Tax Strategy

UK Tax Risk Management Policy

Boston-based Liberty Mutual Holding Company (“LMHC”), the parent corporation of the Liberty Mutual Insurance group of entities (“Liberty Mutual Insurance”), 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 over 800 offices 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 the overall Principles and 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 Principles

  • We behave with integrity
  • We treat people with dignity and respect
  • We motivate, inspire, and engage talent
  • We deliver an exceptional customer experience
  • We continuously improve and innovate
  • We execute thoroughly and seek excellence


Our Code of Business Ethics and Conduct

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

  • Act with Integrity:We act with honesty and integrity whenever and wherever we represent Liberty Mutual Insurance Group. We treat everyone with dignity and respect.
  • Avoid Conflicts of Interest:We avoid situations where our own interests might conflict with Liberty Mutual Insurance Group’s interests, including in our personal relationships and activities, and in giving or receiving gifts or entertainment. We use Company resources for business purposes, and not for our own personal gain or for purposes unrelated to our business.
  • Protect Information:We protect personal and non-public Company information we encounter at Liberty Mutual Insurance Group from unauthorized use or disclosure. We abide by the Liberty Mutual Insurance Privacy Principles, and we do not use or access such information for our own personal gain or when we don’t have a business reason to do so.
  • Comply with the Law:We follow all applicable laws when we conduct our business.
  • Raise Compliance Concerns:We are not afraid to speak up or seek advice when we are unsure of the right thing to do. We do not retaliate against anyone for seeking advice or making a report in good faith.


Approach to Tax Risk and Risk Tolerance

  • Liberty Mutual Insurance’s objective is to comply with the legal requirements in the taxing jurisdictions in which it operates and seeks to effectively manage tax risk while optimizing after tax income. The company prudently utilizes outside legal and technical experts to supplement our highly technical and professional internal tax staff.
  • Risk tolerance for material tax compliance penalties or material financial statement tax misstatements is low. Liberty Mutual Insurance meets tax filing requirements and conservatively presents financial statements.
  • 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 outside tax advisors to evaluate tax risk and appropriate tax treatment.
  • 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 Principles
      • 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 Liberty Specialty Markets (LSM), Ironshore, and various other UK operations including Liberty Information Technology, Hughes, branches and permanent establishments.
  • 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 global transactional taxes.
  • 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 Board of Directors of LSM, Ironshore, or other UK operations, in accordance with the Liberty Mutual Insurance tax policies and protocols.
  • In respect of LSM, the Chief Executive Officer (the President and Managing Director) of each entity has delegated to the LSM Group Finance Director and Senior Accounting Officer, who are supported by the LSM tax team, responsibility for managing UK 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 LSM’s significant risks for tax, if any, are discussed and monitored by the LSM Audit and Risk 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 LSM Board.
  • This segregation of responsibilities enables LSM to operate a three lines of defence model in respect of tax risk, involving process owners, the LSM Board as tax risk steward (with authority delegated to the LSM Group Finance Director) and Internal Audit providing the final assurance level.
  • The Ironshore Board of Directors delegate the management of tax risk to the Ironshore UK Head of Finance and Senior Accounting Officer, who is supported by the Ironshore UK finance team and the Ironshore Group Tax Director and external tax advisors. Ironshore engages external tax advisors to provide certain tax compliance and advisory services.  Ironshore’s tax risk is managed in in a manner consistent with Liberty Mutual Insurance’s tax policies and protocols.
  • The objective of Ironshore’s risk management activities is to manage risk, including tax risk, in a controlled fashion that is consistent with Liberty Mutual Insurance’s appetite and its available capital capacity, while retaining the ability to implement long term business plans and meet obligations to its shareholders and policyholders. The aim is not to avoid or eliminate risk entirely, but to manage closely the exposure to risk.  Should an operational error occur, it is reported, the issue remediated and the control(s) may be strengthened to mitigate any future operational error from arising.
  • 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 Ironshore UK Board.
  • Other UK operations’ tax risk is managed by the related business Chief Financial Officer with oversight by Liberty Mutual Insurance’s U.S. Corporate Taxation department.

Relationship with HMRC

  • LSM, Ironshore, and other UK operations endeavour to maintain an open and constructive relationship with HMRC. They seek to work in partnership with HMRC.
  • 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.
  • Those responsible for UK taxation seek to build good relationships with the appropriate HMRC Customer Compliance Manager and team by engaging in discussions about tax affairs on a regular basis, particularly:
      • Making full disclosure to HMRC, where required by law, in the event of any inadvertent error(s) arising;
      • Disclosing any relevant planning undertaken, in line with the legal disclosure requirements and criteria as set out by HMRC;
      • In respect of current, future and retrospective tax risks, events and interpretation of the law across all relevant taxes and duties, facilitating a mutually beneficial relationship.


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 work day to serve causes they support in the communities in which they live. Over 28,500 employees served alongside over 850 U.S. and international charities.
  • Give with Liberty – 72% of U.S. employees pledge over $12M to over 8,000 charities. Liberty Mutual Insurance matches 50% of employee gifts, for over $18M in contributions.
  • Corporate philanthropy and grants.

Liberty consider that the above statement complies with its obligation under paragraph 16(2) of Schedule 19, Finance Act 2016 to publish a group tax strategy.