* Combined op ratio of 94.5 pct-96 pct forecast for FY17
* Higher claims in Latin America and Asia boost activity
* Premium income so far in line with expectations (Adds CEO comment, details about profit margin)
June 21 (Reuters) - QBE Insurance Group QBE.AX said on Wednesday its emerging markets division saw higher than expected claims activity during the first five months of 2017, leading the insurer to forecast a higher combined operating ratio.
More weather-related claims in Latin America and a higher frequency of medium-sized risk claims in Asia boosted activity, the company said. No. 1 insurer by premium income now expects a half-year and annual combined operating ratio of 94.5 percent to 96 percent, compared with a February forecast of 93.5 percent to 95 percent. A lower combined operating ratio typically translates to higher profits for insurers.
"We are encouraged by the improvement in the combined operating ratio in Australia and New Zealand as well as North America while Europe continues to perform well," QBE Chief Executive John Neal said.
"Nonetheless, heightened claims activity in our emerging markets division will increase the group's interim and FY17 combined operating ratio by around 1 percent."
The company forecast interim insurance profit margin to be in the range of 8.5 percent to 9.5 percent. It reported insurance profit margin of 9.7 percent in 2016.
Premium income so far this financial year was in line with expectations.
The insurer, which generates almost three-quarters of its premiums abroad, said in February it expected the market to remain challenging in 2017 though there were indications of a modest improvement. to Tuesday's close of A$13.23, QBE shares have gained 6.5 percent since the start of the year.