After becoming a “virtual regulator” during the Covid-19 pandemic, the Bermuda Monetary Authority’s future may be as a hybrid, with both a virtual platform and a physical location.

That possibility is highlighted in the BMA’s annual report, which also showed the Authority recorded a budget surplus of $727,000 last year, ending a three-year run of deficits.

The BMA responded early to the coronavirus, activating its business continuity plan during the first week of February 2020, more than a month before Bermuda recorded its first diagnosed cases of Covid-19.

A remote infrastructure was put in place by the Authority’s crisis management team, led by chief operating officer Shanna Lespere, which allowed the financial-services regulator to deliver throughout 2020 “and continue to do so until the BMA team can safely return to the office”.

Jeremy Cox, the BMA’s executive chairman, writing in the report, said the jury is still out on whether the Authority stays a virtual regulator. He added: “Our approach may well end up being a hybrid: a virtual platform to empower collaboration with emerging technologies, both within our organisation and with industry, and a solid brick-and-mortar location to foster a strong BMA team culture and demonstrate a substantial physical presence to our key stakeholders.”

The BMA’s budget surplus for the fiscal year that ended on December 31, 2020, has been added to its general reserve, which stood at $17.9 million at the end of the year. The reserve has previously been used to cover budget shortfalls.

The Authority’s total revenues improved 9.2 per cent to $60.81 million, mainly due to a $7 million increase in revenue from contracts with licensees and customers.

Its total expenses were $60.08 million, about $1.9 million higher than in 2019. Salaries and employee benefits increased by about $3.3 million. There was a $1.04 million fall in general expenses.

The Authority increased its staff by two during 2020 to end the year with 217 employees.

In 2019, the BMA started a three-year phasing in of wide-ranging fee increases approved by the Bermuda Government. The $7 million increase in revenue from contracts with licensees and customers last year was largely due to an almost $6 million rise in revenue from insurance fees.

Mr Cox said the impact of the coronavirus pandemic turned last year into “a unique and unmitigated disaster of epic proportions” for many of Bermuda’s companies and business communities. He said the loss of lives and livelihoods globally was on a scale typically associated with armed conflicts.

Bermuda’s economy had fared well, he said, due to the strength and buoyancy of the international business sector, the island’s compact size, and the effectiveness of measures by the Government to control the spread of the virus.

He said for the BMA it was “the year we thought the unthinkable, shut up shop, turned off the lights and, almost overnight, morphed into something we would never have been before: a completely virtual regulator”.

Mr Cox highlighted projects and initiatives the Authority was involved in during 2020, including the application of the Incorporate Segregated Accounts Companies Act 2019, and informal consultation for the creation of a digital identity service provider framework.

At the end of this year, Mr Cox will depart from his position as executive chairman. He will be succeeded by Craig Swan, the BMA’s deputy chief executive officer.

Mr Cox said: “I would be remiss if I did not state the absolute pleasure it has been to serve Bermuda’s financial services industry for the past three decades and through various roles at the BMA for two of those. Our team is exceptional, setting the bar higher with each passing year, and I am confident they will continue to do so long into the future.”