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The hurricane strengthening off the U.S. East Coast is buffeting insurance providers as investors assess the possible damages.

Losses began to accelerate as Joaquin grew into a Category 4 hurricane, with top winds increasing to 130 miles (210 kilometers) per hour from 120 earlier. Declines in the industry faded during the afternoon amid speculation the risks may not be so great for all companies.

Shares of a group of property and casualty insurers in the Standard & Poor’s 500 dropped as much as 1.3 percent before paring losses to 0.2 percent. Travelers Cos. led declines, slumping 2.4 percent to a one-month low before trimming its selloff to 1.2 percent. Allstate Corp., the largest publicly traded U.S. home insurer, finished 0.5 percent lower after a 1.6 percent retreat.

“Everyone thinks hurricanes are bad for insurance, but the opposite is really true. If it hits and rates go up, it’s good for the companies,” said John Kornitzer, portfolio manager and chief executive officer of Kornitzer Capital Management Inc. His holdings including Allstate and American International Group Inc.

Allstate and Progressive Corp. are among the insurers most exposed to a major U.S. storm, according to a note Wednesday from Amit Kumar of Macquarie Group Ltd. Catastrophe losses for Northbrook, Illinois-based Allstate totaled $1.06 billion in the fourth quarter of 2012, which included Sandy, a Category 1- strength storm that struck New York and New Jersey that October.

Allstate has been reducing its risk for years as Chief Executive Officer Tom Wilson limited sales in catastrophe-prone regions, raised rates and increased purchases of reinsurance. Similarly, AIG, which has a more significant presence outside the U.S., has a smaller share of its earnings at risk, Kumar wrote. AIG gained 0.2 percent after slumping as much as 1.3 percent.

“Historically, Sandy and Katrina, any of the big storms, the insurance companies lost a lot of money but they all recouped and came back,” Kornitzer said. Allstate tumbled almost 11 percent between October and November 2012, before rebounding by January 2013.

The largest U.S. seller of home coverage is State Farm Mutual Automobile Insurance Co., which is owned by its policyholders. It’s the top writer of catastrophe-exposed premiums in the mid-Atlantic region, according to a note Thursday from Meyer Shields, an analyst at Keefe Bruyette & Woods.

Joaquin raked parts of the Bahamas on Thursday, as the storm was 70 miles south-southeast of San Salvador. Forecasters debated how much of a threat the storm poses to the East Coast, with computer models used to predict where storms will go producing different results.

The storm is providing a silver lining for some stocks, as Home Depot Inc., Lowe’s Cos. and Owens Corning rose for a second consecutive day. These companies might benefit should rebuilding be required.

–With assistance from Sonali Basak and Felice Maranz in New York and Brian K. Sullivan in Boston.

Topics Catastrophe Natural Disasters USA Carriers Hurricane