NEVER WASTE A GOOD CATASTROPHE
“The onset of the first true hard market in some 15 years led to a flood of new money entering the market.”
Wyn Jenkins, editor
As it has for every nation globally, 2020 has brought unprecedented challenges to Bermuda. The health threat of COVID-19 and government restrictions that followed posed severe challenges for the country’s economy and the fabric of its business community.
Yet Bermuda’s uniqueness has served it well this year. Its ability to easily control its own borders combined with a swift and joined-up government effort on managing the virus meant it managed the health threat quickly and efficiently.
Equally, while Bermuda’s economy took a massive knock, overall it proved a lot more robust and resilient than that of many other countries. Its international business sector, already used to conducting much of its business remotely, transitioned seamlessly to working from home, thus helping to prop up parts of the domestic economy hit hardest by the measures.
The result has been that Bermuda was able to start easing restrictions and get money pumping through the economy much faster than in other parts of the world.
It also took the initiative in other ways. The ‘Work From Bermuda’ programme, which allows travellers to work remotely from Bermuda for a year, was widely regarded as a success as the end of 2020 approached.
Equally, the Island was benefiting from a desire on the part of business travellers generally to enjoy some form of normality as offices started reopening.
This momentum was accelerated by trends in what remains one of the Bermuda economy’s most important pillars: risk transfer. The onset of the first true hard market in some 15 years led to a flood of new money entering the market—and once again much of it was put to work via Bermuda entities.
Established companies were first out of the blocks raising new capital but a number of substantial startups have also emerged on the Island. These have been complemented by a longer-term trend of the life and long-term reinsurance sector enjoying steady growth, and a burgeoning ILS market, which remains dominant on a global basis.
This positivity is enhanced by some of the other structural innovations introduced by the regulator in recent years, designed to boost some sectors and ensure appropriate regulatory measures for others. The creation of a new class of reinsurer, designed to meet the needs of collateralised business models, is one example that should give Bermuda a further boost, as is the regulatory sandbox and innovation hub.
Meanwhile, other parts of the economy are also looking positive. Bermuda’s funds and asset management sector is looking increasingly bullish, attracting new types of investment, interest from private equity and hedge funds and family offices to a greater extent than it has in a long time. This acts as a perfect complement to the Island’s risk transfer expertise and platforms.
Against this backdrop, Bermuda looks well-positioned—certainly compared with many other countries—to thrive post-COVID-19. In fact, the pandemic could accelerate certain positives for the country and also inform the complex debate around immigration, which remains central to any debate about the Island’s future.
As Greg Wojciechowski, chief executive officer of the Bermuda Stock Exchange, says in the roundtable covering the general economy: “They say you should never waste a good catastrophe.” In this case, Bermuda certainly seems poised to benefit.
Wyn Jenkins, editor
Image courtesy of Shutterstock / Roman Bodnarchuk