Analysts: Allstate has big exposure to Gustav

"The company has been reducing its exposure to catastrophe prone areas such as the Gulf, but it remains the second largest home insurer in the Gulf region," said Sandler O'Neill & Partners analyst Paul Newsome in a note to clients.

Gustav hit shore Monday morning as a relatively fast-moving Category 2 hurricane. It weakened as it made landfall near Cocodrie, La., about 70 miles southwest of New Orleans. According to early estimates from Newark, Calif.-based Risk Management Solutions Inc., insurance losses on land are between $3 billion and $7 billion and oil-drilling damage is about $1 billion to $3 billion.

Allstate's exposure to the storm, as measured by 2007 direct written Louisiana premiums, is about 15.5 percent, second only to State Farm's exposure, according to Stifel, Nicolaus & Co. analyst Meyer Shields.

Still, that is only a fraction--or 1.7 percent--of the company's total 2007 direct written premiums, he said.

While the storm will certainly impact individual insurers, analysts don't expect it to have any lasting impact on the sector in the form of price increases.

"Most large hurricanes create significant losses for the insurers, but these losses are usually not large enough or unique enough to affect insurance prices," Newsome said.

Allstate shares slipped 15 cents to $44.98 in afternoon trading.