Major New Zealand insurer Tower will return an initial $NZ70 million ($61.8 million) of capital to investors following the sale of most its life insurance business.

The company sold the operation to Fidelity Life Assurance in May for about $NZ145 million ($128.56 million).

CEO David Hancock says Tower will return a total of $NZ114.5 million ($101.52 million) overall.

The company will soon confirm the process and timing for the initial payout, following the Reserve Bank’s confirmation of minimum solvency margin requirements.

“We continue to review our capital management plan following the issue of full insurance licences for our general insurance and retained life insurance businesses,” Mr Hancock said.

It is now “appropriate” to return some capital to shareholders, because it is surplus to capital and business requirements.

“The form and timing of the return of $70 million is yet to be decided,” a Tower spokesman told insuranceNEWS.com.au.

Tower’s results for the half-year to March 31 show the sale of its health, investments and life businesses will release capital of $NZ370 million ($328.04 million).

“Of this, $NZ120 million ($106.39 million) has already been distributed and it is intended that a further $NZ114.5 million will be returned to shareholders once the life sale has been completed.”