set character in string

It is absolutely impossible to modify any string. Strings are immutable. All methods which "modify" a string actually create a brand new string using the data from source string(s).

You can use the mutable class System.Text.StringBuilder: http://msdn.microsoft.com/en-us/library/system.text.stringbuilder%28v=vs.110%29.aspx[^].

At the end, you still can back to a string, by calling the instance method StringBuilder.ToString() (overridden System.Object.ToString()). But you should understand that it will generate a brand new string.
However, to understand how strings really work, read about string interning:
http://msdn.microsoft.com/en-us/library/system.string.intern(v=vs.110).aspx[^],
http://msdn.microsoft.com/en-us/library/system.string.isinterned(v=vs.110).aspx[^],
http://en.wikipedia.org/wiki/String_interning[^],
http://csharpexperiments.blogspot.com/2013/04/string-interning.html[^].

—SA

If solution 2 is not an option, you can still go for a regular expression that will extract the three parts of your initial string, allowing you to place your minus sign between them.

This should look like:

using System.Text.RegularExpressions;

public static string GetFormattedValue(string initial) {
   string formatRegex = @"^(?<First>[\d]{7})(?<Second>[\d]{4})(?<Third>[\d]{3})$";
   Regex r = new Regex(formatRegex, RegexOptions.Compiled | RegexOptions.CultureInvariant);
   Match m = r.Match(initial);
   if (m.Success) {
      return string.Format("{0}-{1}-{2}", m.Groups["First"], m.Groups["Second"], m.Groups["Third"]);
   }
   else {
      return string.Empty;
      // OR
      // throw new ArgumentException("initial is not of required format.");
   }
}

But this solution requires that all input strings share the same format.

Hope this helps.