By Bonnie Adler
Westporter John Seo, who now makes a pretty good living at gauging the risk of catastrophic events, told a Westport Library audience tonight choosing the wrong entrepreneurial partner could be a disaster. He said his path to becoming one the world’s experts at what he does was not an easy one.
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John Seo addresses a Westport Library audience tonight. (CLICK TO ENLARGE) Bonnie Adler for WestportNow.com
Raised In Dallas, the son of Korean immigrant parents –- his father was a professor of economic theory at Southern Methodist University –- he said they wanted him to be a mathematician, just like his mother. But he said he always dreamed of becoming an entrepreneur.
His dreams came true as co-founder and managing principal of Westport-based Fermat Capital Management. Now the largest investment manager of catastrophe bonds in the world, the firm manages $4.5 billion in investments.
Seo, who spoke as part of the library’s “Insights from Entrepreneurs” series, has 21 years experience in fixed income bond and derivatives trading and has been in the catastrophe bond market for more than 15 years.
Catastrophe bonds are designed to spread the risk of damage created by extremely rare and extraordinarily powerful events like Super Storm Sandy.
Seo said his first entrepreneurial venture ended in failure and the 100 percent loss of all his savings when he invested unwisely with the wrong person.
“That first lesson is this—there are tremendous business opportunities, but the biggest risk is not about all the positive things you need to do,” he said. “Partner risk is the biggest risk of an entrepreneur.”
Before starting Fermat Capital with his brother Nelson in 2001, Seo was senior trader in the Insurance Products Group at Lehman Brothers, an officer of Lehman Re, and a state-appointed advisor to the Florida Hurricane Catastrophe Fund.
As a young man, Seo earned a degree in physics from Massachusetts Institute of Technology, and a Ph.D. in biophysics from Harvard University, and held on to his dream even as he worked for Harvard University in Boston and later, Lehman Brothers, in fixed income bond and derivatives trading.
In the mid-1990s, married with five children and financial security, Seo said he thought he would never start his own business.
However, after he and his wife Stella, who trained as a concert pianist at Juilliard, visited Westport, his priorities changed. They decided they wanted to live here. So he left Boston to work in New York at Lehman Brothers, all the while clinging to the ultimate dream of starting his own firm.
He said one day a clear understanding of catastrophe risk crystallized in his mind while commuting on a Metro-North train into New York.
“I suddenly saw it,” he said. “I had a fundamental insight. Catastrophe risk feels emotional, but I realized you can deconstruct the risks. I was seeing how to price and manage catastrophe risk. I figured I had an edge, as a trained mathematician. I went into the garage with my brother Nelson, and started Fermat Capital Management.”
Seo’s work was featured in a 2007 cover story in The New York Times Magazine by Michael Lewis. He has also testified before the U.S. Congress as an expert on the catastrophe bond market.
