Exhibit 1
  Managements
 Discussion
and
 Analysis
 Sun Life Financial Inc.
 For the Year Ended December 31, 2009




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TABLE OF CONTENTS
 Overview
    
    
    5Enterprise Mission, Vision, Values and Strategy
    
    
    5Business Profile
    
    
    6Financial Highlights
    
    
    7Corporate Developments
    
    
    8Outlook
    
    
    9Medium-Term Financial Objectives
    
    
    9Accounting
and Control Matters
    
    
    11Critical Accounting Policies and Estimates
    
    
    11Changes in Accounting Policies
    
    
    17Controls and Procedures
    
    
    19Non-GAAP Financial Measures
    
    
    20Financial
Performance
    
    
    222009 Consolidated Results of Operations
    
    
    22Fourth Quarter 2009 Performance
    
    
    27Business
Segment Results
    
    
    31SLF Canada
    
    
    31SLF U.S.
    
    
    34MFS Investment Management
    
    
    37SLF Asia
    
    
    39Corporate
    
    
    42Investments
    
    
    43Risk
Management
    
    
    49Risk Management Framework
    
    
    49Risk Philosophy and Principles
    
    
    50Accountability
    
    
    51Risk Management Policies
    
    
    51Risk Categories
    
    
    52Credit Risk
    
    
    52Market Risk
    
    
    52Insurance Risk
    
    
    56Operational Risk
    
    
    56Strategic Risk
    
    
    57Capital
and Liquidity Management
    
    
    57Principal Sources of Funds
    
    
    58Liquidity
    
    
    58Capital
    
    
    59Shareholder Dividends
    
    
    61Capital Adequacy
    
    
    62Off-balance Sheet Arrangements
    
    
    64Commitments, Guarantees, Contingencies and Reinsurance Matters
    
    
    65Legal
and Regulatory Proceedings
    
    
    65
 Sun Life Financial Inc.
    
    2




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Use of Non-GAAP Financial Measures
 Year-end
  forward-looking
 Forward-looking Information
  Sun Life Financial Inc.
    
    3




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Sun Life Financial Inc.
    
    4




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##### 



OVERVIEW
 
 Enterprise Mission, Vision, Values and Strategy
 Mission
  Vision
  Values
  Values
 Integrity
    
    We are committed to the highest standards of business ethics and good governance.Engagement
    
    We value our diverse, talented workforce and encourage, support and reward them for contributing to
the full extent of their potential.Customer Focus
    
    We provide sound financial solutions for our customers and
always work with their interests in mind.Excellence
    
    We pursue operational excellence through our dedicated people,
our quality products and services, and our value-based risk management.Value
    
    We deliver value to the customers and shareholders we serve and to the communities in which
we operate.StrategyWe will leverage our strengths around the world to help our customers achieve lifetime
financial security and create value for our shareholders.We will work to achieve our strategy through focused execution of the following five enterprise
priorities:Generate
value-building
growth
    
    Sustain profitable top-line growth.Intensify customer
focus
    
    Meet the needs of customers by delivering top quality products and services that are
grounded in consumer insight.Enhance
productivity and
efficiency
    
    Continuously improve productivity and efficiency to increase competitiveness.Strengthen risk
management
    
    Continue to enhance risk management processes and practices to maximize shareholder value.Foster innovation
    
    Embed creativity and innovation throughout the organization to improve business results
and gain competitive advantage.
 Sun Life Financial Inc.
    
    5




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##### 



Business Profile
  Business Segment
    
    Business UnitsSLF Canada
    
    Individual Insurance & InvestmentsGroup BenefitsGroup WealthSLF U.S.
    
    AnnuitiesIndividual InsuranceEmployee Benefits GroupMFS Investment Management
    
    -SLF Asia
    
    -Corporate
    
    SLF U.K.Corporate Support
  Products
    
    SLF Canada
    
    SLF U.S.
    
    MFS
    
    SLF Asia
    
    CorporateIndividual life insurance
    
    n
    
    n
    
    
    
    n
    
    nIndividual annuity and savings
    
    n
    
    n
    
    
    
    n
    
    nGroup life and health
    
    n
    
    n
    
    
    
    nGroup pension and retirement
    
    n
    
    
    
    
    
    nMutual funds
    
    n
    
    
    
    n
    
    nAsset management
    
    n
    
    n
    
    n
    
    nIndividual health insurance
    
    n
    
    
    
    
    
    nReinsurance (life retrocession)
    
    
    
    
    
    
    
    
    
    n
  Distribution Channels
    
    SLF Canada
    
    SLF U.S.
    
    MFS
    
    SLF AsiaDirect sales agents
    
    n
    
    
    
    
    
    nIndependent and managing general agents
    
    n
    
    n
    
    
    
    nFinancial intermediaries (e.g., brokers)
    
    n
    
    n
    
    n
    
    nBanks
    
    
    
    n
    
    n
    
    nPension and benefit consultants
    
    n
    
    n
    
    n
    
    nDirect sales (including Internet and
telemarketing)
    
    n
    
    
    
    
    
    n
 Sun Life Financial Inc.
    
    6




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##### 



Financial Highlights
 ($ millions, unless otherwise noted)
    
    2009
    
    
    
    2008
    
    
    2007Common shareholders net income (loss)Operating(1)
    
    
    561
    
    
    
    
    (40
    )
    
    
    2,294Reported
    
    
    534
    
    
    
    
    785
    
    
    
    2,219Basic reported earnings per share (EPS) ($)
    
    
    0.95
    
    
    
    
    1.40
    
    
    
    3.90Diluted EPSOperating(1)
    
    
    0.99
    
    
    
    
    (0.10
    )
    
    
    3.98Reported
    
    
    0.94
    
    
    
    
    1.37
    
    
    
    3.85ROE (%)Operating(1)
    
    
    3.5
    %
    
    
    
    -0.3
    %
    
    
    14.3
    %Reported
    
    
    3.4
    %
    
    
    
    5.1
    %
    
    
    13.8
    %Dividends per common share ($)
    
    
    1.44
    
    
    
    
    1.44
    
    
    
    1.32Dividend payout ratio(2)(%)
    
    
    152
    %
    
    
    
    103
    %
    
    
    34
    %Dividend yield(3)(%)
    
    
    5.4
    %
    
    
    
    3.8
    %
    
    
    2.5
    %MCCSR ratio(4)
    
    
    221
    %
    
    
    
    232
    %
    
    
    213
    %Total Revenue
    
    
    27,572
    
    
    
    
    15,563
    
    
    
    21,188Premiums, deposits and fund salesPremium revenue, including administration services onlypremium equivalents
    
    
    20,004
    
    
    
    
    18,613
    
    
    
    17,037Segregated fund deposits
    
    
    11,060
    
    
    
    
    10,919
    
    
    
    13,320Mutual fund sales
    
    
    24,642
    
    
    
    
    19,327
    
    
    
    21,335Managed fund sales
    
    
    33,525
    
    
    
    
    20,944
    
    
    
    27,613Total premiums, deposits and fund sales
    
    
    89,231
    
    
    
    
    69,803
    
    
    
    79,305Assets under management (AUM)(as at December 31)(5)General fund assets
    
    
    120,082
    
    
    
    
    119,833
    
    
    
    114,291Segregated fund assets
    
    
    81,305
    
    
    
    
    65,762
    
    
    
    73,205Mutual fund assets(5)
    
    
    96,077
    
    
    
    
    83,602
    
    
    
    101,858Managed fund assets(5)
    
    
    134,121
    
    
    
    
    110,405
    
    
    
    134,297Other AUM(5)
    
    
    1,046
    
    
    
    
    1,490
    
    
    
    1,613Total AUM(5)
    
    
    432,631
    
    
    
    
    381,092
    
    
    
    425,264Capital(as at December 31)Subordinated debt and other capital(6)
    
    
    4,692
    
    
    
    
    3,726
    
    
    
    2,946Participating policyholders equity
    
    
    107
    
    
    
    
    106
    
    
    
    95Total shareholders equity
    
    
    17,307
    
    
    
    
    17,303
    
    
    
    17,122Total capital
    
    
    22,106
    
    
    
    
    21,135
    
    
    
    20,163
 (1)
    
    Operating earnings, diluted operating EPS and operating ROE are non-GAAP measures and exclude certain items described
on page 20 under the heading Non-GAAP Financial Measures. All EPS measures refer to diluted EPS, unless otherwise stated(2)
    
    The dividend payout ratio represents the ratio of common shareholders dividends to reported common shareholders net
income(3)
    
    The dividend yield represents the common dividend per share as a percentage of the average of the high and low share price(4)
    
    Represents the Minimum Continuing Capital Surplus Requirement ratio of Sun Life Assurance Company of Canada(5)
    
    AUM, mutual fund assets, managed fund assets, other AUM and total AUM are non-GAAP Financial Measures. For additional
information, see the section under the heading Non-GAAP Financial Measures on page 20.(6)
    
    Other capital refers to Sun Life ExchangEable Capital Securities (SLEECS), which qualify as capital for Canadian
regulatory purposes. Additional information is available in the section Capital and Liquidity Management under the heading Capital on
page 59
 Sun Life Financial Inc.
    
    7




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Corporate Developments
  Acquisition of U.K. Business
  Other Developments
   Common Share Activity
   Financing Arrangements
      Sun Life Financial Inc.
    
    8




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Outlook
    
 Medium-Term Financial Objectives
   
    
    To achieve an operating ROE in the 13-15% range(1)
    
    To maintain a strong capital position and effective capital deployment.
   
 (1)
    
    Operating ROE is a non-GAAP
measure. For additional information, see the section under the
heading on page 20 under the heading Non-GAAP Financial
Measures.
 Sun Life Financial Inc.
    
    9




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##### 



Factor
    
    
    Assumptions
    
    
    2009 ExperienceEquity Markets
    
    
    A steady rise in the
annual level of equity
market indices,
primarily the S&P 500,
by approximately 7%-8%
    
    
    The S&P 500 increased
by 23%, while the
S&P/TSX Composite Index
increased by 31%Interest Rates
    
    
    Near-term stability in
North American interest
rates across the yield
curve and over the
longer term, interest
rates that are
generally higher than
statutory or
contractual minimums
required on certain
guaranteed products
offered by the Company
    
    
    Movements in interest
rates on government
treasuries in Canada
and the U.S. varied,
ranging from a decrease
of 64 bps at the short
end of the curve to an
increase of 197 bps at
the long endCredit
    
    
    A credit environment
within historical
norms, which reflects
the Companys best
estimates on credit
    
    
    Rating agencies
maintained an
accelerated pace of
downgrades, and credit
experience worsenedCurrency
    
    
    Stability in exchange
rates between the
Canadian dollar and
foreign currencies,
primarily the U.S.
dollar and the British
pound sterling
    
    
    Throughout most of
2009, the value of the
Canadian dollar
strengthened. In
particular, the
Canadian dollar
appreciated by $0.13
against the U.S. dollar
in 2009
  
    
    To achieve an operating ROE in the 12  14% range
    
    To maintain a strong capital position and effective capital deployment
   Sun Life Financial Inc.
    
    10




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ACCOUNTING AND CONTROL MATTERS
 
 Critical Accounting Policies and Estimates
  Benefits to Policyholders
    
    
    when taken one at a time, each provision is reasonable with respect to the underlying best
estimate assumption and the extent of uncertainty present in making that assumption; and
    
    in total, the cumulative effect of all provisions is reasonable with respect to the total
actuarial liabilities.
     Sun Life Financial Inc.
    
    11




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Critical Accounting
    
    
    Determination Methodology and
    
    
    Financial SignificanceEstimate
    
    

Assumptions
    
    
    (measured as at December 31,
2009)Equity markets
 the value of the
Companys
policyholder
obligations for
certain products is
dependent on
assumptions about
the future level of
equity markets
    
    
        The
calculation of
actuarial
liabilities for
equity
market-sensitive
products includes
provisions for
moderate changes in
rates of equity
market return with
provisions
determined using
scenario testing
under the standards
established by the
Canadian Institute
of Actuaries
    
    
        For participating
insurance and universal life
products, investment returns are
passed through to policyholders
through changes in the amounts of
dividends declared or in the rate
of interest credited. Changes in
equity values are largely offset
by changes in actuarial
liabilities
    Products such as
segregated fund and annuity
option guarantees are exposed to
equity risk. Hedging programs
are in place to manage this risk
    An immediate 10% increase
across all equity markets would
result in an estimated increase
in net income of $75 million to
$125 million. Conversely, an
immediate 10% decrease across all
equity markets would result in an
estimated decrease in net income
of $150 million to $200 million
    An immediate 25% increase
across all equity markets would
result in an estimated increase
in net income of $150 million to
$250 million. Conversely, an
immediate 25% decrease across all
equity markets would result in an
estimated decrease in net income
of $475 million to $575 million
    A 100 basis point
reduction in assumed future
equity and real estate returns
would result in an estimated
decrease in net income of $350
million to $450 millionInterest rates
the value of the
Companys
policyholder
obligations for all
policies is
sensitive to
changes in interest
rates
    
    
        The
calculation of
actuarial
liabilities for all
policies includes
provisions for
moderate changes in
interest rates with
provisions
determined using
scenario testing
under the standards
established by the
Canadian Institute
of Actuaries
    The major
part of this
sensitivity is
offset with a
similar sensitivity
in the value of the
Companys assets
held to support
actuarial
liabilities
    
    
        For certain products,
including participating insurance
policies and certain forms of
universal life policies and
annuities, the effect of changes
in interest rates is largely
passed through to policyholders
through changes in the amount of
dividends declared or in the rate
of interest credited. As well,
these products generally have
minimum interest rate guarantees.
Hedging programs are in place to
manage interest rate movements
    An immediate 1% parallel
increase in interest rates across
the entire yield curve would
result in an estimated change in
net income between -$50 million
and $50 million. An immediate 1%
parallel decrease in interest
rates would result in an
estimated decrease in net income
of $150 million to $250 millionAsset default
provisions are
included in
actuarial
liabilities for
possible future
asset defaults on
current assets and
future purchases
    
    
        The amount
included in
actuarial
liabilities is
based on possible
reductions in the
expected future
investment yield
depending on the
creditworthiness of
the asset
    The
underlying
assumptions for
bonds and mortgages
are derived from
long-term studies.
The bond
assumptions are
based on total U.S.
market experience.
The mortgage
assumptions are
based on the
Companys
experience
    
    
        Asset default provisions
included in actuarial liabilities
amounted to $2.9 billion on a
pre-tax basis as at December 31,
2009. The amount excludes
defaults that can be passed
through to participating
policyholders and excludes
provisions for loss in the value
of equity and real estate assets
supporting actuarial liabilities
 Sun Life Financial Inc.
    
    12




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Critical Accounting
    
    
    Determination Methodology and
    
    
    Financial SignificanceEstimate
    
    
    Assumptions
    
    
    (measured as at December 31, 2009)Mortality
the rates of death
for defined groups
of people
    
    
        The best
estimate
assumptions are
determined annually
by studying the
Companys average
five-year
experience.
Industry experience
is considered where
the Companys
experience is not
sufficient to be
statistically
valid
    Where lower
mortality rates
result in an
increase in
actuarial
liabilities, the
mortality rates are
adjusted to reflect
estimated future
improvements in
life span
    Where lower
mortality rates
result in a
decrease in
actuarial
liabilities, the
mortality rates do
not reflect any
future improvement
that might be
expected
    
    
        For life insurance
products for which higher
mortality would be financially
adverse to the Company, a 2%
increase in the best estimate
assumption would decrease net
income by about $90 million
    For life insurance
products for which lower
mortality would be financially
adverse to the Company, a 2%
decrease in the best estimate
assumption would decrease net
income by about $10 million
    For annuity products for
which lower mortality would be
financially adverse to the
Company, a 2% decrease in the
mortality assumption would
decrease net income by about $80
millionMorbidity both
the rates of
accident or
sickness and the
rates of subsequent
recovery for
defined groups of
people
    
    
        The best
estimate
assumptions are
determined by
studying the
Companys average
five-year
experience.
Industry experience
is considered where
the Companys
experience is not
sufficient to be
statistically
valid
    Long-term
care and critical
illness insurance
assumptions are
developed in
collaboration with
reinsurers and
largely based on
their experience
    For those
benefits where the
Company or industry
experience is
limited, larger
provisions for
adverse deviation
are included
    
    
        For products for which
the morbidity is a significant
assumption, a 5% adverse change
in the morbidity assumption would
reduce net income by about $110
millionPolicy termination
rates the rates
at which policies
terminate prior to
the end of the
contractual
coverage periods
    
    
        The best
estimate
assumptions are
determined annually
by studying the
Companys average
five-year
experience.
Industry experience
is considered where
the Companys
experience is not
sufficient to be
statistically
valid
    Rates may
vary by plan, age
at issue, method of
premium payment and
policy duration
    Assumptions
for premium
cessation occurring
prior to
termination of the
policy are required
for universal life
contracts
    
    
        For products for which
fewer terminations would be
financially adverse to the
Company, a 10% decrease in the
termination rate assumption would
decrease net income by about $170
million
    For products for which
more terminations would be
financially adverse to the
Company, a 10% increase in the
termination rate assumption would
decrease net income by about $130
millionOperating expenses
and inflation 
actuarial
liabilities provide
for future
policy-related
expenses
    
    
        The best
estimate
assumptions are
determined annually
and based on recent
Company experience
    The
increases assumed
in future expenses
are consistent with
the future interest
rates used in the
scenario testing
under the standards
established by the
Canadian Institute
of Actuaries
    
    
        A 5% increase in unit
expenses would result in a
decrease in net income of about
$140 million
 Sun Life Financial Inc.
    
    13




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Fair Value of Investments
        .
 Sun Life Financial Inc.
    
    14




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Other-than-Temporary Impairment of Financial Assets and Allowance for Investment Losses
     .
   Sun Life Financial Inc.
    
    15




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Goodwill and Other Intangibles
      Income Taxes
  Pension Plans and Other Post-Retirement Benefits
   Sun Life Financial Inc.
    
    16




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Sensitivity
of Key Assumptions
 ($ millions)
    
    Pension
    
    Other post-retirementObligation
    
    Expense
    
    Obligation
    
    ExpenseImpact of a 1% change in key assumptionsDiscount rateDecrease in assumption
    
    $
    358
    
    
    $
    36
    
    
    $
    32
    
    
    $
    2Increase in assumption
    
    
    (309
    )
    
    
    (34
    )
    
    
    (29
    )
    
    
    (2
    )Expected long-term rate of return on plan assetsDecrease in assumption
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    Increase in assumption
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    Rate of compensation increaseDecrease in assumption
    
    
    (44
    )
    
    
    (10
    )
    
    
    
    
    
    
    Increase in assumption
    
    
    46
    
    
    
    10
    
    
    
    
    
    
    
    
 
 Changes in Accounting Policies
 Changes in Accounting Policies in 2009
  Goodwill
and Intangible Assets
  Credit Risk and the Fair Value of Financial Assets and Financial Liabilities
  Effective Interest Method for Financial Instruments Subsequent to Recognition of an Impairment
Loss
  Sun Life Financial Inc.
    
    17




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Impairment of Financial Assets
  Financial Instrument Disclosures
  International Financial Reporting Standards
  
    
    Education and training
    
    Accounting policy changes and financial reporting
    
    Information technology and data systems
    
    Impacts on business activities
    
    Internal controls over financial reporting
    
    
    Investment Contracts  The Company expects minor measurement differences to arise on
those insurance contacts classified as investment contracts under IFRS. Measurement of
insurance contracts (representing more than 90% of existing insurance contracts) will remain
the same and continue to be valued under the Canadian Asset Liability Method, the current
Canadian GAAP methodology.
    
    Real estate  All properties (other than owner-occupied properties), will be classified as
investment property and measured at fair value under IFRS. Owner-occupied properties will be
classified as property, plant and equipment and measured at cost less depreciation.
 Sun Life Financial Inc.
    
    18




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##### 




    
    Consolidation and Presentation  The concept of control under IFRS will require the
consolidation of certain structured entities currently not consolidated under current
Canadian GAAP. In addition, reinsurance recoverable may no longer be netted against
insurance contract liabilities under IFRS. The impact of these changes will result in certain
asset and liability balances being presented on a gross basis.
    
    Goodwill  Impairment testing will be conducted at a more granular level known as the
cash generating unit under IFRS compared to the testing at a reporting unit level for
Canadian GAAP. The Company anticipates that the amount of goodwill carried under IFRS will be
lower than under Canadian GAAP.
    
    Re-designations  Certain financial instruments designated as held for trading under
Canadian GAAP will require re-designation as available for sale or loans and receivables.
    
    Hedge Accounting  IFRS does not permit the use of the short-cut method or the
critical terms match method for the assessment of hedge effectiveness. As a result, the
Company expects additional ineffectiveness from hedging relationships to be reported under
IFRS.
    
    Stock-based Compensation  Certain awards granted by a subsidiary of the Company that
were treated as equity settled awards and measured at fair value at the date of grant will be
considered cash settled liabilities under IFRS and be re-measured at fair value at each
reporting date until the awards are settled in cash, which may impact the Companys operating
expenses under IFRS.
  
    
    Employee benefits  The Company expects to recognize unamortized actuarial gains and
losses in retained earnings on transition to IFRS instead of deferring and amortizing these
balances in future earnings.
    
    Foreign currency  The Company expects to reset the cumulative translation gains and
losses to nil at transition (reverse against retained earnings) instead of computing the
translation gain and loss amounts retrospectively under IFRS.
    
    Business Combinations  The relevant standard under IFRS may be applied retrospectively
or prospectively on transition. The Company expects to elect not to restate acquisitions
prior to the IFRS transitional date of January 1, 2010.
  
 Controls and Procedures
   Sun Life Financial Inc.
    
    19




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##### 



Managements Report on Internal Control Over Financial Reporting
   Internal ControlIntegrated Framework,
  Changes in Internal Control over Financial Reporting
  
 Non-GAAP Financial Measures
    Sun Life Financial Inc.
    
    20




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##### 



Reconciliation of Operating Earnings
 ($ millions)
    
    2009
    
    
    
    2008
    
    
    2007Reported Earnings (GAAP)
    
    
    534
    
    
    
    
    785
    
    
    
    2,219After-tax gain (loss) on special itemsClarica brand write-off
    
    
    
    
    
    
    
    
    
    
    
    (43
    )Re-branding expenses in Canada
    
    
    
    
    
    
    
    
    
    
    
    (10
    )EBG integration costs
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Premium paid to redeem Partnership Capital Securities
    
    
    
    
    
    
    
    
    
    
    
    (18
    )Gain on sale of interest in CI Financial
    
    
    
    
    
    
    
    825
    
    
    
    Restructuring costs to reduce expense levels
    
    
    (27
    )
    
    
    
    
    
    
    
    Total special items
    
    
    (27
    )
    
    
    
    825
    
    
    
    (75
    )Operating earnings
    
    
    561
    
    
    
    
    (40
    )
    
    
    2,294Impact of special items on diluted operating EPS($ per share)
    
    2009
    
    
    2008
    
    2007EPS  Reported (GAAP)
    
    
    0.94
    
    
    
    
    1.37
    
    
    
    3.85Net gains (losses) on special items
    
    
    (0.05
    )
    
    
    
    1.47
    
    
    
    (0.13
    )EPS  Operating
    
    
    0.99
    
    
    
    
    (0.10
    )
    
    
    3.98
 Sun Life Financial Inc.
    
    21




---



##### 



FINANCIAL PERFORMANCE
 
 2009 Consolidated Results of Operations
 Common Shareholders Net Income
  ($ millions, unless otherwise noted)
    
    2009
    
    
    
    2008
    
    
    2007Total net income
    
    
    622
    
    
    
    
    857
    
    
    
    2,290Less:Participating policyholders net income
    
    
    9
    
    
    
    
    2
    
    
    
    2Dividends paid to preferred shareholders
    
    
    79
    
    
    
    
    70
    
    
    
    69Common shareholders net income
    
    
    534
    
    
    
    
    785
    
    
    
    2,219Adjusted for
special
items(1)
    
    
    27
    
    
    
    
    (825
    )
    
    
    75Operating earnings (loss)
    
    
    561
    
    
    
    
    (40
    )
    
    
    2,294Basic EPS ($) from:Common shareholders net income
    
    
    0.95
    
    
    
    
    1.40
    
    
    
    3.90Operating
earnings
(loss)(1)
    
    
    1.00
    
    
    
    
    (0.07
    )
    
    
    4.03Diluted EPS ($) from:Common shareholders net income
    
    
    0.94
    
    
    
    
    1.37
    
    
    
    3.85Operating
earnings
(loss)(1)
    
    
    0.99
    
    
    
    
    (0.10
    )
    
    
    3.98Common shareholders net income (loss) by segmentSLF Canada
    
    
    866
    
    
    
    
    645
    
    
    
    1,050SLF U.S.
    
    
    (465
    )
    
    
    
    (1,016
    )
    
    
    581MFS
    
    
    152
    
    
    
    
    194
    
    
    
    281SLF Asia
    
    
    76
    
    
    
    
    33
    
    
    
    123Corporate
    
    
    (95
    )
    
    
    
    929
    
    
    
    184Total
    
    
    534
    
    
    
    
    785
    
    
    
    2,219
 (1)
    
    The items not included in operating
earnings are described on page 20 under the heading Non-GAAP Financial
Measures.  Sun Life Financial Inc.
    
    22




---



##### 



Impact of Economic Environment
  Significant
Items Impacting 2009 Results
    
    Net Income ($ millions)
    
    
    
    EPS ($)Downgrades on the Companys investment portfolio
    
    
    (670
    )
    
    
    
    (1.19
    )Implementation of equity- and interest rate-related actuarial assumption updates
    
    
    (513
    )
    
    
    
    (0.91
    )Net impairments
    
    
    (431
    )
    
    
    
    (0.77
    )Equity markets (net of hedging)
    
    
    306
    
    
    
    
    0.54Interest Rates
    
    
    206
    
    
    
    
    0.37Total
    
    
    (1,102
    )
    
    
    
    (1.96
    )
 Return on Equity
  Assets Under Management
 (1)
  (i)
    
    positive market movements of $47.5 billion;(ii)
    
    net sales of mutual, managed and segregated funds of $25.6 billion;(iii)
    
    an increase of $4.9 billion from the change in value of held-for-trading assets;(iv)
    
    an increase of $6.6 billion in segregated funds and $1.3 billion in general funds
arising from the acquisition of the Lincoln U.K. business; and(v)
    
    business growth of $2.7 billion, mostly in the wealth businesses; partially offset by(vi)
    
    a decrease of $37.1 billion from a strengthening Canadian dollar against foreign
currencies compared to the prior period exchange rates.
  (i)
    
    an increase of $4.9 billion from the change in value of
held-for-trading assets;(ii)
    
    a gain of $2.7 billion from business growth; and(iii)
    
    an increase of $1.3 billion from the acquisition of the
Lincoln U.K. business; partially offset by(iv)
    
    a decrease of $8.7 billion from the strengthening of the
Canadian dollar against foreign currencies.
 
 (1)
    
    AUM, mutual fund assets, managed fund
assets, other AUM and total AUM are Non-GAAP Financial Measures.
See the section under the heading Non-GAAP Financial Measures on page 20. Sun Life Financial Inc.
    
    23




---



##### 



Revenue
   Total Revenue
 ($ millions)
    
    2009
    
    
    
    2008
    
    
    2007PremiumsAnnuities
    
    
    4,795
    
    
    
    
    3,592
    
    
    
    3,530Life insurance
    
    
    6,380
    
    
    
    
    5,928
    
    
    
    6,010Health insurance
    
    
    4,335
    
    
    
    
    4,067
    
    
    
    3,584Total premiums
    
    
    15,510
    
    
    
    
    13,587
    
    
    
    13,124Net investment income (loss)
    
    
    9,392
    
    
    
    
    (767
    )
    
    
    4,852Fee Income
    
    
    2,670
    
    
    
    
    2,743
    
    
    
    3,212Total
    
    
    27,572
    
    
    
    
    15,563
    
    
    
    21,188
   Sun Life Financial Inc.
    
    24




---



##### 



Adjusted Revenue (1)
 ($ millions)
    
    2009
    
    
    
    2008SLF Canada
    
    
    11,407
    
    
    
    
    7,927SLF U.S.
    
    
    11,714
    
    
    
    
    3,817MFS
    
    
    1,251
    
    
    
    
    1,381SLF Asia
    
    
    1,813
    
    
    
    
    498Corporate
    
    
    1,387
    
    
    
    
    1,940Total as reported
    
    
    27,572
    
    
    
    
    15,563Impact of currency changes and
changes in the value of
held-for-trading assets and
derivative instruments
    
    
    3,251
    
    
    
    
    (8,117
    )Total adjusted revenue
    
    
    24,321
    
    
    
    
    23,680
 
 (1)
    
    Adjusted revenue is a non-GAAP Measure.  Policy Benefits
  Policy
Benefits
 ($ millions)
    
    2009
    
    
    
    2008
    
    
    2007Payments to policyholders, beneficiaries
and depositors
    
    
    13,457
    
    
    
    
    13,775
    
    
    
    14,244Net transfers to segregated funds
    
    
    860
    
    
    
    
    539
    
    
    
    952Increase (decrease) in actuarial liabilities
    
    
    7,697
    
    
    
    
    (4,429
    )
    
    
    (2,515
    )Total
    
    
    22,014
    
    
    
    
    9,885
    
    
    
    12,681
  Sun Life Financial Inc.
    
    25




---



##### 



Review
of actuarial methods and assumptions
   Assumption
    
    Increase (Decrease)
    
    
    Commentsin actuarial($ millions)
    
    liabilitiesMortality/Morbidity
    
    
    (137
    )
    
    Improved mortality experience on both life insurance and savings productsLapse and other policyholder behaviour
    
    
    375
    
    
    Updates to policyholder behaviour assumptions in the Companys individual insurance business.Expense
    
    
    119
    
    
    Impact of reflecting recent experience studies in several of the Companys businessesInvestment Returns
    
    
    987
    
    
    Driven primarily from negative impact of the implementation of equity- and interest
rate-related actuarial assumption updates in the third quarter of 2009 and cumulative changes
in Conditional Tail Expectation levels related to changes in equity market
levels experienced during 2009.Other
    
    
    (105
    )Total
    
    
    1,239
  Expenses and Other
  Expenses
& Other
 ($ millions)
    
    2009
    
    
    
    2008
    
    
    2007Commissions
    
    
    1,662
    
    
    
    
    1,545
    
    
    
    1,811Operating expenses
    
    
    3,142
    
    
    
    
    2,979
    
    
    
    3,183Intangibles amortization
    
    
    34
    
    
    
    
    24
    
    
    
    77Premium taxes
    
    
    222
    
    
    
    
    227
    
    
    
    240Interest expenses
    
    
    403
    
    
    
    
    366
    
    
    
    349Income taxes
    
    
    (542
    )
    
    
    
    (343
    )
    
    
    522Non-controlling interests in net income of
subsidiaries
    
    
    15
    
    
    
    
    23
    
    
    
    35Participating policyholders net income
    
    
    9
    
    
    
    
    2
    
    
    
    2Dividends to preferred shareholders
    
    
    79
    
    
    
    
    70
    
    
    
    69Total
    
    
    5,024
    
    
    
    
    4,893
    
    
    
    6,288
  Sun Life Financial Inc.
    
    26




---



##### 



Income
Taxes
     Impact
of Currency
    
 Fourth Quarter 2009 Performance
    Sun Life Financial Inc.
    
    27




---



##### 



Performance by Business Group
      Additional Financial Disclosure
   Sun Life Financial Inc.
    
    28




---



##### 



(i)
    
    net sales of mutual, managed and segregated funds of $7.1 billion;(ii)
    
    positive market movements of $9.8 billion; and(iii)
    
    an increase of $6.6 billion in segregated funds and $1.3 billion in general funds
arising from the acquisition of the Lincoln Financial business in the United Kingdom;
partially offset by(iv)
    
    a decrease of $4.2 billion from the strengthening of the Canadian dollar
against foreign currencies.
 Quarterly
Information
  ($ millions, unless otherwise noted)
    
    2009
    
    
    
    2008Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Common shareholders net income (loss)Operating(1)
    
    
    296
    
    
    
    (140
    )
    
    
    591
    
    
    
    (186
    )
    
    
    
    (696
    )
    
    
    (396
    )
    
    
    519
    
    
    
    533Reported
    
    
    296
    
    
    
    (140
    )
    
    
    591
    
    
    
    (213
    )
    
    
    
    129
    
    
    
    (396
    )
    
    
    519
    
    
    
    533Diluted EPS (in dollars)Operating(1)
    
    
    0.52
    
    
    
    (0.25
    )
    
    
    1.05
    
    
    
    (0.33
    )
    
    
    
    (1.25
    )
    
    
    (0.71
    )
    
    
    0.91
    
    
    
    0.93Reported
    
    
    0.52
    
    
    
    (0.25
    )
    
    
    1.05
    
    
    
    (0.38
    )
    
    
    
    0.23
    
    
    
    (0.71
    )
    
    
    0.91
    
    
    
    0.93Basic Reported in EPS (in dollars)
    
    
    0.53
    
    
    
    (0.25
    )
    
    
    1.06
    
    
    
    (0.38
    )
    
    
    
    0.23
    
    
    
    (0.71
    )
    
    
    0.92
    
    
    
    0.95ROE annualizedOperating(1)
    
    
    7.6
    %
    
    
    -3.5
    %
    
    
    14.9
    %
    
    
    -4.7
    %
    
    
    
    -17.9
    %
    
    
    -10.2
    %
    
    
    12.9
    %
    
    
    13.4
    %Reported
    
    
    7.6
    %
    
    
    -3.5
    %
    
    
    14.9
    %
    
    
    -5.5
    %
    
    
    
    3.3
    %
    
    
    -10.2
    %
    
    
    12.9
    %
    
    
    13.4
    %Common shareholders net income (loss) by
segmentSLF Canada
    
    
    243
    
    
    
    219
    
    
    
    210
    
    
    
    194
    
    
    
    
    (55
    )
    
    
    157
    
    
    
    296
    
    
    
    247SLF U.S.
    
    
    (9
    )
    
    
    (413
    )
    
    
    364
    
    
    
    (407
    )
    
    
    
    (679
    )
    
    
    (533
    )
    
    
    83
    
    
    
    113MFS
    
    
    49
    
    
    
    43
    
    
    
    32
    
    
    
    28
    
    
    
    
    30
    
    
    
    49
    
    
    
    56
    
    
    
    59SLF Asia
    
    
    27
    
    
    
    13
    
    
    
    19
    
    
    
    17
    
    
    
    
    16
    
    
    
    (8
    )
    
    
    12
    
    
    
    13Corporate
    
    
    (14
    )
    
    
    (2
    )
    
    
    (34
    )
    
    
    (45
    )
    
    
    
    817
    
    
    
    (61
    )
    
    
    72
    
    
    
    101Total
    
    
    296
    
    
    
    (140
    )
    
    
    591
    
    
    
    (213
    )
    
    
    
    129
    
    
    
    (396
    )
    
    
    519
    
    
    
    533Total revenue
    
    
    4,993
    
    
    
    8,831
    
    
    
    8,720
    
    
    
    5,028
    
    
    
    
    4,706
    
    
    
    2,560
    
    
    
    4,411
    
    
    
    3,886Total AUM ($ billions)
    
    
    433
    
    
    
    412
    
    
    
    397
    
    
    
    375
    
    
    
    
    381
    
    
    
    389
    
    
    
    413
    
    
    
    415
 (1)
    
    Operating earnings, diluted operating EPS
and operating ROE are non-GAAP measures and exclude the items described under
the heading Non-GAAP Financial Measures on page 20. Sun Life Financial Inc.
    
    29




---



##### 



Third
Quarter 2009
   Second
Quarter 2009
  First
Quarter 2009
  Fourth
Quarter 2008
  Third
Quarter 2008
  Second
Quarter 2008
  First
Quarter 2008
  Sun Life Financial Inc.
    
    30




---



##### 



Business Segment Results
  
 SLF Canada
 Business Profile
  
 Strategy
   
 2009 Business Highlights
 
    
    Individual life and health insurance sales grew by 2% to $163 million and reflected
a more profitable product mix. Sales of Individual fixed interest investment products,
including accumulation annuities, GICs and payout annuities, grew by 83% to $1.0 billion for
the full year 2009 over 2008.
    
    Group Retirement Services (GRS) continued to build on its leadership position in the
Defined Contribution (DC) industry capturing 41% of the total DC market activity in the first
nine months of 2009, as recently reported by LIMRA. Pension rollover sales increased by 16%
to $855 million, achieving a record level retention rate of 51% in 2009. GRS continued to
deliver strong results, with overall sales increasing to $4.1 billion, an increase of 5% over
2008.
    
    Group Benefits delivered strong sales results, with sales up 29% to $331 million for 2009.
Group Benefits was also successful in retaining the federal Public Service Health Care Plan
contract, the largest group plan in Canada. Sun Life also introduced the new My Life and My
Health Choices program, easy-to-buy life and health insurance coverage for plan members
retiring or terminating from their group benefit plans.
    
    Significant innovation took place during the year to broaden the Individual life, health,
and wealth product suite as well as re-pricing and de-risking of segregated funds. In GRS,
the new Defined Benefit Solutions business was launched, which offers de-risking solutions to
defined benefit pension plan sponsors.
    
    Operating expenses were reduced by 1% from 2008 levels, through a program of productivity
improvements, while achieving sales growth and client satisfaction targets.
   Sun Life Financial Inc.
    
    
    
    31




---



##### 



Financial and Business Results
 Summary statement of operations
 ($ millions)
    
    2009
    
    
    
    2008
    
    
    2007Premiums
    
    
    6,952
    
    
    
    
    6,273
    
    
    
    6,004Net investment income
    
    
    3,757
    
    
    
    
    966
    
    
    
    2,586Fee income
    
    
    698
    
    
    
    
    688
    
    
    
    695Total revenue
    
    
    11,407
    
    
    
    
    7,927
    
    
    
    9,285Client disbursements and change in actuarial liabilities
    
    
    8,777
    
    
    
    
    4,986
    
    
    
    6,149Commissions and other expenses
    
    
    1,803
    
    
    
    
    1,846
    
    
    
    1,868Income taxes
    
    
    (54
    )
    
    
    
    435
    
    
    
    200Non-controlling interests in net income of subsidiaries
and par policyholders income
    
    
    15
    
    
    
    
    15
    
    
    
    18Common shareholders net income (1)
    
    
    866
    
    
    
    
    645
    
    
    
    1,050
 (1)
    
    Earnings in 2007 and 2008 included income of $146 and $117, respectively,
from the Companys 37% ownership interest in CI Financial, which the Company sold in the fourth
quarter of 2008    
 Results by Business Unit
 Individual Insurance & Investments
   
   Sun Life Financial Inc.
    
    
    
    32




---



##### 



Group Benefits
    Group Wealth
 (1)
     
 (1)
    
    As measured by Benefits Canada magazines 2009 Defined Contribution Plan Survey released in December 2009.   Sun Life Financial Inc.
    
    
    
    33




---



##### 



2010 Outlook and Priorities
        
 SLF U.S.
 Business Profile
  
 Strategy
       Sun Life Financial Inc.
    
    
    
    34




---



##### 



2009 Business Highlights
 
    
    Recommendations from a strategic review initiated in the fourth quarter of 2008 have
been implemented, and have resulted in a greater focus in SLF U.S.s core businesses and a
centralized distribution and marketing platform to drive top-line growth.
    
    Focused execution, as well as increased distributor and customer focus has resulted in
sales in core lines well above industry growth rates. Total domestic sales in 2009 were up
more than 35% compared to 2008, with domestic variable annuities up almost 60% and domestic
individual life sales up 6%. Variable annuities market share increased from 1.46% at the end
of the fourth quarter of 2008 to 3.53% at the end of the third quarter of 2009.
    
    Substantial changes were implemented throughout 2009 to further improve SLF U.S. variable
annuity products overall risk profile and profitability, including modifications to product
design, investment allocation and price.
    
    SLF US initiated its first brand awareness campaign. The multi-media campaign employs
television, print, and on-line advertising to increase awareness of the Sun Life Financial
brand in the United States, including sponsorship of Cirque du Soleil and the Frozen
Fenway ice hockey event.
    
    SLF U.S. maintained its focus on expense management and operational efficiency, holding
overall expenses relatively flat in 2009 while engaging in significant talent recruitment,
technology upgrades, distribution improvements, marketing campaigns and brand development.
 Financial and Business Results
 Summary
statement of operations
 (US$ millions)
    
    2009
    
    
    
    2008
    
    
    2007Premiums
    
    
    5,989
    
    
    
    
    5,395
    
    
    
    5,163Net investment income
    
    
    3,773
    
    
    
    
    (2,279
    )
    
    
    1,422Fee income
    
    
    508
    
    
    
    
    522
    
    
    
    691Total revenue
    
    
    10,270
    
    
    
    
    3,638
    
    
    
    7,276Client disbursements and change in actuarial liabilities
    
    
    9,397
    
    
    
    
    3,404
    
    
    
    4,664Commissions and other expenses
    
    
    1,745
    
    
    
    
    1,678
    
    
    
    1,914Income taxes
    
    
    (435
    )
    
    
    
    (561
    )
    
    
    142Non-controlling interests in net income of subsidiaries
and par policyholders income
    
    
    3
    
    
    
    
    
    
    
    
    3Common shareholders net income
    
    
    (440
    )
    
    
    
    (883
    )
    
    
    553Selected financial information in Canadian dollarsTotal revenue
    
    
    11,714
    
    
    
    
    3,817
    
    
    
    7,830Common shareholders net income (loss)
    
    
    (465
    )
    
    
    
    (1,016
    )
    
    
    581
      Sun Life Financial Inc.
    
    
    
    35




---



##### 



Results by Business Unit
 Annuities
   
  Individual Insurance
    Employee Benefits Group
    Sun Life Financial Inc.
    
    
    
    36




---



##### 



2010 Outlook and Priorities
    
 MFS Investment Management
 Business Profile
  
 Strategy
     Sun Life Financial Inc.
    
    
    
    37




---



##### 



2009 Business Highlights
 
    
    MFS had a record year for sales, with gross sales totaling US$48.5 billion.
    
    MFS had its strongest net flows in domestic retail mutual funds since 2001, including nine
consecutive months of net inflows which led to US$3.6 billion of net inflows in 2009.
    
    Managed fund gross sales of US$26.7 billion in 2009 were 50% higher than in 2008.
    
    U.S. retail investment performance continued to be strong during 2009, with 83% of MFSs
fund assets ranking in the top half of their respective three-year Lipper categories at
December 31, 2009.
 Financial and Business Results
 Summary
statement of operations
 (US$ millions)
    
    2009
    
    
    
    2008
    
    
    2007Total revenue
    
    
    1,106
    
    
    
    
    1,308
    
    
    
    1,573Commissions and other expenses
    
    
    875
    
    
    
    
    985
    
    
    
    1,123Income taxes
    
    
    89
    
    
    
    
    128
    
    
    
    173Non-controlling interests in net income of subsidiaries
    
    
    6
    
    
    
    
    9
    
    
    
    15Common shareholders net income
    
    
    136
    
    
    
    
    186
    
    
    
    262Sales (US$ billions)Gross
    
    
    48.5
    
    
    
    
    36.0
    
    
    
    42.7Net
    
    
    18.9
    
    
    
    
    (5.8
    )
    
    
    (4.0
    )Pre-tax operating profit margin ratio
    
    
    26
    %
    
    
    
    30
    %
    
    
    36
    %Average net assets (US$ billions)
    
    
    153
    
    
    
    
    172
    
    
    
    198Selected financial information in Canadian dollarsTotal revenue
    
    
    1,251
    
    
    
    
    1,381
    
    
    
    1,687Common shareholders net income
    
    
    152
    
    
    
    
    194
    
    
    
    281
     
   Sun Life Financial Inc.
    
    
    
    38




---



##### 



2010 Outlook and Priorities
     
 SLF Asia
 Business Profile
   
 Strategy
  
 2009 Business Highlights
 
    
    In Indonesia, a new bancassurance joint venture with CIMB Group was established.
CIMB Niaga Bank is one of the largest banks in Indonesia, with over 600 branches and three
million customers. Since its launch in July 2009, the operation has recorded strong sales
through the in-branch and telemarketing channels.
    
    On July 29, 2009, the Company announced the restructuring of its insurance joint venture
in China. The repositioning of Sun Life Everbright as a domestic insurer will help drive
expansion in Chinas financial services market and enable the Company to fully leverage China
Everbright Banks broad distribution.
    
    Sun Life Hong Kong expanded its alternative distribution channels, with bancassurance
sales increasing by 118% in 2009 compared to 2008 and contributing 25% of total individual
life sales in 2009 compared to 11% in 2008. Sales from financial intermediaries were also up
by 65% in 2009 compared to 2008.
    
    In India, Birla Sun Life Asset Management Company Limited was awarded the industrys
prestigious Mutual Fund House of the Year award for the second consecutive year, a first in
the Indian Mutual Fund Industry. The business continued to have strong momentum with assets
under management and gross sales growth of 48% and 72% in 2009, respectively, over 2008 on a
local currency basis.
   Sun Life Financial Inc.
    
    
    
    39




---



##### 



Financial and Business Results
 Summary
statement of operations
 ($ millions)
    
    2009
    
    
    
    2008
    
    
    2007Premiums
    
    
    848
    
    
    
    
    726
    
    
    
    629Net investment income
    
    
    846
    
    
    
    
    (318
    )
    
    
    255Fee income
    
    
    119
    
    
    
    
    90
    
    
    
    93Total revenue
    
    
    1,813
    
    
    
    
    498
    
    
    
    977Client disbursements and change in actuarial liabilities
    
    
    1,314
    
    
    
    
    64
    
    
    
    501Commissions and other expenses
    
    
    402
    
    
    
    
    379
    
    
    
    330Income taxes
    
    
    21
    
    
    
    
    22
    
    
    
    23Common
shareholders net income
    
    
    76
    
    
    
    
    33
    
    
    
    123
    
 Results by Business Unit
 Hong Kong
   Philippines
     Sun Life Financial Inc.
    
    
    
    40




---



##### 



Indonesia
   India
    China
    
 2010 Outlook and Priorities
      Sun Life Financial Inc.
    
    
    
    41




---



##### 



Corporate
   Financial and Business Results
 Summary
statement of
operations(1)
 ($ millions)
    
    2009
    
    
    
    2008
    
    
    2007Premiums
    
    
    849
    
    
    
    
    851
    
    
    
    963Net investment income
    
    
    504
    
    
    
    
    1,056
    
    
    
    421Fee income
    
    
    34
    
    
    
    
    33
    
    
    
    25Total revenue
    
    
    1,387
    
    
    
    
    1,940
    
    
    
    1,409Client disbursements and change in actuarial liabilities
    
    
    1,231
    
    
    
    
    1,138
    
    
    
    974Commissions and other expenses
    
    
    280
    
    
    
    
    87
    
    
    
    209Income taxes
    
    
    (108
    )
    
    
    
    (285
    )
    
    
    (28
    )Non-controlling interests in net income of subsidiaries
    
    
    
    
    
    
    
    1
    
    
    
    1Dividends paid to preferred shareholders
    
    
    79
    
    
    
    
    70
    
    
    
    69Common shareholders net income
    
    
    (95
    )
    
    
    
    929
    
    
    
    184Special items(2)
    
    
    27
    
    
    
    
    (825
    )
    
    
    61Operating
earnings
    
    
    (68
    )
    
    
    
    104
    
    
    
    245
  
 SLF
U.K.
   
 (1)
    
    Including consolidation adjustments
related to activities between segments.(2)
    
    See Non-GAAP Financial Measures on page 20.   Sun Life Financial Inc.
    
    
    
    42




---



##### 



Investments
  
 Investment Profile
   Investments
 2009
    
    
    
    2008% of total
    
    
    
    
    
    
    
    
    
    
    
    % of totalCarrying
    
    
    Fair
    
    
    carrying
    
    
    
    Carrying
    
    
    Fair
    
    
    carrying($ millions)
    
    Value
    
    
    Value
    
    
    value
    
    
    
    Value
    
    
    Value
    
    
    valueHeld-for-trading bonds
    
    
    51,634
    
    
    
    51,634
    
    
    
    48
    
    
    
    
    48,458
    
    
    
    48,458
    
    
    
    45Available-for-sale bonds
    
    
    9,673
    
    
    
    9,673
    
    
    
    9
    
    
    
    
    10,616
    
    
    
    10,616
    
    
    
    10Mortgages and corporate loans
    
    
    19,449
    
    
    
    19,941
    
    
    
    18
    
    
    
    
    22,302
    
    
    
    22,485
    
    
    
    21Held-for-trading stocks
    
    
    4,331
    
    
    
    4,331
    
    
    
    4
    
    
    
    
    3,440
    
    
    
    3,440
    
    
    
    3Available-for-sale stocks
    
    
    635
    
    
    
    649
    
    
    
    1
    
    
    
    
    1,018
    
    
    
    1,020
    
    
    
    1Real estate
    
    
    4,877
    
    
    
    5,124
    
    
    
    4
    
    
    
    
    4,908
    
    
    
    5,812
    
    
    
    5Policy loans
    
    
    3,303
    
    
    
    3,303
    
    
    
    3
    
    
    
    
    3,401
    
    
    
    3,401
    
    
    
    3Cash, cash equivalents and
short-term securities
    
    
    11,868
    
    
    
    11,868
    
    
    
    11
    
    
    
    
    8,879
    
    
    
    8,879
    
    
    
    8Derivative assets
    
    
    1,382
    
    
    
    1,382
    
    
    
    1
    
    
    
    
    2,669
    
    
    
    2,669
    
    
    
    3Other invested assets
including held-for-trading
and other available-for sale
invested assets
    
    
    1,077
    
    
    
    1,109
    
    
    
    1
    
    
    
    
    1,187
    
    
    
    1,230
    
    
    
    1Total invested assets
    
    
    108,229
    
    
    
    109,014
    
    
    
    100
    
    
    
    
    106,878
    
    
    
    108,010
    
    
    
    100
   Sun Life Financial Inc.
    
    
    
    43




---



##### 



Bonds
   
 
   Asset-backed securities
 2009
    
    
    
    2008BBBAmortized
    
    
    Fair
    
    
    BBB and
    
    
    
    Amortized
    
    
    Fair
    
    
    and($ millions)
    
    Cost
    
    
    value
    
    
    higher
    
    
    
    Cost
    
    
    value
    
    
    higherCommercial mortgage-backed securities
    
    
    2,219
    
    
    
    1,772
    
    
    
    92.9
    %
    
    
    
    2,820
    
    
    
    1,889
    
    
    
    99.7
    %Residential mortgage-backed securitiesAgency
    
    
    735
    
    
    
    768
    
    
    
    100.0
    %
    
    
    
    1,108
    
    
    
    1,138
    
    
    
    100.0
    %Non-agency
    
    
    1,318
    
    
    
    886
    
    
    
    80.2
    %
    
    
    
    1,773
    
    
    
    1,092
    
    
    
    98.4
    %Collateralized debt obligations
    
    
    243
    
    
    
    169
    
    
    
    34.9
    %
    
    
    
    449
    
    
    
    215
    
    
    
    80.8
    %Other*
    
    
    729
    
    
    
    571
    
    
    
    80.6
    %
    
    
    
    983
    
    
    
    754
    
    
    
    97.3
    %Total
    
    
    5,244
    
    
    
    4,166
    
    
    
    87.5
    %
    
    
    
    7,133
    
    
    
    5,088
    
    
    
    98.3
    %
 *
    
    Other includes sub-prime, a portion of the Companys exposure to Alt-A and other asset-backed securities.   Sun Life Financial Inc.
    
    
    
    44




---



##### 



As at December 31, 2009
    
    
    
    
    
    RMBS 
    
    
    RMBS (based on fair value)
    
    CMBS
    
    
    Agency
    
    
    Non-agency
    
    
    CDOs
    
    
    OtherRatingAAA
    
    
    67.3
    %
    
    
    100.0
    %
    
    
    29.9
    %
    
    
    7.5
    %
    
    
    55.1
    %AA
    
    
    7.9
    %
    
    
    0.0
    %
    
    
    28.4
    %
    
    
    21.6
    %
    
    
    5.6
    %A
    
    
    8.0
    %
    
    
    0.0
    %
    
    
    11.5
    %
    
    
    0.2
    %
    
    
    10.2
    %BBB
    
    
    9.7
    %
    
    
    0.0
    %
    
    
    10.4
    %
    
    
    5.6
    %
    
    
    9.7
    %BB & Below
    
    
    7.1
    %
    
    
    0.0
    %
    
    
    19.8
    %
    
    
    65.1
    %
    
    
    19.4
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Vintage2005 & Prior
    
    
    80.9
    %
    
    
    57.7
    %
    
    
    87.9
    %
    
    
    68.6
    %
    
    
    55.6
    %2006
    
    
    14.7
    %
    
    
    8.6
    %
    
    
    10.0
    %
    
    
    11.4
    %
    
    
    17.1
    %2007
    
    
    4.3
    %
    
    
    13.0
    %
    
    
    1.5
    %
    
    
    20.0
    %
    
    
    1.5
    %2008
    
    
    0.0
    %
    
    
    15.9
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    25.8
    %2009
    
    
    0.1
    %
    
    
    4.8
    %
    
    
    0.6
    %
    
    
    0.0
    %
    
    
    0.0
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 As at December 31, 2008
    
    
    
    
    
    RMBS 
    
    
    RMBS (based on fair value)
    
    CMBS
    
    
    Agency
    
    
    Non-agency
    
    
    CDOs
    
    
    OtherRatingAAA
    
    
    74.5
    %
    
    
    100.0
    %
    
    
    33.2
    %
    
    
    19.1
    %
    
    
    51.3
    %AA
    
    
    7.7
    %
    
    
    0.0
    %
    
    
    48.0
    %
    
    
    46.5
    %
    
    
    13.9
    %A
    
    
    8.3
    %
    
    
    0.0
    %
    
    
    11.6
    %
    
    
    10.5
    %
    
    
    20.4
    %BBB
    
    
    9.2
    %
    
    
    0.0
    %
    
    
    5.6
    %
    
    
    4.7
    %
    
    
    11.7
    %BB & Below
    
    
    0.3
    %
    
    
    0.0
    %
    
    
    1.6
    %
    
    
    19.2
    %
    
    
    2.7
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Vintage2005 & Prior
    
    
    85.6
    %
    
    
    59.2
    %
    
    
    90.2
    %
    
    
    75.0
    %
    
    
    59.3
    %2006
    
    
    10.8
    %
    
    
    11.1
    %
    
    
    8.2
    %
    
    
    9.5
    %
    
    
    18.5
    %2007
    
    
    3.5
    %
    
    
    13.1
    %
    
    
    1.6
    %
    
    
    15.5
    %
    
    
    2.5
    %2008
    
    
    0.1
    %
    
    
    16.6
    %
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    19.7
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    Sun Life Financial Inc.
    
    
    
    45




---



##### 



Mortgages and Corporate Loans
     Mortgages by type and location
 ($ millions)
    
    Residential
    
    
    Non-residential
    
    
    Total2009Canada
    
    
    2,341
    
    
    
    5,193
    
    
    
    7,534United States
    
    
    280
    
    
    
    5,905
    
    
    
    6,185United Kingdom
    
    
    
    
    
    
    57
    
    
    
    57Total mortgages
    
    
    2,621
    
    
    
    11,155
    
    
    
    13,776Corporate loans
    
    
    
    
    
    
    
    
    
    
    5,673Total mortgages and corporate loans
    
    
    
    
    
    
    
    
    
    
    19,4492008Canada
    
    
    2,620
    
    
    
    5,896
    
    
    
    8,516United States
    
    
    342
    
    
    
    7,338
    
    
    
    7,680United Kingdom
    
    
    
    
    
    
    71
    
    
    
    71Total mortgages
    
    
    2,962
    
    
    
    13,305
    
    
    
    16,267Corporate loans
    
    
    
    
    
    
    
    
    
    
    6,035Total mortgages and corporate loans
    
    
    
    
    
    
    
    
    
    
    22,302
    Sun Life Financial Inc.
    
    
    
    46




---



##### 



December 31, 2009
 Gross Carrying Value
    
    
    
    
    
    
    Allowance for lossesCorporate
    
    
    
    
    
    
    
    
    
    
    Corporate($ millions)
    
    Mortgages
    
    
    loans
    
    
    Total
    
    
    Mortgages
    
    
    loans
    
    
    TotalNot past due
    
    $
    13,600
    
    
    $
    5,649
    
    
    $
    19,249
    
    
    $
    
    
    
    $
    
    
    
    $
    Past due:Past due less than 90 days
    
    
    30
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    Past due 90 to 179 days
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Past due 180 days or more
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    Impaired
    
    
    252
    
    
    
    33
    
    
    
    285
    
    
    
    106
    
    
    
    10
    
    
    
    116Balance, December 31, 2009
    
    $
    13,882
    
    
    $
    5,683
    
    
    $
    19,565
    
    
    $
    106
    
    
    $
    10
    
    
    $
    116
 December 31, 2008
 Gross Carrying Value
    
    
    
    
    
    
    Allowance for lossesCorporate
    
    
    
    
    
    
    
    
    
    
    Corporate($ millions)
    
    Mortgages
    
    
    loans
    
    
    Total
    
    
    Mortgages
    
    
    loans
    
    
    TotalNot past due
    
    $
    16,171
    
    
    $
    5,946
    
    
    $
    22,117
    
    
    $
    
    
    
    $
    
    
    
    $
    Past due:Past due less than 90 days
    
    
    17
    
    
    
    17
    
    
    
    34
    
    
    
    
    
    
    
    
    
    
    
    Past due 90 to 179 days
    
    
    
    
    
    
    14
    
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    Past due 180 days or more
    
    
    1
    
    
    
    9
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    Impaired
    
    
    91
    
    
    
    59
    
    
    
    150
    
    
    
    13
    
    
    
    10
    
    
    
    23Balance, December 31, 2008
    
    $
    16,280
    
    
    $
    6,045
    
    
    $
    22,325
    
    
    $
    13
    
    
    $
    10
    
    
    $
    23
 Stocks
  Real Estate
   Derivative Financial Instruments and Risk Mitigation
      Sun Life Financial Inc.
    
    
    
    47




---



##### 



Products/Application
    
    Uses of Derivative
    
    Derivative UsedU.S. universal life
contracts and U.K.
unit-linked pension
products with guaranteed
annuity rate options and
U.K. With Profit fund
    
    To limit potential
financial losses
from significant
reductions in asset
earned rates
relative to
contract guarantees
and to protect the
SLF U.K. With
Profit fund from
the impact of a
significant fall in
the U.K. equity
market below a
specified level
    
    Options, swaps and spreadlocks
on interest rates; put and
call options on the U.K.
equity indexInterest rate exposure in
relation to
asset/liability
management
    
    To manage the
sensitivity of the
duration gap
between assets and
liabilities to
interest rate
changes
    
    Interest rate swaps and optionsU.S. variable annuities,
Canadian segregated funds
and reinsurance on
variable annuity
guarantees offered by
other insurance companies
    
    To manage the
exposure to product
guarantees
sensitive to
movement in equity
market and interest
rate levels
    
    Put and call options on equity
indices; futures on equity
indices, government bonds and
interest rates; interest rate
swapsU.S. fixed index annuities
    
    To manage the
exposure to product
guarantees related
to equity market
performance
    
    Futures and options on equity
indices; swaps and futures on
interest ratesCurrency exposure in
relation to
asset/liability
management
    
    To reduce the
sensitivity to
currency
fluctuations by
matching the value
and cash flows of
specific assets
denominated in one
currency with the
value and cash
flows of the
corresponding
liabilities
denominated in
another currency
    
    Currency swaps and forwards
    ($ millions)
    
    2009
    
    
    
    2008As at December 31Net fair value
    
    
    125
    
    
    
    
    (550
    )Total notional amount
    
    
    47,260
    
    
    
    
    50,796Credit equivalent amount
    
    
    1,010
    
    
    
    
    1,260Risk-weighted credit equivalent amount
    
    
    7
    
    
    
    
    28
      Sun Life Financial Inc.
    
    
    
    48




---



##### 



Impaired Assets
       
 Risk Management
 
 Risk Management Framework
      Sun Life Financial Inc.
    
    
    
    49




---



##### 



Risk Philosophy and Principles
  
 Strategic Alignment
     
 Stakeholder Interests
   
 Capability Alignment
  
 Risk Budgeting
  
 Portfolio Perspective
    Sun Life Financial Inc.
    
    
    
    50




---



##### 



Risk to Reputation
  
 
 Accountability
     
 
 Risk Management Policies
  
   Sun Life Financial Inc.
    
    
    
    51




---



##### 



Risk Categories
   Credit Risk
 Risk Description
  Credit Risk Management Governance and Control
  
    
    Detailed credit risk management policies
    
    Specific investment diversification requirements such as investing by asset class,
geography and industry
    
    Credit portfolio, counterparty and sector exposure limits
    
    Target capital levels that exceed regulatory minimums
    
    Credit quality ratings for portfolio investments are established and reviewed regularly
    
    Comprehensive due diligence processes and ongoing credit analysis
    
    Reserve provisions are established in accordance with standards set forth by the
Canadian Institute of Actuaries
    
    Use of stress-testing techniques, such as Dynamic Capital Adequacy Testing, which
measure the effects of large and sustained adverse credit developments
    
    Comprehensive compliance monitoring practices and procedures including reporting against
pre-established investment limits
    
    Active credit risk governance including independent monitoring and review and reporting
to senior management and the Board
  
 Market Risk
 Risk Description
  Sun Life Financial Inc.
    
    
        52




---



##### 



Market Risk Management Governance and Control
  
    
    Establishment of an enterprise-wide risk appetite and stress testing policy
    
    Product development and pricing policies that require detailed risk assessment and
pricing provisions for material market risks
    
    Hedging and asset-liability management programs are maintained in respect of key
selected market risks
    
    Target capital levels that exceed regulatory minimums
    
    The effects of large and sustained adverse market movement are measured through stress
testing techniques such as Dynamic Capital Adequacy Testing
 
    
    Reserve provisions are established in accordance with standards set forth by the
Canadian Institute of Actuaries
    
    Ongoing monitoring and reporting of market risk sensitivities against pre-established
risk tolerance limits
 Sources of Equity Market Risk
   December 31, 2009($ millions)
    
    
    Fund Value
    
    
    Amount at Risk
    
    
    Actuarial LiabilitiesSLF Canada
    
    
    
    10,796
    
    
    
    
    539
    
    
    
    
    215SLF U.S.
    
    
    
    21,069
    
    
    
    
    3,006
    
    
    
    
    675Run-off reinsurance
    
    
    
    3,049
    
    
    
    
    811
    
    
    
    
    452Total
    
    
    
    34,915
    
    
    
    
    4,356
    
    
    
    
    1,342
 December 31, 2008($ millions)
    
    
    Fund Value
    
    
    Amount at Risk
    
    
    Actuarial LiabilitiesSLF Canada
    
    
    
    7,940
    
    
    
    
    1,373
    
    
    
    
    616SLF U.S.
    
    
    
    18,115
    
    
    
    
    6,490
    
    
    
    
    1,726Run-off reinsurance
    
    
    
    3,675
    
    
    
    
    1,200
    
    
    
    
    694Total
    
    
    
    29,730
    
    
    
    
    9,063
    
    
    
    
    3,036
   Sun Life Financial Inc.
    
    
    
    53




---



##### 



Hedging of Guarantees
        Sun Life Financial Inc.
    
    
    
    54




---



##### 



Market Risk Sensitivity
  Interest Rates(1)
    
    

Equity Markets(2)
    
    

Equity Markets(2)1% increase
    
    
    1% decrease
    
    
    10% increase
    
    
    10% decrease
    
    
    25% increase
    
    
    25% decreaseNet income impact ($millions)
    
    

    (50)  50

    
    

    (150)  (250)

    
    

    75  125

    
    

    (150)  (200)

    
    

    150  250

    
    

    (475)  (575)MCCSR
ratio(3)
    
    
    up to
    
    
    up to
    
    
    up to
    
    
    up to
    
    
    up to
    
    
    up to8 percentage
    
    
    12 percentage
    
    
    5 percentage
    
    
    5 percentage
    
    
    5 percentage
    
    
    15 percentagepoints
    
    
    points
    
    
    points
    
    
    points
    
    
    points
    
    
    pointsincrease
    
    
    decrease
    
    
    increase
    
    
    decrease
    
    
    increase
    
    
    decrease(1)    Represents a 100 basis point parallel shift in assumed interest rates across the entire yield curve as at December 31, 2009(2)    Represents the respective change across all equity markets as at December 31, 2009. Assumes that actual equity exposures consistently and precisely track the broader
equity markets. Since in actual practice equity related exposures generally differ from broad market indices (due to the impact of active management, basis risk, and other factors),
realized sensitivities may differ significantly for from those illustrated above(3)    The sensitivities provided are relative to the MCCSR ratio for Sun Life Assurance of 221%
      Sun Life Financial Inc.
    
    
    
    55




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##### 



www.sec.gov
  Insurance Risk
 Risk Description
  Insurance Risk Management Governance and Control
  
    
    Enterprise-wide insurance underwriting and claims, product development and pricing, and
reinsurance risk management policies
    
    Product development and pricing policies require detailed risk assessment and provision
for material insurance risks
    
    Reserve provisions are established in accordance with standards set forth by the Canadian
Institute of Actuaries
    
    Target capital levels established that exceed regulatory minimums
    
    Board-approved maximum retention limits (amounts issued in excess of these limits are
reinsured)
    
    Various limits, restrictions and fee structures may be introduced into plan designs in
order to establish more homogeneous policy risk profile and limit potential for
anti-selection
    
    Enterprise underwriting and risk selection standards with oversight by corporate
underwriting and claims risk management function
    
    Diversification and risk pooling is managed by aggregation of broad exposures across
product lines, geography, distribution channels, etc.
    
    Experience studies (both Company specific and industry level) and Source of Earnings
analysis are periodically monitored and factored into ongoing valuation, renewal and new
business pricing processes
    
    Effects of large and sustained adverse market movement are measured through Dynamic
Capital Adequacy Testing and other stress-testing techniques
    
    Sun Life Financial has established a reinsurance ceded policy to set acceptance criteria
and protocols to monitor the level of reinsurance ceded to any single reinsurer or group of
reinsurers. The Companys reinsurance counterparty risk profile is monitored closely,
including through regular reporting to the Risk Review Committee of the Board of Directors
 
 Operational Risk
 Risk Description
  Sun Life Financial Inc.
    
    
    
    56




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##### 



Operational Risk Management Governance and Control
  
    
    Enterprise-wide policies for all significant operational risks
    
    A comprehensive insurance program, including appropriate levels of self-insurance, is
maintained to provide protection against a specified range of potential operational losses.
    
    An environmental risk management program is maintained to help protect investment assets
(primarily real estate, mortgage and structured finance portfolios) from losses due to
environmental issues and to help ensure compliance with applicable laws.
    
    Business continuity, crisis management and disaster recovery programs have been
implemented and undergo periodic testing
    
    An enterprise-wide security program has been established, consisting of policies,
procedures, processes, and technology, aligned to appropriate industry standards and
compliant with applicable laws and regulations.
    
    An enterprise-wide compliance framework has been established consisting of policies and
operating guidelines, supported by a network of compliance officers
    
    Privacy policies, privacy officers and processes have been established to provide
guidance on handling private and confidential information and for reporting privacy issues
to appropriate management for response and resolution
    
    Ongoing monitoring and reporting of all significant operational risks, including regular
briefings to senior management and Board Committees
    
    Annual enterprise-wide attestation by all employees regarding compliance with the Sun
Life Financial Code of Business Conduct.
  Strategic Risk
 Risk Description
  Strategic Risk Management Governance and Control
   Capital and Liquidity Management
   Sun Life Financial Inc.
    
    
    
    57




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##### 



Principal Sources of Funds
    ($ millions)
    
    2009
    
    
    2008
    
    2007Net cash provided by operating activities
    
    
    3,548
    
    
    
    
    1,737
    
    
    
    1,068Net cash provided by (used in) financing activities
    
    
    1,052
    
    
    
    
    (499
    )
    
    
    (92
    )Net cash provided by (used in) investing activities
    
    
    (3,451
    )
    
    
    
    35
    
    
    
    (2,010
    )Changes due to fluctuations in exchange rates
    
    
    (802
    )
    
    
    
    642
    
    
    
    (299
    )Increase (decrease) in cash and cash equivalents
    
    
    347
    
    
    
    
    1,915
    
    
    
    (1,333
    )Cash and cash equivalents, beginning of year
    
    
    5,518
    
    
    
    
    3,603
    
    
    
    4,936Cash and cash equivalents, end of year
    
    
    5,865
    
    
    
    
    5,518
    
    
    
    3,603Short-term
securities, end of year (1)
    
    
    6,003
    
    
    
    
    3,361
    
    
    
    1,897Cash, cash equivalents and short-term securities, end of year
    
    
    11,868
    
    
    
    
    8,879
    
    
    
    5,500
 (1)
    
    Includes a restatement of $1,745 million of short term securities as at December 31, 2008
that were previously included as cash equivalents. As a result, cash flows provided by
(used in) investing activities have been adjusted by $1,745 million in the
2008 amounts above.
 
 Liquidity
  
    
    Capital levels
    
    Asset levels
    
    Matching position
    
    Diversification and credit quality of its investments
    
    Cash forecasts and actual amounts against established targets
  Sun Life Financial Inc.
    
    
    
    58




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##### 



Capital
     Sun Life Financial Inc.
    
    
    
    59




---



##### 



Source of Capital
 ($ millions)
    
    2009
    
    2008
    
    2007Subordinated debt
    
    
    3,048
    
    
    
    2,576
    
    
    
    1,796Trust Securities(1)
    
    
    1,644
    
    
    
    1,150
    
    
    
    1,150EquityParticipating policyholders equity
    
    
    107
    
    
    
    106
    
    
    
    95Preferred shareholders equity
    
    
    1,741
    
    
    
    1,495
    
    
    
    1,495Common shareholders equity (2)
    
    
    15,566
    
    
    
    15,808
    
    
    
    15,627Total Equity
    
    
    17,414
    
    
    
    17,409
    
    
    
    17,217Total Capital
    
    
    22,106
    
    
    
    21,135
    
    
    
    20.163Ratio of debt to total capital
    
    
    21.2
    %
    
    
    17.6
    %
    
    
    14.6
    %Ratio of debt plus preferred shares to total capital
    
    
    29.1
    %
    
    
    24.7
    %
    
    
    22.0
    %
 (1)
    
    Includes SLEECS net of associated transaction costs(2)
    
    Certain components of accumulated other comprehensive income, namely unrealized gain and losses on cash
flow hedges and available-for-sale debt securities, (effective 2008) are excluded from regulatory capital
     Series 2009-1 due December 31, 2108.
    Sun Life Financial Inc.
    
    
    
    60




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##### 



Number of Common Shares Outstanding(in millions)
    
    2009
    
    2008
    
    2007Balance, beginning of year
    
    
    559.7
    
    
    
    564.1
    
    
    
    571.8Stock options exercised
    
    
    4.7
    
    
    
    0.4
    
    
    
    2.1Shares repurchased
    
    
    
    
    
    
    (4.8
    )
    
    
    (9.8
    )Balance, end of year
    
    
    564.4
    
    
    
    559.7
    
    
    
    564.1Number of Stock Options Outstanding(in millions)
    
    
    2009
    
    
    
    2008
    
    
    
    2007Balance, beginning of year
    
    
    10.0
    
    
    
    8.2
    
    
    
    9.1Options issued
    
    
    4.3
    
    
    
    2.3
    
    
    
    1.3Options exercised or cancelled
    
    
    (1.1
    )
    
    
    (0.5
    )
    
    
    (2.2
    )Balance, end of year
    
    
    13.2
    
    
    
    10.0
    
    
    
    8.2
 
 Shareholder Dividends
    Dividends declared for 2009Amount per shareCommon shares
    
    $
    1.44
 Class A preferred shares
    
    Coupon rate
    
    Date issued
    
    Amount per shareSeries 1
    
    4.75%
    
    February 25, 2005
    
    $
    1.187500Series 2
    
    4.80%
    
    July 15, 2005
    
    $
    1.200000Series 3
    
    4.45%
    
    January 13, 2006
    
    $
    1.112500Series 4
    
    4.45%
    
    October 10, 2006
    
    $
    1.112500Series 5
    
    4.50%
    
    February 2, 2007
    
    $
    1.112500Series 6R
    
    6.00%
    
    May 20, 2009
    
    $
    0.921580
 Sun Life Financial Inc.
    
    
    
    61




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##### 



Capital Adequacy
     (PIE CHART)(PIE CHART)
 Sun Life Financial Inc.
    
    
    
    62




---



##### 



Sun Life Assurance MCCSR($ millions)
    
    2009
    
    
    2008
    
    
    2007Capital availableRetained earnings and contributed surplus
    
    
    9,733
    
    
    
    10,117
    
    
    
    9,957Other comprehensive income
    
    
    (1,510
    )
    
    
    (841
    )
    
    
    (1,521
    )Common and preferred shares
    
    
    2,596
    
    
    
    1,996
    
    
    
    1,446Innovative instruments and subordinated debt
    
    
    3,094
    
    
    
    2,600
    
    
    
    2,400Other
    
    
    269
    
    
    
    219
    
    
    
    531Less:Goodwill and intangibles in excess of limit
    
    
    1,859
    
    
    
    1,893
    
    
    
    1,607Non-life investments and other
    
    
    1,660
    
    
    
    1,585
    
    
    
    1,555Total capital available
    
    
    10,663
    
    
    
    10,613
    
    
    
    9,651Required capitalAsset default and market risks
    
    
    2,699
    
    
    
    2,620
    
    
    
    2,497Insurance risks
    
    
    1,397
    
    
    
    1,279
    
    
    
    1,276Interest rate risks
    
    
    735
    
    
    
    683
    
    
    
    861Other
    
    
    
    
    
    
    
    
    
    
    (110
    )Total capital required
    
    
    4,831
    
    
    
    4,582
    
    
    
    4,524MCCSR ratio
    
    
    221
    %
    
    
    232
    %
    
    
    213
    %
      Sun Life Financial Inc.
    
    
    
    63




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##### 



Off-balance Sheet Arrangements
  
    
    Earn management fees and additional spread on a matched book of business
    
    Reduce financing costs
  
    
    Asset securitizations
    
    Securities lending
 Asset securitizations
   ($ millions)
    
    2009
    
    
    
    2008As at December 31Securitized assets under management
    
    
    1,882
    
    
    
    
    2,269The Companys retained interest
    
    
    35
    
    
    
    
    70For the year ended December 31Cash flow received on retained interests and
servicing fees
    
    
    11
    
    
    
    
    12
 Securities Lending
  
 Sun Life Financial Inc.
    
    
    
    64




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##### 



Commitments, Guarantees, Contingencies and Reinsurance Matters
   Financial Liabilities and Contractual Obligations
 ($ millions)
    
    Total
    
    
    Within 1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    Over 5 yearsSenior debentures and unsecured financing(1)
    
    
    10,805
    
    
    
    233
    
    
    
    459
    
    
    
    459
    
    
    
    9,654Subordinated debt(1)
    
    
    5,510
    
    
    
    191
    
    
    
    383
    
    
    
    383
    
    
    
    4,553Bond repurchase agreements and securities lending
transactions
    
    
    1,266
    
    
    
    1,266
    
    
    
    
    
    
    
    
    
    
    
    Accounts payable and accrued expenses
    
    
    1,927
    
    
    
    1,927
    
    
    
    
    
    
    
    
    
    
    
    Borrowed funds(1)
    
    
    385
    
    
    
    98
    
    
    
    142
    
    
    
    83
    
    
    
    62General fund policy liabilities(2)
    
    
    196,763
    
    
    
    12,365
    
    
    
    11,504
    
    
    
    11,543
    
    
    
    161,351Total liabilities
    
    
    216,656
    
    
    
    16,080
    
    
    
    12,488
    
    
    
    12,468
    
    
    
    175,620Contractual commitments(3)Contractual loan, equity and real estate
    
    
    804
    
    
    
    419
    
    
    
    197
    
    
    
    119
    
    
    
    69Operating leases
    
    
    332
    
    
    
    90
    
    
    
    138
    
    
    
    65
    
    
    
    39Total contractual commitments
    
    
    1,136
    
    
    
    509
    
    
    
    335
    
    
    
    184
    
    
    
    108
  (1)
    
    Expected interest payments included.(2)
    
    General fund policyholder liability cash flows include estimates related to the timing and payment of death and disability claims, policy maturities, annuity payments,
minimum guarantees on segregated fund products, policyholder dividends, amounts on deposits, commissions and premium taxes offset by contractual future premiums and fees on in-force contracts.
These estimated cash flows are based on the best estimate assumptions used in the determination of policyholder liabilities. These amounts are undiscounted and do not reflect recoveries from
reinsurance agreements. The actuarial and other policy liability amounts included in the 2009 SLF Inc.s Consolidated Financial Statements are based on the present value of the estimated cash flows
and are net of reinsured amounts. Due to the use of assumptions, actual cash flows will differ from these estimates.(3)
    
    Contractual commitments and operating lease commitments are not reported on the consolidated balance sheets. 
 Legal and Regulatory Proceedings
  Sun Life Financial Inc.
    
    
    
    65