Tower Limited
Annual Report 2022
TOWER LIMITED
ANNUAL REPORT 2022
2022 YEAR IN REVIEW
UPDATE FROM CHAIR & CEO
MAKING INSURANCE EASY
• Innovating to make insurance easier for customers
• Creating beautifully simple and rewarding customer experiences
• Transparency & fairness at the heart of our customer experience
• Flood risk-based pricing
• Expanding our core product range
• Partnering everywhere
• Making insurance affordable and accessible
• Investing in the Pacific
CLIMATE CHANGE – TACKLING THE CHALLENGE OF A LIFETIME
• Managing the impacts of climate change
• Supporting our communities through climate change
SUPPORTING CUSTOMERS THROUGH LARGE EVENTS AND EVERYDAY CLAIMS
• FY22 large events and everyday claims
• Transforming our claims experience
PUTTING OUR PEOPLE FIRST
• Diverse and inclusive to the core
• Supporting our people
• Developing careers in the Pacific
PROTECTING THE FUTURE
• Managing our ESG issues
• Our ESG strategy
BOARD OF DIRECTORS
CONSOLIDATED FINANCIAL STATEMENTS
• Financial Statements
• Notes to the consolidated financial statements
INDEPENDENT AUDITOR'S REPORT
APPOINTED ACTUARY'S REPORT
CORPORATE GOVERNANCE AT TOWER
GRI CONTENT INDEX
TOWER DIRECTORY
REGISTRAR
01
02
04
06
12
14
16
18
20
22
24
26
28
32
34
40
42
48
50
54
56
58
60
62
63
64
66
66
74
113
118
122
136
142
143
TOWER LIMITED ANNUAL REPORT 2022TOWER LIMITED ANNUAL REPORT 2022 02
2022 YEAR IN REVIEW
2022 YEAR IN REVIEW
03
2022 IN REVIEW
13%
$27.3m
$18.9m
319k
200k
Underlying GWP growth
$457m vs $404m in FY21*
Underlying profit incl. large events
vs $20.8m in FY21*
50%
Of Tower customers hold
multiple products
78%
Growth in EV policies - 4140 policies
in FY22 vs 2320 in FY21
Profit after taxation
$19.3m in FY21
Customer growth
vs 304,000 in FY21
My Tower registrations
vs 132k in FY21
30%
Reduction in New Zealand electricity
emissions after moving to 6 Green Star
head office, vs 2020 baseline year
7.8
Employee NPS
vs 7.7 in FY21
$19m
Large events
vs $13.9m in FY21
73k
Everyday claims paid
in New Zealand
*For a reconciliation of Tower’s underlying GWP and underlying profit, which are non-GAAP measures, to its reported GWP
and profit after taxation respectively, see Tower’s FY22 Investor Presentation, announced 23 November, 2022 via the NZX.
04
UPDATE FROM CHAIR & CEO
UPDATE FROM CHAIR & CEO
05
UPDATE
FROM
CHAIR &
CEO
"At Tower, our purpose is to inspire, shape
and protect the future for the good of our
customers and communities."
Strong growth and
business performance
We are pleased to report that in the
year to 30 September 2022, our
underlying profit including large events
was $27.3m, up 31% from $20.8.m for
the full-year 2021. Underlying profit,
excluding large events, was $41m,
compared to $30.8m in the prior year.
Profit after taxation was $18.9m, versus
$19.3m at the end of FY21.
Tower’s focus on simple and rewarding
customer experiences combined
with our digital and data capability
have contributed to strong growth.
During the financial year we grew
customer numbers to 319,000, up 5%
on last financial year. We also grew our
underlying gross written premiums
(GWP) 13% year on year, up to $457m.
Reflecting these positive results and
based on Tower’s dividend policy, the
Board has declared a final dividend
of 4 cents per share. This will be
paid on 1 February 2023,bringing
total dividends for FY22 to 6.5 cents
per share.
We remain in a strong capital and
solvency position. As at 30 September
2022, Tower’s New Zealand parent
solvency ratio was 205% and the
company was holding $22m above
itstarget solvency margin.
In March, the Board returned $30.6m in
excess capital to shareholders by
way of a compulsory share buyback
under a court-sanctioned Scheme
of Arrangement.
In FY22 Tower successfully navigated
global and domestic challenges
including record inflation, supply
chain blockages, access to talent,
and increasing large events. We are
pleased that the actions we have taken
to address these challenges, combined
with consistent growth and strong
underlying business performance, are
delivering results for shareholders.
Delivering on innovation and growth
Our flagship Tower Direct business
continues to go from strength to
strength, growing GWP by 17% to
$320m as we innovate to build
rewarding and engaging
relationships with customers.
Our digitisation strategy has seen us
make the process of purchasing and
managing insurance policies and
making a claim even easier on one
simple online platform. We have
also enhanced transparency
of pricing and individual property risk
with the introduction of our flood
and earthquake risk rating tool.
Digitisation of our Pacific business
continues at pace and we are now
operating on one core platform across
New Zealand and the Pacific, leading
to further improvements in efficiency
and competitiveness.
Similarly, our partnerships business
has attracted new partners such as
Ray White, and our flagship Trade
Me offering has increased by 38% to
45,000 policies. During the year we
were pleased to complete our strategy
of acquiring legacy insurance books
from banks and migrating them to
Tower Direct, reducing commission
payments by around $11m per year.
Our technology partnerships
are enabling the business to be
increasingly nimble in responding
to challenges and capitalising on
opportunities.
In the financial year we were
particularly pleased to win a number
of industry awards for our leading
customer experience, including the
Insurance Business Awards New
Zealand General Insurer of the Year,
and the top Canstar Car Insurer of
the Year and Outstanding Value Car
Insurance Awards for the second
year running.
Recognising our people
Our 2022 financial year result is a credit
to Tower’s management and people
who focused on delivering our strategy
and the resulting customer benefits.
We were pleased to have further
bolstered our leadership team and
Board this financial year. In January,
we welcomed both our Chief Financial
Officer, Paul Johnston, and Chief Claims
Officer, Steve Wilson, and in June,
Greg Moore joined as Chief Digital
and Data Officer.
In February we farewelled Steve Smith
who had been a Director of Tower since
2012. On 30 November, Warren Lee
retired following seven years' service
to Tower. We sincerely thank Steve
and Warren for their considerable
contribution towards Tower’s
transformation over the years.
Just after the close of the financial year,
the Board was pleased to welcome
Geraldine McBride as a Director on
1 October. Geraldine brings extensive
governance and technology industry
experience both internationally and in
New Zealand.
Managing the impacts of
climate change
It’s clear that the biggest challenge
we collectively face is the threat of
climate change.
Tower is committed to navigating the
changing climate in support of our
customers and communities in
New Zealand and the Pacific, and in the
long-term interests of our shareholders.
That’s why we have introduced flood
risk-based pricing and a parametric
insurance pilot, to better inform and
prepare our customers and business
for the future.
Increasing the large event limit in our
financial plans and the successful
renewal of Tower’s reinsurance
programme also provide important
protection from this volatility.
In the coming financial year, we will
respond to the Government’s new,
mandatory Climate-related Disclosures
reporting regime by sharing the risks
and opportunities we anticipate from
a range of potential climate change
scenarios. We see this regime as a
positive opportunity to inform our
business strategy and support
future resilience.
Environmental, social and
governance commitments
This year, for the first time, we are
pleased to integrate environmental,
social and governance (ESG)
commentary throughout our annual
report, in accordance with the
Global Reporting Initiative (GRI) 2021
Standards. This approach reflects our
commitment to transparency and
providing shareholders with the widest
possible view of our activities.
Tower has identified and prioritised its
most relevant ESG impacts and has
initiatives in place to address them.
These are highlighted throughout the
report with a list of our material topics
summarised on page 62.
We welcome feedback on this report
from our shareholders and look forward
to sharing our progress as we continue
our sustainability journey, in tandem
with our other strategic priorities.
MICHAEL
STIASSNY
Chairman
BLAIR
TURNBULL
CEO
06
MAKING INSURANCE EASY
MAKING INSURANCE EASY
07
MAKING
INSURANCE EASY
08
MAKING INSURANCE EASY
MAKING INSURANCE EASY
09
Key to our strategy is a
relentless focus on our
customers, deepening
our relationships with
them through rewards,
new products and other
offerings that make
sense and create value.
10
MAKING INSURANCE EASY
MAKING INSURANCE EASY
11
DON’T JUST TAKE
OUR WORD FOR IT
“Just great service,
easily accessible
and right first time!!”
– Davina, Tower customer, March 2022
“Incredible friendliness,
so engaging and
explained everything.”
– Carolyn, Tower customer, December 2021
“The My Tower login
is super easy to use
to update and change
policies.”
– Pradeep, Tower customer, August 2022
NEW ZEALAND GENERAL INSURER
OF THE YEAR
Insurance Business Awards NZ 2022,
Awarded in February
CANSTAR CAR INSURER
OF THE YEAR
Awarded in September
CANSTAR 2022 OUTSTANDING VALUE
CAR INSURANCE AWARD
Awarded in September
CELENT CUSTOMER EXPERIENCE
TRANSFORMATION
Celent Model Insurer Awards 2022,
Awarded in March
NEW ZEALAND INSURTECH INITIATIVE
OF THE YEAR AWARD
Insurance Asia Awards 2022 – Quick Quote,
Awarded in June
12
INNOVATING TO MAKE INSURANCE EASIER FOR CUSTOMERS
INNOVATING TO MAKE INSURANCE EASIER FOR CUSTOMERS
13
INNOVATING TO MAKE INSURANCE
EASIER FOR CUSTOMERS
Customers are increasingly engaging with us online.
In FY22 Tower continued
to invest in and develop
industry-leading
technology and tools to
deliver beautifully simple
customer experiences.
This digital focus has
contributed to our flagship
Tower Direct business
performing well in FY22,
with GWP up 17% to $320m.
Throughout the year we’ve continued
to enhance our unique My Tower
offering. In addition to purchasing
insurance, making a claim, and
updating and keeping track of policies
on one simple online platform,
customers can also:
• View a personalised comparison
of pricing changes at renewal time
• View their property’s individual
risk profile for flooding and
earthquakes
• Adjust their sum insured
• Update their personal details
and payment methods
• View discounts and promotions.
200k
66%
17%
50%
48%
Customers now registered for My Tower NZ, vs 132k in FY21
Of Tower Direct sales now digital
Increase in Tower Direct online quotes from FY21
Of service tasks and transactions completed digitally in NZ
Of claims now lodged online in NZ
14
CREATING BEAUTIFULLY SIMPLE AND REWARDING CUSTOMER EXPERIENCES
CREATING BEAUTIFULLY SIMPLE AND REWARDING CUSTOMER EXPERIENCES
15
CREATING
BEAUTIFULLY
SIMPLE AND
REWARDING
CUSTOMER
EXPERIENCES
Charlie the chatbot
Charlie the chatbot handled more than 92,000
customer queries in FY22. Through clever use of
artificial intelligence, Charlie can answer more than
10,000 unique questions and is learning more every
day. Charlie is available to customers 24/7.
Quick Quote
Making it quicker to get a quote has increased the
number of quotes we’ve provided. Quick Quote uses
big data and automation to make the insurance
quotation process as simple as possible for
customers. A quote from Tower now only requires
responses to between five and nine questions,
depending on the policy.
16
TRANSPARENCY & FAIRNESS AT THE HEART OF OUR CUSTOMER EXPERIENCE
TRANSPARENCY & FAIRNESS AT THE HEART OF OUR CUSTOMER EXPERIENCE
17
TRANSPARENCY & FAIRNESS AT
THE HEART OF OUR CUSTOMER
EXPERIENCE
We are focused on building trust, through fair and transparent insurance services.
Our customer research tells us that
insurers traditionally do not make
things easy for customers; only a
quarter of Kiwis told us they are
confident they have the right cover
for all their risks*. Three-quarters of
people surveyed also told us that
transparency of information is one
of the most important factors when
deciding on an insurance provider.
We recognise the need for clearly
worded and simple descriptions
of insurance products that ensure
customers understand what they’re
covered for.
Easy to understand insurance
In addition to ensuring our policies
achieve the WriteMark plain English
standard, we progressed several
important initiatives in FY22 aimed at
increasing transparency and fairness.
These include our approach to risk-
based pricing for flooding which
launched in November 2021,
and continually simplifying and
improving our customer self-service
offering through digitisation.
We enhanced our digital platform to
provide customers with transparent
pricing. We also challenged industry
norms by making it easier for
customers to cancel their insurance
online without needing to call the
contact centre.
With 82% of customers surveyed
saying they are likely or very likely
to insure with Tower again in the
future, this approach has removed an
unnecessary pain point for customers.
Toka Tū Ake – EQC levy change
A substantial change to premiums in
2022 was driven by the Government’s
decision to double the amount Toka
Tū Ake – EQC will pay out in certain
types of natural disasters, to $300k
per household.
With most customers seeing a
resulting increase in premiums,
Tower proactively explained the
change in premiums to customers,
including producing an easy-to-
understand video which received
positive customer feedback.
Putting things right for our customers
An important part of being fair and
transparent is fronting up and fixing
things when we don’t get them right.
In the 2023 financial year, Tower will
put things right for customers whose
discounts weren’t calculated correctly.
Following an internal review, we
identified that some customers who
hold multiple policies with Tower
have not received the multi-policy
discount they were entitled to. After
we identified the issue, we proactively
advised the Financial Markets
Authority (FMA). We are identifying
affected customers and calculating
refunds due. Customers will not need
to take any action as we will make
contact directly as appropriate. We
sincerely apologise to customers who
have been affected by this error. We
have put new processes in place to
ensure that customers always receive
their correct discounts.
*From Tower research commissioned in September 2021, which surveyed 1,000 New Zealanders
18
FLOOD RISK-BASED PRICING
FLOOD RISK-BASED PRICING
19
FLOOD
RISK-BASED
PRICING
In November 2021, Tower introduced
flood risk-based pricing and a new
online tool to help all Kiwis better
understand and prepare for the
risks their properties face, and to
ensure we keep premiums fair
and transparent.
The tool was developed in
partnership with Risk Management
Solutions (RMS, a global risk-
modelling company). It’s the first fully
probabilistic flood model for
New Zealand and allows a low,
medium or high rating for every
residential address in the country.
We also use this data to help
customers understand their
premiums. Through My Tower
we have raised the benchmark
around open and transparent
pricing for customers, by presenting
visual breakdowns of customer
premiums in a simple chart, where
they can easily compare year-on-
year changes for the various
pricing elements.
Throughout 2022, all home
insurance customers who have
held Tower policies prior to
November 2021 have been
transitioned to our new flood-risk
rating model, with nearly 90%
receiving a reduction in the flood-
risk portion of their premiums.
Looking forward, Tower will expand
its risk-based pricing approach to
include coastal erosion and coastal
flooding risk by the end of 2023,
with windstorm to follow.
20
EXPANDING OUR CORE PRODUCT RANGE
EXPANDING OUR CORE PRODUCT RANGE
21
EXPANDING OUR CORE
PRODUCT RANGE
At Tower, we’re all about solving our customers’
problems before they even know they have them.
This enables us to build deeper relationships with
customers who then stay with us longer.
Pet insurance
We launched pet insurance in
December 2021. From home and
contents to canines and cats,
customers are now able to insure
their most precious possessions
and furry friends with Tower.
In FY22, Tower developed a new
renovation insurance product. We also
partnered with Allianz Partners to offer
travel and pet insurance.
Travel cover
Tower launched travel insurance in
October 2021. Once borders opened
fully in March, Kiwis left the country in
earnest with 19% of travel insurance
policies purchased for trips to
Australia, followed by New Zealand
at 14%, the UK at 12%, and Fiji and the
US at 9%.
55
18
19%
Injured dogs recovered
Sick cats nursed back
to health
Of travel insurance policies were
for trips to Australia - our most
popular destination
Contract Works –
Renovation cover
Kiwis took out more than 30,000
renovation consents for their houses
last year. But our research* shows
many people aren’t aware home
insurance doesn’t cover everything
related to renovating.
In August 2022, Tower launched
Contract Works – Renovation cover.
It’s separate from house insurance
and builders’ insurance, and covers
damage while work is being done, as
well as theft of construction materials.
Disciplined, data-driven underwriting
improving risk accuracy
We are staying ahead of inflationary
pressures by ensuring accurate sum
insured amounts for our customers’
homes. Now almost 100% of our house
customers’ sums insured are updated
automatically on their policies, either
by the consumer price index or the
Cordell calculator, compared to only
77% a year ago.
Our underwriting capability is
becoming increasingly automated,
with 95% of risks in New Zealand
now sold without requiring a manual
underwriting review.
We are continuously monitoring
our pricing to ensure we stay both
competitive and profitable. Our agility
and data-driven capabilities have
enabled us to make more than 140
pricing and underwriting adjustments
in the year.
*From Tower research commissioned in July 2022, which surveyed 1,005 New Zealanders
22
PARTNERING EVERYWHERE
PARTNERING EVERYWHERE
23
PARTNERING EVERYWHERE
Smart, meaningful
partnerships have been
key to unlocking growth
amid a rapidly changing
insurance landscape.
Bringing Kiwis home safe
We’re proud to celebrate one
year of partnering with Coastguard
New Zealand. New Tower Boat
customers are eligible for a discounted
Coastguard membership.
In FY22 Tower’s
Partnerships business
increased GWP from
active partners by 35%
to $54m and Tower has
attracted a number of new
partners over the year.
Coastguard volunteers and staff are
also eligible for insurance discounts.
These discounted rates help drive
Coastguard memberships and
ultimately, keep more Kiwis
water safe.
Ray White Concierge
TSB
Unlike any other service in the New
Zealand property industry, Ray White
launched Concierge in partnership
with Tower in October 2022.
Our partnership with Ray White makes
it even easier for people to insure their
home during a seamless property
purchase process experience, with
access to our entire product range and
My Tower platform.
Kiwi Adviser Network
In September 2022, Tower partnered
with the Kiwi Adviser Network
(KAN). KAN has relationships with
200 advisors and 20 New Zealand
mortgage lenders across NZ.
This partnership helps simplify
insurance referrals for advisers and
is another positive step forward for
Tower’s partnerships advisory model,
helping to accelerate the growth of
our network by 35% to 1,500 active
advisors throughout FY22.
Flagship Trade Me Partnership
Our flagship Trade Me partnership
has gone from strength to strength
this financial year, growing 38% to
$25m GWP and helping Tower reach
a range of customers through Trade
Me Insurance (TMI). In March, TMI
extended its offering to include our
Boat insurance product. With more
than 3,000 boats for sale on Trade Me
at any one time, we're continuing to
provide insurance cover for products
on Trade Me with our online journey.
In May we announced a new five-year
referral agreement with TSB, providing
the opportunity for further growth.
Tower has underwritten TSB-branded
insurance products since 2004.
Legacy insurance book
acquisitions complete
In September we completed our
strategy of acquiring legacy insurance
books and migrating them to Tower
Direct. We announced we would
acquire and assume Kiwibank’s rights
and obligations relating to servicing
a portfolio of insurance policies
underwritten by Tower.
Since February 2021, Tower has
purchased books for a total price
of $26m from ANZ, Westpac, TSB
and Kiwibank, ending commission
payments and enabling us to have
a direct relationship with these
customers, who hold more than
88,000 assets and contents policies.
Previously, Tower paid total
commission to these partners
of around $11m per annum.
Reducing commissions
The transformation of our Partnerships
business to a lower commission model
and our legacy book acquisitions have
resulted in commission payments
reducing to 2.2% of gross earned
premiums in FY22.
24
MAKING INSURANCE AFFORDABLE AND ACCESSIBLE
MAKING INSURANCE AFFORDABLE AND ACCESSIBLE
25
“Cyclones bring a lot of damage to our
village. This type of insurance will help
us buy food and replace or repair our
damaged possessions. It just costs
a few bundles of fish to pay for the
premiums for the whole year.”
– Ledua, Tower Fiji Cyclone Response Cover pilot customer.
MAKING INSURANCE
AFFORDABLE AND ACCESSIBLE
Providing affordable and accessible insurance is a priority for Tower, including in
our Pacific markets, where most people are either not insured or are underinsured.
Low rates of insurance in the Pacific
are due to a range of issues, including
the insurability of many Pacific homes,
the unique ownership structures of
properties within families, affordability,
a lack of insurance products to suit
their needs, or a lack of available
internet or transportation to access
insurance products.
We know that not having the right
cover makes people, communities, and
economies reliant on aid, which creates
unnecessary uncertainty and can mean
it takes more time to recover when the
worst happens.
As a Kiwi and Pacific insurer, we have
a responsibility to ensure insurance
remains accessible and affordable.
This is a challenge given the current
inflationary environment and
increasing risks from large events
and climate change.
We are committed to providing
products that meet our customers’
needs, offering insurance services that
are as affordable and accessible as
possible, and increasing the number
of people with appropriate insurance.
We continuously monitor our
pricing and benefits to ensure we are
competitive and offer value for money.
We have also formed an affordability
focus group to ensure our team have
all the right skills necessary to help
customers navigate affordability issues.
customer is impacted by a weather
event, regardless of damage and
without the need for an insurance
assessor’s signoff.
In the Pacific, Tower has advocated
strongly for higher penetration of
insurance.
This year we made a submission to
the Fiji National Financial Inclusion
Strategy, calling for fast and affordable
internet access. We participated in an
industry initiative to develop a financial
literacy programme for insurance
with the United Nations Development
Programme (UNDP). And in February
we announced a partnership with
Business Link Pacific to increase
insurance knowledge in the
South Pacific.
Cyclone Response Cover
We see the Pacific as an excellent
test bed for new technology and
product development. With weather
events becoming more extreme,
it’s important for insurers to look at
different insurance models to help
communities recover more quickly
from widespread damage.
Parametric insurance provides a
rapid cash pay-out when a
In October 2022, Tower launched
Cyclone Response Cover, a parametric
insurance pilot in Fiji, ahead of the
2022/2023 cyclone season. Cyclone
Response Cover automatically pays
customers following cyclone events,
based on windspeed and proximity.
It aims to help communities recover
more quickly from a large event and
offers financial security and peace
of mind to customers who may not
benefit from traditional insurance.
It’s an affordable, lower-cost, lower
total cover approach and nimbler
than the assessment-based insurance
models we have now. It isn’t a silver
bullet and won’t replace assessment-
based insurance, but it’s part of the
solution – importantly, it’s a step
forward in increasing insurance
accessibility across the Pacific.
Following the pilot phase, Cyclone
Response Cover will be available
to all Tower customers in Fiji for the
2023/2024 cyclone season. From
there, Tower will begin to expand
the product into our other Pacific
Island markets.
26
INVESTING IN THE PACIFIC
INVESTING IN THE PACIFIC
27
INVESTING IN THE PACIFIC
Tower has been helping to protect Pacific Island customers and communities with
insurance for more than 140 years.
now also live in Vanuatu and Tonga.
In April 2022, we launched our
signature My Tower platform in Fiji,
followed by My Tower Vanuatu in
November 2022.
My Tower means our Fiji customers
no longer need to make the trip to
one of our branches to make a claim,
purchase insurance, change their sum
insured or pay their premiums – all of
this can now be done online via
My Tower.
We plan to launch online quote to buy
and My Tower across all our Pacific
territories by the end of FY23.
Simplifying our Pacific business
In December 2021, Tower completed
the acquisition of its subsidiary
National Pacific Insurance Limited
(NPI) which operates across Tonga,
American Samoa and Samoa. Tower
has begun the process of rebranding
NPI to Tower.
In June 2022, Tower announced the
conditional sale of all its shares in
its Papua New Guinea subsidiary to
Alpha Insurance Limited. The sale
was completed in October 2022. It
delivers good value to shareholders
and will enable Tower to accelerate
streamlining and modernising our
Pacific business operation.
In this time, Tower has been able to
tap into local talent, expertise and
important perspectives on issues
like product development and more
recently, climate change.
Our Pacific team has been
instrumental in the development of
our parametric insurance pilot and
in understanding climate change
impacts on our Pacific customers.
Our operations hub in Suva is the heart
of our Pacific arm. In the last two years
alone, we’ve celebrated significant
growth in Fiji, creating more than 50
new jobs for local people, and we
now have staff in Suva working across
every Tower business unit.
This growth both bolsters the local
economy and safeguards overall
business continuity and resilience.
Having people across different regions
means our team in Fiji can support our
Pacific customers as well as peaks
and troughs in customer service calls
across the Tower Group.
Beyond investing in talent, we’re also
investing heavily in digital and data
technologies to increase insurance
accessibility and bring a more modern,
streamlined insurance experience to
the Pacific region.
We’ve invested nearly NZ$7m into our
Pacific digital transformation, and our
digital platform is now live in every
Pacific market we operate in.
In March 2022, we launched Fiji and
the Pacific’s first ever online quote-to
buy insurance experience, and this is
1
71%
88%
45%
Core NZ and Pacific personal
lines platform now live
Increase in Fiji new
business vs FY21
Of all Fiji new business purchased
via new digital platform
Of all new business in
the Pacific purchased via
new platform
Tower’s core platform has now
been rolled out across seven Pacific
countries, supporting a return to
growth for our Pacific business with
GWP up 8% to $58m.
28
CLIMATE CHANGE – TACKLING THE CHALLENGE OF A LIFETIME
CLIMATE CHANGE – TACKLING THE CHALLENGE OF A LIFETIME
29
CLIMATE CHANGE – TACKLING THE
CHALLENGE OF A LIFETIME
30
CLIMATE CHANGE – TACKLING THE CHALLENGE OF A LIFETIME
CLIMATE CHANGE – TACKLING THE CHALLENGE OF A LIFETIME
31
Tower is focused on managing
the impacts of climate change,
both within our business and
for the communities we serve.
We recognise that we have a
responsibility to make a positive
contribution to mitigating
climate change through our own
operations, and through our
influence as a committed Kiwi
and Pacific business.
32
MANAGING THE IMPACTS OF CLIMATE CHANGE
MANAGING THE IMPACTS OF CLIMATE CHANGE
33
MANAGING THE IMPACTS
OF CLIMATE CHANGE
Tower has four main strategies for managing climate change impacts:
1
3
Continuing to expand our risk-based
pricing strategy to include more
climate-related hazards.
Implementing a robust reinsurance
programme to provide protection
from volatility.
2
4
Budgeting for increasing large
events in our planning to manage
Managing the impacts of climate
financial impacts.
change
Working towards a more sustainable
future by supporting communities
through climate change and reducing
emissions through every aspect of our
value chain.
Robust reinsurance programme
Climate-related Disclosures
In October 2022, we successfully
renewed our reinsurance programme
for the 2023 financial year, obtaining
comprehensive cover with very
competitive rates for our home, motor,
boat and commercial portfolios, across
New Zealand and the Pacific.
Tower’s reinsurance strategy provides
protection from volatility caused by
large events and maintains financial
flexibility to support growth, while
underpinning strong solvency.
The New Zealand Government's
new Climate-related Disclosures
reporting regime will come into effect
for accounting periods starting after
1 January 2023 and will therefore
apply to Tower’s FY24 reporting.
We see this reporting regime as a
positive opportunity to inform our
business strategy and are planning
to make some early Climate-related
Disclosures in our FY23 reporting.
Lifting awareness & education
Tower increased the catastrophe
upper limit to $934m to reflect
business growth. The catastrophe
cover excess is $11.9m, up from
$11.3m in FY22.
Reinsurers are attracted to Tower’s
robust risk management capabilities,
strong underwriting, including our
approach to risk-based pricing, and
our dynamic rating capability.
To help raise awareness of risks
and climate change issues we
are sharing useful data with New
Zealand customers via our flood and
earthquake hazard model. We also
support scientific research, education
and innovation through our partnership
with Waikato University’s Bachelor of
Climate Change Studies.
We are committed to championing informed and
pragmatic dialogue on climate change impacts
and responses. Throughout the year, Tower
has been vocal on these issues with a range of
stakeholders and media in New Zealand and in
the Pacific. We are clear about what’s needed.
Insurers need to develop new products and models.
Local and central government need to invest
in mitigation solutions for suburbs and cities.
We need urgent changes to building codes and to
take weather events into consideration as we plan
new housing developments.
1
2
3
34
SUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGE
SUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGE
35
SUPPORTING COMMUNITIES
THROUGH CLIMATE CHANGE
Tower is committed to helping New Zealand and the
Pacific’s transition to a more sustainable future.
Our greatest opportunity to support
this aim is by positively influencing and
supporting our customers through the
services and products we provide.
including policies that cover electric
and hybrid vehicles, e-bikes and
e-scooters.
Decarbonising transport
Ensuring our product development
and innovation supports climate
change resilience and action is a
priority for Tower. We know traditional
insurance products fail to adequately
support many Pacific people who
either do not have insurance or are
underinsured. To help build future
resilience in the face of climate
change in the Pacific, we are piloting
parametric insurance with Cyclone
Response Cover and improving the
accessibility of insurance products
through digital investments.
In New Zealand, Tower is supporting
more sustainable forms of transport
with innovative insurance offerings
Since broadening the range of EVs
we insure in 2021 and the introduction
of government schemes to incentivise
uptake of EV and hybrid vehicles,
sales of EV policies continued to soar,
with the number of Tower EV policies
increasing by 78% during 2022.
Sustainability benefit
Our $15,000 sustainability payment,
on top of the sum insured, provides
an incentive to choose sustainable
building materials and features when
building a new home following a total
loss from fire or flood.
78%
65%
Growth in EV cover
Growth in hybrid vehicle cover
36
SUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGE
SUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGE
37
GoCarma carbon feature
This year, we updated our GoCarma
app to present customers’
personalised carbon emissions from
driving and give feedback on how to
improve driving to reduce emissions.
Carbon emissions target
Tower has set a science-based
reduction target of 21% over five
years from our 2020 base year.
We first calculated our carbon
footprint for two financial years in
2021 in accordance with the
requirements of the Greenhouse
Gas Protocol and ISO 14064-1:2018.
We have ambitiously elected to
use FY20 (1 October 2019 – 30
September 2020) as our first year of
measurement, which includes multiple
lockdowns in all the markets we
operate in. While this base year does
not reflect our pre-Covid footprint, we
are aiming to incorporate the lessons
of three years of working remotely and
travelling less.
We take measuring and reducing our
emissions seriously as we recognise
that every effort to reduce emissions
helps to mitigate global warming.
Our carbon impacts reach well beyond
the boundaries of our own operational
activities and include the activities of
our whole value chain, including the
suppliers we work with.
Our emissions profile
Our emissions temporarily reduced in
FY21 due to the substantial reduction
in travel and energy use experienced
by many office-based companies
throughout the pandemic. As
expected, our ambitious targets are
proving challenging as we continue
to grow and increase customer
interactions, particularly in the
Pacific islands.
This return to normal activities has
seen our overall carbon footprint
increase 12% to 617 tCo2e against
our FY20 baseline year (551 tCo2e).
This is largely driven by our Pacific
fleet of 18 vehicles which have
doubled emissions compared to our
FY20 base year contributing to a 78%
increase in our Scope 1 emissions.
We are committed to reducing our
fleet emissions and have already
taken actions to curb these, such
as replacing our New Zealand fleet
with plug-in hybrid vehicles. This has
helped manage increases to our New
Zealand mobile combustion emissions
in FY22 and we expect to see the full
benefit of this change in FY23.
We will transition four of our Pacific
fleet vehicles to hybrids in FY23.
Some 62% of Tower’s greenhouse
gas (GHG) emissions come from our
Pacific operations. While this is largely
due to vehicle use, it also reflects the
energy supply in the Pacific compared
to mostly renewable sources in New
Zealand. In our Pacific premises we
rely on generators when the local
electricity grids regularly fail. In FY23
we will investigate how we can
implement more sustainable electricity
sources for our Pacific properties.
The move to our new 6 Green Star-
rated building in Auckland has
helped reduce our corporate office
emissions and waste in New Zealand,
contributing to a 30% reduction
in Scope 2 emissions and an 80%
decrease in emissions from our
Auckland premises versus our
base year.
Air travel accounted for 12% of our
emissions in FY22. While this was up
63% from FY21 as we reconnected
with our people in the Pacific after
two years of restrictions, it is down
42% compared to the FY20 base year,
contributing to a 5% reduction in Scope
3 emissions. In FY22 we implemented
a new Sustainable Business Travel
Policy, which requires staff to first
consider alternatives to travelling such
as use of video conference, as well as
more sustainable ways to travel.
Paper use and waste were minor
contributors to our carbon footprint
in FY22.
In FY22 we also developed a Supplier
Code of Conduct, which sets out our
environmental, social and governance
expectations for all our suppliers. In
FY23 we will work proactively with
suppliers to understand and reduce
our broader emissions profile.
In taking responsibility for our
emissions, our preferred approach
is to invest in initiatives that reduce
gross emissions as much as possible.
Therefore, we have elected not to
offset our FY22 emissions.
Emissions by scope
SCOPE
FY20 (TCO2E)
FY21 (TCO2E)
FY22 (TCO2E)
SCOPE 1
SCOPE 2
SCOPE 3
169
180
202
115
165
98
300
126
191
38
SUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGE
SUPPORTING OUR COMMUNITIES THROUGH CLIMATE CHANGE
39
NEW 6 GREEN STAR
HEAD OFFICE
Tower’s new home at 136 Fanshawe Street was designed,
developed, and constructed with sustainability in mind.
The building is equipped with cutting-edge technology aimed
at saving energy and cutting waste, and features a 6 Green Star
rating, using the Green Star NZ – Office Built V3 tool.
40
SUPPORTING CUSTOMERS THROUGH LARGE EVENTS AND EVERYDAY CLAIMS
SUPPORTING CUSTOMERS THROUGH LARGE EVENTS AND EVERYDAY CLAIMS
41
SUPPORTING CUSTOMERS
THROUGH LARGE EVENTS
AND EVERYDAY CLAIMS
42
FY22 LARGE EVENTS AND EVERYDAY CLAIMS
FY22 LARGE EVENTS AND EVERYDAY CLAIMS
43
FY22 LARGE EVENTS
AND EVERYDAY CLAIMS
OCT 21
JAN 22
Hunga Tonga -
Hunga Ha’apai
volcanic eruption
& tsunami
FEB 22
Cyclone Dovi
JUN-JUL 22
Nationwide storms
FEB 22
North & South Island
floods (incl Westport
and West Coast)
MAR 22
North Island
rainstorms
AUG 22
Nelson-Tasman
floods
SEP 22
359%
$7.7m
68
17.5k
31.3k
11.2k
Increase in mask-related claims,
mainly for broken or lost hearing aids
and glasses
In claims related to damage caused
by children*
Lightning strikes resulting
in claims
Car windscreens replaced or repaired
Vehicles fixed or replaced (in addition
to windscreen claims)
Claims for Kiwi and Pacific homes
*Parents and caregivers at Tower were unsurprised by this statistic
44
FY22 LARGE EVENTS AND EVERYDAY CLAIMS
FY22 LARGE EVENTS AND EVERYDAY CLAIMS
45
HUNGA TONGA–
HUNGA HA'APAI
VOLCANIC
ERUPTION
AND TSUNAMI
"One thing that stands
out for us is honesty.
Thank you very much
for always being there
for us in the bad times,
during Cyclone Harold
and the Tsunami.”
– Marian, Tower Tonga Customer
January 2022 saw a one in a thousand year event;
the Hunga Tonga–Hunga Ha'apai volcanic eruption
and subsequent tsunami in Tonga. The event was
seen and felt around the globe and was an incredibly
challenging time for the people of Tonga, including
our Tower team and customers.
Since then, Tower’s goal has been to
help the people of Tonga recover as
quickly as possible, so they can focus
on rebuilding their lives.
Initial response
The force of the eruption severed
Tonga’s internet and communications
cable, with international
communications not restored until
five weeks later. However, Tower’s
operational resilience meant we were
able to communicate immediately
with our people to ensure their safety
and begin to help customers. It also
meant that our in-country claims
partner networks could be deployed
almost immediately to begin assessing
damage and assisting customers.
Lodging claims and fast
Simultaneously, we ran radio ads
letting all people in Tonga, including
our customers, know how to protect
their homes and cars from further
damage and how to make a claim.
Our locally based staff proactively
contacted customers to lodge claims,
and within three weeks almost all
customers had been contacted and
the status of their homes and cars
was known.
We are proud to say that due to our
planning for in-country resource in
case of large events, Tower paid its
first claim within a month of the event
as soon as the banking networks were
re-established. Within two months,
we had lodged every claim, settled
many and understood the likely cost
to Tower. All our customers had a
settlement pathway in place. At the
end of the financial year Tower had
settled 93% of all claims related to
the event.
Tower is incredibly proud of the
courage and dedication displayed
by our teams to do what’s right for
our customers and really make a
difference in their lives, during such
a difficult and traumatic time.
46
FY22 LARGE EVENTS AND EVERYDAY CLAIMS
FY22 LARGE EVENTS AND EVERYDAY CLAIMS
4747
LAKE
ŌHAU FIRE,
TWO
YEARS ON
“You don’t think it will happen to
you but having gone through
something like this, you wouldn’t
go without insurance.”
– Nyree Schaar, Tower customer & Lake Ōhau resident
October 2020
October 2022
October 2022 marked
the two year anniversary
of the Lake Ōhau fire, one
of New Zealand’s largest
wildfires on record.
Tower customers Nyree and Pieter
Schaar, along with their children Josh
and Emily, cat Whiskers and dog Rex,
lost their family home of 10 years in the
fire, alongside nearly 50 other houses.
We caught up with the Schaars in
their new home, completely rebuilt
by Tower, amongst one of the most
stunning landscapes in the country.
Meeting with the Schaars reminded
us of how important our role is to
make things easier on people’s
journey to recovery.
close to the house and still have a
home,” says Nyree.
the family. Within a week they’d been
assigned a Claims Manager.
“He was in contact pretty quickly and
organised the removal of everything
from the site. Overall, we’ve been happy
with the service provided.”
The Schaar family was “so relieved”
when they got the keys to their new
home in June 2022.
“We rebuilt the same house with some
minor changes. We were sitting there
the first night and all said it felt exactly
the same, even the cat only took about
20 minutes before she was settled.”
“I wasn’t sure what we were insured for,
and I had an awful feeling we weren’t
insured for enough. I had just been
burying my head in the sand in a bit of
a daze. We’d paid to build our home,
friends and family helped with labour
and we’d done a lot ourselves. We
couldn’t afford to replace it.
“By lunch time that day our house
was gone, and I thought ‘okay this is
serious now’. I called Tower and they
were incredibly helpful, they paid us
$1,000 upfront to buy necessities and
confirmed we had enough cover to
rebuild. My reaction was ‘oh thank God’.
“We’ve still got a mortgage. We’d
probably be living on site right now in a
caravan if we didn’t have insurance.”
“We knew driving away that it was
gone. You can’t have flames that
Over the next week a Tower
representative checked in daily with
48
TRANSFORMING OUR CLAIMS EXPERIENCE
TRANSFORMING OUR CLAIMS EXPERIENCE
49
TRANSFORMING
OUR CLAIMS
EXPERIENCE
Inflation impacts all facets
of life, including how far
your insurance cover will
stretch. Due to the sharp
increase in inflation over
the previous 12 months,
in FY22 it became more
expensive to repair and
rebuild homes, and
repair or replace cars
and contents.
Tower’s unique advantage is
our ability to identify and quickly
address emerging trends, Thanks to
our investments in digital and data
technology, Tower is able to quickly
identify and address emerging trends,
In the financial year, we continued
to take decisive actions to deliver
improvements, including:
• Working with our supply chain to
enhance efficiencies and improve
our customer experience
• Launching a new feature that will
allow us to further automate the
process of detecting genuine and
suspicious claims in real time
• Continuing to improve our digital
capability to streamline the claims
lodgement process, which has seen
the proportion of New Zealand
claims lodged online increase from
31% to 48%.
Our increasing scale is also continuing
to deliver efficiencies, with Tower’s
BAU loss ratio being brought back to a
more normal level of 48.9%, compared
to 50.2% in the 2021 financial year.
Our new Repair Partners
In June 2022, Tower announced that
we would reassess our motor repairer
relationships across the country,
to evolve to a model that prioritises
strong partnerships, innovation
and streamlined experiences for
customers.
As part of the process, we issued a
Request for Proposal (RFP) to suppliers
in Auckland, Hamilton, Tauranga,
Wellington, Christchurch and Dunedin
to create a new repair network.
In October 2022, the network for
the six main centres was finalised,
consisting of 12 motor Repair Partners
across 19 locations, who are investing
in their businesses, looking to innovate,
and are keen to grow alongside us.
Each Repair Partner now provides
a new and improved repair
experience, where Tower customers
are pre-authorised.
Tower will commence an RFP for the
rest of New Zealand and strategically
source a new Repair Partner network
in Fiji, in FY23.
Enhancing the customer
experience with new remote
assessing innovation
To help speed up motor claims
processing and repairs and get
customers back on the road sooner,
Tower trialled a remote assessment
tool with a small group of motor
repairers during 2021.
In October 2022, the tool went live
with our Repair Partners, as part of
our new repair experience offering.
Our remote assessment tool operates
via a smartphone app that allows
customers to talk to repairers in real
time and submit video and images of
vehicle damage. The same information
submitted to the repairer during the
remote assessment is also passed
via the app to Tower, decreasing
administration time for repairers and
making the claims approval process
faster.
The tool saves customers an extra
drive to the workshop and associated
carbon emissions.
Detecting potential fraud via AI
In April 2022, Tower implemented
an AI-based technology which
automates the process of detecting
genuine and suspicious claims in real
time, to allow for a faster process for
customers in need.
By putting claims with low risk of
fraud on a fast track, this new
technology is standardising and
further speeding up claims
screening with greater accuracy.
While it is early days, the results
are promising. Tower's detection
rate of potentially unjustified claims
has improved by 300%, which has
led to a greater proportion of
claims either being withdrawn or
appropriately declined.
50
PUTTING OUR PEOPLE FIRST
PUTTING OUR PEOPLE FIRST
51
PUTTING OUR
PEOPLE FIRST
52
PUTTING OUR PEOPLE FIRST
PUTTING OUR PEOPLE FIRST
53
We believe that
genuinely caring
for our people’s
wellbeing is
fundamental to
a healthy and
agile culture.
v
54
DIVERSE AND INCLUSIVE TO THE CORE
DIVERSE AND INCLUSIVE TO THE CORE
55
Our new employee benefits
In today’s competitive market for talent, we know
that people want to work for a company that has
a strong purpose and whose values align with
their own. It was important to us that our company
benefits reflect this, and we introduced a new set of
employee benefits for all our people in June 2022.
1
2
3
4
Birthday day off
An additional paid day off work.
Eight extra leave days
The ability to purchase eight extra
annual leave days each year.
Wellbeing leave
The use of our sick leave allowance
(up to 10 days a year) has now
been expanded to include time for
proactively managing personal or
family wellness.
Flexible working
New guidance which empowers
leaders and teams to determine
the best approach for them while
balancing customer, company,
team and individual priorities.
These are in addition to our existing benefits
which include group insurances, discounts
on insurance, retail partner discounts,
contemporary parental leave entitlements,
eyesight testing, study assistance and more.
DIVERSE AND INCLUSIVE
TO THE CORE
In the 2022 financial year, Tower undertook a programme
of cultural change and improvement. From November
2021 to February 2022, we collaborated with diverse
groups of people from across the business to get a
shared understanding of who we are now and who we
want to be in the years to come. The result was a new
company purpose, values and employee proposition.
The Tower team comes from all walks
of life and cares for one another.
as an employer and retention of
talented employees.
We recognise that a lack of diversity
excludes minority groups which
limits diverse thinking and impacts
mental health and emotional
wellbeing. Diversity is an important
part of customer innovation. We
are committed to having a diverse
and inclusive workplace that builds
people’s physical and emotional
wellbeing.
Investing in a positive business culture
that prioritises the personal growth of
our people impacts our attractiveness
Tower has policies and processes in
place to ensure equal opportunities for
roles at Tower. Our recruitment policy
incorporates cultural considerations for
conducting interviews and outlines a
process to ensure all interview panels
are balanced culturally and by gender.
Tower offers unconscious bias training
to all staff.
In FY22 we commenced an emerging
talent programme, with a focus on
identifying diverse future leaders.
Our purpose
“To inspire, shape and protect the future for the good
of customers and communities.”
‘Inspire’ and ‘shape’ because our innovative and disruptive thinking is driving
New Zealand and Pacific insurance forward, at a pace nobody else is used to.
And ‘protect,’ of course, because that is our fundamental role as an insurer.
Our values
N
S
E
We do what's right
Our people come first
Progress boldly
Our customers are our compass
56
SUPPORTING OUR PEOPLE
SUPPORTING OUR PEOPLE
57
SUPPORTING
OUR PEOPLE
To support our people’s wellbeing, we:
Hosted mental health first aid training
seminars
Provided free and anonymous EAP
counselling sessions
Introduced meeting-free
Friday afternoons
Provided staff with onsite Flu vaccinations
and time off to receive Covid-19
vaccinations and boosters
Hosted webinars sharing practical tips to
manage stress and anxiety
Received DVFREE tick certification
and participated in Shine awareness
programmes and fundraisers.
To support our diverse people, we:
Achieved Rainbow Tick recertification
Started the Tower Kapa Haka Rōpū
Celebrate Diwali, Ramadan, Matariki, Pacific
Language Weeks, Lunar New Year, Pink
Shirt Day and International Women’s Day
Our approach is working
Across 2021, our employee engagement score improved from 7.1 in the first
quarter to 7.7 in the last quarter. Employee engagement continued to improve to
7.8 at the end of FY22.
MIND
THE GAP
In March 2022, Tower joined the Mind the Gap register as one of the first 50
businesses in New Zealand to publicly report its gender pay gap.
While our results aren’t unique to Tower, we are committed to doing everything
we can to support women to progress in their careers, as they choose. This
includes using this data to make positive changes across our business where
needed, starting with our emerging talent programme formed at the end of
FY22, and by committing to targets to increase gender and ethnic diversity
across Tower’s leadership population.
-
0.1
%
Gender pay equity gap
When we compare like-for-like roles for
women and men at Tower in New Zealand,
our pay equity gap is –0.1% (women are paid
.1% more than men for the same role).
25.9
%
Gender pay gap
%
2.2
Leadership gender pay gap
Comparing our senior leadership population
and the average pay gap between men and
women, our leadership pay gap is 2.2% (men
are paid 2.2% more than women).
When we take the total salary for all women and divide
that by the number of women, and the total salary of all
men and divide that by the number of men, we have a
gap of 25.9%.
For the most part, this is because we have a larger
proportion of women in some our New Zealand frontline
roles, and a greater proportion of men in senior roles.
CELEBRATING OUR PEOPLE
In recognition of Tower as a great place to work, Tower was named an Insurance
Business New Zealand Top Insurance Employer for 2022
Head of Customer Partnerships and Relationships, Sarah-Jane Wild, named on
the Insurance Business New Zealand Elite Women 2022 list
Head of Portfolio Performance, Oliver Bale, Head of Underwriting, Nick Meister,
and Customer Experience Owner, Krutika Chikara, named on the Insurance
Business New Zealand Rising Stars 2022 list
Head of Pacific Operations, Ali Wilkinson, winner of the 2022 ANZIIF Making a
Difference Awards, Claims Award
58
DEVELOPING CAREERS IN THE PACIFIC
DEVELOPING CAREERS IN THE PACIFIC
59
DEVELOPING
CAREERS IN
THE PACIFIC
As a major insurer in the Pacific
and New Zealand, we’re investing
in the economic future of the
communities that our people live,
play and work in.
We do this by creating meaningful job opportunities
and fostering career development ‘at home’ in the
Pacific Island nations we operate in.
Our operations hub in Suva is the heart of our Pacific
arm. In the last two years alone, we’ve created 50
new jobs in Fiji and now employ more than 100
people across the Pacific, with the vast majority
being local women. Our roles in Fiji comprise the
full range of corporate positions, including, finance,
technology, human resources, marketing and
customer service.
Partnering with our Pacific family adds value to
both the Pacific and New Zealand economies.
It also enhances the cultural ties of all countries
and as the largest insurer in the region, creates
great, localised experiences for our more than
30,000 Pacific customers.
60
PROTECTING THE FUTURE
PROTECTING THE FUTURE
61
PROTECTING
THE FUTURE
62
MANAGING OUR ESG ISSUES
OUR ESG STRATEGY
63
OUR ESG
STRATEGY
MANAGING OUR ENVIRONMENTAL,
SOCIAL AND GOVERNANCE
(ESG) ISSUES
As the largest Kiwi insurer, Tower plays a crucial role in protecting New Zealand
and the Pacific, contributing to their prosperity for future generations.
Walking the talk authentically on
sustainability is vital to ensure integrity
and credibility. That means making sure
the right foundations are in place and
ensuring we are always thinking ahead.
below with relevant impacts identified
and addressed throughout the report.
The impacts reflect Tower’s business
operations in both New Zealand and
the Pacific Islands.
In 2022 we were pleased to launch
Tower’s first ESG strategy, which
guides how we manage relevant
environmental, social and governance
issues. This annual report is Tower’s
first step into sustainability reporting
with the aim of continuing to improve
our disclosures and performance.
This report has been prepared in
accordance with the Global Reporting
Initiative (GRI) 2021 standards.
Tower has been part of Kiwi and Pacific
communities for more than 150 years,
supporting customers to protect
the things they love and need. This
strategy and report provide us with the
opportunity to be more transparent
about our broader business activities.
Our approach to identifying
material impacts
In 2021, we identified a range of
topics and impacts through research
and engagement which included
interviewing a range of stakeholder
representatives and relevant experts.
We spoke to our Board, shareholders
and partners, representatives from
the wider insurance industry and
financial markets, as well as experts in
sustainable finance and climate change.
We undertook employee workshops
involving senior management and a
diverse range of people and roles from
across the business.
In 2022, we assessed and prioritised
the full range of Tower’s sustainability
impacts using the GRI 3: 2021
methodology. The full results are listed
These material issues have
been reviewed and approved by
our leadership.
•
•
Affordable and accessible
insurance
Transparent and fair insurance
• Managing the impacts of
•
•
climate change
Carbon emissions
Product development and
innovation
• Diversity and inclusion
•
•
Employee wellbeing
Corporate governance
• Data protection
•
•
•
Corporate community citizenship
Environmental footprint
Responsible investment
ESG Governance
Tower’s Board provides the highest
level of ESG governance at Tower. The
Board approves our ESG reporting and
monitors our performance through
periodic updates from management.
ESG Governance is formalised through
an executive level steering committee
which has responsibility for overseeing
progress on our initiatives and monitors
environmental and social risks. Our
ESG performance is coordinated by
the Head of Corporate Affairs and
Sustainability, reporting to the CEO.
The Board and management will
continue their focus on ESG governance
and climate risks and opportunities by
developing new policies and enhancing
our governance framework in FY23.
Our ESG targets
We are continuing to develop our
ESG targets and measures. We have
identified targets for the following
material impacts:
Fair and transparent insurance:
•
80% of all products are WriteMark
certified by end of FY23, 95% by
end of FY25.
Affordable & accessible insurance:
•
•
•
40% of transactions in the Pacific
are completed via digital platform
by end of FY25.
Consistent digital offerings in
place across New Zealand and our
Pacific markets by end of FY23.
1,000 parametric policies in place
in the Pacific by the end of FY23.
Carbon emissions target:
•
Tower has set a target, grounded
in science, of a 21% reduction over
five years from our 2020 base year.
Diversity & inclusion,
and wellbeing targets:
•
Safety – Tower’s safety target is
zero harm. Tower is committed
to creating a culture where
incidents, near misses, hazards and
discomfort are reported.
• Diversity – Drive practices and
outcomes that will result in Tower's
leadership reflecting the diversity
(gender and ethnicity) of our
customers and communities -
100% of hiring panels, candidate
shortlists and succession plans
consist of one woman candidate
and one ethnically diverse
candidate. Attrition of diverse talent
is kept below the level of gender
and ethnic representation.
64
BOARD OF DIRECTORS
BOARD OF DIRECTORS
65
MICHAEL STIASSNY
GRAHAM STUART
WENDY THORPE
GERALDINE MCBRIDE
WARREN LEE
MARCUS NAGEL
LLB, BCom, CFInstD
Chairman
Non-Executive Director
Independent
Director from: 12 October 2012
BCom (Hons), MS, FCA
Non-Executive Director
Independent
Director from: 24 May 2012
Michael is a Chartered Fellow and
past President of the Institute of
Directors. He has both a Commerce
and Law degree from the University
of Auckland. He is Chairman of Ngāti
Whātua Ōrākei Whai Rawa Limited
and New Zealand Automotive
Industries Ltd, and is a director of a
number of other companies including
Tegel Group Holdings Ltd, and New
Talisman Gold Mines Ltd.
Michael resides in Auckland
—New Zealand.
With over 30 years of senior
management experience, Graham
has held senior leadership roles
with several major corporates, in
New Zealand and overseas, the latest
being the Sealord Group of which he
was Chief Executive Officer for
seven years.
Graham has a Bachelor of
Commerce (First Class Hons) from
the University of Otago, a Master of
Science from Massachusetts Institute
of Technology and is a Fellow of
Chartered Accountants Australia and
New Zealand. Graham has served
on a number of government bodies
including the Food & Beverage
Taskforce and the Māori Economic
Development Panel.
Graham resides in Auckland
—New Zealand.
BA (French), BBus (Accounting), Grad Dip,
Applied Fin & Inv, Harvard AMP, FFin, GAICD
Non-Executive Director
Independent
Director from: 1 March 2018
Wendy had an extensive executive
career in financial services, leading
technology and operations in
insurance and wealth management.
Her most recent executive role was
as Group Executive, Operations for
AMP Ltd, and she was previously
Chief Operations Officer and Chief
Information Officer for AXA
in Australia.
Wendy is Chair of Online Education
Services, Chair of Epworth Healthcare,
and a Non-Executive Director of
People's Choice Credit Union and
Data Action. Wendy has a Bachelor
of Arts from LaTrobe University, a
Bachelor of Business from Swinburne
University and a Graduate Diploma
in Applied Finance and Investment
from the Securities Institute of
Australia. She completed the
Advanced Management Program at
Harvard Business School, is a Fellow
of the Financial Services Institute of
Australasia and a Graduate member
of the Australian Institute of
Company Directors.
Wendy resides in Melbourne
—Australia.
BSc
BCom, CA
Non-Executive Director
Independent
Appointed Director: 1 October 2022
Non-Executive Director
Independent
Director from: 26 May 2015
MBA (International Management),
MBA (Banking and Finance)
Non-Executive Director
Not Independent
Director from: 14 January 2019
Geraldine has extensive governance
and technology industry experience,
having performed Board and senior
leadership roles both in New Zealand
and internationally, with Sky Network
Television Limited, SAP, Dell and IBM.
Geraldine is the founder and CEO of
MyWave.
Geraldine holds a Bachelor of Science
from Victoria University and is a
Chartered Member of the NZIOD.
Geraldine was appointed to fill a
casual vacancy on the Board. She will
retire at the 2023 Annual Shareholder
Meeting and will be eligible to stand
for re-election.
Geraldine resides in Christchurch
—New Zealand.
Warren has extensive experience in
the international financial services
industry. Warren's two most recent
executive positions were Chief
Executive Officer of the Victorian
Funds Management Corporation and
Chief Executive Officer, Australia and
New Zealand for AXA Asia Pacific
Holdings Limited. Warren is currently
a non-executive director of MetLife
Limited, MyState Limited, and Avenue
Hold Limited. He has a Bachelor
of Commerce from the University
of Melbourne and is a member of
Chartered Accountants Australia and
New Zealand. Warren retired from the
board on 30 November 2022.
Warren resides in Melbourne
—Australia.
BOARD
OF DIRECTORS
Marcus has significant insurance
industry experience.
For a decade he has performed
senior leadership roles for Zurich in
Europe and globally. In his last role
at Zurich, he served as the Chief
Executive Officer of Zurich Germany
managing both life insurance and
general insurance businesses. He
has also held the position of Vice
Chairman of the joint venture with
ADAC, Germany’s largest Automotive
Club, Chairman of the direct insurer,
DA Direct, and Chairman of the life
insurer, Zurich Deutscher Herold.
Prior to that, he also managed the
independent financial adviser/broker
business for Zurich Global Life.
Marcus holds a Master’s Degree in
Banking and Finance from Goethe
University in Frankfurt, Germany and
Master of International Management
from the Arizona State University
Thunderbird School of Global
Management in Arizona, United States
of America. Marcus was nominated by
Bain Capital Credit LP (Bain Capital) to
represent Bain Capital’s stake in Tower
(Bain Capital hold 19.99% of Tower’s
ordinary shares) and his appointment
was supported by the Tower Board.
Marcus resides in Schindellegi
—Switzerland.
66
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
67
CONSOLIDATED
FINANCIAL STATEMENTS
68
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS
69
Financial Statements
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
1
1.1
1.2
1.3
1.4
2
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
Overview
About this report
Consolidation
Critical accounting judgements and estimates
Segmental reporting
Underwriting activities
Underwriting revenue
Net claims expense
Underwriting expense
Net outstanding claims
Unearned premium liability
Deferred insurance costs
Receivables
Payables
Provisions
2.10
Assets backing insurance liabilities
3
3.1
3.2
3.3
4
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
Investments
Investment income
Investments
Fair value hierarchy
Risk management
Risk management overview
Strategic risk
Insurance risk
Credit risk
Market risk
Liquidity risk
Capital management risk
Operational risk
Regulatory and compliance risk
Conduct risk
Cyber risk
Climate change risk
70
71
72
73
74
74
74
76
76
78
78
79
79
80
84
85
85
86
87
87
87
87
88
88
89
89
89
89
91
92
93
94
95
95
95
95
95
5
5.1
5.2
5.3
5.4
5.5
6
6.1
6.2
6.3
7
7.1
7.2
7.3
7.4
8
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
Capital structure
Contributed equity
Reserves
Net tangible assets per share
Earnings per share
Dividends
Other balance sheet items
Property, plant and equipment
Intangible assets
Leases
Tax
Tax expense
Current tax
Deferred tax
Imputation credits
Other information
Notes to the consolidated statement of cash flows
Related party disclosures
Auditor's remuneration
Discontinued operation and asset held for sale
Contingent liabilities
Subsequent events
Capital commitments
Impact of new accounting standards and changes in
interpretation of current standards
96
96
96
97
97
97
98
98
99
102
104
104
104
105
107
107
107
108
108
109
110
110
111
111
Independent Auditor's report, and Appointed Actuary's report
Independent Auditor's report
Appointed Actuary's report
113
118
70
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED BALANCE SHEET
71
Consolidated statement of comprehensive income
Consolidated balance sheet
FOR THE YEAR ENDED 30 SEPTEMBER 2022
AS AT 30 SEPTEMBER 2022
Gross written premium
Unearned premium movement
Gross earned premium
Outward reinsurance premium
Movement in deferred reinsurance premium
Outward reinsurance premium expense
Net earned premium
Claims expense
Less: Reinsurance and other recoveries revenue
Net claims expense
Gross commission expense
Commission revenue
Net commission expense
Underwriting expense
Underwriting profit
Investment income
Investment expense
Other income
Other expenses
Financing and other costs
Profit before taxation from continuing operations
Tax expense
Profit after taxation from continuing operations
Profit after taxation from discontinued operation
Profit after taxation for the year
Items that may be reclassified to profit or loss
Currency translation differences
Items that will not be reclassified to profit or loss
Gain on asset revaluation
Deferred income tax relating to asset revaluation
Other comprehensive loss net of tax
Total comprehensive profit for the year
Earnings per share:
Basic and diluted earnings per share (cents) for continuing operations
Basic and diluted earnings per share (cents)
Profit after taxation attributed to:
Shareholders
Non-controlling interests
Total comprehensive profit attributed to:
Shareholders
Non-controlling interests
NOTE
2022
$000
RE-PRESENTED
2021
$000
445,580
396,003
(27,258)
(9,383)
2.1
418,322
386,620
(66,116)
(152)
(66,268)
352,054
(240,147)
15,243
(60,341)
1,586
(58,755)
327,865
(226,920)
24,601
Assets
Cash and cash equivalents
Investments
Receivables
Current tax asset
Assets classified as held for sale
Deferred tax asset
Deferred insurance costs
Right of use assets
2.1
2.2
2.1
2.3
3.1
7.1
8.4
5.2
5.2
5.4
5.4
(224,904)
(202,319)
Property, plant and equipment
Intangible assets
Total assets
Liabilities
Payables
Unearned premiums
Outstanding claims
Lease liabilities
Provisions
Current tax liabilities
Liabilities classified as held for sale
Deferred tax liabilities
Total liabilities
Net assets
Equity
Contributed equity
Accumulated losses
Reserves
Total equity attributed to shareholders
Non-controlling interests
Total equity
The above statement should be read in conjunction with the accompanying notes.
The financial statements were approved for issue by the Board on 23 November 2022.
(14,390)
5,105
(9,285)
(94,220)
23,645
1,498
(338)
1,355
(63)
(897)
25,200
(7,526)
17,674
1,181
18,855
(17,667)
6,461
(11,206)
(87,160)
27,180
559
(384)
707
(52)
(363)
27,647
(9,245)
18,402
913
19,315
3,948
(1,213)
–
–
3,948
22,803
4.43
4.73
18,803
52
18,855
22,737
66
22,803
159
(16)
(1,070)
18,245
4.21
4.43
18,683
632
19,315
17,729
516
18,245
NOTE
2022
$000
2021
$000
8.1
3.2
2.7
7.2a
8.4
7.3a
2.6
6.3a(i)
6.1
6.2
2.8
2.5
2.4
6.3a(ii)
2.9
7.2b
8.4
7.3b
5.1
5.2
84,502
258,634
242,089
13,069
20,811
23,893
37,819
23,326
5,417
94,653
116,129
277,470
216,925
12,901
–
24,450
31,967
25,577
9,374
88,592
804,213
803,385
58,911
238,116
124,531
35,054
11,873
136
9,258
8,806
486,685
317,528
460,191
(41,212)
(101,451)
317,528
–
69,977
212,275
122,338
39,421
6,709
170
–
2,775
453,665
349,720
492,424
(39,995)
(105,385)
347,044
2,676
317,528
349,720
The above statement should be read in conjunction with the accompanying notes.
Michael P Stiassny
Chairman
Graham R Stuart
Director
72
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
73
Consolidated statement of changes in equity
Consolidated statement of cash flows
YEAR ENDED 30 SEPTEMBER 2022
FOR THE YEAR ENDED 30 SEPTEMBER 2022
Year Ended 30 September 202
Balance as at 30 September 2021
Comprehensive income
Profit for the year
Currency translation differences
Total comprehensive income
Transactions with shareholders
Capital return to shareholders
Purchase of non-controlling interests
Dividends paid
Other
Total transactions with shareholders
At the end of the year
Year Ended 30 September 2021
Balance as at 30 September 2020
Comprehensive income
Profit for the year
Currency translation differences
Gain on asset revaluation
Deferred income tax relating to asset revaluation
Total comprehensive income
Transactions with shareholders
Dividends Paid
Other
Total transactions with shareholders
At the end of the year
ATTRIBUTED TO SHAREHOLDERS
CONTRIBUTED
EQUITY
$000
ACCUMULATED
LOSSES
$000
RESERVES
$000
NON-CONTROLLING
INTEREST
$000
TOTAL EQUITY
$000
492,424
(39,995)
(105,385)
2,676
349,720
–
–
–
(30,634)
(1,599)
–
–
(32,233)
460,191
18,803
–
18,803
–
–
(20,028)
8
(20,020)
(41,212)
–
3,934
3,934
–
–
–
–
–
(101,451)
52
14
66
–
(2,742)
–
–
(2,742)
–
18,855
3,948
22,803
(30,634)
(4,341)
(20,028)
8
(54,995)
317,528
492,424
(48,107)
(104,431)
2,160
342.046
–
–
–
–
–
–
–
–
18,683
–
–
–
18,683
(10,541)
(30)
(10,571)
–
(1,097)
159
(16)
(954)
–
–
–
632
(116)
–
–
516
–
–
–
19,315
(1,213)
159
(16)
18,245
(10,541)
(30)
(10,571)
492,424
(39,995)
(105,385)
2,676
349,720
The above statement should be read in conjunction with the accompanying notes.
Cash flows from operating activities
Premiums received
Interest received
Fee and other income received
Reinsurance and other recoveries received
EQC settlement receipt
Motor premium refund payments
Reinsurance paid
Reinsurance paid in relation to settlement of EQC receivable
Claims paid
Employee and supplier payments
Income tax paid
Operating activities cashflow from discontinued operations
Net cash inflow from operating activities
Cash flows from investing activities
Proceeds from sale of interest bearing investments
Proceeds from sale of unlisted equity investments
Payments for purchase of interest bearing investments
Payments for purchase of intangible assets
Payments for purchase of customer relationships
Payments for purchase of property, plant & equipment
Investing activities cashflow from discontinued operations
Net cash outflow from investing activities
Cash flows from financing activities
Payments for capital return to shareholders
Purchase of non-controlling interests
Received from lessor on signing of new lease
Dividends paid
Facility fees and interest paid
Payments relating to lease liabilities
Financing activities cashflow from discontinued operations
Net cash outflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Effect of foreign exchange rate changes
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Cash from discontinued operations
Cash and cash equivalents at the end of the year from continuing operations
The above statement should be read in conjunction with the accompanying notes.
2022
$000
RE-PRESENTED
2021
$000
425,677
389,236
6,519
4,063
11,745
–
–
(57,256)
–
(238,483)
(90,191)
(1,768)
(522)
59,784
5,268
6,212
17,668
52,883
(1,351)
(54,288)
(10,741)
(213,756)
(92,384)
(1,928)
1,276
98,095
181,412
156,544
–
(181,578)
(14,695)
(6,089)
(2,617)
(103)
(23,670)
(30,634)
(4,341)
–
(20,028)
(897)
(6,044)
(1,766)
(63,710)
(27,596)
3,765
116,129
92,298
(7,796)
84,502
25
(190,548)
(8,866)
(14,434)
(3,163)
1,220
(59,222)
–
–
10,944
(8,866)
(378)
(2,684)
(1,287)
(2,271)
36,602
(581)
80,108
116,129
–
116,129
8.4
The 2022 balance represents the purchase of Westpac and TSB's rights and obligations relating to servicing a portfolio of insurance underwritten by Tower. The 2021 balance represents the
purchase of ANZ's rights and obligations relating to servicing a portfolio of insurance underwritten by Tower. Please refer to note 6.2 for more information.
74
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
75
Notes to the consolidated financial statements
FOR THE YEAR ENDED 30 SEPTEMBER 2022
OVERVIEW
This section provides information that is helpful to an overall understanding of the financial statements and the areas of critical accounting
judgements and estimates included in the financial statements. It also includes a summary of Tower's operating segments.
1.1 About this Report
a. Entities reporting
The financial statements presented are those of Tower Limited (the Company) and its subsidiaries. The Company and its subsidiaries together are referred
to in this financial report as Tower or the Group. The address of the Company's registered office is 136 Fanshawe Street, Auckland, New Zealand.
During the periods presented, the principal activity of the Group was the provision of general insurance. The Group predominantly operates in New
Zealand with some of its operations based in the Pacific Islands region.
The financial statements were authorised for issue by the Board of Directors on 23 November 2022. The entity’s owners or others do not have the power
to amend the financial statements after issue.
b. Statutory base
Tower Limited is a company incorporated in New Zealand under the Companies Act 1993 and listed on the NZX Main Board and the Australian Securities
Exchange. The Company is a reporting entity under Part 7 of the Financial Markets Conduct Act 2013.
c. Basis of preparation
The Company is a for-profit entity and the financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting
Practice (NZ GAAP). They comply with International Financial Reporting Standards (IFRS), New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) and other applicable financial reporting standards, as appropriate for Tier 1 for-profit entities.
The financial statements of the Group have been prepared in accordance with the requirements of Part 7 of the Financial Markets Conduct Act 2013 and
the NZX Main Board Listing Rules.
The Group financial statements are presented in New Zealand dollars and rounded to the nearest thousand dollars. They have been prepared in
accordance with the historical cost basis except for certain financial instruments that are stated at their fair value.
d. Re-presentation of comparatives
The Group's Papua New Guinea Operations ("disposal group") constitutes a discontinued operation and is classified as held for sale as at 30 September
2022. Profit or loss information for the current period is prepared on a continuing basis with net results from discontinued operations presented
separately. Profit or loss information for 2021 has been re-presented for comparability. Refer to note 8.4 for further details.
Where necessary, comparative information has been reclassified for consistency with the current year presentation.
1.2 Consolidation
a. Principles of consolidation
The Group financial statements incorporate the assets and liabilities of all subsidiaries of the Company at balance date and the results of all subsidiaries
for the year.
Subsidiaries are those entities over which the consolidated entity has control, being power over the investee; exposure, or rights to variable returns from
its involvement with the investee; and the ability to use its power over the investee to affect the amount of the investor’s returns.
The results of any subsidiaries acquired during the year are consolidated from the date on which control was transferred to the consolidated entity and
the results of any subsidiaries disposed of during the year are consolidated up to the date control ceased. During the year ended 30 September 2022,
Tower Limited acquired the minority shareholding of National Pacific Insurance Limited. This is now 100% owned by Tower Limited.
The acquisition of controlled entities from external parties is accounted for using the acquisition method of accounting. Non-controlling interests in the
results and equity of subsidiaries are shown separately in the statement of comprehensive income, statement of changes in equity and balance sheet
respectively. Acquisition related costs are expensed as incurred.
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change
in carrying amount recognised in profit or loss.
Intercompany transactions and balances between Group entities are eliminated on consolidation.
1.2 Consolidation (continued)
b. Foreign currency
(i) Functional and presentation currencies
The financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates. The
Group financial statements are presented in New Zealand dollars and rounded to the nearest thousand dollars unless stated otherwise.
(ii) Transactions and balances
In preparing the financial statements of the individual entities, transactions denominated in foreign currencies are translated into the entities
functional and reporting currency using the exchange rates in effect at the transaction dates. Monetary items receivable or payable in a foreign
currency are translated at reporting date at the closing exchange rate.
Translation differences on non-monetary items such as financial assets held at fair value through profit or loss are reported as part of their fair value
gain or loss.
Exchange differences arising on the settlement or retranslation of monetary items at year end exchange rates impact profit after tax in the
consolidated statement of comprehensive income unless the items form part of a net investment in a foreign operation. In this case, exchange
differences are taken to the Foreign Currency Translation Reserve and recognised (as part of comprehensive profit) in the statement of
comprehensive income and the statement of changes in equity.
(iii) Consolidation
For the purpose of preparing consolidated financial statements the assets and liabilities of subsidiaries with a functional currency different to the
Company are translated at the closing rate at the balance date. Income and expense items for each subsidiary are translated at a weighted average
of exchange rates over the period, as a surrogate for the spot rates at transaction dates. Foreign currency translation differences are taken to the
Foreign Currency Translation Reserve and recognised in the statement of comprehensive income and the statement of changes in equity.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and
are translated at the closing rate with movements recorded through the Foreign Currency Translation Reserve in the statement of changes in equity.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the
statement of comprehensive income.
c. Subsidiaries
The table below lists Tower Limited's principal subsidiary companies and controlled entities. All entities have a balance date of 30 September.
NAME OF COMPANY
Parent Company
New Zealand general insurance operations
Tower Limited
Subsidiaries
Overseas general insurance operations
Tower Insurance (Cook Islands) Limited
Tower Insurance (Fiji) Limited
Tower Insurance (PNG) Limited (refer Note 8.4)
National Pacific Insurance Limited ("NPI") (refer Note 5.1)
National Pacific Insurance (Tonga) Limited (refer Note 5.1)
National Pacific Insurance (American Samoa) Limited (refer Note 5.1)
Tower Insurance (Vanuatu) Limited
Management service operations
Tower Services Limited
INCORPORATION
2022
2021
HOLDINGS
NZ
Parent
Parent
Cook Islands
Fiji
PNG
Samoa
Tonga
American Samoa
Vanuatu
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
71%
71%
71%
100%
NZ
100%
100%
76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
77
1.3 Critical accounting judgements and estimates
In preparing these financial statements management is required to make estimates and related assumptions about the future. The estimates and related
assumptions are based on experience and other factors that are considered to be reasonable, and are reviewed on an ongoing basis. Revisions to the
estimates are recognised in the period in which they are revised, or future periods if relevant. The key areas in which estimates and related assumptions
are applied are as follows:
— Net outstanding claims
— Liability adequacy test
— Intangible assets
note 2.4
note 2.5
note 6.2
— Lease liabilities (incremental borrowing rate)
note 6.3a(ii)
— Deferred tax
note 7.3
1.4 Segmental reporting
a. Operating segments
Tower operates in two geographical segments, New Zealand and the Pacific region. New Zealand comprises the general insurance business
underwritten in New Zealand. Pacific Islands comprises the general insurance business underwritten in the Pacific by Tower subsidiaries and branch
operations. Other contains balances relating to Tower Services Limited (management services entity), and also includes intercompany eliminations and
group diversification benefits.
The Group does not derive revenue from any individual or entity that represents 10% or more of the Group's total revenue.
The Pacific Islands operating segment excludes the disposal group and assets and liabilities held for sale. The prior year comparatives have been
re-presented accordingly. Intercompany transactions with the disposal group are eliminated within continuing operations, refer note 8.4.
1.4 Segmental reporting (continued)
b. Financial performance of continuing operations
Year Ended 30 September 2022
Gross written premium
Gross earned premium
Outward reinsurance premium
Net earned premium
Net claims expense
Net commission expense
Underwriting expense
Underwriting profit/(loss)
Net investment income
Other expenses
Profit before tax from continuing operations
Profit after tax from continuing operations
Year Ended 30 September 2021 (Re-presented)
Gross written premium
Gross earned premium
Outward reinsurance premium
Net earned premium
Net claims expense
Net commission expense
Underwriting expense
Underwriting profit
Net investment income
Other expenses
Profit before tax from continuing operations
Profit after tax from continuing operations
c. Financial position of continuing operations
Additions to non-current assets
30 September 2022
Additions to non-current assets
30 September 2021
Total assets 30 September 2022
Total assets 30 September 2021
Total liabilities 30 September 2022
Total liabilities 30 September 2021
NEW ZEALAND
PACIFIC ISLANDS
$000
$000
OTHER
$000
TOTAL
$000
395,490
369,871
(51,026)
318,845
(207,184)
(8,048)
(76,089)
27,524
1,023
192
28,739
21,642
351,058
340,568
(44,918)
295,650
(195,343)
(9,762)
(76,519)
14,026
43
182
14,251
8,855
50,090
48,451
(15,242)
33,209
(18,066)
(1,237)
(18,131)
(4,225)
137
203
(3,885)
(4,314)
44,945
46,052
(13,837)
32,215
(6,888)
(1,444)
(10,641)
13,242
132
110
13,484
9,620
–
–
–
–
445,580
418,322
(66,268)
352,054
346
(224,904)
–
–
346
–
–
346
346
–
–
–
–
(9,285)
(94,220)
23,645
1,160
395
25,200
17,674
396,003
386,620
(58,755)
327,865
(88)
(202,319)
–
–
(88)
–
–
(88)
(73)
(11,206)
(87,160)
27,180
175
292
27,647
18,402
NEW ZEALAND
PACIFIC ISLANDS
$000
$000
OTHER
$000
TOTAL
$000
29,547
51,970
723,805
708,527
426,930
405,058
883
430
74,539
92,843
51,462
43,660
(4,327)
26,103
–
52,400
(14,942)
(10,615)
(965)
(617)
783,402
790,755
477,427
448,101
Additions to non-current assets include additions to property, plant and equipment, right of use assets, intangible assets and investments in subsidiaries.
78
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
79
1.4 Segmental reporting (continued)
Definition
An operating segment is a group of 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. Operating segments are reported in a manner consistent with the internal reporting provided to the
chief operating decision-maker (the Chief Executive Officer) who reviews the operating results on a regular basis and makes decisions on resource
allocation and assessing performance.
2. UNDERWRITING ACTIVITIES
This section provides information on Tower's underwriting activities.
Tower collects premiums from customers in exchange for providing insurance coverage. These premiums are recognised as revenue when they
are earned by Tower, with a liability for unearned premiums recognised on the balance sheet.
When customers suffer a loss that is covered by their policy, Tower will make payments to customers or suppliers, which it recognises as claims
expenses. To ensure Tower’s obligations to customers are properly recorded within the financial statements, Tower recognises provisions for
outstanding claims.
To manage Tower’s risk and optimise its returns, Tower reinsures some of its exposure with reinsurance companies. The premiums paid to
reinsurers are recognised as an expense, while recoveries from reinsurers are recognised as revenue.
2.1 Underwriting Revenue
Composition
Gross written premium
Movement in unearned premium liability
Gross earned premium
Reinsurance and other recoveries revenue
Reinsurance commission
Insurance administration services commission
Commission revenue
Underwriting revenue
Recognition and measurement
2022
$000
2021
$000
445,580
396,003
(27,258)
(9,383)
418,322
386,620
15,243
24,601
3,971
1,134
5,105
5,343
1,118
6,461
438,670
417,682
Gross earned premium is recognised in the period in which the premiums are earned during the term of the contract, excluding taxes and levies
collected on behalf of third parties. It includes a provision for expected future premium cancellations (which is offset against gross premium
receivables, see note 2.7), and customer remediation (see note 2.9). The proportion of premiums not earned in the consolidated statement of
comprehensive income at reporting date is recognised in the consolidated balance sheet as unearned premiums.
Reinsurance and other recoveries on paid claims, reported claims not yet paid, claims incurred but not reported and claims incurred but not
enough reported are recognised as revenue. Recoveries are measured as the expected future receipts and recognised when the claim is incurred.
Reinsurance commission revenue includes reimbursements by reinsurers to cover part of Tower's management and sales expense over the term
of the reinsurance agreements. Reinsurance commission income can also include a proportion of expected profitability of business ceded to the
reinsurer. The final value of the variable commission is based on the achievement of a hurdle rate over time. This revenue is recognised over the
term of the reinsurance agreements dependent on the profitability of proportional arrangement which is reassessed at each reporting date.
Insurance administration services commission includes a percentage of levies collected on behalf of third parties and is recognised at the point
the levy is collected.
2.2 Net claims expense
Composition
EXC. CANTERBURY EARTHQUAKE
CANTERBURY EARTHQUAKE
TOTAL
2022
$000
2021
$000
Gross claims expense
Reinsurance and other recoveries revenue
Net claims expense
231,034
(13,613)
217,421
226,611
(23,396)
203,215
Recognition and measurement
2022
$000
9,113
(1,630)
7,483
2021
$000
309
(1,205)
(896)
2022
$000
2021
$000
240,147
(15,243)
224,904
226,920
(24,601)
202,319
Net claims expense is measured as the difference between net outstanding claims liability at the beginning and end of the financial year plus any
claims payments made net of reinsurance and other recoveries received during the financial year. Please refer to note 2.4 for more information.
Additional disclosures related to the Canterbury earthquake events in 2010 and 2011 are provided in note 2.4..
2.3 Underwriting expense
Composition
People costs
People costs capitalised during the year
Technology
Amortisation
Depreciation
External fees
Marketing
Communications
Miscellaneous
Movement in deferred acquisition costs
Claims related management expenses reclassified to claims expense
Service fees charged to discontinued operations
Underwriting expenses
2022
$000
2021
$000
84,160
(7,557)
14,556
14,723
4,992
10,594
11,757
3,039
3,258
(6,511)
(37,085)
(1,706)
94,220
64,626
(3,569)
14,320
12,556
4,440
10,300
8,477
3,829
4,319
877
(31,320)
(1,695)
87,160
Includes $2.7m (2021: $2.3m) of depreciation on right of use assets. See note 6.3b for further information.
2021 included a writedown for a deficiency on the liability adequacy test of $2.5m, refer note 2.6. This resulted in a lower amortisation expense of deferred acquisition costs in 2022.
Refer note 8.4 for further detail.
80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
81
2.4 Net outstanding claims
a. Composition
Central estimate of future cash flows
Claims handling expense
Risk Margin
Gross outstanding claims
Reinsurance recoveries
Net outstanding claims
Net claim payments within 12 months
Net claim payments after 12 months
Net outstanding claims
Recognition and measurement
EXC. CANTERBURY EARTHQUAKE
CANTERBURY EARTHQUAKE
TOTAL
2022
$000
2021
$000
2022
$000
2021
$000
2022
$000
2021
$000
89,404
5,564
5,051
100,019
(10,293)
89,726
76,422
13,304
89,726
87,535
5,430
6,724
99,689
(18,970)
80,719
69,687
11,032
80,719
18,056
772
5,684
24,512
(3,787)
20,725
8,497
12,228
20,725
16,402
1,314
4,933
22,649
(3,880)
18,769
7,508
11,261
18,769
107,460
103,937
6,336
10,735
6,744
11,657
124,531
122,338
(14,080)
110,451
84,919
25,532
110,451
(22,850)
99,488
77,195
22,293
99,488
Gross outstanding claims liability comprises a central estimate of future cash outflows and a risk margin for uncertainty.
The outstanding claims liability is measured at the central estimate of future cash outflows relating to claims incurred prior to the reporting date
including direct and indirect claims handling costs. The liability is measured based on the advice of the Appointed Actuary or on valuations which
have been peer reviewed by the Appointed Actuary. It is intended to include no deliberate or unconscious bias toward over or under-estimation.
Given the uncertainty in establishing the liability, it is likely the final outcome will differ from the original liability established. Changes in the claim
estimates are recognised in profit or loss in the reporting period in which the estimates are changed.
The gross outstanding claim liabilities also include a risk margin that relates to the inherent uncertainty in the central estimate of the future
payments. The risk margin represents the amount by which the liability recognised in the financial statements is greater than the actuarial estimate.
Tower currently applies a 75% probability of adequacy to the outstanding claims liability which means there is a 1-in-4 chance all future claim
payments will exceed the overall reserve held.
Discounting has been applied to the provision for outstanding claims relating to the Canterbury earthquakes, using spot rates derived from
government issued bonds. The overall discount, at 30 September 2022, is equivalent to using a uniform discount rate of 4.2% per annum. At the
previous valuation of the Canterbury earthquakes liability, discounting was not applied as it was considered immaterial in a lower interest rate
environment. Discounting has also not been allowed for on other outstanding claims as the expected timeframe for paying these claims is short,
and the impact of discounting is considered to be immaterial.
Uncertainties surrounding the liability estimation process include those relating to the available data, actuarial models and assumptions, the
statistical uncertainty associated with the general insurance run-off process and external risks.
Net outstanding claims liability is calculated by deducting reinsurance and other recoveries from gross outstanding claims. Reinsurance and other
recoveries on outstanding claims are recognised as income with the corresponding asset being recognised on the balance sheet.
2.4. Net outstanding claims (continued)
b. Reconciliation of movements in net outstanding claims liability
2022
$000
2021
$000
GROSS
REINSURANCE
NET
GROSS
REINSURANCE
NET
Balance brought forward
Claims expense – current year
Claims expense – prior year
Incurred claims recognised in profit or loss
from continuing operations
Incurred claims recognised in profit or loss
from discontinued operations
Claims paid and reinsurance and other
recoveries raised from continuing and
discontinued operations
Foreign exchange
Liabilities reclassified as held for sale
122,338
248,024
(5,970)
(22,850)
(20,429)
4,491
99,488
227,595
(1,479)
107,747
234,675
(5,772)
(12,889)
(22,171)
(2,464)
94,858
212,504
(8,236)
240,147
(15,243)
224,904
226,920
(24,601)
202,319
1,907
(695)
1,212
1,983
(34)
1,949
(239,706)
24,604
(215,102)
(213,350)
14,397
(198,953)
1,826
(1,981)
(347)
451
1,479
(1,530)
(962)
–
277
–
(685)
–
Outstanding claims
124,531
(14,080)
110,451
122,338
(22,850)
99,488
Refer note 8.4.
c. Development of claims
The following table shows the development of net outstanding claims relative to the current estimate of ultimate claims costs for the five most recent years.
ULTIMATE CLAIMS COST ESTIMATE
PRIOR
$000
2018
$000
2019
$000
2020
$000
2021
$000
2022
$000
TOTAL
$000
At end of incident year
One year later
Two years later
Three years later
Four years later
Ultimate claims cost
Cumulative payments
Central estimate
Claims handling expense
Risk margin
Net outstanding claim liabilities
Reinsurance recoveries
Gross outstanding claim liabilities
147,806
146,214
147,073
144,041
146,234
143,209
145,752
143,233
146,157
146,157
–
158,309
183,003
200,370
154,825
153,470
–
–
181,656
–
–
–
–
–
–
–
143,233
153,470
181,656
200,370
(145,627)
(142,612)
(150,821)
(173,193)
(134,491)
15,237
530
621
2,649
8,463
65,879
93,379
6,337
10,735
110,451
14,080
124,531
All amounts in this note exclude discontinued operations, consistent with other profit or loss disclosures.
Prior year numbers have been restated at current year exchange rates to reflect the underlying development of claims.
d. Actuarial information
The estimation of outstanding claims as at 30 September 2022 has been carried out by:
(i) Geoff Atkins, BA (ActuarDc), FIAA, FIAL, FANZIIF, Appointed Actuary – Canterbury earthquake claims; and
(ii) John Feyter, B.Sc., FNZSA – all other outstanding claims
The New Zealand actuarial assessments are undertaken in accordance with the standards of the New Zealand Society of Actuaries, in particular
Professional Standard No. 30 "Valuations of General Insurance Claims". The Actuaries were satisfied as to the nature, sufficiency and accuracy of the data
used to determine the outstanding claims liability. The outstanding claims liability is set by the Actuaries at a level that is appropriate and sustainable to
cover the Group's claims obligations after having regard to the prevailing market environment and prudent industry practice.
82
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
83
2.4. Net outstanding claims (continued)
e. Canterbury earthquakes
Cumulative impact of Canterbury earthquakes
As at 30 September 2022, Tower has 36 claims remaining to settle (2021: 33) as a result of the earthquakes impacting the Canterbury region during 2010
and 2011. The following table presents the cumulative impact of the four main Canterbury earthquake events on the consolidated statement of
comprehensive income.
2.4. Net outstanding claims (continued)
Canterbury Earthquake outstanding claims liability
Assumptions are made for the estimation of outstanding claims related to the Canterbury earthquakes. The key assumptions are estimated ultimate
costs (including building costs) for settling open claims, and the numbers of new overcap claims, litigated claims, re-opened claims and their associated
costs. Other elements of judgement include the apportionment of claim costs between the four main earthquake events, future claim management
expenses and assessment of the risk margin.
Earthquake claims estimate net of EQC payments
Reinsurance recoveries
Claim expense net of reinsurance recoveries
Reinsurance expense
Cumulative impact of Canterbury earthquakes before tax
Income tax
Cumulative impact of Canterbury earthquakes after tax
Canterbury earthquake impact on profit or loss before tax
Net claims (gain)/expense
Critical accounting estimates and judgements
Outstanding claims liability (excluding Canterbury Earthquakes)
2022
$000
2021
$000
(953,531)
733,720
(219,811)
(25,045)
(244,856)
(944,418)
732,090
(212,328)
(25,045)
(237,373)
68,560
66,464
(176,296)
(170,909)
2022
$000
2021
$000
7,483
(896)
ASSUMPTION
Number of future new overcap and new litigated claims
Average cost of new overcap or new litigated claim
Provision for re-opened claims
Additional portfolio-level provision for incurred but not enough reported
New overcap and new litigated claims
2022
$000
2021
$000
46
38
114,000
121,000
1,070,000
2,400,000
2,355,000
1,274,000
New overcap claims are typically for properties that have previously been managed by EQC but where damage is now assessed as being more extensive
than previously thought and there is now an insurance claim payable.
New litigated claims are existing or future new claims that are referred to either the Insurance Tribunal or the High Court for resolution. Costs for new
litigated claims are assumed to be substantially higher than costs for other overcap claims. Only a small number of new litigated claims is now expected.
Provision for re-opened claims
Re-opened claims arise where additional liability arises for additional scope not previously identified or where a repair has failed or where another
expense is payable for a claim that is currently closed.
f. Sensitivity Analysis
The impact on profit or loss of changes in key assumptions used in the calculation of the outstanding claims liabilities is summarised below. Each change
has been calculated in isolation from the other variables and is stated before income tax.
Outstanding claims excluding Canterbury earthquake
The estimation of the outstanding claims liability involves a number of key assumptions. Tower's estimation uses Company specific data, relevant industry
data and general economic data for each major class of business. The estimation process factors in a number of considerations including the risks to
which the business is exposed to at a point in time, claim frequency and severity, historical trends in the development of claims as well as legal, social
and economic factors that may affect each class of business.
ASSUMPTION
Expected future claims development proportion
Claims handling expense ratio
Risk margin
Expected future claims development proportion
2022
$000
20.3%
6.6%
6.0%
2021
$000
19.7%
6.7%
9.1%
Expected future claims development
Claims handling expense ratio
Risk margin
Canterbury earthquake outstanding claims
This is the proportion of additional claims cost that is expected to be recognised in the future for claims that have already been reported. The assumption
is expressed as a proportion of current case estimates for open claims and the resulting amount is recognised in the balance sheet as an outstanding
claims liability.
Claims handling expense ratio
This reflects the expected cost to administer current open and future claims. The ratio is calculated based on historical experience of claims handling costs.
Number of new overcap or new litigated claims
Risk margin
Risk margins are calculated for outstanding claims in each country separately and a diversification benefit is calculated taking into account the
uncorrelated effect of random risk. The total risk margin percentage shown is calculated on a weighted average basis. The decrease in the risk margin
this year reflects the reassessment of uncertainty on claim outcomes as a result of the COVID-19 pandemic.
Change in average cost of a new overcap or new litigated claim
Number of reopened claims
Change in average cost of a reopened claim
MOVEMENT IN
ASSUMPTION
+ 10%
- 10%
+ 10%
- 10%
+ 10%
- 10%
MOVEMENT IN
ASSUMPTION
+ 35%
- 35%
+ 20%
- 20%
+ 35%
- 35%
+ 20%
- 20%
IMPACT ON PROFIT OR (LOSS)
2022
$000
(1,419)
1,419
(556)
556
(505)
505
2021
$000
(1,339)
1,339
(543)
543
(672)
672
IMPACT ON PROFIT OR (LOSS)
2022
$000
(1,817)
1,817
(1,038)
1,038
(375)
375
(214)
214
2021
$000
(1,610)
1,610
(920)
920
(840)
840
(480)
480
84
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
85
2.5 Unearned premium liability
Reconciliation
Opening balance
Premiums written during the year from continuing operations
Premiums earned during the year from continuing operations
Unearned premium movement from continuing operations
Premiums written during the year from discontinued operations
Premiums earned during the year from discontinued operations
Unearned premium movement from discontinued operations
Foreign exchange movements
Liabilities reclassified as held for sale
2022
$000
2021
$000
212,275
203,452
445,580
396,003
(418,322)
(386,620)
27,258
8,055
(8,684)
(629)
3,957
(4,745)
9,383
8,678
(8,910)
(232)
(328)
–
2.6 Deferred insurance costs
Reconciliation
DEFERRED ACQUISITION COSTS
DEFERRED OUTWARDS
REINSURANCE EXPENSE
DEFERRED INSURANCE COSTS
2022
$000
2021
$000
2022
$000
2021
$000
2022
$000
2021
$000
Balance bought forward
21,116
25,220
10,851
9,447
31,967
34,667
Costs deferred
Amortisation expense
Writedown due to LAT deficiency
Foreign exchange movements
Asset reclassified as held for sale
48,192
(42,765)
–
247
(248)
40,323
(41,897)
(2,534)
4
_
Closing balance
26,542
21,116
17,283
(17,073)
–
1,303
(1,087)
11,277
17,968
(16,428)
–
(136)
_
10,851
65,475
(59,838)
–
1,550
(1,335)
37,819
58,291
(58,325)
(2,534)
(132)
–
31,967
Unearned premium liability from continuing operations
238,116
212,275
Deferred insurance costs are expected to be amortised within 12 months from reporting date.
All unearned premiums will be earned in the 12 months after 30 September 2022 and therefore are current liabilities. The unearned premium liability is
presented net of cancellation provisions.
Recognition and measurement
Unearned premium liability is the portion of premiums written that are yet to be earned in the consolidated statement of comprehensive income.
It is calculated based on the term of the risk and in accordance with the expected pattern of the incidence of risk underwritten using an appropriate
pro-rated method.
Adequacy of unearned premium liability
Tower undertakes a liability adequacy test ("LAT") to determine whether the unearned premium liability is sufficient to pay future claims net of
reinsurance recoveries.
If the present value of expected future net cash flows relating to current insurance contracts, plus a risk margin, exceeds the unearned premium
liabilities less related deferred acquisition costs and intangible assets, then the unearned premium liability is deemed deficient. This deficiency is
immediately recognised in profit or loss. In recognising the deficiency, Tower will first write down any related deferred acquisition costs or intangible
assets before recognising an unexpired risk liability.
The unearned premium liability as at 30 September 2022 was sufficient for the New Zealand business (2021: $2.0m deficiency). The unearned
premium liabilities as at 30 September 2022 for each Pacific entity was also sufficient (2021: all sufficient with the exception of Fiji and Vanuatu where a
total deficiency of $0.5m was recognised).
%
Central estimate net claims as a % of unearned premium liability
Risk margin as a % of net claims
Critical accounting estimates and judgements
2022
2021
45.5%
11.2%
45.2%
11.0%
The LAT is conducted using a central estimate of premium liability adjusted for risk margin and it is carried out on an individual country basis. The
test is based on prospective information and so is heavily dependent on assumptions and judgements.
Recognition and measurement
Acquisition costs comprises costs incurred in obtaining and recording general insurance contracts such as advertising expenses, sales expenses
and other underwriting expenses. These costs are initially capitalised and then expensed in line with the earning pattern of the related premium.
Deferred acquisition costs at the reporting date represent the acquisition costs related to unearned premium.
Outwards reinsurance expense reflects premiums ceded to reinsurers and is recognised as an expense in accordance with the pattern of
reinsurance service received. Deferred outwards reinsurance expense at the reporting date represents outwards reinsurance expenses related to
unearned premium.
2.7 Receivables
Composition
Gross premium receivables
Provision for expected future premium cancellations
Premium receivable
Reinsurance recoveries
Canterbury earthquake reinsurance recoveries
Other recoveries
Reinsurance and other recoveries
Finance lease receivables
Prepayments
Other receivables
Receivable from discontinued operations
Receivables
Receivable within 12 months
Receivable in greater than 12 months
Receivables
Refer note 8.4 for further detail.
2022
$000
2021
$000
200,715
(651)
200,064
15,847
3,787
11,378
31,012
2,375
4,411
2,401
1,826
178,213
(655)
177,558
20,326
3,880
5,207
29,413
4,278
3,279
2,397
–
242,089
216,925
241,742
214,504
347
2,421
242,089
216,925
86
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
87
2.7 Receivables (continued)
Recognition and measurement
Receivables (inclusive of GST) are recognised at fair value and are subsequently measured at cost less any impairment.
Tower's premium receivables and reinsurance and other recoveries arise from insurance contracts. These receivables are impaired if there is
objective evidence that Tower will not be able to collect all amounts due according to the original terms of the receivable.
The remainder of Tower's receivables are assessed for impairment based on expected credit losses.
Finance lease receivables
Tower entered into a sub-lease for its previous Auckland premises. The sub-lease is for the remaining non-cancellable term of the head lease and
therefore is classified as a finance lease. The profile of the net receipts is illustrated in the table below:
Less than one year
Between one and five years
Total undiscounted finance lease receivable
Unearned finance income
Net investment in the finance lease
2.8 Payables
Composition
Trade payables
GST payable
EQC & Fire and Emergency New Zealand levies payable
Reinsurance premium payable
Unsettled investment purchases
Other
Payables
Payable within 12 months
Payable in greater than 12 months
Payables
Recognition and measurement
2022
$000
2,074
347
2,421
(46)
2,375
2021
$000
2,019
2,421
4,440
(162)
4,278
2022
$000
2021
$000
14,672
25,951
11,583
3,696
–
3,009
58,911
11,452
23,264
10,857
6,343
11,456
6,605
69,977
58,911
69,977
–
–
58,911
69,977
Payables are recognised where goods or services that have been received or supplied and have been invoiced or formally agreed with the
supplier. Payables are stated at the fair value of the consideration to be paid in the future inclusive of GST. GST payable represents the net amount
payable to the respective tax authorities.
2.9 Provisions
Composition
Annual leave and other employee benefits
Customer remediation
Provisions
Payable within 12 months
Payable in greater than 12 months
Provisions
2022
$000
8,219
3,654
11,873
10,716
1,157
11,873
2021
$000
6,709
–
6,709
6,235
474
6,709
This is a one-off provision for customer remediation arising from an error in the calculation of multi-policy discounts.
Recognition and measurement
Tower recognises a provision when it has a present obligation as a result of a past event and it is more likely than not that an outflow of resources
will be required to settle the obligation. Tower's provision represents the best estimate of the expenditure required to settle the present obligation
at the end of the reporting period.
2.10 Assets backing insurance liabilities
Tower has determined that all assets within its insurance companies are held to back insurance liabilities, with the exception of: (i) property, plant and
equipment; (ii) right of use assets, (iii) intangible assets; and (iv) investments in operating subsidiaries. Assets backing insurance liabilities are managed in
accordance with approved investment mandate agreements on a fair value basis and are reported to the Board on that basis.
3. INVESTMENTS
Tower invests funds collected as premiums and provided by shareholders to ensure it can meet its obligations to pay claims and expenses and to
generate a return to support its profitability. Tower has a low risk tolerance and therefore the majority of its investments are in investment grade
supranational and government bonds, and term deposits.
3.1 Investment income
Interest income
Net realised loss
Net unrealised loss
Investment income
2022
$000
6,835
(2,028)
(3,309)
1,498
2021
$000
5,127
(2,152)
(2,416)
559
Net realised losses relate to the maturity of fixed interest bonds, with interest coupon rates higher than market rates, purchased at higher than face value.
The corresponding higher interest received is reflected in the interest income amount.
Recognition and measurement
Tower's investment income is primarily made up of realised and unrealised interest income on fixed interest investments and fair value gains or
losses on its investment assets. Both are recognised in the period that they are earned through profit or loss.
88
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
89
3.2 Investments
Fixed interest investments
Property investment
Investments
Recognition and measurement
2022
$000
2021
$000
258,600
277,436
34
34
258,634
277,470
Tower's investment assets are designated at fair value through profit or loss. Investment assets are initially recognised at fair value and are remeasured to
fair value through profit or loss at each reporting date. Tower's approach to measuring the fair value of these assets is covered in the note 3.3.
Purchases and sales of investments are recognised at the date which Tower commits to buy or sell the assets (i.e. trade date). Investments are
derecognised when the rights to receive future cash flows from the assets have expired, or have been transferred, and substantially all the risks and
rewards of ownership have transferred.
3.3 Fair value hierarchy
Tower designates its investments at fair value through profit or loss in accordance with its Treasury policy. It categorises its investments into three levels
based on the inputs available to measure fair value:
Level 1
Fair value is calculated using quoted prices in active markets. Tower currently does not have any Level 1 investments.
Level 2
Investment valuations are based on direct or indirect observable data other than quoted prices included in Level 1. Level 2 inputs include: (1)
quoted prices for similar assets or liabilities; (2) quoted prices for assets or liabilities that are not traded in an active market; or (3) other
observable market data that can be used for valuation purposes. Tower investments included in this category include government and
corporate debt, where the market is considered to be lacking sufficient depth to be considered active, and part ownership of a property that
is rented out to staff.
Level 3
Investment valuation is based on unobservable market data. Tower currently does not have any Level 3 investments.
As at 30 September 2022
Fixed interest investments
Property investment
Investments
As at 30 September 2021
Fixed interest investments
Property investment
Investments
LEVEL 1
$000
LEVEL 2
$000
LEVEL 3
$000
TOTAL
$000
–
–
–
–
–
–
258,600
34
258,634
277,436
34
277,470
–
–
–
–
–
–
258,600
34
258,634
277,436
34
277,470
There have been no transfers between levels of the fair value hierarchy during the current financial period (2021: nil).
4. RISK MANAGEMENT
Tower is exposed to multiple risks as it works to set things right for its customers and their communities whilst maximising returns for its
shareholders. Everyone across the organisation is responsible for ensuring that Tower's risks are managed and controlled on a day-to-day basis.
4.1 Risk management overview
Tower’s approach to achieving effective risk management is to embed a risk-aware culture where everyone across the organisation (including contractors
and third parties) is responsible for managing risk.
Tower’s Board expresses its appetite for risk in a Risk Appetite Statement, which:
(i) Gives clear concise guidance to management of parameters for risk taking.
(ii) Embeds risk management into strategic and decision-making processes.
(iii) Facilitates risk to be managed at all levels of the organisation through a structured process to identify risk, and the allocation of clear, personal
responsibility for management of identified risks by assigned risk owners.
The Board then approves and adopts: (i) the Risk Management Framework (RMF) which is the central document that explains how Tower effectively
manages risk within the business; and (ii) the Reinsurance Management Strategy (ReMS) which describes the systems, structures, and processes which
collectively ensures Tower's reinsurance arrangements and operations are prudently managed. These documents are approved annually by the Board.
The Board has delegated its responsibility to the Risk Committee to provide oversight of risk management practices and provide advice to the Board and
management when required. In addition, the Risk Committee also monitors the effectiveness of Tower’s risk management function which is overseen by
the Chief Risk Officer (CRO). The CRO provides regular reports to the Risk Committee on the operation of the RMF.
Tower has embedded the RMF with clear accountabilities and risk ownership to ensure that Tower identifies, manages, mitigates and reports on all key
risks and controls through the three lines of defence model.
(i) First line: Operational management has ownership, responsibility and accountability for directly identifying, assessing, controlling and mitigating key
risks which prevent them from achieving business objectives.
(ii) Second Line: Tower’s Risk, Compliance and Conduct Function is responsible for developing and implementing effective risk, compliance and conduct
management processes; providing advisory support to the first line of defence and constructively challenging operational management and risk and
obligation owners to ensure positive assurance.
(iii) Third line: Internal Audit is responsible and accountable for providing an independent and objective view of the adequacy and effectiveness of the
Group’s risk management, governance and internal control framework. Internal audit, along with other groups such as external audit, report
independently to the Board and/or the Audit Committee.
The RMF is supported by a suite of policies that address the risks and compliance obligations covered in this section.
4.2 Strategic risk
Strategic risk is the risk that internal or external factors compromise Tower's ability to execute its strategy or achieve its strategic objectives. Strategic risk
is managed through:
(i) Monitoring and managing performance against Board approved plan and targets.
(ii) Board leading an annual strategy and planning process which considers our performance, competitor positioning and strategic opportunities.
(iii) Identifying and managing emerging risks using established governance processes and forums.
4.3 Insurance risk
Insurance risk is the risk that for any class of risk insured, the present value of actual claims payable will exceed the present value of actual premium
revenues generated (net of reinsurance). This risk is inherent in Tower's operations and arises and manifests through underwriting, insurance
concentration and reserving risk.
90
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
91
4.3 Insurance risk (continued)
a. Underwriting risk
Underwriting risk refers to the risk that claims arising are higher (or lower) than assumed in pricing due to bad experience including catastrophes,
weakness in controls over underwriting or portfolio management, or claims management issues. Tower has established the following key controls to
mitigate this risk:
(i) Use of comprehensive management information systems and actuarial models to price products based on historical claims frequencies and claims
severity averages, adjusted for inflation and modelled catastrophes, trended forward to recognise anticipated changes in claims patterns after
making allowance for other costs incurred by the Group.
4.4 Credit risk
Credit risk is the risk of loss that arises when a counterparty fails to meet their financial obligations to Tower in accordance with the agreed terms. Tower's
exposure to credit risk primarily results from transactions with security issuers, reinsurers and policyholders and is set out below.
a. Investment and treasury
Tower manages its investment and treasury credit risks in line with limits set by the Board:
(i) New Zealand cash deposits that are internally managed are limited to banks with a minimum Standard & Poor's (S&P) AA- credit rating.
(ii) Passing elements of insurance risk to reinsurers. Tower's Board determines a maximum level of risk to be retained by the Group as a whole.
(ii) Cash deposits and investments that are managed by external investment managers are limited to counterparties with a minimum S&P A- credit rating.
Tower's reinsurance programme is structured to adequately protect the solvency and capital positions of the insurance business. The adequacy of
reinsurance cover is modelled by assessing Tower's exposure under a range of scenarios. The plausible scenario that has the most financial
significance for Tower is a major Wellington earthquake. Each year, as part of setting the coming year's reinsurance cover, comprehensive modelling
of the event probability and amount of the Group's exposure is undertaken.
(iii) Underwriting limits are in place to enforce appropriate risk selection criteria and pricing with specific underwriting authorities that set clear
parameters for the business acceptance.
b. Concentration risk
Concentration risk refers to the risk of underwriting a number of like risks, where the same or similar loss events have the potential to produce claims
from many of Tower's customers at the same time. Tower is particularly subject to concentration risks in the following variety of forms:
(i) Geographic concentration risk – Tower purchases a catastrophe reinsurance programme to protect against a modelled 1-in-1000 years whole of
portfolio catastrophe loss.
(ii) Product concentration risk – Tower's business is weighted towards the NZ general insurance market where its risks are concentrated in house
insurance (Home & Contents) and motor insurance. Tower limits its exposure through proportionate reinsurance arrangements. The table below
illustrates the diversity of Tower's operations.
GROSS WRITTEN PREMIUM (%)
NZ
PACIFIC
TOTAL
NZ
PACIFIC
TOTAL
2022
2021
Home & Contents
Motor
Commercial
Liability
Workers compensation
Other
Total
51%
35%
1%
1%
0%
0%
88%
3%
3%
5%
0%
1%
0%
54%
38%
6%
1%
1%
0%
12%
100%
52%
34%
1%
1%
0%
1%
89%
4%
3%
4%
0%
0%
0%
11%
56%
37%
5%
1%
0%
1%
100%
The Pacific Islands operating segment excludes the disposal group and the prior year comparatives have been re-presented accordingly.
Tower has limited exposure to long-tail classes (which comprises part of "liability" and "workers compensation"). Long-tail classes have increased
uncertainty of the ultimate cost of claims due to the additional period of time to settlement.
c. Reserving risk
Reserving risk is managed through the actuarial valuation of insurance liabilities and monitoring of the probability of adequacy booked reserves. The
valuation of the net central estimate is performed by qualified and experienced actuaries. The central estimate is subject to a comprehensive review at
least annually.
(iii) Tower holds deposits and invests in Pacific regional investment markets through its Pacific Island operations to comply with local statutory
requirements and in accordance with Tower investment policies. These deposits and investments generally have low credit ratings representing the
majority of the value included in the 'Below BBB' and 'not rated' categories in the table below. This includes deposits and investments with Australian
bank subsidiaries that comprise 55% (2021: 88%) of the 'not rated' category.
CASH AND CASH EQUIVALENTS
FIXED INTEREST INVESTMENTS
TOTAL
2022
$000
2021
$000
2022
$000
2021
$000
2022
$000
2021
$000
–
–
66,228
83,614
–
–
1,614
16,660
84,502
–
–
9,173
23,342
116,129
119,198
110,957
24,399
–
2,009
2,071
94,430
143,548
33,100
–
2,226
4,166
119,198
177,185
24,399
–
3,623
18,731
94,430
227,162
33,100
–
11,399
27,508
258,634
277,470
343,136
393,599
AAA
AA
A
BBB
Below BBB
Not rated
Total
b. Reinsurance
Tower manages its reinsurance programme in line with the ReMS. Tower seeks to manage the quantum and volatility of insurance risk in order to reduce
exposure and overall cost.
Tower's policy is to only deal with reinsurers with a credit rating of S&P A- or better unless local statutory requirements dictate otherwise. Additional
requirements of the policy are for no individual reinsurer to have more than 25% share of the overall programme and Tower is prohibited from offering
inwards reinsurance to external entities. The following table provides details on Tower's exposure to reinsurance recoveries:
AAA
AA
A
BBB
Below BBB
Not rated
Total
OUTSTANDING CLAIMS
PAID CLAIMS
REINSURANCE ON:
2022
$000
–
5,830
8,319
9
102
220
2021
$000
–
12,005
10,805
–
–
40
2022
$000
–
2,929
2,220
–
3
2
2021
$000
–
1,028
320
–
–
4
TOTAL
2022
$000
–
8,759
10,539
9
105
222
2021
$000
–
13,033
11,125
–
–
44
14,480
22,850
5,154
1,352
19,634
24,202
92
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
93
4.4 Credit risk (continued)
4.5 Market risk (continued)
The following table provides further information regarding the ageing of reinsurance recoveries on paid claims at the balance date.
The following table demonstrates the impact of the New Zealand dollar weakening or strengthening against the most significant currencies for which
Tower has foreign exchange exposure holding all other variables constant.
NOT DUE
$000
1 MONTH
$000
1 TO 2 MONTHS
$000
2 TO 3 MONTHS
$000
OVER 3 MONTHS
$000
TOTAL
$000
PAST DUE
5,154
1,352
–
–
–
–
–
–
–
–
5,154
1,352
As at 30 September 2022
Reinsurance recoveries on paid claims
As at 30 September 2021
Reinsurance recoveries on paid claims
c. Premium receivable
Tower's premium receivable balance primarily relates to policies which are paid on either a fortnightly or monthly basis. Payment default or policy
cancellation – subject to the terms of the policyholder's contract – will result in the termination of the insurance contract eliminating both the credit risk
and the insurance risk.
NOT DUE
$000
1 MONTH
$000
1 TO 2 MONTHS
$000
2 TO 3 MONTHS
$000
OVER 3 MONTHS
$000
TOTAL
$000
PAST DUE
As at 30 September 2022
Net premium receivable
As at 30 September 2021
Net premium receivable
192,464
5,933
1,188
384
95
200,064
169,915
5,514
1,484
562
83
177,558
This includes premiums that are less than 30 days outstanding (which are owed but not past due) of $4.0m (2021: $5.5m).
4.5 Market risk
Market risk is the risk of adverse impacts on investment earnings resulting from changes in market factors. Tower's market risk is predominately as a
result of changes in the value of the New Zealand dollar (currency risk) and interest rate movements. Tower's approach to managing market risk is
underpinned by its Treasury Policy as approved by the Board.
a. Currency risk
Tower's currency exposure arises from the translation of foreign operations into Tower's functional currency (currency translation risk) or due to
transactions denominated in a currency other than the functional currency of a controlled entity (operational currency risk). The currencies giving rise to
this risk are primarily the US dollar, Fijian dollar and Papua New Guinea (PNG) kina.
Tower's principal currency risk is currency translation (where movement impacts equity). Tower generally elects not to hedge this risk as it is difficult
given the size and nature of the currency markets in the Pacific. Tower seeks to minimise its net exposure to foreign operational risk by actively seeking to
return surplus cash and capital to the parent company.
Operational currency risk impacts profit and generally arises from:
(i) Procurement of goods and services denominated in foreign currencies. Tower may enter into hedges for future transactions, using authorised
instruments, provided that the timing and amount of those future transactions can be estimated with a reasonable degree of certainty.
(ii) Investment assets managed by the external investment manager that are denominated in foreign currencies. Tower's Board set limits for the
management of currency risk based on prudent asset management practice. Regular reviews are conducted to ensure that these limits are
adhered to.
New Zealand Dollar – USD
Currency strengthens by 10%
Currency weakens by 10%
New Zealand Dollar – Fijian Dollar
Currency strengthens by 10%
Currency weakens by 10%
New Zealand Dollar – PNG Kina
Currency strengthens by 10%
Currency weakens by 10%
b. Interest rate risk
DIRECT IMPACT ON EQUITY
IMPACT ON PROFIT OR (LOSS)
2022
$000
2021
$000
2022
$000
2021
$000
(793)
969
(854)
1,044
(629)
769
(581)
710
(1,667)
2,037
(743)
908
113
(138)
(74)
90
44
(54)
23
(28)
(38)
47
30
(36)
Tower is exposed to interest rate risk through its holdings in interest-bearing assets. Interest-bearing assets with a floating interest rate expose Tower to
cash flow interest rate risk, whereas fixed interest investments expose Tower to fair value interest rate risk.
Tower's interest rate risk primarily arises from fluctuations in the valuation of fixed-interest investments recognised at fair value and from the underwriting
of general insurance contracts, which have interest rate exposure due to the use of discount rates in calculating the value of insurance liabilities.
Fixed-interest investments are measured at fair value through profit or loss. Movements in interest rates impact the fair value of interest-bearing financial
assets and therefore impact profit or loss (there is no direct impact on equity). The impact of a 1% increase or decrease in interest rates on fixed interest
investments is shown below (holding everything else constant).
Interest rates increase by 1% (2021: 0.5%)
Interest rates decrease by 1% (2021: 0.5%)
IMPACT ON PROFIT OR (LOSS)
2022
$000
(1,617)
1,690
2021
$000
(988)
960
Tower manages its interest rate risk through Board approved investment management guidelines that give regard to policyholder expectations and risks,
and to target surplus for solvency as advised by the Appointed Actuary.
4.6 Liquidity risk
Liquidity risk arises where liabilities cannot be met as they fall due as a result of insufficient funds and/or illiquid asset portfolios. Tower mitigates this risk
through maintaining sufficient liquid assets to ensure that it can meet all obligations on a timely basis.
Tower is primarily exposed to liquidity risk through its obligations to make payment for claims of unknown amounts on unknown dates. Fixed-interest
investments can generally be readily sold or exchanged for cash to settle claims and are managed in accordance with the policy of broadly matching the
overall maturity profile to the estimated pattern of claim payments. This is illustrated in the table below:
NET OUTSTANDING CLAIMS LIABILITY
CASH AND INVESTMENTS
2022
$000
2021
$000
2022
$000
2021
$000
Floating interest rate (at call)
–
–
Within 3 months
3 to 6 months
6 to 12 months
After 12 months
Total
45,224
20,726
18,969
25,532
110,451
42,949
17,070
17,176
22,293
99,488
84,649
28,181
44,940
55,407
129,959
343,136
116,217
75,129
31,890
47,381
122,982
393,599
94
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
95
4.7 Capital management risk
4.8 Operational risk
Capital risk is the risk that capital is insufficient or not of the best form to provide a buffer against losses arising from unanticipated events, while also
maximising the efficient use of capital with a view to enhancing growth and returns, and adding long-term value to Tower's shareholders.
Tower has a documented description of its capital management process which sets out Tower's principles, approaches, and processes in relation to
capital management that enables it to operate at an appropriate level of target solvency capital which is within the bounds of Tower's risk appetite.
The capital management process allows the Board, management, rating agencies and the regulator to understand Tower's approach to capital
management, including requirements for formulating capital targets, and monitoring, reporting and remediating capital as required.
The operation of the capital management process is reported annually to the Board together with a forward-looking estimate of expected capital
utilisation and capital resilience. In addition, Tower carries out stress, reverse stress and scenario testing to ensure the level of capital is appropriate given
its risk appetite.
a. Regulatory solvency capital
The Reserve Bank of New Zealand (RBNZ) is the prudential regulator and supervisor of all insurers carrying on insurance business in New Zealand, and is
responsible for administering the Insurance (Prudential Supervision) Act 2010. Tower measures the adequacy of capital against the Solvency Standards
for Non-life Insurance Business published by the RBNZ alongside additional capital held to meet RBNZ minimum requirements and any further capital as
determined by the Board.
Foreign operations are subject to regulatory oversight in the relevant jurisdiction. It is Tower's policy to ensure that each of the licenced insurers in the
Group maintain an adequate capital position within the requirements of the relevant regulator.
During the year ended 30 September 2022 the Group complied with all externally imposed capital requirements (2021: complied).
Tower Limited's Group and Parent solvency margin are illustrated in the table below.
Operational risk is the risk of loss due to inadequate or failed internal processes or systems, human error or from external events.
Tower's approach is to proactively manage our operational risks to mitigate potential customer detriment, regulatory or legal censure, financial and
reputational impacts.
Tower has in place appropriate operational processes and systems, including prevention and detection measures. These include processes which seek
to ensure Tower can absorb and/or adapt to internal or external occurrences that could disrupt business operations.
Management and staff are responsible for identifying, assessing, recording and managing operational risks in accordance with their roles and
responsibilities. Associated controls for identified risks are recorded and then actively monitored and managed through our enterprise risk management
system (ERMS). Incidents are managed by the first line of defence and overseen by the second line of defence, with ongoing reporting to management
and the Board Risk Committee.
Tower also maintains and regularly updates its Crisis Management, Business Continuity and Disaster Recovery Plans to minimise the impact of material
incidents or crisis events and to support continuity of critical systems and processes.
4.9 Regulatory and compliance risk
Regulatory and compliance risk is defined as the risk of legal, regulatory or reputational impacts arising from failure to manage compliance obligations, or
failure to anticipate and prepare for changes in the regulatory environment.
Tower, via its ERMS, has in place an obligations management framework. The framework provides operational and managerial oversight of applicable
and relevant regulatory compliance obligations to Tower and supports Tower in discharging its obligations under legislation across NZ & the Pacific.
Tower engages with regulators and regularly monitors developments in regulatory requirements to support ongoing compliance.
2022
$000
2021
$000
4.10 Conduct risk
PARENT
GROUP
PARENT
GROUP
Conduct risk is defined as the risk that conduct may contribute to poor outcomes for customers.
Actual solvency capital
Minimum solvency capital
Solvency margin
Solvency ratio
136,423
66,530
69,893
205%
171,647
79,018
92,629
217%
179,439
66,252
113,187
271%
214,128
79,927
134,201
268%
Tower is required to maintain a solvency margin of at least $15m (2021: $25m), due to a license condition issued by the RBNZ.
In October 2020, the RBNZ commenced consultation on a review of the Insurance (Prudential Supervision) Act 2010. As part of the overall process, the
RBNZ issued an exposure draft on an interim solvency standard (ISS) in July 2021 which anticipated the introduction of IFRS 17. The final ISS was issued in
October 2022.
Tower will apply the new ISS from 1 October 2023. The ISS: combines requirements for life and non-life insurers, which were previously separate
standards; proposes enhancements to the transparency of solvency reporting; provides for increased prudential supervision for insurers operating close
to their minimum solvency margin; and imposes some changes that will impact solvency margins. The change in the ISS which is expected to have the
largest impact on Tower's solvency margin, the introduction of the operational risk capital charge, will be phased in over the four years to 2026. While
Tower is still assessing the ISS in its final form, Tower expects to maintain an appropriate capital position under the ISS.
b. Capital composition
The balance sheet capital mix at reporting date is shown in the table below:
Total equity attributed to shareholders
c. Financial strength rating
2022
$000
2021
$000
317,528
347,044
Tower Limited has an insurer financial strength rating of "A- (Excellent)" and a long-term issuer credit rating of "a-" as affirmed by international rating
agency AM Best Company Inc. in April 2022.
Tower manages Conduct risk through a number of measures including undertaking ongoing product reviews to ensure products are delivering good
customer outcomes, reviewing customer feedback to identify conduct trends or issues, completing quality assurance reviews, managing vulnerable
customers, holding workshops with frontline staff to identify potential conduct issues and embedding and monitoring controls across the business to
deliver fair customer outcomes.
Tower's approach to managing conduct risk is set out in its Conduct Governance Framework. The framework is a collation of policies, frameworks and
processes and ensures there's robust governance in place to oversee Tower's conduct risk profile including reporting to the Management and Board
Committees.
4.11 Cyber risk
Cyber risk is any risk associated with financial loss, disruption or damage to the reputation of Tower resulting from either the failure, or unauthorised or
erroneous use of its information systems.
Tower’s approach to Cyber risk is to proactively protect against, monitor for and respond to those cyber threats seen to be targeting the organisation.
Tower continues to monitor evolving key cyber risks, which are being discussed and reviewed on a monthly basis through our Management Risk and
Conduct Committee and on a quarterly basis with the Risk Committee. Risk mitigation is achieved through ongoing investment in Tower’s Security
programme and Tower’s dedicated security function.
4.12 Climate change risk
Climate change risk is the risk associated with the unpredictable nature and impacts of weather events which may increase in frequency and severity
over time due to changes in climate.
Tower’s RMF considers environmental and emerging risks, which are regularly reported to the Board. Tower's approach to managing climate change risk
includes leading the market by continuing to expand our risk-based pricing strategy for climate-related hazards, maintaining a robust reinsurance
programme to provide protection from volatility in weather events, planning for increasing large events over time in our budget process to limit financial
impacts, and supporting communities through climate change via product development and education of customers.
Tower considers that climate change risk does not impact the valuation of the majority of Tower's assets and liabilities, where these assets are expected
to be realised in one year or less. For non-current assets, Tower has looked to its short-medium term forecasting, which implicitly includes allowances for
the risk of climate change in forecasts of the severity and frequency of future claims, including large events. These forecasts show continued profitability
for Tower, which supports the carrying value of non-current assets. Accordingly, Tower does not consider that climate change risk has a material impact
on the assets and liabilities recorded in these financial statements, as at 30 September 2022.
96
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
97
5. CAPITAL STRUCTURE
This section provides information about how Tower finances its operations through equity. Tower's capital position provides financial security to its
customers, employees and other stakeholders whilst operating within the capital requirements set by regulators.
5.1 Contributed equity
Opening balance
Return of share capital to shareholders
Purchase of non-controlling interests
Total contributed equity
Represented by:
Opening balance
Cancellation of shares on return of capital
Total shares on issue
2022
$000
2021
$000
492,424
(30,634)
(1,599)
460,191
492,424
–
–
492,424
421,647,258
421,647,258
(42,163,271)
–
379,483,987
421,647,258
On 9 March 2022 the Group completed its ordinary share buy-back for a consideration of $30.6m (including transaction costs). This resulted in 42.2m shares being cancelled during the year
ended 30 September 2022.
On 14 October 2021 Tower Limited reached an agreement to increase its shareholding in National Pacific Insurance Limited from 71.39% to 93.88% for a consideration of $3.4m. Tower Limited
subsequently commenced a process to acquire the remaining 6.12% shareholding which completed on 17 December 2021 for a consideration of $0.9m.
Ordinary shares issued by the Company are classified as equity and are recognised at fair value less direct issue costs. All shares rank equally with one
vote attached to each share. There is no par value for each share.
5.2 Reserves
Opening balance
Currency translation differences arising during the year
Foreign currency translation reserve
Opening balance
Gain on revaluation
Deferred tax on revaluation
Asset revaluation reserve
Capital reserve
Separation reserve
Reserves
2022
$000
2021
$000
(6,082)
3,934
(2,148)
1,707
–
–
1,707
(4,985)
(1,097)
(6,082)
1,564
159
(16)
1,707
11,990
(113,000)
(101,451)
11,990
(113,000)
(105,385)
The separation reserve was created in 2007 at the time of the demerger of the New Zealand and Australian businesses in accordance with a ruling provided by the Australian Tax Office (ATO). It
will be carried forward indefinitely as a non-equity reserve to meet the requirements of the ATO.
5.2 Reserves (continued)
Recognition and measurement
The assets and liabilities of entities whose functional currency is not the New Zealand dollar are translated at the exchange rates ruling at balance
date. Income and expense items are translated at a weighted average of exchange rates over the period approximating spot rates at the
transaction dates. Exchange rate differences are taken to the foreign currency translation reserve.
Tower's land and buildings are valued at fair value less accumulated depreciation. Any surplus on revaluation of these items is transferred directly
to the asset revaluation reserve unless it offsets a previous decrease in value recognised in profit or loss in which case it is recognised in the
consolidated statement of comprehensive income.
5.3 Net tangible assets per share
Net tangible assets per share
2022
$000
2021
$000
0.55
0.57
Net tangible assets per share have been calculated using the net assets as per the balance sheet adjusted for intangible assets (including goodwill) and
deferred tax assets divided by total shares on issue.
5.4 Earnings per share
Profit from continuing operations attributable to shareholders ($ thousands)
Profit from discontinued operations attributable to shareholders ($ thousands)
2022
2021
17,622
1,181
17,770
913
Weighted average number of ordinary shares for basic and diluted earnings per share (number of shares)
397,851,001
421,647,258
Basic and diluted earnings per share (cents) for continuing operations
Basic and diluted earnings per share (cents)
4.43
4.73
4.21
4.43
The basic and diluted average numbers of ordinary shares shown above are used for calculating all earnings per share measures including those for
profit after tax from discontinued operations (note 8.4).
5.5 Dividends
On 30 June 2022, Tower paid an interim dividend of 2.5 cents per share (2021: 2.5 cents per share), with the cash impact of $9.5m (2021: $10.5m).
On 23 November 2022, the Board approved a final dividend of 4 cents per share (2021: 2.5 cents per share), with the dividend being payable on 1
February 2023. The anticipated cash impact of the final dividend is approximately $15.2m (2021: $10.5m).
98
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
99
6. OTHER BALANCE SHEET ITEMS
This section provides information about assets and liabilities not included elsewhere.
6.1 Property, plant and equipment
Composition:
30 September 2022
Composition:
Cost
Accumulated depreciation
Property, plant and equipment
Reconciliation:
Opening balance
Depreciation
Additions
Disposals
Foreign exchange movements
Assets reclassified as held for sale
Closing Balance
LAND AND
BUILDINGS
$000
OFFICE EQUIPMENT
AND FURNITURE
$000
MOTOR VEHICLES
$000
COMPUTER
EQUIPMENT
$000
–
–
–
4,102
–
–
–
456
(4,558)
–
4,547
(2,303)
2,244
1,968
(422)
814
(85)
(23)
(8)
2,244
1,949
(979)
970
769
(288)
500
–
15
(26)
970
5,237
(3,034)
2,203
2,535
(1,577)
1,277
(4)
(23)
(5)
2,203
TOTAL
$000
11,733
(6,316)
5,417
9,374
(2,287)
2,591
(89)
425
(4,597)
5,417
Assets reclassified as held for sale include the Suva building ($4.5m) and the assets of discontinued operations. Refer to Note 8.4.
During the year, and following the decommissioning of several legacy ‘on premise’ IT systems, a review of property, plant & equipment with zero book values was completed. As a consequence,
property, plant and equipment with a total cost and accumulated depreciation of $12.6m were written off as they are no longer in use. As the assets had zero book values, there was no impact
on profit or loss from these write-offs.
30 September 2021
Composition:
Cost
Accumulated depreciation
Property, plant and equipment
Reconciliation:
Opening balance
Depreciation for continuing operations
Depreciation for discontinued operations
Additions
Revaluations
Disposals
Foreign exchange movements
Closing Balance
4,102
–
4,102
4,035
–
–
–
159
–
(92)
4,102
4,257
(2,289)
1,968
2,989
(838)
(90)
1,437
–
(1,527)
(3)
1,968
1,616
(847)
769
1,083
(242)
(18)
–
–
(34)
(20)
769
17,292
(14,757)
2,535
1,934
(1,104)
(2)
1,654
–
56
(3)
2,535
27,267
(17,893)
9,374
10,041
(2,184)
(110)
3,091
159
(1,505)
(118)
9,374
6.1 Property, plant and equipment (continued)
Recognition and measurement
Property, plant and equipment is initially recorded at cost including transaction costs and subsequently measured at cost less any accumulated
depreciation and impairment losses.
Depreciation is calculated using the straight line method to allocate the asset's cost or revalued amounts, net of any residual amounts, over their
useful lives. The assets' useful lives are reviewed and adjusted if appropriate at each balance date. An asset's carrying amount is written down
immediately to its recoverable amount if it is considered that the carrying amount is greater than its recoverable amount.
Furniture & fittings
5-9 years
Leasehold property improvements
3-12 years
Motor vehicles
Computer equipment
5 years
3-5 years
Land and buildings are shown at fair value, based on periodic valuations by external independent appraisers less subsequent depreciation for
buildings. Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount
is restated to the revalued amount of the asset.
6.2 Intangible assets
a. Amounts recognised in the balance sheet
30 September 2022
Composition:
Cost
Accumulated amortisation
Intangible Assets
Reconciliation:
Opening balance
Amortisation
Additions
Disposals
Transfers to property, plant and equipment
Closing Balance
GOODWILL
$000
SOFTWARE
$000
CUSTOMER
RELATIONSHIPS
$000
17,744
–
17,744
17,744
–
–
–
–
17,744
79,259
(25,801)
53,458
48,527
(9,764)
16,934
(184)
(2,055)
53,458
34,745
(11,294)
23,451
22,321
(4,959)
6,089
–
–
23,451
TOTAL
$000
131,748
(37,095)
94,653
88,592
(14,723)
23,023
(184)
(2,055)
94,653
During the year, and following the decommissioning of several legacy IT systems, a review of intangible assets with zero book values was completed. As a consequence, intangible assets with a
total cost and accumulated amortisation of $32.8m were written off as they are no longer in use. As the assets had zero book values, there was no impact on profit or loss from these write-offs.
100
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
101
6.2a Amounts recognised in the balance sheet (continued)
6.2a Amounts recognised in the balance sheet (continued)
30 September 2021
Composition:
Cost
Accumulated amortisation
Intangible Assets
Reconciliation:
Opening balance
Amortisation
Additions
Disposals
Transfers to property, plant and equipment
Closing Balance
GOODWILL
$000
SOFTWARE
$000
CUSTOMER
RELATIONSHIPS
$000
17,744
–
17,744
17,744
–
–
–
–
17,744
98,850
(50,323)
48,527
47,866
(8,205)
10,528
(237)
(1,425)
48,527
28,656
(6,335)
22,321
12,238
(4,351)
14,434
–
–
22,321
TOTAL
$000
145,250
(56,658)
88,592
77,848
(12,556)
24,962
(237)
(1,425)
88,592
In the year ended 30 September 2021, Tower acquired and assumed ANZ's rights and obligations related to servicing the insurance polices of a group of customers already underwritten by Tower,
and entered into a non-compete agreement for a period of 5 years. In the year ended 30 September 2022, Tower acquired and assumed Westpac's and TSB Bank's rights and obligations relating
to servicing the insurance polices of two further groups of customers already underwritten by Tower. The amounts capitalised includes the price paid and associated acquisition/migration
costs. The assets will be amortised over 5 year (the ANZ non-compete agreement) or 10 years (for other customer relationships), with the pattern of amortisation being aligned with expected net
cashflow benefits over this period.
Recognition and measurement
Intangible assets are assets without physical substance. They are recognised as an asset if it is probable that expected future economic benefits
attributable to the asset will flow to Tower and that costs can be measured reliably.
Application software and customer relationships are recorded at cost less accumulated amortisation and impairment. Application software is
amortised on a straight line basis over the estimated useful life of the software. Customer relationships are amortised over the estimated useful life
in accordance with the pattern of economic benefit consumption.
Internally generated intangible assets are recorded at cost which comprise all directly attributable costs necessary to create, produce and prepare
the asset to be capable of operating in the manner intended by management. Amortisation of internally generated intangible assets begins when
the asset is available for use and is amortised on a straight line basis over the estimated useful life.
The useful lives for each category of intangible assets with a finite life are as follows:
— capitalised software: 3-5 years for general use computer software and 3-10 years for core operating system software
— customer relationships: 5-10 years
Goodwill (i.e. assets with an indefinite useful life) generated as a result of business acquisition is initially measured as the excess of the purchase
consideration over the fair value of the net identifiable assets and liabilities acquired. Goodwill is not subject to amortisation but is tested for
impairment annually or more frequently where there are indicators of impairment.
Critical accounting estimates and judgements
The customer relationships asset predominantly consists of customer relationship asset with a useful life equivalent to the customer base’s
expected lifespan of ten years with the exception of one asset with an additional non-compete component that has a contracted useful live of
five years.
Where applicable the estimated capitalised cost related to the customer relationships asset has been apportioned between the two asset
components by valuing the non-compete at the differential in net present value of the asset from improved customer retention over the non-
compete period, pro-rated over the full asset value. This valuation is calculated with reference to cash flow forecasts that combine past experience
with future expectations based on prevailing and anticipated market factors, expected retention rates (86-94%) and a discount rate of 12.5% for
each customer relationship asset.
b. Impairment testing
An impairment charge is recognised in profit or loss when the carrying value of the asset, or cash-generating unit (CGU), exceeds the calculated
recoverable amount.
(i) Software and customer relationships
Software and customer relationships are reviewed at each reporting date by determining whether there is an indication that the carrying values may
be impaired. If an indication exists, the asset is tested for impairment. A loss is recognised for the amount by which the carrying value exceeds the
asset's recoverable value.
There were no indications of impairment during the year and therefore these assets were not tested for impairment (2021: no indications).
Critical accounting estimates and judgements
The recoverable amount for software and customer relationships is determined by reference to a value in use calculation based on (i) cash flow
forecasts that combine past experience with future expectations based on prevailing and anticipated market factors; and (ii) a discount rate that
appropriately reflects the time value of money and the specific risks associated with the assets.
Value-in-use calculations involve the use of accounting estimates and assumptions to determine the projected net cash flows, which are
discounted using an appropriate discount rate to reflect current market assessment of the risks associated with the assets. An impairment charge
for capitalised software is incurred where there is evidence that the economic performance of the asset is not as intended by management.
Customer relationships represent the present value of future benefits expected to arise from existing customer relationships. The assumptions for
the useful life are based on historical information.
(ii) Goodwill
Goodwill is deemed to have an indefinite useful life and is tested annually for impairment or more frequently where there is an indication that the
carrying value may not be recoverable.
Goodwill is allocated to cash generating units (CGUs) expected from synergies arising from the acquisition giving rise to goodwill. Tower's goodwill is
allocated to the New Zealand general insurance CGU.
Tower undertook an annual impairment review and no loss has been recognised in 2022 as a result (2021: nil). COVID-19 impacts were again taken
into account when performing the review.
Critical accounting estimates and judgements
The recoverable amount of the New Zealand general insurance business is assessed by determining its value in use by discounting the future
cash flows generated from the continuing use of the unit (2021: the recoverable amount was assessed with reference to appraisal value
techniques, which is a common practice for insurance companies). A base discount rate of 14.5% was used in the calculation (2021: 12.0%). The
cash flows are based on management's plans and forecasted profits for FY23 -FY25 (2021: FY22 -FY24). The projected cash flows are determined
based on past performance and management's expectations for market developments with a terminal growth rate of 3% (2021: 2.5%).
The overall valuation is sensitive to a range of assumptions including the discount rate and the terminal growth rate. Reasonable changes to these
assumptions will not result in an impairment.
102
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
103
6.3 Leases
a. Amounts recognised in the Balance Sheet
(ii) Right of use assets
30 September 2022
Composition:
Cost
Accumulated depreciation
Right of use assets
Reconciliation:
Opening balance
Depreciation
Additions
Disposals
Revaluations
Net foreign exchange movements
Assets reclassified as held for sale
Right of use assets
30 September 2021
Composition:
Cost
Accumulated depreciation
Right of use assets
Reconciliation:
Opening balance
Depreciation for continuing operations
Depreciation for discontinued operations
Additions
Disposals
Revaluations
Net foreign exchange movements
Right of use assets
OFFICE SPACE
$000
MOTOR
VEHICLES
$000
TOTAL
$000
26,977
(3,651)
23,326
25,569
(2,702)
438
(37)
968
(347)
(563)
23,326
–
–
–
8
(3)
–
(5)
–
–
–
–
OFFICE SPACE
$000
MOTOR
VEHICLES
$000
26,901
(1,332)
25,569
7,189
(2,242)
(162)
24,332
(3,308)
(3)
(237)
25,569
25
(17)
8
22
(14)
–
–
–
–
–
8
26,977
(3,651)
23,326
25,577
(2,705)
438
(42)
968
(347)
(563)
23,326
TOTAL
$000
26,926
(1,349)
25,577
7,211
(2,256)
(162)
24,332
(3,308)
(3)
(237)
25,577
6.3a. Amounts recognised in the Balance Sheet (continued)
(ii) Lease liabilities
Composition:
Current
Non-current
Lease liabilities
Due within 1 year
Due within 1 to 2 years
Due within 2 to 5 years
Due after 5 years
Discount
Lease liabilities
Recognition and measurement
2022
$000
2021
$000
6,237
28,817
35,054
6,237
4,440
11,990
15,876
(3,489)
35,054
6,082
33,339
39,421
6,082
6,041
12,055
19,514
(4,271)
39,421
Lease liabilities are recognised at the date Tower has the right to use the corresponding asset. Lease liabilities are initially measured as the present
value of expected lease payments under lease arrangements. Lease liability will include any option to extend where it is reasonably certain that the
option will be exercised. The lease payments are discounted using the incremental borrowing rate as the interest rate in the lease cannot be readily
determined. The incremental borrowing rate is the rate of interest that Tower would have to pay to borrow over a similar term, and with a similar
security, the funds necessary to obtain an asset of a similar value to the right of use asset in a similar economic environment. Tower's incremental
borrowing rate is based on bonds issued by financial institutions with similar credit rating and maturity profile. Incremental borrowing rates used
during the year ranged between 1.9% and 5.0% (2021: between 1.9% and 3.6%).
Subsequent repayments are split between principal and interest cost where the finance cost represents the time value of money and is charged to
the profit or loss over the lease period. The discount rate applied is unchanged from that applied at the initial recognition of the lease, unless there
are material changes to the lease.
b. Amounts recognised in the consolidated statement of comprehensive income
CLASSIFICATION
Depreciation and impairment
Underwriting expense & corporate and other expenses
Interest expense
Gain on disposal
Lease expense
Finance costs
Other Income
c. Amounts recognised in the consolidated statement of cash flows
2022
$000
(2,705)
(897)
12
(3,590)
2021
$000
(2,252)
(363)
1,179
(1,436)
2022
$000
2021
$000
(6,044)
(2,684)
In August 2021 Tower entered into a new lease with a 10 year term for its Auckland premises. Tower recognised an initial right of use asset of $24.0m and an initial lease liability of $33.3m with
the difference primarily representing lease incentives. Tower has assumed no renewals of the lease past the initial 10 year term for the right of use asset and lease liability.
Recognition and measurement
Total cash outflow for lease principal payments
Right of use assets are recognised when Tower has the right to use the corresponding assets. Right of use assets are measured at cost comprising
the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives
received; and indirect costs; and restoration costs. Right of use assets are generally depreciated over the shorter of the asset's useful life and the
lease term on a straight line basis.
104
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
105
7. TAX
This section provides information on Tower's tax expense during the year and its position at balance date.
7.1 Tax expense
Composition
Current tax
Deferred tax
Adjustments in respect of prior years
Tax expense
Tax expense from continuing operations
Tax expense from discontinued operations
Reconciliation of prima facie tax to income tax expense
Profit before tax from continuing operations
Profit before tax from discontinued operations
Profit before taxation
Prima facie tax expense at 28% (2021: 28%)
Adjustments in respect of prior years
Tax effect of non-deductible expenses and non-taxable income
Foreign tax credits written off
Other
Tax expense
Recognition and measurement
2022
$000
1,159
6,593
292
8,044
7,526
518
2021
$000
3,745
5,785
(395)
9,135
9,245
(110)
2022
$000
2021
$000
25,200
1,699
26,899
7,532
293
(732)
371
580
8,044
27,647
803
28,450
7,966
(395)
796
861
(93)
9,135
Tax expense is calculated on the basis of the applicable tax rates that have been enacted or substantively enacted at the end of the reporting
period in the jurisdictions Tower operates in. There have been no tax rate changes during the year in these jurisdictions. Current tax expense
relates to tax payable for the current financial reporting period while deferred tax will be payable in future periods.
7.2 Current tax
a. Current tax asset
Excess tax payments related to prior periods
Excess tax payments related to current period
Current tax assets
Expected to be recovered from 2024 as per the Board approved operational plan for 2023 to 2025.
Excess tax payment made in the Pacific Islands during the reporting period.
2022
$000
2021
$000
12,038
1,031
13,069
12,038
863
12,901
7.2 Current tax (continued)
b. Current tax liability
The current tax liability balance of $136k (2021: $170k) relates to taxes payable to offshore tax authorities in the Pacific Islands.
Recognition and measurement
Overpayment of tax in the current and prior periods is recognised as a current tax asset. Current tax assets are measured at the amount expected
to be recovered from the taxation authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the end of the
reporting period.
7.3 Deferred tax
a. Deferred tax asset
Composition
Tax losses recognised
Software, property, plant and equipment
Leases
Provisions and accruals
Recognised in profit or loss
Impact through other comprehensive income
Recognised in comprehensive profit or loss
Set-off of deferred tax liabilities pursuant to NZ IAS 12
Deferred tax asset
Deferred tax asset from continuing operations
Deferred tax asset from discontinued operations
Reconciliation of movements
Opening balance
Movements recognised in profit or loss
Deferred tax asset pre NZ IAS 12 set off
2022
$000
23,716
1.989
352
5,258
31,315
2021
$000
24,116
2,834
373
4,165
31,488
–
–
31.315
31,488
(7,278)
24,037
23,893
144
(7,038)
24,450
24,450
–
2022
$000
2021
$000
31,488
(173)
31,315
35,397
(3,909)
31,488
106
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
107
7.3 Deferred tax (continued)
b. Deferred tax liability
Composition
Deferred acquisition costs
Customer relationships
Software, property, plant and equipment
Other
Recognised in profit or loss
Asset revaluation
Recognised in comprehensive profit or loss
Set-off of deferred tax liabilities pursuant to NZ IAS 12
Deferred tax liability
Primarily relates to withholding tax on undistributed profit from the Pacific Islands.
Reconciliation of movements
Opening balance
Movements recognised in other comprehensive income
Movements recognised in profit or loss
Deferred tax liability pre NZ IAS 12 set off
Recognition and measurement
2022
$000
(7,016)
(4,412)
(4,163)
(203)
(15,794)
(290)
(16,084)
7,278
(8,806)
2022
$000
(9,813)
148
(6,419)
(16,084)
2021
$000
(5,481)
(3,433)
–
(461)
(9,375)
(438)
(9,813)
7,038
(2,775)
2021
$000
(7,921)
(16)
(1,876)
(9,813)
Deferred tax is income tax which is expected to be payable or recoverable in the future as a result of the unwinding of temporary differences.
These arise from differences in the recognition of assets and liabilities for financial reporting and from the filing of income tax returns. Deferred tax
is recognised on all temporary differences, other than those arising from (i) goodwill or (ii) from the initial recognition of assets and liabilities in a
transaction (other than in a business combination) that affects neither the accounting nor taxable profit or loss.
At the reporting date, the Group has recognised a deferred tax asset in respect of its unused tax losses of $84.7m (2021: $86.1m).
Deferred tax is calculated at the tax rates that are expected to apply to the year when the liability is settled or the asset realised, based on tax rates
and tax laws that have been enacted or substantively enacted at balance date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when
they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Critical accounting judgements and estimates
Deferred tax assets are recognised for all unused tax losses to the extent it is probable that taxable profits will be available against which the losses
can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised based on
the likely timing and quantum of future taxable profits.
This assessment is completed on the basis of the approved strategic plans of Tower Limited and subsidiaries. Tower's ability to utilise these tax
losses depends on the future profitability, shareholder continuity and no major change in Tower's business. The enactment of the new business
continuity test in the Income Tax Act 2007 on 30 March 2021 for carrying forward tax losses means that Tower is able to carry forward its tax losses
even if there is a significant shareholding change, as long as the business continuity test is met.
7.4 Imputation credits
The Group imputation credit account reflects the imputation credits held by the Company as the representative member of the Group.
Imputation credits available for use in subsequent reporting periods
8. OTHER INFORMATION
This section includes additional disclosures which are required by financial reporting standards.
8.1 Notes to the consolidated statement of cash flow
Composition
Cash at bank
Deposits at call
Cash and cash equivalents
The average interest rate at 30 September 2022 for deposits at call is 2.89% (2021: 0.25%).
Reconciliation of profit for the year to cash flows from operating activities
Profit after taxation from continuing operations
Adjusted for non-cash items
Depreciation of property, plant and equipment
Depreciation, impairment and disposals of right of use assets
Amortisation of intangible assets
Financing costs
Fair value losses on financial assets
Gain on disposal of fixed assets
Change in deferred tax
Adjusted for movements in working capital
Change in receivables
Change in payables
Change in taxation
Net cash inflows from operating activities from continuing operations
Cashflows from operating activities from discontinued operations
Net cash inflows from operating activities
2022
$000
2021
$000
271
271
2022
$000
2021
$000
54,422
30,080
84,502
88,740
27,389
116,129
2022
$000
2021
$000
17,674
18,402
2,287
2,705
14,723
897
5,337
(24)
6,452
(30,495)
41,445
(695)
60,306
(522)
59,784
2,182
2,252
12,556
363
4,568
319
5,731
41,957
6,888
1,601
96,819
1,276
98,095
108
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
109
8.2 Related party disclosures
8.4 Discontinued operation and asset held for sale
Tower considers key management personnel to consist of the Board of Directors, Chief Executive Officer and executive leadership team. Information
regarding individual director and executive compensation is provided in the Corporate Governance section of the annual report.
Salaries and other short term employee benefits paid
Long term benefits
Termination benefits
Director fees
Related party remuneration
2022
$000
4,466
773
748
676
6,663
2021
$000
4,799
260
486
723
6,268
Tower insurance products are available to all key management personnel on the same terms as available to other employees. In addition, Tower
purchases indemnity insurance for all directors both past and present covering liabilities and legal expenses incurred whilst in office.
The Board has decided to implement a share based long term incentive scheme with effect from 1 October 2022.
During the year ended 30 September 2022, Tower Limited acquired the minority shareholding of National Pacific Insurance Limited. Refer Note 5.1.
Definition
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity,
directly or indirectly, including any director (whether executive or otherwise) of that entity.
8.3 Auditor's remuneration
Audit of financial statements
Other assurance services
Total fees paid to Group's auditors
Fees paid to subsidiaries' auditors different to Group auditors:
Audit of financial statements
Auditors remuneration
2022
$000
612
63
675
16
691
2021
$000
599
60
659
14
673
Audit of financial statements includes fees for both the audit of annual financial statements and the review of the interim financial statements. PwC Fiji performs the audits of all overseas
incorporated subsidiaries with the support of PwC New Zealand and other PwC network firms. $129.6k is paid to other PwC network firms (non New Zealand) for their audit services.
On 10 June 2022 Tower announced the conditional sale of all of its shares in its Papua New Guinea subsidiary to Alpha Insurance Limited for a sale price
of AUD 7.9m, subject to settlement adjustments. The sale was still conditional as at 30 September 2022 and so the Group's Papua New Guinea
Operations constitutes a discontinued operation and is classified as held for sale as at 30 September 2022. Subsequently, the sale became
unconditional and was completed on 28 October 2022, for a revised price of PGK 22m, subject to settlement adjustments and transaction costs. The
estimated gain on sale that will be included in profit or loss after tax, including reclassifications of amounts in the foreign currency translation reserve, is
approximately $2.1m, however at the time these financial statements were prepared a final calculation of the gain on sale had not been completed
At 30 September 2022, Tower was actively marketing the Suva building for sale. The recoverable amount of the building of $4.5m is included in the
property, plant and equipment disclosed below. The sale is expected to be completed within a year from the reporting date.
The sale of the Suva building was approved by the Board on 3 November 2022. Refer note 8.6.
Assets and liabilities classified as held for sale
Assets classified as held for sale
Cash and cash equivalents
Investments
Receivables
Current tax assets
Deferred tax assets
Deferred insurance costs
Right of use assets
Property, plant and equipment
Total assets classified as held for sale
Liabilities classified as held for sale
Payables
Unearned premiums
Outstanding claims
Lease liabilities
Provisions
Total liabilities classified as held for sale
Net assets classified as held for sale
2022
$000
7,796
3,580
2,565
315
144
1,335
479
4,597
20,811
1,965
4,745
1,981
519
48
9,258
11,553
Other assurance services includes annual solvency return assurance and Pacific Island regulatory return audits. The other assurance services for the year ended 30 September 2021 were
Property, plant and equipment disclosed above includes the Suva building carrying value of $4.5m.
completed during the year ended 30 September 2022.
The audit of Tower Insurance (Vanuatu) Limited was performed by Law Partners (2021: Law Partners).
As at 30 September 2022, Tower PNG owed other members of the Tower Group of $1.8m.. The liabilities from discontinued operations disclosed above are stated without adjustment for these
intercompany transactions.
The cumulative currency translation losses recognised in other comprehensive income in relation to the discontinued operation as at 30 September
2022 were $2.7m.
110
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
111
8.4 Discontinued operation and asset held for sale (continued)
Profit from discontinued operation
Gross written premium
Unearned premium movement
Gross earned premium
Outward reinsurance premium
Movement in deferred reinsurance premium
Outward reinsurance premium expense
Net earned premium
Claims expense
Less: Reinsurance and other recoveries revenue
Net claims expense
Gross commission expense
Commission revenue
Net commission expense
Underwriting expense
Underwriting profit
Investment income
Other income/(expense)
Financing and other costs
Profit before taxation
Tax expense
Profit after taxation from discontinued operation
2022
$000
8,055
629
8,684
(3,187)
(58)
(3,245)
5,439
(1,907)
695
(1,212)
(310)
288
(22)
(2,559)
1,646
50
15
(12)
1,699
(518)
1,181
2021
$000
8,678
232
8,910
(3,426)
(46)
(3,472)
5,438
(1,983)
34
(1,949)
(391)
292
(99)
(2,591)
799
21
(2)
(15)
803
110
913
Tower PNG paid fees to other members of the Tower Group of $2.4m during the financial year ended 30 September 2022 (2021: $2.5m), relating to the provision or reinsurance, management
and other services. These amounts are included within the reinsurance premium expense and underwriting expense lines above, and are then eliminated within continuing operations.
Earnings per share
2022
2021
Basic and diluted earnings per share (cents) for discontinued operations
0.30
0.22
The currency translation differences recognised in other comprehensive income during the period ending 30 September 2022 in relation to the
discontinued operation were $1.1m.
8.5 Contingent liabilities
The Group is occasionally subject to claims and disputes as a commercial outcome of conducting insurance business. Provisions are recorded for these
claims or disputes when it is probable that an outflow of resources will be required to settle any obligations. Best estimates are included within claims
reserves for any litigation that has arisen in the usual course of business.
The Group has no other contingent liabilities.
8.6 Subsequent events
On 6 October 2022, Tower entered an agreement with Kiwibank to purchase the rights and obligations relating to servicing the insurance polices of a
group of customers underwritten by Tower for $5.9m payable on 1 December 2022.
On 28 October 2022, Tower completed the sale of Tower Insurance (PNG) Limited, refer note 8.4 for more information.
On 3 November 2022, the Board approved the sale of Suva building at a price of FJD 8.2m which, after allowing for transaction costs and taxes, is greater
than the book value of this asset recorded in these financial statements. The estimated gain on sale to be recognised in profit or loss after tax is
approximately $1.1m, however at the time these financial statements were prepared a final calculation of the gain on sale had not been completed.
On 23 November 2022, the Board approved a full year dividend of 4 cents per share, with the dividend being payable on 1 February 2023 as specified by
Note 5.5. The anticipated cash impact of the final dividend is approximately $15.2m.
8.7 Capital commitments
As at 30 September 2022, Tower has nil capital commitments (2021: nil).
8.8 Impact of new accounting standards and changes in interpretation of current accounting standards
New accounting standards
No new accounting standards were implemented during the year with a material effect on Tower.
Issued and effective
The only new or revised accounting standard that is expected to have a material impact on Tower’s financial statements is NZ IFRS 17 Insurance Contracts
(“IFRS 17”). Other new or revised accounting standards that will be mandatory in future financial years are not expected to have a material impact.
IFRS 17
IFRS 17 is effective for periods beginning on or after 1 January 2023. Tower will apply the standard for the year ending 30 September 2024, with the
comparative period for the year ending 30 September 2023. Tower expects to apply the standard using the full retrospective approach.
IFRS 17 replaces the current guidance in NZ IFRS 4 Insurance Contracts (“IFRS 4”), and establishes principles for the recognition, measurement,
presentation and disclosure of insurance contracts. The standard introduces substantial changes in the presentation of financial statements and
disclosures, introducing new balance sheet and income statement line items and increased disclosure requirements compared with existing reporting.
IFRS 17 contains three new measurement models. The general model measures insurance contracts based on the fulfilment cash flows (the present
value of estimated future cash flows with an explicit risk adjustment for non-financial risk) and the contractual service margin (the unearned profit that
will be recognised as services are provided over the coverage period). A modified version of the general model (the variable fee approach) is applied to
insurance contracts with direct participation features, and a simplified measurement model (the premium allocation approach, or “PAA”) is permitted in
certain circumstances. The PAA is similar to the current measurement model used for general insurance. Tower expects all its current insurance contracts
and reinsurance contracts will meet the requirements of the PAA.
Under the PAA, insurance and reinsurance contracts will be aggregated together into portfolios based on the contracts having similar risks and being
managed together, and then divided into groups based on the expected profitability of contracts and the periods in which the contracts are
written. Insurance contracts and reinsurance contracts are measured separately. Under the aggregation requirements, the identification and
measurement of contracts that are expected to be loss making will be performed at a lower granularity than occurs for the liability adequacy test under
current accounting standards, with any loss component recognised on initial recognition.
IFRS 17 makes changes to the way that discount rates are applied to future cash flows, with discount rates required to reflect the time value of money,
the characteristics of the cash flows and the liquidity characteristics of the insurance contracts. Tower has determined that it will not discount insurance
assets and liabilities for remaining coverage unless the time between the provision of the services and the premiums received will be more than one year.
Insurance assets and liabilities for incurred claims will be discounted to reflect the time value of money. The methodology for deriving the discount rate is
currently being finalised, with Tower expecting to apply the bottom-up approach, whereby a risk-free yield curve is adjusted through the addition of an
illiquidity premium.
IFRS 17 allows a choice between expensing acquisition costs related to the fulfilment cash flows immediately, or deferring them. Tower expects to defer
acquisition costs and amortise them over the coverage period of the related insurance contracts.
IFRS 17 requires a risk adjustment for non-financial risk to be applied to reflect the compensation an entity requires for bearing uncertainty about the
amount and timing of cash flows. This differs from the risk margin used under IFRS 4, which reflects the inherent uncertainty in the central estimate of
future claims cash flows. Tower is developing its framework for determining the risk adjustment and expects to use a confidence level approach.
112
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
INDEPENDENT AUDITORS REPORT
113
8.8 Impact of new accounting standards and changes in interpretation of current accounting standards (continued)
IFRS 17 also introduces significant changes to the presentation of insurance contracts. Assets and liabilities related to portfolios of insurance contracts
and reinsurance contracts will be shown separately on the balance sheet, replacing current insurance related line such as premium receivables, deferred
insurance costs and unearned premiums. In the consolidated statement of comprehensive income Tower will present income and expenses related to
insurance contracts gross of reinsurance, which will be disclosed separately.
Tower has a programme to assess the impact of adopting NZ IFRS 17 and to project manage the transition to the new standard including system
development. Tower has completed a proposed accounting policy framework under NZ IFRS 17, subject to approval by the Board, and systems
development work is in the implementation phase.
IFRS 17 is not expected the change the underlying economics or cash flows of Tower’s business, although it may impact how profit emerges on a
year-to-year basis, and it will change the presentation in the financial statements. Due to the complexity of the requirements within the standard and with
global interpretations continuing to change, some material judgements and accounting policy choices are still under consideration by Tower, and
therefore a full assessment of the financial impact of IFRS 17 has not yet been completed.
Independent auditor’s report
To the shareholders of Tower Limited
Our opinion
In our opinion, the accompanying consolidated financial statements of Tower Limited (the Company),
including its subsidiaries (the Group), present fairly, in all material respects, the financial position of the
Group as at 30 September 2022, its financial performance and its cash flows for the year then ended
in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS)
and International Financial Reporting Standards (IFRS).
What we have audited
The Group's consolidated financial statements comprise:
●
●
●
●
●
the consolidated balance sheet as at 30 September 2022;
the consolidated statement of comprehensive income for the year then ended;
the consolidated statement of changes in equity for the year then ended;
the consolidated statement of cash flows for the year then ended; and
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs
(NZ)) and International Standards on Auditing (ISAs). Our responsibilities under those standards are
further described in the Auditor’s responsibilities for the audit of the consolidated financial statements
section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with Professional and Ethical Standard 1 International
Code of Ethics for Assurance Practitioners (including International Independence Standards) (New
Zealand) (PES 1) issued by the New Zealand Auditing and Assurance Standards Board and the
International Code of Ethics for Professional Accountants (including International Independence
Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code), and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
Our firm carries out other assurance services for the Group over solvency and regulatory insurance
returns. In addition, certain partners and employees of our firm may deal with the Group on normal
terms within the ordinary course of trading activities of the Group. The provision of these other
services and relationships have not impaired our independence as auditor of the Group.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the consolidated financial statements of the current year. These matters were addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these matters.
PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand
T: +64 9 355 8000, www.pwc.co.nz
114
INDEPENDENT AUDITORS REPORT
INDEPENDENT AUDITORS REPORT
115
Description of the key audit matter
How our audit addressed the key audit matter
Description of the key audit matter
How our audit addressed the key audit matter
The outstanding claims liability includes a
risk margin that allows for the inherent
uncertainty in the central estimate of future
claim cash outflows. In determining the risk
margin, the Group makes judgements
about the volatility of each class of
business written and the correlation
between different geographical locations.
Refer to note 2.4 to the consolidated
financial statements.
(2) Recoverability of the deferred tax
asset arising from tax losses
(2022: $23,716,000, 2021: $24,116,000)
The majority of the Group’s deferred tax
asset arises from tax losses. We
considered recoverability of the deferred
tax asset a key audit matter because
utilisation of the asset is sensitive to the
Group’s expected future profitability and
sufficient continuity of the ultimate
shareholders or business continuity.
Management judgement is involved in
forecasting the timing and quantum of
future taxable profits, which are inherently
uncertain, and whether it is probable the
tax losses will be utilised in the foreseeable
future.
Refer to note 7.3 to the consolidated
financial statements.
In considering the recoverability of the deferred tax
asset arising from tax losses we performed the
following procedures:
● compared the previous management budget with
actual results to assess the reliability of
management’s forecasting;
● considered the reasonableness of the
assumptions in the year ending 30 September
2023 operational plan on the forecast utilisation
of tax losses;
● assessed the Group’s ability to maintain
sufficient continuity of the ultimate shareholders
or to meet the business continuity test and
therefore its entitlement to offset the tax losses
against future taxable profits; and
● determined whether it was probable (more likely
than not) that the tax losses would be utilised in
the foreseeable future.
(1) Valuation of outstanding claims
(2022: $124,531,000, 2021: $122,338,000)
We considered the valuation of outstanding
claims a key audit matter as it involves an
estimation process combined with
significant judgements and assumptions,
made by management, to estimate future
cash outflows to settle claims.
The outstanding claims liability includes a
central estimate of the future cash outflows
relating to claims incurred, as at and prior
to the reporting date, and the expected
costs of handling those claims. There is
uncertainty over the amount that reported
claims and claims incurred at the reporting
date but not yet reported to the Group will
ultimately be settled at. The estimation
process relies on the quality of underlying
claims data and the use of informed
estimates to determine the quantum of the
ultimate loss.
Key actuarial assumptions applied in the
valuation of outstanding claims (excluding
Canterbury earthquakes) include:
● expected future claims development
proportion; and
● claims handling expense ratios.
Outstanding claims in relation to the
Canterbury earthquakes have a greater
degree of uncertainty and judgement. This
mainly arises due to the uncertainty as to
further deterioration of open known claims,
the Earthquake Commission (EQC)
reporting of new claims to the Group which
have gone over the $100,000 statutory
liability cap (over cap claims), new litigation
claims, reopening of closed claims,
expected claims costs for open claims and
estimates of future claims management
expenses.
Changes in assumptions can lead to
significant movements in the outstanding
claims liability.
Claims data is a key input to the actuarial estimates.
Accordingly, we:
● evaluated the design effectiveness and tested
controls over claims processing;
● assessed a sample of claim case estimates at
the year end to check that they were supported
by an appropriate management assessment and
documentation;
● assessed, on a sample basis, the accuracy of
previous claim case estimates by comparing to
the actual amount settled during the year and
analysed any escalation in the claim case
estimate to determine whether such escalation
was based on new information available during
the year;
inspected a sample of claims paid during the
year to confirm that they are supported by
appropriate documentation and approved within
delegated authority limits; and
tested the integrity of data used in the actuarial
models by agreeing relevant model inputs, such
as claims data, to source, on a sample basis.
●
●
Together with our actuarial experts, we:
● considered the work and findings of the actuaries
engaged by Tower;
● evaluated the actuarial models and
methodologies used, and any changes to them,
by comparing with generally accepted models
and methodologies applied in the sector;
● assessed key actuarial judgements and
●
assumptions and challenged them by comparing
with our expectations based on Tower’s
experience, our own sector knowledge and
independently observable industry trends (where
applicable);
tested on a sample basis, the underlying
calculations in certain valuation models; and
● assessed the risk margin by comparing to known
industry practice. In particular we focused on the
assessed level of uncertainty in the central
estimate and the inherent uncertainty in the
remaining Canterbury earthquake claims and
consistency of the risk margin with prior periods.
PwC
57
PwC
56
116
INDEPENDENT AUDITORS REPORT
INDEPENDENT AUDITORS REPORT
117
Our audit approach
Overview
Overall group materiality: $4.5 million, which represents
approximately 1% of gross written premium from continuing and
discontinued operations.
We chose gross written premium as the benchmark because, in our
view, it is the benchmark against which the performance of the
Group is most commonly measured by users, and is a generally
accepted benchmark for insurance companies.
A full scope audit was performed for the Company based on its
financial significance to the Group. Specified audit procedures were
performed on financial statement line items of certain subsidiaries
and analytical review procedures were performed on remaining
Group entities.
As reported above, we have two key audit matters, being:
● Valuation of outstanding claims
● Recoverability of the deferred tax asset arising from tax losses
As part of designing our audit, we determined materiality and assessed the risks of material
misstatement in the consolidated financial statements. In particular, we considered where
management made subjective judgements; for example, in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain. As in all
of our audits, we also addressed the risk of management override of internal controls, including among
other matters, consideration of whether there was evidence of bias that represented a risk of material
misstatement due to fraud.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain
reasonable assurance about whether the consolidated financial statements are free from material
misstatement. Misstatements may arise due to fraud or error. They are considered material if,
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality,
including the overall Group materiality for the consolidated financial statements as a whole as set out
above. These, together with qualitative considerations, helped us to determine the scope of our audit,
the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both
individually and in aggregate, on the consolidated financial statements as a whole.
How we tailored our group audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion
on the consolidated financial statements as a whole, taking into account the structure of the Group, the
accounting processes and controls, the industry and countries in which the Group operates.
Other information
The Directors are responsible for the other information. The other information comprises the
information included in the Annual Report, but does not include the consolidated financial statements
and our auditor's report thereon. The Annual Report is expected to be made available to us after the
date of this auditor's report.
Our opinion on the consolidated financial statements does not cover the other information and we will
not express any form of audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit, or otherwise
appears to be materially misstated.
When we read the other information not yet received, if we conclude that there is a material
misstatement therein, we are required to communicate the matter to the Directors and use our
professional judgement to determine the appropriate action to take.
Responsibilities of the Directors for the consolidated financial statements
The Directors are responsible, on behalf of the Company, for the preparation and fair presentation of
the consolidated financial statements in accordance with NZ IFRS and IFRS, and for such internal
control as the Directors determine is necessary to enable the preparation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements, as a whole, are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (NZ) and ISAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is
located at the External Reporting Board’s website at:
https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
This description forms part of our auditor’s report.
Who we report to
This report is made solely to the Company’s shareholders, as a body. Our audit work has been
undertaken so that we might state those matters which we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s shareholders, as a body, for our
audit work, for this report or for the opinions we have formed.
The engagement partner on the audit resulting in this independent auditor’s report is Karen Shires.
For and on behalf of:
Chartered Accountants
23 November 2022
Auckland
PwC
58
PwC
59
118
APPOINTED ACTUARY'S REPORT
APPOINTED ACTUARY'S REPORT
119
APPOINTED
ACTUARY'S REPORT
120
APPOINTED ACTUARY'S REPORT
APPOINTED ACTUARY'S REPORT
121
23 November 2022
The Directors
Tower Limited
136 Fanshawe Street
Auckland 1010
Dear Directors
Review of Actuarial Information contained in the financial statements
As required by Section 78 of IPSA the Appointed Actuary, Geoff Atkins of Finity Consulting, has reviewed the
actuarial information contained in, or used in the preparation of, the financial statements at 30 September
2022. Geoff Atkins and Finity have no relationship with or interest in Tower other than being a provider of
actuarial services.
I prepared the actuarial valuation of liabilities remaining from the Canterbury Earthquakes and reviewed the
actuarial valuations of insurance liabilities for the New Zealand business and the Pacific Islands businesses. I
reviewed the other actuarial information as specified by IPSA in Section 77, including the solvency calculations
for the financial statements.
No limitations were placed on me in performing the review and all data and information requested was
provided.
Nothing has come to my attention that would lead me to believe that any of the actuarial information
contained in, or used in the preparation of, the financial statements is not appropriate.
In my opinion the company has maintained a solvency margin in excess of the minimum required as at 30
September 2022.
The report is being provided for the sole use of Tower for the purpose state above. It is not intended, nor
necessarily suitable, for any other purpose and should only be relied on for the purpose for which it is intended.
Yours sincerely
Geoff Atkins (Appointed Actuary)
Fellows of the New Zealand Society of Actuaries
Anagha Pasche
Fellows of the New Zealand Society of Actuaries
122
CORPORATE GOVERNANCE AT TOWER
CORPORATE GOVERNANCE AT TOWER
123
CORPORATE GOVERNANCE
AT TOWER
124
CORPORATE GOVERNANCE AT TOWER
CORPORATE GOVERNANCE AT TOWER
125
This section of the Annual Report provides an overview of the corporate
governance principles, policies and processes adopted and followed by
Tower’s Board during the year ending 30 September 2022 (FY22)
The Board is committed to achieving the highest
standards of corporate governance, ethical behaviour,
and accountability. When there are developments in
corporate governance practices, the Board reviews
these against Tower’s practices and updates Tower’s
practices where appropriate, including seeking external
advice to encourage an environment of continuous
improvement in Board performance.
For the reporting period to 30 September 2022, the
Board considers that Tower’s corporate governance
practices have materially adhered to the NZX Corporate
Governance Code (NZX Code). Further information about
the extent to which Tower has complied with each of
the NZX Code recommendations is set out in Tower’s
corporate governance statement, available on Tower’s
website at tower.co.nz/investor-centre.
The following policies and company documentation are
available on Tower’s website (https://www.tower.co.nz/
investor-centre/corporate-governance/policies):
STATUTORY DISCLOSURES
DIVERSITY
Gender Diversity
The below table provides a quantitative breakdown
as to the gender composition of Tower’s Directors
and Officers, and other employee groups as at 30
September 2022, compared to 30 September 2021,
including subsidiaries. The Executive Leadership
team includes the Chief Executive Officer and those
employees who report directly to the Chief Executive
Officer. The Senior Leadership Team refers
to employees in remuneration band 8 and above.
Total Company figures exclude the Board of Directors,
and include permanent and fixed term employees,
and the employees of Tower’s Pacific Island subsidiaries.
GROUP
% GROUP
NUMBER
% GROUP
NUMBER
30 SEPTEMBER 2022
30 SEPTEMBER 2021
• Tower Limited Constitution
• Corporate Governance Statement
• Board Charter
• Board Protocols
• Audit Committee Terms of Reference
• Risk Committee Terms of Reference
• Remuneration & Appointments Committee
Terms of Reference
• Director and Executive Remuneration Policy
• Insider Trading and Market Manipulation Policy
• Corporate Disclosure Policy
• External Audit Independence Policy
• Health and Safety Policy
• Code of Conduct Policy
• Diversity and Inclusion Policy
Board of Directors
Males
Females
Gender Diverse
Executive Leadership team
Males
Females
Gender Diverse
Senior Leadership team
Males
Females
Employees
Males
Females
Total company
Males
Females
Total employees
80%
20%
0%
88%
12%
0%
63%
37%
38%
62%
39%
61%
83%
17%
0%
67%
33%
0%
42%
58%
40%
60%
40%
60%
4
1
0
7
1
0
27
16
268
446
302
463
765
5
1
0
6
3
0
11
15
293
447
310
465
775
126
CORPORATE GOVERNANCE AT TOWER
CORPORATE GOVERNANCE AT TOWER
127
Evaluation from the Board on Tower’s
performance with respect to diversity
and inclusion
Tower has a diversity and inclusion policy, focussing on
the following categories:
• Gender diversity
• Age and career progression
• Ethnicity and Pacific and Māori inclusion
• LGBTIQ+ identification and inclusion
• Accessibility
The Board considers there has been continued progress
on initiatives focused around the pillars of gender, culture,
sexuality, age and accessibility in FY22.
Tower’s bi-annual engagement survey is a key way of
measuring progress diversity and inclusion activities.
In the most recent survey, Tower’s diversity and inclusion
score increased by 0.1 over FY22. This places Tower in
the top 25% of the finance industry (and is higher than
our overall engagement score of 7.8), which the Board
considers demonstrative of the progress that we have
made over the last 12 months.
Diversity and Inclusion score
8.8
0
0.5 above Finance benchmark
In the top 25% of Finance
Gender
Representation
10
Tower’s overall female representation remains consistent
year-over-year at 60% female / 40% male. In FY22 Tower
captured data in respect of other gender identities for the
first time.
0%
20%
40%
60%
80%
100%
Female 59.92%
Male 39.10%
Other gender identity 0.98%
Gender pay gap
Tower has calculated its gender pay gap for New
Zealand team members. When comparing like-for-like
roles for women and men at Tower in New Zealand,
Tower’s pay equity gap is 0.1%. Comparing our senior
leadership population and the average pay gap between
men and women, our leadership pay gap is 2.2% (men
are paid 2.2% more than women).
The overall gender gap is 25.9%. For the most part, this is
because we have a larger proportion of women in some
our New Zealand frontline roles, and a larger proportion
of men in senior roles.
Tower is proud to have contributed to MindtheGap NZ
Public Pay Gap registry, and shares its gender pay gap
information on its external careers page to increase
visibility and accountability. Tower intends to extend its
pay gap reporting to include Māori and Pacific data.
Inclusion
In 2022, Tower was re-accredited by the Rainbow Tick,
reflecting Tower's commitment to valuing people in
the workplace, and embracing the diversity of sexual
and gender identities. The number of Tower employees
identifying as part of the Rainbow community fell from
93 to 81 (12.7% to 9.7%). There was also an increase in
the percentage of individuals either leaving the question
blank or choosing not to disclose from 77 to 167 (12.9%
to 19.9%). Alongside the collection of data to understand
gender identities, Tower has developed guidelines to
support Tower individuals who are transitioning.
Tower also maintained domestic violence abuse charity
Shine’s DVFree Tick for creating a domestic violence-
free workplace. This reflects Tower's commitment
to ensuring our people feel safe and have the
appropriate channels to raise any domestic violence
they may experience with a group of trained Tower First
Responders.
Throughout FY22, Tower has sponsored and celebrated
a number of events celebrating diversity including a
company-wide zoom chat with Black Fern Ruby Tui,
Fijian and Samoan language weeks, and Diwali, together
with a celebration of Te Reo Māori during Te Wiki o te
Reo Māori 2022.
CURRENT ETHNICITY BREAKDOWN
BAND-7
8
9
10
EXEC
TOTAL
HIRES
TOTAL
NET
FY22 HIRES
African
Asian
Chinese
Fijian
Fijian Indian
Filipino
Indian
Māori
Samoan
Sri Lankan Tamil
Afrikaner
Australian
British
Danish
English
European
German
Irish
n
a
e
p
o
r
u
E
-
n
o
N
n
a
e
p
o
r
u
E
New Zealand European
South African European
Prefer not to disclose/did not disclose
Total
Ethnicity
Representation
–
3
2
2
–
3
4
2
–
1
–
–
1
–
1
3
1
1
24
2
5
55
1
–
–
–
–
–
3
1
1
–
1
–
–
1
1
1
–
1
10
–
–
21
–
–
1
1
–
–
–
–
–
–
–
–
2
–
–
–
–
–
6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1
–
–
3
–
–
6
–
–
10
10
–
–
–
–
1
–
–
–
–
–
–
1
–
–
2
2
–
–
2
–
–
8
–
–
1
1
–
1
1
–
–
–
–
1
1
–
1
1
1
1
11
1
3
25
26
73
5
104
4
18
-14
3
3
In FY22, Tower broadened the range of ethnicities its
employees can identify as. This has enabled Tower to
identify that 53% of its workforce is made up of diverse,
non-European ethnicities, with 42% of the workforce
being made up of European ethnicities, and 5% of the
workforce preferring not to disclose.
Achieving representation of diverse ethnicities at
leadership levels has proven challenging in a very
competitive labour and hiring market where immigration
into New Zealand has only recovered to around 1/3 of
pre-pandemic levels. A breakdown of the ethnicity of
Tower's senior staff is set out in the table above.
Tower Talent Programmes
In FY22, two targeted talent development programmes
were introduced with a view to identify, retain and
accelerate the development of diverse talent.
The Talent & Culture Group (TCG) is made up of 12 senior
leaders identified from Tower’s executive team from a
pool of high-potential talent and potential successors.
The Emerging Talent Programme (ETP) pilot was
launched in late FY22 targeting diverse talent at all levels
at Tower.
The TCG was launched in January 2022, and the
group has played a significant role in defining and
implementing key initiatives across Tower related to
talent and culture. Achievements include the definition of
Tower’s new Purpose and Values, and embedding those
values into the performance framework.
In September 2022 Tower commenced a pilot for
an Emerging Talent Programme comprising 13 staff
from Claims, Partnerships, Sales & Service and
Technology divisions. Participants come from a range of
backgrounds, genders and ethnicities.
The purpose of the programme is to:
• develop emerging talent at Tower, providing growth
opportunities for a diverse pipeline of talented people
in the business
• give participants a chance to broaden their horizons at
Tower, get exposure, learn skills and build relationships
outside of the areas they normally work
• over time increase diversity across all levels at Tower
As part of the programme, participants will have access
to learning experiences including team activities, focus
groups, guest speakers, mentoring sessions, action
learning projects and opportunities to build networks.
128
CORPORATE GOVERNANCE AT TOWER
CORPORATE GOVERNANCE AT TOWER
129
BOARD COMMITTEES
During FY22 the Board comprised the following
members:
Micheal Stiassny (Chair), Graham Stuart, Steve Smith
(until 2 February 2022), Warren Lee, Wendy Thorpe,
Marcus Nagel.
The Board has determined, based on information
provided by directors regarding their interests, and
the criteria for independence contained in the Board
and Director Protocols, that as at 30 September 2022,
Mr Stiassny, Mr Stuart, Mr Lee and Ms Thorpe were
independent. The Board determined that Mr Nagel
was not independent due to his relationship with
Tower’s largest shareholder. The criteria for assessing
independence contained in the Board and Director
protocols is benchmarked against the RBNZ and NZX
independence requirements.
During FY22 the Board had the following committees:
Audit Committee
Members: Graham Stuart (Chair), Michael Stiassny, Steve
Smith (retired 2 February 2022), Warren Lee (retired 30
November), Wendy Thorpe, Marcus Nagel.
Risk Committee
Members: Warren Lee (Chair) until 31 August 2022
(retired 30 November 2022), Wendy Thorpe (Chair) from
1 September 2022, Michael Stiassny, Graham Stuart,
Steve Smith (retired 2 February 2022), Marcus Nagel.
Remuneration and Appointments Committee
Members: Michael Stiassny (Chair), Graham Stuart, Steve
Smith (retired 2 February 2022), Warren Lee (retired 30
November 2022), Wendy Thorpe, Marcus Nagel.
Other committees
Tower’s Board may establish sub-committees from time
to time. In 2022, a Results Sub-Committee was convened
on two occasions.
Board and Committee meeting attendance
The following numbers of Board and Committee
meetings were held during the year from 1 October 2021
to 30 September 2022:
• Board meetings – 12
• Audit Committee meetings – 3
• Risk Committee meetings – 4
• Remuneration and Appointments Committee – 6
• Results Sub-Committee – 2
All executive members have a standing invitation to
attend all Board meetings, although they do not always
attend the entire meeting.
The Chief Executive Officer, Chief Financial Officer, Chief
Risk Officer, General Counsel & Company Secretary
attend all Audit Committee and Risk Committee
meetings by standing invitation.
The Chief Executive Officer, Chief People Officer
and General Counsel & Company Secretary attend
all meetings of the Remuneration and Appointment
Committee by standing invitation.
All Board, Audit, Risk and Remuneration and
Appointment Committee meetings are attended by
the General Counsel & Company Secretary who is
responsible for taking accurate minutes of each meeting
and ensuring that Board procedures are observed.
Director attendance at Board and Committee meetings held in the year to 30 September 2022 is set out below:
BOARD
AUDIT COMMITTEE
RISK COMMITTEE
REMUNERATION
AND APPOINTMENTS
COMMITTEE
RESULTS
SUB-COMMITTEE
Meetings held
Michael Stiassny
Steve Smith (retired 2 February 2022)
Graham Stuart
Warren Lee
Wendy Thorpe
Marcus Nagel
12
11
6
12
12
12
11
3
2
1
3
3
3
3
4
3
2
4
4
4
4
6
6
3
6
6
6
4
2
2
1
2
–
–
–
Remuneration
Director Remuneration
REMUNERATION AND BENEFITS RECEIVED BY TOWER
SUBSIDIARY DIRECTORS
IN THE YEAR ENDED 30 SEPTEMBER 2022
The Board’s approach is to remunerate directors at a
similar level to comparable Australasian companies,
with a small premium to reflect the complexity of the
insurance and financial services sector. At the Annual
Shareholders’ Meeting in February 2004 shareholders
approved a maximum payment of NZ$900,000 per
annum for director fees.
Tower seeks external advice when reviewing Board
remuneration. The Remuneration and Appointments
Committee is responsible for assisting directors with the
review of directors’ fees. Remuneration is considered
through the lens of the Director and Executive
Remuneration Policy to ensure that directors and
executives are remunerated in a fair and reasonable
manner, and that such remuneration is transparently
communicated to relevant stakeholders.
Non-executive directors are also paid additional fees for
sitting on certain Board Committees.
Annual fees as approved by the Board with effect from
1 October 2020 are:
TOWER LIMITED
BOARD/COMMITTEE FEES
CHAIR (NZ$) MEMBER (NZ$)
Base fee – Board of directors
180,000
100,000
Audit Committee
Risk Committee
10,000 (included in base
Director fee)
10,000 (included in base
Director fee)
Remuneration and Appointments Committee
–
–
The total of the remuneration received by each for the
year ended 30 September 2022 are set out below (NZ$,
and exclusive of GST, if any):
REMUNERATION AND BENEFITS
RECEIVED BY TOWER LIMITED DIRECTORS IN THE YEAR ENDED 30 SEPTEMBER 2022
Michael Stiassny
Graham Stuart
Steve Smith
Warren Lee (Chair of Risk Committee until 1 September 2022)
Wendy Thorpe (Chair of Risk Committee commencing 1 September 2022)
Marcus Nagel
180,000
110,000
38,333
109,166
100,833
100,000
Rodney Reid, Director, National Pacific
Insurance Limited (retired 3 October
2021)
Heseti Vaai, Director, National Pacific
Insurance Limited (retired 1 December
2021)
Isikeli Tikoduadua, Director Tower
Insurance (Fiji) Limited and, National
Insurance Company (Holdings) Pte
Limited
Barry Whiteside, Director Tower
Insurance (Fiji) Limited
Ernie Gangloff, Director Tower
Insurance (PNG) Limited (retired 28
October 2022)
1625 Samoan Tala
1625 Samoan Tala
18,000 Fijian Dollars
20,000 Fijian Dollars
50,000 Kina
Directors of Tower Limited and its subsidiaries are
reimbursed for out of pocket expenses incurred in the
course of their activities as directors, including travel and
other expenses. As these expenses are not in the nature of
remuneration or benefits, they are not listed here.
No employee of Tower Limited or its subsidiaries who acts
as a director of a subsidiary receives any remuneration
for their role as a director of that subsidiary. The number
of employees who receive remuneration of more than
$100,000 is included in the remuneration table on
page 132. Auditor fees paid on behalf of Tower and its
subsidiaries are disclosed in the financial statements
CEO and senior executive remuneration
The Board’s approach to remunerating the Chief Executive
Officer and other key executives is to provide market-
based remuneration packages comprising a blend of
fixed and variable remuneration, with clear links between
individual and company performance, and reward. This
approach is intended to encourage Tower’s executives
to meet Tower’s short and long-term objectives. The
Remuneration and Appointments Committee reviews the
remuneration packages of the Chief Executive Officer
and the Chief Executive Officer’s direct reports at least
annually.
The Chief Executive Officer, Mr Blair Turnbull, is
remunerated through a combination of a base salary
of $650,000, (inclusive of a Kiwisaver contribution)
and variable performance incentives including a Short
Term Incentive (STI) and a Long Term Incentive (LTI).
The maximum STI is currently $325,000 per annum
based on meeting key financial and non-financial and
operational performance measures. The maximum LTI per
annum is currently $975,000 (total) should Tower deliver
Total Shareholder Return performance relative to the
performance of companies within the NZX50 index.
In FY22, Mr Turnbull was eligible for an STI payment of
$181,675, and an LTI payment of $650,000.
130
CORPORATE GOVERNANCE AT TOWER
CORPORATE GOVERNANCE AT TOWER
131
Employee remuneration
FROM
TO
2021
2022
The table below sets out the number of employees or
former employees of Tower (excluding directors and
former directors and employees of Tower’s subsidiaries)
who received remuneration and other benefits valued
at or exceeding $100,000 for the years ended 30
September 2022 and 2021. Remuneration includes
base salary, performance payments and redundancy or
other termination payments. The 2022 figures include
company contributions of 3% of gross earnings for those
individuals who are members of a KiwiSaver scheme.
These contributions are not included in the 2021 figures.
The remuneration bands are expressed in New Zealand
Dollars.
100,000
109,999
110,000
119,999
120,000
129,999
130,000
139,999
140,000
149,999
150,000
159,999
160,000
169,999
170,000
179,999
180,000
189,999
190,000
199,999
200,000
209,999
210,000
219,999
220,000
229,999
230,000
239,999
240,000
249,999
250,000
259,999
260,000
269,999
270,000
279,999
280,000
289,999
300,000
309,999
310,000
319,999
320,000
329,999
330,000
339,999
340,000
349,999
350,000
359,999
380,000
389,999
400,000
409,999
440,000
449,999
450,000
459,999
470,000
479,999
490,000
499,999
530,000
539,999
560,000
569,999
610,000
619,999
650,000
659,999
23
19
16
8
7
8
5
2
1
2
1
1
3
2
0
2
2
0
3
0
0
1
1
2
1
0
0
0
1
0
0
1
1
1
0
32
22
29
25
18
16
15
3
10
8
8
0
3
1
1
0
2
1
3
2
2
1
0
0
0
1
1
1
0
1
1
0
0
0
1
Total
115
209
SECURITY HOLDER INFORMATION
Substantial product holders
(as at 30 September 2022)
The names and holdings of Tower’s substantial product
holders based on notices filed with Tower under the
Financial Markets Conduct Act 2013 as at 30 September
2022 are:
NAME
TOTAL ORDINARY
SHARES
14
15
16
17
18
19
Bain Capital Credit LP, Bain Capital Investments
(Europe) Limited and Dent Issuer Designated Activity
Company
Salt Funds Management Limited
Accident Compensation Corporation
Investment Services Group Limited
New Zealand Funds Management Limited on behalf
of itself and its wholly owned subsidiary New Zealand
Funds Superannuation Limited
67,464,858
29,607,771
36,239,113
20,589,363
26,615,216
These totals may differ from the shareholdings described
in other sections on this report.
Largest shareholders
(as at 15 November 2022)
The names and holdings of the 20 largest registered
Tower shareholders as at 15 November 2022 were:
NAME
TOTAL
ORDINARY
SHARES %UNITS
Investment Custodial Services Limited
3,512,373
0.93
TEA Custodian Limited Client Property
Trust Account – NZCSD
3,027,220
0.80
HSBC Nominees A/C NZ Superannuation
Fund Nominees Limited – NZCSD
2,971,425
0.78
Rural Equities Limited
2,025,000
0.53
New Zealand Depository Nominee
Limited
Hobson Wealth Custodian Limited
20
Forsyth Barr Custodians Limited
<1-CUSTODY>
1,956,528
0.52
1,945,628
0.51
1,779,617
0.47
Totals: Top 20 holders of ORDINARY SHARES (Total)
267,501,618
70.49
Securities held by Directors
At 30 September 2022, directors, or entities related to
them held relevant interests (as defined in the Financial
Markets Conduct Act 2013) in Tower Limited shares as
follows:
ORDINARY SHARES
DIRECTOR
Michael Stiassny
Graham Stuart
Wendy Thorpe
Warren Lee
Marcus Nagel
BENEFICIAL
624,897
202,500
14,625
108,450
56
Dent Issuer Designated Activity Company
75,896,447
20.00
Accident Compensation Corporation –
NZCSD
36,318,045
9.57
Citibank Nominees (New Zealand)
Limited – NZCSD
31,063,105
8.19
National Nominees Limited – NZCSD
16,060,989
4.23
Director trading in Tower securities
In FY22, all directors had shares cancelled as part of
a compulsory share buyback. There were no other
acquisitions or disposals of Tower shares by its directors.
NUMBER OF SHARES
CANCELLED ON 9 MARCH 2022
CONSIDERATION ($NZ)
($NZ0.72 PER SHARE)
Lennon Holdings Limited
15,800,000
4.16
Michael Stiassny
HSBC Nominees (New Zealand) Limited
– NZCSD
14,499,664
3.82
BNP Paribas Nominees (NZ) Limited –
NZCSD
13,959,307
3.68
Masfen Securities Limited
11,430,000
3.01
Graham Stuart
Wendy Thorpe
Warren Lee
Marcus Nagel
JBWere (NZ) Nominees Limited
11,090,058
2.92
Shareholder analysis
69,433
22,500
1,625
12,050
6
49,991.76
16,200
1,170
8,676
4.32
HSBC Nominees (New Zealand) Limited
A/C State Street – NZCSD
7,762,443
2.05
Public Trust – NZCSD
JP Morgan Chase Bank NA NZ Branch
– Segregated Clients Acct – NZCSD
BNP Paribas Nominees (NZ) Limited –
NZCSD
6,125,000
1.61
6,116,713
1.61
4,162,056
1.10
Tower’s shares are quoted on both the NZSX and ASX.
As at 30 September 2022, 16,301 Tower shareholders
held less than A$500 of Tower shares (i.e., less than a
marketable parcel as defined in the ASX Listing Rules),
amounting to a total of 6,249,528 of the Tower shares
on issue.
1
2
3
4
5
6
7
8
9
10
12
11
13
132
CORPORATE GOVERNANCE AT TOWER
CORPORATE GOVERNANCE AT TOWER
133
In comparison, a ‘minimum holding’ under the NZX
Listing Rules means a holding of shares having a value
of at least NZ$1,000. As at 16 November 2022, 19,861
Tower shareholders held less than NZ$1,000 of Tower
Shares (being, a parcel size of 1,667 at $0.60 per share),
amounting to a total of 10,187,831 of the Tower shares on
issue.
Total voting securities
HOLDING RANGE
ORDINARY SHARES
NUMBER OF HOLDERS
379,483,987
24,116
15 November 2022
16 November 2022
(prior to compulsory
buyback completed
March 2022)
transactions and matters involving the directors must
be recorded. The interests register for Tower Limited
is available for inspection on request by shareholders.
Tower’s constitution provides that an ‘interested’ director
may not vote on a matter in which he or she is interested
unless the director is required to sign a certificate in
relation to that vote pursuant to the Companies Act 1993,
or the matter relates to a grant of an indemnity pursuant
to section 162 of the Companies Act 1993.
During the year to 30 September 2022, pursuant to
section 140 of the Companies Act 1993 Tower’s directors
disclosed new interests and cessations of interest as
noted in the table below. Disclosures made since 30
September 2022 are also noted.
421,647,258
24,577
Warren Lee
Tower’s ordinary shares each carry a right to vote on any
resolution on a poll at a meeting of shareholders. Holders
of ordinary shares may vote at a meeting in person, or by
proxy, representative or attorney.
The address and telephone number of the office at which
the register of Tower securities is kept is set out in the
directory at the back of this Annual Report.
Spread of Shareholders
(as at 15 November 2022)
HOLDING RANGE
HOLDER
COUNT
HOLDER
COUNT %
HOLDING
QUANTITY
(ORDINARY
SHARES)
HOLDING
QUANTITY %
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
17,747
4280
711
1124
221
73.65
17.79
2.96
4.67
7,002,966
8,839,842
5,029,859
34,171,798
.12
324,442,522
Total
24, 137
100
379,483,987
1.84
2.32
1.33
8.91
85.63
100
Indemnity and insurance
In accordance with section 162 of the Companies Act
1993 and Tower's constitution, Tower has provided
insurance for and indemnities to, directors and
employees of Tower for losses from actions undertaken
in the course of their duties. The insurance includes
indemnity costs and expenses incurred to defend an
action that falls outside the scope of the indemnity.
Particulars have been entered in the Interests Register
pursuant to section 162 of the Companies Act 1993
Interests register
Tower and its subsidiaries are required to maintain an
interests register in which the particulars of certain
MyState Limited
MyState Bank Limited
TPT Wealth Limited
Avenue Hold Limited (ceased 4 July 2022)
Avenue Bank Limited (ceased 4 July 2022)
MetLife Insurance Limited
MetLife General Insurance Limited
Warakirri Asset Management Limited
Warakirri Holdings Pty Limited
Flinders Investment Partners Pty Limited
Michael Stiassny
Bengadol Corporation Limited
Emerald Group Limited
Gadol Corporation Limited
Geffen Holdings Limited
Michael Spencer Limited
Ngāti Whātua Ōrākei Housing Trustee Limited
Ngāti Whātua Ōrākei Whai Rawa Limited
Poukawa Estate Limited
Ted Kingsway Limited
Whai Rawa GP Limited
Whai Rawa Kainga Development Limited
LPF Group Limited
MS10 Limited
Morgan HoldCo Limited
Remuera Investments Limited
Te Waenga Ltd
Tegel Group Holdings Ltd
New Talisman Gold Mines Ltd
New Zealand Automotive Investments Limited
(from 21 August 2022)
Graham Stuart
Leroy Holdings Limited
EROAD Limited
VinPro Limited
NorthWest Healthcare Properties Management Limited
Metro Performance Glass Limited
H4G Group Limited, trading as Vet South and VetNZ
(from 1 February 2022)
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Chair
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Chair
Director
Chair
Director
Chair
Wendy Thorpe
Online Education Services Pty Limited
Chair
Very Special Kids (ceased 25 October 2021)
Epworth Foundation (Epworth Healthcare)
Ausgrid Asset Partnership (ceased 25 June 2022)
Ausgrid Operator Partnership (ceased 25 June 2022)
Plus ES Partnership (ceased 25 June 2022)
Australian Central Credit Union Ltd T/A People’s Choice
Credit Union
Epworth Geelong Limited
Data Action (from 3 October 2022)
auDA (from 16 November 2022)
Marcus Nagel
3Arrow AG
Jarowa AG
Barry Whiteside
Kontiki Finance
Pacific Catastrophe Risk Insurance Company
Bayly Trust
Isikeli Tikoduadua
Merchant Finance
Vodafone Fiji
Fiji Commerce Commission
iTaukei Land Trust Board
Special Administrators for Suva City and Lami Town
USP MBA Advisory Committee
Blair Turnbull
InsurtechNZ
Insurance Council of New Zealand
Ernie Gangloff
Gangloff Consulting Limited
Gangloff Projects Limited
Pacific Training Consortium Limited
BSP Financial Group Limited
New Britain Palm Oil Limited
Highlands Pacific Limited
Business Incubation Solution Limited
BSP Finance (Fiji) Pte Limited
Institute of National Affairs Inc.
University Rugby Football Union Club
Capital Rugby Union Inc.
Veialawa Rereiwasaliwa
Bank of Baroda – Fiji Operations
Director
Director
Director/Trustee
Chairman
Director
Commissioner
Director
Chairman
Chairman
Co-Chair
Board member
Managing Director
Director
Director
Director
Director
Director
Director
Director
President
President
Treasurer
Member, Local
Advisory Board
Angus Shelton
Shelton Contracting Limited
Director
Director
Chair
Director
Director
Director
Director
Director
Director
Director
Director
Director
Specific disclosures of interest
Directors made disclosures in respect of the
implementation of Tower Limited’s capital return to
shareholders whereby the company cancelled 1 share for
every 10 shares held on the record date of 8 March 2022.
Details of the shares cancelled are set out on page 131.
Directors also disclosed the monetary value of dividends
received during the year.
NATURE OF
INTEREST
MONETARY
VALUE
Michael Stiassny Shareholder of
17,358 Based on a Dividend
694,330 shares in
Tower Limited
Shareholder of
624,897 shares in
Tower Limited
Shareholder of
225,000 shares in
Tower Limited
Shareholder of
202,500 shares in
Tower Limited
Shareholder of
16,250 shares in
Tower Limited
Shareholder of
14,625 shares in
Tower Limited
Shareholder of 62
shares in Tower
Limited
Shareholder of 56
shares in Tower
Limited
Beneficial
Shareholder of
120,500 shares in
Tower
Beneficial
Shareholder of
108,450 shares in
Tower Limited
Shareholder of
110,000 shares in
Tower Limited
of NZ$0.025 per
share declared on
24 November 2021
1562 Based on a Dividend
of NZ$0.0025 per
share declared on
24 May 2022
5625 Based on a Dividend
of NZ$0.025 per
share declared on
24 November 2021
506 Based on a Dividend
of NZ$0.0025 per
share declared on
24 May 2022
406 Based on a Dividend
of NZ$0.025 per
share declared on
24 November 2021
37 Based on a Dividend
of NZ$0.0025 per
share declared on
24 May 2022
2 Based on a Dividend
of NZ$0.025 per
share declared on
24 November 2021
0.14 Based on a Dividend
of NZ$0.0025 per
share declared on
24 May 2022
3013 Based on a Dividend
of NZ$0.025 per
share declared on
24 November 2021
271 Based on a Dividend
of NZ$0.0025 per
share declared on
24 May 2022
2750 Based on a Dividend
of NZ$0.025 per
share declared on
26 May 2021
Graham Stuart
Wendy Thorpe
Marcus Nagel
Warren Lee
Steve Smith
134
CORPORATE GOVERNANCE AT TOWER
CORPORATE GOVERNANCE AT TOWER
135
Corporations Act 2001 (Australia)
Tower is not subject to Chapters 6, 6A, 6B or 6C of
the Corporations Act 2001 (Australia) dealing with the
acquisition of shares (such as substantial holdings and
takeovers).
The Annual Report is signed on behalf of the Board by
Michael Stiassny
Chair
Graham Stuart
Director
Tower subsidiary company directors
Trading Halt
In March 2022, Tower Limited implemented a capital
return by way of Court approved scheme of arrangement,
under which NZ$30.6m was returned to shareholders with
1 ordinary share for every 10 ordinary shares held on the
record date being cancelled. In order to facilitate the share
cancellation, a trading halt on NZX and ASX was necessary
during the Ex-Date and Record Date for the scheme
(being 7 March 2022 and 8 March 2022 respectively). As
such, NZX applied a trading halt as an operational matter
to facilitate the corporate action, and ASX agreed to grant
a trading halt at Tower’s request.
Limits on acquisition of securities under
New Zealand law
Tower undertook to the ASX, at the time it granted
Tower a full listing in July 2002, to include the following
information in its annual report. Except for the limitations
detailed below, Tower securities are freely transferable
under New Zealand law.
The New Zealand Takeovers’ Code prohibits a person
(including associates) from increasing their shareholding
to more than 20% of the voting rights in Tower except in
accordance with the Takeovers Code. The exceptions
include a full or partial takeover offer in accordance with
the Takeovers Code, a scheme of arrangement (under
the Companies Act 1993), an acquisition or an allotment
approved by an ordinary resolution of shareholders, a
creeping acquisition (in defined circumstances) and a
compulsory acquisition once a shareholder owns or
controls 90% or more of the voting rights in Tower.
The New Zealand Overseas Investment Act 2005 and
related regulations determine certain investments
in New Zealand by overseas persons. Generally, the
Overseas Investment Office’s consent is required if an
‘overseas person’ acquires Tower shares or an interest in
Tower shares of 25% or more of the shares on issue or,
if the overseas person already holds 25% or more, the
acquisition increases that holding.
The New Zealand Commerce Act 1986 is likely to prevent
a person from acquiring Tower shares if the acquisition
would, or would be likely to, substantially lessen
competition in a market.
Directors of Tower’s subsidiary companies during the
year to 30 September 2022 were:
TOWER SUBSIDIARY COMPANY DIRECTORS
Tower Services Limited
The National Insurance
Company of New Zealand
Limited
Blair Turnbull, Paul Johnston and
Angus Shelton
Blair Turnbull, Paul Johnston and
Angus Shelton
National Insurance Company
(Holdings) Pte Limited
Blair Turnbull, Isikeli Tikoduadua, Paul
Johnston, Ronald Mudaliar
Southern Pacific Insurance
Company (Fiji) Limited
Tower Insurance (Fiji) Limited
Blair Turnbull, Isikeli Tikoduadua,
Peter Muggleston and Barry
Whiteside, Paul Johnston
Blair Turnbull, Isikeli Tikoduadua, Paul
Johnston, Peter Muggleston, and
Barry Whiteside
Tower Insurance (Cook Islands)
Limited
Blair Turnbull, Paul Johnston, and
Peter Muggleston
Tower Insurance (PNG) Limited
(ceased to be a subsidiary on
28 October 2022)
Blair Turnbull, Paul Johnston, Peter
Muggleston, Ronald Mudaliar, and
Ernie Gangloff
National Pacific Insurance
Limited
National Pacific Insurance
(Tonga) Limited
Rodney Reid, Peter Muggleston,
Heseti Vaai, Jeffrey Wright, Blair
Turnbull, Paul Johnston and Ronald
Mudaliar
Jeffrey Wright, Peter Muggleston,
Blair Turnbull, Paul Johnston and
Ronald Mudaliar
Tower Insurance (Vanuatu)
Limited
Blair Turnbull, Paul Johnston, Peter
Muggleston and Stephen Grant Ives
National Pacific Insurance
(American Samoa)
Rodney Reid, Jeffrey Wright, Blair
Turnbull, Ronald Mudaliar, Paul
Johnston, Veilawa Rereiwasaliwa
OTHER MATTERS
Donations
During the financial year ended 30 September 2022,
donations made by Tower Limited and its subsidiaries
totalled $4,703.94.
Credit rating
In April 2022, global rating organisation A.M. Best
Company affirmed Tower Limited’s financial strength
rating of A- (Excellent).
Waivers
Tower Limited did not rely on, or make any applications
for, waivers from the NZX Listing Rules or the ASX Listing
Rules in the financial year ending on 30 September 2022.
136
GRI CONTENT INDEX
GRI CONTENT INDEX
137
GRI CONTENT INDEX
138
GRI CONTENT INDEX
GRI CONTENT INDEX
139
GRI Content Index
Statement of use:
Tower has reported the information cited
in this GRI content index for the period 1
October 2021 to 30 September 2022, in
accordance with the GRI Standards.
GRI 1 used:
GRI 1: Foundation 2021
DISCLOSURE
LOCATION/INFORMATION
DISCLOSURE
LOCATION/INFORMATION
GRI 2: GENERAL DISCLOSURES 2021
2-1
Organisational details
Pg 142 Tower Directory
2-2
2-3
Entities included in the organisation’s
sustainability reporting
Pg 142 Tower Directory
Reporting period,
frequency and contact
point
Tower reports sustainability information annually. This report covers the period 1 October 2021
– 30 September 2022. This report was published on 16 December, 2022. Questions about this
report can be directed to Emily.Davies@tower.co.nz
2-18
Evaluation of the performance of the
highest governance body
See Corporate Governance Statement in this link: https://www.tower.co.nz/investor-centre/
corporate-governance/policies/
2-19
Remuneration policies
See Corporate Governance Statement in this link: https://www.tower.co.nz/investor-centre/
corporate-governance/policies/
2-20
Process to determine remuneration
See Director and Executive Remuneration Policy and Remuneration and Appointments
Committee Terms of Reference in this link:
https://www.tower.co.nz/investor-centre/corporate-governance/policies/
2-21
Annual total compensation ratio
Not disclosed: information on annual compensation ratio is not reported externally.
2-4
Restatements of information
This is Tower’s first report in accordance with the GRI Standard
2-22
Statement on sustainable
development strategy
Pg 62
2-5
External assurance
External assurance approach is covered in our Corporate Governance Statement which can be
found in this link: https://www.tower.co.nz/investor-centre/corporate-governance/policies/
We have not sought external assurance on our sustainability information.
2-6
Activities, value chain and other
business relationships
https://www.tower.co.nz/about-us/
2-7
Employees
Tower has 780 employees across New Zealand and the Pacific, 59% of whom are women, and
41% are men. The numbers of permanent, temporary, full, and part-time employees broken down
by gender and region is currently not available.
2-8
Workers who are not employees
As at 30 September 2022, Tower had 50 contingent workers who are predominantly independent
contractors on either direct or agency contracts engaged in technology or project-based work.
There were no significant fluctuations in this number during the reporting period.
2-9
Governance structure
and composition
Our Governance structure and composition, along with a list of committees of the highest
governance body can be found here: https://www.tower.co.nz/investor-centre/corporate-
governance/the-board/
Nomination and selection of the
highest governance body
Chair of the highest
governance body
Role of the highest governance
body in overseeing the management
of impacts
https://www.tower.co.nz/wp-content/uploads/2020/12/TOWER-Constitution.pdf
Pg 64
Pg 62
Role of the highest governance body
in sustainability reporting
Pg 62
2-15
Conflicts of interest
See Code of Ethics Policy in this link: https://www.tower.co.nz/investor-centre/corporate-
governance/policies/
2-16
Communication of critical concerns
See Corporate Governance Statement in this link: https://www.tower.co.nz/investor-centre/
corporate-governance/policies/
Communication of critical concerns regarding ESG topics is to be developed in FY23.
2-17
Collective knowledge of the highest
governance body
See Corporate Governance Statement in this link: https://www.tower.co.nz/investor-centre/
corporate-governance/policies/
Actions to advance the collective knowledge, skills, and experience of the highest governance
body on sustainable development to be undertaken in FY23.
2-10
2-11
2-12
2-13
2-14
2-23
Policy commitments
Relevant policies currently in place can be found here: https://www.tower.co.nz/investor-centre/
corporate-governance/policies/
2-24
Embedding policy commitments
See Corporate Governance Statement in this link: https://www.tower.co.nz/investor-centre/
corporate-governance/policies/
2-25
Processes to remediate
negative impacts
https://www.tower.co.nz/contact-us/complaints-and-compliments/
Remediation process for our material impacts is covered under the relevant topics.
2-26
Mechanisms for seeking advice and
raising concerns
See Code of Ethics Policy in this link: https://www.tower.co.nz/investor-centre/corporate-
governance/policies/
Staff are encouraged to raise concerns with their manager, or a senior leader. Tower’s whistle
blower service provides a confidential avenue to report any serious concerns.
2-27
Compliance with laws
and regulations
In FY22 Tower recorded no significant instances of non-compliance with laws and regulations.
Accordingly there are no fines to report.
2-28
Membership associations
Tower is a member of Insurance Council of New Zealand and is especially active in ICNZ’s Climate
Change committee. Other memberships are detailed throughout tower.co.nz
2-29
Approach to stakeholder
engagement
Tower takes a collaborative approach to stakeholder engagement. In 2022 Tower developed a
new company purpose and values with stakeholders at the heart (pg 54) Similarly, our Southern
Star drives outcomes for customers and our people, this is: "To deliver beautifully simple
experiences for our people and customers." Our ESG strategy was developed in consultation with
a range of stakeholders and considers our impacts on various stakeholder groups.
2-30
Collective bargaining agreements
None
3-1
3-2
3-3
Process to determine material topics
Pg 62
List of material topics
Pg 63
Management of material topics
Affordable and accessible insurance Pg 24
Transparent and fair insurance Pg 16
Managing the impacts of climate change Pg 30-35
Carbon emissions Pg 36-37
Product development and innovation Pg 20
Diversity and inclusion Pg 54-57
Employee wellbeing Pg 56
Corporate governance Pg 62 and 122-135
Data protection – not currently available
Corporate community citizenship – not currently available
Environmental footprint – not currently available
Responsible investment – not currently available
Delegation of responsibility for
managing impacts
The board delegates day-to-day management of the company to the CEO and does not currently
provide for any additional specific delegation of ESG impacts.
GRI 3: MATERIAL TOPICS 2021
140
GRI CONTENT INDEX
GRI CONTENT INDEX
141
DISCLOSURE
LOCATION/INFORMATION
DISCLOSURE
LOCATION/INFORMATION
GRI 305: EMISSIONS 2016
305-1
Direct (Scope 1) GHG emissions
Pg 37
Scope 1 emissions include distributed natural gas in New Zealand and vehicle fleet fuel in
New Zealand and the Pacific.
305-2
Energy indirect (Scope 2)
GHG emissions
Pg 37
Scope 2 emissions include electricity consumption from all business premises.
305-3
Other indirect (Scope 3)
GHG emissions
Pg 37
Scope 3 emissions include transmission & distribution losses for electricity & gas, air travel, hotel
stays, rental cars, taxi travel, working from home, paper purchased (NZ only), waste to landfill (NZ
only) and water (NZ and some Pacific locations).
305-5
Reduction of GHG emissions
Pg 37
403-3
Occupational health services
403-4 Worker participation, consultation,
and communication on occupational
health and safety
2016 GRI 401: EMPLOYMENT 2016
401-1
New employee hires and employee
turnover
In FY22 Tower hired 307 staff to address growth and attrition. These comprised permanent, fixed
term and casual new hires. New hires by Gender: Female: 145, Male: 106, Gender Diverse: 3, Non
Binary: 2, Not disclosed: 51. New hires by region: New Zealand: 271, Pacific: 36 Number and rate of
new employees by age is currently unavailable.
Over the period employee numbers increased by 82 full-time equivalent staff from 708 in FY21 to
790 in FY22, due to increased business growth and regulatory compliance requirements.
Employee attrition was 29.9% in FY22, reflecting the year’s challenging employment market in
New Zealand.
403-5 Worker training on occupational
health and safety
403-6
Promotion of worker health
Tower workers have access to Employee Assistance Programme counselling sessions provided
offsite by external trained counsellors. These sessions are arranged by workers independently
and any information discussed is strictly confidential between EAP and Tower employees. If
employees choose to get health checks, these are done directly with General Practitioners and
results are kept confidential between the worker and General Practitioner.
As per the Health and Safety at Work Act 2015, Tower has the default ratio of 1 Health and Safety
Representative per every 19 workers. These representatives engage and consult with workers
regularly and report any concerns to the Health and Safety Advisor or/and at the Health and
Safety meeting. Tower’s H&S Management system is reviewed by the Health and Safety Advisor
annually to ensure risks are kept up to date.
Tower has several Health and Safety committees that meet monthly and are chaired by Health
and Safety committee members on a rotation basis. The Health and Safety Representatives are
chosen to represent different divisions of the business and are voted into the committee by the
Health and Safety Advisor and existing members. Committee members are allocated specific
time each month to undertake their responsibilities. Their responsibilities include, but are not
limited to, office inspections, disseminating H&S updates from the meetings to relative teams,
ensuring H&S is on the agenda at all team meetings and promotion of a wide range of health,
safety and wellbeing education and activities.
Tower offers training to workers who volunteer to be First Aiders, Fire Wardens, Mental Health
First Aiders, and Domestic Violence First Responders. In addition to this Defensive Driver training
every two years is mandatory for all workers where their primary employment involves driving.
Asbestos awareness training is mandatory for Building Assessors. Training is provided free of
charge and workers are given paid leave to undertake all of the above training.
Tower supports its employees that have non-work-related accidents through workstation
assessments to ensure they have the necessary equipment to undertake their job. Where a
return-to-work plan is required, Tower will work alongside ACC to facilitate a satisfactory solution
for the employee. Health checks in the Pacific are done through a local General Practitioner, and
the results are confidential and not shared with Tower.
Tower offers employees access to several health promotion services including Employee
Assistance Programme (online and in person); discounted Flu vaccinations and MoleMap skin
checks (onsite or through vouchers) and access to trained Mental Health First Aiders (online and
in-person).
Tower promotes prevention off communicable diseases in the Pacific through education on
symptoms, prevention and treatment. Our Rainbow network supports education on AIDS
awareness and prevention.
GRI 405: DIVERSITY AND EQUAL OPPORTUNITY 2016
405-1
Diversity of governance bodies
and employees
Pg 122-135
405-2
Ratio of basic salary and
remuneration of women to men
Pg 57
GRI 418: CUSTOMER PRIVACY 2016
418-1
Substantiated complaints
concerning breaches of
customer privacy and losses
of customer data.
Tower has not disclosed the number of complaints related to customer data privacy as this is
subject to confidentiality constraints.
401-2
Benefits provided to full-time
employees that are not provided to
temporary or part-time employees
Benefits are offered to both full-time and part-time permanent employees. Tower benefits
include Group Insurances, parental leave, ability to buy additional leave, birthday leave, Tower
insurance discounts, health insurance discounts, partner discounts, eyesight testing, and study
assistance.
401-3
Parental leave
Tower offers Primary Paid Carer Leave & paid Parental Leave for staff who have worked with
us for 6 months or more. For the first 12 weeks, Tower will top up the IRD payment to the
equivalent of the employee's usual weekly take-home pay. Tower also offers paid keeping in
touch days, flexible working for six weeks upon return from parental leave, and we will pay a one-
off lump sum payment to IRD of 3% of base salary as a contribution (pro-rated for time
on unpaid leave).
Additionally, any Annual Leave taken on the employee's return from parental leave will be paid at
their usual rate. This is more generous than the current Holidays Act legislation and means take-
home pay is not affected when the employee takes paid annual leave.
For staff whose spouses or partners are the primary caregivers we offer two weeks' paid partner
leave. In FY22: 27 employees took parental leave (all female) versus 31 in FY21 (30 female, 1
gender not disclosed); 12 employees returned to work from parental leave during FY22 (all
female); of these 9 are still employed 12 months after return to work (all female).
GRI 403: OCCUPATIONAL HEALTH AND SAFETY 2018
403-1
Occupational health and safety
management system
See Health and Safety Policy in this link:
https://www.tower.co.nz/investor-centre/corporate-governance/policies/
403-2
Hazard identification, risk
assessment, and incident
investigation
Tower’s H&S Management System has an incident register where incidents are reported.
When reporting, it is mandatory that all incidents are rated using the Hierarchy of Control and
each incident must have a corrective action added and be reviewed on an annual basis. Once
entered into the register, incidents are then reviewed by the Health and Safety Advisor who will
investigate any incidents with an inherent high rating.
Workers are encouraged to report hazards and hazardous situations through the H&S system.
Tower’s H&S Policy is in line with New Zealand’s Health and Safety at Work Act 2015. All workers
have access to the Health and Safety Policy on Tower’s intranet.
142
TOWER DIRECTORY
REGISTRAR
143
TOWER DIRECTORY
Enquiries
For customer enquiries, call Tower on 0800 808 808
or visit www.tower.co.nz
For investor enquiries:
Telephone: +64 9 369 2000
Email: investor.relations@tower.co.nz
Website: www.tower.co.nz
Board of Directors
Michael Stiassny (Chair)
Warren Lee (until 30 November 2022)
Steve Smith (until 2 February 2022)
Graham Stuart
Wendy Thorpe
Marcus Nagel
Geraldine McBride (from 1 October 2022)
Chief Executive Officer
Blair Turnbull
Company Secretary
Hannah Snelling (until March 2022)
Tania Pearson (from March 2022)
Executive Leadership Team
Blair Turnbull
Paul Johnston
Jonathan Beale
James Brownell (acting)
Michelle Finch
Andrew Hambleton
Michelle James (until March 2023)
Anna Kooperberg
Greg Moore
Ronald Mudaliar
Peter Muggleston (until March 2022)
Tania Pearson
Paula ter Brake (until August 2022)
Steven Wilson
Registered Office
New Zealand
Level 5, 136 Fanshawe Street, Auckland
PO Box 90347
Auckland
Telephone: +64 9 369 2000
Facsimile: +64 9 369 2245
Australia
C/– PricewaterhouseCoopers Nominees (N.S.W) Pty Ltd
PricewaterhouseCoopers Darling Park Tower 2
Level 1
201 Sussex Street
Sydney, NSW 2000, Australia
Auditor
PricewaterhouseCoopers
Lawyers
MinterEllisonRuddWatts
Banker
Westpac New Zealand Limited
Company numbers for FY22
Tower Limited
(Incorporated in New Zealand)
NZ Incorporation 143050
NZBN 9429040323299
ARBN 645 941 028
Stock exchanges
The Company’s ordinary shares are listed on the
NZSX and the ASX. On Wednesday 18 May 2016, Tower’s
ASX admission category changed to “ASX Foreign
Exempt Listing”.
Registrar
New Zealand
Computershare Investor Services Limited
Level 2, 159 Hurstmere Road,
Takapuna, Auckland
Private Bag 92119
Auckland 1142
Freephone within New Zealand: 0800 222 065
Telephone New Zealand: +64 9 488 8777
Australia
Computershare Investor Services Pty Limited
Yarra Falls, 452 Johnston Street
Abbotsford VIC 3067
GPO Box 3329
Melbourne Vic 3000
Freephone within Australia: 1800 501 366
Telephone Australia: +61 3 9415 4083
Email: enquiry@computershare.co.nz
Website: www.computershare.com/nz
You can also manage your holdings electronically
by using Computershare’s secure website
www.investorcentre.com/nz
This website enables holders to view balances, change
addresses, view payment and tax information and update
payment instructions and report options.
Tower recommends shareholders elect to have any
payments direct credited to their nominated bank
account in New Zealand or Australia to minimise the risk
of fraud and misplacement of cheques.
We also encourage shareholders to receive investor
communications electronically as it keeps costs down,
delivery of our communications to you is faster and it
is better for the environment. All you need to do is log
in to www.investorcentre.com/nz and update your
‘Communication Preference’ to enable us to send all your
investor correspondence electronically where possible.
Please quote your CSN number or shareholder number
when contacting Computershare.