NEW YORK (

TheStreet

) -- Shares of property insurers were rallying Monday on hopes that the damages from Hurricane Irene might be less than feared.

Allstate

(ALL) - Get Report

was gaining 7.6% to $26.08,

Chubb

(CB) - Get Report

was up 4% at $61.79 and

Travelers

(TRV) - Get Report

was surging nearly 5% to $50.62. All three insurance companies are considered heavily-exposed to potential damages, given their significant market shares in the tri-state area.

Industry analysts are still trying to assess the damage from the hurricane. While the storm lost intensity as it moved northwards, sparing New York city from potentially catastrophic damages, its impact was far-reaching.

Analysts at Moody's expect that initial loss estimates will likely have wide ranges. "The simple logistics of reporting claims and sending in insurance adjustors to assess losses in the most severely affected areas, which will likely have damaged infrastructure and limited access, creates numerous challenges in developing more accurate loss estimates at this stage."

However, initial reports suggest that a significant amount of the damage was caused by flooding, which is typically not covered by insurance companies. That fueled optimism in the insurance majors, whose shares have been beaten down in the run up to Irene.

Other analysts also expected that the latest hurricane will lead insurers to raise prices on policies in certain commercial lines.

Moody's expects

State Farm

,

Nationwide

, Allstate, Liberty Mutual and Travelers to bear significant losses. That would be in addition to high weather-related losses already sustained by insurers year-to-date.

However, as large national writers, "these companies have strong capital bases able to withstand a fair degree of catastrophe volatility," Moody's noted.

Sandler O'Neill argued last week investors use the short-term declines in insurance company stock prices linked to fears on weather-related claims to accumulate stocks that they think are attractive and have good fundamentals.

On Monday, the brokerage house upgraded Allstate to a buy from a hold rating, citing attractive valuations. "There is understandable concern in the market over the impact that Hurricane Irene may have upon property-casualty insurers and in particular Allstate as it has an approximately 10% market share in the New York City tri-state area. However, that being said, any damage from Hurricane Irene should serve to simply move us further towards a hard market in commercial lines pricing," the analysts said in a note.

"

Allstate has rarely traded this low on a price-to- book value basis. Shares are now trading at just 68% of book value versus the large cap peer group (ex-PGR) at an average of 77%. We also like the company because we think this is a good contrarian pick, we believe the franchise is largely intact, and prices are increasing in both the auto and home insurance businesses," the report said.

--Written by Shanthi Bharatwaj in New York

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