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HIG to Divest Hartford Funds to Wellington, Unlocking $1.9B Value
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Key Takeaways
HIG agreed to sell Hartford Funds to Wellington in a deal with an estimated net present value of $1.9B.
The Hartford will receive $300M at closing plus payments tied to future cash flows over seven years.
Hartford Funds, with about $160B AUM, will join Wellington's U.S. Wealth business after approvals.
The Hartford Insurance Group, Inc. (HIG - Free Report) has agreed to sell Hartford Funds to its long-time partner, Wellington Management, in a deal with an estimated net present value of $1.9 billion. The deal extends a partnership spanning more than four decades and will integrate Hartford Funds into Wellington's U.S. Wealth business under the Wellington brand.
Under the agreement, HIG will receive $300 million in cash at closing, along with additional payments tied to the after-tax cash generated by the combined wealth-management business over the next seven years. The transaction is expected to be closed in the first quarter of 2027, subject to regulatory and fund approvals.
The sale also reflects the close relationship between the two firms. Management believes Hartford Funds will benefit from being part of a larger integrated wealth platform. Wellington already sub-advises approximately 83% of Hartford Funds' assets. With roughly $160 billion in assets under management, Hartford Funds has been a significant part of the partnership, making full integration a logical next step.
The move aligns with The Hartford's strategy of increasing its focus on core insurance operations while unlocking value from its asset-management business. HIG's strong operating performance provides a solid foundation for the transaction. Core earnings rose 34% year over year to $866 million in first-quarter 2026, benefiting from increased investment income. Additionally, its trailing 12-month core return on equity of 22.5% compared favorably with the industry average of 7.4%
The transaction enhances capital flexibility and provides an additional source of future cash flows. By divesting the retail asset-management business, HIG can allocate more resources to its core business segments while continuing to participate in the growth potential of the combined wealth platform through the seven-year cash-participation arrangement. The deal simplifies the company's business mix and strengthens its focus on its core insurance franchises.
HIG’s Stock Price Performance
Shares of HIG have lost 1.6% over the past year compared with the industry’s 5.3% decline.
The Zacks Consensus Estimate for Mercury General’s 2026 earnings is pegged at $11.38 per share, indicating 44.1% year-over-year growth. MCY has witnessed one upward revision in the past 30 days, with no movement in the opposite direction. The consensus estimate for 2026 revenues is pinned at $6.4 billion, implying 8.5% year-over-year growth.
The Zacks Consensus Estimate for Hanover Insurance’s 2026 earnings is pegged at $18.36 per share, which has witnessed two upward revisions in the past 30 days, with no movement in the opposite direction. THG beat earnings estimates in each of the trailing four quarters, with the average surprise being 28.5%. The consensus estimate for 2026 revenues is pinned at $6.95 billion, implying 4.7% year-over-year growth.
The Zacks Consensus Estimate for First American’s 2026 earnings is pegged at $6.81 per share, indicating 12.6% year-over-year growth. FAF beat earnings estimates in each of the trailing four quarters, with the average surprise being 22%. The consensus estimate for 2026 revenues is pinned at $8.06 billion, implying 8.1% year-over-year growth.
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HIG to Divest Hartford Funds to Wellington, Unlocking $1.9B Value
Key Takeaways
The Hartford Insurance Group, Inc. (HIG - Free Report) has agreed to sell Hartford Funds to its long-time partner, Wellington Management, in a deal with an estimated net present value of $1.9 billion. The deal extends a partnership spanning more than four decades and will integrate Hartford Funds into Wellington's U.S. Wealth business under the Wellington brand.
Under the agreement, HIG will receive $300 million in cash at closing, along with additional payments tied to the after-tax cash generated by the combined wealth-management business over the next seven years. The transaction is expected to be closed in the first quarter of 2027, subject to regulatory and fund approvals.
The sale also reflects the close relationship between the two firms. Management believes Hartford Funds will benefit from being part of a larger integrated wealth platform. Wellington already sub-advises approximately 83% of Hartford Funds' assets. With roughly $160 billion in assets under management, Hartford Funds has been a significant part of the partnership, making full integration a logical next step.
The move aligns with The Hartford's strategy of increasing its focus on core insurance operations while unlocking value from its asset-management business. HIG's strong operating performance provides a solid foundation for the transaction. Core earnings rose 34% year over year to $866 million in first-quarter 2026, benefiting from increased investment income. Additionally, its trailing 12-month core return on equity of 22.5% compared favorably with the industry average of 7.4%
The transaction enhances capital flexibility and provides an additional source of future cash flows. By divesting the retail asset-management business, HIG can allocate more resources to its core business segments while continuing to participate in the growth potential of the combined wealth platform through the seven-year cash-participation arrangement. The deal simplifies the company's business mix and strengthens its focus on its core insurance franchises.
HIG’s Stock Price Performance
Shares of HIG have lost 1.6% over the past year compared with the industry’s 5.3% decline.
Image Source: Zacks Investment Research
HIG’s Zacks Rank & Key Picks
HIG currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Finance space are Mercury General Corporation (MCY - Free Report) , The Hanover Insurance Group, Inc. (THG - Free Report) and First American Financial Corporation (FAF - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Mercury General’s 2026 earnings is pegged at $11.38 per share, indicating 44.1% year-over-year growth. MCY has witnessed one upward revision in the past 30 days, with no movement in the opposite direction. The consensus estimate for 2026 revenues is pinned at $6.4 billion, implying 8.5% year-over-year growth.
The Zacks Consensus Estimate for Hanover Insurance’s 2026 earnings is pegged at $18.36 per share, which has witnessed two upward revisions in the past 30 days, with no movement in the opposite direction. THG beat earnings estimates in each of the trailing four quarters, with the average surprise being 28.5%. The consensus estimate for 2026 revenues is pinned at $6.95 billion, implying 4.7% year-over-year growth.
The Zacks Consensus Estimate for First American’s 2026 earnings is pegged at $6.81 per share, indicating 12.6% year-over-year growth. FAF beat earnings estimates in each of the trailing four quarters, with the average surprise being 22%. The consensus estimate for 2026 revenues is pinned at $8.06 billion, implying 8.1% year-over-year growth.