Balance Sheet of 2006
Generali do Brasil - Companhia Nacional de Seguros

MANAGEMENT REPORT

Dear Stockholders,

In compliance with the relevant legal and statutory provisions, the Management hereby submits to your appreciation the Financial Statements relative to the Fiscal Year ended on December 31, 2006, followed by the Explanatory Notes and the Opinion of the Independent Auditors.

Below we highlight the main aspects that have influenced our performance during this period:

Net Premiums Issued

The net proceeds reached R$ 295 million, showing an increase of 9% in relation to the sums ascertained in the previous year. We should point out the development of the business in the Automobile/RCF area, of approximately 15%, with losses decaying nearly 4 p.p., as shown in the Explanatory Note 13, keeping the tendency of recovery of the profit markup of these products.

The operations of the Remaining Elementary Fields, besides continuing to exhibit satisfactory results, have presented a production increase of approximately 15%, especially in the Asset Risks segment, where the Company has obtained materially positive results.

The increase in the production of these set of fields reflects the correct development strategy of the Insurance Company.

Results from the Period

The final result has been affected by the losses in the Life / Personal Accidents fields, as shown in the same Explanatory Note 13 mentioned above, and by the payment of extraordinary indemnities regarding some agreements expired in 1996 and 1997.

It is also worth mentioning that the negative result obtained in the period is being absorbed by the Net Assets in the “Accumulated Losses” account.
We point out that the Company registers its financial investment based on the market value.

As referred to in the Explanatory Note 18, on January 19, 2007, in an Extraordinary Meeting, the stockholders decided on the capital increase of R$ 17 million. With such attitude, our major stockholders are anticipating the new requirements as to any need of reinforcement of the Solvency Margin, and confirm their trust in continuing present in the Brazilian insurance market, where they have been operating for over 80 years.

Generali Group in the World

Assicurazioni Generali, our parent company, operating since 1831, with head office in Italy, is one of the greatest insurance companies in the world. Generali Group is present in all continents, through 107 insurance companies, 119 financial institutions and real estate agencies, and 71 other companies.

With approximately 62,000 employees, the Generali Group has been solidifying its position as one of the main insurance groups in Europe. It has closed the III Quarter of 2006 with profits of around 2 billion Euros (23% over the profit obtained in the same period of the previous year).

The estimate is to close the fiscal year of 2006 with a volume of premiums issued accounting for approximately 65 billion Euros, a reserve and investment amount of approximately 325 billion Euros, and a profit exceeding 2.4 billion Euros.

Acknowledgments

We would like to thank our Insured Parties and Brokers for the preference and trust granted to us, and also to the Managers and Employees of the Authorities of the Sector, as well as to our Employees for the dedication and effort they have been showing.

Rio de Janeiro, February 16, 2007.