QBE Insurance Group Ltd., Australia’s largest insurer by market value, fell the most in nine months in Sydney trading after reporting a 37 percent drop in first-half net income.

QBE shares were 8.3 percent lower at A$15.63, the most since Nov. 12, at 10:18 a.m. local time, cutting gains for the year to 43 percent. Net income declined to $477 million in the six months ended June 30 as premiums fell in North America and it set aside more for unresolved claims. That missed a $555 million median estimate of seven analysts surveyed by Bloomberg News.

Chief Executive Officer John Neal, who took up his position a year ago, is targeting cost cuts by reducing jobs and simplifying processes at the insurer, which has made 135 acquisitions in the past 30 years to expand to 48 countries. He plans to save at least $250 million annually by 2015 through a restructuring program that the company estimates will cost $156 million this year.

“We were expecting less of a decline, and our full year 2013 $1.39 billion net profit forecast is under review,” David Ellis, a Sydney-based analyst at Morningstar Inc., said in an e- mailed note. “The restructuring and rebuilding work continues and we remain confident of the long-term turnaround in earnings and dividends.”

QBE in February wrote off $407 million for amortization and impairments largely on its U.S. operation pushing it to miss its full-year profit forecast, filings show.

Plans Underway

The insurer said today it was disappointed in having to set aside $178 million for prior year claims while gross written premiums from its North American operations dropped 16 percent.

“Plans are underway to rebuild our premium base in the specialist U.S. lender placed insurance business,” Neal said in today’s statement.

Reflecting the weakness in North America, QBE cut its gross written premium target for the year to between $17.5 billion and $18 billion from its earlier forecast of $18.5 billion to $19 billion.

QBE’s latest result includes a loss of $24 million on its fixed-income investments in the first-half compared with a gain of $259 million a year earlier when it revalued its bond portfolio.

The insurer expects an insurance profit margin of 11 percent for the full year after a margin of 10.8 percent in the first half, it said.

Editors: Iain McDonald, Tomoko Yamazaki