Ahead of the Bell: Chubb, Travelers upgraded

An analyst upgraded shares of Chubb Corp. and Travelers Cos. on Tuesday, saying the property and casualty insurers stand to gain from the troubles at rival American International Group Inc.

Citi Investment Research analyst Joshua Shanker raised his ratings on Chubb and Travelers to "Buy" from "Hold." The two would stand to gain market share, particularly in the commercial insurance business, from credit ratings cuts at AIG, he said.

"In the event of a ratings downgrade ... a large amount of AIG's business may be in play, as insurance contracts are dependent on the financial stability of the carrier," Shanker wrote in a note to investors.

On Tuesday morning, Standard & Poor's, Moody's Investors Service and Fitch Ratings all slashed their ratings on AIG. The world's largest insurer is under intense pressure to raise new capital to shore up its books amid the downturn on Wall Street.

Shanker also said Ace Ltd. could gain from AIG's troubles, along with Arch Capital Group Ltd. and W.R. Berkley Corp.

He raised his share price target on Chubb to $57 from $56, and on Travelers to $51.50 from $49.50.