TOWER LIMITED — Interim / Quarterly Report 2011

May 26, 2011

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27 May 2011

Market Information NZX Limited Level 2, NZX Centre 11 Cable Street PO Box 2959 Wellington New Zealand

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

TOWER Limited preliminary announcement for half year ended 31 March 2011

Please find attached the following documents in relation to the half year ended 31 March 2011:

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• Media release

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• NZX Appendix 1

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• ASX Appendix 4D

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• Financial Statements and accountants’ report

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• Details of interim dividend and NZX Appendix 7

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• Results Presentation

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Bronwyn Walsh Company Secretary & Compliance Manager TOWER Limited

ARBN 088 481 234 Incorporated in New Zealand

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MEDIA RELEASE

For immediate release

27 May 2011

TOWER PROFIT PLEASING DESPITE EARTHQUAKES - DIVIDEND TO BE PAID

(Auckland – NZ): TOWER Limited today reported a pleasing financial result for the six months to March 31 in the wake of the Christchurch earthquakes and will pay an interim dividend of 4 cents per share on 4 July 2011. The dividend will be fully imputed and matches the interim dividend paid for the same period the previous year, which was the first interim dividend paid since July 2002.

Excluding costs associated with the earthquakes in Christchurch and the discount rate movement, TOWER reported an after tax profit of $26.2 million compared with $27.7 million for the corresponding period a year earlier.

After the impact of the Christchurch earthquakes and the movement in the discount rate the net profit for the half year to 31 March 2011 was $13.0 million, down by $15.1 million on the previous year. However, overall equity increased to $447.2 million.

Group Managing Director, Rob Flannagan, said “TOWER is delighted to be announcing this result and to be in such a strong position after providing for more than $350 million of claims for the two major Christchurch earthquakes.”

“TOWER takes a prudent approach to insurance and risk management and it has been business as usual for all three of TOWER’s operations: Health & Life, General Insurance and Investments.”

TOWER Chairman Tony Gibbs said “the pleasing financial result was achieved under challenging circumstances but TOWER has once again demonstrated the merits of maintaining a strong balance sheet and the value of proactively managing risks and investments.

“The impact of the Christchurch earthquakes aside, TOWER performed well across its three businesses, whilst changing the business model to focus on improving and strengthening its customer service,” Mr Gibbs said.

“TOWER is a well established company with origins stretching back to 1869 and during the reporting period has reinforced its position as a market leader in providing products and services in insurance, investments and KiwiSaver,” he said.

“It is also encouraging that as a listed company owned by shareholders, TOWER is in a strong position to give policyholders assurances that claims made in the aftermath of the Christchurch earthquakes will be met,” he said.

ENDS

For further information please contact:

Rob Flannagan Group Managing Director TOWER Limited Tel: +64 9 369 2057

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APPENDIX 1

HALF YEAR PRELIMINARY ANNOUNCEMENTS AND HALF YEAR RESULTS

RESULTS FOR ANNOUNCEMENT TO THE MARKET

TOWER LIMITED

ReportingPeriod	6months to 31 March 2011
PreviousReportingPeriod	6months to 31 March 2010

	Amounts (000s)	Percentage change
Revenue from ordinary activities	NZ$ 259,408	10.2% decrease
Net profit from ordinary activities aftertaxattributable to shareholders	NZ$ 12,779	54.1% decrease
Net profit attributable to shareholders	NZ$12,779	54.1% decrease
Interim Dividend	Amount per security	Imputed amount per security
	NZ 4.0 cents	NZ 0.017143 cents
RecordDate	Friday,17June2011
DividendPaymentDate	Monday,4July2011
Comments	Net profit from ordinary activities in the half year to 31 March 2011 includes a loss of NZ$5.7 million (2010: gain NZ$0.4 million) which has arisen as a result of changes in the global investment market, which in turn affect the discount rate applied under the relevant accounting standards in valuing individual life risk policy liabilities. Also during the period is the loss attributed to the Christchurch earthquakes of NZ$7.5 million. Profit for the half year excluding the impact of the Christchurch earthquakes and discount rate is NZ$26.2 million which is a decrease of 5.4% over the comparable result in the previous half year.
Additional Information	TOWER’s dividend reinvestment plan will operate for the interim dividend. The last date for receipt of the election noticeforparticipation is17June2011.

Refer attached 31 March 2011 unaudited Financial Statements for TOWER Limited and its subsidiaries and Presentation for more detailed analysis and explanation

TOWER Limited

APPENDIX 4D PRELIMINARY INTERIM REPORT 26 May 2011 ASX LISTING RULES 4.2A

TOWER LIMITED PRELIMINARY INTERIM REPORT

Current ReportingPeriod	6 months ended 31 March 2011
Previous ReportingPeriod	6 months ended 31 March 2010

RESULTS FOR ANNOUNCEMENT TO THE MARKET

	Half year	Movement
	31 March 2011
	000’s
Total revenue from ordinary activities	NZ$ 259,408	- 10.2%
Net profit after tax from ordinary activities
attributed to shareholders	NZ$ 12,779	- 54.1%
Net profit for the period attributed to
shareholders	NZ$ 12,779	-54.1%

INTERIM DIVIDEND

An interim dividend of NZ 4.0 cents per share has been declared. The Record Date is 17 June 2011. The dividend will be paid net of tax on 4 July 2011. The dividend will be fully credited with imputation credits at the ratio of 30/70 or 42.85%, being NZ 0.017143 cents per share. No franking credits apply. TOWER’s dividend reinvestment plan will operate for the interim dividend. The last date for receipt of the election notice for participation is 17 June 2011.

ADDITIONAL COMMENTS

Net profit from ordinary activities in the 6 months to 31 March 2011 includes a loss of NZ$5.7 million (2010: gain NZ$0.4 million) which has arisen as a result of changes in the global investment market, which in turn affect the discount rate applied under the relevant accounting standards in valuing individual life risk policy liabilities. Also during the period is the loss attributable to the Christchurch earthquakes of NZ$7.5 million. Profit for the half year excluding the impact of the Christchurch earthquakes and discount rate is NZ$26.2 million which is a decrease of 5.4% over the NZ$27.7 million comparable result for the same period last year.

Refer attached 31 March 2011 unaudited Financial Statements for TOWER Limited and its subsidiaries and Presentation for more detailed analysis and explanation.

1

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TOWER LIMITED

INTERIM FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED

31 MARCH 2011

TOWER LIMITED INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2011

Table of Contents

CONSOLIDATED INCOME STATEMENT ........................................................................................................................... 3 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ......................................................................................... 4 CONSOLIDATED BALANCE SHEET ................................................................................................................................... 5 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................................................... 6 CONSOLIDATED STATEMENT OF CASH FLOWS .............................................................................................................. 7 NOTES TO THE INTERIM FINANCIAL STATEMENTS ......................................................................................................... 8 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES .................................................................................................................... 8 2. IMPACT OF CHRISTCHURCH EARTHQUAKES AND DISCOUNT RATE EFFECT ........................................................................................ 8 3. PREMIUM REVENUE ............................................................................................................................................................ 9 4. INVESTMENT REVENUE ........................................................................................................................................................ 9 5. FEE AND OTHER REVENUE .................................................................................................................................................. 10 6. MOVEMENT IN POLICY LIABILITIES ........................................................................................................................................ 10 7. LIFE INSURANCE AND INVESTMENT CONTRACT LIABILITIES ......................................................................................................... 10 8. SEGMENTAL REPORTING .................................................................................................................................................... 11 9. INTEREST BEARING LIABILITIES ............................................................................................................................................. 12 10. NET ASSETS PER SHARE .................................................................................................................................................... 12 11. NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS ........................................................................................................... 13 12. DISTRIBUTIONS TO SHAREHOLDERS .................................................................................................................................... 13 13. CONTINGENT LIABILITIES .................................................................................................................................................. 13 14. SUBSEQUENT EVENTS ...................................................................................................................................................... 14

2

TOWER LIMITED CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR ENDED 31 MARCH 2011

Note Revenue Premium revenue from insurance contracts 3 Less : Outwards reinsurance expense 3 Net premium revenue Investment revenue 4 Fee and other revenue 5 Net operating revenue Expenses Claims expense Less : Reinsurance recoveries revenue Net claims expense (Decrease)/increase in policy liabilities 6 Management and sales expenses Net claims and operating expenses Financing costs Total expenses Profit before taxation Tax expense attributed to policyholders' returns Profit attributed to shareholders before taxation Tax expense attributed to shareholders' profits Profit for the half year 2 Profit attributed to: Shareholders Minority interests Basic and diluted earnings per share (cents)	Half year ended 31 March 31 March 2011 2010 Unaudited Unaudited $000 $000
	215,096 209,808 (22,517) (19,622)
	192,579 190,186 27,420 62,820 16,892 16,306
	236,891 269,312
	431,630 127,612 (299,988) (5,979)
	131,642 121,633 (8,351) 8,133 93,850 89,920
	217,141 219,686 3,836 3,758
	220,977 223,444
	15,914 45,868 (102) (9,498)
	15,812 36,370 (2,866) (8,268)
	12,946 28,102
	12,779 27,859 167 243
	12,946 28,102
	4.88 10.88

The profit for the half year includes the impact of the Christchurch earthquakes and the discount rate effect. Refer to note 2.

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

3

TOWER LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 MARCH 2011

Note Profit for the half year 2 Other comprehensive income: Currency translation differences Other comprehensive income net of taxation Total comprehensive income for the half year Total comprehensive income/(loss) attributed to: Shareholders Minority interests	Half year ended 31 March 31 March 2011 2010 Unaudited Unaudited $000 $000
	12,946 28,102 2,622 1,097
	2,622 1,097
	15,568 29,199
	15,648 29,164 (80) 35
	15,568 29,199

The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

4

TOWER LIMITED CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2011

Note Assets Cash and cash equivalents Receivables Financial assets at fair value through profit or loss Derivative financial assets Liabilities ceded under reinsurance 7 Property, plant and equipment Prepaid tax assets Deferred acquisition costs Deferred tax assets Intangible assets Total Assets Liabilities Payables Current tax liabilities Other liabilities Provisions Derivative financial liabilities Interest bearing liabilities 9 Non-life insurance liabilities Deferred tax liabilities Life insurance and investment contract liabilities 7 Total Liabilities Net Assets Equity Contributed equity Accumulated losses Reserves Total equity attributed to shareholders Minority interests Total Equity	31 March 30 September 31 March 2011 2010 2010 Unaudited Audited Unaudited $000 $000 $000
	245,216 207,842 150,562 529,494 218,271 137,167 902,152 953,818 1,075,129 52,624 71,217 50,557 14,634 16,065 16,631 6,498 6,629 6,222 25,587 25,587 36,230 42,184 43,587 43,851 9,194 19,606 25,443 61,677 55,022 46,894
	1,889,260 1,617,644 1,588,686 56,620 53,896 57,539 1,542 3,362 13,796 - - 22,745 6,063 8,525 5,822 5,550 2,044 15,090 80,915 80,602 80,284 622,506 328,794 259,638 34,068 47,510 35,772 634,804 651,579 681,644
	1,442,068 1,176,312 1,172,330
	447,192 441,332 416,356
	564,624 558,762 555,282 (14,216) (12,021) (32,112) (106,061) (108,332) (109,540)
	444,347 438,409 413,630 2,845 2,923 2,726
	447,192 441,332 416,356

The financial statements were approved for issue by the Board on 26 May 2011.

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AI (Tony) Gibbs Chairman

John Spencer Director

The consolidated balance sheet should be read in conjunction with the accompanying notes.

5

TOWER LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 MARCH 2011

Half year ended 31 March 2011 At the beginning of the half year Comprehensive income for the period Profit for the half year Currency translation differences Total comprehensive income for the period Transactions with shareholders Shares issued under dividend reinvestment plan Shares issued under employee share options scheme Movement in share based payment reserve Dividends paid Movement in treasury shares Other Total transactions with shareholders At the end of the half year Half year ended 31 March 2010 At the beginning of the half year Comprehensive income for the period Profit for the half year Currency translation differences Total comprehensive income for the period Transactions with shareholders Shares issued under dividend reinvestment plan Shares issued under employee share options scheme Movement in share based payment reserve Dividends paid Other Total transactions with shareholders At the end of the half year	Attributed to shareholders(unaudited)
	Share capital Accumulated losses Reserves Total Minority interest Total equity $000 $000 $000 $000 $000 $000
	558,762 (12,021) (108,332) 438,409 2,923 441,332 - 12,779 - 12,779 167 12,946 - - 2,869 2,869 (247) 2,622
	- 12,779 2,869 15,648 (80) 15,568 5,221 - - 5,221 - 5,221 608 - - 608 - 608 - 706 (598) 108 - 108 - (15,656) - (15,656) - (15,656) 33 - - 33 - 33 - (24) - (24) 2 (22)
	5,862 (14,974) (598) (9,710) 2 (9,708)
	564,624 (14,216) (106,061) 444,347 2,845 447,192
	547,680 (35,128) (110,795) 401,757 2,691 404,448 - 27,859 - 27,859 243 28,102 - - 1,305 1,305 (208) 1,097
	- 27,859 1,305 29,164 35 29,199 7,046 - - 7,046 - 7,046 556 - - 556 - 556 - 228 (50) 178 - 178 - (25,043) - (25,043) - (25,043) - (28) - (28) - (28)
	7,602 (24,843) (50) (17,291) - (17,291)
	555,282 (32,112) (109,540) 413,630 2,726 416,356

The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

6

TOWER LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 MARCH 2011

Note Cash flows from operating activities Premiums received Interest received Dividends received Investment income Non-life company fee income Reinsurance received Reinsurance paid Claims expenses Payments to suppliers and employees Interest paid Income tax paid Net cash (outflow)/inflow from operating activities 11 Cash flows from investing activities Net receipts for financial assets Net payments for purchase of property, plant and equipment and intangible assets Net cash inflow from investing activities Cash flows from financing activities Proceeds from issue of share capital Dividend paid Payment of supplementary dividend Net cash (outflow) from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of half year Cash and cash equivalents at end of half year	31 March 31 March 2011 2010 Unaudited Unaudited $000 $000 Half year ended
	216,269 208,433 17,751 18,418 1,239 1,195 16,307 17,239 16,892 15,972 11,671 14,912 (26,777) (28,125) (147,230) (148,804) (106,822) (88,147) (3,524) (3,476) (7,446) (539)
	(11,670) 7,078 68,694 25,020 (9,234) (10,505)
	59,460 14,515 641 585 (10,435) (17,276) (622) (721)
	(10,416) (17,412) 37,374 4,181 207,842 146,381
	245,216 150,562

Note:

The consolidated statement of cash flows presents the net changes in cash flow for financial assets, property, plant and equipment and intangible assets. TOWER considers that knowledge of gross receipts and payments is not essential to understanding certain activities of TOWER and it is considered acceptable to report only the net changes in cash flow for these items. This is based on the fact that either the turnover of these items is quick, the amounts are large, and the maturities are short or the value of the sales are immaterial.

The consolidated statement of cash flows should be read in conjunction with the accompanying notes.

7

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2011

1. Summary of significant accounting policies

Entities reporting

The interim financial statements presented are those of TOWER Limited (the Company) and its subsidiaries (the Group).

Statutory base TOWER Limited is a company domiciled in New Zealand, registered under the Companies Act 1993 and listed on the New Zealand and Australian Stock Exchanges. The Company is an issuer under the Financial Reporting Act 1993.

Basis of preparation

These interim financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP), as appropriate for profit oriented entities, International Accounting Standard 34, and New Zealand equivalent to International Accounting Standard 34, Interim Financial Reporting.

The interim financial statements should be read in conjunction with the annual financial statements for the year ended 30 September 2010, which have been prepared in accordance with International Financial Reporting Standards, and New Zealand equivalents to International Financial Reporting Standards.

The interim financial statements were approved by the Board of Directors on 26 May 2011.

The interim financial statements for the six months ended 31 March 2011 are unaudited.

Accounting policies

The principal accounting policies adopted in the preparation of the interim financial statements are consistent with those of the audited annual financial statements as at 30 September 2010.

Comparatives

Where necessary, comparative information has been reclassified to achieve consistency of disclosure with the current period.

2. Impact of Christchurch earthquakes and discount rate effect

The after taxation impact of the Christchurch earthquake and the discount rate is presented to provide a more meaningful comparison of the Group’s profit for the reported financial periods.

With the 22 February 2011 Christchurch earthquake occurring in the first half of its financial year, TOWER has, consistent with its policy on reinsurance, purchased additional cover to maintain its reinsurance position. The high cost of further reinsurance and net claims, together with other costs associated with the Christchurch earthquakes, has increased TOWER’s expenses in the current financial year.

In the half year ended 31 March 2011 these costs amounted to $7,544,000 after taxation. Total net earthquake expenses are expected to amount to $15 million to $20 million after taxation for the year ending 30 September 2011. The costs associated with the 4 September 2010 event amounted to $4,470,000 after taxation. These costs were expensed in the financial statements for the year ended 30 September 2010.

The movement in the discount rate during the March 2011 half year impacted the individual life risk policy liabilities and decreased Group profit after tax. In the comparative period to March 2010 the discount rate created a gain to the Group profit after tax. The discount rate applied to value individual life risk policy liabilities included within life insurance contract liabilities in Note 7, is based on the current riskfree interest rates. The decline in the risk-free interest rates led to a change in the value of individual life risk policy liabilities, generating a net expense after tax of $5,729,000 in the period (2010: gain of $376,000).

Profit for the half year Additional costs associated with Christchurch earthquakes Outwards reinsurance expense Claims expenses net of reinsurance recoveries revenue Management and sales expenses Income tax impact Christchurch earthquakes impact after tax Discount rate effect Income tax impact Discount rate effect after tax Profit for the half year excluding the impact of Christchurch earthquakes and discount rate	Half year ended 31 March 31 March 2011 2010 Unaudited Unaudited $000 $000
	12,946 28,102 2,667 - 7,150 - 39 - (2,312) -
	7,544 - 5,884 (402) (155) 26
	5,729 (376)
	26,219 27,726

8

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2011

3. Premium revenue

Life insurance premiums Life investment premiums Total life premiums Less: Deposits recognised as an increase in policy liabilities Life insurance contract premiums recognised as revenue General insurance premiums Health insurance premiums Less: Reinsurance ceded Total net premium revenue 4. Investment revenue Fixed interest securities (1) Interest income Net realised (loss)/gain Net unrealised loss Equity securities (1) Dividend income Net realised loss Net unrealised gain Property securities (1) Property income Net unrealised gain Other (2) Other investment revenue Net realised gain Net unrealised (loss)/gain Total investment revenue Total investment revenue Total realised gain Total unrealised gain	31 March 31 March 2011 2010 Unaudited Unaudited $000 $000 43,276 42,422 207 250 43,483 42,672 (219) (2,114) 43,264 40,558 102,123 101,541 69,709 67,709 215,096 209,808 (22,517) (19,622) 192,579 190,186 Half year ended 17,751 18,836 (97) 2,282 (1,202) (534)
	**16,452 20,584 **
	1,239 1,195 (2,103) (418) 17,496 20,755
	16,632 **21,532 **
	1,152 1,124 1,039 2,050
	2,191 3,174
	62 78 14,536 13,568 (22,453) 3,884
	(7,855) 17,530
	20,204 21,233 12,336 15,432 (5,120) 26,155
	27,420 62,820

(1) The income and loss in these categories has been generated by financial assets designated on initial recognition at fair value through profit or loss.

(2) Other investment income has been generated by derivative financial assets and financial liabilities classified as held for trading at fair value through profit or loss.

9

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2011

5. Fee and other revenue

5. Fee and other revenue
Investment and management fees Other revenue Total fee and other revenue 6. Movement in policy liabilities (Decrease)/increase in policy liabilities (Decrease) in non-current health insurance contract liabilities (Decrease)/increase in life insurance contract liabilities (Decrease)/increase in life investment contract liabilities		31 March 31 March 2011 2010 Unaudited Unaudited $000 $000 Half year ended
		16,841 16,268 5138
		16,892 16,306
		(2,829) 6,800 (1,236) 2,268 (4,286) (935)
		(8,351) 8,133

7. Life insurance and investment contract liabilities

7. Life insurance and investment contract liabilities
Life insurance contract liabilities Life investment contract liabilities Total life insurance and investment contract liabilities Less: Liabilities ceded under reinsurance Net life insurance and investment contract liabilities	31 March 30 September 31 March 2011 2010 2010 Unaudited Audited Unaudited $000 $000 $000
	602,966 619,820 647,787 31,838 31,759 33,857
	634,804 651,579 681,644 (14,634) (16,065) (16,631)
	620,170 635,514 665,013

The movement in life insurance and investment contract liabilities include movements recognised in the income statement (refer to Note 6), changes in liabilities ceded under reinsurance, deposits and withdrawals and other adjustments, which do not affect the income statement.

10

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2011

8. Segmental reporting

Half year ended 31 March 2011 Revenue Revenue - external Revenue - internal Total revenue Unrealised investment gain/(loss)(1) Net operating revenue Profit before income tax Income tax (expense)/credit Underlying profit for the year Less discount rate(2) Less Christchurch earthquakes(3) Profit for the year Half year ended 31 March 2010 Revenue Revenue - external Revenue - internal Total revenue Unrealised investment gain/(loss)(1) Net operating revenue Profit before income tax Income tax (expense)/credit Underlying profit for the year Add discount rate(2) Profit for the year Segment assets 31 March 2011 (Unaudited) 30 September 2010 (Audited) 31 March 2010 (Unaudited)	Health Insurance Life Insurance General Insurance Investments Holding companies and eliminations Total Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited $000 $000 $000 $000 $000 $000
	71,419 57,701 93,724 16,522 2,645 242,011 - - 104 2,464 (2,568) 0
	71,419 57,701 93,828 18,986 77 242,011 (2,033) (3,744) (498) - 1,155 (5,120)
	69,386 53,957 93,330 18,986 1,232 236,891
	9,130 7,538 15,260 4,371 (4,800) 31,499
	(2,648) 2,592 (5,285) (1,346) 1,407 (5,280)
	6,482 10,130 9,975 3,025 (3,393) 26,219
	- (5,729) - - - (5,729) - (2,150) (5,367) - (27) (7,544)
	6,482 2,251 4,608 3,025 (3,420) 12,946
	73,433 55,499 95,929 15,565 2,731 243,157 - - 206 2,674 (2,880) -
	73,433 55,499 96,135 18,239 (149) 243,157
	(2,689) 27,509 1,364 - (29) 26,155
	70,744 83,008 97,499 18,239 (178) 269,312
	9,620 20,049 17,489 2,957 (4,623) 45,492 (2,886) (9,840) (5,612) (911) 1,483 (17,766)
	6,734 10,209 11,877 2,046 (3,140) 27,726 - 376 - - - 376
	6,734 10,585 11,877 2,046 (3,140) 28,102
	153,844 819,058 719,427 29,843 167,088 1,889,260 149,426 829,409 430,799 27,047 180,963 1,617,644 154,593 923,687 367,562 42,225 100,619 1,588,686

Note:

(1) Unrealised investment gains and losses have been separately disclosed to show their impact on total revenue of the business segments.

• (2) The discount rate effect, as discussed in Note 2, has been adjusted for tax and shown separately to provide a more meaningful comparison between the reported periods.

• (3) The effect of the Christchurch earthquakes adjusted for tax has been separately disclosed to show their impact on the business segments.

Description of segments

The operating segments are based on 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.

Management has determined the operating segments based on the internal reporting reviewed by the Board of Directors (Chief Operating Decision Maker) for the purpose of making decisions on resource allocation and assessing performance.

Health insurance includes all health and disability insurance in New Zealand. Life insurance includes all life insurance in New Zealand. General Insurance includes all general insurance services in New Zealand and the Pacific Islands. Investments include all wealth management services in New Zealand. Other includes head office expenses, financing costs and eliminations.

11

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2011

9. Interest bearing liabilities

9. Interest bearing liabilities
Fixed rate senior unsecured bonds Unamortised capitalised costs	31 March 30 September 31 March 2011 2010 2010 Unaudited Audited Unaudited $000 $000 $000
	83,211 83,220 83,210 (2,296) (2,618) (2,926)
	80,915 80,602 80,284

Fixed rate senior unsecured bonds

On 24 March 2009, the Group issued $81,759,000 of fixed rate senior unsecured bonds, bearing a fixed interest rate of 8.5% per annum. The bonds mature on 15 April 2014.

The above total of $80,915,000 includes $1,452,000 of accrued interest (30 September 2010: $1,460,433 and 31 March 2010: $1,451,000). The Group capitalised $3,499,000 of costs associated with the issuance of the bonds. These costs are amortised over the five year term of the bonds using the effective interest rate method. The bonds are carried at amortised cost using the effective interest method. The amortised costs during the period to 31 March 2011 were $322,000 (30 September 2010: $601,005 and 31 March 2010: $293,000).

The fair value of fixed rate senior unsecured bonds as at 31 March 2011 is $86,280,000 (30 September 2010: $85,464,000 and 31 March 2010: $83,852,000), this has been estimated by reference to the average quoted market price of the underlying debt securities at the end of the period.

10. Net assets per share

10. Net assets per share
Net assets per share (NZ dollars) Net tangible assets per share (NZ dollars)	31 March 31 March 2011 2010 Unaudited Unaudited $ $ Half year ended
	1.70 1.61
	1.56 1.47

12

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2011

11. Note to consolidated statement of cash flows

Net profit after tax for the half year Add/(less) non-cash items Depreciation of property, plant and equipment Amortisation of intangible assets Change in insurance and life investment contract liabilities Unrealised loss/(gain) on financial assets Share based payments expense and movement in fair value of employee share option derivative Accrued interest on borrowings Gain on disposal of property, plant and equipment (Decrease)/increase in deferred tax Add/(less) movements in working capital (excluding the effects of exchange differences on consolidation) (Increase)/decrease in receivables Increase/(decrease) in payables (Increase)/decrease in taxation (Less)/add other items classified as investing or financing activities Decrease in capitalised costs Net cash (outflow)/inflows from operating activities Reconciliation of profit for the period to net cash flows from operating activities	31 March 31 March 2011 2010 Unaudited Unaudited $000 $000 Half year ended
	12,946 28,102 1,652 1,677 1,062 921 (15,343) (16,185) 5,120 (26,155) 109 163 (9) (11) (5) - (3,030) 4,360
	(10,444) (35,230) (304,311) 6,905 291,266 (6,392) (1,449) 13,400
	(14,494) 13,913 322 293
	(11,670) 7,078

12. Distributions to shareholders

On 25 November 2010 the Directors declared a final dividend for the 2010 financial year of 6 cents per share. The total amount payable was $16,277,649 including supplementary dividend, of which $5,221,002 was paid in TOWER shares under the dividend reinvestment plan and $11,056,647 paid in cash.

The dividend was paid on 25 January 2011.

13. Contingent liabilities

There were no contingent liabilities as at 31 March 2011 (31 March 2010: Nil).

13

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2011

14. Subsequent events

(a) Declaration of dividend

On 26 May 2011 the Directors declared a dividend of 4 cents per share. The dividend will be paid on 4 July 2011. Estimated dividend payable including supplementary dividend is $10,958,826.

(b) Earthquake Commission

The Earthquake Commission (EQC) has recently communicated its position on claims in respect of the Christchurch earthquakes, which has the effect of limiting claims to a maximum amount in any policy year.

If this is correct, the EQC limits do not apply per event, and are a maximum aggregate limit in a policy year (unless a payout has been made). This interpretation of the EQC limits has not been accepted as correct and TOWER is disputing the EQC position.

14

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Independent Accountants’ Report to the shareholders of TOWER Limited

Report on the Interim Financial Statements

We have reviewed the interim consolidated financial statements (“financial statements”) of Tower Limited and its subsidiaries (the Group) on pages 3 to 14, which comprise the balance sheet as at 31 March 2011, the income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the period then ended, and the notes to the financial statements that include a summary of significant accounting policies and other explanatory information.

Directors’ Responsibility for the Interim Financial Statements

The Company’s Directors are responsible for the preparation and presentation of the financial statements that present fairly the financial position of the Group as at 31 March 2011, and its financial performance and cash flows for the period ended on that date.

Accountants’ Responsibility

We are responsible for reviewing the financial statements presented by the Directors in order to report to you whether, in our opinion and on the basis of the procedures performed by us, anything has come to our attention that would indicate that the financial statements do not present fairly the matters to which they relate.

A review is limited primarily to enquiries of company personnel and analytical review procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit on the financial statements and, accordingly, we do not express an audit opinion.

We have reviewed the financial statements of the Group for the period ended 31 March 2011 in accordance with the Review Engagement Standards issued by the New Zealand Institute of Chartered Accountants.

We have no relationship with, or interests in, the Group other than in our capacities as accountants conducting this review and providers of other assurance, advisory and tax services. These matters have not impaired our independence as accountants of the Group.

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PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz

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Independent Accountants’ Report TOWER Limited

Opinion

Based on our review, nothing has come to our attention that causes us to believe that the financial statements which have been prepared in accordance with International Accounting Standard 34 and New Zealand Equivalent to International Accounting Standard 34: Interim Financial Reporting do not present fairly the financial position of the Group as at 31 March 2011 and its financial performance and cash flows for the period ended on that date.

Restriction on Distribution or Use

This report is made solely to the Company’s shareholders, as a body. Our review work has been undertaken so that we might state to the Company’s shareholders those matters which we are required to state to them in an accountants’ 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 review procedures, for this report or for the opinions we have formed.

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Chartered Accountants 26 May 2011

Auckland

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27 May 2011

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 final dividend

TOWER Limited ( Company ) advises that a final dividend of 4 cents per share, net of tax, will be paid on Monday 4 July 2011 ( Payment Date ) to all shareholders on the register as at 5pm on Friday, 17 June 2011 ( Record Date ). NZX Appendix 7 is attached.

Shareholders with a New Zealand or Australian address on the Company’s register will be able to elect to participate in the Company’s Dividend Reinvestment Plan ( DRP ) up to the Record Date. Ordinary shares will be issued on the Payment Date to all shareholders who elect to participate in the DRP at a strike price equal to 97.5% of the volume weighted average price of the Company's ordinary shares on NZX on the five trading days following the Record Date. The cash dividend that would otherwise be payable to these shareholders will be applied to pay up the issue price on the shares issued under the DRP. The shares issued under the DRP will rank equally with all existing ordinary shares of the Company.

If the shareholder is tax resident in New Zealand, the dividend will be fully credited with imputation credits at the ratio of 30/70 or 42.85%, being $0.017143 per share. TOWER will withhold resident withholding tax where applicable.

If the shareholder is tax resident in a jurisdiction other than New Zealand where the non-resident withholding tax rate is 15% or more and holds a shareholding of less than 10% in TOWER, the dividend will be credited with imputation credits of $0.010084 per share and a supplementary dividend of $0.007059 will be paid. The total ratio of the imputation credits and supplementary dividend is 30/70 or 42.85%. TOWER will withhold non-resident withholding tax where applicable.

If the shareholder is not tax resident in New Zealand and their shareholding interest in TOWER is either 10% or more, or less than 10% and the non-resident withholding tax rate is less than 15%, the dividend will be fully credited with imputation credits at the ratio of 30/70 or 42.85%, being $0.017143 per share.

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

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APPENDIX 7 – NZSX Listing Rules

EMAIL: announce@nzx.com

Notice of event affecting securities

NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10. For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required.

Number of pages including this one (Please provide any other relevant details on additional pages)

Full name of Issuer Name of officer make this notice	Full name of Issuer Name of officer make this notice	TOWER Limited	TOWER Limited	TOWER Limited	TOWER Limited	TOWER Limited
		authori	sed to							Authority for e.g. Directors			event, ' resolution
							Bronwyn Walsh								Directors' resolution
Contact phone number			09 369 2201							09 369 2160				e		27 05				2011
Nature of event Tick as appropriate				Bonus Issue Rights Issue			If ticked, state whether: Taxable Capital Call Dividend			/ Non Taxable If ticked, state		Conv F	ersion ull			Rights Issue Interest Renouncable
				non-renouncable			change 			whether: In		terim  Y	ear	Special
EXISTING securitie Description of the class of securities			s affe	cted by this			If more than on			e security is affecte		d by the event, u	se a separate fo ISIN	rm.
				Ordinary shares													NZTWRE0001S3
																	If unknown, contact NZX
Details of securitie			s issu	ed pursuant to this event If						more than one clas		s of security is to	be issued, use ISIN	a separ			ate form for each class.
Description of the class of securities Number of Securities to be issued following eve			nt
				Ordinary shares													NZTWRE0001S3
												Minimum Entitlement					If unknown, contact NZX Ratio, e.g 1 for 2 for
					To be determined under DRP
Conversion, Maturity, Call Payable or Exercise Date Strike price per security for any Strike Price available.				issue in lieu or	dat	N/A						Treatment of Fractions provide an OR explanation of the ranking
						e Enter N/A if not applicable
M	onies Associated with E			vent In dollars	an	Dividen d cents		d payable, Call payable, Exercise price, C Source of Payment				onversion price, Redemption price, Application money.
												Retained profits
	Amount per security (does not include any exc			luded income)
					$0.04
	Excluded income per security (only applicable to listed PIEs)
	Currency Total monies				NZ$*						Supplementary Amount per security dividend in dollars and cents details - NZSX Listing Rule 7.12.7 Date Payable							$0.007059
					$10.96 million**													4 July, 2011
T In is	axation the case of a taxable bonus sue state strike price										Amountper Security in Dollars and cents to six deci							malplaces
									Resident Withholding Tax		Imputation Credits (Give details) $0.001714
							$				$0.001714							$0.017143
									Foreign Withholding Tax		FWP Credits (Give details) $0.007059
																		$0.000000
Timing (Refer Appendix 8 in th Record Date 5pm For calculation of entitlements - Notice Date Entitlement letters, call notices,					e NZ		SX Listing Rules)				Application Date Also, Call Payable, Dividend / Interest Payable, Exercise Date, Conversion Date. In the case of applications this must be the last business day of the week. Allotment Date For the issue of new securities.
							17 June, 2011							4 July, 2011
conversion notices mailed														4 July, 2011
OFFICE USE ONLY Ex Date: Commence Quoting Rights: Cease Quoting Rights 5pm: Commence Quoting New Securities: Cease QuotingOld Security5pm:											Security Code: Security Code:

• Shareholders on the Company's Australian register will be paid in AU$ calculated at the exchange rate on the Record Date

• ** Estimate based on curent % of non-resident shareholders

TOWER Group Analysts Briefing – Half Year Results – 31 March 2011

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Rob Flannagan Group Managing Director Michael Boggs Group Chief Operating Officer

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TOWER Group
Half Year Results – 31 March 2011
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Agenda

• Results Overview

• Business Performance

• Looking Forward

2

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TOWER – GROUP EXECUTIVE
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Group Managing Director
Rob Flannagan
General General General Chief Chief Company
Distribution Manager Product and Manager Customer Manager Operating Officer Information Officer Secretary and Compliance InvestmentsCEO
Manager
and Marketing Pricing Services (COO) (CIO)
Bronwyn Sam Stubbs
Monica Mathis Antony Vriens Debbie Eyre Michael Boggs Tony Dixon Walsh
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3

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TOWER Group Financial Summary
Half Year 31 March 2011
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� Profit excluding the impact of Christchurch earthquake and discount rate

$26.2m 5% ↓

• Net profit

• Total equity

$13.0m 54% ↓ $447.2m 7% ↑

• Interim dividend (Fully imputed)

4 cps

Changes are compared to half year 31 March 2010

4

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TOWER Group Results
Summary
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	Half Year Ended
$ millions	Mar-11 Mar-10 Sep-10
Health & Life General Insurance Investments	16.6 16.9 16.4 10.0 11.9 14.5 3.0 2.0 0.8
Business unit net profit after tax Finance and corporate expenses	29.6 30.8 31.7 (3.4) (3.1) (2.7)
ProfitexcludintheimactofChristchurchearthuakes
g p q and discount rate Net of Christchurch expense Discount rate effect	26.2 27.7 29.0 (7.5) (4.5) (5.7) 0.4 5.6
Net profit after tax	13.0 28.1 30.1
% change
Profit excluding the impact of Christchurch earthquakes and discount rate Net profit after tax	(5%) (54%)

5

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TOWER Business Performance
Trends
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Group
60
50
40
30
20
10
0
2007 2008 2009 2010 2011
General Insurance
30
25
20
15
10
5
0
2007 2008 2009 2010 2011
$ millions
$ millions
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Health & Life
35
30
25
20
15
10
5
0
2007 2008 2009 2010 2011
Investments
8
7
6
5
4
3
2
1
0
2007 2008 2009 2010 2011
$ millions
$ millions
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6

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TOWER Business Performance
Trends
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Dividends
12
10
8
6
4
2
0
2007 2008 2009 2010 2011
Interim dividend Full year dividend
per share
s
cent
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7

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TOWER Business Performance
Trends
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Gearing
40%
35%
30%
25%
20%
15%
10%
5%
0%
2007 2008 2009 2010 2011
Gearing (debt to debt plus equity) - March
Gearing (debt to debt plus equity) - September
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Net Asset Backing
2.0
1.6
1.2
0.8
0.4
0.0
2007 2008 2009 2010 2011
Net asset backing - March
Net asset backing - September
er share
p
$
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Note: March 2009 includes both bank borrowings and capital notes.

8

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TOWER Group Results
Summary
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• Profit excluding the impact of Christchurch earthquakes and discount rate is down by $1.5 million on the same period last year.

• If we include the costs of Christchurch and the Discount rate in net profit, the Group’s net profit after tax for the half year to 31 March 2011 is $13 million .

• Even though we have had major events recently, TOWER remains in a strong financial position. The Board has decided to pay an interim dividend to shareholders. A fully imputed dividend of 4 cents per share will be paid on the 4[th] of July 2011.

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Business Performance

10

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TOWER Group Results
Summary
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	Half Year Ended
$ millions	Mar-11 Mar-10 Sep-10
Health & Life General Insurance Investments	16.6 16.9 16.4 10.0 11.9 14.5 3.0 2.0 0.8
Business unit net profit after tax Finance and corporate expenses	29.6 30.8 31.7 (3.4) (3.1) (2.7)
ProfitexcludintheimactofChristchurchearthuakes
g p q and discount rate Net of Christchurch expense Discount rate effect	26.2 27.7 29.0 (7.5) (4.5) (5.7) 0.4 5.6
Net profit after tax	13.0 28.1 30.1
% change
Profit excluding the impact of Christchurch earthquakes and discount rate Net profit after tax	(5%) (54%)

• The full year impact of Christchurch is expected to be $15 - $20 million after tax

11

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TOWER – Health & Life
Analysis of Profit - Health
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f Profit - Health
	Half Year Ended
$ millions	Mar-11 Mar-10 Sep-10
Health premium
Net premium Premium payback payments	69.7 67.7 68.2 (9.9) (6.0) (7.3)
Incurred claims Management and sales expenses Movement in policy liabilities Investment income on assets backing policyliabilities	59.8 61.7 60.9 (37.1) (37.3) (44.7) (17.8) (17.5) (18.1) 3.2 (0.1) (3.5) (0.9) 1.6 6.7
Insurance profit Investment income on shareholders' funds	7.2 8.4 1.3 1.9 1.2 0.3
Profit before tax Income tax expense	9.1 9.6 1.6 (2.6) (2.9) (0.8)
Profit after tax	6.5 6.7	0.8
% change
Profit after tax	(3%)

• Net premiums have continued to grow, 3% up

• Claims (excluding maturities) are down

• Management and sales expenses have been contained

• Profit after tax has reduced by 3% on last year

12

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TOWER – Health & Life
Analysis of Profit – Life
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Profit – Life
	Half Year Ended
$ millions	Mar-11 Mar-10 Sep-10
Net premiums Incurred claims Management and sales expenses Movement in policy liabilities Investment income on assets backing policy liabilities	34.0 31.7 32.7 (42.8) (32.3) (37.0) (20.2) (19.7) (21.9) 17.7 (11.0) (9.4) 15.5 46.2 47.7
Insurance profit Investment income on shareholders' funds	4.2 14.9 12.1 3.3 5.1 22.7
Profit before tax I/i	7.5 20.0 34.8 2 1
ncome tax (expense)credt	6 (9 8) (9 3) . . .
Profit excluding the impact of Christchurch earthquakes and discount rate Net of Christchurch expense Discount rate effect	10.1 10.2 15.5 (2.1) (5.7) 0.4 5.6
Profit after tax	2.3 10.6 21.1
% change
Underlying profit after tax Profit after tax	(199%) (78%)

• Continued premium growth

• Investment income down on previous period

• Profit excluding the impact of Christchurch earthquakes and discount rate reduced slightly

13

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TOWER – General Insurance
Analysis of Profit
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of Profit
	Half Year Ended
$ millions	Mar-11 Mar-10 Sep-10
Net premiums Incurred claims Management and sales expenses	91.8 90.8 93.9 (44.6) (46.0) (48.3) (35.9) (33.6) (32.3)
Underwriting result Investment income on assets backing insurance liabilities	11.3 11.2 13.3 2.6 3.9 4.7
Insurance profit/(loss) Investment income on shareholders' funds	13.9 15.1 18.0 1.4 2.4 3.0
Profit/(loss) before tax Income tax expense	15.3 17.5 21.0 (5.3) (5.6) (6.5)
Profit excluding the impact of Christchurch earthquakes Net of Christchurch expense	10.0 11.9 14.5 (5.4) (4.5)
Profit after tax	4.6 11.9 10.0
% change
Profit after tax	(61%)

• The Christchurch earthquake costs after tax of $5.4 million reflects $3.5 million of claims cost with the balance being increased reinsurance charges

• Remaining reinsurance costs incurred will be recognised in the second half of the year

14

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TOWER – Investments
Analysis of Profit
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	Half Year Ended
$ millions	Mar-11 Mar-10 Sep-10
Income Management and sales expenses	19.0 18.2 19.9 (14.6) (15.3) (18.9)
Profit before tax Income tax expense	4.4 2.9 1.0 (1.4) (0.9) (0.2)
Profit after tax	3.0 2.0 0.8
% change
Profit after tax	50%

• This business continues to change its mix with greater focus on lower margin products such as KiwiSaver

• Management and Sales expenses have moved to lower levels

15

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TOWER – Investments
KiwiSaver
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KiwiSaver Total Funds Under Management
700 100,000 4.2
90,000
600
4.0
80,000
500 70,000
3.8
60,000
400
50,000 3.6
300
40,000
3.4
200 30,000
20,000
100 3.2
10,000
0 0 3 0.
Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11
KiwiSaver Funds Under Management
Number of members Total Funds Under Management
$ millions Members
$ billions
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• The average value of KiwiSaver funds per member in the TOWER scheme is over $6,200, 29% higher than the overall market average of $4,800

• TOWER’s total funds under management has grown by $230 million since March 2010 to $3.98 billion

• Budget changes will increase KiwiSaver funds under management in the long term

16

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TOWER Group
Balance Sheet Summary
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$ millions	Mar-11	Mar-10	Sep-10
Cash & call deposits	187.7	150.6	138.5
Total investment assets	1,012.3	1,125.7	1,094.3
Other operational assets	689.2	312.4	384.8
Total assets	1,889.2	1,588.7	1,617.6
Policy liabilities & insurance provisions	(1,257.3)	(941.3)	(980.4)
External debt - bonds	(80.9)	(80.3)	(80.6)
Other operational liabilities	(103.8)	(150.7)	(115.3)
Total liabilities	(1,442.0)	(1,172.3)	(1,176.3)
Total equity	447.2	416.4	441.3

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Looking Forward

18

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TOWER – Strategic Goals
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Our strategic goals are focused on profitable growth. We will achieve this by:

• Being a customer centric organisation

• Doubling our product penetration per customer

• Giving our customers access to our full product range through their channel of choice

• Investing in our staff’s development to drive TOWER’s success

• Continuously delivering a return on equity to our shareholders of at least 12.5%

Customers will be able to rely on TOWER to deliver on its promise

19

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TOWER - Environment
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• We are entering a period of inflationary pressures. The cumulative effect of these is unknown at this point.

• TOWER is pleased to see the prudential regulation regime include requirements for best practice risk management and governance alongside solvency and capital requirements suitable for New Zealand. TOWER anticipates capital requirements may increase with the Reserve Bank having reviewed the draft solvency standards following the Christchurch ear th qua k es.

• Financial Advisors Act – We have achieved the status of a Qualifying Financial Entity (QFE) and we will have a fully qualified sales force by 1[st] July 2011.

• TOWER continues to closely monitor responses to life tax changes which require consideration of multiple factors.

20

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TOWER - Looking Forward
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• We have transitioned to a functional model that leverages all of the Group’s assets in order to drive growth.

• Consolidation of our key IT systems (legacy system replacement) will be live in August with completion of all data transfer by February 2012. Costs have increased through expansion of scope and time. Total costs for the project will be approximately $40 million.

• We are still looking to enhance our strength through acquisition. Our interest in AMI has been well publicised.

• Having regard to the changes that have taken place within TOWER and the environment, we are very comfortable with our position. We are a truly New Zealand and Pacific focused company looking after what our customers value. We are now positioned for faster growth and enhanced shareholder returns.

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TOWER Group
Half Year Results – 31 March 2011
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End

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