Argo makes concessions to hedge fund shareholder

Bermuda-based insurer and reinsurer Argo Group International Holdings Ltd. said Thursday it has agreed to appoint three new board members and to pay out up to $1.75 million in reimbursed fees and expenses in a truce with shareholder Voce Capital Management LLC.

Under the agreement, Argo will reimburse Voce up to $1.75 million for “its reasonable, documented out-of-pocket fees and expenses incurred in connection with its proxy contest at the company’s 2019 annual general meeting of shareholders,” according to the insurer’s 8K filing with the U.S. Securities and Exchange Commission.

San Francisco-based hedge fund Voce, with a 5.6% stake in Argo, has also agreed to certain customary standstill provisions and to withdraw its proxy solicitation to seek board changes at a requisitioned special general meeting of shareholders, Argo said in a statement.

Carol A. McFate will join Argo’s board, subject to regulatory approval, filling the seat of former CEO and director Mark Watson, and two additional board members will be appointed with input from Voce, Argo said.

Ms. McFate, who was chief investment officer of Xerox Corp. from November 2006 to October 2017, will also join the board’s nominating and corporate governance committee and another committee as selected by the board, Argo said.

Argo remains under investigation by the U.S. Securities and Exchange Commission regarding disclosure of certain compensation matters.

Mr. Watson, the insurer’s former CEO, stepped down last November amid the probe into executive pay and Kevin Rehnberg, president of Argo Group U.S. Inc., head of the Americas and chief administration officer, was named interim CEO with immediate effect.

Argo had been involved in months of back-and-forth with Voce on the issue of executive compensation and what Voce regarded as Mr. Watson’s “excessive expenses and misuse of corporate assets.”