Voce begins process to call special meeting of Argo shareholders

Investment advisor Voce Capital Management (Voce), the beneficial owner of approximately 5.8 percent of the shares of Argo Group International Holdings, has filed a Preliminary Consent Statement in connection with the solicitation of consents to call a special meeting of shareholders (the Special Meeting) of Argo.

The move follows news on November 5 that Argo CEO Mark Watson was to retire. His departure followed disclosure of an ongoing Securities and Exchange Commission (SEC) investigation at Argo related to executive compensation and benefits and associated disclosure issues.

On November 6, Argo reported a net loss of $25.1 million or $0.73 per diluted share, compared to net income of $40.6 million or $1.17 per diluted share for the 2018 third quarter.

On November 7, rating agency AM Best placed the Financial Strength Rating (FSR) of A (Excellent) of Argo Re and its subsidiaries under review with negative implications.

Voce issued the following statement in connection with the filing of its Preliminary Consent Statement:

“Since the 2019 Annual Meeting of Shareholders, the situation at Argo has significantly deteriorated. In October, the press reported that the Securities and Exchange Commission (the SEC) had subpoenaed Argo over its executive compensation and perquisites, which investigation Argo was then forced to publicly confirm.

“On November 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. The board replaced him with an internal CEO after failing to consider even a single external candidate for the job.

“Both AM Best and S&P Global Ratings subsequently announced negative actions related to their ratings of the company’s debt, and each specifically cited Argo’s poor corporate governance and failed board oversight as the reason for their actions.

“There are crucial leadership, governance and strategic choices which are being made in real time and will have lasting and potentially irreversible effects once rendered. This is why we insisted, in our October 14 press release following news of the SEC investigation and our November 6 press release upon the replacement of the CEO, that shareholder voices must be heard in Argo’s boardroom. Yet the board has refused every overture that we have made to appoint directors nominated by shareholders. These issues are critical and urgent, and time is of the essence. Argo’s shareholders cannot wait any longer.

“That is why today we are launching a process to call a Special Meeting so that shareholders may consider proposals to replace five incumbent directors with five highly-qualified, fully-independent directors. Once we file our definitive consent solicitation statement, we will simply be asking shareholders to consent to the calling of a Special Meeting, which is permitted by Argo’s bye-laws and will require the concurrence of holders of at least 10 percent of Argo’s common stock. Consents at this stage 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.

“We look forward to engaging with our fellow shareholders as this process moves forward to address the many challenges facing Argo.”