailed within the Strategy section):

Key Impacted Business Units – by climate related risks
Climate Risk Categories – Transition & Physical Risks
Climate Risk Ratings – high, medium, low
High Inherent Risks – measured under the three climate scenarios and three time horizons.

Respond

Tower’s response considered each of the climate-related risks and assigned controls against them to arrive at a residual risk rating. In line with Tower’s RMF, where a residual risk is High and cannot be managed through the control environment, it is reported to the Tower Board for risk acceptance or otherwise. No climate-related risks have been identified as unable to be managed effectively through appropriate controls and actions.

Accountability for managing these risks is assigned to Tower’s executives and senior management. The suite of risks provides an overall climate-related risk profile for Tower and facilitates the monitoring of those risks over time. Where the nature of the risk changes, the response to managing that risk may change also.

Monitor, assure and escalate

Due to the nature of Tower’s business and our risk-based pricing approach, climate-related risks make up five of our high residual risks. All five of these climate-related risks have actions in place to monitor and help mitigate.

All material climate-related risks across each of the identified scenarios and time horizons (as detailed within the Strategy section) have been recorded in Protecht and will be reviewed as part of the usual cycle of risk reviews within each business unit. The Climate Risk Forum will assist in regular monitoring of the climate risk landscape and is described on the right.

A comprehensive review of identified risks and opportunities will be undertaken annually and following any updates to Tower’s climate change scenarios.

The Climate Risk Forum

The purpose of the Climate Risk Forum (CRF) is to facilitate discussion, collaboration, and action on climate-related risks and opportunities.

The CRF convenes internal stakeholders from various teams to review and share knowledge, best practices, and innovative solutions. Its goal is to ensure identified climate-related risks and opportunities remain current and relevant, and to address the challenges posed by climate change.

The CRF is composed of climate risk owners and the Sustainability Manager, with subject matter experts (SMEs) attending as required. The CRF meets quarterly to discuss specific climate-related risks and opportunities, with the first meeting held in July 2024.

Climate-related risks are considered over the short, medium and long-term time horizons identified in the Strategy section page 17.

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Governance

Strong governance underpins our management of climate-related risks and opportunities.

Tower’s Board of Directors provides leadership within a framework of prudent and effective controls, enabling the assessment and management of all risks and opportunities, including those that are climate-related. The Board composition is provided in our Annual Report 2024, on page 50.

Details of our governance of climate-related topics in FY24 are detailed in the table on page 36.

Governance framework

The Board is responsible for approving and overseeing Tower’s ESG strategy and reporting. This includes considering sustainability strategies and oversight of Tower’s climate-related risks, including physical and transition risks, and climate-related opportunities. The Board retains overall accountability for the development and ownership of climate-related strategy, transition planning, metrics and targets and climate-related disclosures.

The Board is assisted in its oversight by its Audit, Risk and People, Remuneration and Appointments Committees. Additionally, Tower’s Executive Leadership Team (ELT) led by our CEO, and topic specific management committees and forums, sponsor and direct key elements of our climate statement development. The roles and responsibilities of each of these bodies, along with key milestones over the reporting period are provided in the table on page 36.

In FY24 climate change risks and opportunities were integrated into Tower’s strategy development processes. This included:

May 2024 – Board consideration of Tower’s climaterelated risks and opportunities identified through the risk management processes detailed on page 31, and the process for integrating these into Tower’s overall strategy and business planning
July 2024 – Annual Board strategy offsite including consideration of climate-related risks, opportunities and associated strategic priorities, alongside wider business considerations in developing the overall strategy and business planning.
July – September 2024 -The outputs of these strategy discussions were incorporated into the three-year business strategy and FY25 operating plan, which the Board approved in October 2024.

In FY24, the Board approved a Climate and Sustainability Governance Framework, establishing the Company’s structures and processes for effective oversight and management of climate-related risks and opportunities. The following diagram illustrates the key roles, responsibilities, communication, and decision-making processes that support the Board in fulfilling its climaterelated governance obligations.

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Climate, sustainability governance framework

Tower Board - overall accountability for overseeing climate-related risks and opportunities, and Tower’s strategy

Recommends approval on: Recommends approval Provide Climate change & ESG, scenarios, risks on: Climate change updates on and opportunities, metrics and targets, & ESG related risks. performance performance and disclosures. against strategy development, metrics and targets, Audit Committee Risk Committee submit draft disclosures for approval. Submit Strategy, risks, Submit Strategy, risks, opportunities and climate opportunities and climate statement. statement. Executive Leadership Team

Assists with: Board and Management and competencies. People, Remuneration and Appointment Committee Inform intentions for training and resourcing.

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Submits
workstream
outputs for
approval and
feedback.
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Sustainability and Climate Change Steerco Management Forums and Committees

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FY24 was a foundational year for establishing our governance processes. The Board approved the Climate and Sustainability Governance Framework in March 2024. Throughout the year, the full Board considered elements of the climate-related disclosure development on behalf of its committees to ensure progress within desired timeframes. The requirements of the framework will be fully embedded in FY25.

Table of Governance bodies, frequency of meetings, their roles and responsibilities

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Governance body Roles and responsibilities Activity
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Tower Limited Board	Overall accountability for climate-related risk and opportunities, transition planning and strategy and	Monthlyprogress update on sustainability
of Directors	all other disclosures in the company’s Climate Statement.	and CRD.
		February 2024Board review of CRD workplan
		and activities
		March 2024Approval of climate change
		scenarios, consideration of climate change risks.
		Review of internal CRD record-keeping process
		and guidelines.
		July 2024consideration of draft climate change
		strategy, draft metrics and targets and GHG
		emissions update. Director skills and capabilities
		survey completed.
		August 2024update on Board and Management
		climate-related skills and capabilities and training.
		October 2024Approval of metrics and targets.
Audit Committee	The Audit Committee assists the Board by:	May 2024Consideration of progress
	• Overseeing climate-related disclosures and the adequacy of control systems for	towards CRD.
	climate-related reporting.
	• Reviewing climate change scenarios, risks and opportunities, metrics and targets, and
	disclosures, and recommending Board approval.
	• Agreeing on the scope of the external auditor’s limited assurance of GHG emissions for the
	climate statement.
Risk Committee	The Risk Committee assists the Board by:	MonthlyChief Risk Officer (CRO) report to Risk
	• Monitors climate-related risks. • Assessing the effectiveness of Tower’s Risk Management Framework, strategy, risk appetite, and risk profile. Ensuring compliance with relevant prudential regulatory requirements,	Committee or Board includes climate change and increased frequency of large events as both a key strategic risk and a compliance risk. This report provides updates on work on climate
	including climate-related transition risks.	related risks.

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Governance body Roles and responsibilities Activity
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People, Remuneration	The People, Remuneration and Appointment Committee assists the Board in its oversight of	Climate metrics are not currently included in
and Appointment	remuneration strategy by:	reward frameworks.
Committee	• Recommending whether climate metrics should be included in reward frameworks, and
	recommending potential metrics.
	• Recommending required skills, capabilities and experience for Board members to ensure the
	Board can effectively manage risks and opportunities arising from climate change.
Executive Leadership	With respect to the Climate Statement, the Executive Leadership Team is responsible for:	December 2023Climate change strategy
Team	• The development and execution of Tower’s climate change strategy and transition plan;	discussion
	• Ensuring that sustainability and climate-related risks and opportunities are considered as part	May 2024Workshop on climate change strategy.
	of investment, underwriting, product design, customer experience, pricing, supply chain and claims processes;	June 2024Completion of Management Skills and Capabilities Survey.
	• Ensuring that all employees are aware of their responsibilities for the identification of climate change risks and opportunities; • Ensuring that employees have relevant climate change and sustainability skills and capabilities.	July- September 2024Climate-related training for management and employees. August/September FY25Operating plan and
		3-year strategic plan development
Management
Sustainability and	This Executive-level committee is chaired by the CEO and includes the CRO, Chief Underwriting	Minimum Monthlymeetings chaired by the CEO.
Climate Change	Officer and Deputy CFO. It oversees:	Updates on Steerco activities are provided to the
Steerco	• Tower’s progress and performance against sustainability strategy and climate change strategy/	Board in the monthly CEO report.
	transition plan/ metrics and targets.	Key climate-related decisions and information
	• The assignment of resources to ensure sustainability and climate change outcomes are achieved. • Delivery of Tower’s sustainability reporting and climate-related disclosures to the Board and	are raised through appropriate governance committees as required.
	its Committees.
Management Risk	The Management Risk and Compliance Committee (MRCC) assists Tower Limited to discharge its	Monthlymeetings with summary of Board CRO
and Compliance	management and governance responsibilities for risk including climate-related risk. The primary	report discussed.
Committee	purpose of the MRCC is to oversee, manage and approve Tower-wide risk, compliance, and conduct
	management practices.
Climate Risk Forum	The Climate Risk Forum is comprised of senior leaders from key functions including claims, sales	July 2024First meeting and review of Terms
	and service, underwriting, pricing, finance and technology. The Forum will meet quarterly and is	of Reference
	dedicated to identifying, assessing, and monitoring climate-related risks and opportunities and
	ensuring appropriate mitigating actions are incorporated into Tower’s strategy and operating plan.

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Product, Pricing	This Committee oversees monitoring, reporting and management of emissions from Tower’s	Monthlymeeting
& Underwriting Committee	underwriting portfolios. It will be responsible for: • Recommending targets for underwriting portfolio emissions reduction to the Sustainability &	This committee’s contribution to climate-related disclosures will commence in FY25.
	Climate Steering Committee.
	• Directing underwriting, product and pricing actions to achieve Tower’s sustainability strategy,
	climate change strategy, and transition plan (once developed).
	• Ensuring alignment of sustainability and climate change underwriting and pricing actions with
	Tower’s business strategy and operations.
Claims Committee	The Claims Committee will oversee monitoring, reporting and management of emissions from	Monthlymeeting
	Tower’s claims supply chain. It will:	This committee’s contribution to climate-related
	• Recommend targets for claims supply chain emissions reduction to the Sustainability & Climate	disclosures will commence in FY25.
	Steering Committee.
	• Recommend claims actions that will achieve Tower’s sustainability strategy and climate change
	strategy, and transition plan (once developed) to the ELT/Sustainability Steering Committee.

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Climate-related skills and capabilities

Board climate skills and capabilities

The Board aims to have an appropriate mix of relevant skills, with particular competencies in the insurance and financial services sector.

In FY24, Tower Directors completed an overview training session with KPMG on CRD Regime requirements.

Additionally, all Directors completed a targeted survey to assess their understanding and knowledge of climaterelated topics, including:

Climate change drivers, risks, and opportunities
GHG emissions
Climate and ESG legislation

Based on the survey results, where necessary Directors will undertake further training in FY25 on Climate and ESG Legal obligations and GHG Calculation and reporting.

Management climate-related skills and capabilities

As an insurer, Tower’s teams have existing skills and capabilities that are highly relevant to managing climaterelated risks and opportunities including general risk management, actuarial, data management, natural hazard modelling, finance, governance, and strategy.

Tower has dedicated sustainability roles, including within senior management. Reporting to the Sustainability and Climate Steering Committee, Tower’s Head of Corporate Affairs and Sustainability is responsible for:

Developing and delivering Tower’s sustainability strategy, incorporating climate-related goals and initiatives for the period 2020-2025.
Leading the delivery of climate-related disclosures, with support from Tower’s Sustainability Manager.

Since beginning work on the first Climate Statement in 2022, management has invested in building specific climate change competencies. In 2023, 32 Tower senior leaders were involved in developing Tower’s climate change scenarios and risk and opportunity themes, thereby building awareness of relevant climate-related issues for Tower.

In August 2024, select members of the ELT and senior leaders completed training on climate-related disclosures and other ESG disclosure obligations with law firm MinterEllisonRuddWatts.

Between July and September 2024, 41 Tower employees including senior leaders and staff involved in delivering climate statements, completed training on the basics of climate change science. Additionally ELT and other senior staff involved in climate-related disclosures received training in sustainability foundations, including climate-related disciplines and GHG accounting standards.

Senior staff in our underwriting and sustainability teams have also completed role-specific training in sustainability and climate-related issues.

Senior leaders actively working on Tower’s Climate Statement have included objectives in their FY24 performance plans related to resourcing and completing their contributions.

Tower also has access to a range of external consultants for specialist expertise and advice which has been noted in Board updates throughout the year as appropriate.

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Appendices

Appendix 1 Index – CRD way finder

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CRD sections CRD disclosures Tower disclosure Adoption provisions
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Governance - To enable primary	(a) the identity of the governance body responsible for oversight of climate-related risks	Section 10:
users to understand both the role	and opportunities;	Governance
an entity’s governance body plays	(b) a description of the governance body’s oversight of climate-related risks and	Framework pg 35.
in overseeing climate-related risks and climate-related opportunities, and the role management plays in assessing and managing those climate-related risks	opportunities (see paragraph 8); and (c) a description of management’s role in assessing and managing climate-related risks and opportunities . (a) the processes and frequency by which the governance body is informed about	Section 10 pg 36
and opportunities.	climate related risks and opportunities;
	(b) how the governance body ensures that the appropriate skills and competencies are
	available to provide oversight of climate-related risks and opportunities;
	(c) how the governance body considers climate-related risks and opportunities when
	developing and overseeing implementation of the entity’s strategy; and
	(d) how the governance body sets, monitors progress against, and oversees
	achievement of metrics and targets for managing climate-related risks and
	opportunities, including whether and if so how, related performance metrics are
	incorporated into remuneration policies (see also paragraph 22(h)).
Strategy - To enable primary users	(a) a description of its current climate-related impacts;	Section 4:	Adoption provision 1:
to understand how climate change	(b) a description of the scenario analysis it has undertaken	Strategy	Current financial impacts.
is currently impacting an entity and how it may do so in the future. This includes the scenario analysis an entity has undertaken, the climate- related risks and opportunities an	(c) a description of the climate-related risks and opportunities it has identified over the short, medium, and long term (d) a description of the anticipated impacts of climate-related risks and opportunities ; and	Pg 10 Pg 12 Pg 17-23	Adoption provision 2: Anticipated Financial impacts Adoption provision 3:
entity has identified, the anticipated	(e) a description of how it will position itself as the global and domestic economy	Pg 19, 24	Transition planning
impacts and financial impacts of these, and how an entity will position itself as the global and domestic	transitions towards a low-emissions, climate-resilient future state.	Pg 9, 24	Adoption provision 4: Scope 3 GHG emissions
economy transitions towards a low-			Adoption provision 5:
emissions, climate-resilient future.			Comparatives for Scope 3
			GHG emissions

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CRD sections CRD disclosures Tower disclosure Adoption provisions
Risk management - To enable (a) a description of its processes for identifying, assessing and managing climate- Section 7: Risk
primary users to understand how related risks (see paragraph 19); and management
an entity’s climate-related risks (b) a description of how its processes for identifying, assessing, and managing climate pg 31
are identified, assessed, and related risks are integrated into its overall risk management processes.
managed and how those processes
An entity must include the following information when describing its processes for
are integrated into existing risk
identifying, assessing and managing climate-related risks:
management processes.
(a) the tools and methods used to identify, and to assess the scope, size, and impact of,
its identified climate-related risks;
(b) the short-term, medium-term, and long-term time horizons considered, including
specifying the duration of each of these time horizons;
(c) whether any parts of the value chain are excluded;
(d) the frequency of assessment; and
(e) its processes for prioritising climate-related risks relative to other types of risks.
Metrics and Targets: To enable To achieve the disclosure objective, an entity must disclose: Measuring our Adoption provision 6:
primary users to understand how (a) the metrics that are relevant to all entities regardless of industry and business model; performance Comparatives for metrics
an entity measures and manages pg 30
(b) industry-based metrics relevant to its industry or business model used to measure Adoption provision 7:
its climate-related risks and
and manage climate-related risks and opportunities; Analysis of trends
opportunities. Metrics and targets
(c) any other key performance indicators used to measure and manage climate-related
also provide a basis upon which
risks and opportunities; and
primary users can compare entities
within a sector or industry. (d) the targets used to manage climate-related risks and opportunities, and
performance against those targets
NZ CS 3
Methods and assumptions, and data (a) a description of the methods and assumptions used in the preparation of its climate- Appendix 5
and estimation uncertainty related disclosures where they are not apparent, including the limitations of those pg 50
methods.
(b) aspects of its disclosure (including amounts) that involve data and estimation
uncertainty, disclosing the sources and nature of data and estimation uncertainties.
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CRD sections CRD disclosures Tower disclosure Adoption provisions
NZ CS 3
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|||||
|---|---|---|---|
|Scenario analysis methods and|(a) the climate-related scenarios it has used, including:|Section 3|
|assumptions|i|a brief description of each scenario narrative;|Understanding|
|our Possible|
|ii.|the time horizons considered, including endpoints and whether the endpoints|
|Futures|
|are determined by a year or a temperature target;|
|pg 12|
|iii.|a description of the various emissions reduction pathways in each scenario|
|and the assumptions underlying pathway development over time, including|Appendix 2|
|the scope of operations covered, policy and socioeconomic assumptions,|Scenario|
|macroeconomic trends, energy pathways, carbon sequestration from|Development|
|afforestation and nature-based solutions and technology assumptions including|pg 43|
|negative emissions technology;|
|iv. an explanation of why the entity believes the chosen scenarios are relevant|
|and appropriate to assessing the resilience of the entity’s business model and|
|strategy to climate-related risks and opportunities; and|
|v.|the sources of data used to construct each scenario.|
|(b) how the scenario analysis process has been conducted, including:|
|vii. whether scenario analysis is a standalone analysis or integrated within the|
|entity’s strategy processes;|
|viii. the governance process used to oversee and manage the scenario analysis|
|process, including the role of the governance body and management;|
|ix. if modelling has been undertaken, a clear description of what modelling was|
|undertaken and why the model was chosen as the appropriate model; and|
|x.|which external partners and stakeholders are involved.|
|GHG emissions methods,|(a) a description of the methods and assumptions used to calculate or estimate GHG|Section 5 Our|
|assumptions and estimation|emissions, and the limitations of those methods. When choices between different|greenhouse gas|
|uncertainty|methods are allowed, or entity-specific methods are used, an entity must disclose|(GHG) emissions|
|the methods used and the rationale for doing so.|pg 25|
|(b) uncertainties relevant to the entity’s quantification of its GHG emissions, including|Appendix 4|
|the effects of these uncertainties on the GHG emissions disclosures.|GHG emissions|
|(c) an explanation for any base year GHG emissions restatements.|methodology|
|pg 45|
|Statement of compliance|An entity whose climate-related disclosures comply with Aotearoa New Zealand|Section 1|
|Climate Standards must include an explicit and unreserved statement of compliance.|Introduction|

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Section 5 Our greenhouse gas (GHG) emissions pg 25 Appendix 4 GHG emissions methodology pg 45 Section 1 Introduction pg 4

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Appendix 2

Appendix 3 Scenario sources of data

Consideration of materiality

The NZ Climate Standards require disclosure of information if it is material according to the definition in NZ CS 3 .

The information provided in our climate disclosure is material to Tower’s primary users, who we have defined as existing and potential shareholders and asset managers. Contextual information is also provided as it supports the key elements of the climate statement.

Considerations we use when determining materiality:

Primary users – existing and potential shareholders and asset managers
Geographical distribution of our operations
Level of influence
Level of impact or anticipated impact
Combined effects

		Boundary condition factor	2022-2025 2026-2035 2036-2050	Data source
ORDERLY: NET ZERO 2050 – NEW ZEALAND	Physical climate changes (RCP 2.6) Social, economic factors	Average NZ temperature (1986-2006 baseline + .7`°`C) Labour productivity due to heat stress (lower bound) NZ land exposed to flooding (1986-2006 baseline) (upper bound) Snowfall (1986-2006 baseline) Sea level rise NZ (1996-2006 baseline) Days above 25`°`C NZ GDP (Billion US$2022/year) NZ population (million) Carbon price (NZ$ 2021) Travel by EVs (light passenger vehicles) Change in person-km travel (greatest modal increase) Global governance and institutions Market access and trade settings Lifestyle Consumer preferences	+1.3`°`C +1.5`°`C +1.6`°`C -0.1% -0.2% -0.3% 0.08% 0.15% 0.2% -41% -45% -48% 10cm 17cm 22cm Estimated. Estimated. 40% 232.41 (NZD 355.15) 297.55 (NZD 454.69) 438.18 (NZD 669.58) 5.1 5.5 6.0 $132 $230 $343 3% 46% 100% Public rail Cycle Cycle Strong and flexible, focus on mitigation and adaptation Moderate free-trade, balanced between globalisation and local communities Human wellbeing Select for corporates with more sustainability attributes	NGFS Climate impact explorer. ‘Absolute change in air temperature in New Zealand. RCP 2.6’. NGFS Climate impact explorer. ‘Change in labour productivity due to heat stress in New Zealand. RCP 2.6’. NGFS Climate impact explorer. ‘Change in land annually exposed to river floods in New Zealand RCP 2.6’. NGFS Climate impact explorer. ‘Relative change in snowfall in New Zealand RCP 2.6’. Retrieved from: Ministry for the Environment.(2017). ‘Coastal Hazards and Climate Change. Guidance for Local Government.’.pp.105. Climate Change Projections for New Zealand Ministry for the Environment.(2018). Climate Change Projections for New Zealand: Atmosphere Projections Based on Simulations from the IPCC Fifth Assessment, 2nd Edition. Wellington: Ministry for the Environment. Table 1. pp.17. Riahi, K et al.(2017). ‘The Shared Socioeconomic Pathways and their energy use, land use and greenhouse gas emissions implications: an overview. Global Environmental Change, Volume 42. As above New Zealand Treasury.(2021). CBAx Tool User Guidance. CBAx Tool User Guidance - September 2021 (treasury.govt.nz) (Orderly follows a high price path) (Assumptions taken from price path noting this is not a market indication of supply and demand) Climate Change Commission.(2021). ‘Draft advice report charts data and scenario dataset. Tailwinds’. As above Climate Scenarios. ‘To The Toolkit, ‘Socioeconomic Development’. Retrieved from: Primer to Climate Scenarios (Orderly follows SSP1)
		Technology and innovation Land use	Medium. High uptake in sustainable technologies Strong land use regulation. Tropical deforestation strongly reduced.
				Frame, B, et al. (2018). ‘Adapting global shared socio-economic pathways for national and local scenarios’.
		Tiriti o Waitangi	Indigenous wellbeing and property rights are protected	Climate Risk Management. Volume 21. Retrieved from: https://doi.org/10.1016/j.crm.2018.05.001 (Orderly follows ‘100% Sustainability’)

		Boundary condition factor Location 2025 (short-term) 2035 (medium- term) 2050 (long- term) Data Source Mean Annual Temperature Change (Average annual temperature (°C) change from pre- industrial baseline) Pacific1 1.5°C 1.7°C 1.8°C NGFS Climate impact explorer. ‘Absolute change in mean air temperature in Fiji.’ RCP 2.6’. Retrieved from: NGFS Climate Impact Explorer plus 0.87 °C (Global average temperature change pre-industrial baseline) Temperature Days Above 35.0°C (Annual average number) Pacific 0.25 0.52 2.06 Climate change knowledge portal (World bank). Projected Days with Heat Index Exceeding 35°c – Fiji RCP2.6. Precipitation (Median) (% increase in precipitation per year vs 1986-2006 baseline) Pacific +6.1% +6.1% +6.2% NGFS Climate impact explorer. ‘Relative change in precipitation (%) in Fiji. RCP 2.6’. Mean Sea Level Rise (Centimetres vs 1986-2006 baseline) Pacific 5.5cm 10.4cm 20.4cm The IPCC AR6 Sea-Level Rise Projections. SSP1-2.6 2020, 2030 and 2050 Fiji (Suva) . Retrieved from: Sea Level Projection Tool – NASA Sea Level Change Portal Expected Damage from River Flooding (% change vs 2015 baseline)2 Pacific -8.4% 23.7% 38.3% NGFS Climate impact explorer. ‘Relative change in annual expected damage from river floods in Fiji. RCP 2.6’. Population (Millions) Pacific 0.89m 0.88m 0.82m FIJI population, SSP1. GDP (Billion US$2005/year) Pacific $5.07(NZD 8.57b) $7.71b (NZD 13.04b) $14.02b (NZD 23.71b) FIJI GDP, OECD Env-Growth – SSP1. Exchange rate of 1.69 was used to convert US dollar to NZ dollar Productivity due to Heat Stress (lower bound) (% change vs 1986-2006 baseline) Pacific -5.2% -6.5% -8.1% NGFS Climate impact explorer. ‘Relative change in labour productivity due to heat stress in Fiji.’ 1.Fiji used as an index for the Pacific to avoid gaps in data availability 2.Expected Damage from River Flooding 1986-2006 baseline data was not available
ORDERLY: NET ZERO 2050 – PACIFIC	Physical risk data	Mean Annual Temperature Change (Average annual temperature (°C) change from pre- industrial baseline) Pacific1 1.5°C 1.7°C 1.8°C NGFS Climate impact explorer. ‘Absolute change in mean air temperature in Fiji.’ RCP 2.6’. Retrieved from: NGFS Climate Impact Explorer plus 0.87 °C (Global average temperature change pre-industrial baseline)
		Temperature Days Above 35.0°C (Annual average number) Pacific 0.25 0.52 2.06 Climate change knowledge portal (World bank). Projected Days with Heat Index Exceeding 35°c – Fiji RCP2.6.
		Precipitation (Median) (% increase in precipitation per year vs 1986-2006 baseline) Pacific +6.1% +6.1% +6.2% NGFS Climate impact explorer. ‘Relative change in precipitation (%) in Fiji. RCP 2.6’.
		Mean Sea Level Rise (Centimetres vs 1986-2006 baseline) Pacific 5.5cm 10.4cm 20.4cm The IPCC AR6 Sea-Level Rise Projections. SSP1-2.6 2020, 2030 and 2050 Fiji (Suva) . Retrieved from: Sea Level Projection Tool – NASA Sea Level Change Portal
		Expected Damage from River Flooding (% change vs 2015 baseline)2 Pacific -8.4% 23.7% 38.3% NGFS Climate impact explorer. ‘Relative change in annual expected damage from river floods in Fiji. RCP 2.6’.
	Socioeconomic data	Population (Millions) Pacific 0.89m 0.88m 0.82m FIJI population, SSP1.
		GDP (Billion US$2005/year) Pacific $5.07(NZD 8.57b) $7.71b (NZD 13.04b) $14.02b (NZD 23.71b) FIJI GDP, OECD Env-Growth – SSP1. Exchange rate of 1.69 was used to convert US dollar to NZ dollar
		Productivity due to Heat Stress (lower bound) (% change vs 1986-2006 baseline) Pacific -5.2% -6.5% -8.1% NGFS Climate impact explorer. ‘Relative change in labour productivity due to heat stress in Fiji.’ 1.Fiji used as an index for the Pacific to avoid gaps in data availability

CLIMATE STATEMENT 2024

Contents

	Boundary condition factor 2022-2025 2026-2035 2036-2050 Data source	Boundary condition factor 2022-2025 2026-2035 2036-2050 Data source
DISORDERLY: DELAYED TRANSITION – NEW ZEALAND Physical climate changes (RCP 4.5) Average NZ temperature (1986-2006 baseline + .7`°`C) +1.3`°`C +1.6`°`C +1.8`°`C NGFS Climate impact explorer. ‘Absolute change in air temperature in New Zealand. RCP 4.5’. Labour productivity due to heat stress (lower bound) -0.1% -0.2% -0.4% NGFS Climate impact explorer. ‘Change in labour productivity due to heat stress in New Zealand. RCP 4.5’. NZ land exposed to flooding (1986-2006 baseline) (upper bound) 0.06% 0.1% 0.2% NGFS Climate impact explorer. ‘Change in land annually exposed to river floods in New Zealand RCP 4.5’. Snowfall (1986-2006 baseline) -41% -45% -56% NGFS Climate impact explorer. ‘Relative change in snowfall in New Zealand RCP 4.5’. Sea level rise NZ (1996-2006 baseline) 10cm 17cm 25cm Ministry for the Environment. (2017). ‘Coastal Hazards and Climate Change. Guidance for Local Government.’.pp.105. Days above 25`°`C Estimated. Estimated. Estimated. Ministry for the Environment.(2018). Climate Change Projections for New Zealand: Atmosphere Projections Based on Simulations from the IPCC Fifth Assessment, 2nd Edition. Wellington: Ministry for the Environment. Table 1. pp.17. Social, economic factors NZ GDP (Billion US$2022/year) 220.57 (NZD 337.05) 247.22 (NZD 377.78) 293.11 (NZD447.9) Climate Change Commission. (2021). ‘Draft advice report charts data and scenario dataset. Headwinds’. NZ population (million) 5.3 5.8 6.2 Carbon price (NZ$ 2021) $99 $173 $343 New Zealand Treasury.(2021). CBAx Tool User Guidance. CBAx Tool User Guidance - September 2021 (treasury.govt.nz) (Disorderly follows a central price path till 2035 then high price path onwards) (Assumptions taken from price path noting this is not a market indication of supply and demand) Travel by EVs (light passenger vehicles) 2% 28% 94% Climate Change Commission.(2021). ‘Draft advice report charts data and scenario dataset. Headwinds’. Change in person-km travel (greatest modal increase) Public rail Public rail Cycle As above Global governance and institutions Global and national institutions make slow progress towards SDGs. Climate Scenarios. ‘To The Toolkit, ‘Socioeconomic Development’. Retrieved from: Primer to Climate Scenarios (Disorderly follows SSP2) Market access and trade settings Current trends, intermediate globalization. Lifestyle Current trends, some consumerism but also lifestyle Consumer preferences Current trends, general push for ESG and climate but intention to action gap Technology and innovation Moderate technology development, disparities between regions. Land use Current trends, land use incompletely regulated Tiriti o Waitangi Ad-hoc protection for indigenous rights Frame, B, et al.(2018). ‘Adapting global shared socio-economic pathways for national and local scenarios’. Climate Risk Management. Volume 21. Retrieved from: https://doi.org/10.1016/j.crm.2018.05.001 (Disorderly follows ‘Kicking, screaming’).



		Boundary condition factor Location 2025 (short-term) 2035 (medium-term) 2050 (long-term) Data source
DISORDERLY: DELAYED TRANSITION - PACIFIC	Physical risk data	Mean Annual Temperature Change (Average annual temperature (°C) change from pre-industrial baseline) Pacific1 1.5°C 1.7°C 2.0°C NGFS Climate impact explorer. ‘Absolute change in mean air temperature in Fiji.’ RCP 4.5’. Retrieved from: NGFS Climate Impact Explorer plus 0.87 °C (Global average temperature change pre- industrial baseline)
		Temperature Days Above 35.0°C (Annual average number) Pacific 0.55 1.47 3.18 Climate change knowledge portal (World bank). Projected Days with Heat Index Exceeding 35°c – Fiji RCP4.5. Retrieved from: https://climateknowledgeportal.worldbank.org/country/fiji/cmip5
		Precipitation (Median) (% increase in precipitation per year vs 1986-2006 baseline) Pacific +6.1% +6.1% +7.8% NGFS Climate impact explorer. ‘Relative change in precipitation (%) in Fiji. RCP 4.5’.
		Mean Sea Level Rise (Centimetres vs 1986-2006 baseline) Pacific 5.3cm 10.1cm 22cm The IPCC AR6 Sea-Level Rise Projections. SSP2-4.5 2020, 2030 and 2050 Fiji (Suva). Retrieved from: Sea Level Projection Tool – NASA Sea Level Change Portal
		Expected Damage from River Flooding (% change vs 2005 baseline)2 Pacific -8.4% 23.7% 57.9% NGFS Climate impact explorer. ‘Relative change in annual expected damage from river floods in Fiji.’ RCP 4.5’.
	Socioeconomic data	Population (Millions) Pacific 0.94m 0.97m 0.97m FIJI GDP, OECD Env-Growth – SSP2.
		GDP (Billion US$2005/year) Pacific $5.01b (NZD 8.47b) $7.01b (NZD 11.85b) $11.33b (NZD 19.16b) FIJI GDP, OECD Env-Growth – SSP2. Exchange rate of 1.69 was used to convert US dollar to NZ dollar.
		Productivity due to Heat Stress (lower bound) (% change vs 1986-2006 baseline) Pacific -5.2% -6.5% -9.7% NGFS Climate impact explorer. ‘Relative change in labour productivity due to heat stress in Fiji.’ RCP 4.5.

1.Fiji used as an index for the Pacific to avoid gaps in data availability 2.Expected Damage from River Flooding 1986-2006 baseline data was not available

CLIMATE STATEMENT 2024

Contents 45

Appendix 4

	Boundary condition factor 2022-2025 2026-2035 2036-2050 Data source	Boundary condition factor 2022-2025 2026-2035 2036-2050 Data source
HOT HOUSE WORLD: CURRENT POLICIES – NEW ZEALAND Physical climate changes (RCP 6.0) Average NZ temperature (1986-2006 baseline + .7`°`C) +1.3`°`C +1.6`°`C +2.0`°`C NGFS Climate impact explorer. ‘Absolute change in air temperature in New Zealand. RCP 6.0’. Labour productivity due to heat stress (lower bound) -0.1% -0.2% -0.4% NGFS Climate impact explorer. ‘Change in labour productivity due to heat stress in New Zealand. RCP 6.0’. NZ land exposed to flooding (1986-2006 baseline) (upper bound) 0.06% 0.09% 0.2% NGFS Climate impact explorer. ‘Change in land annually exposed to river floods in New Zealand RCP 6.0’. Snowfall (1986-2006 baseline) -41% -45% -56% NGFS Climate impact explorer. ‘Relative change in snowfall in New Zealand RCP 6.0’. Sea level rise NZ (1996-2006 baseline) 10cm 17cm 30cm Ministry for the Environment. (2017). ‘Coastal Hazards and Climate Change. Guidance for Local Government.’.pp.105. Days above 25`°`C Estimated. Estimated. Estimated. Ministry for the Environment. (2018). Climate Change Projections for New Zealand: Atmosphere Projections Based on Simulations from the IPCC Fifth Assessment, 2nd Edition. Wellington: Ministry for the Environment. Table 1. pp.17. Social, economic factors NZ GDP (Billion US$2005/yr) 242.77 (NZD 370.98) 339 (NZD 518.03) 577.33 (NZD 882.22) Riahi, K et al. (2017). ‘The Shared Socioeconomic Pathways and their energy use, land use and greenhouse gas emissions implications: an overview. Global Environmental Change, Volume 42. NZ population (million) 5.3 5.9 6.9 Carbon price $67 $116 $173 New Zealand Treasury. (2021). CBAx Tool User Guidance. CBAx Tool User Guidance - September 2021 (treasury.govt.nz) (Hot House World follows a low price path) (Assumptions taken from price path noting this is not a market indication of supply and demand) Travel by EVs (light passenger vehicles) 2% 15% 81% Climate Change Commission. (2021). ‘Draft advice report charts data and scenario dataset. Current Policy Reference’. Retrieved from: Climate Change Commission Change in person-km travel (greatest modal increase) Public rail Public rail Public rail As above Global governance and institutions Strong investment in institutions globally and nationally to enhance human and social capital Climate Scenarios. ‘To The Toolkit, ‘Socioeconomic Development’. Retrieved from:Primer to Climate Scenarios (Hot House World follows SSP5) Market access and trade settings Highly globalised trade Lifestyle Consumerism driven, disjoint from nature Consumer preferences Economic and social preferences Technology and innovation High rates of technology and innovation, including in adaptation Land use Incomplete regulation, historic trends followed Tiriti o Waitangi Lacking commitment from Government Frame, B, et al. (2018). ‘Adapting global shared socio-economic pathways for national and local scenarios’. Climate Risk Management. Volume 21. Retrieved from: https://doi.org/10.1016/j.crm.2018.05.001 (Hot House World follows “Homoeconomicus”).	Physical climate changes (RCP 6.0) Average NZ temperature (1986-2006 baseline + .7`°`C) +1.3`°`C +1.6`°`C +2.0`°`C NGFS Climate impact explorer. ‘Absolute change in air temperature in New Zealand. RCP 6.0’. Labour productivity due to heat stress (lower bound) -0.1% -0.2% -0.4% NGFS Climate impact explorer. ‘Change in labour productivity due to heat stress in New Zealand. RCP 6.0’. NZ land exposed to flooding (1986-2006 baseline) (upper bound) 0.06% 0.09% 0.2% NGFS Climate impact explorer. ‘Change in land annually exposed to river floods in New Zealand RCP 6.0’. Snowfall (1986-2006 baseline) -41% -45% -56% NGFS Climate impact explorer. ‘Relative change in snowfall in New Zealand RCP 6.0’. Sea level rise NZ (1996-2006 baseline) 10cm 17cm 30cm Ministry for the Environment. (2017). ‘Coastal Hazards and Climate Change. Guidance for Local Government.’.pp.105. Days above 25`°`C Estimated. Estimated. Estimated. Ministry for the Environment. (2018). Climate Change Projections for New Zealand: Atmosphere Projections Based on Simulations from the IPCC Fifth Assessment, 2nd Edition. Wellington: Ministry for the Environment. Table 1. pp.17.
		Boundary condition factor Location 2025 (short-term) 2035 (medium-term) 2050 (long-term) Data source
HOT HOUSE WORLD: CURRENT POLICIES – PACIFIC	Physical risk data	Mean Annual Temperature Change (Average annual temperature (°C) change from pre- industrial baseline) Pacific1 1.5°C 1.7°C 1.9°C NGFS Climate impact explorer. ‘Absolute change in mean air temperature in Fiji. RCP 6.0’.
		Temperature Days Above 35.0°C (Annual average number) Pacific 0.28 0.26 4.34 Climate change knowledge portal (World bank). Projected Days with Heat Index Exceeding 35°c – Fiji RCP6.0.
		Precipitation (Median) (% increase in precipitation per year vs 1986-2006 baseline) Pacific +6.1% +6.1% +7.1% NGFS Climate impact explorer. ‘Relative change in precipitation (%) in Fiji. RCP 6.0’.
		Mean Sea Level Rise (Centimetres vs 1986-2006 baseline) Pacific 5.1cm 10cm 23cm The IPCC AR6 Sea-Level Rise Projections. SSP3-7.0 2020, 2030 and 2050 Fiji (Suva). Retrieved from: Sea Level Projection Tool – NASA Sea Level Change Portal
		Expected Damage from River Flooding (% change vs 2005 baseline)2 Pacific -8.4% 23.7% 55.9% NGFS Climate impact explorer. ‘Relative change in annual expected damage from river floods in Fiji.’ RCP 6.0’.
	Socioeconomic data	Population (Millions) Pacific 0.97m 1.04m 1.12m FIJI GDP, OECD Env-Growth – SSP3.
		GDP ((Billion US$2005/year) Pacific $5.07b (NZD 8.57b) $6.52b (NZD 11.02b) $9.17 (NZD 15.51b) FIJI GDP, OECD Env-Growth – SSP3. Exchange rate of 1.69 was used to convert US dollar to NZ dollar
		Productivity due to Heat Stress (lower bound) (% change vs 1986-2006 baseline) Pacific -4.7% -6.5% -9.2% NGFS Climate impact explorer. ‘Relative change in labour productivity due to heat stress in Fiji.’ RCP 6.0.

GHG emissions methodology

Tower’s GHG emissions have been calculated and reported in line with the requirements of the GHG Protocol. We have adopted an operational control consolidation approach with our accounting boundary incorporating all Tower offices in NZ and the Pacific.

Tower has contracted the services of Bravegen to assist with the collation, assessment and loading of emissions source data into their online Corporate Sustainability Reporting (CSR) tool.

Bravegen CSR has been developed to meet the requirements of the GHG Protocol and ISO 14064-1:2018 Greenhouse gases — Part 1: Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals.

The CSR software uses a calculation methodology for quantifying the emissions inventory using emissions source activity data multiplied by emission or removal factors. Emissions factors are primarily sourced from the 2024 Ministry for the Environment’s (MFE) Measuring Emissions: A Guide for Organisations unless otherwise stated. Tower has procured electricity emissions factors for our Pacific Island facilities from the International Energy Agency (IEA) derived from the 2006 Intergovernmental Panel on Climate Change (IPCC) Guidelines and the IEA World Energy Balances data. The Oceania total emissions factor has been selected for use.

Quantities of each GHG are converted to tonnes of CO2 equivalent (tCO2e) using the global warming potential from the IPCC Fifth Assessment Report (AR5). The time horizon is 100 years.

1.Fiji used as an index for the Pacific to avoid gaps in data availability

2.Expected Damage from River Flooding 1986-2006 baseline data was not available

CLIMATE STATEMENT 2024

Contents

Restatements

The following emissions source have been restated for the period 2020 to 2023:

Closure of Papua New Guinea facilities 2023. Base year emission have been adjusted to exclude Papua New Guinea to enable comparable assessment against FY24 emissions.
Estimation of Vanuatu and Suva retail offices’ Scope 2 emissions in 2024 and applied to all years from FY20. The estimation is based on the average Pacific office kwh electricity consumption per FTE and multiplied by the FTE numbers for each office. The restatement ensures completeness in Scope 2 reporting for our Pacific Island facilities.

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Scope
& GHG GHG emission Data collection
Business units Methodology Estimates/assumptions/uncertainty Quality
protocol source unit
category
----- End of picture text -----

1	Vehicle fleet fuel	All business units	Litres	Using litres of fuel report	NZ– fuel types and volumes reports provided by	NZ– high
				and MfE emissions factor for vehicle classes and fuel types.	fleet card provider. Electricity used to charge EVs is not captured or estimated for charging offsite. Pacific– fuel card data is reported in fuel types and	Pacific– moderate
					volumes or spend data from finance system with
					current average fuel price to calculate litres where
					fuel card data not available. MfE emissions factor
					used in absence of Pacific specific factors.
2	Electricity	All business units	kWh	Apply MfE purchased	NZ– invoices from electricity supplier. Auckland	NZ– high
	consumption (location based			electricity annual average emissions factor to kwh reports from suppliers for Auckland, and Rotorua	shared space 17.3% attribution to Tower based and net leased area as a % of total floor area. Pacific– kWh extracted from invoices or estimated using average per capita energy use for invoiced	Pacific- moderate
				Pacific emissions factor	Pacific offices.
				sourced from IEA.
3	T&D losses	New Zealand	GJ/kWh	Apply MfE purchased	Supplier invoices.	NZ– high
Category 3 Fuel- and energy- related activities	electricity			electricity T&D losses to New Zealand energy consumption data. Apply IEA T&D emissions factor for Pacific.		Pacific – low/ moderate

CLIMATE STATEMENT 2024

Contents

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3	Air travel	All business units	NZ– pkm	Apply MfE 2024 emissions	NZ– Air travel booked through contracted provider.	NZ– high
Category 6 Business			Pacific– pkm	factor for appropriate flight class with radiative forcing to	All flight categories (domestic, short haul, long haul), pkm distances and class of travel reported.	Pacific– low
Travel				travel agent reports on pkm.	Pacific– Flights primarily booked through travel
					agent and reported as above. The remainder are
					captured through financial reports on expenditure.
					Trip distance is estimated based on most common
					trips and $ value where direct supplier data is
					not available.
3	Hotel stays	All business units	NZ– room	Apply MfE 2024 emissions	NZ–Accommodation booked through contracted	NZ– high
Category 6 Business Travel			nights Pacific– spend data	factor to reported room nights or MfE 2023 for locations excluded in 2024.	provider and reported as night stays per person. Pacific– Estimated room nights based on spend captured in financial reports. Assumed all	Pacific– low
					spend included.
3	Rental cars	New Zealand only	NZ– kms +	Apply MfE 2024 rental car	NZ– Rental car provider report and annual uplift	NZ– high
Category			uplift	emissions factor to kms.	estimated to take account of bookings made with
6 Business					other providers based on expense data.
Travel
3	Taxi travel	New Zealand only	kms & $ spend	Apply MfE 2024 emissions	NZ– All taxi travel booked through Corporate Cabs	NZ– high
Category				factor for taxi journeys to	& Taxi Charge and reported as km travelled in
6 Business				reported or estimated kms.	vehicle category. Expenses also assessed annually
Travel					to estimate other journeys based on spend.
3	Employee	All business units	kms travelled	Apply MfE 2024 emissions	NZ&Pacific– Estimated total employee commute	NZ–
Category 7	Commute		per transport	factors for each transport	emissions data using employee commute survey	moderate
Employee Commuting			mode	category using the Abley Carbonwise commute emissions web based survey.	to provide an average commute emissions per employee extrapolated to total employee numbers. 48% survey response rate across NZ and Pacific	Pacific– moderate

CLIMATE STATEMENT 2024

Contents

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3	Working from	All business units	Employee day	Apply MfE 2024 emissions	NZ&Pacific– Estimated WFH data calculated	NZ–
Category 7	home			factor for employee days	using employee commute survey data extrapolated	moderate
Employee Commuting				worked from home.	to total employee numbers. 48% response rate across NZ and Pacific.	Pacific– moderate
3	Paper	New Zealand only	kg	Apply EPA Victoria 2019	Reports provided by paper providers.	NZ– high
Category 1 – Purchased goods and	purchased			emissions factor for premium grade paper kg.	Primarily carbon neutral paper purchased with small quantities of premium quality paper.
services
3	Waste to landfill	New Zealand only	t	Apply MfE 2024 landfilled	Reports provided by waste providers.	NZ– high
Category 5 – Waste generated in operations.				waste emissions factor to actual and estimated tonnes.	Auckland landlord agent provides waste quantities from contracted waste removal contractor based on 17.3% attribution for shared office space. The % allocation is based on the Net Leased Area for each
					tenant as a proportion of overall floor area.
3	Water supply	New Zealand	kL	Apply MfE 2024 water	Reports provided by water providers. Auckland	NZ– high
Category 1 Purchased Goods & Services.		and some Pacific locations		emissions factor to reported and estimate quantities.	office applies a 17.3% share of data provided based on the landlord agents report.	Selected Pacific locations– moderate

CLIMATE STATEMENT 2024

Contents

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GHG emission
Scope Reason for exclusion
source
----- End of picture text -----

1	Hydrofluorocarbon (HFC) emissions from	These were estimated to be 0.03% of emissions in FY20 for NZ operations.
	refrigeration or heating, ventilation, and air conditioning (HVAC) (NZandPacific)	We have been unable to clarify the nature of HVAC systems in our Pacific Island offices in FY24. However the largest office in Suva is newly refurbished and it is considered unlikely any leaks or top ups will have occurred.
		As a result we do not believe this will be a significant emissions source.
1	Stationary diesel related to back up	Insufficient data available to calculate related emissions. Due to the size of Pacific offices considered likely to
	generators (Pacific)	be immaterial.
3	Employee vehicle claims (NZ)	In previous years these emission sources were calculated to be less than 1% and continue to remain an immaterial
		emissions source.
3	Waste generated in operations (Pacific)	We have been unable to obtain data for waste generated in our Pacific Island operations in FY24. We do not believe
		this will be a significant emissions source.
3	Value chain emissions from:	We have not yet developed our whole of value chain reporting processes. We have included working from home
	• Purchased goods & services	and paper for our NZ operations in the FY24 year.
	• Capital goods	In FY24, we commenced workstreams to capture broader scope 3. These will include emissions from our
	• Transportation & distribution – upstream	underwriting portfolios, supply chain and investment portfolios.
	and downstream
	• Use of sold products

Footnote: There are inherent data uncertainties with emissions data due to the limited availability of information and Tower’s reliance on external sources, which means that there may be a lag in the data, the data is over or understated, and/or the quantification may be unreliable. The Quality score is assigned based on the availability, certainty and completeness of data.

CLIMATE STATEMENT 2024

Contents

Appendix 5 Assumptions, Methodologies and Limitations Statement

Forward looking statements

This climate statement contains climate-related and other forward-looking statements and metrics, which are not and should not be considered guarantees, predictions or forecasts of future climate-related outcomes or financial performance.

There remains significant uncertainty in climate data, metrics, and modelling. The forward-looking statements are inherently subject to uncertainties, risks, and assumptions, many of which are beyond our control. These may include, but are not limited to, economic conditions, market trends, regulatory developments, and other known and unknown factors. The many underlying risks and assumptions may cause actual outcomes to differ materially.

As a result, readers are cautioned not to place undue reliance on any forward looking statements contained within this climate statement. All information stated within this climate statement is relevant at the date of publication only.

Further Clarifications

Current climate-related impacts have been derived from internal categorization and quantification of claims data alongside known catastrophic and large weather events.

Climate-related risks & opportunities were developed on the basis of the ICNZ Climate-related scenarios, Tower’s scenarios, internal expertise and knowledge and guidance from scenario source data. These are limited by the current lack of clear modelling.

Anticipated Impacts were derived using a combination of internal and external data sources.

Population growth - Projections for scenario development as detailed in Appendix 3.
Dwelling growth - Internal analysis based on forecasted population growth above.
Transition to EV vehicles and vehicle ownership rate assumptions based on internal data and market trends.
Tower’s expected market share of target markets - Management’s best estimate based on internal data and knowledge.
Claims estimates – Management’s best estimate based on internal data and knowledge.

Measuring our Performance - Metrics

Transition risks - % of vehicles insured that are internal combustion engines (ICEs) derived from categorized motor policies as sourced from the underlying vehicle data obtained from RedBook.
Physical risks - % of high flood risk homes insured. The definition of ‘High Flood Risk’ is Tower’s own definition and not necessarily consistent with other public sources. Specifically it relates to insurance risk and cost to repair or replace property relative to the risk of flooding and not just the chances of flooding occurring in isolation. It also relates to Tower’s own risk appetite or interpretation of the level of risk.
Opportunities current – % of EV and PHV vehicles covered. Data is derived from categorised motor policies as sourced from the underlying vehicle data obtained from RedBook.
Capital Deployment has been calculated based on FY24 operational expenditure on climaterelated activities identified by the Sustainability and Climate Steerco.
Proportion of dwellings in high hazard risk areas – Management’s best estimate based on internal data and knowledge.
Growth of multi-unit dwellings – Management’s best estimate based on internal data and knowledge
Stormwater infrastructure investments – Management’s best estimate based on internal data and knowledge.

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tower.co.nz

AI assistant

TOWER LIMITED — Annual Report 2024

65971_rns_2024-11-27_99735570-53b5-46ae-92d7-942e7ee484a8.pdf

Tower Limited

FY24 Full Year Results for Announcement to Market

ENDS

Tower Delivers Strong FY24 Result

Strong business performance

Delivering operational efficiencies

No large events recorded in FY24

FY25 guidance

ENDS

(for Equity Security issuer/Equity and Debt Security issuer)

Contents

2024 snapshot

9.5[C]

People

Customers

Community

Update from the Chair and CEO

Strong business performance

Leading customer experience

Targeted growth through risk-based pricing and disciplined underwriting

Enhanced claims management

Delivering operational excellence

Fostering a more sustainable future

Investing in our people and culture

The year ahead

"In my view, Tower is a really unique business, and I am very proud to have played a part in its long history.

Our values

Our strategic pillars

My Tower

$446m

+ 35

Ways to save

Products to suit our customers and communities

Market-leading risk-based pricing

Increasing insurance accessibility with parametric insurance

2023

2024

Looking ahead

Promoting parametric at the Commonwealth Heads of Government Meeting 2024 (CHOGM), Business Forum

Award winning Tower experience

Proud to partner

Kiwibank

HealthCarePlus

Using data driven decision-making to manage premiums and our business

Putting things right for our customers

Efficient and effective

Claims transformation

Continuing to automate the claims journey

Streamlining the motor repair journey

Delivering operational efficiencies

Doing business in Fiji makes good business sense

“To see an incredible business like we saw this morning with Tower actually, that is trailblazing a world class organisation here in Suva.”

Streamlining and strengthening our Pacific operations

In FY24 we completed the sales of our Solomon Islands business and Vanuatu subsidiary.

$ m 48

Here for our customers at claims time

Strengthening the foundations of our business

Robust reinsurance to support growth and strong solvency

Our people come first

Looking after our people

20.2[%]

Gender pay gap

Gender pay equity gap

Leadership gender pay gap

Leadership gender pay equity gap

For Tower, by Tower people

Strengthening our culture of risk awareness

ESG Governance

Bringing our people on the sustainability journey

Tower Climate Change Scholarship

We're proud to support the next generation of climate leaders.

Tower Vunilagi Scholarship

2,300 hours of volunteering by our people

Future focused for our planet

Material impacts

B Corp

Board of Directors

TOWER LIMITED Annual Report 2024