NEW YORK (Bloomberg) — Bermuda-based business insurer XL Capital Ltd. and US insurer Allstate Corp. may report the strongest growth in book value among property and casualty insurers for the third quarter as investments gain ground, Barclays Plc said.

Book values "could continue to see solid linked-quarter growth" from gains in corporate bonds, municipals, commercial mortgage-backed securities and equities, Jay Gelb, a Barclay's analyst, wrote yesterday in a note to clients. Book value is a measure of assets minus liabilities.

Allstate's book value may grow 15 percent in the third quarter, and XL's may climb 12 percent, Gelb said. Bermuda-based Flagstone Reinsurance Holdings Ltd. may record less book value growth than its peers, with a five percent increase, he said.

Allstate, based in Northbrook, Illinois, reported a 23 percent gain in book value for the second quarter to $28.11 a share as fixed-income and equities portfolios gained value. XL's book value advanced 26 percent to $18.91 a share, increasing for the first time since September 2007.

Allstate rose five cents to $28.23 as of 1:30 p.m. today in New York Stock Exchange composite trading, and has declined 14 percent this year. XL rose 41 cents, or 2.6 percent, to $16.45.

After suffering substantial investment losses during the turmoil on financial markets last year, XL's rebound in 2009 has gone down well with investors, as the company's share price has climbed 345 percent this year to date.

"Our book-value estimates could have further upside if there are no third quarter hurricane losses," Gelb wrote.