Zacks: Health insurance is “thriving under stress”
The health insurance industry was "thriving under stress," according to Zacks. Most top-performing companies were able to exceed 2013 Q1 estimates of Zacks Consensus. These included CIGNA Corp., WellPoint Inc., Aetna Inc., Humana Inc., Molina Healthcare, and Health Net, Inc. Meanwhile, UnitedHealth Group Inc. met the estimated figures.
According to Zacks, a lower inflation trend in the medical sector and strong performance of operations were the main drivers of this exceedance in earnings performance. "Following the first quarter results, most of the carriers raised their 2013 earnings estimates, reflecting optimism for the rest of the year. We, however, expect narrower margins in 2013 compared to the strong margins in the 2010-2012 period, when favorable prior-period claim development and continued lower-than-expected utilization helped the industry witness strong margins," Zacks added.
Zack anticipated the margins to decline in 2013 and beyond. This decline will be due to back-to-normal levels of medical costs.
Previously, the health insurance industry faced many external challenges. These challenges included regulatory reforms, competitive market, and the uncertain US economy.