Insurance stocks have been volatile since late August as investors anticipated significant losses after Hurricane Harvey hit Texas and the southern United States and they braced for property damage from Hurricane Irma.

But even as Florida cities dealt with flooding and millions of people were without power after Irma ripped roofs off homes, insurance experts pared their loss estimates.

Irma and Harvey were "more likely to be earnings events than capital events" for reinsurers, S&P Global Ratings said on Monday. Last week it had warned of potential capital events - when losses exceed annual earnings and can require raising new capital.

"Based on the insured loss projections coming out," Credit Suisse analyst Ryan Tunis said he does not expect Harvey and Irma to "create a need for capital raises."

As a result, shares of Florida insurers United Insurance Holdings Corp (>> United Insurance Holdings Corp), Heritage Insurance Holdings Inc (>> Heritage Insurance Holdings Inc), HCI Group Inc (>> HCI Group Inc) and Universal Insurance Holdings Inc (>> Universal Insurance Holdings, Inc.) had gains between 11 percent and 23 percent on Monday.

After starting September with sharp declines for fear of Irma, insurers largely retraced losses from the first week of the month.

Shares of larger insurer Chubb Ltd (>> Chubb Ltd) rose 3.8 percent while Travelers Companies Inc (>> The Travelers Companies) and Progressive Corp gained more than 2 percent.

The Dow Jones U.S. Insurance index <.DJUSIR> gained 1.6 percent, ahead of the S&P 500's <.SPX> 1 percent gain.

Catastrophe modeling firm AIR Worldwide, a unit of Verisk Analytics (>> Verisk Analytics), on Monday narrowed its estimate for U.S. insured losses to a range of $20 billion to $40 billion from its $15 billion to $50 billion estimate published on Saturday.

"Irma is going to be a very costly event but nowhere near what it threatened to do," said Sandler O'Neill managing director Paul Newsome, who expects insurers to be able to cover losses with earnings from a quarter to a year.

The top end of AIR Worldwide's estimate would put Irma right behind Katrina, according to the Insurance Information Institute, which estimated Katrina's losses at $41.1 billion in 2005.

Irma crossed into Georgia from Florida on Monday with 60 mph winds after killing 39 people in the Caribbean, where it was at its fiercest. [nL2N1LS07P]

For selected Caribbean islands, AIR’s estimated insured losses from Irma was $5 billion to $15 billion.

In Europe, shares of reinsurer Swiss Re AG (>> Swiss Re) rose 4.3 percent and Scor SE (>> Scor SE) gained 3 percent, boosting stock indexes.

Among other reinsurers, Aspen Insurance Holdings shares rose 9.3 percent while Everest Re (>> Everest Re Group Ltd) and XL Group (>> XL Group Ltd) were up roughly 5 percent.

Axis Capital (>> Axis Capital Holdings Limited) gained 6 percent while Alleghany Corp (>> Alleghany Corporation) rose 3.9 percent.

(Reporting by Lewis Krauskopf and Sinead Carew; Editing by Meredith Mazzilli and Dan Grebler)

By Sinead Carew and Lewis Krauskopf