Quarterly Management Discussion & Analysis (MDA300905.pdf)

Insurance, Pension Plan and CapitalizationThe table below shows the technical provisions byproduct and by guaranteed yield for participants.Technical Reserves by product/guarantee in 09/30/2005R$ MillionVGBL 6,243 - - 6,243 57.5%PGBL 2,950 - - 2,950 27.1%TRADITIONAL - 1,556 85 - 1,641 15.1%DEFINED BENEFIT - - 27 27 0.2%ACCESSORIES - - - 5 5 0.0%At the end of the third quarter of 2005, technicalprovisions added up to approximately R$ 11 billion, up9.0% on the previous quarter.At September 30, 2005, VGBL products and PGBLproducts accounted for 57.5% and 27.1% of totalpension plan technical provisions, respectively.Offering the customer greater transparency than theformer pension plan products with a definedcontribution or a defined benefit, VGBL and PGBL hadtheir resources invested in exclusive funds during theaccumulation phase, and do not constitute a risk forthe company, which merely passes on the yieldachieved in the fund.The Traditional and Defined Benefit plans, which haveceased to be marketed by Itaú, offered the customerthe guarantee of a minimum yield, tied to an index (IGP-M or TR). At the end of the third quarter of 2005, theirshare in the technical provisions was 15.4%.It should be mentioned that on July 4, 2005, the OfficialGazette of the Union published Provisional Measure no.255/05, which extends the time limit for opting forDefinitive Regressive Taxation. Now, customers whocontracted an Itaú Private Pension Plano or Itaú FAPIbefore December 31, 2004 have until December 30, 2005to opt for Definitive Regressive Taxation. Customerscontracting new plans have until the last business dayof the month subsequent to the contract date tochoose the form of taxation.CapitalizationThe pro forma net income of the capitalization companiesreached R$ 23 million in the third quarter of 2005, decreasingby 36.5% compared to the prior quarter. Such result is dueto lower securities revenues in relation to the previousquarter, coupled with corporate restructuring processes.This quarter, we ran the sales campaign for PIC Natureza,which is a premium bond with monthly payments of R$35.00 or R$ 50.00. Under this campaign, approximately 114.5thousand bonds were sold, which contributed towardsthe portfolio reaching 3.9 million active bonds,corresponding to R$ 1,101 million in technical provisions.In the past 12 months, cash prizes amounting to R$ 32million were distributed to 833 customers whose bondswere drawn at random.The following table shows the changes in the portfolio ofcapitalization bonds with monthly payments (PIC) andthose with a single payment (Super PIC).Number of capitalization bonds3,686Super PIC3,596398 413PIC3,7333,735409 425In Thousand3,9343,289 3,182 3,324 3,311 3,49409/30/2004 12/31/2004 03/31/2005 06/30/2005 09/30/200543933 Management Discussion and AnalysisBanco Itaú Holding Financeira S.A.