UnitedHealth Enrollee Health Costs Drive 1.1% Fund Drag, Shares Slump Over 50%
Bretton Fund’s Q4 2025 investor letter attributed a -1.1% drag on performance to UnitedHealth’s unexpectedly high medical loss ratio, as sicker enrollee populations drove higher health costs than forecast. The insurer replaced CEO Andrew Witty with Stephen Hemsley after shares plunged from $510 to below $240 during 2025.
1. Fund Performance Impact
UnitedHealth contributed a -1.1% performance drag to Bretton Fund’s Q4 2025 returns due to insurance cost overruns and elevated medical loss ratios.
2. Surge in Enrollee Health Costs
The insurer discovered that members were significantly sicker than projected, causing health expenses to exceed actuarial forecasts and compressing thin insurance margins.
3. Leadership Change
In May 2025, the board replaced CEO Andrew Witty with former CEO Stephen Hemsley to address poor cost modeling and restore profitability.
4. Share Price Decline
UnitedHealth’s share price tumbled from $510 at the start of 2025 to below $240 by August after cost modeling errors came to light.