TOWER LIMITED — M&A Activity 2017

Feb 8, 2017

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8 February 2017 (T o ronto Time ) /9 Februar y 2017 (Ne w Zealand Time)

Market Information NZX Li m ited Level 1, NZX Centr e 11 Cabl e Street Wellington New Z e aland

Company Announ c ements Off i ce ASX Li m ited Exchan g e Centre Level 6, 20 Bridge S treet Sydne y NSW 200 0 Australia

Fairfax Financial to Acquire Tower

(Unless o therwise pr o vided herei n , all dollar a mounts in t h is announcement are ex p ressed in N e Zealan d dollars)

TORONTO, CANADA and AUCKLAND, NEW ZEALAND

Highlights:

• All c ash offer o f $1.17 per T o wer share, for an aggr e gate acqui s ition cost o f $197 milli o n (ap p roximately US$144 mil l ion at current exchang e rates), rep r esents a pr e mium of 4 8 % to To w er’s closin g share pric e on 8 February 2017 an d a 47% pre m ium to To w er’s three-month vol u me weight e d average p rice (VWA P )

• Shareholders h o lding over 18% of Tow e r shares h a ve entered into firm vo t ing agreements to vot e in favour o f the transa c tion

• Off e r unanimo u sly support e d by the T o wer board, in the abse n ce of a su p erior propo s al

Tower L imited (“To w er”) (NZX/ A SX: TWR) a nd Fairfax F inancial Holdings Limi t ed ("Fairfax") (TSX:FFH)(TSX:FFH.U) are plea s ed to anno u nce that th e y have ent e red into a S cheme Implementation Agreement.

Under this agreem e nt, Fairfax w ill acquire 1 00% of To w er shares a t $1.17 per s hare for an aggreg a te purchas e price of $ 1 97 million ( a pproximat e ly US$144 m illion at cu r rent excha n ge rates) (t h e “Fairfax P roposal”). The transacti o n has bee n unanimou s ly approve d by the To w er board of directors. In addition, t wo of Tow e r’s major shareholders, Salt Funds M anageme n t and ACC (w h o collectiv e ly hold 18. 1 % of Tower shares), ha v e entered i n to firm voti n g agreem e nts under w hich they have commi t ted to vote in favour of the Fairfax P roposal.

The pri c e of $1.17 p e r share re p resents a p r emium of 48% to Tower’s closing s h are price o n 8 Februa r y 2017 and a 47% premium to Tow e r’s three-month volum e weighted average pri c e (VWAP).

Since a n nouncing o n 29 Nove m ber 2016 i t s intention t o create RunOff Co, To w er has pro g ressed plannin g for separation which w as design e d to provid e a path to unlock unre a lised value for shareh o lders. In th e course of this work, th e Board ha d been appr o ached by F airfax.

Tower C hairman M i chael Stias s ny said, “Gi v en the sub s tantial pre m ium to To w er’s share p rice, the certaint y provided b y the Fairf a x Proposal a nd the support it has r e ceived fro m Salt Fund s Manag e ment and A CC, the Bo a rd determi n ed to unan i mously rec o mmend th e Fairfax Pr o posal to all shareholders, in the abse n ce of a su p erior propo s al. Tower’s separation s trategy wil l be pursue d in the eve n t that the F a irfax Prop o sal is not successful.”

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“Tower is one of th e largest ins u rers in Ne w Zealand a n d the Pacific Islands, w ith a long-standing history, good bran d recognitio n and a stro n g market p o sition,” sai d Prem Wat s a, Chairma n and CEO of Fairfax. “Th e acquisition of Tower w ill provide u s with an i m mediate si g nificant pr e sence, with a s t rong mana g ement tea m , which will continue t o be led by Richard Ha r ding, in a m arket where F airfax curr e ntly has limited exposure.”

“The ke y factors in F airfax’s abi l ity to prese n t an attrac t ive propos a l to Tower w ere the sp e ed at which t h e transacti o n could be conducted , the reputa t ion of Fairf a x for closin g transactio n s and treating stakehold e rs fairly,” said Prem Wa t sa.

The Fai r fax Propos a l is subject to customa r y condition s , including approvals f r om the Re s erve Bank of New Zeala n d, the Ne w Zealand O v erseas Inv e stment Offi c e, Pacific I s lands regu l atory authori t ies, and To w er shareholders.

Tower w ill call a sp e cial meeti n g of shareholders to o b tain shareh o lder appro v al. This m e eting is expect e d to be hel d in April 2017. Approval at that me e ting must b e by at lea s t 75% of vo t es cast, representing more t han 50% o f the total v o ting rights o f the comp a ny.

In the a b sence of a superior pr o posal, eac h Tower dir e ctor has un d ertaken to vote all To w er shares in his control in favour of the Fairfa x Proposal a t that meeti n g.

Tower s hareholder s do not yet need to ta k e any actio n in respons e to the Fai rf ax Propos a l. In due course, shareholders will recei v e detailed d ocumenta t ion from Tower outlini n g the prop o sed transac t ion and ins t ructions for voting.

The To w er board a l so confirm s that the Fairfax Propo s al does not impact To w er insuranc e policies and the rig h ts of polic y holders. Al l policies an d rights will remain wit h Tower Ins u rance Limited (or relevan t Pacific Isla n ds subsidi a ries) in the e vent of a c h ange in o w nership of T ower Limited .

Further information about the F airfax Prop o sal will be m ade available from www.t o wer.co.nz/i n vestor-ce n tre.

Tower L imited is a h olding co m pany for T o wer Insura n ce. Tower I n surance is a leading g e neral insurer i n New Zea l and and th e Pacific Isla n ds offering car, house, contents, b u siness, tra v el and other p e rsonal insurance lines. Listed on t h e NZX and A SX, Tower is the third l argest insu r ance group i n New Zeal a nd, with ar o und 265,0 0 0 custome r s.

Fairfax F inancial H o ldings Limi t ed is a Tor o nto, Canad a based hol d ing compa n y, listed on the Toront o Stock Exc h ange, whic h , through it s subsidiari e s, is engag e d in proper t y and casu a lty insuran c e and rein s urance and investment managem e nt.

ENDS

TOWE R Michae l Stiassny Chairm a n Tower L imited ARBN 0 88 481 234 Incorporated in New Z e aland

FAIRFA X John V a rnell Vice Pr e sident, Cor p orate Dev e lopment Fairfax F inancial H o ldings Limi t ed 1-(416) 3 67-4941

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To arrange media interviews, please contact in the first instance: Nicholas Meseldzij a Tower L imited Head o f Corporate C ommunic a tions Mobile: +64 21 581 8 69 Email: nicholas.me s eldzija@to w er.co.nz

EDITO R ’S NOTES:

INDICA T IVE TIMET A BLE

Event	In dicative tim ing
9 Febru ary 2017	 Announce ment ofpro posed tran saction
March2 017	  Notice of to be mad Anticipate Meeting and e available d receipt of sharehold RBNZ appr er vote mate oval rials expec ted
April 20 17	 Sharehold er meeting and vote
Mid-Ma y 2017	  Anticipate acquisition Anticipate d receipt of ) approval d receipt of Overseas In final HighC vestmentA ourt appro ct (busines val s
30 June 2017	 Implemen tation andc losingof tr ansaction

Note: T i metable is i n dicative onl y and subjec t to change.

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