Tower : Annual Meeting Address

For personal use only

Level 5, 136 Fanshawe Street

Auckland 1142, New Zealand

ARBN 645 941 028

Incorporated in New Zealand

2 February 2022
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TOWER LIMITED - ANNUAL MEETING ADDRESS

Attached is a copy of the address and presentation to Tower's annual meeting of shareholders, held today at 10:00am.

ENDS

This announcement has been authorised by the Tower Board.

Blair Turnbull

Chief Executive Officer

Tower Limited

For media enquiries, please contact in the first instance: Emily Davies

Head of Corporate Affairs and Reputation [phone] [e-mail]

For personal use only

Tower 2022 Annual Shareholder Meeting Script

2 February, 2022

Slide 1 - Cover page - Michael Stiassny

Mōrena, good morning and thank you for making the time to join us online this morning.

My name is Michael Stiassny, Chairman of Tower Limited. As it's now 10.00am, I am pleased to open Tower's Annual Shareholder Meeting.

On behalf of my fellow Directors, welcome and thank you for joining us via the Computershare Online Meetings platform. This is your meeting, and, given the ongoing restrictions imposed by the pandemic, we appreciate you making the effort to join us remotely today.

With me this morning and, following strict COVID-19 protocols in Tower's Auckland office, are directors, Steve Smith, and Graham Stuart.

PAUSE

And joining us by video link, due to COVID-19 travel restrictions, are your directors Warren Lee, Wendy Thorpe, and Marcus Nagel.

PAUSE

Also joining us in the room today is our Chief Executive Officer, Blair Turnbull and our Chief Financial Officer Paul Johnston. Our Auditors, PricewaterhouseCoopers are also present virtually and are available to answer shareholder questions.

As today's meeting is being held online via the Computershare Meeting Platform, we have Shareholders, Proxies and Guests attending the meeting virtually. Shareholders and proxies are able to ask questions and submit votes.

Slide 2 - Questions

I encourage you to submit questions via Computershare at any time during the meeting. If you do have a question, please select the Q&A tab on the right half of your screen. Type your question into the field and press send. Your question will be submitted immediately. Specific questions on any of the resolutions to be considered will be answered as the relevant resolution is put forward and general questions will be addressed in question time later in the meeting.

Should you require any assistance, you can type your query and one of the Computershare team will assist and reply to your query or, alternatively, you can call Computershare on 0800-650-034 or from overseas [phone].

Questions may be moderated, or if we receive multiple questions on a topic, they may be amalgamated. However, questions will not be censored, unless they are unseemly or rude.

If we run out of time to answer all questions in the course of this meeting, we will answer them directly via email and post the responses on our website.

Slide 3 - Voting process

Voting today will be by way of a poll on all items of business. To provide you with enough time to vote, I will shortly open voting for all resolutions.

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At that time, if you are eligible to vote at this meeting, you will be able to cast your vote under the Vote tab. To vote, simply select your voting direction from the options shown on screen. You can vote for all resolutions together, at once, or for individual resolutions. When the tick appears, your vote has been cast. To change your vote after that time, simply select 'Change Your Vote'. You can do this until I declare voting closed.

[PAUSE]

I now declare voting open on all items of business. The resolutions will be open in the vote tab, you may submit your votes at any time and I will let you know in advance that voting will be closing.

Slide 4 - Agenda

Here is today's meeting agenda.

We will provide you with an update on last year's performance and our strategy, as well as the progress we've made at Tower in recent months.

Following Blair's presentation, we will move to the formal resolutions set out in the Notice of Meeting.

Let's now move on to the formal part of the meeting.

Apologies

Are there any apologies?

(If not:) Thank you.

(If yes:) Thank you, I will ask the Secretary to record those in the minutes.

Quorum

The Company's constitution requires a quorum of 25 shareholders for this meeting. As confirmed by Computershare, this requirement has been met and a quorum exists.

Proxies

In addition to those attending in person today, 558 shareholders, holding a total of 142,670,525 shares, have appointed proxies (including proxies instructed to abstain). The appointed proxies represent 33.84% of valid securities voted.

In my capacity as Chairman of the meeting and in my own name I hold proxies for 460 shareholders, representing 142,051,439 shares, or 33.69% of all shares.

I intend to vote all undirected proxies I have received in favour of resolutions 1, 2, 3, 4, and 5.

Annual Report and Notice of Meeting

The annual report was made available on Tower's website on the 22nd of December 2021.

I propose that we take the Annual Report and Notice of Meeting as read.

Slide 5 - Chairman's update

Supporting Pacific resilience

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Before I talk about Tower's performance over the past year, I wish to take a moment to talk about recent events in Tonga. The level of devastation is enormous and - as is often the case - will have the largest impact on those with the very least.

We are grateful that our team up there were unharmed and are now able to assist our customers to lodge claims and pick up the fabric of their lives. However, the impact of the volcanic eruption and tsunami on a community ill-equipped to cope with a disaster of this magnitude was a timely reminder of the need to do more to support resilience in the Pacific.

Tower is proudly a New Zealand and Pacific insurer and takes its responsibilities to all those communities equally seriously. Insurance plays a vital role in economic resilience, enabling people to get on with their lives, remain productive and face the future with confidence.

And, as a business operating in the Pacific, we are mindful that access to insurance is not a level playing field.

The proportion of people who have insurance in Tonga - and across the Pacific - is low and inevitably in times of natural disaster, substantial New Zealand aid is required to deliver a meaningful response. As the effects of climate change intensify in the region, this situation is only going to worsen.

Without significantly increasing levels of insurance cover in the islands, reliance on New Zealand (and other governments) to provide relief is going to increase.

We believe that by increasing rates of insurance in the Pacific, those nations will be far less reliant on foreign aid and disaster relief and can improve their long-term economic resilience.

For some time, Tower has been working with other businesses who operate in the Pacific to look for ways to address this inequity and achieve a win:win for both New Zealand and Pacific Island nations. We are committed to finding a collective solution for this challenge and we are doing our part by digitising in the Pacific to help improve access to insurance.

As we announced in our market update on the 21st of January, Tower is in a strong position to support our customers throughout Tonga's recovery. As an insurer we plan for these events and our reinsurance excess is well within the $20m provided for large events in our FY22 guidance.

The future of private insurance in New Zealand

The situation in Tonga is a timely reminder of changes closer to home and the future of private insurance in New Zealand.

In September, the Government announced its decision to increase the EQC building cap from $150,000 to $300,000 for damage caused by natural disasters including earthquakes, tsunamis and volcanic eruptions.

The Government has said it expects this change to lead to reduced insurance premiums and, should that fail to occur, it is prepared to look at other options to assure New Zealanders the market is competitive.

Unfortunately, the government's expectation of the impact of the raising of the EQC cap fails to take into account the full range of factors that drive premium costs. The EQC levy is just one component. Other considerations include inflation, supply chain issues, the rapidly rising costs of construction, and, most importantly, the international reinsurance market which underwrites and supports the majority of New Zealand's seismic risk.

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Tower is all for competition - our model is predicated on offering an attractive alternative to the major Australian insurers - but we equally believe that ensuring the industry remains sustainable is essential.

From a customer point of view, the changes to the EQC cap will also see insurance costs rise for homeowners in less earthquake-prone areas. While Tower has worked hard to remove the inherent unfairness of cross-subsidisation by implementing transparent, risk-based pricing, the EQC building cap will partly undo that work.

Homeowners in high-risk areas like Wellington, Hawkes Bay and Gisborne will have their premiums subsidised by every other Kiwi.

[PAUSE]

Tower believes that the increase in EQC cap has the potential to undermine an already competitive industry that is vital to support New Zealanders in their time of greatest need. And, we do not wish to see a return to subsidisation that is inequitable and penalises our customers who live in lower seismic risk areas.

Tackling the challenges

Looking back on the past year, it is clear that the insurance industry faced numerous challenges:

• There was a marked increase in large events and large house claims;
• Pandemic-inducedsupply chain and inflationary pressures swiftly led to a general increase in business as usual claims costs;
• And, low interest rates meant lower investment income.

Tower was not immune. It was a tough year that saw our profits squeezed. The Board acknowledges and shares your frustration, but can also confirm that actions taken to address these issues in the final quarter of the 20/21 financial year are making inroads. In particular, the introduction of a full house fire replacement cap and risk-based pricing for inland flooding will continue to have a positive impact in 2022.

Along with the rest of the world, the COVID-19 pandemic continues to challenge New Zealand and the Pacific. Our business continuity practices have ensured we put people first. The entire Tower workforce is set up to work remotely, so they can remain safe while meeting the needs of our customers.

Strong and well capitalised

You will also be aware that we were able to recommence the payment of dividends with a full year dividend of 5 cents per share being declared. There's no question it has been a long journey for Tower - and you as our shareholders - to get to this point and we acknowledge and thank you for your continued support. We look forward to consistently making dividend payments in a prudent and appropriately cautious manner.

[PAUSE]

Shortly, we will vote on our proposal for a capital return of $30.4 million to shareholders.

As advised in our full year results, in March 2021, the Reserve Bank lowered Tower's solvency condition from $50 million to $25 million. As at the 30th of September 2021, Tower's New Zealand

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