NEW YORK (Bloomberg) — Ace Ltd. chief executive officer Evan Greenberg said competing insurers have underestimated the amount of reserves needed to back claims from policies sold in prior quarters and may face lower earnings because of it.

"Some companies have released reserves to goose returns in the short term, and that may come back to bite them," Greenberg said today at a conference in Brooklyn sponsored by Standard & Poor's. He didn't name the companies.

Property and casualty insurers may post lower profits this year after draining reserves in 2008 amid industry-wide price declines, Moody's Investors Service said March 20.

Those so-called reserve releases, which add to earnings, totalled about $14 billion across the industry, Moody's said. Companies can release the money they had set aside when preliminary indications signal claims are lower than expected.

"Releasing casualty reserves early because of the early news is kind of an optimist view," Greenberg said. "The casualty business is not for the faint of heart, and it's not for optimists."

Ace is headquartered in Zurich, with principal executive offices in Bermuda.