In the Summer 2025 edition of our Health Insurance Financial Pulse newsletter we cover key market trends and dynamics impacting health insurer financial results and profitability.
Earlier this year, we reported on Q1 2025 financials, highlighting the challenging market and deteriorating financial performance and earnings of major public companies. In this edition we provide a comprehensive report, covering the reported 2024 statutory financial experience for health insurers, the rise in premium deficiency reserves (PDRs), public companies’ reported Q2 2025 financials, a summary of recent health plan merger and acquisition (M&A) activity, and a look into public companies’ deteriorating valuation trends. Explore the key highlights below and download our newsletter for full insights.
2024 statutory financials and PDR trends signal mounting pressure
Market-wide pre-tax margins decreased in 2024 to -0.3% for the first time in recent memory, with increased industry loss ratios in all lines of business compared to 2023.
Total premium deficiency reserves (PDRs) more than doubled from 2022 ($2.2 billion) to 2024 ($4.4 billion), with an approximately equal increase of around $1.1 billion each year. Non-Public Blues had the greatest change, tripling their total recorded PDR amounts. Public companies approximately doubled theirs, while other companies had the smallest proportional PDR increase over the period.
Health insurer margins fall in Q2 2025 as valuations lag market
We reviewed large public companies’ profitability for their insured business and noted that reported profit margins for Q2 2025 were 0.5% lower than Q2 2024 on average, with the reduction driven by Elevance and UnitedHealthcare increased loss ratios. Navigating continuing profitability headwinds in 2025 remains challenging.
Overall, market valuations and stock prices decreased for public health insurers while the S&P increased by over 10% in Q2 2025. Notably, United HealthCare Group saw a well- publicized decline in its stock price in the second quarter.
Health sector M&A remains muted as AI and integration shape strategy
Limited M&A activity was reported between health plans in the first half of 2025. Within the broader health care industry, payers and providers continue focusing on operational improvements through AI and acquisitions in key therapeutical areas. Consolidation and vertical integration could lead to greater activity in the M&A space going forward, especially considering the payer profitability challenges.
