NEW YORK (Bloomberg) ? Hurricane Dennis may cost insurers, including State Farm Mutual Automobile Insurance Co. and Allstate Corp., as little as $1 billion after it weakened before making landfall on Florida?s Panhandle yesterday, storm modellers said.

AIR Worldwide, which uses computers to gauge insured property damage, estimated $1 billion to $2.5 billion in claims from Dennis, less than the $7.1 billion caused last year by Ivan, which followed a similar path. Risk Management Solutions Inc., another modeller, predicted $1 billion to $5 billion in claims.

Dennis was downgraded to a Category 3 storm from a Category 4 on the five-tier Saffir-Simpson scale just before coming ashore at 2.25 p.m. Central time on Sunday, the National Hurricane Center said. The storm took a narrower path than Ivan and blew its strongest winds east of Pensacola, Florida, preserving the more populated area worst hit by Ivan, said AIR Vice President Steve Offsey.

?It was fortunate that Dennis was both very compact and impacted an area that is less built up than other areas along the Gulf Coast,? said Offsey. Boston-based AIR is a unit of Insurance Services Office Inc.

Dennis struck between Florida?s Pensacola Beach and Navarre Beach with maximum sustained winds of nearly 120 mph, according to the hurricane center. It had been a Category 4 storm with winds of almost 135 mph about two hours before landfall.

Storm modeller Eqecat Inc. yesterday estimated Dennis would produce $3 billion to $8 billion in insured losses.

?It seems that the hurricane had much less impact than anticipated,? said Michael Dion, an analyst at Sandler O?Neill & Partners LP in New York who estimated Dennis may produce about $3 billion in claims.

Four hurricanes in Florida last year cost insurers a record $22.9 billion and nearly wiped out third-quarter earnings for Allstate, the biggest publicly traded auto and home insurer in the US.

Two of them, Charley and Ivan, are the second and third most expensive storms after Andrew, which struck Miami and cost insurers $20.8 billion in 1992, according to Insurance Services.

With peak winds extending about 25 miles from its eye at landfall, Ivan was more than twice as wide as Dennis, AIR said. Dennis also hit at a forward velocity of 21 mph, compared with 13 mph for Ivan, leaving less time for repeated battering.

Risk Management, based in Newark, California, said its estimate factors in inflated repair costs following last year?s storms.

Shares of Allstate rose 51 cents, or 0.9 percent, to $60.68 in New York Stock Exchange composite trading.

St. Paul Travelers Cos., the second-largest US commercial insurer, rose 79 cents, or 2 percent, to $40.82, and Chubb Corp. rose 47 cents, or 0.6 percent, to $86.42.

Munich Re, the world?s largest reinsurer, expects Dennis to produce 3 billion euros ($3.6 billion) to 4 billion euros ($4.8 billion) in insured losses, spokesman Florian Woest said.

The company, which reinsures policies sold directly to homes and businesses, expects its own costs to be between 70 million euros ($84 million) and 130 million euros ($157 million).

Hannover Re, the world?s No. 5 reinsurer, said Dennis won?t lower its earnings forecast.

?Damage made by Dennis is minor compared to all big hurricanes last year,? said spokeswoman Gabriele Handrick.

State Farm, which is owned by its policyholders, has the largest market share for home coverage in Florida, Alabama and Mississippi, according to A.M. Best Co.?s ranking of 2004 premiums. Allstate is second in Florida and third in Alabama and Mississippi.

State Farm has mobilised 600 catastrophe claim adjusters to join agents in Florida and Alabama, the company said in a statement today.

?It?s too early at this point to make any kind of estimate on claims,? said Fraser Engerman, a spokesman for the Bloomington, Illinois-based insurer, yesterday.