US based property and casualty underwriter Tower Group has announced sale of its health insurance business for $102m to Australian private health insurer NIB Holdings.

Subject to clearance from the Overseas Investment Office, the sale is part of the company’s previously announced strategy to collaborate or divest its health insurance unit to streamline operations.

According to an estimate, its medical insurance has a market share of 13%, which yielded a profit of $6.8m in the first six months of the year.

Tower Group managing director Rob Flanaghan said the amount of capital that would be repaid will be equal to the proceeds received.

The company said that all proceeds would be returned to shareholders, while NIB will offer health insurance to Tower life and general insurance customers without affecting the service level.

Tower offers a variety of specialized property and casualty insurance products and services to small and mid-sized businesses and to individuals.