QBE’s emerging markets division was a “catalyst” for earnings red flags announced last month, Group General Counsel and Company Secretary Carolyn Scobie says.

The emerging markets division’s combined operating ratio is expected to blow out to 110% because of higher than expected claims from Asia and Latin America.

“Claims activity in emerging markets, QBE’s smallest operating division, became the catalyst for an accelerated reforecast by QBE’s global divisions,” she said.

The division will add about 1% to the group’s overall combined operating ratio, which has been revised to 94.5-96% from 93.5-95%.

QBE is under scrutiny from the Australian Securities Exchange (ASX) after senior management told investors at the May annual general meeting that emerging markets was contributing positively.

The ASX is asking when the insurer first became aware of the information that triggered the earnings warning.

“It was not until a board meeting on June 21… that the financial condition of each of its global divisions, including the emerging markets division, had been clarified and confirmed,” Ms Scobie said.

“As a result, the board determined there was a reasonable degree of certainty that the statement it had made at its AGM regarding a target combined operating ratio of 93.5-95% would need to be revised.”

QBE made a net profit of $US844 million ($1.1 billion) last year and the combined operating ratio improved to 93.2% from 94.3% in 2015.