Activist shareholder Voce Capital Management LLC is renewing its fight with the board of Argo Group International Holdings Ltd. This time, Voce is calling for a special meeting of Argo shareholders to elect five independent board members.

Argo has been embroiled in a shareholder dispute with Voce, a hedge fund that owns close to 6 percent stake in the insurer. Voce alleged that Argo had excessive corporate expenses, which included corporate jet travel and housing for former CEO Mark Watson III. Argo has denied accusations of lavish spending.

In its call for a shareholder meeting, Voce said, “the situation at Argo has significantly deteriorated” since the company’s annual general meeting in May.

In October, the press reported that the Securities and Exchange Commission had subpoenaed Argo over its executive compensation, which Argo subsequently was forced to publicly confirm, the statement from Voce continued.

“On Nov. 5, Argo announced the sudden ‘retirement’ of its CEO, yet the board awarded him a lucrative package of cash severance, accelerated stock vesting and benefits,” added Voce. “The board replaced him with an internal CEO after failing to consider even a single external candidate for the job.”

Voce then cited the fact that both AM Best and S&P Global Ratings have announced they had placed Argo and its subsidiaries under review with negative implications as a result of the SEC investigation and governance-related risks.

When AM Best issued its ratings review in early November, it said it had concerns about “the pending conclusions of the SEC investigation and the potential for this inquiry to extend beyond Mr. Watson.”

Further shareholder discontent “could lend itself to management and board distraction, the emergence of class action lawsuits and renewed shareholder activist activity,” said AM Best in its review announcement.

Voce has tried and failed repeatedly to get the Argo board to appoint independent directors nominated by shareholders and this is its latest move. Argo had no comment on Voce’s action.

“These issues are critical and urgent, and time is of the essence. Argo’s shareholders cannot wait any longer,” said Voce, noting that a board change is “urgently needed to retire a culture of failed oversight and poor governance at Argo.”

Voce this is why it is launching a process to get shareholders to consider proposals “to replace five incumbent directors with five highly qualified, fully independent directors.”

The first step in the process is to get shareholders to consent to the calling of a “special meeting,” permitted by Argo’s bye-laws, which will require concurrence of shareholders of at least 10% of Argo’s common stock, said Voce. This first step will not determine if any Argo directors are removed or replaced, only whether a shareholder meeting to consider and vote on such proposals will occur, explained Voce.

Source: Voce Capital Management

*This story ran previously in our sister publication Insurance Journal.