In the latest twist in the proxy battle between Argo Group International Holdings Ltd and activist shareholders Voce Capital Management LLC, a proxy advisory firm has said “it would be reasonable” for the chairman of Argo to be asked to leave the board.

Glass Lewis & Co also gave support to the idea to elect to the board two of the five picks proposed by Voce.

Voce has trumpeted the report as strongly in line with its own views about Argo, and as further backing for its “compelling roadmap” to achieve cost savings and unlock shareholder value at the Bermudian-based insurer.

Meanwhile Argo, while welcoming parts of the report, defended the contributions made to the company by Gary Woods, its chairman, and fellow board member Sedgwick Browne.

The election of directors will form part of Argo’s annual meeting on May 24.

Voce Capital is a San Francisco-based hedge fund that is the beneficial owner of about 5.6 per cent of the shares of Argo. Earlier this year it attacked what it called a “spendthrift culture” and “inappropriate corporate expenses” at Argo.

It has issued a 66-page presentation, entitled “Righting the Ship”, outlining its plan for how Argo can reduce expenses, undergo compensation reforms, and achieve capital allocation improvements, portfolio rationalisation and enhanced corporate governance.

Glass Lewis said it believed Voce “had underscored several inferior corporate governance practices at Argo”, and that it had raised valid questions about the company’s “high expenses”.

Reacting to the report, Voce also said: “We are pleased that Glass Lewis supports our multifaceted call for change at Argo and recommends shareholders vote for the election of our highly qualified nominees Charles Dangelo and Nicholas Walsh and the removal of its long-serving chairman.”

On Tuesday, another proxy advisory firm, Institutional Shareholder Services, issued its report that gave support to Argo and its board.

Following Glass Lewis’s report, Argo noted its positive remarks regarding shareholder returns, operational results and a commitment to board of director refreshment.

In a statement, the insurer said: “We are pleased that both Glass Lewis and ISS recognise the strong results we have delivered for shareholders, our continued strong operational performance and the merits of our board refreshment process. We particularly value the support of ISS, which recognises the strength of our board’s nominees and our commitment to strong corporate governance practices.”

However, it said Glass Lewis had failed to acknowledge the important contributions that Mr Woods and Mr Browne “continue to make as strong and engaged directors”.

Argo has previously described Voce’s claims directed at the company as spurious allegations that are part of a “misleading” media campaign. Earlier this month, a few days after Voce’s released its “Righting the Ship” document, Argo published a 68-page document entitled “Argo Group: driving growth and value for shareholders.”

Argo is urging shareholders to vote for all of the company’s directors.