Sun Life Financial

MANAGEMENT’S DISCUSSION & ANALYSIS

For the period ended March 31, 2006

Dated April 27, 2006

Earnings and Profitability

FINANCIAL SUMMARY


(Unaudited)	Quarterly Results
	Q1’06		Q4’05		Q3’05		Q2’05		Q1’5

Revenues ($ millions)		5,315		5,338		5,504		5,988		5,088
Common Shareholders’ Net Income ($ millions)		491		478		430		477		458
Operating Earnings⁽¹⁾ ($ millions)		493		490		481		477		458
Earnings per Common Share (EPS) ($)		0.84		0.82		0.74		0.81		0.77
Operating EPS⁽¹⁾ ($)		0.85		0.84		0.82		0.81		0.77
Fully Diluted Operating EPS⁽¹⁾ ($)		0.84		0.83		0.82		0.81		0.77
Return on Common Equity (ROE) (%)		13.1		13.0		11.7		13.0		12.6
Operating ROE⁽¹⁾ (%)		13.2		13.3		13.1		13.0		12.6
Average Common Shares Outstanding (millions)		581.8		582.8		584.2		587.4		591.8
S&P 500 Index (daily average)		1,283		1,232		1,223		1,181		1,192
S& P500 Index (close)		1,295		1,248		1,229		1,191		1,181

Sun Life Financial Inc.⁽²⁾ reported common shareholders’ net income of $491 million for the first quarter ended March 31,2006, up $33 million from $458 million in the first quarter of 2005. The increase in common shareholders’ net income was primarily the result of increased earnings in Sun Life Financial U.S. and the contribution from the acquisition of CMG Asia Limited and CommServe Financial Limited (collectively CMG Asia). The strengthening of the Canadian dollar reduced earnings by $18 million. ROE for the first quarter of 2006 was 13.1% compared with 12.6% for the first quarter of 2005. The 50 basis point improvement was the result of improved earnings and the repurchase of common shares. EPS were $0.84,9% higher than the $0.77 reported in the prior year.

Operating EPS, which do not include the $2 million after-tax charge for integration costs associated with the CMC Asia acquisition, were $0.85 for the first quarter of 2006 up 10% (14% in constant currency) from the first quarter of 2005. Operating ROE reached 13.2%, up 60 basis points (80 basis points in constant currency) from the first quarter of 2005.

Performance by Business Group

The Company manages its operations and reports its results in five business segments: Sun Life Financial Canada (SLF Canada), Sun Life Financial U.S. (SLF U.S.), MFS Investment Management (MFS), Sun Life Financial Asia (SLF Asia), and Corporate. Additional details concerning the segments and the purpose and use of the segmented information are outlined in Note 4 to Sun Life Financial Inc.’s first quarter 2006 Interim Consolidated Financial Statements, which are prepared in accordance with Canadian generally accepted accounting principles (GAAP). Where appropriate, information on a business segment has been presented both in Canadian dollars and the segment’s local currency to facilitate the analysis of underlying business trends. ROE for the business segments is a “Non-GAAP” financial measure as outlined under “Use of Non-GAAP Financial Measures”.


⁽¹⁾		Operating earnings, operating EPS and operating ROE exclude the charge of $51 million related to the sale of Administradora de Fonde de Pensiones Cuprum S.A. (Cuprum) taken in the third quarter of 2005 and the after-tax charges of $12 million and $2 million for the integration of CMG Asia taken in the fourth quarter of 2005 and the first quarter of 2006, respectively. See “Use of Non-GAAP Financial Measures”.

⁽²⁾		Or together with its subsidiaries and joint ventures “the Company” or “Sun Life Financial”.

Sun Life Financial Inc. § SunLife.com 3

Management’s Discussion and Analysis

SLF CANADA


	Quarterly Results
	Q1’06		Q4’05		Q3’05		Q2’05		Q1’05

Revenues ($ millions)		2,255		2,288		2,120		2,104		2,146
Premiums & Deposits ($ millions)		4,989		4,137		3,501		3,800		5,412
Common Shareholders’ Net Income ($ millions)
Individual Insurance & Investments		150		131		128		145		168
Group Benefits		37		85		69		54		38
Group Wealth⁽¹⁾		47		38		31		37		39

Total		234		254		228		236		245
ROE (%)		13.7		15.1		13.5		14.2		14.8


⁽¹⁾		Group Wealth comprises Group Retirement Services and Institutional Investments.

SLF Canada’s earnings decreased by 4% compared to the first quarter of 2005 primarily due to unusually favourable annuity mortality experience in Individual Insurance & Investments in 2005.

•		Individual Insurance & Investments earnings for the first quarter of 2006 decreased by 11% over the first quarter of 2005 mainly due to unusually favourable annuity mortality experience in 2005. Earnings from Cl Financial Inc. (Cl) were $3 million lower than in the first quarter of 2005, as the rise in CI’s stock price resulted in additional stock-based compensation.

•		Group Benefits earnings for the first quarter of 2006 decreased by 3% over the first quarter of 2005 as long-term disability claims were higher in the current quarter.

•		Group Wealth earnings for the first quarter of 2006 grew by 21% over the first quarter of 2005 reflecting higher equity markets and business growth.

SLF Canada continues to strengthen its market position in all lines of business through distribution and product innovation. Group Retirement Services led the Canadian industry with 38% of defined contribution sales in 2005 and terminated plan member asset retention for the first quarter increased 16% over the same period last year. Individual Insurance & Investments introduced an improved Critical Illness product with enhanced return of premium options and reduced minimum benefit amounts and excellent progress was made in growing wholesale distribution.

SLF U.S.


	Quarterly Results
	Q1’06		CM’05		Q3’05		Q2’05		Q1’05

Revenues (US$ millions)		1,734		1,699		2,020		2,281		1,539
Revenues (C$ millions)		2,001		1,994		2,443		2,835		1,889
Common Shareholders’ Net Income (us$ millions) Annuities		85		84		78		72		34
Individual Life		23		34		21		20		25
Group Life & Health		—		10		10		15		6

Total (US$ millions)		108		128		109		107		65
Total (C$ millions)		125		149		133		132		81
ROE (%)		12.9		15.6		13.6		13.8		8.6

Earnings for SLF U.S. rose 54% compared to the first quarter of 2005. The appreciation of the Canadian dollar against the U.S. dollar reduced earnings in SLF U.S. by C$8 million compared to the first quarter of 2005.

In U.S. dollars, earnings of US$108 million were 66% higher than in the first quarter of 2005. Earnings increased this quarter as a result of improved interest spreads of US$13 million, partially offset by unfavourable group claims experience of US$7 million and the net impact of US$4 million on the transfer of MFS Retirement Services Inc. (RSI), MFS’s 401 (k) administration and recordkeeping business, to SLF U.S. The remaining increase in earnings was the result of changes in equity markets. Increases in equity markets during the first quarter of 2006 contributed to SLF U.S. earnings, in contrast to first quarter of 2005 earnings which were dampened by equity market declines. The increase in equity markets has significantly reduced the Company’s exposure to guaranteed minimum death benefits. Accordingly, future equity market improvements may have a less pronounced impact on Annuities earnings.

•

Annuities earnings increased US$51 million compared to the first quarter of 2005 as a result of stronger equity market performance and improved interest spreads, partially offset by the transfer of RSI to SLF U.S.

4 Sun Life Financial Inc. § First Quarter 2006

•		Individual Life earnings were US$2 million lower than in the first quarter of 2005 as the favourable impact of the lower cost funding solution for universal life product reserves and improved mortality were more than offset by lower earnings from the offshore universal life business, which were unusually high in the first quarter of 2005.

•		Group Life & Health earnings decreased US$6 million compared to the first quarter of 2005 due to unfavourable claims experience.

SLF U.S. continued to execute its organic growth strategy by significantly increasing its distribution capabilities during the first quarter of 2006. Following its recent agreement with National Financial Partners, SLF U.S. reached agreements with M Financial Group, one of the United States’ leading distributors of financial products and services to affluent markets, and Medical Group Insurance Services, Inc., the nation’s largest provider of insurance products to physician group practices. In addition, SLF U.S. and United Concordia Companies, Inc. (UCCI), one of the largest dental insurers in the country, announced a new marketing arrangement that gives SLF U.S. the ability to distribute UCCI’s group dental products packaged with SLF U.S.’s group life and disability products. Finally, the repositioning of RSI as an SLF U.S. business unit in the first quarter of 2006 provides SLF U.S. with an established distribution platform in the U.S. retirement savings market. It is expected that the investments in these additional distribution initiatives will have a positive impact on sales which may also increase new business strain in the near-term.

MFS


	Quarterly Results
	Q1’06			Q4’05		Q3’05		Q2’05		Q1’05

Revenues (US$ millions)		360			354		342		332		332
Revenues (C$ millions)		416			416		412		413		407
Common Shareholders’ Net Income (US$ millions)		45			38		38		34		37
Common Shareholders’ Net Income (C$ millions)		52			45		46		42		46
Average Net Assets (US$ billions)		167			158		155		147		145
Assets Under Management (US$ billions)		170			162		157		150		145
Net Sales/(Redemptions) (US$ billions)		(0.3	)		1.9		1.4		3.5		0.7
Market Movement (US$ billions)		7.7			2.9		6.3		1.8		(2.4	)
S&P 500 Index (daily average)		1,283			1,232		1,223		1,181		1,192

MFS contributed net income of C$52 million for the first quarter of 2006, an increase of 13% compared to first quarter of 2005. The appreciation of the Canadian dollar against the U.S. dollar reduced earnings for MFS by C$3 million compared to the first quarter of 2005.

MFS generated net income of US$45 million for Sun Life Financial, an increase of US$8 million, or 22%, from the first quarter of 2005. Growth in average net assets of 15% resulted in an increase in revenues of 8% to US$360 million compared to the first quarter of 2005. The transfer of Retirement Services Incorporated to SLF US. reduced servicing revenues by US$6 million and improved earnings for MFS.

Net sales at MFS were negative US$0.3 billion for the first quarter of 2006 as continuing positive institutional net sales of US$1.4 billion did not fully offset net redemptions of retail mutual funds. Gains in the equity markets continued to fuel growth in total assets which ended March 2006 at a record US$170 billion, an increase of US$8 billion for the quarter and US$25 billion from March 2005.

SLF ASIA


	Quarterly Results
	Q1’06		Q4’05		Q3’05		Q2’05		Q1’05

Revenues ($ millions)		226		257		152		167		183
Common Shareholders’ Net Income ($ millions)		24		7		10		19		6
ROE (%)		10.2		4.3		9.8		17.6		5.4

SLF Asia’s first quarter 2006 revenues were up 24% over the same quarter last year primarily due to the acquisition of CMG Asia.

First quarter 2006 earnings, after the after-tax integration charge of $2 million, were up $18 million over the same period a year ago primarily due to the CMG Asia acquisition, as a result of synergies, higher investment yields and improved asset liability matching.

Strong sales results in the quarter and new distribution arrangements further enhanced the positioning of SLF Asia for profitable long-term growth. In India, Birla Sun Life Insurance Company Limited’s expansion program to double the direct sales force has progressed well and contributed to a 37% year-over-year growth in sales in local currency. Birla Sun Life finalized bancassurance agreements during the quarter with five cooperative banks in India. In China, Sun Life Everbright Life Insurance Company Limited, the Company’s joint venture operation in China, registered a 135% growth in sales in local currency, with the development of new agency operations in Zhejiang province and strong alternate distribution production.

Sun Life Financial Inc. § sunlife.com 5

Management’s Discussion and Analysis

CORPORATE

Corporate includes the results of Sun Life Financial’s U.K. operations (SLF U.K.), the active Reinsurance business unit and run-off reinsurance as well as investment income, expenses, capital and other items not allocated to Sun Life Financial’s other business groups. Run-off reinsurance is included in Other operations.


	Quarterly Results
	Q1’06		Q4’05			Q3’05			Q2’05			Q1’05

Common Shareholders’ Net Income/(Loss) ($ millions)
SLF U.K.		38		58			48			39			47
Reinsurance		9		(18	)		(6	)		15			14
Other		9		(17	)		(29	)		(6	)		19

Total		56		23			13			48			80

Common shareholders’ net income of $56 million reflected the negative impact of currency on SLF U.K., poor mortality experience in Reinsurance and a reserve strengthening in run-off reinsurance.

•		SLF U.K. earnings were $9 million lower than in the first quarter of 2005, primarily due to the $6 million impact of the strengthening of the Canadian dollar relative to the U.K. pound.

•		Current quarter results in Reinsurance reflect the $14 million impact of adverse mortality relative to the first quarter of 2005, which was partially offset by reduced new business strain compared to the first quarter of 2005.

•		Earnings in Other were $10 million lower compared to the first quarter of 2005 primarily due to a reserve strengthening for the long-term care product in run-off reinsurance.

Additional Financial Disclosure

REVENUE

Under Canadian GAAP, premium revenue includes annuity premiums, which are excluded as revenue under U.S. GAAP and also for similar products sold by other financial institutions.

Revenues of $5.3 billion in the first quarter of 2006 increased by $227 million over the same period in 2005. Excluding the unfavourable impact of $208 million due to the strengthening of the Canadian dollar against foreign currencies, revenues grew $435 million. The increase in revenues was due to higher premiums in all business groups, increased investment income and higher asset management fees.

Premium revenue rose to $3.0 billion, improving by $83 million over the first quarter last year or by $187 million excluding the unfavourable impact of $104 million due to the strengthening of the Canadian dollar. SLF Canada’s higher premiums of $108 million from Group Benefits due to business growth and the termination of a reinsurance agreement were partly offset by the $75 million reduction in Group Wealth premiums which had recorded a large sale in the first quarter of 2005. Premium revenue in SLF U.S. remained flat as the lower premiums from U.S. Annuities, largely from equity-indexed annuities, were offset by higher premiums of Individual Life and Group Health.

First quarter 2006 net investment income grew $105 million, or 7%, from the first quarter of 2005 despite an unfavourable impact of $64 million due to the strengthening of the Canadian dollar. Fluctuations in equity markets and interest rate levels were the main drivers of this increase.

Fee income of $753 million in the first quarter of 2006 was up $79 million from the same period in 2005, before an unfavourable currency translation impact of $40 million, with additional asset management fees earned on higher asset levels.

6 Sun Life Financial Inc. § First Quarter 2006

Management’s Discussion and Analysis

ASSETS UNDER MANAGEMENT

AUM reached $402.4 billion at March 31, 2006 compared to $387.4 billion at December 31,2005, and $365.8 billion at March 31,2005. The increase of $15 billion between December 31,2005 and March 31,2006, primarily resulted from business growth and

(i)		market movements of $12.5 billion
(ii)		an increase from the weakening of the Canadian dollar against foreign currencies at the end of the first quarter of 2006 of $0.8 billion, and
(iii)		net sales of mutual, managed and segregated funds of $0.4 billion.

AUM increased $36.6 billion between March 31, 2005 and March 31, 2006 mainly related to continued business growth and

(i)		market movements of $33.8 billion
(ii)		net sales of mutual, managed and segregated funds of $8.2 billion
(iii)		an increase of $4.4 billion from the CMG Asia acquisition, partially offset by
(iv)		a decrease from the strengthening of the Canadian dollar against foreign currencies of $12.9 billion.

CHANGES IN THE BALANCE SHEET AND SHAREHOLDERS’ EQUITY

Total general fund assets were $112.4 billion at March 31,2006, compared to $110.4 billion a year earlier. Increases due to business growth as well as $2.2 billion reflecting the acquisition of CMG Asia were partly reduced by $3.3 billion from the stronger Canadian dollar.

Actuarial and other policy liabilities of $77.4 billion at March 31,2006 were $801 million higher than at March 31,2005. Business growth mostly in SLF Canada and SLF U.S. and an increase of $1.6 billion from the acquisition of CMG Asia were offset by the $2.3 billion effect from the stronger Canadian dollar.

Shareholders’ equity, including Sun Life Financial Inc.’s preferred share capital, was $16.0 billion at March 31,2006, $536 million higher than at December 31,2005. Shareholders’ net income, before preferred share dividends of $11 million, contributed $502 million and the issuance of Class A Preferred Shares Series 3 added $245 million. Currency fluctuations further increased equity by $32 million. Dividend payments on common shares of $160 million and $72 million for the cost of common shares repurchased and cancelled, net of stock-based compensation costs, somewhat diminished these increases.

At March 31, 2006, Sun Life Financial Inc. had 580,895,493 common shares and 39,000,000 preferred shares outstanding.

CASH FLOWS


	Quarterly Results
($ millions)	Q1’06			Q1’05

Cash and cash equivalents, beginning of period		2,740			3,748
Cash flows provided by (used in):
Operating activities		867			736
Financing activities		699			148
Investing activities		(403	)		(710	)
Changes due to fluctuations in exchange rates		(1	)		37

Increase in cash and cash equivalents		1,162			211

Cash and cash equivalents, end of period		3,902			3,959
Short-term securities, end of period		1,275			1,898

Total cash, cash equivalents and short-term securities		5,177			5,857

Net cash, cash equivalents and short-term securities at the end of the first quarter of 2006 decreased $680 million from the first quarter of 2005 mainly as a result of a net increase in investments in long-term assets and the acquisition of CMG Asia in the fourth quarter of 2005. Financing activities reflect the issuance of $700 million fixed/floating debentures and preferred shares of $250 million issued in March 2006 compared to $400 million preferred shares issued during the first quarter of 2005.

Sun Life Financial Inc. § sunlife.com 7

Management’s Discussion and Analysis

RISK MANAGEMENT

Sun Life Financial has developed a framework to assist in categorizing, monitoring and managing the risks to which it is exposed. The major categories of risk are credit risk, market risk, insurance risk and operational risk. Operational risk is a broad category that includes legal and regulatory risks, people risks and systems and processing risks.

Through its ongoing risk management procedures, Sun Life Financial reviews the various risk factors identified in the framework and reports to senior management on a monthly basis and to the Risk Review Committee of the Board quarterly. Sun Life Financial’s risk management procedures and risk factors are described in Sun Life Financial Inc.’s Management’s Discussion and Analysis (MD&A) and Annual Information Form (AIF) for the year ended December 31, 2005. Interest rate and equity market sensitivities are disclosed in the annual MD&A, but change as market levels change, new business is added, or as management actions are taken.

REGULATORY AND LEGAL MATTERS

Sun Life Financial Inc. and certain of its U.S. subsidiaries are cooperating with insurance and securities regulators and other government and self-regulatory agencies in the United States in their investigations and examinations with respect to various issues. Certain of these investigations and examinations may lead to settled administrative actions. While it is not possible to predict the resolution of these matters, management expects that their ultimate resolution will not be material to the Company’s consolidated financial condition or results of operations.

As previously disclosed, Sun Life Financial Inc. and MFS have been named as defendants in multiple lawsuits in U.S. courts relating to the matters that led to the settlements between MFS and U.S. regulators in 2004 and it is not possible to predict the outcome of these actions at this time. Sun Life Financial Inc. and its subsidiaries are also engaged in various legal actions in the ordinary course of business, which are not expected to have a material adverse effect, individually or in the aggregate, on the Company’s consolidated financial position or results of operations.

Additional information concerning these and related matters is provided in Sun Life Financial Inc.’s annual MD&A, annual financial statements and AIF for the year ended December 31, 2005. Copies of these documents are available at www.sedar.com.

USE OF NON-GAAP FINANCIAL MEASURES

Management evaluates the Company’s performance on the basis of financial measures prepared in accordance with GAAP, including earnings, EPS and ROE. Management also measures the Company’s performance based on certain non-GAAP measures, including operating earnings, and other financial measures based on operating earnings, including operating EPS and operating ROE, that exclude certain significant items that are not operational or ongoing in nature. Management also uses financial performance measures that are prepared on a constant currency basis, which excludes the impact of currency fluctuations. Management measures the performance of its business segments using ROE that is based on an allocation of common equity or risk capital to the business segments, using assumptions, judgments and methodologies that are regularly reviewed and revised by management. Management believes that these non-GAAP financial measures provide information useful to investors in understanding the Company’s performance and facilitate the comparison of the quarterly and full-year results of the Company’s ongoing operations. These non-GAAP financial measures do not have any standardized meaning and may not be comparable with similar measures used by other companies. They should not be viewed as an alternative to measures of financial performance determined in accordance with GAAP. Additional information concerning these non-GAAP financial measures and reconciliations to GAAP measures are included in Sun Life Financial Inc.’s annual MD&A and the Supplementary Financial Information packages that are available in the Investor Relations – Financial Publications section of Sun Life Financial’s website, www.sunlife.com.

Operating earnings, operating EPS and operating ROE exclude the $51 million charge taken in the third quarter of 2005 related to the Cuprum sale and the integration charges for CMC Asia of $12 million and $2 million taken in the fourth quarter of 2005 and the first quarter of 2006, respectively.

8 Sun Life Financial Inc. § First Quarter 2006

Management’s Discussion and Analysis

FORWARD-LOOKING STATEMENTS

Some of the statements contained in this document, including those relating to the Company’s strategies and other statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates” or similar expressions, are forward-looking statements within the meaning of securities laws. Forward-looking statements include, without limitation, the information concerning possible or assumed future results of operations of the Company. These statements are not historical facts but instead represent only the Company’s expectations, estimates and projections regarding future events.

Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties that are difficult to predict. The future results and stockholder value of Sun Life Financial Inc. may differ materially from those expressed in these forward-looking statements due to, among other factors, the matters set out under “Risk Factors” in Sun Life Financial Inc.’s AIF and the factors detailed in its other filings with Canadian and U.S. securities regulators, including its annual MD&A, and annual and interim financial statements which are available for review at www.sedar.com.

Factors that could cause actual results to differ materially from expectations include, but are not limited to: external factors, including changes in equity market performance, interest rates, currency exchange rates and government regulations; the amount and composition of assets under management; the management of product pricing; mortality and morbidity rates; expense management; the maintenance of spreads between credited rates and investment returns; surrender and lapse rates; the management of market and credit risks; the management of risks inherent in products with guaranteed benefit options; and the results of regulatory investigations into the practices of the mutual fund, insurance, annuity and financial product distribution industries, including private legal proceedings and class actions that have been commenced or threatened in connection with these practices. The Company does not undertake any obligation to update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by law.

Sun Life Financial Inc. § sunlife.com 9