Fidelity Life is a New Zealand owned company that specializes in life insurance, personal protection, business insurance, savings, investment and KiwiSaver.

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Under the agreement with Fidelity, TOWER will sell most of its non-participating life insurance policies and retain the capital currently held against those policies, releasing an aggregate amount of capital of $189m.

In addition, TOWER will also retain its participating book and other run-off life insurance assets which have an embedded value of $23m. The sale implies a total value of $212m for TOWER’s life insurance business.

TOWER Group managing director, Rob Flannagan, said: "TOWER would now focus on delivering high quality general insurance products and services to customers in New Zealand and the Pacific Islands, leveraging off its strong market position and brand reputation.

"The half year results presentation on 28 May will include details of how TOWER will apply the proceeds of the transaction, including the amount of capital to be returned to shareholders. At that time, TOWER will also provide pro-forma financial information to reflect the sale of its life insurance business; information relating to the ongoing capital structure and earnings and dividend guidance for the ongoing specialist general insurance business and remaining assets," Flannagan said.

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The sale of TOWER’s Life insurance business is subject to terms and conditions customary for a transaction of this type. Subject to satisfaction and timing of conditions, settlement is likely to occur in July 2013.