Discontinued Operations and Disposal Groups

17. Discontinued Operations

Sale of Hartford Funds Business

On June 3, 2026, the Company and Wellington Management ("Wellington") entered into a definitive agreement under which Wellington will acquire Hartford Funds Management Group, Inc. ("Hartford Funds"), a subsidiary of Hartford Holdings, Inc. This transaction represents an exit from the Company's mutual fund, exchange-traded funds and third-party life and annuity separate account asset management business. Under the terms of the agreement, Wellington will operate Hartford Funds and serve as investment advisor to all funds following closing.

Transaction consideration consists of $300 of cash payable at closing and contingent consideration in the form of quarterly payments representing 95% of after tax available cash generated by the combination of Hartford Funds’ business and Wellington’s business supporting Hartford Funds, including the sale of certain other Wellington-sponsored products in the U.S. wealth market, for an expected period of seven years following closing, which period may be shortened or extended based on specified performance thresholds. Beginning five years after closing, if the net present value ("NPV") of the quarterly cash flows, discounted at 11%, together with the upfront proceeds, equals or exceeds $2.1 billion, quarterly payment obligations will terminate. If, at the end of the initial seven-year period, the NPV of the quarterly cash flows, discounted at 11%, together with the upfront proceeds, is less than $1.5 billion, quarterly payments will continue until the earlier of the quarter in which the $1.5 billion threshold is met or the end of eight additional quarters.

During the term of the contingent consideration, the Company will retain certain limited protective and information rights designed to preserve the value of the contingent payments; however, such rights do not provide the Company with the ability to direct the activities that most significantly impact the economic performance of the business. In addition, the Company expects to provide transition services for a limited period following closing.

Upon being classified as held for sale, the Hartford Funds reporting unit goodwill of $272 was tested for impairment. The

fair value of the reporting unit significantly exceeded its carrying value; therefore, no impairment was recognized. The estimated fair value incorporates multiple inputs into discounted cash flow calculations including assumptions that market participants would make in valuing the reporting unit. Assumptions include projected growth, earnings forecasts, assets under management, and the weighted average cost of capital used for the purposes of discounting.

Upon being classified as held for sale in the second quarter of 2026, the Company recognized a $251 deferred tax asset and related income tax benefit within discontinued operations associated with the transaction representing the difference between the tax basis and U.S. GAAP carrying value of Hartford Funds.

Prior to closing, the Company expects to receive a pre-closing dividend of approximately $170 from Hartford Funds, subject to market and operating performance through closing.

At closing, the Company expects to recognize an estimated after tax realized loss of approximately $150 in discontinued operations, reflecting the difference between the carrying value of Hartford Funds and the cash consideration recognized upon deconsolidation, subject to future operating performance and market conditions. The Company will account for the contingent consideration as a gain contingency, which is not deemed realizable until it is received, and therefore is not recognized on the closing date. Following closing, contingent consideration payments will be made to the Company on a quarterly basis and recognized in net income in the period received.

The transaction is expected to close in the first quarter of 2027, subject to customary closing conditions, including regulatory and fund approvals. Hartford Funds has met the criteria for reporting as discontinued operations and is reported in the Corporate category until closing.


Major Classes of Assets and Liabilities to be Transferred to the Buyer in Connection with the Sale
	Carrying Value as of June 30, 2026		Carrying Value as of December 31, 2025
Assets
Cash and investments	$	515	$	473
Goodwill	272		272
Other assets	114		119
Total assets held for sale	$	901	$	864
Liabilities
Deferred income taxes	$	32	$	32
Other liabilities	148		144

Total liabilities held for sale	$	180	$	176


Reconciliation of the Major Line Items Constituting Pretax Profit of Discontinued Operations
	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenues

Fee income	$	295	$	256	$	578	$	516



Net investment income	5		6		10		10
Net realized gains	7		9		5		9
Total revenues	307		271		593		535
Benefits, losses and expenses


Insurance operating costs and other expenses [1]	222		199		441		404
Total benefits, losses and expenses	222		199		441		404
Income from discontinued operations before income taxes	85		72		152		131
Income tax expense (benefit)	(233)		15		(218)		28
Income from discontinued operations, net of tax	$	318	$	57	$	370	$	103

[1] Corporate allocated overhead has been included in continuing operations.


Cash Flows from Discontinued Operations
	Six Months Ended June 30,
	2026		2025
Net cash provided by operating activities from discontinued operations	$	95	$	86
Net cash used for investing activities from discontinued operations	$	(10)	$	(3)