John Tan: Self-starter and trailblazer

WONG KIM HOH MEETS... JOHN TAN
Asia Capital Reinsurance Group founder quit school after O levels to get head start in career
The Sunday Times, 27 Oct 2013

Looking at a clock one day when he was in his early teens, John Tan was struck by an existential question.

"I was thinking to myself: The hands of the clock keep going round and round and whether a person is 15 or 50, he would be doing the same things every day: eating, sleeping or working."

Surely, he told himself, there has to be more to life than one big cycle of repetition?

It took a bit of grappling with but he finally decided he was put on this Earth for a purpose.

"I arrived at a simple answer: I should love life and love everybody unconditionally," he says.

He decided he should also not be a burden to society. And that meant earning enough to not only look after himself but others too.

And that he has done.

The 57-year-old is the founder and chief executive of the Asia Capital Reinsurance (ACR) Group, which has offices in nearly 10 locations across the world and registered US$765 million (S$946 million) in gross written premiums for the last financial year.

The seventh of nine children, he has always been a self-starter and trailblazer.

His late father, the manager of a trading firm, sailed from China to Singapore before the war, leaving behind his wife and four daughters. It was 15 years before he sent for his wife and children and by then, two of the girls had died. The couple went on to have five more children in Singapore.

The need to be self-sufficient surfaced early in Mr Tan. He was paying his own school fees at St Andrew's by the time he was nine.

"I wanted to earn my own money and didn't want my parents to support me. I started teaching my classmates when I was in Primary 3. Their parents paid me by buying my textbooks," he says.

By the time he hit his teens, he was earning his own pocket money by working at night as a factory cleaner.

"I cleaned and swept floors from 11pm to 6am at a textile factory and a rubber factory in MacPherson. I would then go to school, do a bit of teaching after classes, and catch some sleep after that," he says.

At 15, after wrestling with the meaning of life, he decided he had to leave school early in order to get a head start in his career.

With a chortle, he describes what went through his young mind then.

"I thought if my life ended at 50, I should retire by 40 so that I could spend at least 10 years in retirement," he says.

"But in order to retire at 40 and not be a burden to society, I needed to have money and a business. I didn't know what sort of business, but I knew that I would need a few things to keep it going: capital, workers and customers. To build all that would take at least 10 years."

After factoring in a few years to gain experience, and a few years to explore different industries, the precocious teen concluded that he would have to join the work force as early as possible.

Although a top student at St Andrew's Secondary, he decided he would quit school after his O levels, study on his own and take the A levels as a private candidate.

He started contributing to the family income by juggling several jobs, including being a factory hand in Queenstown and selling clothes at New World Amusement Park and People's Park.

Although his A-level results qualified him for university, getting a degree was out of the question.

"Most graduates started working at 24. If I got into the wrong industry after graduating, I'd be finished. But if I started working at 20, I could still keep to my time plan if my first job didn't work out," he says. "I had to make sure I didn't waste time."

After national service, he was recruited as a management trainee by United Overseas Insurance (UOI).

Although trainees had to go through a three-year programme, he was made a manager in the claims section in just two months.

Asked how he managed that feat, he smiles and says: "Initiative."

"I looked at the programme and told myself I was not going to spend two or three years on it," he says. The fastest way to understand the business, he decided, was to learn himself and not wait to be taught.

His first target was the claims department.

"I asked myself, We are paying out money. Why? What are our obligations? How is it contracted? What sort of policies do we sell?"

He asked for files of all the policies the company sold, as well as claims made.

"Basically, I went to work at 5.30am and I left after midnight," says Mr Tan, who was given the key to the office which was located in McCallum Street.

After poring over 5,000 files and making notes, he told himself he could improve the system. He identified the issues and problems, came up with a work flow chart, marked out areas which could be streamlined and came up with a set of standard operating procedures.

He then passed his report to the company's managing director Hwang Soo Jin, a former Member of Parliament for Jalan Kayu.

"He asked me, 'Did you do this yourself? Did anyone ask you to do it? So you have a lot of time?' " he recalls, laughing.

"He then said, 'Don't bother with the training programme. You can run the claims department as manager,'" recalls Mr Tan, who also made newspaper headlines for obtaining his Associateship and Fellowship of the Chartered Insurance Institute in a short three years. Most people took at least five or six years.

When he left UOI after three years, he was barely 24. A couple of insurance companies tried to lure him over as general manager but he joined insurance brokers Anthony Lumsden-Cook to get international exposure.

"As it was an insurance broking firm, I saw the other side - why clients wanted to buy a certain cover, what they knew, what they did not know. But I got more curious. Both sides were transacting - one side was passing risk, the other side was taking risks but I wanted to know what the risk was and which side was doing a better job."

After three years, he forked out $10,000 of his savings, hired some professional engineers, rented a small office in Peninsula Plaza and started Equitas which provided risk assessment services.

It was successful from the word go because he had identified a niche. His clients included big insurance corporations such as AIG and Continental

"I started out by taking a map of Jurong and told myself I wanted to understand the risk of every factory there - from petrochemicals to paints."

He did and moved on to Malaysia a year later.

Equitas was extremely lucrative; his take-home pay sometimes hit as much as $180,000 a month.

But something was gnawing at him.

"My fee was based on time. You could charge $3,000 an hour but it was still based on time and it was limited. Income based on capital was better, and on ideas, better still."

An offer to join Malaysian tycoon Robert Kuok's business empire came in 1985 while he was working on a project for Mr Kuok's Malaysia Shipyard and Engineering.

"They told me they were thinking of setting up a risk management unit. But I told them, 'If I join you, I don't want to do risk management. I want to find out how Robert Kuok got rich'," he says with a hearty laugh.

He closed down Equitas, even though his income here was a lot more generous than the package offered by Mr Kuok.

"Money was not important to me. I was just very hungry to learn," says Mr Tan, who became a corporate planner for the tycoon.

The two-year gig was invaluable.

"I saw the bigger world of how things worked, how Robert Kuok moved from sugar to plantations to properties to supermarkets," he says, adding that he learnt all about sunset and sunrise industries as well as market dynamics and political risks.

A challenge came knocking two years later, one which he could not turn down.

Price Waterhouse approached him and asked if he was interested in helping to turn around National Insurance, then an ailing insurance company.

And so he uprooted himself again to Brunei.

Mr Hsieh Fu Hua, chairman of United Overseas Bank and formerly chief executive of the Singapore Exchange, says one of Mr Tan's greatest strengths is his adventurous spirit.

"He is quite prepared to venture out of his comfort zone. And even though he has never gone to university, he has an extremely expansive mind," adds Mr Hsieh, who has known Mr Tan for more than 25 years.

What greeted the entrepreneur in Brunei was dire: just one employee, and a business which had gone into rigor mortis.

But in just one year, he earned back all the company's lost capital.

He mapped out a strategy. He negotiated a deal with Union Reinsurance - a subsidiary of UBS - which agreed to back all the risks his company took, offered better rates and personally inked deals with the likes of oil giant Shell, banks and the Bruneian government.

In two years, he grew the staff to 40, and annual premiums from nothing to $28 million.

He left after selling his shares of the company - given to him at 10 cents - at a much higher price.

His next stop was with Union Reinsurance, where he stayed for 15 years until it was bought over by Swiss Re, now the second-largest reinsurer in the world.

He continued at Swiss Re in Zurich, where he worked on global product management until he was transferred to Hong Kong where he was its Asia marine head until 2005.

By then, he was deeply convinced there was a need for an Asian reinsurer.

"I was in Zurich during the 1997 Asian financial crisis and I thought it was pathetic that money was flowing out of Asia when it was supposed to be a century of high growth for the continent.

"The only reason this was so was due to the perception that risk was high and the returns didn't match the risks. There was no body which addressed the risk and maintained that it was good."

He felt he had to do something about this, and broached the idea of setting up an Asian reinsurer with several friends, including Mr Koh Boon Hwee, former chairman of DBS Group and Singapore Airlines.

"He said, 'If you don't do it, there will be nobody doing it for the next 30 years. Even if you don't succeed, it is worth a try'," recalls Mr Tan, who quit Swiss Re shortly after.

He approached a couple of private equity firms which were so intrigued by the idea that they were willing to provide the $1 billion he said he needed.

But he held back.

"If they gave me a billion just like that, either I was selling too cheap or their agenda may be different," he says.

He worked with Morgan Stanley instead, which helped him to develop a business plan and raise funds to set up ACR which manages risks for ships, airlines and other growth industries in Asia.

The response was overwhelming. They found themselves with US$4.8 billion during their first tender of interest.

But after eliminating parties which wanted control and dictated tough terms, they settled on US$620 million from angel investors who included Mr Koh, Mr Hsieh and London-based investment firm 3i as well as Malaysia's state investment company Khazanah Nasional.

ACR started operating in January 2007 with half a dozen staff in a serviced office in Republic Plaza. Today, it employs more than 400 people, more than 300 of whom are based in Singapore and the rest in its overseas offices including in Shanghai, Tokyo, Seoul, Dubai and Bahrain.

Mr A.K. Wong, who is chief executive of ACR in Malaysia and who has known Mr Tan for more than 30 years, says: "He has always challenged the conventional way of doing things. Setting up ACR was a daunting task. I was not surprised that he pulled it off but I was surprised he did it in just one year, which is a very short time."

Mr Tan says: "I'm not working for the money any more. Reinsurance is the ability to take risk. As Asia develops, we hope to be the body that governments can rely on to do that."

Meanwhile, the father of three children aged between 16 and 22 has delivered on his word to help support others.

He gives generously to charity and like his mentor Mr Hsieh - the founder of Binjai Tree Foundation - hopes to set up his own charity foundation one day.

He wants to set up a series of Rainbow Homes all over the world, the first one within the next year. He declines to go into details except to say that the homes will help people "who are finding it tough to cope with living".

"Rainbows are the natural colours of life, and when they appear, people feel hope and peace. I want to give hope and peace, not just to old folk but people who need them - from kids to stressed city folks."

He ends the interview by showing his favourite painting - a calligraphic piece with xin - the Chinese word for heart - taking centrestage.

"Everything starts with the heart. When you're young, you put your ideals first. When you're older, you put your heart first."

Learning from dad's charitable nature

"Every month when his pay came in, he would take out his cheque book and give 50 per cent of it away even though the family could have done with more. I'd help him to write the cheques. He didn't feel there was a need to explain why he did it. It was love, he was sharing what he had."

MR JOHN TAN on his late father, a manager in a trading firm

Doing something meaningful

"When something is not constrained by time, space or resources, it becomes very meaningful. Tan Kah Kee may have gone a long time but some of the things he did transcend time and are worthy of emulation today."

MR TAN on the late philanthropist who contributed generously to many charitable causes, especially education, in South-east Asia and China