TOWER LIMITED — Interim / Quarterly Report 2010

May 27, 2010

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28 May 2010

Market Information Company Announcements Office NZX Limited ASX Limited Level 2, NZX Centre Exchange Centre 11 Cable Street Level 6, 20 Bridge Street PO Box 2959 Sydney NSW 2000 Wellington AUSTRALIA New Zealand

TOWER Limited - Results Information pack for half year ended 31 March 2010

Further to the announcement today of TOWER’s results for the half year ended 31 March 2010, attached is a Results Information pack.

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Bronwyn Walsh Company Secretary TOWER Limited

ARBN 088 481 234 Incorporated in New Zealand

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TOWER LIMITED

Results Information

Half Year Ended 31 March 2010

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Contents

1. Financial overview ..................................................................................................................... 3 2. Results summary ...................................................................................................................... 4 3. Balance sheet summary ......................................................................................................... 5-6 4. Business unit performance Health & Life ........................................................................................................................... 7-8 General Insurance ................................................................................................................ 9-10 Investments ............................................................................................................................. 11 5. Appraisal value ........................................................................................................................ 12 6. Carrying value / appraisal value ............................................................................................... 13 7. Health & Life Insurance - profit summary ................................................................................. 14 8. Health & Life Insurance - Change in embedded value ............................................................. 15 9. Health & Life Insurnace - Change in value of one year’s new business ................................... 16 10. Health & Life Insurance - Embedded value and value of one year’s new business .................. 17

2 TOWER Results Information

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Financial overview 1

	Half year ended
$ millions (unless stated otherwise)	Mar-10 Sep-09 Mar-09 Sep-08 Mar-08 Sep-07
PREMIUM AND FUNDS Group gross premium Funds under management / advice	416.0 419.4 414.1 401.9 393.6 387.5 3,749 3,623 3,402 3,732 3,916 5,033
PROFIT Net profit after tax (from continuing operations) Underlying profit (excludes discount rate effect)	28.1 23.5 26.6 20.3 20.2 19.5 27.7 25.4 21.5 18.0 20.4 20.1
EQUITY Net assets Shares on issue (millions)	416.4 404.4 307.4 294.2 270.1 261.9 258.7 254.8 193.9 191.9 191.8 189.3
DIVIDEND Cents per share Dividend to earnings per share	4.0 9.0 8.0 6.0 37% 37% 40% 37%
EARNINGS RATIOS
Earnings per share (cents per share) *
Profit attributed to shareholders Return on equity (annualised) Profit attributed to shareholders Underlying profit (excludes discount rate effect) Return on equity adjusted for Rights Issue	10.88 11.33 12.98 10.09 10.02 9.58 13.7% 14.3% 17.7% 14.7% 15.0% 14.4% 13.6% 15.3% 14.5% 13.8% 15.3% 14.9% 16.3% 16.1% 17.7% 14.7% 15.0% 14.4%
CAPITAL STRENGTH Gearing gross Interest cover (times) Financial strength rating - Health Financial strength rating - Life Financial strength rating - General Insurance	16.2% 16.5% 35.0% 22.9% 24.4% 25.0% 13.2 8.3 9.2 2.1 6.3 14.2 A- A- A- A- A- A- A- A- A- A- A- A- A- A- A- A- A- A-
EV & VNB Embedded value Change in embedded value (pre transfers) Value of one year's new business	205.0 195.0 182.1 185.6 168.3 172.2 13.1 12.9 (3.5) 21.2 9.0 5.7 6.1 6.1 2.7 2.7 3.4 3.6
INSURANCE PROFIT RATIOS Insurance profit/(loss) to net earned premium ratio - Health 12.4% 8.0% 12.6% (0.9%) 12.8% 4.3% Insurance profit/(loss) to net earned premium ratio - Life 52.4% 42.1% 2.3% (17.1%) (3.4%) 21.1% Insurance profit to net earned premium ratio - General Insurance 16.6% 8.4% 13.3% 7.0% 11.6% 11.4%
MANAGEMENT AND SALES EXPENSES AND COST RATIOS Management and sales expenses 89.9 84.5 94.7 89.2 91.8 85.0 Cost to income ratio 66.2% 70.7% 76.8% 95.0% 82.2% 78.0% Staff numbers 761 773 760 793 794 799

• Sep 07- Mar 09 adjusted for bonus element of Rights Issue

3 TOWER Results Information

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Results summary 2

Profit and loss summary

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Health & Life	29.6	23.3	11.1	(2.5)	10.6	10.2
General Insurance	17.5	10.6	14.7	8.9	12.5	12.9
Investments	2.9	4.9	3.3	2.2	2.9	6.5
Finance & corporate expenses	(4.5)	(5.2)	(5.5)	(6.1)	(5.9)	(5.0)
Profit before tax	45.5	33.6	23.6	2.5	20.1	24.6
Income tax (expense)/credit	(17.8)	(8.2)	(2.1)	15.5	0.3	(4.5)
Underlying profit	27.7	25.4	21.5	18.0	20.4	20.1
Discount rate effect	0.4	(1.9)	5.1	2.3	(0.2)	(0.6)
Profit from continuing operations	28.1	23.5	26.6	20.3	20.2	19.5

Profit and loss - Anslysis by shareholder	and policyholder
$ millions	Health & General Investments Corporate Group Health & Group Life Insurance Shareholder Life Total Shareholder Policyholder
Results to 31 March 2010
Insurance profit and operating earnings Investment income on shareholders' funds Corporate expenses Financing costs	15.5 15.1 2.8 33.4 9.5 42.9 4.6 2.4 0.1 1.9 9.0 9.0 (2.6) (2.6) (2.6) (3.8) (3.8) (3.8)
Profit/(loss) before tax Tax (expense)/credit	20.1 17.5 2.9 (4.5) 36.0 9.5 45.5 (3.2) (5.6) (0.9) 1.4 (8.3) (9.5) (17.8)
Underlying profit/(loss) after tax Discount rate effect	16.9 11.9 2.0 (3.1) 27.7 0.0 27.7 0.4 0.4 0.4
Profit/(loss) after tax	17.3 11.9 2.0 (3.1) 28.1 28.1
Results to 31 March 2009
Insurance profit/(loss) and operating earnings Investment income on shareholders' funds Corporate expenses Financing costs	10.9 13.3 3.1 27.3 (2.0) 25.3 2.2 1.4 0.2 0.7 4.5 4.5 (2.7) (2.7) (2.7) (3.5) (3.5) (3.5)
Profit/(loss) before tax Tax credit/(expense)	13.1 14.7 3.3 (5.5) 25.6 (2.0) 23.6 0.7 (5.3) (1.0) 1.5 (4.1) 2.0 (2.1)
Underlying profit/(loss) after tax Discount rate effect	13.8 9.4 2.3 (4.0) 21.5 0.0 21.5 5.1 5.1 5.1
Profit/(loss) after tax	18.9 9.4 2.3 (4.0) 26.6 26.6

4 TOWER Results Information

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Balance sheet summary 3

Balance sheet summary 2010

$ millions	Health & Life General Ins Investments Head Office & Eliminations Group Mar-10 Group Sep-09
Cash & call deposits Total investment assets * Deferred acquisition costs Intangible assets Other operational assets/(liabilities)	10.8 30.5 1.8 107.5 150.6 146.4 919.0 204.4 0.4 1.9 1,125.7 1,130.0 23.0 12.8 8.1 43.9 45.1 13.1 17.7 16.1 46.9 39.2 112.4 102.2 31.9 (24.9) 221.6 230.2
Total assets Policy liabilities & insurance provisions External debt Other operational (liabilities)/assets	1,078.3 367.6 42.2 100.6 1,588.7 1,590.9 (765.8) (175.5) (941.3) (954.1) (80.3) (80.3) (80.0) (105.7) (52.0) (26.2) 33.2 (150.7) (152.4)
Total liabilities	(871.5) (227.5) (26.2) (47.1) (1,172.3) (1,186.5)
Total equity	206.8 140.1 16.0 53.5 416.4 404.4
*** Investment assets breakdown**
Fixed interest securities (NZ) Fixed interest securities (AUS) Fixed interest securities(International)	567.8 109.1 676.9 55.9 55.9 3.3 27.8 31.1 571.1 192.8 0.0 0.0 763.9 51.1 51.1 1.9 1.9 172.5 3.0 175.5 223.6 3.0 0.0 1.9 228.5 73.7 8.6 0.4 82.7 50.6 50.6 919.0 204.4 0.4 1.9 1,125.7
Total fixed interest securities Equity securities (NZ) Equity securities (AUS) Equitysecurities(International)
Total equities securities Property securities Derivative financial instruments
Total investment assets
Credit ratings for investment assets	Mar-10 47.0 505.4 284.8 5.3 17.7 860.2 104.9 228.5 82.7 416.1 1,276.3 150.6 1,125.7 1,276.3
Investment assets subject to credit rating AAA AA A BBB or below Unrated investments Investment assets not subject to credit rating Fixed interest securities Equity securities Property securities
Total cash and investment assets
Cash and call deposits Investment assets
Total cash and investment assets

5 TOWER Results Information

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Balance sheet summary 2009

$ millions	Health & Life General Ins Investments Head Office & Eliminations Group Mar 09 Group Sep-08
Cash & call deposits Total investment assets * Deferred acquisition costs Intangible assets Other operational assets/(liabilities)	14.1 48.3 3.5 86.8 152.7 58.3 878.5 187.4 24.3 1,090.2 1,141.0 25.4 13.5 9.0 47.9 49.8 14.2 17.7 0.6 3.6 36.1 37.3 100.2 105.3 48.8 (26.0) 228.3 233.2
Total assets Policy liabilities & insurance provisions External debt Other operational (liabilities)/assets	1,032.4 372.2 61.9 88.7 1,555.2 1,519.6 (753.2) (181.2) (934.4) (991.1) (165.2) (165.2) (87.6) (101.2) (49.4) (35.8) 38.2 (148.2) (146.7)
Total liabilities	(854.4) (230.6) (35.8) (127.0) (1,247.8) (1,225.4)
Total equity	178.0 141.6 26.1 (38.3) 307.4 294.2
*** Investment assets breakdown**
Fixed interest securities (NZ) Fixed interest securities (AUS) Fixed interest securities(International)	518.7 126.5 21.9 667.1 48.5 48.5 32.3 1.0 33.3 551.0 176.0 0.0 21.9 748.9 36.0 3.1 39.1 2.4 2.4 152.3 152.3 188.3 3.1 0.0 2.4 193.8 73.3 8.3 81.6 65.9 65.9 878.5 187.4 0.0 24.3 1,090.2
Total fixed interest securities Equity securities (NZ) Equity securities (AUS) Equitysecurities(International)
Total equities securities Property securities Derivative financial instruments
Total investment assets
Credit ratings for investment assets	Mar-09 20.3 424.6 386.6 6.3 6.1 843.9 123.6 193.8 81.6 399.0 1,242.9 152.7 1,090.2 1,242.9
Investment assets subject to credit rating AAA AA A BBB or below Unrated investments Investment assets not subject to credit rating Fixed interest securities Equity securities Property securities
Total cash and investment assets
Cash and call deposits Investment assets
Total cash and investment assets

6 TOWER Results Information

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Business unit performance 4

Health & Life

Analysis of profit - Health

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Net premiums	67.7	66.3	65.3	63.7	62.5	59.9
Incurred claims	(43.3)	(43.5)	(39.6)	(43.0)	(34.3)	(35.7)
Management and sales expenses	(17.5)	(18.3)	(18.7)	(21.9)	(19.1)	(20.1)
Movement in policy liabilities	(0.1)	0.4	(4.7)	(5.3)	(3.2)	(2.4)
Investment income on assets backing policy liabilities	1.6	0.4	5.9	5.9	2.1	0.9
Insurance profit/(loss)	8.4	5.3	8.2	(0.6)	8.0	2.6
Investment income on shareholders' funds	1.2	1.1	1.0	1.2	0.9	0.1
Profit before tax	9.6	6.4	9.2	0.6	8.9	2.7
Income tax expense	(2.9)	(1.9)	(2.8)	(0.3)	(3.4)	(0.9)
Profit after tax	6.7	4.5	6.4	0.3	5.5	1.8

Analysis of profit - Life

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Net premiums	31.7	30.9	30.6	29.9	29.0	27.9
Incurred claims	(32.3)	(33.6)	(31.4)	(36.4)	(31.7)	(33.9)
Management and sales expenses	(19.7)	(23.1)	(22.0)	(19.4)	(17.1)	(18.5)
Movement in policy liabilities	(9.3)	(11.3)	47.7	0.1	33.1	6.5
Investment income/(loss) on assets backing policy liabilities	46.2	50.1	(24.2)	20.7	(14.3)	23.9
Insurance profit/(loss)	16.6	13.0	0.7	(5.1)	(1.0)	5.9
Investment income on shareholders' funds	3.4	3.9	1.2	2.0	2.7	1.6
Profit/(loss) before tax	20.0	16.9	1.9	(3.1)	1.7	7.5
Income tax (expense)/credit	(9.8)	(3.6)	5.5	13.9	8.1	2.2
Underlying profit	10.2	13.3	7.4	10.8	9.8	9.7
Discount rate effect	0.4	(1.9)	5.1	2.3	(0.2)	(0.6)
Profit after tax	10.6	11.4	12.5	13.1	9.6	9.1

7 TOWER Results Information

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Health & Life - In-force premium

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Individual & Group Health	137.9	135.6	132.2	130.1	127.8	123.5
Individual Life	54.8	51.5	47.9	45.1	43.0	42.4
Group Life	18.2	20.0	18.5	18.1	17.1	16.5
Total in-force premium	210.9	207.1	198.6	193.3	187.9	182.4

Health & Life - Premium from new business

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Individual & Group Health	3.0	3.3	3.0	3.7	3.3	3.9
Individual Life	4.3	5.7	3.8	3.3	1.8	2.1
Group Life	0.5	2.0	0.8	0.5	1.2	2.4
Total new business	7.8	11.0	7.6	7.5	6.3	8.4

Health & Life - Lapses

	Half year ended
%	Mar-10 Sep-09 Mar-09 Sep-08 Mar-08 Sep-07
Individual & Group Health lapse Individual Life lapse	10.6% 13.4% 11.7% 12.1% 11.5% 11.4% 11.1% 12.0% 11.6% 12.5% 10.3% 11.9%
Health & Life - Claims ratio
	Half year ended
%	Mar-10 Sep-09 Mar-09 Sep-08 Mar-08 Sep-07
Individual & Group Health Individual Life Group Life	55.0% 59.0% 54.8% 61.9% 51.0% 57.4% 33.1% 31.5% 36.3% 40.6% 31.4% 38.7% 46.8% 66.8% 59.8% 52.3% 34.2% 48.8%
All claims	49.6% 53.5% 51.3% 56.8% 46.0% 53.1%
Total Life	35.8% 38.4% 41.9% 42.4% 31.9% 40.7%

Health & Life - Management and sales expenses

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Management expenses	18.5	20.4	23.2	23.2	21.9	25.8
Commissions	18.7	21.0	17.5	18.1	14.3	12.8
Total expenses	37.2	41.4	40.7	41.3	36.2	38.6

8 TOWER Results Information

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General Insurance

Analysis of profit - General Insurance

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Net premiums	90.8	95.3	99.7	96.1	93.2	93.3
Incurred claims	(46.0)	(56.7)	(52.8)	(59.3)	(53.2)	(53.8)
Management and sales expenses	(33.6)	(35.2)	(36.2)	(34.2)	(32.2)	(33.0)
Underwriting profit	11.2	3.4	10.7	2.6	7.8	6.5
Investment income on assets backing technical reserves	3.9	4.6	2.6	4.1	3.0	4.1
Insurance profit	15.1	8.0	13.3	6.7	10.8	10.6
Investment income on shareholders' funds	2.4	2.6	1.4	2.2	1.7	2.3
Profit before tax	17.5	10.6	14.7	8.9	12.5	12.9
Income tax expense	(5.6)	(2.7)	(5.3)	(1.8)	(4.8)	(4.1)
Profit after tax	11.9	7.9	9.4	7.1	7.7	8.8

General Insurance - Gross written premiums (Rolling 12) and lapses

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
New Zealand	159.1	160.6	164.4	163.7	161.8	159.3
Pacific Islands	46.0	51.7	51.1	44.9	43.9	45.8
Total gross written premiums	205.1	212.3	215.5	208.6	205.7	205.1
Lapse rate	15.5%	16.8%	16.4%	17.2%	18.0%	20.0%

General Insurance - Net premiums and claims

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Net premiums	90.8	95.3	99.7	96.1	93.2	93.3
Claims	46.0	56.7	52.8	59.3	53.2	53.8
Claims ratio	50.7%	59.5%	53.0%	61.7%	57.1%	57.7%

General Insurance - Underwriting profits

	Half year ended
$ millions	Mar-10 Sep-09 Mar-09 Sep-08 Mar-08 Sep-07
Underwriting profit	11.2 3.4 10.7 2.6 7.8 6.5
* Combined ratio	87.7% 96.4% 89.3% 97.3% 91.6% 93.0%

• Claims and costs to net premium ratio

9 TOWER Results Information

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General Insurance - Management and sales expenses

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Management expenses	25.3	26.2	26.5	25.2	23.0	24.2
Commissions	8.3	9.0	9.7	9.0	9.2	8.8
Total expenses	33.6	35.2	36.2	34.2	32.2	33.0

10 TOWER Results Information

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Investments

Analysis of profit - Investments

			Half year ended	Half year ended
$ millions	40,238.0	40,057.0	39,873.0	39,692.0	39,508.0	39,326.0
Total income *	18.2	21.0	18.8	21.5	23.0	25.3
Management and sales expenses *	(15.3)	(16.1)	(15.5)	(19.3)	(20.1)	(18.8)
Profit before tax	2.9	4.9	3.3	2.2	2.9	6.5
Income tax expense	(0.9)	(1.4)	(1.0)	(0.8)	(0.6)	(2.5)
Profit after tax	2.0	3.5	2.3	1.4	2.3	4.0

Investments - Funds under management and advice**

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Total funds under management and advice	3,749	3,623	3,402	3,732	3,916	5,033
Total income *	18.2	21.0	18.8	21.5	23.0	25.3

Investments - Kiwisaver

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Funds under management	402.4	326.5	198.0	139.2	57.1	n/a
Number of members	82,143	76,957	67,129	56,084	37,047	n/a
Average funds per member	4,899	4,243	2,950	2,482	1,541	n/a

Investments - Management and sales expenses

			Half year ended
$ millions	Mar-10	Sep-09	Mar-09	Sep-08	Mar-08	Sep-07
Management expenses	13.2	13.5	13.7	15.7	14.2	12.6
Other expenses	0.1	0.0	0.2	0.0	1.7	2.4
Kiwisaver/PIE establishment	0.0	0.1	0.1	0.7	0.9	0.7
Sales expenses	2.0	2.5	1.5	2.9	3.3	3.1
**Total expenses ***	15.3	16.1	15.5	19.3	20.1	18.8

• Income and expenses for prior periods have been reclassified to achieve consistency in presentation with the current period. The reclassification had no impact on profit before tax.

** Total funds under management includes funds from Kiwisaver.

11 TOWER Results Information

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Appraisal value 5

$ millions	Investments Health & Life General Ins Holdings Companies Group Sep-09 Group Mar-09 Group Mar-10
Net worth Value of In-force business	31.1 31.1 27.8 27.4 173.9 173.9 167.2 154.7
Embedded value Value of 1 years new business Value of Future new business	205.0 0.0 0.0 0.0 205.0 195.0 182.1 6.1 6.1 6.1 2.7 24.4 24.4 24.5 10.6
Appraisal value (enterprise value) Fair value of net assets	229.4 0.0 0.0 0.0 229.4 219.5 192.7 110.7 170.3 16.0 53.5 350.5 343.9 239.6
Appraisal value	340.1 170.3 16.0 53.5 579.9 563.4 432.3

Comments

• The life companies’ embedded values grew by a combined $10.0m over the 6 months or 5.1%, whilst the appraisal values grew by $9.9m or 4.5%. Allowing for the $3.1 of net internal dividends paid, the combined return is 6.0%.

• The fair values of TOWER Medical Insurance and TOWER Insurance have increased by a combined $10.7m or 4.0%. Allowing for the $13.9m of internal dividends paid the combined return is 9.1% over the 6 months to 31 March 2010.

12 TOWER Results Information

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Carrying value / appraisal value 6

$ millions	Appraisal Value Mar-10 Carrying Value of Net Assets Appraisal Value Sep-09 Mar-09 Sep-08 Carrying Value of Net Assets Appraisal Value Carrying Value of Net Assets Appraisal Value Carrying Value of Net Assets	Appraisal Value Mar-10 Carrying Value of Net Assets Appraisal Value Sep-09 Mar-09 Sep-08 Carrying Value of Net Assets Appraisal Value Carrying Value of Net Assets Appraisal Value Carrying Value of Net Assets
Health & Life TOWER Health & Life TOWER Medical TOWER Life (NZ)	110.3 167.3 115.2 156.9 107.0 136.2 94.5 130.0 67.0 110.7 48.6 104.6 44.1 95.8 37.7 89.8 29.5 62.1 30.2 62.7 26.9 56.5 26.3 66.4
General Insurance TOWER Insurance	206.8 340.1 194.0 324.2 178.0 288.5 158.5 286.2 140.1 170.3 136.9 165.7 138.8 153.2 145.9 160.3
Investment business TOWER Asset Management TOWER Managed Funds	140.1 170.3 136.9 165.7 138.8 153.2 145.9 160.3 5.5 5.5 6.4 6.4 6.4 6.4 5.8 5.8 10.5 10.5 23.2 23.2 19.7 19.7 18.0 18.0
Other TOWER Group head office External debt	16.0 16.0 29.6 29.6 26.1 26.1 23.8 23.8 133.8 133.8 123.9 123.9 129.7 129.7 53.6 53.6 (80.3) (80.3) (80.0) (80.0) (165.2) (165.2) (87.6) (87.6)
Total capital employed	416.4 579.9 404.4 563.4	307.4 432.3 294.2 436.3

Comments

• The appraisal value of total capital employed of TOWER Group is well in excess of the carrying value of its net assets.

13 TOWER Results Information

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Life Insurance - profit summary 7

$ millions	Mar-10 Sep-09 Mar-09 Sep-08 Mar-08 Sep-07
Life insurance operating earnings Planned profits Experience profit (loss)	7.1 8.0 7.9 7.0 6.7 8.0 0.7 2.7 (1.1) 1.6 0.3 (1.1)
Insurance profit net of tax Investment income on shareholders' funds (net of tax)	7.8 10.7 6.8 8.6 7.0 6.9 2.4 2.6 0.6 2.2 2.8 2.8
Underlying profit Discount rate changes	10.2 13.3 7.4 10.8 9.8 9.7 0.4 (1.9) 5.1 2.3 (0.2) (0.6)
Profit after tax	10.6 11.4 12.5 13.1 9.6 9.1

Comments

• Planned profits have reduced following a change in the treatment of lapses for policyholders aged over 65. Previously these policies were assumed to lapse at the same rate as other policies, whereas they are now assumed to lapse at a higher rate. This reduces the assessed lifetime profit of in-force policies and so also reduces current planned profits.

• The experience profits relate primarily to the group insurance portfolio. Other items of experience were broadly in line with expectations.

• Year on year earnings from health have increased marginally.

14 TOWER Results Information

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Health & Life Insurance - Change in embedded value 8

$ millions
	TOWER Life TOWER Health & Life
Embedded value as at 30 September 2009	59.0 136.0
Expected increase in value of in-force Experience: Investment earnings Other Changes in assumptions: Investment earnings Value from new business Miscellaneous: Other	2.7 7.1 2.1 0.2 (0.3) (0.4) (0.7) (0.1) 0.1 2.4 (4.5) 1.4
Embedded value as at 31 March 2010	58.4 146.6

Comments

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• The primary matter impacting TOWER Life’s embedded value has been investment returns, with actual returns over the 6 months adding $2.1m of value whilst lower expectations of future returns have reduced the value by $0.7m. The experience profit on the group insurance portfolio noted above was offset by higher than expected scheme cancellations that acted to reduce the assessed future profits of the portfolio.

There were no significant experience items for TOWER Health & Life.

• The value of new business written in TOWER Health & Life has again improved, the $2.4m for the 6 months comparing favourably with 2009’s full year result of $2.7m.

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Health & Life Insurance - Change in value of one year's new business 9

$ millions
	TOWER Life TOWER Health & Life
Value of one year’s new business as at 30 September 2009	0.9 5.2
Change in one year’s volumes and mix of business Changes in assumptions: Other
Value of one year’s new business as at 31 March 2010	0.9 5.2

Comments

• The value of one year’s new business has been assessed on the same basis as applied at 30/9/09, hence the values have not changed.

• Our assessment of future new business that we expect to write hasn’t changed from that which was undertaken as at September 2009, there have been no changes in assumptions or expectations meaning this figure has stayed the same.

Refer to page 17 for assumptions used

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Health & Life Insurance - Embedded value and value of one year's new business 10

$ millions	TOWER Life TOWER Health & Life TOWER Life TOWER Health & Life TOWER Life TOWER Health & Life TOWER Life TOWER Health & Life Mar-10 Sep-09 Mar-09 Sep-08
Net worth Value of in-force business	18.4 12.7 19.2 8.6 17.7 9.7 17.6 7.4 40.0 133.9 39.8 127.4 36.4 118.3 46.0 114.6
Embedded value	58.4 146.6 59.0 136.0 54.1 128.0 63.6 122.0
Value of one year’s new business	0.9 5.2 0.9 5.2 0.6 2.1 0.7 2.0

Assumptions & Sensitivity Analysis

Assumptions	TOWER Life TOWER Health & Life TOWER Life TOWER Health & Life Mar-10 Sep-09	TOWER Life TOWER Health & Life TOWER Life TOWER Health & Life Mar-09 Sep-08
Inflation Discount rate Earnings assumption (net of tax) ranges Expenses inflation	11.5% 11.5% 11.5% 11.5% 3.4% to 6.0% 4.1% 3.5% to 6.1% 4.1% 2.0% 2.0% 2.0% 2.0%	11.5% 11.5% 11.5% 11.5% 3.9% to 6.1% 3.9% 4.0% to 6.2% 4.4% 2.0% 2.0% 2.0% 2.0%
Sensitivity analysis	TOWER Life TOWER Health & Life TOWER Life TOWER Health & Life Mar-10 Sep-09	TOWER Life TOWER Health & Life TOWER Life TOWER Health & Life Mar-09 Sep-08
Base appraisal value Appraisal value assuming: Discount rate 1% higher Investment returns 1% higher Discontinuance rate 10% higher Renewal expenses 10% higher	62.1 167.3 62.7 156.9 59.2 154.6 59.9 144.7 71.7 169.0 71.7 162.8 61.3 152.2 61.7 138.4 60.1 162.4 60.6 147.7	56.5 136.2 66.4 130.0 54.0 126.4 63.0 120.6 65.5 137.6 76.3 132.4 55.8 126.4 65.5 121.2 54.5 131.5 64.4 125.9

17 TOWER Results Information