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Proxy battle halted at the last minute

A proxy battle between Argo Group International Holdings Ltd and activist shareholders has been halted, but recriminations continue.

Voce Capital Management LLC had been pushing to have a number of Argo's directors removed, and had proposed alternative candidates to replace them. The election of directors will form part of Argo's annual meeting on Friday.

However, Voce said yesterday it had “no choice” but to withdraw its nominations after two out of the five state departments of insurance in the US that had previously given permission for its filing of a definitive proxy statement “flip-flopped” and revoked their approvals.

It laid the blame for the turn of events on lobbying by Argo. However, Argo, in its own statement, said: “It appears that Voce may have failed to take all steps or disclose all information required by the departments of insurance in a timely fashion.”

Voce Capital is a San Francisco-based hedge fund that is the beneficial owner of about 5.6 per cent of the shares of Argo. Earlier this year it attacked what it called a “spendthrift culture” and “inappropriate corporate expenses” at Argo.

In a statement yesterday it claimed Argo's role in lobbying the various departments of insurances in the US “is clear and irrefutable”. It said one of the states to revoke its prior approval, Virginia, had said in a letter it had considered additional materials and information provided by Argo.

In addition, Voce said the Illinois department of insurance had threatened to pursue injunctive relief or seek the voiding of any proxy votes cast should the contest proceed.

“Given these disturbing, last-minute developments, it is clear there is a cloud of uncertainty hanging over the annual meeting and its potential outcome. Accordingly, we have no choice but to withdraw our nominations for election of directors and cease soliciting proxies therefor,” Voce said.

In its response, Argo said: “It is unfortunate that Voce, having failed to address such rudimentary state regulatory requirements well in advance of beginning its campaign, now offers this as an excuse for its decision not to let its proposals proceed to a vote.”

The insurer added: “As of last night, it was clear that shareholders were overwhelmingly supporting Argo, and that Voce did not have the support it needed for its proposals and director nominees. Rather than allow the process to continue and let shareholders decide the issue, Voce has chosen to abandon its activist campaign before the vote became final.”

Voce said it would vote against the election of Argo's “five Class III directors” and was urging others to do likewise. It also said: “Moving forward, we are evaluating all potential legal remedies for this situation, including potentially requisitioning a special general meeting.”

Argo said it “fully supports the right for shareholders to exercise their vote”.

It added: “Argo continues to engage with shareholders as we pursue our strategy for strong shareholder returns and our clear path for driving continued value creation. We thank our shareholders for their continued support.”

Situation changed: Voce Capital said it had no choice but to withdraw its nominations for election of directors at the Argo Group annual meeting on Friday (Photograph by Akil Simmons)

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Published May 22, 2019 at 9:00 am (Updated May 21, 2019 at 8:02 pm)

Proxy battle halted at the last minute

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