Argo fights back against Voce ‘falsehoods’ with detailed SEC filing

Re/insurer Argo Group has fought back against “Voce Capital’s continued falsehoods” by reiterating its “strong track record” and work to drive growth and value for shareholders, as the war of words with the activist investor shows no signs of abating.

Argo has filed a presentation with the US Securities and Exchange Commission detailing its achievements and more on what it describes as its “best-in-class” board and the firm’s corporate governance to defend its actions.

Argo disparaged Voce’s recently proposed plan for the company to boost shareholder value saying it revealed “a lack of experience in insurance company operating strategies or execution challenges”. The re/insurer criticised Voce for including “inaccurate financial metrics in its recent presentation” and said the plan was “absurd, consisting of nothing more than speculation and fictional scenarios”.

The filed document states that the specialty re/insurer’s operating strategy is delivering “superior shareholder returns”, with annualised GAAP return on average equity (ROAE) of 20.1 percent in Q1 2019. It said that the 9.1 percent annualised adjusted operating ROAE for the quarter represented a 100 basis point improvement year-over-year, indicating “strong momentum”.

In addition, shareholder returns for the company were robust compared with its peers with a one-year total shareholder return of 35.9 percent versus the peer median of 11.8 percent While the company’s three-year total shareholder return was 88.8 percent compared with a peer median of 43.8 percent. The favourable comparisons continued when looking at five-year returns, which for Argo are 164.5 percent compared with a peer median of 74 percent.

Addressing Voce’s repeated denunciation of the re/insurer’s board, Argo said the members have “the critical expertise and independence needed to continue providing the necessary oversight and protect shareholder value”. It emphasised the board’s mix of skills to oversee near- and long-term strategy, including “deep insurance industry knowledge, significant finance, technology and capital markets expertise and business operations backgrounds”.

Argo also rejected criticisms of its corporate governance, saying the firm had “best-in-class” policies and that Argo renews its board to introduce fresh thinking. The company said this strategy was exemplified by the five new independent members added in the past three years.

Argo independent chairman Gary Woods said: “Argo’s board has overseen the company’s successful transformation from a domestic insurer specialised in workers’ comp to a global underwriter of specialty insurance and reinsurance, paving the way for Argo’s superior shareholder returns.

“Our operating strategy has been deliberately constructed to deliver for shareholders and our positive financial outlook supports continued value creation.”
The situation is expected to come to a head at Argo’s AGM on 24 May 2019.

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