Argo Group is urging shareholders to reject allegations of “reckless behavior” and “poorly researched claims” from activist stockholder Voce Capital Management when the company’s annual shareholder meeting takes place on May 24.
Those rebuttals are part of a letter that Bermuda-based property/casualty specialty insurer and reinsurer released to shareholders as part of its definitive proxy filing. In it, Argo Group rebuts every accusation ranging from extravagant spending practices to the alleged illegal appointment of two board members.
In the letter, signed by board members, Argo framed Voce Capital as an outsider that has accumulated stock in the company only in recent months. Argo also accused Voce of launching a proxy contest against it “to push its short term agenda.”
“We have always encouraged shareholder engagement, and now we need your support to prevent the short term interests of an activist hedge fund from disrupting the steady growth and superior shareholder returns you have come to expect,” the letter asserts.
Voce’s criticisms began in February, when it unleashed public accusations that the board had supported a pricy corporate art collection and luxury home/corporate jet travel for Argo CEO Mark Watson. At the same time, Voce nominated its own slate of independent board member candidates, after which it accused Argo Group of illegally appointing two board members.
Argo has denied all allegations, and in its new shareholder letter, outlined those denials in detail as it pleaded for voting support at the company’s annual meeting.
In the letter, Argo argued it is creating value for shareholders in the form of improved underwriting margins, business growth and added use of technology. The company said it growing competitively in each of its key operations, and that its experienced and newer board members have helped fuel a continued upward trajectory for Argo.
Argo accused Voce Capital of using “spurious allegations” and a “misleading media campaign,” and tries to correct the record in multiple ways.
Not Actually Penthouse; Art Was a Relative Bargain
Argo, for example, said it “did not build, nor have we ever had, a penthouse apartment above our New York offices,” as was accused. Rather, Argo said, the space in question is a meeting room “with a large table surrounded by glass walls.”
Argo also denies having purchased expensive art or maintaining a pricy art collection. The company acknowledged it puts thought into designing its various office spaces for its 1,300 employee. However, it said that “added together, the cost of every piece of artwork carried on our balance sheet for all of our office spaces worldwide over the past two decades is less than a million dollars- hardly a sum worthy of public space.”
Additionally, Argo defended its corporate sponsorship program as a cost-effective exercise that builds client relationships, and it said that the company’s corporate aircraft “is managed in an effective manner” for its “global diversified business platform.”
As far as Voce, Argo said it has tried to communicate with the firm about its issues, and that it always welcomes “opportunities to engage in collaborative dialogue” with its shareholders.
Source: Argo Group