Liberty Mutual Insurance Company, Australia Branch (Liberty Australia) operates as a branch of the Massachusetts based Liberty Mutual Insurance Company. This information is provided in compliance with the requirements of Prudential Standard CPS 511 Remuneration and provides qualitative information about Liberty Australia’s remuneration practices in compliance with that standard for the financial year ended 31 December 2024.
Governance
The APAC Commercial & Specialty HR Team ensures correct governance of remuneration within Liberty Australia, following the guidelines and processes established at the Liberty Mutual Group level and cascaded down to Liberty International Insurance leadership and Liberty International Insurance APAC leadership. The Remuneration Policy approach and regulatorily required outcomes determined by this process are reviewed and approved by the Senior Officer outside Australia (SOoA). The SOoA is responsible for approving the Remuneration policy regularly following review and sign-off by regional HR leadership, the President of Australia and the legal function.
Liberty Australia’s Remuneration Policy ensures that Liberty Australia’s remuneration arrangements remain competitive to attract and retain the right talent and to be consistent with its culture, business plan, strategic objectives and risk management framework. Effective management of both financial and non-financial risks, sustainable performance and the entity’s long-term soundness and the prevention and mitigation of conduct risk are key objectives of the Remuneration Policy.
Design and structure
Liberty Australia employees have remuneration structured to include a fixed component (salary, statutory superannuation and any applicable packaged benefits) and two possible variable remuneration components:
- Short term incentive program (STIP) paid following a performance year; and
- Long term incentive plan (LTIP) vesting over a period of three years to ensure alignment of sustainable success and long term business performance.
The STIP is a cash reward recognition paid to eligible employees based on financial and non-financial objectives and business performance. The LTIP functions as a phantom-stock program noting that Liberty Australia is a branch and Liberty Mutual Group is a mutual rather than a stock-based company. The distribution of STIP and LTIP considers both ‘bottom line’ underwriting result as well as ‘top line’ premium income and other non-financial measures. The LTIP is primarily aimed at senior employees and in consideration of these factors works to align remuneration outcomes with Liberty Australia’s business plan, strategic objectives and risk management framework.
Liberty Australia’s Remuneration Policy also covers the nature and terms of variable remuneration for Liberty Australia’s key executives in specified roles. The Remuneration Policy ultimately provides that the SOoA is responsible for approving variable remuneration outcomes for senior managers and executive directors, and on a cohort basis for highly paid material risk-takers, other material risk-takers and Risk and Financial Control Personnel. It also enables the SOoA to apply ‘clawback’ and ‘malus’ in respect of employees who have been responsible for a material breach, risk management failure or misconduct, or who have been terminated for cause (including dishonesty or serious and wilful misconduct), aiding in the prevention and mitigation of conduct risk.
In all cases the powers the SOoA may exercise under the Remuneration Policy are in keeping with the requirements of CPS 511 and the Financial Accountability Regime as it applies to Liberty Australia’s Accountable Persons.
Working with third parties
When Liberty Australia enters into a contract with a third-party service provider, it must ensure that the contractual terms of the engagement and associated processes adequately address the risk that the service provider's compensation arrangements may create a material conflict with the terms of Liberty Australia’s Remuneration Policy. Liberty Australia’s legal, HR, compliance and risk teams work together to ensure that third party arrangements are appropriately reviewed to address this.