Voce says Argo board ‘cannot be trusted’ following ‘retirement’ of CEO Watson

Activist shareholder Voce Capital has said Argo’s board “cannot be trusted” to choose the firm’s leadership or future direction, following news earlier this week that embattled CEO Mark Watson has “retired” from the role. Argo announced on Tuesday that Mr Watson will step down with immediate effect. He will be replaced on an interim basis by Kevin Rehnberg, who has been president of Argo Group US and head of the Americas and chief administration officer since January. Mr Watson will continue to work as an adviser and Argo board member until the end of this year. The move coincides with an ongoing investigation by the US Securities and Exchange Commission (SEC) into compensation issues at the Bermuda-based insurer. The follows a public row between Argo and investor Voce Capital over allegations that the company and former CEO Mr Watson misused corporate assets and filed excessive expenses. Argo has previously refuted the claims and this week said it “continues to believe that the amounts involved are not material to the company’s financial position or results of operations”. Its board said it is fully cooperating with the SEC investigation and continues to conduct its review of governance and compensation matters. But it seems the departure of Mr Watson is linked to the complaints. Following news of his “retirement”, Voce Capital said the “abrupt” CEO transition “does not allay” its concerns about broader governance and oversight issues at Argo, including those related to the ongoing SEC investigation. It added that Argo’s existing board cannot be trusted to choose the next leader or future strategic direction. Voce Capital argues that a reconstituted board, including shareholder representation, is “urgently needed at Argo to ensure shareholder interests are finally being put first”. Meanwhile, Argo has announced a new reporting structure incorporating newly appointed executive vice-presidents under the watch of interim CEO Mr Rehnberg. Mr Rehnberg said: “The new structure focuses on maintaining operational excellence and providing additional senior leadership for Argo’s growing, profitable Americas businesses, all of which continue to improve processes, reduce expenses and put the right people in the right roles.” Adding: “These changes will also help us accelerate the overarching digital transformation of the entire organisation by enabling me to focus more time on operations company-wide.” Two of the three executive vice-presidents – Gary Grose and Tim Carter – have already been appointed. The third is to be announced later this year. Mr Grose currently serves as Argo Group producer management and marketing leader and head of colony specialty. In addition to continuing to lead group producer management and marketing, Mr Grose will oversee the following businesses: contract, property, environmental, inland marine and transportation Mr Carter joins Argo following leadership roles with AIG’s commercial insurance segment. Prior to AIG, he held chief underwriting officer roles at Zurich in their North America and Europe divisions. Mr Carter will be responsible for US underwriting as well as surety, programmes, alternative risk solutions, trident public risk solutions, and Argo Construction. The third executive vice-president will oversee US claims as well as casualty, Argo Pro, Argo Insurance, Rockwood and cyber.

Voce says Argo board ‘cannot be trusted’ following ‘retirement’ of CEO Watson

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