Major health insurers show signs of recovery – but a key test looms

Piotr Swat | SOPA Images | Lightrocket | Major health insurers appear to be off to an encouraging start this year — but a crucial test for the sector is still ahead. Solid first-quarter results have helped lift investor sentiment, even as insurers continue to grapple with higher medical costs. Companies including UnitedHealth , Elevance , Cigna and Humana all beat estimates for the quarter, with some hiking their 2026 outlooks. Those results were largely expected due to seasonal factors such as a milder flu season and weather disruptions that temporarily suppressed medical costs, said Barclays analyst Andrew Mok. A more meaningful signal, Mok said, is that insurers strengthened medical reserves — money set aside to pay future claims — adding a cushion that could support their outlooks. But there's still a "huge caveat," according to Baird analyst Michael Ha. Insurers have incomplete data on medical costs in the first quarter due to a lag in claims processing, as expenses like hospital stays and procedures can take one or two months to be fully reviewed and reimbursed. By the end of the quarter, companies may only have "real hard claims data" from January, so "we always tell investors to take the first quarter with a grain of salt," Ha said. That sets up the second quarter as the real proving ground. …