Voce hits back at Argo proxy statement, claims board appointments are invalid

In an ongoing dispute, Voce Capital Management, 5.6 percent shareholder of Argo Group, has questioned the legality of the Bermuda re/insurer's appointment of two independent directors, Samuel Liss and Tony Latham, to its board.

The activist investor hit back at Argo's recent proxy statement made ahead of its annual general meeting, which largely reiterates its criticisms of Argo's corporate expenses, and suggests these appointments are invalid under Argo's bye-laws and Bermuda law.

“It has been over one month since we released our public letter cataloguing the shockingly high expense structure and gross misuse of corporate assets at Argo," Voce said in its response. "Our letter contained a comprehensive analysis of a widespread syndrome of mis-, mal- and non-feasance at the highest levels inside Argo. We believe these issues are symptomatic of an irresponsible and wasteful corporate culture at the company, abetted by a board of directors seemingly uninterested in even the most rudimentary level of oversight or corporate governance."

Voce continued: "Argo’s laconic response to the very serious allegations detailed in our letter speaks volumes. Other than dismissing our criticism of management’s misuse of corporate assets as an ‘ad hominem attack,’ Argo has provided shareholders with no substantive response whatsoever."

Specifically, Voce alleges that a section of Argo's bye-laws authorises the board to appoint directors only "to fill a casual vacancy". Voce believes this means only shareholders can fill vacant board seats.

Voce has been very critical of Argo's performance and leadership, taking aim at the personal life of CEO Mark Watson III and corporate expenses of the company. It previously sent a 7,000-word letter detailing the supposed situation, which it made public on Monday February 25.

In its proxy statement made ahead of the annual general meeting,  Argo had urged shareholders to vote against Voce's own board proposals.

Voce added that it expects the board to launch a comprehensive investigation to determine whether Argo's actions constituted violations of law or the its Code of Conduct and Business Ethics.

In response to another reiteration of Voce's extraordinary claims, Argo Group has expressed its disappointment in Voce to "engage in a campaign of misinformation to support its activist campaign to remove members of Argo’s well-qualified and experienced board."

Argo added: "As publicly announced on February 20, 2019, the board properly appointed Messrs. Latham and Liss to fill two vacancies, bringing the number of directors up to 13 as authorized by Argo Group’s bye-laws and Bermuda law. Voce’s assertions challenging these appointments are simply incorrect. It is telling that Voce waited five weeks to raise its latest attempt to distract Argo’s shareholders. Our board remains focused on continuing Argo’s strong performance and looks forward to continuing to engage with all shareholders in the coming weeks.”

The Bermuda re/insurer has also argued Voce has ignored its  track record of value creation for its shareholders, citing 1, 3 and 5-year period total shareholder returns of 39 percent, 69 percent and 136 percent, respectively.  From 2010 to 2018, Argo returned in excess of $645 million of capital to shareholders.