Slide 1: TOWER
TOWER
Slide 2: Financial Results Year Ended 30 September 2002
ITOWER Financial Results Year Ended 30 September 2002 Keith Taylor — Acting Group CEO Sydney, 5 December 2002
Slide 3: FY2002 NPAT loss of NZ$74.9 million
TOWER m FY 2002 NPAT loss of NZ$74.9 million — significantly impacted by weak investment markets and large one-off costs and write-downs mw NZ operations — good performance m@ Bridges - good growth in profits and FUM mw TOWER Australia — very disappointing result - intensive operational focus — new
Slide 4: Expected profit result $80m+
TOWER Expected profit result $80m+ >» Investment markets - $26.1m » Write-offs (IT & other) - $31.2m » TAL operational & experience losses -$44.0m » Restructuring costs (including redundancies) -$10.1m » Bridges revaluation -$35.8m
Slide 5: Financial results summary year ended Sept 2002
TOWER Year ended 30 Sept 2 2001 Change NZ$ million Premium Income 458.8 419.3 +9% Fee income 175.1 184.17 -5% Investment Income (53.3) 93.7 -157% NPAT (pre Bridges revaluation) Bridges revaluation NPAT EPS cents (42.0) 43.4 -197% Net Asset Backing NZ$ 4.36 5.05 -14% Assets Under Management NZ$ billi
Slide 6: Profit components year ended Sept 2002
ITOWER Year ended 30 Sept 2002 2001 2000 NZ$ million Planned Profits 42.3 45.1 49.6 Experience profits/(losses) (62.7) 3.8 (7.5) Capitalised loss reversal/(recognition) (12.4) 0.7 4.4 Other business operating margins > operating companies 25.1 25.6 18.6 > holding company (28.3) (14.1) (3.1) Movement
Slide 7: Drivers of planned profits and operating margins
ITOWER m Planned profits down 6% (NZ$2.8m) > Currency > Higher lapse rates and lower levels of new business in TOWER Australia > Run-off of TOWER Life NZ business m Experience losses in TOWER Australia, NZ$65.9m m= Capitalised loss recognition, NZ$12.4m > Higher expense assumptions and lapses in TOW
Slide 8: Experience profits by half-year
|TOWER NZ $million H2/02 H1/02 Lapses & Surrenders Lump sum claims/mortality Investment income/Disc Rate Taxation Other Operational
Slide 9: Lapses, claims and expense experience
ITOWER m Lapses + surrenders (mainly in TOWER Australia) > Impact of poor investment markets on some closed investment products > Increase in disability premiums causing higher than expected lapses m Disability income claims — continued improvement in experience m Expense profit (Experience loss $48
Slide 10: TOWER Australia: write-downs and review
TOWER m Write downs and adjustments following review responsible for 2002 loss mw Jim Minto (prev CEO TOWER NZ) - started 6 Nov m Some progress but more urgency required-— full operational review underway by new leadership team m Experience loss of A$54.8 million @ Write down in valuation of life ow
Slide 11: TOWER Australia results (A$ million)
TOWER Year ended 30 Sept 2002 2001 2000 A$ million Planned Profits 26.4 27.1 29.2 Experience profits/(losses) (54.8) (6.8) 9.1* Capitalised loss reversal/(recognition) (10.2) 0.5 3.9 Other bus operating margins 0.0 0.0 1.7 Movement in value of life co owned subs. (28.4) 14.0 1.9 Net investment retur
Slide 12: Bridges (A$ million)
ITOWER Bridges (A$ million) 2002 2001 Change Income 38.7 33.8 +15% m FUM increased by A$231m (8%) to A$3.1 billion m TPS 10* largest discretionary master trust in Australia (maintaining market position) m 111 Bridges planners (in 40 locations), plus 18 planners from other dealers exclusively support
Slide 13: Bridges valuation as at September 2002 A$168 million
TOWER m Valuation as at 30 September 2002 A$168 million m Independently valued every 6 months m Good profit in 2002 m Poor investment markets m Margin squeeze m Planner income sharing m Future growth m 5.5% of funds under management 413
Slide 14: NZ retail funds management
TOWER NZ$ million 2002 2001 2000 Operating income 48.7 50.3 44.6 Net premium income 27.8 33.0 91.4 Investment income (14.7) (34.3) 77.4 u a Challenging year due to continued trend away from managed investment products to cash/mortgage funds in current volatile investment climate a NZ's largest retai
Slide 15: Wealth management / administration results
ITOWER 2001 2000 74.2 67.2 NZ$ million Net income m Decision to retain business after seeking offers m Profit down due to sale process and one-offs m Income relatively static across all categories = Mgt & sales expenses up $4.5m, including $2.3m of one-off costs m Assets under management and adminis
Slide 16: Asset management results
ITOWER NZ$ million 2002 2001 2000 Net income 19.4 18.3 20.0 Mgt & sales expenses 13.3 12.3 12.2 m FUM as at 30 Sept 02 $7.9 billion — external $1.8 billion, internal $6.1 billion m New Zealand continues to be strong in investment performance (wholesale balanced super fund best returns for 2"¢ year i
Slide 17: TOWER Insurance and TOWER Health & Life
TOWER TOWER Insurance NZ$ million 2002 2001 2000 Net premium income 143.8 140.2 133.7 Investment incom > Profit 84% up — improved investment income + good cost control. > Maintained record of positive underwriting despite unusually high fire claims TOWER Health & Life NZ$ million Net premium income
Slide 18: Corporate and other expenses
|TOWER NZ$ million 2002 2001 2000 Shareholder admin 4.3 49 44 Other mgt expenses 29.2 12.5 10.4 TOWER China 3.6 2.5 1.7 Tax expense (8.0) (5.5) (4.4) m Other Mgt expenses include > $8.4m - due to restructuring > $6.0m- BCG/due diligence costs > $14.8m - recurring m Exited China — no more costs going
Slide 19: TOWER Australia: issues and strategy to reverse
|TOWER m Issues for last year > Increased actual expenses > Switch acquisition to maintenance > Lapses higher than planned for DI book > Write offs > Lower sales momentum m Strategy to reverse > Immediate review of business scope > Cost reductions > Sales momentum rebuild > Focus on quality of servi
Slide 20: High level strategy going forward
|TOWER m High level strategy going forward > Business model > Markets > Products/services > Alliances > Distribution 20
Slide 21: Debt, gearing and capital adequacy
ITOWER m™ Total Debt $443 million ($512 million in 2001) m Gearing 36.6% (36.1% in 2001) m™ Capital adequacy meet all regulatory requirements ™ Capitalised expenses $63.1 million ($50.6 million IT) m= Future Capex <$20 million in 2003 ($30-40m in recent years} 24
Slide 22: Depreciation and dividend policy
|TOWER m Depreciation — expense will be lower due to large write-off of capitalised expenditure m Dividend policy — intention to resume paying dividends from 1H03 — lower level than previously 22
Slide 23: Appointment of new Group CEO imminent
TOWER m Appointment of new Group CEO imminent m Strategic and operational review due early in New Year > IAC, personal trustee business, asset management capability, capital management m Divestments/Acquisitions m Domicile/Franking credits 23
Slide 24: Most issues of 2001/2 are non-recurring
TOWER m Most issues of 2001/2 are non-recurring m Made management, staffing, financial and structural changes necessary for good base going forward m Benefits of restructuring will emerge in 2002/3 m Sales momentum will take time to re-build in TOWER Australia 24
Slide 25: Summary of the year
|TOWER m Very weak investment markets m Operational difficulties in TOWER Australia — sales, expenses, IT m Other operations performed well m™ Significant restructuring — particularly since July 25