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    abby-sternberg and abhishek-sharma

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      Five key trends driving public health insurers’ financial performance in Q4 2024

      1. Average profit margins decreased to their lowest point since before 2021. There was a 1.5% decrease in average profit margin from Q3 2024, mainly due to a decrease in Cigna’s reported gain.
      2. Average loss ratios increased considerably. Average loss ratios increased compared to Q3 2024, driven by higher acuity in the Medicaid business, and are 4.5% higher than Q4 2023. Cigna reported a 5.1% deterioration in their loss ratio compared to Q3 2024.
      3. Operating expense ratios declined relative to Q3 2024. Reported operating expense ratios were 1.5% lower than Q3 2024 and are at their lowest point since before 2021.
      4. Decline in Medicaid membership due to eligibility redeterminations has slowed down. Medicaid membership only declined by about 100,000 members in the quarter, reflecting a deceleration in the significant losses experienced in previous quarters due to the eligibility redetermination process.
      5. Market capitalization declined for all carriers. As of December 31, 2024, the collective quarter-end market capitalization of the seven public healthcare companies we monitor was its lowest since before 2021.
      Exhibit 1: Net income % of premium
      Q1 2021 to Q4 2024
      Source: Oliver Wyman analysis/ Test -1 with url/ Test -2 with out/ Test- 3/ Test-4/

      Net income for public health insurers declined relative to Q3 2024

      Overall, the unweighted average profit margin (net income/premium) of 1.5% for the four insurers is 1.5% lower than the Q3 2024 unweighted average, and 3.6% lower than the Q4 2023 unweighted average of 5.1%.

      UnitedHealthcare recorded a net profit margin of 5.6% in Q4 2024, a 0.5% decrease versus Q3 2024, which is in line with levels seen in 2022 and 2023.

      Cigna saw their margin decrease in Q4 2024, from 6.2% in Q3 2024 to 1.4% in Q4 2024, the lowest point it has been since Q4 2020.

      Key insights of Q4 2024 health benefits and medical care ratios

      Most companies’ Q4 2024 utilization is on the high end of expectations, particularly for Medicaid business, as redeterminations leave companies with higher acuity members enrolled in Medicaid than prior quarters.

      Centene. Health benefits ratio for the quarter was 89.6% and 88.3% for the full year. Centene stated that this was driven by Medicaid, as the acuity of retained and rejoining Medicaid members is higher than the acuity of members lost during the redetermination process.

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