“We are currently projecting that variable losses in this business will be between $350 million and $400 million for the full year 2025.”

In context

“e improvements were primarily driven by the favorable year-over-year impact of prior year reserve development across all lines of business, the majority of which was related to fourth quarter 2024 dates of service. We also benefited from better underlying performance in Medicare, including the impact of improved Medicare Advantage star ratings for the 2025 payment year and seasonally strong performance in our Medicare Part D products. Partially offsetting this strong performance were a number of estimate changes related to prior period revenue. Altogether, prior year reserve development net of changes in revenue estimates contributed approximately $400 million to adjusted operating income in the quarter. As David mentioned earlier, we plan to exit our individual exchange business in 2026. We are currently projecting that variable losses in this business will be between $350 million and $400 million for the full year 2025. As a result of these losses, as well as updates to reflect the seasonality of this business, this quarter we established a premium deficiency reserve of approximately $450 million related solely to the 2025 coverage year. This PDR reflects updated seasonality projections based on our current membership mix, as well as higher membership than previously anticipated. The premium deficiency reserve increased our first quarter medical benefit ratio by approximately 130 basis points. Medical cost trends during the quarter remained elevated but appeared to show early signs of stabilization and were broadly in line with our expectations for most of our businesses. While our group commercial business delivered a strong quarter, our individual exchange business did experience higher than expected t”