Hartford Financial ( HIG) said it has agreed to a $2.5 billion capital investment from Allianz SE ( AZ), plans to cut its dividend and will report a loss in the third quarter.

For $31 a share, Allianz will purchase $750 million of preferred shares convertible to common stock after receipt of applicable approvals, and $1.75 billion of 10% junior subordinated debentures. Allianz also will receive warrants which entitle it to purchase $1.75 billion of common stock at an exercise price of $25.32 a share, subject to shareholder approvals. The warrants expire in seven years.

Insurer Hartford said it plans to cut its quarterly dividend to 32 cents a share from 53 cents.

Hartford said it expects to report a third-quarter loss of $8.50 to $8.80 a share, including net realized capital losses in the range of $7.05 to $7.25 a share, or about $2.1 billion to $2.2 billion. The company said the vast majority of the realized capital losses are impairments on its investment portfolio. About 75% of the impairments are related to investments in the financial services sector, which were hurt by recent market turmoil, the company said.

With the Allianz investment, the company said it projects it will finish the year with a capital margin of about $3.5 billion, in excess of its modeled rating agency requirements to maintain AA level ratings.

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