Ace Ltd. chief executive officer Even Greenberg warned yesterday that reinsurance business was being priced too aggressively by newcomers to the market, and it is likely to increase as capital grows.

Mr. Greenberg, speaking on a conference call yesterday after Ace released its results, said beyond catastrophe-related coverage, ?rates continue to soften around the world at roughly the same pace we have been experiencing throughout the year.

?New business pricing tends to be more aggressive and at times undisciplined. There are numerous examples of new business coming to market where the pricing in our judgment is inadequate.?

With the industry poise for a very profitable year in 2006, there will likely be ?substantial? growth in capital, which may fuel further price reductions for non-catastrophe related coverage next year, he added.

?I see no signs at this time leading me to believe that this will turn into an undisciplined free for all. On the other hand, there isn?t a whole lot of room to reduce pricing and still earn a reasonable return on equity.?

Mr. Greenberg?s comments dampened enthusiasm for the stocks of Ace and XL Capital yesterday after they released results on Tuesday night that beat analysts? expectations.

Ace shares closed up 65 cents to $58.34 after being down earlier in the day and XL closed down 94 cents to to $70.12.

Mr. Greenberg added: ?We are frankly experiencing the other side of volatility, the positive side.

?Pricing for cat(astrophe)-exposed business, particularly in peak zones, remains firm,? he said.

He added that market conditions for those areas continue to look firm for policies that will renew in 2007.

?However, that depends on the behaviour of a few large reinsurers.?

This year?s quiet hurricane season helped push Ace to net income of $578 million or $1.73 a share, compared with a loss of $112 million, or 43 cents a share, in the third quarter 2005, when the company took an after-tax charge of $742 million due to losses from a record hurricane season.

Operating income, which excludes investment gains or losses, was $652 million, or $1.96 a share, compared with a loss of $187 million, or 70 cents a share, in the third quarter last year.

Mr. Greenberg said that the company expects to receive a license to sell property casualty reinsurance in Vietnam by the end of the year and expects to receive notification of a license to sell life reinsurance in Russia soon.

Greenberg also said the company has a clear strategy of where it wants to grow in terms of product, types of customer and territory. ?Where acquisitions fit in is in relation to that strategy,? he said.

?He said the price had to be right, and now prices for potential acquisitions tend to be too high.

?We get in line, but we don?t kiss a lot of girls,? he said. ?It seems that so far the prices are beyond what we think is the right price to pay.?

Paul Newsome, an analyst at A.G. Edwards, said insurance and reinsurance stocks performed well ahead of third-quarter earnings because many investors were anticipating strong results.

?There?s a perception that everyone should blow through earnings estimates,? he said. ?Investors were buying in anticipation of very good earnings now that they?ve got them, they?re selling.?

Mr. Newsome also said comments from executives like Greenberg about casualty rates may have also restrained shares.

?There have been a fair amount of comments made on various conference calls about falling casualty insurance prices and the impact that would have on revenue growth,? he said. ?There are concerns that revenue growth is going to be flat to down in future for many insurers.?