Managed care company UnitedHealth Group Inc. becomes the first major health insurer to report first-quarter earnings when it releases results Thursday before the market opens.

WHAT TO WATCH FOR: Health insurers finished strong in 2010, as a slowdown in care use helped companies beat analyst expectations and pile up cash. But 2011 is expected to pose more challenges on several fronts.

Starting this year, insurers are required to spend minimum percentages of their premiums on medical care or offer rebates to consumers. This new health care overhaul rule on medical-loss ratios may create some volatility in insurance pricing as insurers adjust to it, Goldman Sachs analyst Matthew Borsch said in a note previewing the quarter. That could affect earnings.

Insurers have said the law, which aims to eventually cover millions of people, will add costs for them in 2011. UnitedHealth, which is based in Minnetonka, Minn., and several other insurers have forecast annual profits that will fall below what they made in 2010. But analysts have said those forecasts are conservative.

UnitedHealth expects adjusted earnings of $3.50 to $3.70 per share on $100 billion in revenue for 2011.

Higher flu claims compared to last year also may increase medical costs in the first quarter, Leerink Swann analyst Jason Gurda said in a separate note.

Health care use slowed in the final two quarters of 2010, in part because consumers tend to cut back on care during a struggling or recovering economy. Borsch said he thinks patient volumes will remain soft in the first quarter. He said in his note these trends tend to stay weak for a few years after a recession.

Bernstein analyst Ana Gupte expects UnitedHealth, Cigna Corp. and Humana Inc. to be among the insurers most likely to beat analyst expectations for the quarter.

WHY IT MATTERS: UnitedHealth is the largest publicly traded health insurer based on total revenue and the second-largest based on enrollment, trailing only WellPoint Inc. It is the first big health insurer to release its earnings every quarter, and many analysts and investors see it as a bellwether for the sector.

Health insurance is UnitedHealth's biggest business, but it also operates segments that sell wellness programs and information services.

WellPoint will follow UnitedHealth with an April 27 earnings report. Aetna Inc. is next on April 28, followed by Humana on May 2 and Cigna on May 5.

WHAT'S EXPECTED: Analysts surveyed by FactSet expect, on average, earnings of 89 cents per share on $24.96 billion in revenue from UnitedHealth.

LAST YEAR'S QUARTER: UnitedHealth started 2010 by trumping analyst expectations, as its first-quarter profit rose 21 percent to $1.19 billion, or $1.03 per share. Revenue climbed 5 percent to $23.19 billion.

The insurer's commercial enrollment, which includes employer-sponsored group insurance and private individual coverage, fell 4 percent to 24.5 million people.

UnitedHealth said it trimmed the percentage of premium revenue it spent on medical claims in last year's first quarter, and a bad winter in parts of the country kept people from using more medical services and submitting claims. That helped keep down costs.