Hartford inks preferred partnership agreement with Wellington

By Toni Weeks

San Diego, Dec. 8 - Hartford Financial Services Group, Inc. entered into a preferred partnership agreement with Wellington Management Co., LLP on Dec. 5, selecting Wellington as the preferred subadviser to the Hartford Funds, according to an 8-K filing with the Securities and Exchange Commission.

Additionally, Wellington will be the preferred partner with respect to Hartford's covered funds, for which Wellington is the sole investment adviser.

The agreement was also made with Hartford's indirect wholly owned subsidiaries, Hartford Life, Inc., Hartford Investment Financial Services, LLC and HL Investment Advisors, LLC.

As part of its position as preferred subadviser to Hartford, Wellington has agreed that

• It will not be the subadviser for any covered fund or separate account sponsored by the 25 largest broker-dealers with written selling agreements related to the Hartford Funds and offered to investors on a stand-alone basis;

• It will not be the subadviser to any covered fund, other than one sponsored by Hartford, if such an appointment would cause the percentage of assets subadvised by Wellington to fall below a specified threshold of competing covered funds;

• It will not enter into new engagements for fixed-income products for covered funds before June 30, 2016; and

• It will not assign specific portfolio managers to manage new covered funds not sponsored by Hartford, if such funds meet identified asset levels.

Hartford may terminate the agreement within 60 days following a breach by Wellington of its obligations or following the five-year anniversary of the preferred partnership agreement.

Wellington may terminate the agreement if replaced as subadviser, resulting in a percentage of Hartford's assets falling below a specified threshold, if Hartford does not offer a Hartford HLS Fund as an investment option within its variable annuity and variable life contracts or on the five-year anniversary of the preferred partnership agreement.

Hartford Investment and HL Investment Advisors have agreed to recommend to the boards of directors/trustees of the Hartford Funds a fee schedule for the Hartford Funds. Wellington will not request any increase in the fee rates and will participate pro rata with Hartford in any fee increases implemented by the board. Similarly, Hartford will not recommend a reduction in the subadvisery fee payable by a Hartford Fund. Wellington has agreed to implement a fee waiver program so that its fees will stay fixed.

Hartford has agreed to notify Wellington if Hartford explores a sale of its mutual fund business and will allow Wellington to participate in any potential sale. Wellington will receive a first right of refusal with respect to a potential sale of Hartford's mutual funds business.

The agreement will terminate on June 5, 2018, unless

• Hartford closes on a sale of its mutual funds business, Wellington is sold or either company experiences a change of control;

• Within 90 days following Dec. 31, 2012 or June 30, 2013, if a specified percentage of fixed-income assets under management are not subadvised by Wellington at that point;

• If there are any violations of law or other proceedings;

• By either company if bankruptcy events occur; or

• If an initial public offering or spin-out of Hartford's mutual fund business closes before June 5, 2014.

Hartford is a provider of insurance and wealth management services for businesses and consumers and is based in Hartford, Conn.

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