Most Bermuda-based insurance and reinsurance stocks rallied on Friday as Hurricane Rita weakened and quelled fears of further huge losses so soon after Hurricane Katrina.

IPC Re and Alea bucked the trend. IPC Re slid 2.94 percent to $31.65 after forecasting it could absorb $300-$600 million or more in Hurricane Katrina losses. Alea fell 8.45 percent and closed at $130 after it said it won?t proceed with its capital raising plans following AM Best downgrading its financial strength and issuer credit ratings.

At market close, Ace Ltd. was up 5.52 percent to $45.88. Before Friday, shares of the Bermuda-based insurer and reinsurer had fallen more than eight percent this week. XL Capital gained 2.88 percent to close the week at $69.22.

?There?s a recognition that Rita is not going to be as bad as people feared,? Paul Newsome, an analyst at A.G. Edwards, said on Friday. ?There was some over-selling yesterday and expectations are growing that there are going to be price increases from this.?

Aspen Holdings rose 4.04 percent to $29.60, PXRE gained 9.02 percent to $15.95 while White Mountains was closed 4.18 percent higher at $620., RenaissanceRe rose 4.55 percent to $45.69 and Partner Re climbed 2.16 percent to $62.38.

Endurance Specialty rose 6.53 percent to $32.13 with Montpelier Re shares rose 8.04 percent to $25.25. Arch Capital slid 2.83 percent to $48.03 and Axis rose 4.21 percent to $27.99.

?It seems the storm is not going to be as strong as we feared and that was enough to take some of the selling pressure off stocks today,? John Augustine, chief investment strategist at Fifth Third Asset Management Inc. in Cincinnati told Reuters. ?A weaker storm benefits companies such as the insurers, the consumer discretionary and some industrials.?