The earliest range of estimates of insured losses for Hurricane Dolly only reached $1.2 billion--good news for some large property-casualty insurers whose second-quarter financial results were punished by record storm losses in the quarter.

Northbrook, Ill.-based Allstate was perhaps the most visible among insurers to suffer storm damage from a portion of the chart-topping property catastrophe insurance losses tallied for the second quarter, which Property Claims Services said amounted to $6 billion for the industry overall.

At Allstate, $698 million in pretax catastrophe losses--the highest second-quarter total reported in its 77-year history--were among several factors bringing net income down to just $25 million for the quarter, compared to $1.4 billion in second-quarter 2007.

For the industry, second-quarter catastrophe losses nearly doubled in both frequency and insured property damage compared to the first quarter, according to PCS, a unit of Jersey City, N.J.-based Insurance Services Office, which also said the number of claims exceeded 1.2 million for the second quarter.

The claims averaged $5,000 each and stemmed from 16 catastrophes in 27 states, PCS said.

Three days after PCS published the second-quarter industry totals and hours before Allstate released its earnings report last week, Hurricane Dolly made landfall near South Padre Island, Texas, prompting the first set of insured loss estimates for catastrophe modeling firms.

AIR put out a range of $300 million to $1.2 billion, with an expected loss of $600 million, and EQECAT estimated less than $800 million.

The next day, Newark, Calif.-based Risk Management Solutions added its forecast to the list, estimating insured losses of less than $750 million from the Category 2 storm, which hit southwest Texas near the border of Mexico with maximum sustained winds reaching near 100 mph.

RMS said its estimate includes wind, flood and storm surge damage to residential, commercial and industrial properties, as well as crop damage and business interruption resulting from power outages, noting that some 500,000 people would be impacted by the storm.

Christine Ziehmann, director of model management at RMS, said in a statement on Thursday: "The largest uncertainty in the loss estimate comes from potential flood damage. The amount of rainfall is currently well below the level of extreme historical events in the area, like Hurricane Amelia in 1987, which resulted in 48 inches of rain, and Beulah in 1969. If the flood damage is limited, then we expect the total insured loss to come in much lower than $750 million."

Before taking a soaking from Hurricane Dolly, Texas saw the most insured catastrophe losses of any state for the second quarter, at $1.08 billion, according to PCS estimates.

Minnesota, Kansas, Arkansas and Oklahoma rounded out the top five most severely affected states.

According to PCS, the costliest second-quarter event, which was caused by the effects of severe weather over seven states from Colorado and Wyoming to Minnesota, occurred in May. PCS estimated insured property damage at $850 million for that event, and Gary Kerney, PCS assistant vice president, added that 135,000 claims were filed.

All of the second-quarter catastrophes resulted from "thunderstorms producing damaging winds, large hail, tornadoes and in some cases flooding," Mr. Kerney said.

According to a chart provided by PCS, which lists second-quarter catastrophe frequency and related insured losses dating back to 1999, the second quarter of 2008 experienced 10 more events and $3.7 billion more in insured losses than the same period in 2007. Both the insured loss estimate and event frequency were higher in the second quarter of 2008 than in any other second quarter listed on PCS' chart.

PCS defines a catastrophe as an event that causes $25 million or more in insured property losses and affects a significant number of policyholders and insurers.

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PCS Reports Chart-Topping 2Q Cat Totals

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