(Reuters) – Cigna Group on Friday raised its annual profit forecast after lower medical costs at the company’s health insurance business helped it beat estimates in the first quarter, lifting shares 3% in premarket trading.

The health insurer saw its medical cost ratio – or spending on claims as a percentage of premiums – fall to 81.3% from 81.5% on higher premiums and lower COVID-19 costs. Market expectations were pegged at 82.1%, according to four analysts polled by Refinitiv.

Other health insurers including UnitedHealth (NYSE:UNH) and Humana (NYSE:HUM) also beat profit estimates and raised forecasts this quarter thanks to strength in their government-backed plans and low medical costs.

Still, that has largely failed to allay investor concerns around 2024, when regulatory pressure on insurers and drug middlemen is seen ramping up in light of the U.S. elections.

Shares of Cigna (NYSE:CI) had fallen 7.6% till Thursday’s close since UnitedHealth’s first-quarter earnings, as investors fretted over insurers recording softer medical costs even as hospitals and medical device makers saw a recovery in non-urgent procedures.

Cigna cut the midpoint of its 2023 medical cost ratio forecast by 10 basis points to between 81.5% and 82.3%.

Its total premiums during the quarter rose 6% to $11.03 billion, beating estimates of $10.42 billion.

Revenue from Cigna’s Evernorth unit, which houses its pharmacy benefit management business, rose nearly 8% to $36.18 billion. The gains were driven by strong growth in specialty pharmacy services, which provide drugs for complex conditions such as cancer and rheumatoid arthritis.

While revenue across segments was stronger than expected, the forecast increase primarily reflected strength in Cigna’s insurance business, J.P. Morgan analyst Lisa Gill said in a note.

Excluding one-off items, the company reported profit of $5.41 per share, beating estimates of $5.22.

Cigna raised its profit forecast by 10 cents to at least $24.70 per share.