TOWER LIMITED — Interim / Quarterly Report 2015

May 25, 2015

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26 May 2015

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

TOWER Limited HY15 Result for announcement to market

In accordance with NZSX Listing Rules; and ASX Listing Rules 4.3A, I enclose the following for release to the market in relation to TOWER Limited (NZE/ASX: TWR) HY15 Result for announcement to market:

1. Media release

2. Management Review

3. NZX Appendix 1

4. ASX Appendix 4D

5. NZX Appendix 7

6. Director Declaration

7. Financial Statements (including independent Auditor’s Report)

This information should be read in conjunction with TOWER Limited’s 2014 Annual Report.

TOWER’s Chairman Michael Stiassny, Chief Executive Officer David Hancock, and Chief Financial Officer Brett Wilson, will discuss the half year results at 10:00am New Zealand time today.

Brett Wilson Chief Financial Officer TOWER Limited

ARBN 088 481 234 Incorporated in New Zealand

For further information, please contact: Tracey Palmer Head of Corporate Communications Mobile: +64 21 837 860 Email: tracey.palmer@tower.co.nz

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26 May 2015 Market Information Company Announcements Office NZX Limited Australian Securities Exchange Limited Level 2, NZX Centre Exchange Centre 11 Cable Street Level 6, 20 Bridge Street Wellington Sydney NSW 2000 New Zealand Australia

TOWER delivers strong underlying earnings and confirms capital management

TOWER has today reported a 36.4% increase in general insurance underlying net profit after tax (NPAT) to $17.9 million for the six months ended 31 March 2015.

TOWER’s reported net loss after tax of $4.9 million was impacted by the increased provisions of $22.6 million after tax for costs associated with the Canterbury earthquake events.

Highlights from HY2015 include:

• Gross Written Premium of $145.9 million, up 4.9% vs the prior corresponding period (pcp)

• Underlying General Insurance NPAT of $17.9 million, up 36.4% vs pcp

• Strong performance from the Pacific operations – 86.9% growth in underlying NPAT

• Industry-leading Canterbury progress with 94% of claims settled and closed

• Underlying EPS of 10.0 cents per share (cps), up 103% vs pcp

• Half year dividend 8.5 cps unimputed, up 30.8% vs pcp

• Confirmed on market buy back of up to $34 million

TOWER Chairman Michael Stiassny said the positive underlying results reflected the industry backdrop of rising premiums and fewer large claims events, as well as the benefits of the company’s strategy, which seeks to make TOWER the leading light in New Zealand and Pacific general insurance.

“Rising premiums, stabilising reinsurance costs, favourable weather, Pacific policy growth and prudent capital management have supported underlying shareholder returns,” he said.

Mr Stiassny said that sound capital management remained a priority for the TOWER Board.

“We are pleased to confirm today our intention to implement an on market share buyback of up to $34 million, or up to 10% of TOWER’s issued capital, to commence shortly.”

Mr Stiassny said that, in line with TOWER’s policy of paying 90-100% of underlying NPAT in dividends, the Board was pleased to announce a half-year dividend of 8.5 cents per share unimputed, an increase of 30.8% on the prior corresponding period.

TOWER Chief Executive Officer David Hancock said that the company had made significant progress implementing its growth strategy in New Zealand and the Pacific during the half year.

“We are very pleased with the improvement in our underlying general insurance profit over the past six months. This reflects an unwavering focus on our three key strategic pillars of financial performance, customer satisfaction and staff engagement, which are critical to TOWER’s ongoing success.”

“We have been busy implementing our growth strategy: transforming our customer interactions to drive revenue and efficiency, building our digital capability to take us into new distribution channels and increasing our very strong position in the Pacific Rim,” he said.

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Mr Hancock said that expanding TOWER’s portfolio of alliance partners also remained a priority.

“Alliances are an important part of TOWER’s growth strategy and a key source of revenue. Consequently we were very pleased to announce in December that an agreement had been signed which will see TOWER become Trade Me’s insurance partner,” he said.

The Pacific Rim business enjoyed strong earnings growth following the devastation of Cyclone Evan in the previous year, with policy numbers increasing 7.7% compared to the prior corresponding period. The Pacific Rim business represents more than a quarter of TOWER revenues and earnings and offers attractive growth opportunities.

“We are currently preparing to enter the Vanuatu market, which offers a great growth opportunity aligned to our core competencies and experience in the Pacific Rim,” Mr Hancock said.

During the half, TOWER made further progress on the Canterbury rebuild, reaching 94% of all claims settled and closed for customers as at 30 April 2015, up from 81% at 31 March 2014. While pleasing progress in claims continues, TOWER has taken the prudent decision to increase provisions following the receipt of the latest actuarial review of projected claims costs.

Mr Hancock said TOWER remained a very well capitalised business and was carrying $51 million in capital above regulatory minimum solvency requirements and a further $63m of cash at the corporate level. Capital management would remain a key component of TOWER’s approach to shareholder value.

Shareholder value is being driven by a number of key areas:

• Growing gross written premiums, improved customer service and cost control in New Zealand;

• Policy growth in existing and new Pacific markets;

• Enhancing TOWER’s operating platform and digital capabilities;

• Exceeding 95% completion on the Canterbury rebuild by the end of 2015; and

• Maintaining strong solvency, paying healthy dividends and where possible returning surplus capital to shareholders.

A disclosure document for the on market share buy back will be sent to all shareholders shortly, ahead of the buy back commencing.

The half-year dividend will be paid on Tuesday 30 June 2015 to shareholders on the register on Friday 12 June 2015.

ENDS

For further information, please contact: Tracey Palmer Head of Corporate Communications Mobile: +64 21 837 860 Email: tracey.palmer@tower.co.nz

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26 May 2015

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

TOWER Management Review – Half Year to 31 March 2015

Half Year Highlights & Achievements:

• Gross Written Premium increased 4.9% to $145.9 million, aided by rate increases in New Zealand and policy growth in the Pacific

• Underlying General Insurance net profit increased 36.4% to $17.9 million, supported by premium growth, investment earnings, cost control and a benign claims environment

• Underlying Pacific net profit after tax increased 86.9% to $5.1 million, assisted by strong policy and premium growth and a reduced loss ratio

• Expanded distribution alliances in New Zealand and the Pacific

• Significant investment in digital capabilities and direct distribution platforms

• Strong progress on Canterbury rebuild with 94% of claims (by volume) and 84% (by value) now settled and closed; on track to exceed 95% by end of calendar year 2015

• Increased certainty in Canterbury with increased reinsurance protection and provisions for claims

• Claims provisions increased by $31.4 million, which has an after tax impact of $22.6 million

• Reported net loss after tax (NPAT) of $4.9 million after additional Canterbury provisions

• Strong solvency maintained with $51 million in capital above regulatory minimum requirements

• Underlying EPS of 10.0 cents, reflects strength of new focused operating structure

• Half year dividend 8.5 cps (unimputed), up 30.8% from HY2014

• Capital return of up to $34 million expected to commence following results

Building shareholder value

TOWER achieved a 36.4% increase in Underlying General Insurance NPAT to $17.9 million[1] for the six months ended 31 March 2015. Following provisions of $22.6 million after tax relating to the Canterbury earthquakes, TOWER reported a net loss after tax (NPAT) of $4.9 million.

1 HY2014 included $3.7m of profit from TLNZ and $1.6 of interest cost relating to bonds which have subsequently been repaid

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The positive underlying results reflect the industry backdrop of rising premiums and fewer large claims events and the benefits of the strategy to be the leading light in New Zealand and Pacific general insurance.

During the half, TOWER made significant progress on implementing its growth strategy in New Zealand and the Pacific. Rising premiums, stabilising reinsurance costs, favourable weather, Pacific policy growth and prudent capital management have supported underlying shareholder returns.

Underlying earnings per share (EPS) of 10.0 cents, a returns measure that has been somewhat distorted by several years of corporate restructuring, is now more reflective of the stable pure general insurance operating structure.

The Board announced a half-year dividend of 8.5 cents per share unimputed, compared to 6.5 cents unimputed in the previous year and remains committed to a 90 – 100% payout ratio over the full year. The half-year dividend will be paid on Tuesday 30 June 2015 to shareholders on the register on Friday 12 June 2015.

TOWER confirms that it intends to undertake a further share buy back of up to $34 million to be acquired on-market and expected to commence following announcement of these financial results.

Performance

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Underlying General Insurance NPAT increased to $17.9 million in HY2015, an increase of 36.4% on the previous corresponding period.

Reflecting more benign weather, the claims ratio across New Zealand and the Pacific declined to 44.5%, down from 50.4% in HY2014. The combined ratio declined to 84.2%.

Half year 2015 was busy for TOWER as it further develops its capabilities to become the leading light in general insurance. TOWER has made significant investments in its digital and direct distribution platforms to transform how it interacts with its customers to drive future growth.

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During the period, as part of its growth strategy, TOWER merged customer service and sales to drive revenue, service levels and operational efficiency. The implementation of the strategy affected shortterm service levels as agents were retrained and roles expanded. TOWER has implemented measures to address service performance and improve customer satisfaction levels to previous levels

TOWER continues to build its brand as a trusted alternative to the major insurers, and a leader in customer service and product innovation. It launched its full replacement for fire benefit in October 2014 and has recently released an updated version of its award-winning SmartDriver app.

The Pacific business enjoyed strong GWP and earnings growth supported by 7.7% policy growth. TOWER is in the process of finalising the preparatory work for entry into the Vanuatu insurance market and continues to explore other Pacific Rim markets.

Expanding the number of TOWER’s alliance partners remains a priority. During the half TOWER continued to work on its Trade Me alliance announced in December 2014 and continues discussions with a number of other potential partners.

TOWER made further progress on the Canterbury rebuild, reaching 94% of all claims settled and closed for customers as at 30 April 2015, up from the 81% reported in the previous corresponding period. The company took advantage of its industry-leading Canterbury rebuild progress and improving reinsurance markets to extend reinsurance cover for the main February 2011 earthquake event.

Capital management is a key component of TOWER’s approach to shareholder value. In addition to the increased dividend announced today, TOWER confirmed a share buy back of up to $34 million will commence following the release of these results.

TOWER remains a very well capitalised business and, before ahead of the latest buy back, is carrying $51m in capital above regulatory minimum solvency requirements in the insurance entity and a further $63m of cash at the corporate level.

Group Profit Summary

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The Group’s reported net loss after tax of $4.9 million was impacted by additional provisions for Canterbury claims costs. TOWER determined it was prudent to increase provisions by $31.4 million which has an after tax impact of $22.6 million.

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TOWER Group underlying net profit (excluding the impact of discount rate and abnormal items) was $17.5 million in HY2015, an increase of 27.2% on the previous corresponding period. With TOWER’s financial statements now reflecting its new corporate structure as a pure general insurer, underlying profit in the General Insurance business approximates the TOWER Group underlying profit. General Insurance underlying profit of $17.9 million represents an increase of 36.4% on the previous corresponding period.

Group corporate financing costs declined in HY2015 on the previous corresponding half year due to the corporate restructure and repayment of the TOWER bonds. Investment income increased due to higher average cash balances following asset sales in FY2014.

General

Insurance

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Financial performance

In General Insurance, Gross Written Premium (GWP) increased 4.9% on HY2014 to $145.9 million, supported by rate growth in New Zealand and policy growth in the Pacific. Gross earned premiums rose 8.2% to $150.4 million. Reinsurance costs increased 9.4% and Net earned premiums (NEP) increased 7.9% on HY2014 to $12 million.

Claims were $55.5 million in HY2015 down from $58.2 million in the previous corresponding period. This fall was driven by the absence of any large weather events compared to $4.8 million in large claims costs in HY2014. The claims ratio declined to 44.5% from 50.4% in HY2014. Premium growth, higher investment income and lower claims lifted General insurance underlying profit after tax by 36.4% to $17.9 million.

The underlying expense ratio (management expenses and commissions to NEP) increased to 39.7% in the half, up from 37.9% in HY2014. TOWER invested in brand, new products and systems to support the business for future growth. The reallocation of expenses due to the new corporate structure also

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resulted in increased expenses in General Insurance. TOWER continues to focus on staff engagement, efficiency and the appropriate cost structure to support future growth.

Pacific Rim represents a key growth engine for TOWER and is already a significant business, accounting for 20% of GWP and 28% of General Insurance underlying NPAT in HY2015. In local currencies, GWP increased across the region, and Pacific GWP as a whole grew 14% to $28.5 million. Underlying net profit after tax from the Pacific increased 86.9% to $5.1 million driven by a benign claims environment across a number of Pacific territories and premium growth.

Papua New Guinea and Fiji together contributed 64% of Pacific GWP in the half, with the TOWER brand “National Pacific Insurance” operating in Samoa, American Samoa and Tonga representing a further 24% of GWP. Operations in the Cook Islands and Solomon Islands contributed the remaining 12%.

Investment revenue increased 10.4% to $6.3 million in HY2015 primarily due to increased cash balances and investment assets held by General Insurance.

TOWER’s underlying tax rate for the General Insurance business in HY2015 was 31.5%. This rate reflects the average of the New Zealand and Pacific Islands corporate rates after taking into account foreign tax credits arising from transactions with the Pacific subsidiaries.

TOWER holds an estimated 4.7% share of the New Zealand general insurance market, placing it in fourth position. In personal lines, TOWER has shares of 10.8% in Home, 9.8% in Contents and 6.3% in Motor lines. This highlights the substantial growth opportunity available to TOWER in the New Zealand market.

The Company has nearly 488,000 policies and more than 270,000 customers in New Zealand and seven Pacific territories through its own direct business and alliance partnerships. New Zealand Alliance policy numbers declined 7.1% in the half on HY2014 due to the continued expected runoff of the ANZ book.

General Insurance priorities during the half

TOWER’s General Insurance strategy focuses on the strategic pillars of customer satisfaction, staff engagement and financial performance to become the leading light in the New Zealand and Pacific general insurance market and drive shareholder value. In HY2015, TOWER’s operational priorities were:

• Enhancing digital capability to support growth in new distribution channels;

• Transforming customer interactions through system and process upgrades to deliver improved customer service, efficiency and revenue;

• Further work on branding and customer innovation; and

• Growing in both established and new Pacific Rim markets.

New distribution channels for insurance products

With around 98% of all TOWER direct sales currently made over the phone, TOWER recognises the significant opportunity to improve sales, service and its cost position by using technology to engage both direct and alliance customers.

The internet and mobile apps like SmartDriver have become attractive channels for insurers like TOWER to promote and sell insurance products. TOWER is seeking to use technology through the entire policy sales and service cycle to better meet customer needs such as convenience, cost and service.

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As part of the investment in technology and processes TOWER has brought forward the completion of its new core system, Insurance Faces. In addition, TOWER has invested in a new digital content management platform to enhance the customer experience and improve design flexibility.

Alliances are an important part of TOWER’s growth strategy and a key source of revenue. TOWER has three types of alliance partnerships: alliances with the major banks which allow them to sell insurance on their banking product platforms; customer referral relationships with New Zealand’s major networks of financial planners; and as underwriter for a number of specialist insurance agencies.

In HY2015, TOWER welcomed an important new partner to its alliance network with an agreement with New Zealand’s leading online marketplace, Trade Me.

TOWER’s investment in digital capabilities and customer service is expected to support and enhance the pursuit of further new alliance opportunities.

Transforming customer interactions to drive returns

Customer retention and growth has been a key strategic pillar of the General Insurance growth strategy. With its renewed focus on customer service in the past 18 months, TOWER has seen very encouraging improvements in key indicators of customer satisfaction. TOWER seeks to deliver an “easy, caring, and individual” relationship with its customers. This approach sees interactions as an opportunity to engage and build a relationship; improve customer retention and extend TOWER’s service offering in order to better address customer needs.

A key element of this approach is the introduction of a new service model that reflects the full customer experience and offers both service and sales functions from a single interaction. Merging sales and service provides the opportunity to significantly improve revenue, service levels and operating efficiency.

Implementation of this merger required retraining of all sales and service staff with an expansion of roles to deliver these functions effectively and efficiently. Execution of the strategy and increased training time, affected short-term call wait times, which impacted service levels and observed Net Promoter Score (NPS) in the March 2015 half year.

NPS is a key measure of customer service and engagement. "Promoters" will generally hold more and higher value policies and stay with TOWER longer. NPS increased from a score of just 6 in November 2013, when the programme began, to reach the 20 to 30 range in the last 12 months.

NPS data can be volatile month–to-month, as evidenced by the fall in NPS during the recent staff retaining. However, the trend for TOWER’s NPS over the past two years is highly encouraging.

Measures have been adopted to improve service performance including expanding the service team, increased training and process enhancements. Staff engagement has been an important part of TOWER’s strategy. A recovery in NPS was seen in April and this is expected to consolidate in the second half. Notwithstanding this, the measure is likely to remain volatile on a month-to-month basis.

Unlocking brand potential through product innovation

In 2014, TOWER strengthened its brand as a trusted New Zealand-owned alternative to the major foreign-owned insurers that dominate the New Zealand market. The launch of the SmartDriver app generated a lot of interest among consumers and, as we were first mover on introducing “telematics” in Australasia, established the TOWER brand as dynamic and innovative.

The app allows TOWER to more efficiently price risk and reinsurance based on the driving data generated from customers. During HY2015, updates to the app have introduced more “gaming” elements designed to further stimulate user engagement.

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This development of technology was recognised when TOWER won “Innovation of the Year” at the 2014 New Zealand Insurance Industry Awards.

TOWER also enhanced its reputation as an insurer that listens to customers with the launch of its full replacement fire benefit for New Zealand homes. Fire is the most common cause of the total loss of a home, after natural disasters, yet only about 10 per cent of New Zealanders consider losing their house to fire to be a high risk.[2]

And while house fire claims make up only a small percentage of insurance claims by number, they are costly, being the largest single category of house claims by value. This new insurance product has been strongly recognised in key brand measures.

In line with the repositioning of the brand and improving its online presence TOWER launched a new corporate website in 2014 and in HY2015 upgraded the site to be fully mobile-friendly.

Growth in Pacific Rim markets

In contrast to the consumer focused New Zealand business, the foundation of TOWER’s Pacific business is small to medium enterprise business insurance. TOWER insures thousands of small traders, as well as their businesses, shops and homes. This is augmented in the region by a healthy motor insurance business.

TOWER has been operating in the Pacific region for 140 years. The success of the Pacific business depends, in part, on the commitment of key employees. Customer satisfaction is high in the Pacific, with NPS in the high 40s and local staff highly engaged.

During the half year, TOWER made further investments in technology and brand in its established Pacific Island markets. TOWER is currently in the process of upgrading its core policy administration system in the Pacific, which will be an enabler of further policy growth in the region.

Our online presence was significantly enhanced with website launches in Fiji, Papua New Guinea and the Solomon Islands. New alliance partnerships have been implemented with two major Papua New Guinean finance companies, and early sales have been promising.

With appropriate risk management and underwriting policies in place, TOWER continues to work on opportunities to expand its presence in the Pacific. TOWER is currently focusing on establishing operations in Vanuatu and is exploring other market opportunities. A number of markets are currently underdeveloped and offer excellent long-term growth prospects in line with those offered within the other economies of the region. TOWER expects to launch in Vanuatu in the current half year period.

Update on Canterbury earthquake rebuild

The resolution of Canterbury claims remains a key operational priority for TOWER with a dedicated team committed to providing certainty for customers and shareholders as they work through outstanding claims. TOWER remains on track to exceed 95% completion by the end of 2015.

Since 2013, TOWER has utilised an actuarial adviser, Deloitte, to project claims costs from the remaining Canterbury earthquake rebuild on a quarterly basis. Following receipt of an actuarial report in April, Deloitte and the TOWER Board determined that provisions should be prudently increased by $31.4 million (before tax) to cover the projected cost of the claims. This has resulted in a $22.6 million after tax profit impact on TOWER’s HY2015 accounts. The main drivers of the increase in projected claim costs were:

2 Horizon Research 2014

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• Greater clarity on the allocation of claims costs between TOWER and its reinsurers for each Canterbury earthquake event;

• An expected increase in claims costs associated with multi-unit dwellings impacted by the earthquakes;

• The anticipated impact of the industry-wide increase in repair and rebuild costs and time delays affecting all outstanding construction work.

Increased claims allocated to the February 2011 earthquake event

Properties in Canterbury were affected by four separate earthquake events. For each event, TOWER’s reinsurance is limited to various amounts. Projected rebuild costs for the February 2011 earthquake event, which caused the greatest damage, have exceeded TOWER’s reinsurance limit for that event of $325 million, while the other three events remain within their respective reinsurance limits.

The most recent review of cost allocation utilised an expanded sample of properties in order to make projections of outcomes for the remaining earthquake rebuild, resulting in a higher proportion of claims than previously assumed being allocated to the February 2011 event. As the February 2011 event has breached reinsurance limits, any increase in projected claims is borne directly by TOWER.

Increased costs related to multi-unit dwellings

While TOWER has made very good progress in settling and closing claims, moving from 81% in the previous equivalent period to 94% at 30 April 2015, a number of the outstanding claims are more complicated as they relate to multi-unit dwellings. These sites are complicated by the involvement of multiple insurers or in some cases property owners with no insurance cover. As TOWER has progressed work cost projections for these sites have increased.

Increased industry costs

Due to skill and material shortages combined with time delays, building costs in Canterbury are growing faster than anticipated, which has been widely acknowledged by TOWER and the industry. This has impacted projections of future claim costs. In the recent Financial Stability Report the Reserve Bank of New Zealand increased its estimates of total industry Canterbury claims to $33-38 billion from the previous estimate of $32-37 billion.

Risk management and reinsurance

As reinsurance rates have eased over the past 12-24 months, TOWER has taken the opportunity to increase its level of reinsurance cover, while maintaining the overall dollar value of reinsurance spending.

TOWER’s Catastrophe Reinsurance programme has been expanded to $682 million, reflecting the growth in TOWER’s house and contents portfolios. There has been no change in reinsurance premiums as a result of the new full replacement for fire insurance.

TOWER purchased new reinsurance cover in October 2014 for large events (excluding New Zealand earthquakes). This cover has been designed to protect against the significant storms that have impacted the business over the past 2-3 years. The reinsurance provides cover for events between $1 million, $5 million and $10 million of cover is provided after an aggregate $5 million of large events has occurred.

TOWER purchased an Adverse Development Cover (ADC) to protect its exposure to further increases in costs related to the Canterbury earthquakes, particularly the February 2011 event. The ADC covers 87.5% of the costs for this event between $388 million and $438 million. At the time the policy was written, the $388 million was $30 million above the provision levels held for the February 2011 event.

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The shift in reinsurance markets has enabled TOWER to reduce risk in the General Insurance business, reducing exposure to volatile large claim events. TOWER continues to examine ways to build shareholder value through improved risk management.

Balance sheet and solvency

TOWER remains highly solvent with capital well above minimum requirements at the business and corporate level. TOWER has $51 million of excess solvency above minimum regulatory requirements in the Insurance entities and holds $63 million of cash in the corporate entities.

TOWER has a long term policy of retaining within its licensed General Insurance entity 175% of the Minimum Solvency Capital (MSC) required under the Insurance (Prudential Supervision) Act 2010. As at 31 March 2015, TOWER’s actual MSC was $71 million.

Capital held by TOWER above the regulatory minimum requirement was $114 million as at 31 March 2015, ($51 million General Insurance solvency above regulatory minimum plus $63 million held at corporate).

Capital management

Total Shareholder Return remained strong in the first half with solid share price performance and higher dividend payments to shareholders.

Capital management and shareholder returns remain priorities for TOWER. In addition to paying healthy dividends, the Company has returned $177 million of capital over the past three years and remains committed to returning additional capital to shareholders where possible.

An on market share buy back of up to $34 million or 9.99% of the shares outstanding will be carried out over the next 12 months. This buy back will be funded out of excess cash currently in the corporate entities and will not impact insurance solvency. A disclosure document for the on market share buy back will be sent to all shareholders shortly, ahead of the buy back commencing.

The half-year dividend of 8.5 cents per share represents an increase of 30.8% on the previous corresponding period. In line with its current policy TOWER expects to pay out 90-100% of underlying profits for the full year as dividends.

Strategy

TOWER aims to deliver attractive shareholder returns by growing a general insurance business that is seen as a leading light in New Zealand and the Pacific Islands.

The Company has established three pillars of its General Insurance strategy: staff engagement, customer satisfaction and financial performance.

TOWER’s long-term approach to building shareholder seeks to:

• Drive growth and efficiency through staff engagement;

• Unlock significant brand potential through customer service;

• Maintain a leading position in attractive Pacific markets;

• Deliver financial performance;

• Efficiently manage risk and capital for better returns; and

• Capitalise on the opportunities presented by industry consolidation.

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In support of this strategy current operational and strategic priorities are:

Unlocking brand potential - Investment in systems and processes to build a strong and efficient platform for growing the business; build a strong performance culture and improve staff engagement; deliver better cost ratios over the medium term; continue to build service and sales culture to drive revenue while lifting Net Promoter Score; consolidate on our efforts in product innovation and the next phase of the brand campaign to differentiate the offer.

Alliance growth opportunity - Enhance digital delivery capability; focus on new initiatives via digital platforms; offer a trusted alternative to the major insurers.

Leadership in Pacific Rim markets – Continue campaign to grow market share in established Pacific markets; consolidate and grow new alliances in key markets; continue preparation to enter new locations and broaden growth options.

Outlook

Industry

For the industry, growth in reinsurance costs is easing somewhat following the Canterbury earthquakes but other costs continue to increase, placing upward pressure on premiums. These costs include:

• Compliance costs and increased capital requirements

• Adverse weather events, which have increased industry costs in recent years

• Increased Canterbury rebuild costs

Technological change will continue to have a significant impact on the industry with major opportunities to improve service, offer and costs. The development of a wider range of potential distribution channels, particularly digital, challenges traditional channels bringing both risks and opportunities for growth. Customers remained highly informed and mobile and price and service remain key drivers of choice.

Industry consolidation is expected to remain a trend in New Zealand insurance, which provides opportunities for shareholder value to be recognised and enhanced. TOWER will look to participate in this trend where there is benefit to shareholders.

TOWER

The immediate future will see us focusing on these objectives:

• Grow New Zealand GWP, focus on customer service and cost control

• Pursue further growth in Pacific Rim markets

• Enhance operating platform and digital capabilities to support growth

• Exceed 95% completion on Canterbury rebuild by end of 2015

• Maintain strong solvency, pay healthy dividends and where possible return surplus capital

• Buy back of up to $34 million expected to begin after HY2015 results announcement

• Dividends 90-100% of underlying NPAT

ENDS

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David Hancock Chief Executive Officer TOWER Limited ARBN 088 481 234 Incorporated in New Zealand

Brett Wilson Chief Financial Officer TOWER Limited ARBN 088 481 234 Incorporated in New Zealand

For further information, please contact:

Investors: Brett Wilson Chief Financial Officer Phone: +64 9369 2172 Email: brett.wilson@tower.co.nz

Media: Tracey Palmer Head of Corporate Communications Mobile: +64 21 837 860 Email: tracey.palmer@tower.co.nz

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APPENDIX 1

HALF YEAR PRELIMINARY ANNOUNCEMENTS AND HALF YEAR RESULTS

RESULTS FOR ANNOUNCEMENT TO THE MARKET

TOWER LIMITED

TOWER LIMITED	TOWER LIMITED	TOWER LIMITED
ReportingPeriod	6months to 31 March 2015
PreviousReportingPeriod	6months to 31 March 2014
	Amounts (000s)	Percentage change
Revenue from ordinary activities	NZ$ 159,515	7.5% increase
Profit from ordinary activities after taxattributable to shareholders	(NZ$ 5,088)	150.8% decrease
Net profit attributable to shareholders	(NZ$4,872)	137.1% decrease
Interim Dividend	Amount per security	Imputed amount per security
	NZ 8.5 cents	Nil
RecordDate	Friday,12June2015
DividendPaymentDate	Tuesday, 30 June2015
Comments	For the half year to 31 March 2015, TOWER Limited’s reported loss from ordinary activities after tax was ($5.1) million (due to an increase in earthquake provisioning after tax of $22.6 million). The loss is a decrease of 150.8% from the prior comparable period, when a profit of $10 million was reported. Net loss after tax for the six month period to 31 March 2015 was ($4.9) million, including non-controlling interest profit of $0.4 million. This is down 137.1% from the prior comparable period.
Additional Information	TOWER’s dividend reinvestment plan will not apply for the interim dividend.

Refer attached 31 March 2014 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 2015 ASX LISTING RULES 4.2A

TOWER LIMITED PRELIMINARY INTERIM REPORT

Current Reporting Period 6 months ended 31 March 2015 Previous Reporting Period 6 months ended 31 March 2014

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Half year Movement 31 March 2015 000’s Total revenue from ordinary activities NZ$ 159,515 7.5% Profit from ordinary activities after tax attributed to shareholders (NZ$ 5,088) (150.8%) Net profit attributed to shareholders (NZ$ 4,872) (137.1%)

INTERIM DIVIDEND

An interim dividend of NZ 8.5 cents per share has been declared. The Record Date is 12 June 2015. The dividend will have no imputation credits attached and will be paid net of withholding tax (where applicable) on 30 June 2015. No franking credits apply. Participation in TOWER’s dividend reinvestment plan will not apply for the interim dividend.

ADDITIONAL COMMENTS

For the half year to 31 March 2015, TOWER Limited’s reported loss from ordinary activities after tax was ($5.1) million (due to an increase in earthquake provisioning after tax of $22.6 million). The loss is a decrease of 150.8% from the prior comparable period, when a profit of $10 million was reported. Net loss after tax for the six month period to 31 March 2015 was ($4.9) million, including non-controlling interest profit of $0.4 million. This is down 137.1% from the prior comparable period.

Refer attached 31 March 2015 unaudited Financial Statements for TOWER Limited and its subsidiaries and Presentation for more detailed analysis and explanation.

1

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 e.g. Directors'	vent, resolution
							Brett Wilson									Directors' resolution
Contact phone number			(09)	369 2202											e		26 05			2015
Nature of event Tick as appropriate				Bonus Issue Rights Issue			If ticked, state whether: Capital Ca	Taxable ll 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, us	e a separate for ISIN	m.
				Ordinary shares														NZTWRE0011S2
																		If unknown, contact NZX
Details of securitie			s issu	ed pursuant t	o t	hi	s event	If		more than one clas			s of security is to	be issued, use a ISIN	separat			e form for each class.
Description of the class of securities Number of Securities to be issued following eve			nt
													Minimum Entitlement					If unknown, contact NZX Ratio, e.g 1 for 2 for
Conversion, Maturity, Call Payable or Exercise Date Strike price per security for any Strike Price available.				issue in lieu or	dat					Tick if paripassu			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	d c	Dividen ents						onversion price, Redemption price, Application money.
													Retained profits
	Amount per security (does not include any exc			luded income)
							$0.085
	Excluded income per security (only applicable to listed PIEs)
	Currency Total monies						NZD				Supplementary Amount per security dividend in dollars and cents details - NZSX Listing Rule 7.12.7 Date Payable								$0.000000
							$0.085												N/A
T In is	axation the case of a taxable bonus sue state strike price						$				Amountper Security in Dollars and cents to six decim								alplaces
									Resident Withholding Tax		Imputation Credits (Give details) $0.028050
											$0.028050								$0.000000
									Foreign Withholding Tax		FDP Credits (Give details) $
																			N/A
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.
							12 June, 2015								30 June, 2015
conversion notices mailed												Must be within 5 business days of application closing date.

OFFICE USE ONLY

Ex Date: Commence Quoting Rights: Security Code: Cease Quoting Rights 5pm: Commence Quoting New Securities: Security Code: Cease Quoting Old Security 5pm:

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TOWER Limited (“the Company”)

Directors’ Declaration in respect of TOWER Limited Financial Statements for the half-year ended 31 March 2015

25 May 2015

TOWER provides the following a directors' declaration in respect of the financial statements for the Company for the half year ended 31 March 2015 (which is equivalent to that which would be prepared by an Australian incorporated company under the Australian Corporations Act 2001 (Cth)).

Declaration

The Directors of the Company hereby declare that in the Directors’ opinion:

• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and

• the TOWER financial statements for the half year ended 31 March 2015 and the notes to those financial statements:

• comply with the accounting standards issued by the New Zealand External Reporting Board and applicable to the Company as a New Zealand incorporated company; and

• give a true and fair view of the financial position and performance of the Company.

This declaration is made in accordance with a resolution of the Directors dated 25 May 2015 and is signed for and on behalf of the Board of Directors by a Director of the Company.

Signed

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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Michael Stiassny Director

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TOWER LIMITED

INTERIM FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED

31 MARCH 2015

TOWER LIMITED INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2015

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 AMENDMENTS TO NZ IFRS .................................................................................................................................. 8 3. PREMIUM REVENUE ........................................................................................................................................................... 8 4. INVESTMENT REVENUE ....................................................................................................................................................... 9 5. PROVISIONS ..................................................................................................................................................................... 9 6. SEGMENTAL REPORTING ................................................................................................................................................... 10 7. NET ASSETS PER SHARE ..................................................................................................................................................... 11 8. FAIR VALUES OF ASSETS AND LIABILITIES ............................................................................................................................... 11 9. NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................................................................ 13 10. DISTRIBUTIONS TO SHAREHOLDERS .................................................................................................................................... 13 11. SOLVENCY REQUIREMENTS ............................................................................................................................................... 13 12. IMPACT OF CANTERBURY EARTHQUAKES ............................................................................................................................. 14 13. SUBSEQUENT EVENTS ...................................................................................................................................................... 15 14. DISCONTINUED OPERATIONS/DISPOSAL GROUPS HELD FOR SALE .............................................................................................. 15

2

TOWER LIMITED CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR ENDED 31 MARCH 2015

Note Revenue Premium revenue from insurance contracts 3 Less : Outwards reinsurance expense 3	Half year ended 31 March 31 March 2015 2014 Unaudited Unaudited $000 $000
	150,398 139,153 (25,664) (23,533)
Net premium revenue Investment revenue 4 Fee and other revenue Net operating revenue Expenses Claims expense Less : Reinsurance recoveries revenue Net claims expense Management and sales expenses Net claims and operating expenses Financing costs Total expenses (Loss) profit attributed to shareholders before taxation Tax expense attributed to shareholders' profits (Loss) profit for the half year from continuing operations Profit for the half year from discontinued operations 14 Profit from disposal of subsidiaries 14 (Loss) profit for the half year (Loss) profit attributed to: Shareholders Non-controlling interest Basic and diluted (loss) earnings per share for continuing operations (cents) Basic and diluted earnings per share for discontinued operations (cents)	124,734 115,620 7,667 7,939 1,450 1,299
	133,851 124,858
	107,376 98,209 (8,791) (29,135)
	98,585 69,074 41,097 36,608
	139,682 105,682 - 3,894
	139,682 109,576
	(5,831) 15,282 743 (5,257)
	(5,088) 10,025
	- 2,519 216 594
	(4,872) 13,138
	(5,262) 12,930 390 208
	(4,872) 13,138
	(2.99) 4.96 0.12 1.57

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 2015

Note (Loss) profit for the half year Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Currency translation differences Other comprehensive loss net of taxation Total comprehensive (loss) income for the half year Total comprehensive (loss) income attributed to: Shareholders Non-controlling interest Total comprehensive (loss) income attributed to equity shareholders arises from: Continuing operations Discontinued operations/disposal groups held for sale 14	Half year ended 31 March 31 March 2015 2014 Unaudited Unaudited $000 $000
	(4,872) 13,138
	(275) (1,455)
	(275) (1,455)
	(5,147) 11,683
	(5,723) 11,698 576 (15)
	(5,147) 11,683
	(5,363) 8,570
	216 3,113
	(5,147) 11,683

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 2015

Note Assets Cash and cash equivalents Receivables Financial assets at fair value through profit or loss 8 Property, plant and equipment Current tax assets Deferred acquisition costs Deferred tax assets Intangible assets Total Assets Liabilities Payables Current tax liabilities Provisions 5 Derivative financial liabilities 8 Insurance liabilities Deferred tax liabilities Total Liabilities Net Assets Equity Contributed equity Accumulated profit Reserves Total equity attributed to shareholders Non-controlling interest Total Equity	31 March 30 September 2015 2014 Unaudited Audited $000 $000
	152,333 168,062 251,379 316,295 215,729 212,407 10,450 6,285 11,410 12,733 19,903 20,028 23,331 19,303 42,697 35,483
	727,232 790,596
	51,387 46,157 631 371 4,570 7,308 79 46 357,715 404,572 6,437 6,133
	420,819 **464,587 **
	306,413 326,009
	396,737 396,819 23,045 42,174 (115,044) (114,583)
	304,738 324,410 1,675 1,599
	306,413 326,009

The interim financial statements were approved for issue by the Board on 25 May 2015.

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Michael P Stiassny Chairman

Graham R Stuart 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 2015

Half year ended 31 March 2015 At the beginning of the half year Comprehensive income for the period (Loss) profit for the half year Other comprehensive income Currency translation differences Total comprehensive (loss) income for the period Transactions with shareholders Capital repayment plan Dividends paid Other Total transactions with shareholders At the end of the half year Half year ended 31 March 2014 At the beginning of the half year Comprehensive income for the period Profit for the half year Other comprehensive income Currency translation differences Total comprehensive income (loss) for the period Transactions with shareholders Capital repayment plan Movement in share based payment reserve Dividends paid Other Total transactions with shareholders At the end of the half year	Attributed to shareholders Unaudited
	Contributed equity Accumulated profit/(loss) Reserves Total Non- controlling interest Total equity $000 $000 $000 $000 $000 $000
	396,819 42,174 (114,583) 324,410 1,599 326,009 - (5,262) - (5,262) 390 (4,872) - - (461) (461) 186 (275)
	- (5,262) (461) (5,723) 576 (5,147)
	(82) - - (82) - (82)
	- (14,060) - (14,060) (500) (14,560)
	- 193 - 193 - 193
	(82) (13,867) - (13,949) (500) (14,449)
	396,737 23,045 (115,044) 304,738 1,675 306,413
	453,935 42,983 (117,103) 379,815 1,262 381,077 - 12,930 - 12,930 208 13,138 - - (1,232) (1,232) (223) (1,455)
	- 12,930 (1,232) 11,698 (15) 11,683 (52,577) - - (52,577) - (52,577) - 44 (44) - - - - (12,432) - (12,432) (146) (12,578) - (10) - (10) - (10)
	(52,577) (12,398) (44) (65,019) (146) (65,165)
	401,358 43,515 (118,379) 326,494 1,101 327,595

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 2015

Note Cash flows from operating activities Premiums received Interest received Dividends received Investment (expense)/income Income from operating activities Reinsurance received Reinsurance paid Claims expenses Payments to suppliers and employees Interest paid Income tax paid Net cashinflow from operating activities 9 Cash flows from investing activities Net receipts from financial assets Receipt for disposal of property, plant and equipment and intangible assets Payments for purchase of property, plant and equipment and intangible assets Proceeds from sale of subsidiaries Net cash (outflow) from investing activities Cash flows from financing activities Capital repayment Dividends paid Payment of minority interest dividends Net cash (outflow) from financing activities Net (decrease) in cash and cash equivalents Foreign exchange movement in cash Cash and cash equivalents at beginning of half year Cash classified as held for sale at beginning of half year Cash classifed as held for sale at the end of half year Cash and cash equivalents at end of half year	31 March 31 March 2015 2014 Unaudited Unaudited $000 $000 Half year ended
	148,831 146,591 8,060 19,520 5 734 (1,010) 10,618 1,450 1,306 73,166 85,838
	(24,575) (28,863) (151,059) (180,432) (38,868) (39,401) - (3,475) (1,002) (2,221)
	14,998 10,215
	(2,656) 10,810
	13 (10)
	(13,178) (3,120)
	- (15,078)
	(15,821) (7,398)
	(82) (52,577)
	(14,060) (12,441) (500) (146)
	(14,642) (65,164) (15,465) (62,347) (264) (1,058) 168,062 341,624 - 8,399 - (8,656)
	152,333 277,962

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 2015

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 2013.

Basis of preparation

The interim financial statements of the Group have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (NZ GAAP). They comply with NZ IAS 34 Interim Financial Reporting and IAS 34 Interim Financial Reporting and consequently, include a lower level of disclosure than is required for full financial statements.

The interim financial statements of the Group have been prepared in accordance with the requirements of the NZX Main Board Listing Rules. TOWER Limited is registered under the Companies Act 1993 and is an FMC Reporting Entity under part 7 of the Financial Markets Conduct Act 2013.

The interim financial statements should be read in conjunction with the annual financial statements for the year ended 30 September 2014, which were 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 2015 are unaudited.

Accounting policies

The principal accounting policies adopted in the preparation of these interim financial statements are consistent with those of the audited annual financial statements for the year ended 30 September 2014.

Cash flows

The consolidated statement of cash flows presents the net changes in cash flow for financial assets. TOWER considers that knowledge of gross receipts and payments is not essential to understanding certain activities of TOWER. This is based on 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.

2. Impact of amendments to NZ IFRS

The application of new or amended accounting standards as of 1 October 2014 has not had a material impact on the financial statements.

3. Premium revenue

Gross written premiums Movement in gross unearned premiums Premium revenue earned from insurance contracts Less : Outwards reinsurance expense Total net premium revenue	31 March 31 March 2015 2014 Unaudited Unaudited $000 $000 Half year ended
	145,884 139,212 4,514 (59)
	150,398 139,153 (25,664) (23,533)
	124,734 115,620

8

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2015

4. Investment revenue

4. Investment revenue
Fixed interest securities	31 March 31 March 2015 2014 Unaudited Unaudited $000 $000 Half year ended
	8,060 8,829 (883) (1,830) 645 919
Interest income Net realised (loss) Net unrealised gain
Equity securities Dividend income Property securities Property income Net realised gain Net unrealised (loss) Derivatives	7,822 7,918
	514
	5 14
	- 4 - 412 - (401)
	- 15
	(127) 114 (33) (122)
Net realised (loss) gain Net unrealised (loss)
Total investment revenue Total investment revenue	(160) (8)
	8,065 8,847 (1,010) (1,304) 612 396
Total realised (loss) Total unrealised gain
	7,667 7,939

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

5. Provisions

5. Provisions
Business separation Employee benefits Total provisions Analysed as:		31 March 30 September 2015 2014 Unaudited Audited
		$000 $000 496 3,028 4,074 4,280 4,570 7,308
Current		4,5707,308 4,570 7,308
Business separation Opening balance at 1 October 2014 Additions Amount utilised in the period Reversal of unused amount Closing balance at 31 March 2015 (Unaudited) Opening balance at 1 October 2013 Additions Amount utilised in the period Reversal of unused amount Closing balance at 30 September 2014 (Audited)	Health Investments Non-participating life Participating life Total
	$000 $000 $000 $000 $000
	- 13 984 2,031 3,028 - - 60 1 61 - - (694) (896) (1,590) - (13) (130) (860) (1,003)
	- - 220 276 496
	372 1,444 4,561 2,880 9,257 - - - 835 835 (226) (1,102) (3,444) (1,289) (6,061) (146) (329) (133) (395) (1,003)
	- 13 984 2,031 3,028

P rovision has been utilised during the period ended 31 March 2015, for legal, consultancy and IT related costs.

Employee benefits Employee benefits include provisions for holiday pay and long service leave.

9

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2015

6. Segmental reporting

6. Segmental reporting
Half year ended 31 March 2015 Revenue Revenue - external Revenue - internal	New Zealand General Insurance Pacific General Insurance Other (Holding companies and eliminations) Total Unaudited Unaudited Unaudited Unaudited $000 $000 $000 $000
	108,675 24,135 1,041 133,851 1,776 (1,776) - -
Net operating revenue (Loss) profit before income tax Income tax (expense) credit(1) (Loss) profit for the half year from continuing operations	110,451 22,359 1,041 133,851
	(11,628) 6,290 (493) (5,831) 3,602 (2,993) 134 743
	(8,026) 3,297 (359) (5,088)
Half year ended 31 March 2014
Revenue Revenue - external Revenue - internal	104,192 18,725 1,941 124,858 - - - -
Net operating revenue Profit (loss) before income tax Income tax (expense) credit(1) Profit (loss) for the half year from continuing operations Segment assets 31 March 2015 (Unaudited) 30 September 2014 (Audited)	104,192 18,725 1,941 124,858
	14,098 5,150 (3,966) 15,282 (3,835) (2,437) 1,015 (5,257)
	10,263 2,713 (2,951) 10,025
	552,192 87,265 87,775 727,232 611,833 82,609 96,154 790,596
Segment liabilities
31 March 2015 (Unaudited)	363,128 52,335 5,356 420,819
30 September 2014 (Audited)	406,264 50,380 7,943 464,587

Note:

(1) Tax expense of individual segments has been impacted by intercompany reclassifications which have been eliminated for management and segmental reporting. This has a nil impact on the Group.

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

New Zealand general insurance includes all fire and general insurance business written in New Zealand. Pacific general insurance includes all fire and general insurance business with customers in the Pacific Islands written by TOWER Insurance Limited subsidiaries and branch operations. Other includes head office expenses, financing costs and intra Group eliminations.

TOWER Group operates in two geographical segments, New Zealand and the Pacific region.

10

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2015

7. Net assets per share

7. Net assets per share
Net assets per share Net tangible assets per share	31 March 30 September 2015 2014 Unaudited Audited $ $
	1.75 1.85
	1.40 1.58

Net assets per share represent the value of the Group’s total net assets divided by the number of ordinary shares on issue at the period end. Net tangible assets per share represent the net assets per share adjusted for the effect of intangible assets and deferred tax balances. Assets from disposal groups are included in the calculation.

8. Fair values of assets and liabilities

Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Refer below for details of valuation methods and assumptions used by TOWER for each category of financial assets and liabilities.

(i) Cash and cash equivalents

The carrying amount of cash and cash equivalents reasonably approximates its fair value.

(ii) Financial assets at fair value through profit or loss and held for trading

The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in Level 1.

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in Level 2. The following fair value measurements are used:

• The fair value of fixed interest securities is based on the maturity profile and price/yield.

• The fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value.

• Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3. At 31 March 2015, the level 3 category includes an investment in equity securities of $1,787,000 (September 2014: $1,835,000). This investment is in unlisted shares of a company which owns one building. The fair value is calculated based on the net assets of the property owning company from the most recently available financial information. The property is periodically independently valued.

(iii) Loans and receivables and other financial liabilities held at amortised cost

Carrying values of loans and receivables, adjusted for impairment values, and carrying values of other financial liabilities held at amortised cost reasonably approximate their fair values.

(iv) Derivative financial liabilities and assets The fair value of derivative financial liabilities and assets is determined by reference to market accepted valuation techniques using observable market inputs.

There have been no transfers between levels of the fair value hierarchy during the current financial period (September 2014: nil).

11

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2015

8. Fair values of assets and liabilities (continued)

The following tables present the Group’s assets categorised by fair value measurement hierarchy levels. There has been no designated financial liability held at fair value through the income statement (September 2014: nil).

Group As at 31 March 2015 Assets Investment in equity securities Investments in fixed Interest securities Investments in property securities Total financial assets As at 30 September 2014 Assets	Total Level 1 Level 2 Level 3 $000 $000 $000 $000
	1,787 - - 1,787 213,908 - 213,908 - 34 - 34 -
	215,729 - 213,942 1,787
Investment in equity securities Investments in fixed Interest securities Investments in property securities Total financial assets	1,835 - - 1,835 210,538 - 210,538 - 34 - 34 -
	212,407 - 210,572 1,835

The following table represents the changes in Level 3 instruments for the period ended 31 March 2015.

Opening balance Foreign currency movement Closing balance	Investment in equity securities
	31 March 30 September
	2015 2014
	Unaudited Audited
	$000 $000
	1,835 1,685
	(48) 150
	1,787 1,835

The following table shows the sensitivity of Level 3 measurements to reasonably possible favourable or unfavourable changes in assumptions used to determine the fair value of the financial asset. If the market value of the investment in equity securities were to change by +/- 10% the impact is outlined below:

	Amount	Changes of	Changes of
	$000	10%	(10%)
As at 31 March 2015
Investment in equity securities	1,787	179	(179)
As at 30 September 2014
Investment in equity securities	1,835	184	(184)

12

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2015

9. Note to consolidated statement of cash flows

9. 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 Accrued interest on borrowings Gain on disposal of property, plant and equipment Increase/(decrease) in deferred tax Gross gain on sale of subsidiaries Add/(less) movements in working capital (excluding the effects of exchange differences on consolidation) Decrease in receivables Decrease 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 2015 2014 Unaudited Unaudited $000 $000 Half year ended
	(4,872) 13,138 1,224 734 577 493 - (12,042) (612) 1,509 - (10) (13) -
	(3,724) 8,555 - (674)
	(2,548) (1,435) 65,061 65,177 (44,397) (64,223) 1,754 (2,870)
	22,418 (1,916)
	- 428
	14,998 10,215

10. Distributions to shareholders

DIVIDEND DECLARED

On 27 November 2014 the Directors declared a final dividend for the 2014 financial year of 8 cents per share. The dividend was paid on 3 February 2015. The total amount paid was $14,059,956. There were no imputation credits attached to the dividend and TOWER did not offer its Dividend Reinvestment Plan for this dividend.

11. Solvency requirements

Minimum solvency capital required to be retained to meet solvency requirements under the Insurance (Prudential Supervision) Act 2010 is shown below. Actual solvency capital exceeds the minimum requirements for TOWER Insurance Limited group by $100.6 million (September 2014: 124.8 million).

As at 31 March 2015 Actual Solvency Capital Minimum Solvency Capital Solvency Margin	31 March 30 September 2015 2014 $000 $000 Unaudited Audited
	171,476 199,448 70,838 74,640
	100,638 124,808

On 22 August 2014 the Reserve Bank of New Zealand imposed a condition of license requirement for TOWER Insurance Limited to maintain a minimum solvency margin of $50.0 million. The methodology and bases for determining the Solvency Margin are in accordance with the requirements of the Solvency Standard for Non-life Insurance Business published by the Reserve Bank of New Zealand.

13

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2015

12. Impact of Canterbury earthquakes

As at 31 March 2015, TOWER has estimated gross ultimate incurred claims of $748.4 million (30 September 2014: $706.9 million) in respect of the 4 September 2010; 22 February 2011; 13 June 2011 and 23 December 2011 Canterbury earthquake events. The following table presents a summary of key information.

able presents a summary of key information.
Cumulative expenses associated with Canterbury earthquakes: Earthquakes claims estimate Reinsurance recoveries Claims expenses net of reinsurance recoveries revenue Reinsurance expense Income tax Cumulative impact of Canterbury earthquakes after tax Recognised in current period	31 March 30 September 31 March 2015 2014 2014 Unaudited Audited Unaudited $000 $000 $000
	(748,400) (706,931) (622,500) 662,646 652,564 568,133
	(85,754) (54,367) (54,367) (20,220) (20,220) (20,220) 30,353 21,565 21,565
	(75,621) (53,022) (53,022)
	(22,599) (191) (191)

There remains considerable uncertainty surrounding the measurement of gross claims liabilities for the Canterbury earthquakes. This uncertainty arises from a number of factors including; longer than normal claims development periods; the allocation of claim costs between events; industry-wide building cost inflation; EQC recoveries and complexities associated with determining risk margin, discount rates and other key actuarial assumptions. Actuarial reviews undertaken at 31 March 2015 have highlighted that expected claims costs from the Canterbury earthquakes have increased in the six months post 30 September 2014 primarily due to:

• The anticipated impact of industry-wide increases in repair and rebuild costs and time delays affecting all construction work;

• An increase in costs associated with settling complex claims for multi-unit dwellings; and

• Greater clarity of the apportionment of claims costs between each Canterbury earthquake event.

The apportionment of gross ultimate incurred claims and associated reinsurance recoveries across the various earthquake events is a significant component of TOWER’s earthquake claims programme. In the six months to 31 March 2015, TOWER has continued to work through its detailed apportionment process, with a significantly larger group of properties having now been assessed. As the number of assessed properties increases, the degree of subjectivity is much reduced. The apportionment process remains consistent with that used at 30 September 2014. This has resulted in the adoption of a revised expected apportionment outcome for the whole portfolio of properties, with a consequential and negative impact on profit and equity of the Group.

For the September 2010; June 2011 and December 2011 events, TOWER remains within its catastrophe reinsurance cover limits. For each event, catastrophe reinsurance cover headroom remaining is $28.4 million; $263.3 million and $488.2 million respectively. TOWER has exceeded its original $325.0 million reinsurance cover limit for the February 2011 event.

However in March 2015, TOWER Limited confirmed the placement of Adverse Development Cover reinsurance (ADC) for TOWER Insurance Limited in relation to the February 2011 event. The ADC provides $50.0 million in cover for adverse developments associated with the February event. TOWER retains exposure to the first $30.0 million in costs above the $358.4 million in estimates allocated at 30 September 2014 to the February 2011 event. On the next $50.0 million in costs, TOWER shares 12.5% (or up to $6.25 million), with the balance covered by reinsurance for the seven year term of the agreement. Following increases at 31 March 2015 to the February 2011 event gross claims estimates of $35.6 million, TOWER has reached the additional reinsurance recovery threshold provided by the ADC. Included within reinsurance recoveries is an amount of $4.1 million in respect of the ADC.

The Group’s Appointed Actuary continues to be directly involved with the earthquake ultimate incurred claims estimate and this extends to the derivation of estimated outcomes. Given the nature of estimation uncertainties discussed, actual claims experience may still deviate, perhaps substantially, from the gross outstanding claims liabilities recorded as at 31 March 2015. Any further changes to estimates will be recorded in the accounting period when they become known.

14

TOWER LIMITED NOTES TO THE INTERIM FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2015

13. Subsequent events

Declaration of dividend

On 25 May 2015 the Directors declared an interim dividend of 8.5 cents per share. There will be no imputation credits attached to the dividend. The dividend will be paid on 30 June 2015 (Payment Date) to all shareholders on the register as at 5pm on Friday, 12 June 2015 (Record Date). The estimated dividend payable is $14,938,703. TOWER will not be operating the Dividend Reinvestment Plan for the interim dividend. TOWER will withhold resident and non-resident withholding tax where applicable.

Return of Capital

On 26 November 2014, the Board approved for announcement to the market, the return of approximately $34 million of capital to shareholders via a voluntary on-market buyback. TOWER continues to hold significant capital above the current solvency minimum required by the Reserve Bank of New Zealand and its own long-term solvency policy. Subject to final approvals and shareholder notifications, TOWER expects the next stage of its capital management programme, an on market share buyback of up to $34 million, to commence following the Company’s half-year results announcement on 26 May 2015.

14. Discontinued operations/disposal groups held for sale

The operating results and financial position of the divested businesses have been removed from individual lines in the financial statements and notes, as required by accounting standards, and have been presented as a discontinued operation and disposal group held for sale below.

For details of discontinued operations and disposal groups held for sale, refer to the 30 September 2014 audited financial statements.

Consolidated results of discontinued operations/disposal groups are as follows:

Profit for the half year from discontinued operations/disposal groups (Loss)/profit for the half year from discontinued operations: Australian liabilities Participating life business Profit from discontinued operations Profit from disposal of subsidiaries Health business Investments business Non-participating life business Participating life business attributable costs Profit from discontinued operations/disposal groups	31 March 31 March 2015 2014 Unaudited Unaudited $000 $000 - (1,168) - 3,687 Half year ended
	- 2,519 - 99 9 279 (634) 13 841 203
	216 594
	216 3,113

Profits from disposal of subsidiaries in the table above result from releases of provision (net of tax) and other attributable costs.

15

To the shareholders of TOWER Limited

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Independent Review Report

Report on the Interim Financial Statements

We have pages 3 to 15, which comprise the condensed statement of financial position as at 31 March 2015, and the condensed statement of comprehensive income, the condensed statement of changes in equity and the condensed statement of cash flows for the six month period ended on that date and selected explanatory notes.

The Directors of TOWER Limited are responsible for the preparation and presentation of these financial statements in accordance with New Zealand Equivalent to International Accounting Standard 34 Interim Financial Reporting (NZ IAS 34) and for such internal controls as the Directors determine are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Our Responsibility

Our responsibility is to express a conclusion on the accompanying financial statements based on our review. We conducted our review in accordance with the New Zealand Standard on Review Engagements 2410 Review of Financial Statements Performed by the Independent Auditor of the Entity (NZ SRE 2410). NZ SRE 2410 requires us to conclude whether anything has come to our attention that causes us to believe that the financial statements, taken as a whole, are not prepared in all material respects, in accordance with NZ IAS 34. As the auditors of the Company, NZ SRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial statements.

A review of financial statements in accordance with NZ SRE 2410 is a limited assurance engagement. The auditor performs procedures, primarily consisting of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing (New Zealand). Accordingly we do not express an audit opinion on these financial statements.

We are independent of the Group. Other than in our capacity as auditors and providers of other related assurance services we have no relationship with, or interests in, the Group.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that these financial statements of the Group are not prepared, in all material respects, in accordance with NZ IAS 34.

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

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Independent Review Report TOWER Limited

Restriction on Distribution or Use

to state to them in our review 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 shareholders, as a body, for our review procedures, for this report, or for the conclusion we have formed.

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Chartered Accountants 25 May 2015

Auckland

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