TOWER LIMITED — Interim / Quarterly Report 2012

May 24, 2012

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25 May 2012

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 Wellington NSW 2000 NEW ZEALAND AUSTRALIA

TOWER Limited - Results for announcement to the market

Attached are the following documents in relation to TOWER Limited’s preliminary announcement for the six months ended 31 March 2012:

1. Media release

2. NZX Appendix 1

3. ASX Appendix 4D

4. Financial Statements and Independent Accountants’ Report

5. NZX Appendix 7

6. Results announcement 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

25 May 2012

TOWER NET PROFIT UP 82% ON STRONG PERFORMANCE

(Auckland – NZ) TOWER Limited today reported a net profit of $23.6 million for the six months to 31 March 2012, an 82% increase over the same period the previous year, and will pay an interim unimputed dividend of 5 cents per share on 2 July.

The Group’s strong result reflects improved financial performance across all business units and recovery from insurance claims and costs associated with the Christchurch earthquakes. This is even after catastrophe claims impacting profit by $4 million in this period.

For the reporting period, the Life business almost doubled net profit to $12.4 million, compared with $6.3 million in 2011. The General Insurance profit increased from $4.6 million for the previous corresponding six months to $5.4 million for the period. The net profit posted by the Health business of $6.8 million and by the Investments business of $3.6 million, also represented improvements.

“Throughout the reporting period, our priority was to focus on getting the basics right through achieving higher revenue growth while maintaining a disciplined approach to costs,” Group Managing Director, Rob Flannagan said.

There was also a strong emphasis on proactively managing risks and investments, he said.

TOWER is in a solid financial position with gearing at 14.6% and net asset backing rising to $1.79 per share.

Mr Flannagan said “the Group is back on track after the negative impact of the Christchurch earthquakes and challenging economic conditions which combined to create a difficult operating environment.”

ENDS

For further information please contact:

Rob Flannagan Group Managing Director TOWER Limited Tel: +64 9 369 2279

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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 2012
PreviousReportingPeriod	6months to 31 March 2011

	Amounts (000s)	Percentage change
Revenue from ordinary activities	NZ$ 295,665	14.0% increase
Profit from ordinary activities after taxattributable to shareholders	NZ$ 23,378	82.9% increase
Net profit attributable to shareholders	NZ$23,378	82.9%increase
Interim Dividend	Amount per security	Imputed amount per security
	NZ 5.0 cents	Nil
RecordDate	Friday,15 June2012
DividendPaymentDate	Monday,2July2012
Comments	Net profit from ordinary activities in the half year to 31 March 2012 includes a gain of NZ$0.7 million (half year to 31 March 2011: loss NZ$4.0 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$3.1 million (half year to 31 March 2011: NZ$7.5 million).
Additional Information	TOWER’s dividend reinvestment plan will operate for the interim dividend. The last date for receipt of the election noticeforparticipation is15 June2012.

Refer attached 31 March 2012 unaudited Financial Statements for TOWER Limited and its subsidiaries and Presentation for more detailed analysis and explanation.

TOWER Limited

APPENDIX 4D PRELIMINARY INTERIM REPORT 25 May 2012 ASX LISTING RULES 4.2A

TOWER LIMITED PRELIMINARY INTERIM REPORT

Current Reporting Period 6 months ended 31 March 2012 Previous Reporting Period 6 months ended 31 March 2011

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Half year Movement 31 March 2012 000’s Total revenue from ordinary activities NZ$ 295,665 14.0% Profit from ordinary activities after tax attributed to shareholders NZ$ 23,378 82.9% Net profit attributed to shareholders NZ$ 23,378 82.9%

INTERIM DIVIDEND

An interim dividend of NZ 5.0 cents per share has been declared. The Record Date is 15 June 2012. The dividend will have no imputation credits attached and will be paid net of withholding tax (where applicable) on 2 July 2012. 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 15 June 2012.

ADDITIONAL COMMENTS

Net profit from ordinary activities in the 6 months to 31 March 2012 includes a gain of NZ$0.7 million (half year to 31 March 2011: loss NZ$4.0 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$3.1 million (half year to 31 March 2011: NZ$7.5 million).

Refer attached 31 March 2012 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 2012

TOWER LIMITED INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2012

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. PREMIUM REVENUE ........................................................................................................................................................... 8 3. INVESTMENT REVENUE ....................................................................................................................................................... 9 4. FEE AND OTHER REVENUE .................................................................................................................................................... 9 5. MOVEMENT IN POLICY LIABILITIES ......................................................................................................................................... 9 6. LIFE INSURANCE AND INVESTMENT CONTRACT LIABILITIES ........................................................................................................ 10 7. SEGMENTAL REPORTING ................................................................................................................................................... 10 8. INTEREST BEARING LIABILITIES ............................................................................................................................................ 11 9. NET ASSETS PER SHARE ..................................................................................................................................................... 11 10. NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS ........................................................................................................... 12 11. DISTRIBUTIONS TO SHAREHOLDERS .................................................................................................................................... 12 12. LIFE INSURANCE LIABILITY DISCOUNT RATE ............................................................................................................................ 13 13. IMPACT OF CHRISTCHURCH EARTHQUAKES ........................................................................................................................... 13 14. SUBSEQUENT EVENTS ...................................................................................................................................................... 13

2

TOWER LIMITED CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR ENDED 31 MARCH 2012

Note Revenue Premium revenue from insurance contracts 2 Less : Outwards reinsurance expense 2 Net premium revenue Investment revenue 3 Fee and other revenue 4 Net operating revenue Expenses Claims expense Less : Reinsurance recoveries revenue Net claims expense Decrease in policy liabilities 5 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 12 Profit attributed to: Shareholders Minority interests Basic and diluted earnings per share (cents)	Half year ended 31 March 31 March 2012 2011 Unaudited Unaudited $000 $000
	231,769 215,096 (29,387) (22,517)
	202,382 192,579 47,466 27,420 16,430 16,892
	266,278 **236,891 **
	134,422 431,630 (3,744) (299,988)
	130,678 131,642 (671) (8,351) 95,419 93,850
	225,426 217,141 3,924 3,836
	229,350 220,977
	36,928 15,914 (5,246) (102)
	31,682 15,812 (8,117) (2,866)
	23,565 12,946
	23,378 12,779 187 167
	23,565 12,946
	8.87 4.88

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 2012

Note Profit for the half year 12 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 2012 2011 Unaudited Unaudited $000 $000
	23,565 12,946 697 2,622
	697 2,622
	24,262 15,568
	24,144 15,648 118 (80)
	24,262 15,568

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 2012

Note Assets Cash and cash equivalents Receivables Financial assets at fair value through profit or loss Derivative financial assets Liabilities ceded under reinsurance 6 Property, plant and equipment Prepaid tax assets Current tax assets Deferred acquisition costs Deferred tax assets Intangible assets Total Assets Liabilities Payables Current tax liabilities Provisions Derivative financial liabilities Interest bearing liabilities 8 Insurance liabilities Deferred tax liabilities Life insurance contract liabilities 6 Life investment contract liabilities 6 Total Liabilities Net Assets Equity Contributed equity Accumulated profit/(loss) Reserves Total equity attributed to shareholders Minority interests Total Equity	31 March 30 September 31 March 2012 2011 2011 Unaudited Audited Unaudited $000 $000 $000
	192,064 223,981 245,216 576,305 612,959 529,494 929,424 883,645 902,152 74,259 75,080 52,624 17,347 20,026 14,634 5,579 6,298 6,498 5,822 12,795 25,587 - 7,347 - 43,594 42,383 42,184 20,577 19,294 9,194 78,840 72,741 61,677
	1,943,811 1,976,549 1,889,260 57,942 57,502 56,620 2,099 - 1,542 6,188 5,325 6,063 50 1,903 5,550 81,607 81,263 80,915 658,216 710,709 622,506 49,748 48,770 34,068 582,660 587,476 602,966 28,745 28,084 31,838
	1,467,255 1,521,032 1,442,068
	476,556 455,517 447,192
	568,644 567,031 564,624 14,611 (4,352) (14,216) (109,149) (109,688) (106,061)
	474,106 452,991 444,347 2,450 2,526 2,845
	476,556 455,517 447,192

The interim financial statements were approved for issue by the Board on 24 May 2012.

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Bill Falconer 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 2012

Half year ended 31 March 2012 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 Movement in share based payment reserve Dividends paid Minority interest dividend paid Other Total transactions with shareholders At the end of the half year 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	Attributed to shareholders (unaudited)
	Share capital Accumulated profit/(loss) Reserves Total Minority interests Total equity $000 $000 $000 $000 $000 $000
	567,031 (4,352) (109,688) 452,991 2,526 455,517 - 23,378 - 23,378 187 23,565 - - 766 766 (69) 697
	- 23,378 766 24,144 118 24,262 1,613 - - 1,613 - 1,613 - 278 (227) 51 - 51 - (5,304) - (5,304) - (5,304) - (194) (194) - 611 - 611 - 611
	1,613 (4,415) (227) (3,029) (194) (3,223)
	568,644 14,611 (109,149) 474,106 2,450 476,556
	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

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 2012

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 inflow/(outflow) from operating activities 10 Cash flows from investing activities Net (payments for)/receipts from financial assets Net payments for purchase of property, plant and equipment and intangible assets Net cash (outflow)/inflow from investing activities Cash flows from financing activities Proceeds from issue of share capital Dividends paid Payment of supplementary dividends Payment of minority interest dividends Net cash outflow from financing activities Net (decrease)/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 2012 2011 Unaudited Unaudited $000 $000 Half year ended
	230,150 216,269 18,261 17,751 1,188 1,239 21,011 16,307 17,300 16,892 64,242 11,671 (36,724) (26,777) (195,884) (147,230) (87,121) (106,822) (3,475) (3,524) (6,493) (7,446)
	22,455 (11,670) (42,945) 68,694 (7,342) (9,234)
	(50,287) 59,460 - 641 (3,691) (10,435) (200) (622) (194) -
	(4,085) (10,416) (31,917) 37,374 223,981 207,842
	192,064 245,216

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 2012

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 2011, which have been prepared in accordance with International Financial Reporting Standards, and New Zealand Equivalents to International Financial Reporting Standards.

The interim financial statements for the six months ended 31 March 2012 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 for the year ended 30 September 2011.

Cash flows

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.

Comparatives

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

2. 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 : Outwards reinsurance expense Total net premium revenue	31 March 31 March 2012 2011 Unaudited Unaudited $000 $000 Half year ended
	45,268 43,276 178207
	45,446 43,483 (189) (219)
	45,257 43,264 113,878 102,123 72,63469,709
	231,769 215,096 (29,387) (22,517)
	202,382 192,579

8

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2012

3. Investment revenue

Fixed interest securities (1) Interest income Net realised gain/(loss) Net unrealised loss Equity securities (1) Dividend income Net realised loss Net unrealised gain Property securities (1) Property income Net realised gain Net unrealised (loss)/gain Other (2) Other investment revenue Net realised gain Net unrealised gain/(loss) Total investment revenue Total investment revenue Total realised gain Total unrealised gain/(loss)	31 March 31 March 2012 2011 Unaudited Unaudited $000 $000 Half year ended
	18,260 17,751 3,505 (97) (6,293) (1,202)
	**15,472 16,452 **
	1,188 1,239 (1,363) (2,103) 14,687 17,496
	14,512 **16,632 **
	1,137 1,152 1,499 - (2,420) 1,039
	216 2,191
	16 62 16,174 14,536 1,076 (22,453)
	17,266 (7,855)
	20,601 20,204 19,815 12,336 7,050 (5,120)
	47,466 27,420

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

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

4. Fee and other revenue

Investment and management fees Other revenue Total fee and other revenue 5. Movement in policy liabilities Decrease in policy liabilities Decrease in non-current health insurance contract liabilities Increase/(decrease) in life insurance contract liabilities Decrease in life investment contract liabilities		16,372 16,841 58 51
		16,430 16,892
		1,252 (2,829) (1,690) (1,236) (233) (4,286) (671) (8,351)

5. Movement in policy liabilities

9

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2012

6. Life insurance and investment contract liabilities

6. 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 2012 2011 2011 Unaudited Audited Unaudited $000 $000 $000
	582,660 587,476 602,966 28,745 28,084 31,838
	611,405 615,560 634,804 (17,347) (20,026) (14,634)
	594,058 595,534 620,170

The movement in life insurance and investment contract liabilities include movements recognised in the income statement (refer to Note 5), changes in liabilities ceded under reinsurance, deposits and withdrawals and other adjustments, which do not affect the income statement.

7. Segmental reporting

7. Segmental reporting
Half year ended 31 March 2012 Revenue Revenue - external Revenue - internal Net operating revenue Profit before income tax Income tax (expense)/credit Profit for the half year before discount rate effect Plus discount rate(1) Profit for the half year Half year ended 31 March 2011 Revenue Revenue - external Revenue - internal Net operating revenue Profit before income tax Income tax (expense)/credit Profit for the half year before discount rate effect Less discount rate(1) Profit for the half year Segment assets 31 March 2012 (Unaudited) 30 September 2011 (Audited) 31 March 2011 (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
	74,653 74,860 98,570 16,387 1,808 266,278 - - 149 1,785 (1,934) -
	74,653 74,860 98,719 18,172 (126) 266,278
	9,446 19,483 9,180 4,991 (7,199) 35,901 (2,645) (7,123) (3,757) (1,409) 1,858 (13,076)
	6,801 12,360 5,423 3,582 (5,341) 22,825
	- 740 - - - 740
	6,801 13,100 5,423 3,582 (5,341) 23,565
	69,386 53,957 93,226 16,522 3,800 236,891 - - 104 2,464 (2,568) -
	69,386 53,957 93,330 18,986 1,232 236,891
	9,130 5,233 7,593 4,371 (4,839) 21,488 (2,648) 1,028 (2,985) (1,346) 1,419 (4,532)
	6,482 6,261 4,608 3,025 (3,420) 16,956 - (4,010) - - - (4,010)
	6,482 2,251 4,608 3,025 (3,420) 12,946
	173,403 860,426 752,531 32,403 125,048 1,943,811 165,558 852,341 794,764 34,133 129,753 1,976,549
	153,844 819,058 719,427 29,843 167,088 1,889,260

Note:

(1) The discount rate effect, as discussed in Note 12, has been adjusted for tax and shown separately to provide a more meaningful comparison between the reported periods.

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TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2012

7. Segmental Reporting (continued)

Description of segments

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 identified the operating segments consistent with 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. Holding Companies and eliminations includes head office expenses, financing costs and intragroup eliminations.

8. Interest bearing liabilities

8. Interest bearing liabilities
Fixed rate senior unsecured bonds Unamortised capitalised costs	31 March 30 September 31 March 2012 2011 2011 Unaudited Audited Unaudited $000 $000 $000
	83,209 83,219 83,211 (1,602) (1,956) (2,296)
	81,607 81,263 80,915

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 $81,607,000 includes $1,450,000 of accrued interest (30 September 2011: $1,460,000 and 31 March 2011: $1,452,000). 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 2012 were $354,000 (30 September 2011: $661,000 and 31 March 2011: $322,000).

The fair value of fixed rate senior unsecured bonds as at 31 March 2012 is $85,890,000 (30 September 2011: $86,109,000 and 31 March 2011: $86,280,000), this has been estimated by reference to the average quoted market price of the underlying debt securities at the end of the period.

9. Net assets per share

Net assets per share Net tangible assets per share	31 March 30 September 31 March 2012 2011 2011 Unaudited Audited Unaudited $ $ $
	1.79 1.72 1.70
	1.60 1.55 1.56

11

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2012

10. 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 (gain)/loss on financial assets Share based payments expense Accrued interest on borrowings Gain on disposal of property, plant and equipment Decrease in deferred tax Add/(less) movements in working capital (excluding the effects of exchange differences on consolidation) Decrease/(increase) in receivables (Decrease)/increase in payables Decrease/(increase) in taxation Add other items classified as investing or financing activities Decrease in capitalised costs Net cash inflows/(outflows) from operating activities Reconciliation of profit for the half year to net cash flows from operating activities	31 March 31 March 2012 2011 Unaudited Unaudited $000 $000 Half year ended
	23,565 12,946 1,141 1,652 821 1,062 (1,477) (15,343) (7,050) 5,120 51 109 (10) (9) - (5) (305) (3,030)
	(6,829) (10,444) 49,966 (304,311) (51,245) 291,266 6,644 (1,449)
	5,365 (14,494) 354 322
	22,455 (11,670)

11. Distributions to shareholders

On 24 November 2011 the Directors declared a final dividend for the 2011 financial year of 2 cents per share. The total amount payable was $5,503,217 including supplementary dividend, of which $1,612,882 was paid in TOWER shares under the dividend reinvestment plan and $3,890,335 paid in cash.

The dividend was paid on 1 February 2012.

12

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2012

12. Life insurance liability discount rate

Profit after tax includes movements in the discount rate applied to value individual life risk policy liabilities which is based on 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 gain of $740,000 in the period (2011: loss of $4,010,000). The movement in the discount rate during the 2012 and 2011 periods impacted the individual life risk policy liabilities and increased/decreased respectively, the Group profit after tax.

Profit for the half year Includes: Discount rate effect before tax - (gain)/loss Income tax on discount rate effect Discount rate effect after tax - (gain)/loss	31 March 31 March 2012 2011 Unaudited Unaudited $000 $000 Half year ended
	23,565 12,946 (1,028) 5,729 288 (1,719)
	(740) 4,010
Profit excluding discount rate	22,825 16,956

13. Impact of Christchurch earthquakes

For the half year ended 31 March 2012, expected incurred claims in respect of the 23 December 2011 earthquake amounted to $4,335,000 pre taxation which is below our reinsurance excess. This amount is included within Claims Expense in the Income Statement. The 31 March 2011 prior period comparative incurred gross claims of $289,227,000 less reinsurance recoveries of $282,077,000 resulting in a net amount of $7,150,000 being incurred claims expenses in respect of both the 4 September 2010 and 22 February 2011 earthquakes.

14. Subsequent events

Declaration of dividend

On 24 May 2012 the Directors declared an interim dividend of 5 cents per share. There will be no imputation credits attached to the dividend. The dividend will be paid on 2 July 2012 (Payment Date) to all shareholders on the register as at 5pm on Friday, 15 June 2012 (Record Date). The estimated dividend payable is $13,318,566.

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 dividends 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.

TOWER will withhold resident and non-resident withholding tax where applicable.

13

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Independent Accountants’ Report

To the shareholders of TOWER Limited

Report on the Interim Financial Statements

We have reviewed the interim condensed financial statements (“financial statements”) of TOWER Limited and the entities it controlled at 31 March 2012 or from time to time during the period (the Group) on pages 3 to 13, which comprise the consolidated balance sheet as at 31 March 2012, the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated 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 2012, 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 2012 in accordance with the Review Engagement Standards issued in New Zealand.

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 taxation services. These services have not impaired our independence as accountants of the Group.

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 2012 and its financial performance and cash flows for the period ended on that date.

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

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

Auckland

24 May 2012

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		24 05				2012
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)
					$0.05
	Excluded income per security (only applicable to listed PIEs)
	Currency Total monies				NZ$*						Supplementary Amount per security dividend in dollars and cents details - NZSX Listing Rule 7.12.7 Date Payable							$0.000000
					$13.32 million													n/a
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) $0.016500
							$				$0.016500							$0.000000
									Foreign Withholding Tax		FWP Credits (Give details)
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.
							15 June, 2012							2 July, 2012
conversion notices mailed														2 July, 2012
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

TOWER Group Analysts’ Briefing – Half Year Results – 31 March 2012

Rob Flannagan Group Managing Director

Michael Boggs Group Chief Operating Officer

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TOWER Group
Half Year Results – 31 March 2012
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 Results Overview

 Business Performance

 Strategic Update

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TOWER Group Financial Summary
Half Year 31 March 2012
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• Net profit after taxation (including minorities) $23.57m ↑ 82%

• Discount Rate

• Profit before discount rate

• Total equity

$0.74m $22.83m ↑ 35% $476.56m ↑ 7%

 Interim dividend (unimputed)

5 cps

Changes are compared to half year 31 March 2011

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TOWER Group Results
Profit Summary
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		Half Year Ended
$ millions		Mar-12 Mar-11 Sep-11
General Insurance Life Health Investments		5.4 4.6 (2.1) 12.4 6.3 12.5 6.8 6.5 3.2 3.6 3.1 3.7
Business unit net profit after tax Finance and corporate expenses		28.2 20.5 17.3 (5.3) (3.4) (3.4)
Profit excluding the impact of discount rate Discount rate effect		22.8 17.0 14.0 0.7 (4.0) 6.4
Net profit after tax		23.6 13.0 20.4
% change
Profit excluding the impact of discount rate Net profit after tax		35% (5%) 82% (54%)

 A solid half year result

Improvement across all business units

• General Insurance recovering well

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TOWER Business Performance
Dividend Trends
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Declared Dividend
($m)
12
10
8
6
4
2
0

2008 2009 2010 2011 2012
Interim dividend Full year dividend
Unimputed
cents per share
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• First half dividend increased to 5 cents per share, but unimputed

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TOWER Business Performance
Gearing and Net Asset Backing Trends
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Gearing
40%
35%
30%
25%
20%
15%
10%
5%
0%
2008 2009 2010 2011 2012
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
2008 2009 2010 2011 2012
Net asset backing - March
Net asset backing - September
$ per share
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Note: March 2009 includes both bank borrowings and capital notes.

• Gearing improved to 14.6%

• Net Asset Backing per share increased to $1.79

• Capacity to service higher gearing to support growth

• opportunities

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TOWER Group Results
Summary
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 TOWER’s net profit after tax for the half year to 31 March 2012 is $23.6 million

• The Group is recovering well from last year’s Canterbury earthquakes

• There has been improvement across all business units from the same period last year

• The Group is financially strong with gearing at 14.6% and net asset backing at $1.79 per share

• The Board has declared an unimputed interim dividend of 5 cents per share

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Business Performance

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TOWER Group Results
Profit Summary
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it Summary
		Half Year Ended
$ millions		Mar-12 Mar-11 Sep-11 Mar-10
General Insurance Life Health Investments		5.4 4.6 (2.1) 11.9 12.4 6.3 12.5 10.2 6.8 6.5 3.2 6.7 3.6 3.1 3.7 2.0
Business unit net profit after tax Finance and corporate expenses		28.2 20.5 17.3 30.8 (5.3) (3.4) (3.4) (3.1)
Profit excluding the impact of discount rate Discount rate effect		22.8 17.0 14.0 27.7 0.7 (4.0) 6.4 0.4
Net profit after tax		23.6 13.0 20.4 28.1
% change
Profit excluding the impact of discount rate Net profit after tax		35% (5%) 82% (54%)

• Improved result reflects increased revenue, lower underlying claims and investment returns

 All businesses have improved on March 10, except for General Insurance which is recovering well

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TOWER – General Insurance
Analysis of Profit
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is of Profit
		Half Year Ended
$ millions		Mar-12 Mar-11 Sep-11
Net premiums - Gross earned premiums - Reinsurance - Catastrophe reinsurance reinstatement Claims Claims catastrophe* Management and sales expenses		93.9 89.2 78.1 113.9 102.1 106.2 (20.0) (10.2) (13.2) (2.7) (14.9) (44.9) (44.6) (41.8) (5.5) (5.0) (9.1) (38.8) (35.9) (35.0)
Underwriting result Investment income on assets backing insurance liabilities		4.7 3.7 (7.8) 2.9 2.6 4.1
Insurance profit/(loss) Investment income on shareholders' funds		7.6 6.3 (3.7) 1.6 1.4 3.4
Profit/(loss) before tax Income tax expense		9.2 7.7 (0.3) (3.8) (3.1) (1.8)
Profit after tax		5.4 4.6 (2.1)
% change
Profit after tax		17% #REF!

*Events >$1m.

• Price increases are recovering the increased cost of reinsurance, but at a delayed rate in this period

• Underlying business growth and reduction in claims ratio is pleasing

• Catastrophe costs continue to impact the results in this period

• Incremental costs reflect increased revenue and focus on servicing our customers.

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TOWER – Life
Analysis of Profit
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ER – Life s of Profit
		Half Year Ended
$ millions		Mar-12 Mar-11 Sep-11
Net premiums Policyholder maturities Life claims Life claims catastrophe Management and sales expenses Movement in policy liabilities Investment income on assets backing policy liabilities		36.0 34.0 34.5 (21.7) (30.3) (24.0) (13.5) (12.5) (13.4) (2.3) 1.1 (19.2) (20.2) (20.8) 0.5 19.5 17.0 32.3 15.5 14.7
Insurance profit Investment income on shareholders' funds		14.4 3.7 9.1 5.1 1.5 9.6
Profit before tax Income tax (expense)/credit		19.5 5.2 18.7 (7.1) 1.1 (6.2)
Profit excluding the impact of discount rate Discount rate effect		12.4 6.3 12.5 0.7 (4.0) 6.4
Profit after tax		13.1 2.3 18.9
% change
Profit excluding the impact of discount rate Profit after tax		95% (162%) 470% (78%)
Overall a strong result reflecting: •Cntind rwth in th Trm Lif b	n

Overall a strong result reflecting:

• Continued growth in the Term Life business

• Positive claims experience

• Improved Investment returns, but substantially for the benefit of policyholders

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TOWER – Health
Analysis of Profit
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		Half Year Ended	Half Year Ended
$ millions		Mar-12 Mar-11	Sep-11
Net premium Incurred claims Premium payback payments Management and sales expenses Movement in policy liabilities Investment income on assets backing policy liabilities		72.6 69.7 (37.3) (37.1) (9.0) (9.9) (19.0) (17.8) 0.2 3.2 1.2 (0.9)	70.9 (39.9) (10.2) (18.6) (2.2) 3.7
Insurance profit Investment income on shareholders' funds		8.7 7.2 0.7 1.9	3.7 1.0
Profit before tax Income tax expense		9.4 9.1 (2.6) (2.6)	4.7 (1.5)
Profit after tax		6.8 6.5	3.2
% change
Insurance profit Profit after tax		22% 5% (3%)

• Net premiums continue to grow and counter the effect of claims inflation

• Claims ratio is being well managed

• Investing in product development

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TOWER – Investments
Analysis of Profit
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		Half Year Ended
$ millions		Mar-12 Mar-11 Sep-11
Income Management and sales expenses		18.9 19.0 19.3 (13.9) (14.6) (13.8)
Profit before tax Income tax expense		5.0 4.4 5.5 (1.4) (1.3) (1.8)
Profit after tax		3.6 3.1 3.7
% change
Profit after tax		17% 55%

• FUM has surpassed $4billion

• The benefits of restructuring are being realised.

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TOWER – Investments
KiwiSaver
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KiwiSaver
900 110,000
800
90,000
700
600 70,000
500
50,000
400
300 30,000
200
10,000
100
0 -10,000
Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12
KiwiSaver Funds Under Management
Number of members
$ millions Members
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• The average value of KiwiSaver funds per member in the TOWER scheme is $7,418, 26% higher than the overall market average of $5,900.

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Total Funds Under Management
4.2
4.0
3.8
3.6
3.4
3.2
3.0
Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12
Total Funds Under Management
$ billions
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• TOWER’s total funds under management have grown by $139 million since March 2011 to $4.12 billion

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TOWER Group
Balance Sheet Summary
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	Half Year Ended
$ millions	Mar-12 Mar-11 Sep-11
Cash & call deposits Total investment assets Other operational assets	192.1 187.7 152.9 1,003.7 1,012.3 1,029.8 748.0 689.2 793.8
Total assets Policy liabilities & insurance provisions External debt - bonds Other operational liabilities	1,943.8 1,889.2 1,976.5 (1,269.7) (1,257.3) (1,326.3) (81.6) (80.9) (81.3) (115.9) (103.8) (113.4)
Total liabilities	(1,467.2) (1,442.0) (1,521.0)
Total equity	476.6 447.2 455.5

• Reflects beginning of Christchurch claims settlement

• TOWER has capital in excess of the new Reserve Bank solvency standards

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Summary

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Environment
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 The economic environment continues to be challenging for the insurance industry

 The new regulatory regimes have added complexity. TOWER is embedding these into ‘business as usual’

• Reinsurers have indicated a need to review policy terms and underwriting criteria to reduce risk in the Region

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Our purpose

By deeply understanding the lives and communities of our customers, we will be the local insurance expert and wealth manager you can rely on to protect and grow your assets. TOWER, keeping promises for over 140 years.

Our plan You can rely on TOWER to keep its promise

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Our values
T ake ownership You are You only We will
O pen and honest part of a need to contact deliver 12.5%
W orking as one committed us once return on
E mpathy in all that we do and engaged equity
R aising the bar team
You value our
simple and easy
to understand
products
Engaging with
us will be easy
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TOWER – Strategic Update
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 TOWER is undertaking a strategic review of its business segments to improve the positioning of TOWER in the market and further enhance value for shareholders

• Outcomes of this review may include strategic partnerships, complementary merger opportunities, acquisitions, divestments and/or a return of capital

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TOWER Group
Half Year Results – 31 March 2012
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End

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