Tower is in talks with the Reserve Bank of New Zealand about proposed conditions on its licence, including an increase to the minimum solvency margin.

The discussions are part of the licensing process, the company told the New Zealand Stock Exchange.

Last month, when releasing its half-year results, Tower revealed it would use the sale of its life business this year to repay debt and return funds to shareholders, leaving $127 million in capital above minimum solvency requirements.

The Reserve Bank – New Zealand’s insurance regulator – is introducing a new licensing system under the Insurance (Prudential Supervision) Act of 2010.

A Tower spokesman told insuranceNEWS.com.au the discussions are ongoing and it would be premature to speculate on potential conditions.