(Bloomberg) -- Ace Ltd. Chief Executive Officer Evan Greenberg said there are signs the insurance industry is entering another era of taking on too much risk as competition pressures companies to lower prices to win business.

“It’s not back to the late ’90s that way, but we are seeing more of the things that cause us to shake our heads,” Greenberg said in a call Wednesday. “People have been really hungry, but we’re not seeing the stupidity that we’ve seen in the past -- not yet.”

Property-and-casualty policy sales fell 2.9 percent in the first quarter, Zurich-based Ace said in a statement after markets closed Tuesday, driven partly by currency fluctuations and declines in the agriculture business. Travelers Cos., the sole P&C insurer in the Dow Jones Industrial Average, said earlier Tuesday that policy sales climbed less than one percent as the pace slowed for rate increases to commercial clients.

Ace declined 1.4 percent to $107.51 at 1:30 p.m. in New York trading. Travelers fell 0.3 percent after slumping 4 percent Tuesday. They are among the largest financial companies to remain profitable through the credit crisis.

Greenberg and Travelers CEO Jay Fishman have said they’re prepared to walk away from business that doesn’t meet profitability targets. Fishman said Tuesday on a call with investors that he would “draw lines in the sand” to prevent underwriting policies at dangerous prices.

Rates for property-catastrophe coverage fell 11 percent for policies that renewed on Jan. 1, a major date for arranging the coverage, according to Guy Carpenter, a division of Marsh & McLennan Cos. Pensions and hedge funds have been making more weather-related bets as they seek risks that aren’t tied to stock and bond markets.

Pulling Handles

The competition has pushed traditional insurers to diversify across products and regions to find areas with better margins. Greenberg on Wednesday highlighted policies that guard clients against cyber risks, and Ace has expanded in nations including Brazil and Mexico through acquisitions.

“We have a lot of handles to pull and we’re pulling all that we can that help to ameliorate the impact of pricing,” Greenberg said on the call. “We are quite diversified by product area. A lot of our business is not commercial P&C, and our commercial P&C is spread very well across the globe and spread around a lot of products.”

Ace’s first-quarter net income slipped 7.2 percent to $681 million. Operating profit, which excludes some investment results, was $2.25 a share, beating by 3 cents the average estimate in a Bloomberg survey of analysts.

Greenberg, who correctly predicted in October that industry competition would fuel an increase ininsurance mergers, said Wednesday that he wouldn’t be surprised by more industry deals.

Some insurers are motivated to seek partners “whenever you have pricing pressures and growth pressures,” he said. “And now you’ve got low-interest rate pressures.”

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