Tax strategy

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Tax Strategy

Boston-based Liberty Mutual Holding Company (“LMHC”), the parent corporation of the Liberty Mutual Insurance group of entities (“Liberty Mutual Insurance or Liberty”), is a diversified global insurer offering a wide range of property and casualty insurance products and services to individuals and businesses alike. LMHC employs more than 50,000 people in 29 countries throughout the world.

Liberty Mutual Insurance’s Principles and Code of Business Ethics and Conduct

Liberty Mutual Insurance’s tax governance and tax risk management is aligned with its Identity, Values, Code of Business Ethics and Conduct. To deliver on our culture of continuous improvement and steadfast integrity, we foster an environment of support, empowerment, and collaboration.

Our Identity and Values

  • Our Identity is our belief, purpose and promise as a company. It’s why we do what we do. Our Belief: We believe progress happens when people feel secure.
  • Our Purpose: We exist to help people embrace today and confidently pursue tomorrow.
  • Our Promise: We promise protection for the unexpected, delivered with care.

Our Values are how we do what we do. As an inclusive organization, we need to:

  • Put people first: Act with empathy, dignity and respect.
  • Keep it simple: Be clear and transparent.
  • Be open: Engage with all people and possibilities.
  • Make things better: Be proactive and challenge the status quo.
  • Act responsibly: Do what’s right and follow through.

Our Code of Business Ethics and Conduct (“The Code”)

The Code applies to all Liberty Mutual Insurance employees, officers and directors, whenever and wherever we do business or act on behalf of Liberty.

  • We act responsibly and honestly and do the right thing:  The way we conduct our business is essential to our reputation and the trust we build with our customers. The Code guides our ethical behavior and puts our values into practice. While the Code offers guidance on specific legal requirements, an ethical workplace is about more than complying with the law. As Liberty employees, we treat each other, our customers and those in our communities with empathy, dignity and respect.
  • Avoid Conflicts of Interest: We all have a responsibility to act in Liberty’s best interests. This includes avoiding situations where our own interests conflict or appear to conflict with Liberty’s interests. A conflict of interest arises when a personal interest or activity interferes, or appears to interfere, with the employees’ work for and responsibilities to Liberty. 
  • Protect Information: Information is one of our most valuable assets. We are responsible for protecting and properly handling the information that fuels our business.  Liberty classifies information into two categories: public and private. While Liberty employees can share public information freely, Liberty employees must keep private information confidential and secure. Private information includes the personal information of our customers, and confidential and restricted business information like business plans, customer lists, pricing and other competitive terms of our business.  Employees should always handle private information according to the Privacy Principles, Data Privacy and Protection Standard, applicable data protection laws and our privacy notices.
  • Comply with the Law: Liberty employees must follow all applicable laws and regulations. Liberty is subject to legal requirements that touch key aspects of our business, including sales, underwriting and claims activities. Our internal procedures are designed to comply with these requirements. All employees should be familiar with and follow all applicable department and business unit procedures that relate to their work, our products and dealings with customers, policyholders and claimants.
  • Raise Compliance Concerns: We have a responsibility to speak up if we suspect behavior that violates the Code or any laws or regulations.  It’s critical that employees are comfortable raising compliance and ethics concerns and we do not tolerate retaliation. As a global insurer, Liberty Mutual has worldwide resources to help employees act with integrity.

Our Social Responsibility

Liberty Mutual Insurance supports communities that it operates in by being a good corporate citizen through our economic contributions of employment and commerce, payment of our legally required taxes, our focus on the environment and sustainability and through our philanthropic activities including many programs at both the corporate and employee level, including:

  • Serve with Liberty – employees devote their workday to serve causes they support in the communities in which they live.
  • Give with Liberty –U.S. employees have pledged millions of dollars to over 8,000 charities. Liberty Mutual Insurance has matched 50% of employee gifts.
  • Corporate philanthropy and grants.

Approach to Tax Risk and Risk Tolerance

Liberty Mutual Insurance’s objective is to comply with legal requirements in the taxing jurisdictions in which it operates and seeks to effectively manage tax risks while optimizing after tax income. Where areas of tax complexities arise, Liberty seeks legal and technical tax advice to supplement the knowledge of our technical and professional tax employees. Where interpretation of existing tax law is unclear or application of new tax law is uncertain, Liberty Mutual Insurance will rely on its internal tax expertise and/or seek guidance from tax advisors to evaluate tax risk and appropriate tax treatment.

Our risk tolerance for material tax compliance penalties or material financial statement tax misstatements is low. 

Liberty Mutual Insurance seeks to take appropriate steps to mitigate material tax risks and remediate identified issues to ensure key controls operate effectively.

Management of tax risk is subject to the oversight of the Risk and Audit Committees of the Board of Directors

Attitude to Tax Planning

Liberty Mutual Insurance’s attitude towards tax planning is to strive to be efficient with its tax affairs and ensure that all tax planning relates directly to commercially focused activities. When considering a commercial transaction, it will aim to optimise its after-tax result consistent with Liberty Mutual Insurance’s approach to tax risk.

Any material tax planning is considered by the relevant operation’s Board of Directors and must be supported by an appropriate level of tax analysis. If the size of the transaction is such that it is considered by the LMHC Board, then any associated tax planning and compliance will also be considered at this level.

In accordance with Liberty Mutual Insurance’s tax protocols, external tax advice on tax matters is sought when specific expertise is required, including on material transactions or where the interpretation of tax law is unclear, and ensures strategy is sound and executed within the bounds of the law.

Overall tax planning considers the following factors, where appropriate:

  • Liberty Mutual Insurance’s Identity & Values
  • Liberty Mutual Insurance’s Code of Business Ethics and Conduct
  • Company reputation
  • Legal compliance
  • Policyholder commitment and outcomes

Approach to Risk Management and Governance

Liberty Mutual Insurance’s global tax practices are overseen from its U.S. headquarters, including, as applicable, to its UK operations which include Global Risk Solutions International (GRSI), Liberty Specialty Markets (LSM), Liberty Mutual Reinsurance (LMRe), Ironshore, and various other UK operations (collectively, ‘UK operations’). 

Liberty Mutual Insurance’s approach to global tax risk is based on principles of legal compliance, reasonable care and materiality. Liberty Mutual Insurance’s global tax risk profile, which includes the UK, is discussed at the Audit and Risk Committees, sub-committees of the LMHC Board.

Liberty Mutual Insurance’s global tax policies and protocols are regularly evaluated. Tax policies and protocols are monitored by Liberty Mutual Insurance’s U.S. Corporate Taxation department, which includes specialists in U.S. income taxes, international income taxes, and transfer pricing.

The LMHC Board is ultimately responsible for stewardship of tax risk and global tax governance policies for Liberty Mutual Insurance.

UK tax policies and procedures are determined or reviewed by the relevant Board of Directors of in accordance with the Liberty Mutual Insurance tax policies and protocols.

In respect of the UK operations, the President and Managing Director of each entity has delegated to the relevant Chief Financial Officers, Financial Controllers and Senior Accounting Officers, who are supported by the UK Tax team, responsibility for managing UK and European tax risk.

The objective of LSM’s risk management activities is to manage risk, including tax risk, consistent with Liberty Mutual Insurance’s risk management approach, while retaining the ability to implement long term business plans and meet obligations to its policyholders and other stakeholders.

Consistent with Liberty Mutual Insurance’s tax policies and protocols, all significant risks for tax, if any, are discussed and monitored by the relevant Boards of Directors (“Boards”), and where constituted, delegated to the relevant CFO Committees. These risks may include those related to interpretation of existing tax law or introduction of new tax laws or the completeness and accuracy of tax compliance filings and requirements. Tax risks are reviewed in line with LSM’s strategic objectives.  A control framework exists to mitigate such risks and these controls are monitored, tested and assessed on an annual basis.

Tax risks are owned by the departments and functions that are responsible for day-to-day operations and related control processes. They are responsible and accountable for meeting the tax obligations, controls and policies as issued or reviewed by the relevant Boards.

This segregation of responsibilities enables the UK operations to operate a three lines of defence model in respect of tax risk, involving process owners, the LSM Boards as tax risk stewards (with authority delegated to the LSM Group Finance Director) and Internal Audit providing the final assurance level.

The management of tax risks of Ironshore entities within the UK operations is performed by the Boards of Directors of the respective entities. The management of the tax risks of these entities is delegated to the UK Tax Team and Finance Teams who engage and oversee external advisers to perform the tax compliance functions. The UK Tax Team engages external advisers to assist in managing the tax risks of Ironshore entities in a manner consistent with Liberty Mutual Insurance’s tax policies and protocols.

Other UK operations’ tax risk is managed by the related business Chief Financial Officer with oversight by Liberty Mutual Insurance’s U.S. Corporate Tax department.

Relationship with tax authorities 

Liberty Mutual Insurance maintain a positive, open and collaborative relationship with tax authorities in the jurisdictions in which we operate. All UK operations are committed to act with transparency, integrity and professionalism in all taxation matters, in a manner consistent with Liberty Mutual Insurance’s values and code of conduct.  All UK operations aim to comply with compliance and reporting requirements.

In the UK, we endeavour to maintain an open and constructive relationship with HM Revenue & Customs (‘HMRC’). We seek to work in partnership with HMRC and we are in regular contact with our Customer Compliance Manager at HMRC

Liberty considers that the above statement complies with its obligation under paragraphs 19(2) and 22(2) of Schedule 19, Finance Act 2016 to publish a group tax strategy:

This tax strategy applies to the following UK companies and UK branches:

  • Liberty UK and Europe Holdings Limited, its UK subsidiaries, and its UK Permanent Establishments of non-UK subsidiaries
  • Liberty Information Technology Limited
  • Liberty Corporate Capital Limited
  • Wausau Insurance Company (UK) Limited
  • Ironshore International Limited and its UK subsidiaries.

This statement relates to the financial year ended 31 December 2023.

Published on 18.12.2023