The dispute between Argo Group International Holdings Ltd and activist shareholders Voce Capital Management erupted again after a proxy advisory firm threw its weight behind Argo’s slate of director nominees in advance of the firm’s annual general meeting next week.

Institutional Shareholder Services Inc noted the strong results that the Bermudian re/insurer’s board and management have delivered for shareholders, and expressed support for Argo’s board and strategic direction, Argo said.

“The company has delivered strong TSR (total shareholder return) over the short and long term and has demonstrated good overall governance; notably, the board has appropriately refreshed itself in recent years,” the ISS report said, according to Argo. “The board also has demonstrated that it has thoughtfully considered many of the concerns raised by the dissident before reaching a conclusion with which the dissident disagrees.”

In concluding that Voce has failed to make a case for its slate of nominees, Argo said, ISS noted Argo’s “ongoing refreshment process that incorporates active, contributing, and additive board members”.

According to Argo’s release, ISS observed: “In fact, independent of the dissident’s involvement, the board’s refreshment is proceeding at a reasonable pace and the dissident’s allegations of a stale board do not appear to accurately reflect the current board dynamic, particularly in the absence of underperforming operations or share returns.”

Argo independent chairman Gary Woods said: “We value the support of ISS, which recognises the strength of our Board’s nominees and our commitment to increasing shareholder value. Our strategy of focusing on profitable underwriting and relationships, portfolio investment and disciplined capital allocation is driving strong performance.

“ISS’s recommendation underscores the importance of an orderly process for board refreshment, which provides stability to the company’s business and supports our commitment to best-in-class governance.”

Voce, a San Francisco-based hedge fund that owns a 5.6 per cent stake in Argo, earlier this year attacked what it called a “spendthrift culture” and “inappropriate corporate expenses” at Argo. Argo has denied Voce’s claims.

Voce, which has put forward its own slate of director nominees, said ISS’s conclusions were “baffling”.

“We have acknowledged from the beginning that Argo’s stock price has appreciated over time. If that’s the end of the inquiry, as it appears to have been for ISS, then with all due respect, there’s no need for a third-party to analyse or weigh in on this proxy contest,” Voce stated.

“The far more relevant questions are why has Argo’s stock performed the way that it has, should it have done better and can it improve going forward?

“What is so puzzling, and in our view erroneous, about ISS’s report is that it acknowledges many of the governance concerns that we have identified, yet then fails to consider them at all in reaching its lopsided recommendation.”

Voce added: “ISS’s commentary acknowledged Argo’s inflated expense structure, lack of adequate disclosure to investors, cherry-picking of metrics, misaligned executive compensation and the risks represented by the comingling of the CEO’s self-promotion and the company’s marketing.”

According to Voce, ISS’s report states: “For a business that requires constant risk assessment, it’s ironic that none of the directors saw the risk in a self-promoting CEO whose interests and hobbies were inextricably intertwined with Argo’s marketing budget.

“Some degree of complacency, perhaps as a byproduct of the company’s Bermuda domicile, may have played a role here.”

The company’s annual general meeting will be held on May 24.