Peace has broken out between Argo Group International Holdings Ltd and activist shareholder Voce Capital Management LLC.

The two organisations have entered into a co-operation agreement to effect changes to Bermudian-based Argo’s board of directors.

Former Xerox executive Carol McFate is being appointed to the board. She was a previous board nominee put forward by Voce.

In addition, Voce will work with Argo to identify two more independent director candidates, one of whom will be selected from a list produced by Voce.

The co-operation agreement follows an almost year-long to-and-fro between the organisations, including a bruising proxy battle, as Voce called for changes to the board and attacked what it called a “spendthrift culture” and “inappropriate corporate expenses” at Argo.

Voce is a San Francisco hedge fund, and is beneficial owner of about 5.8 per cent of the shares of Argo.

Last month, Voce made a filing with the US Securities and Exchange Commission aimed at securing a special general meeting of Argo shareholders, with a view to seeking the removal and replacement of up to five members of the Argo board.

In a counter move shortly afterwards, Argo announced its annual meeting in 2020 was being brought forward from May to March, and that five directors, including chairman Gary Woods, would retire at that meeting.

Now, with the announcement of the co-operation agreement, Voce has agreed to certain customary “standstill” provisions and to withdraw its proxy solicitation to seek board changes at the requisitioned special general meeting of shareholders it had sought.

Argo is under investigation by the SEC regarding disclosure of certain compensation matters.

The company announced the immediate retirement of Mark Watson as chief executive officer of Argo in November. Mr Watson continued to serve as a member of the board until December 31.

Ms McFate will fill the board seat vacated by Mr Watson, subject to regulatory approval. She will join the board’s nominating and corporate governance committee and an additional committee as selected by the board.

She was originally put forward as a nominee for the board by Voce last May, before the activist shareholder withdrew its candidates shortly before Argo’s annual meeting.

Ms McFate was chief investment officer at Xerox Corporation from 2006 to 2017. Prior to that she served as executive vice-president and global treasurer for XL Global Services Inc, a subsidiary of XL Capital Ltd. Ms McFate also held senior executive positions with American International Group and The Prudential Insurance Company of America.

As mentioned, Voce will work with Argo’s nominating and corporate governance committee to identify two new independent director candidates to stand at the annual meeting in March. One candidate will be selected from the list produced by Voce for election at its previously sought special meeting of shareholders.

Thomas Bradley, chairman of the nominating and corporate governance committee said: “We are pleased to have reached a constructive agreement with Voce and value their input as we continue to enhance our board composition and governance practices.”

He welcomed Ms McFate to the board, and said: “Her strong leadership and executive experience in the insurance and investment management industries will help drive continued value creation for our shareholders.”

Meanwhile, J. Daniel Plants, founder and chief investment officer of Voce, said: “We made a substantial investment in Argo because we believe it has significant untapped value that can be realised.

“The appointment of Carol McFate to the board, the addition of two other independent directors selected with Voce’s input, and the company’s ongoing governance improvements, are substantive and positive developments that give us confidence in the new course that Argo has charted.

“We look forward to working with Argo’s board and management in the shared pursuit of creating value for all shareholders.”

The agreement between Argo and Voce will be filed with the SEC.