Property insurers are increasingly attractive to investors as the hurricane season passes its midpoint and forecasters lower expectations about the storms they think will hit the United States this year.

"It's too early to declare victory," said Jay Cohen, who covers insurers for Merrill Lynch. But "limited tropical storm activity will be a short-term positive for most insurance and reinsurance stocks."

For example, Allstate Corp. (ALL), the second largest home insurer in the United States, has a consensus estimate for the third quarter of $1.33 a share, 33 percent below the second quarter, and would benefit if the storm season remained quiet, Cohen said in an interview.

Insurers took a beating from hurricanes in both 2004 and 2005, when seven major storms hit the Gulf Coast, causing more than $80 billion in insured losses from 5.5 million claims, according to the Insurance Information Institute. Among them was Hurricane Katrina, the largest storm ever in terms of damages.

With that in mind, insurers based their 2006 expectations on three major storms colliding with the continent and causing massive damage.

"The property insurers built into their earnings estimates for a heavy hurricane season," said Donald Light, an insurance industry analyst with Celent LLC. "If we get to October unscathed, we'll see those estimates raised by 10 percent to 15 percent."

So far, only Hurricane Ernesto has reached the United States as a tropical storm, while Hurricane Florence has blown out to sea, swiping Bermuda but leaving the U.S. unscathed apart from rough seas on the Atlantic Coast.

With the six-month hurricane season, which starts June 1, already into its fourth month, forecasters are revising their predictions. Sept. 10 is considered the height of the storm season.

On Monday, Tropical Storm Risk, a London-based weather service, lowered its forecast for Atlantic hurricanes to slightly below normal, saying dust from the Sahara has inhibited storms. Other forecasters have said warm El Nino waters in the Pacific have affected wind patterns and squelched hurricanes.

The Standard & Poor's index of property casualty insurers has risen 4.8 percent since the start of August, surpassing the Standard & Poor's 500 index gain of 2.7 percent.

American International Group Inc. Chief Executive Martin Sullivan told investors at a conference on Tuesday that he didn't expect to see property insurance rates decline even if the 2006 hurricane season remained mild.

REINSURERS SHOULD SEE GAINS

Reinsurers, which provide backup to property insurers when there's a major catastrophe, should also see gains. In fact, the reinsurers could see "perhaps their biggest profits ever," said Geoff Bromley, chairman of reinsurance broker Guy Carpenter's Asian and European units Tuesday at the reinsurance conference in Monte Carlo.

Bermuda reinsurers, led by companies such as Ace Ltd.

and Montpelier Re Holdings Ltd. , have already seen total net income rise 14 percent or $4.5 billion in the first half from year-earlier levels, according to Benfield Group Ltd., a London insurance broker.

But insurers should not get used to their good luck, warned Robert Hartwig, chief economist with the Insurance Information Institute.

"This should be viewed as a lull to gain some stability," said Hartwig. "The expectation is that the next 10 to 20 years of hurricanes will be above average."