Argo Group shareholder Voce Capital Management has described the specialty re/insurer’s board as having been “asleep at the switch for decades” and urged for immediate and sweeping changes at the company following the departure of Chief Executive Officer Mark E. Watson III.
Watson’s ‘retirement’ from Argo followed news that the re/insurer had been subpoenaed by The US Securities and Exchange Commission over compensation practices for its executives.
Before that, Argo had been locked in an ongoing, messy back-and-forth with Voce, over issues including executive compensation practices and the independence of its board of directors.
Now, in a recently released statement, Voce has underlined its belief that “The abrupt ‘retirement’ of Argo’s CEO yesterday does not resolve our concerns about the Company’s operations, strategy and corporate governance.”
Voce says the handling of Watson’s departure raises more questions than it answers including the decision to allow him, in light of what appears to be an admission of misconduct, to receive a “cash severance of $2.5 million while continuing to collect base salary of nearly $200,000 over the next few weeks.”
Voce underlines what it perceives to be a need to reconstitute Argo’s board and consider external candidates for the now-vacant CEO temporarily being filled by President of Argo Group US Kevin J. Rehnberg.
“With no disrespect to Mr. Rehnberg, who appears to have run the US business successfully, why would the Board refuse to even consider external candidates,” Voce’s statement reads, “especially given the large number of highly-qualified property and casualty CEOs who are currently available as a result of all of the M&A activity in the industry?”
Argo Group today reported a net loss of $25.1 million for the third-quarter versus net income of more than $40 million a year earlier, driven in part by an increase in current and prior accident year losses of $51.8 million.