Evan Greenberg, the chairman and chief executive of Chubb, is warning that more and more alternative capital flooding into the insurance market is putting pressure on pricing and that it may not fully appreciate the risks.

Speaking on Chubb’s third-quarter earnings call, Mr Greenberg said that casualty sidecars, broker facilities and managing general agencies backed by investor capital were adding capacity when competition is already high.

“Sidecars and broker facilities, blind follow facilities, more MGAs with capital behind them … this is all throwing out of balance the supply relative to demand, and it is a lot of very naive capacity,” he said.

According to a Fitch Ratings survey at the Monte Carlo Rendez-Vous last month, 60 per cent of the 93 respondents expected property catastrophe reinsurance prices to fall at the January 2027 renewals. The market already saw sharp price reductions at the January 2026 renewals, when record global reinsurance capital of $760 billion, including $124 billion of third-party capital, favoured buyers.

Bermuda accounts for roughly 92 per cent of global alternative capital in the insurance-linked securities market. Local ILS funds hold a net asset value of $13.71 billion.

On the call, Mr Greenberg said some investors in casualty sidecars appeared to believe they could earn returns while passing longer-term exposure back to the carrier that fronts the business.

“There is one brand where they are cleverly going to make a trade, even in casualty sidecars, and they are going to try to pass, or they have it arranged to pass the tail back to the carrier that is fronting it, who is going to end up holding the trash,” he said.

He questioned whether other capital providers had considered the risk of costs exceeding the prices charged for coverage.

“I think a lot of that clever capital does not understand the pricing versus the loss cost environment,” Mr Greenberg said. “I do not think they are going to end up making the turn that they think they might make.”

Chubb reported core operating income of $2.98 billion for the third quarter and P&C underwriting income of almost $2.1 billion. Its combined ratio was 84.1 per cent, meaning it paid out 84.1 cents in claims and expenses for every dollar of premium earned.

However, Mr Greenberg said the wider commercial P&C market was becoming more competitive, particularly in the United States and London.

He said the price pressure already seen in property insurance was spreading to casualty lines.

“Beyond property, competitive market conditions are spreading to more casualty lines, where pricing in numerous areas is failing to keep pace with loss costs,” Mr Greenberg said.

Chubb itself has reduced exposure in some property and financial-lines business where it decided pricing or terms were inadequate. It has also purchased additional reinsurance in those areas, Mr Greenberg said.

The insurer’s chief also identified artificial intelligence liability as an emerging exposure for the industry. He said insurers would probably respond through a combination of clearer policy language, exclusions and separate AI liability coverages, with prices and terms varying by the type of risk.

Mr Greenberg said standards for certifying AI models, as well as stronger governance and management practices, could eventually help insurers better assess and underwrite the exposure.