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Under the deal, announced today (6 October), Allianz will buy $750m (£429m) of preferred shares convertible to common stock at $31 (£17.73) per share.

It will also acquire $1.75bn (£1bn) of 10 per cent junior subordinated debentures, which are callable by Hartford at par beginning 10 years after issuance.

Allianz will also receive warrants, which entitle it to purchase $1.75bn (£1bn) of common stock at $25.32 (£14.48) per share, subject to shareholder approvals. The warrants expire in seven years.

The deal comes as Hartford estimated a third quarter loss of between $8.50 to $8.80 per share and core earnings per share in the range of $1.50 to $1.60 before one-time item.

The Hartford's chairman and chief executive officer Ramani Ayer said: "We are taking decisive action to ensure that The Hartford remains well capitalized for long-term success.

"This investment strengthens our ability to weather volatile markets and continue to invest and vigorously compete in our businesses. We are dedicated to honouring our commitments to customers."

Michael Diekmann, chairman of the board of management and chief executive officer of Allianz SE, added: "We believe in the fundamental strength of the US economy and its insurance industry and respect The Hartford as a great insurance brand. We anticipate a favourable return on our investment."

At the same time, Greg McGreevey, who joined Hartford in August, has been appointed as executive vice president and chief investment officer for The Hartford and president of Hartford Investment Management Company.

He succeeds Dave Znamierowski who is leaving the company.