An activist investor has Argo Group International Holdings in its sights, claiming the company has a “spendthrift culture” and misdirects corporate assets to support the chief executive officer’s “lifestyle and hobbies”.

Voce Capital Management, which has a 5.8 per cent interest in the Bermudian-based specialty insurer, is calling for the company to improve its return on equity, and said this can only be done in a meaningful way by addressing Argo’s “shockingly high” and “shockingly inappropriate” corporate expenses.

Voce said it was deeply concerned that the Argo board of directors had “failed to hold the CEO and management accountable”, and has proposed that four directors be replaced.

In a letter to shareholders, San Francisco-based Voce, which is the beneficial owner of more than 1.9 million shares of Argo, catalogued what it said was “a history of misuse of corporate assets” that had resulted in “value destruction” of the company and its shareholders.

In reply, Argo defended its track record and said Voce has made a number of misleading and inaccurate statements, and had personally attacked Mark Watson, Argo CEO, in its letter.

As examples of its concerns, Voce questioned the need for Argo to have a fleet of three corporate jets, two as fractional owners, and one which it estimates costs the company $3 million a year. It described that jet as Mr Watson’s “personal chariot, whisking him and his entourage around the world”.

In its letter, filed with the US Securities and Exchange Commission, Voce detailed “dramatic and expensive real estate”, that it said had cost shareholders dearly, naming the offices in San Antonio, Texas, a New York office in downtown Manhattan, and a central London office near Lloyd’s.

It also noted the purchasing of artwork for the offices, and said Mr Watson, who is a board member of the San Antonio Museum of Art, curates the Argo art collections himself.

In addition, Argo’s sponsorship of sailing teams and events, including the Argo Gold Cup, has been questioned by Voce, which noted that sailing is another passion of Mr Watson.

The letter to shareholders said that Mr Watson was given a $1.5 million relocation allowance for moving to Bermuda in 2007, along with a $1.4 million bonus for agreeing to move to the island with his family. Voce said he was also given $360,000 annual housing allowance that year.

Listing its various concerns, Voce claimed the Argo board lacks independence and relevant experience and “is directly responsible for this waste of corporate assets”. Calling for change, it noted that many of the directors had been in place for between 10 and 20 years, and that four of them are more than 70 years old.

In reply, the Argo board said it, and the company’s management, welcomed input from all shareholders. Its response, filed with the SEC, also stated: “In that spirit, we were looking forward to continuing our dialogue with Voce, but are disappointed that Voce has decided not to engage us constructively.

“Instead, Voce has sent a letter to shareholders that contains a number of misleading and inaccurate statements and personally attacks the company’s CEO, ignoring Argo’s track record of strong value creation for all shareholders. This is demonstrated by its leading one, three and five-year period total shareholder returns of 39 per cent, 69 per cent and 136 per cent, respectively. The company also returned in excess of $645 million of capital to shareholders from 2010 to 2018.”

Argo said it had lowered its expense ratio by 260 basis points to 37.8 per cent, last year. It added: “The improving expense ratio, along with strong execution of the company’s strategy, is contributing to the achievement of the company-stated long-term ROE target of 700 basis points above the risk-free rate.”

Voce has proposal removing from the Argo board Gary Woods, the chairman, Hector De Leon, John Power, and Mural Josephson, and replacing them with its nominees Carol McFate, Bernard Bailey, Rear Admiral Kathleen Dussault, and J. Daniel Plants.

Argo said it will review the nomination notice and proposed nominees, and present its formal recommendations in a definitive proxy statement that will be filed with the SEC and e-mailed to shareholders eligible to vote at this year’s Argo annual meeting. The date for Argo’s annual meeting has not yet been scheduled.