The current make-up of the board of directors at Argo Group International Holdings Ltd is “vastly superior” to the candidates put forward by activist investors Capital Returns Management LLC, the company has claimed.

And in a letter to shareholders, sent in advance of Argo’s annual general meeting scheduled for December 15, it urges them to vote for the current members of the board.

Meanwhile, Capital Partners has written to Argo shareholders urging them to vote for change.

In a statement, Argo said: “Argo’s nominating and corporate governance committee formally interviewed both Ronald Bobman and David Michelson and concluded that neither candidate offers any incremental skills or experience that would be additive to the current board.

“It is the view of the entire board that an exchange for any one of the board’s existing directors for either of Capital Returns’ nominees would result in a loss of superior talent and experience at a critical juncture for the company and a degradation in the quality of board dialogue.”

Argo said it has “successfully refreshed its board and management team”.

It said: “Six of Argo’s nine directors have joined the board since the company undertook its proactive refreshment programme.

“Most recently, Argo appointed to the board J. Daniel Plants, chief investment officer of Voce Capital Management LLC, Argo’s largest active shareholder at approximately 9.5 per cent of the company’s outstanding common shares.

“Over the last four years, Argo has added five best-in-class C-suite executives. Together, these highly experienced, industry-respected executives are successfully overseeing the company’s transformation.”

Other highlights of the letter, according to Argo:

• Over the past two years, Argo has streamlined its portfolio to focus on its most profitable business lines.

• In the past three months, Argo has announced two major transactions that will result in the transfer of approximately $954 million in net reserves.

• Argo has successfully re-underwritten its core US specialty business and reduced costs.

• Argo is overseeing a robust strategic review process.

Capital Partners, which said it is one of the largest shareholders among actively managed funds of Argo, issued a statement saying that it explained to shareholders in the letter why it believes “urgent change” is needed at Argo.

It said Argo has lost more than 64 per cent of its value over the past three years, erasing more than $1.5 billion of shareholder value.

It added: “Capital Returns believes the current board of directors and executive management team have demonstrated they are incapable of creating value for Argo shareholders. It has become clear to us that new, qualified directors are required to ask hard questions and push Argo in the right direction.”

Capital Returns said its nominees, Mr Bobman and Mr Michelson, are “two experienced insurance industry experts that Capital Returns believes can help the board and shareholders”.

And it said it believes that two directors in particular — Bernard Bailey and Al-Noor Ramji — should be replaced.

Capital Returns said: “These directors have served on the board during a period of value destruction. Capital Returns believes that if shareholders sit idle and allow these directors to continue to serve alongside the other incumbent directors, there is no reason to expect any different outcome going forward.

“Replacing these two directors (one whom, by the company's own admission, entirely lacks industry knowledge and the other a technologist) with new directors that have extensive and relevant insurance expertise is in order.

“If elected, Capital Returns' candidates will exercise their best judgment and work with the remaining directors to maximise the value of Argo. It is hard for us to imagine how such a change could possibly harm shareholders, and there is a significant likelihood that the addition of objective, experienced directors can significantly help Argo's underperformance and suboptimal and poorly executed strategy.”

It urged shareholders to support its call for change at Argo by voting to elect Mr Bobman and Mr Michelson, and to not vote for Mr Ramji and Mr Bailey.

Argo’s squabble with Capital Partners comes just a week after news that the Police and Fire Retirement System for the City of Detroit has filed a class-action lawsuit against Argo.

The plaintiffs are demanding a jury trial in the case against Argo and five officers and former officers of the company.

The securities class action complaint names Argo, Thomas A. Bradley, Scott Kirk, Kevin J. Rehnberg, Mark E. Watson III and Jay S. Bullock.

The suit alleges the defendants defrauded investors by issuing false and misleading statements concerning the company’s ability to set appropriate reserves, changing its underwriting policies and writing policies outside of its “core” business.