No one in the business world could have foreseen the upheaval that 2020 would unleash on the Bermuda economy. The year was characterised by business closures, layoffs and redundancies on a scale the island has not seen in modern times.

It was a year when existing trends towards digitisation and remote working accelerated dramatically, albeit more through necessity than choice. As KPMG’s Stephen Beatty told a Bermuda Chamber of Commerce webinar in June: “The nature of work has changed by 20 years over the last ten weeks.”

The silver lining was that Bermuda’s international business sector thrived, boosted by a hard market in insurance and reinsurance that sparked a wave of new capital coming into the industry and a clutch of start-ups known as the Class of 2020.

For tourism-related and service industries, however, 2020 was an unmitigated annus horribilis. Income simply stopped for hotels, restaurants, retailers and personal services businesses as the Government tried to combat the spread of the virus with shelter-in-place in the month of April and the closure of LF Wade International Airport to commercial flights for more than three months.

The most financially fragile of those businesses went under, while the survivors battle on towards the light at the end of a long tunnel, thanks only to a combination of funds put in by their owners, tax breaks from the Government, rent deals with landlords, and savage cost-cutting, including layoffs, redundancies and reduced working hours.

A foot survey in July and August by the Chamber of Commerce found that of the 558 business surveyed, 45, or 8 per cent, had closed for good, while only six out of ten had fully reopened, meaning that many of the survivors are operating on a smaller scale than pre-Covid days.

A trickle of air visitors gave some hotels the opportunity to reopen at a much reduced capacity, while restaurants have had a few months of scaled-down operation, limited both by social-distancing restrictions and the reluctance of consumers to get together and dine during a pandemic. The word “pivot” was used a lot as businesses adapted to extraordinary circumstances. Restaurants such as the Barracuda Grill constructed outdoor dining areas, while hotels like The Loren targeted the local crowd with “staycation” offers and pandemic-conscious outdoor entertainment.

The closure of the Fairmont Southampton for refurbishment until early 2022 saw the loss of the island’s largest hotel and hundreds of jobs. The good news is that the $180 million overhaul could help to fill contractors’ order books next year, after the completion of the new airport passenger terminal and the imminent conclusion of work on the new St Regis Hotel in St George’s.

Surviving retailers have been forced to reinvent themselves, with features including kerbside pick-up, home delivery and an increased digital presence, while a few have chosen to close their physical stores and go online only. However, the choice of many not to travel during the summer holidays helped to boost on-island spending, with retail sales up over 2019 in both July and August.

The “two Bermudas” took on a new meaning. Which side of the “haves” or “have-nots” divide you fell depended largely on whether you could do your job from home. The Government stepped in with a new unemployment benefit, forking out about $57 million to spare those whose incomes had come to an abrupt halt from even more severe hardship. With unemployment likely to linger, especially in the hospitality trade, more aid will be surely needed.

Technology, however, enabled many to swap office wear for pyjamas and work from the comfort of their own homes. Zoom became a verb as the teleconferencing platform surged in popularity. Those who worked through 2020 uninterrupted and who were fortunate enough not to suffer a pay cut, with their travel budget unspent, should end 2020 in strong financial shape and be ready to lead the recovery when the pandemic finally fades.

The remote-working revolution also inspired the Work From Bermuda Certificate, an offer of extendable one-year residency aimed at digital nomads. Hundreds applied, many of them technology entrepreneurs, and some have settled down happily. One of them was Abbie Sheppard, chief of staff for London-based start-up Cameo, who came here on holiday in July and recalled: “I came for five days, but I rang my parents and said ‛I’m not coming home’.”

The arrival of the digital nomads has given the real estate industry a shot in the arm, rejuvenating the higher end of the market, in particular. Some of those attracted to the island plan to set up businesses here, as is happening with artificial intelligence company Afiniti.

Together with the spike in interest from overseas, a desire for larger living spaces is also emerging from people who expect that working from home will become a permanent feature of their lives.

Perhaps the greatest cause for optimism in the Bermuda economy is the insurance industry. After heavy losses in catastrophe and casualty lines alike in recent years, prices are rising across the board in a way they have not done in years. Richard Brindle, the Fidelis chief executive, sees this as the hardest re/insurance market in about 20 years.

Between $12 billion and $15 billion has flowed into the industry to take advantage of market conditions and much of it has come to Bermuda, suggesting that the island is still regarded as the most efficient place to deploy new re/insurance capital.

Much of the money has been raised by existing companies, such as RenaissanceRe, Arch Capital, Fidelis, Convex Group and Hiscox. There have also been $1 billion start-ups in the shape of Vantage Risk, led by Bermuda market veterans Greg Hendrick and Dinos Iordanou, and Conduit Re. Lloyd’s insurers Chaucer and Ark have also set up new Class 4 reinsurers on the island. Experts believe the hard market will persist, offering hope that the market will thrive and expand.

A potential downside lingers, however, in the form of unknown exposures to the pandemic. For example, many commercial insurance buyers have disputed rejection of their business interruption claims, despite insurers’ insistence that policies routinely exclude pandemic. Hiscox, for example, was forced by the High Court of England and Wales to pay out on some such claims it had previously rejected.

Some US states have considered legislation to force insurers to pay pandemic-related business interruption claims. Introduced all over the US, this would hand the industry the “largest loss in its history”, leaving many insurers insolvent, insurance expert Robert Hartwig told The Royal Gazette.

Amid the drama of the pandemic, major economies continued their war on tax avoidance. A proposed global minimum tax rate, designed to ensure that multinational companies all pay a yet-to-be-determined minimum rate, is the latest threat to lurk in Bermuda’s near future. Tax expert Will McCallum, of KPMG, said he believed the island’s re/insurance industry would fall within the scope of the proposal from the Organisation for Economic Co-operation and Development, as it stands. The oft-stated remark that the island’s re/insurers base themselves here for many reasons other than the tax advantages could be put to the test in 2021.

The biggest local deal of 2020 was Algonquin Power and Utilities Corp’s $365 million takeover of Ascendant Group, after the deal was finally given the green light by the Regulatory Authority and the Minister of Finance in October, 14 months after shareholders had approved it. The transaction gave local shareholders a collective windfall of $200 million, while some serious economic stimulus is in the pipeline as the Canadian company has committed to invest $300 million on green energy projects in Bermuda.

Bermuda Commercial Bank also found a buyer in November, when its parent company Somers Ltd struck a deal to sell the bank to Provident Holdings, a company owned by a group of investors led by Christopher Maybury, an island resident and entrepreneur.

In fintech, the year began with the launch of the first captive to provide custody insurance for cryptocurrency assets. US cryptocurrency exchange Gemini has established the captive, named Nakamoto, to provide itself with insurance that had proved difficult to find in the commercial market. Cameron and Tyler Winkelvoss, the tech investor twins who founded Gemini, met with David Burt, the Premier, to mark the occasion.

Another difficulty for fintech is the lack of local banking services. Jewel, the proposed digital asset-friendly bank, is trying to solve that problem and said in September it had applied for a banking licence from the Bermuda Monetary Authority. Also in September, the Government said it was working with Stablehouse, a payment and foreign exchange platform for stablecoins, on creating a digital stimulus token backed by Bermuda dollars.

Most businesspeople will be delighted to have reached the end of 2020, with the hope that things can only get better.