Activist shareholder Voce Capital Management is pushing for five new independent directors to replace incumbents on the board of Bermudian re/insurer Argo Group.Voce says the governance situation at Argo has “significantly deteriorated” since the insurer’s annual meeting this year, citing an SEC investigation into executive compensation and subsequent ratings agency actions.The San Francisco-based hedge fund also criticises the “lucrative package” given to Argo’s former chief executive officer Mark Watson on his “sudden retirement” this month.Voce said it has launched a process to call a special meeting of shareholders as it seeks backing for the replacement of directors. The investor, which owns about 5.8 per cent of Argo, has been fighting a proxy battle with Argo since February, when it claimed the company had a “spendthrift culture” and misdirected corporate assets to support the former CEO’s “lifestyle and hobbies”.Argo announced the immediate retirement of Mr Watson three weeks ago after it was revealed that the US Securities and Exchange Commission were investigating the company over disclosure of certain compensation matters. Argo has said it is fully co-operating with the SEC investigation.Argo added at the time that company shares valued at $2.2 million, owned by Mr Watson, were to be placed into an escrow account to be used to reimburse Argo if an investigation finds that certain personal expenses of his were paid for by the company.The insurer will pay Mr Watson $2.5 million under the terms of the separation agreement made public in an SEC filing.Argo appointed Kevin Rehnberg as interim CEO to replace Mr Watson.Voce yesterday filed a Preliminary Consent Statement in connection with the call for a special meeting.Voce said: “Since the 2019 annual meeting of shareholders, the situation at Argo has significantly deteriorated. “In October, the press reported that 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.”On November 7, AM Best said it was placing Argo’s credit ratings “under review with negative implications”. The rating agency added that when it affirmed Argo’s ratings in October it had been unaware of the SEC subpoena that had been issued to Argo “some time before”.AM Best added that ratings review “considers the serious nature of the aforementioned SEC inquiry and the diminished credibility among Argo stakeholders in light of the board’s actions to keep this inquiry confidential while undergoing an extensive internal investigation on compensation governance matters related to Argo and its former chief executive officer.”It added: “Perhaps of most concern to AM Best are the pending conclusions of the SEC investigation and the potential for this inquiry to extend beyond Mr Watson.”In its statement today Voce said: “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.” Voce said it had repeatedly insisted that shareholders’ voices should be heard in the Argo 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.”Voce wants to replace five of Argo’s existing board members with “highly qualified, fully independent directors”, a proposal it wants to air at the special meeting. “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 byelaws and will require the concurrence of holders of at least 10 per cent 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.”