The Travelers Companies Inc. said today that that its estimateof third quarter catastrophe losses--primarily from Hurricanes Ike,Gustav and Dolly--amounts to approximately $690 million after-taxand $1.05 billion pre tax, net of reinsurance.

Travelers said Ike reflects catastrophe losses in eight statesand includes estimated share of assessments from the TexasWindstorm Insurance Association.

On the investment side, the St. Paul, Minn.-based company saidinvestment losses would amount to $115 million after-tax and $170million pre-tax in the third quarter. This includes $44 millionafter-tax and $67 million pre-tax, with respect to securitiesissued by Lehman Brothers Holdings Inc. and its subsidiaries.

Travelers said as of Sept. 30 it is not a party to any creditdefault swaps and it has approximately $15 million of loansoutstanding under its securities lending program for which itbelieves it has no exposure to loss.

On reserves, Travelers said in the third quarter it expects toreport net favorable prior year reserve development ofapproximately $210 million after-tax and $330 million pre-tax.

The net favorable prior year reserve development is driven bybetter than expected loss experience, Travelers said, primarily inthe commercial multi-peril and general liability product lines.

The reserve development also includes a $46 million after-taxand $70 million pre-tax increase to asbestos reserves. Travelerssaid it completed its annual in-depth asbestos claim review in thethird quarter of 2008.

Taking all of the news together, Travelers said operating incomeper share would be reduced by 80-cents and net income per sharewould drop $1. The company said operating income differs from netincome in that operating income excludes the after-tax impact ofnet realized investment losses.

"Our disciplined attention to risk management both operationallyand in our investment activities has served us well in this activestorm season and in a difficult economic environment," said Jay S.Fishman, chairman and chief executive officer of Travelers in astatement.

"Our catastrophe losses were consistent with our risk andpricing models, net realized investment losses were modest relativeto our overall investment portfolio and better than expected lossexperience resulted in net favorable prior year reservedevelopment," he continued.

Whether it was reaction to the news, or the upbeat nature of themarket throughout the day, Wall Street reacted by sending thecompany's stock up over $4 to close to $35 a share in the earlyafternoon. By the close of the day shares stood at $35.49 a share,up $4.99.

(This story was updated at 4:02 p.m.)