Recent claims that Argo Group Chief Executive Officer Mark E. Watson III has perpetuated “shockingly high and shockingly inappropriate” expenses over the past decade have been labelled misleading and inaccurate by the company.
In a statement released this morning Argo accused Voce Capital Management (Argo’s fourth-largest shareholder) of ignoring the firm’s track record of “strong value creation for all shareholders.”
“This is demonstrated by its leading 1, 3 and 5-year period total shareholder returns of 39%, 69% and 136%, respectively. The company also returned in excess of $645 million of capital to shareholders from 2010 to 2018,” the statement reads.
Meanwhile, addressing allegations from Voce of sub-par return on equity (ROE) due to “frivolous” operating and corporate expenses, Argo states that 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.
“Moreover, a critical metric used in determining long-term value creation is the compound annual growth rate of book value per share, which averaged approximately 9% including dividends from 2002 to 2018.”
In its release yesterday Voce also put forward intentions to nominate four independent Director candidates to a Board it described as misaligned and inexperienced.
Argo has since stated that the company has a “strong and diverse” group of independent directors, including five new directors who have been added to the board over the past two years.
The current Board of Directors also says they will review Voce’s nomination notice and proposed nominees in accordance with its fiduciary duties under applicable law and the company’s corporate governance guidelines.
“The board will present its formal recommendation regarding director nominees in the company’s definitive proxy statement and other materials, which will be filed with the Securities and Exchange Commission and mailed to all shareholders eligible to vote at the 2019 Annual General Meeting.”
“The company has not yet scheduled its 2019 Annual General Meeting. Argo shareholders are not required to take any action at this time,” the statement concludes.
