Hanover Insurance

Hanover just had its best third quarter ever. It earned 5.15 dollars per share from its core business and an 18.7 percent return on shareholder money. Leaving out storm damage, it spent less than 86 cents on claims and costs for every dollar of premiums, down from about 88 cents a year ago.

Insurers invest your premiums until claims come due, and Hanover's investment income jumped 12.7 percent to 131.9 million dollars this quarter. It's also using spare cash to buy back its own stock: about 86 million dollars last quarter and 263 million dollars so far this year. Fewer shares means each remaining owner holds a bigger slice.

Storms and other disasters cost Hanover 109.7 million dollars this quarter. That ate 6.8 cents of every premium dollar, compared to about 3 cents a year ago. It also pushed the main business insurance unit to a small loss on its policies, paying out a bit more than a dollar for every dollar it collected.

Hanover's premium sales grew just 3.1 percent this quarter, slower than the 4.5 percent pace a year ago. Growth in its specialty unit dropped from 8.3 percent to 3.3 percent, and specialty price increases slowed to 4.3 percent. Future profit gains will depend more on picking the right customers than on simply charging more.