Share tip of the week: an insurer to inflation-proof your portfolio

This high-yielding insurer has already delivered an impressive performance this year. But the CEO intends to improve shareholder value even further. Paul Hill explains.

With Christmas fast approaching, my best guess for 2011 is that the FTSE 100 will tread water. However, there is an outside chance that there will be an 'equity melt-up' and the index will soar. If so, it would be driven up by spooked investors worried about rising inflation. Shareholders would remain largely unscathed, but prudent savers and pensioners would get hammered as the purchasing power of their money diminished. So what to do?

The answer is to bolt some inflation protection onto your portfolio. The cheapest form is large-cap equities, which offer attractive dividend yields and enjoy strong pricing power. Enter Aviva, the world's sixth-largest insurer. This giant provides 53 million customers with pension and general insurance (such as cover for car products in Europe, North America and Asia). Worldwide revenues were up 5% in the first nine months of this year at £35.9bn. Long-term savings sales were 6% higher, and non-life insurance up by 4%. The firm's proforma net asset value (NAV) which reflects the boost from closing its final salary scheme came in at 497p per share in September, up from June's 461p.

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Paul gained a degree in electrical engineering and went on to qualify as a chartered management accountant. He has extensive corporate finance and investment experience and is a member of the Securities Institute.

Over the past 16 years Paul has held top-level financial management and M&A roles for blue-chip companies such as O2, GKN and Unilever. He is now director of his own capital investment and consultancy firm, PMH Capital Limited.

Paul is an expert at analysing companies in new, fast-growing markets, and is an extremely shrewd stock-picker.