Tower : Notice of Annual Meeting and Proxy Form

The business before the annual meeting this year covers the usual administrative matters (auditor remuneration and

director re-elections), but also the approval of the proposed NZ$30.4m capital return. I encourage all shareholders to

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re d the Notice of Meeting and explanatory notes carefully as they provide important information on the capital return

in particular.

Business of the meeting

Presentations

Item 3: Re-election of Graham Stuart as Director of Tower.

a) Chair's address

"That Graham Stuart, who retires on rotation in accordance with

b) CEO's address

NZX Listing Rule 2.7.1 be re-elected as a Director of Tower."

Resolutions

Item 4: Re-election of Marcus Nagel as Director of Tower

It m 1: Auditor Remuneration

"That Marcus Nagel, who retires on rotation in accordance with

To consider, and if thought fit, to pass the following by

NZX Listing Rule 2.7.1 be re-elected as a Director of Tower."

ordinary resolution:

Item 5: Capital Return

"That the Board be authorised to determine the auditor's fees

To consider and, if thought fit, to pass the following by special

and expenses for the 2022 financial year."

resolution:

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Warren Lee

BCom, CA

Non-Executive Director

Independent

Appointed Director:

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26 May 2015

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On 30 November 2021, Tower applied to the High Court of New Zealand for an order directing Tower to put the Scheme to

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shareholders. The Court made initial orders on 10 December 2021 which require (amongst other things) the Scheme to be

approved by special resolution of shareholders (that is, a resolution passed by a 75% majority of the votes of all shareholders

entitled to vote and voting at the meeting), and IRD approval of the Scheme to be obtained by 9 February 2022. Tower

will also be seeking a ruling from the Australian Tax Office in relation to the tax effect of the capital return for Australian tax

purposes on Australian Shareholders. However, this will not be a condition of the Scheme.

If the resolution is passed and IRD approval is obtained, Tower will seek final orders from the High Court sanctioning the

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return of capital. The final orders that are being sought by Tower sanctioning the Scheme are set out in the copy of Tower's

application to the Court (dated 30 November 2021), which accompanies this Notice of Meeting.

Consequently, as at 30 September 2021 (and following payment of the dividend announced on 24 November 2021), Tower

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If shareholders do not approve the Scheme or if IRD approval is not obtained, the Scheme will not proceed

and Tower's application to the High Court will be discontinued.

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The Directors of Tower unanimously recommend that shareholders vote in favour of the Scheme

(Resolution 5).

RATIONALE FOR THE CAPITAL RETURN

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In 2019 Tower undertook a capital raising to fund the acquisition of Youi NZ's insurance portfolio, and also to reflect a change

in its RBNZ licence conditions reflecting the removal of its EQC receivable1 from its solvency calculations due to a dispute

concerning it. As advised to the market on 24 November 2020, the dispute was settled with Tower receiving a net amount of

NZ$42.1 million2.

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had approximately NZ$37.7 million of surplus capital in excess of its target operating range for its prudential

solvency margins.

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The Board has been through an extensive exercise to determine the best use of these funds (subject to maintaining

appropriate headroom above minimum solvency margins), including potential acquisition opportunities. The Board does not

believe that any better opportunities exist at present or are likely in the short to medium term for these funds.

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After taking into account Tower's balance sheet structure, prudential and solvency requirements, investment opportunities

and operating outlook, the Board has determined that approximately NZ$30.4 million be returned to shareholders by the

Scheme.

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Immediately following the capital return Tower's solvency margins and ratios will be materially above the minimum

prescribed by law3.

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In determining the amount of capital to be returned to shareholders, Tower considered a number of factors, including:

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a. Tower's statutory capital adequacy requirements and its solvency position (including that of subsidiaries);

b. any potential need for capital expenditure over the next 1 - 2 years;

c. Tower's ability to meet all of its liabilities;

d. Tower's credit quality; and

e. likely future revenues and liabilities.

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In determining the preferred form of capital return, Tower sought advice from its external legal advisers, investment bankers,

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appointed actuary, and tax advisers. All options were considered, including the payment of a dividend, both on-market and

off-market share buyback transactions, and the proposed Scheme. After careful consideration by the Board, the preferred

method adopted was the Scheme.

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In reviewing the options for the return of capital, Tower's objectives included:

a. certainty that the return of capital would proceed (with a low level of execution risk);

b. ensuring that the payment made to shareholders is appropriately treated as a return of capital for New Zealand tax

purposes (see further information under the heading "Taxation - New Zealand" below). Tower will also be seeking

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a ruling from the Australian Tax Office in relation to the tax effect of the capital return for Australian tax purposes on

Australian Shareholders (see further information under the heading "Taxation - Australia" below);

c. ensuring that the return of capital will be made in a timely manner, so that shareholders receive cash in the near term;

and

d. adopting a method that ensured all shareholders are treated on the same basis and that the return of capital does not

alter any shareholder's proportionate voting or distribution rights.

THE SCHEME AND ITS EFFECT

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Subject to approval by shareholders, receipt of IRD approval by 9 February 2022 (see "Taxation - New Zealand" below), and

receipt of final orders from the High Court sanctioning the return of capital, the Scheme will result in:

a. the cancellation of one (1) in every ten (10) shares held by each shareholder in Tower (together with all rights

attaching to those shares) on the Record Date (as defined in paragraph 20 below). Fractions of a share will be

rounded up or down to the nearest whole number (with 0.5 rounded down); and

b. the payment to each shareholder of NZ$0.72 for each share cancelled. Shareholders with an address on the

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register in Australia at 7:00pm (New Zealand time) on the Record Date for determining the shareholders to

participate in the Scheme will be paid the NZ$0.72 converted into Australian dollars at the exchange rate

organised by Tower's share registrar on or about that time, as approved by Tower. In this way, Tower will return to

shareholders, on a pro rata basis, approximately NZ$30.4 million of capital. On the Record Date, there are expected

to be 421,647,258 shares on issue. Based on this number, 42,164,726 ordinary shares will be cancelled (subject to

rounding). This will leave the total number of ordinary shares on issue at approximately 379,482,532.

Subject to the approval of shareholders and receipt of IRD approval (see "Taxation - New Zealand" below), the final orders