By Lilla Zuill
NEW YORK (Reuters) - Property insurer Travelers Cos Inc
But investor reaction to the two was different as Travelers, which saw an 82 percent slide in earnings, said it is trying to exploit opportunities from troubles at its rival American International Group Inc
That helped boost its shares as the broader market tanked.
Allstate, which reported after its stock fell 11.6 percent in the regular trading session, posted a surprise loss, hurt both by catastrophe losses and losses on its investment portfolio. Allstate shares were unchanged in extended trading.
Travelers Chief Executive Jay Fishman, in a post-earnings call with investors, said there had been an increase in requests for quotations on business from current AIG customers.
He added that the company was in a good position to respond to requests from midsized companies -- an area where Travelers specializes.
The company is also seeing signs that insurance rates, which have dropped sharply in recent years, could be heading higher after large catastrophe losses and investment losses from the credit crisis, and restrained capacity after large mortgage losses pushed AIG near the brink of bankruptcy last month.
SHARE BUYBACK SUSPENDED
Since January, Travelers' stock has fallen 31 percent, compared with a drop of 62 percent in the Standard & Poor's insurance index <.GSPINSC>.
Allstate, which is down 46 percent over the same period, was hit by the second highest catastrophe losses in its 77-year history in 2008.
That helped cause an operating loss of $190 million, or 35 cents a share, far short of analysts earnings forecast of 66 cents a share, according to Reuters Estimates.
Allstate was hit on at least two fronts -- catastrophe payouts were high, and its investment portfolio dropped by about $8.6 billion to about $105 billion. The portfolio was hurt by $4.6 billion in writedowns from widening credit spreads and equity market value declines.
Allstate suspended its share buyback plan to preserve capital and ahead of 2009, which could hold more economic turmoil.
A rise in catastrophe claims from hurricanes Dolly, Gustav and Ike also took its toll on Travelers, as did investment losses.
Amid $682 million in catastrophe losses from hurricane damage earlier this year, Travelers cut its operating income forecast for 2008 to a range of $4.90 to $5.10 per share, from $5.50 to $5.85 previously.
Analysts polled by Reuters Estimates on average forecast full-year operating earnings of $5.21 per share.
Still some analysts said they viewed the company as well positioned given the industry's wider troubles.
"We view TRV as undervalued given what we view as a relatively conservative balance sheet and underwriting practices, and our view that the company is well-positioned to leverage opportunities amid turmoil at other firms," said Standard & Poor's analyst Catherine Seifert in a research note.
BUYING AIG ASSETS?
Fishman assured investors that the company was treading carefully amid "unprecedented ... market dislocation."
The company said it is vetting acquisition opportunities when they arise but did not directly answer a question on being a potential buyer for AIG's personal lines business, which could complement its existing operations.
AIG is selling off much of the company to repay a massive government loan, including its U.S. personal lines business. It has said it was in advance talks with a buyer for part of that business.
Fishman stressed the company's business plan was not dependent on acquisitions, echoing comments from the past.
He added that the company was acutely aware that raising capital in the current environment would be costly.
"We have a healthy regard for the cost of equity -- we get it, we are all owners," Fishman told investors.
(Additional reporting by Elinor Comlay and Christian Plumb; editing by John Wallace, Matthew Lewis and Bernard Orr)