##### 



Exhibit 3




---



##### 



(i)
    
    SLF Inc.s Managements Discussion and Analysis (MD&A) for the year ended December 31,
2006, and(ii)
    
    SLF Inc.s Consolidated Financial Statements and accompanying notes (Consolidated
Financial Statements) for the year ended December 31, 2006.




---



##### 



Table of contents
 ManagementsDiscussion &
    
    ConsolidatedAnalysis
    
    FinancialAnnual
    
    Incorporated by
    
    StatementsInformation Form
    
    Reference
    
    and NotesCorporate structure
    
    
    1General development of the business
    
    
    2
    
    
    32
    
    15Business of Sun Life FinancialGeneral summary
    
    
    4
    
    
    810Business performance
    
    
    
    
    
    1131
    
    26Risk management
    
    
    
    
    
    3843Investments
    
    
    
    
    
    4345Capital structureGeneral description
    
    
    6
    
    
    
    
    3540, 4950Constraints
    
    
    7Market for securities
    
    
    7Sales of unlisted securities
    
    
    8Dividends
    
    
    9
    
    
    4647
    
    4Transfer agent and registers
    
    
    11Directors and executive officers
    
    
    12Interests of experts
    
    
    16Regulatory matters
    
    
    17Risk factors
    
    
    26Legal and regulatory proceedings
    
    
    31
    
    
    50
    
    43Additional information
    
    
    31AppendicesA 
Charter of Audit and Conduct Review Committee
    
    
    32B  Policy Restricting the use of External Auditors
    
    
    34




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##### 



Corporate structure
       
 Sun
Life Financial Inc. | sunlife.com
    
    
    1




---



##### 



General development of the business
    Products
    
    SLF Canada
    
    SLF U.S.
    
    MFS
    
    SLF Asia
    
    CorporateIndividual life insurance
    
    
    n
    
    
    
    n
    
    
    
    
    
    
    
    n
    
    
    
    nIndividual annuity and savings
    
    
    n
    
    
    
    n
    
    
    
    n
    
    
    
    n
    
    
    
    nGroup life and health
    
    
    n
    
    
    
    n
    
    
    
    
    
    
    
    nGroup pension and retirement
    
    
    n
    
    
    
    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
    
    
    
    
    
    
    
    nPension and benefit consultants
    
    
    n
    
    
    
    n
    
    
    
    nDirect sales (including Internet)
    
    
    n
    
    
    
    
    
    
    
    n
    
    
    
    n
   2
    
    Sun Life Financial Inc.
| sunlife.com




---



##### 



Corporate reorganization
  CMG Asia Limited
  Other operations
  U.S. group benefits business acquisition
   Sun Life Financial Inc. | sunlife.com
    
    
    3




---



##### 



Business of Sun Life Financial
           4
    
    Sun Life Financial Inc.
| sunlife.com




---



##### 



Country/Business
    
    Number of FTEsCanada
    
    
    7,323United States
    
    
    4,969Philippines
    
    
    625Hong Kong
    
    
    560Ireland
    
    
    378Indonesia
    
    
    268India
    
    
    66United Kingdom
    
    
    32Bermuda
    
    
    28China
    
    
    15Total
    
    
    14,264
   Sun Life Financial Inc. | sunlife.com
    
    
    5




---



##### 



Capital structure
    Issued Share Capital
 Number of
    
    
    
    
    
    
    Exchanges1Security
    
    Shares
    
    
    TSX
    
    NYSE
    
    PSECommon Shares

    
    
    571,897,513

    
    
    
    
    n
    
    
    
    n
    
    
    
    nClass A Preferred SharesSeries 1
    
    
    16,000,000
    
    
    
    
    nSeries 2
    
    
    13,000,000
    
    
    
    
    nSeries 3
    
    
    10,000,000
    
    
    
    
    nSeries 4
    
    
    12,000,000
    
    
    
    
    nSeries 52
    
    
    10,000,000
    
    
    
    
    n
 1
    
    Toronto Stock Exchange (TSX), New York Stock Exchange (NYSE) and
Philippines Stock Exchange (PSE)2
    
    The Class A Preferred Shares Series 5
were issued on February 2, 2007
     Class A Preferred Shares
 QuarterlySeries
    
    Dividend ($)
    
    Early Redemption Date
    
    Prospectus DateSeries 1
    
    
    0.296875
    
    
    March 31, 2010
    
    February 17, 2005Series 2
    
    
    0.300000
    
    
    September 30, 2010
    
    July 8, 2005Series 3
    
    
    0.278125
    
    
    March 31, 2011
    
    January 6, 2006Series 4
    
    
    0.278125
    
    
    December 31, 2011
    
    October 2, 2006Series 5
    
    
    0.281250
    
    
    March 31, 2012
    
    January 25, 2007
 6
    
    Sun Life Financial Inc.
| sunlife.com




---



##### 



Regulatory matters  Canada 
Restrictions on ownership
   Common Shares
 Price ($)TradingHigh
    
    Low
    
    Close
    
    Volume(thousands)January
    
    
    48.70
    
    
    
    46.13
    
    
    
    47.74
    
    
    
    20,857February
    
    
    50.49
    
    
    
    47.28
    
    
    
    49.75
    
    
    
    28,252March
    
    
    50.65
    
    
    
    48.76
    
    
    
    49.65
    
    
    
    23,709April
    
    
    50.12
    
    
    
    46.51
    
    
    
    47.15
    
    
    
    21,226May
    
    
    47.35
    
    
    
    43.78
    
    
    
    45.18
    
    
    
    32,839June
    
    
    46.60
    
    
    
    43.10
    
    
    
    44.35
    
    
    
    24,996July
    
    
    46.19
    
    
    
    42.81
    
    
    
    43.19
    
    
    
    20,637August
    
    
    46.00
    
    
    
    41.79
    
    
    
    45.52
    
    
    
    27,429September
    
    
    47.19
    
    
    
    44.34
    
    
    
    45.85
    
    
    
    26,021October
    
    
    47.25
    
    
    
    44.11
    
    
    
    47.22
    
    
    
    29,818November
    
    
    49.90
    
    
    
    46.52
    
    
    
    48.75
    
    
    
    24,821December
    
    
    51.75
    
    
    
    48.63
    
    
    
    49.32
    
    
    
    21,784
 Sun Life Financial Inc. | sunlife.com
    
    
    7




---



##### 



Class A Preferred Shares
 Series 1
    
    Series 2Price ($)
    
    Trading
    
    Price ($)
    
    TradingHigh
    
    Low
    
    Close
    
    Volume
    
    High
    
    Low
    
    Close
    
    Volume(thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    (thousands)January
    
    
    26.15
    
    
    
    25.11
    
    
    
    25.37
    
    
    
    384
    
    
    
    26.20
    
    
    
    25.21
    
    
    
    25.38
    
    
    
    270February
    
    
    25.70
    
    
    
    25.26
    
    
    
    25.49
    
    
    
    318
    
    
    
    25.80
    
    
    
    25.35
    
    
    
    25.75
    
    
    
    289March
    
    
    25.94
    
    
    
    25.03
    
    
    
    25.58
    
    
    
    383
    
    
    
    25.92
    
    
    
    25.26
    
    
    
    25.68
    
    
    
    381April
    
    
    25.80
    
    
    
    24.36
    
    
    
    24.70
    
    
    
    235
    
    
    
    25.90
    
    
    
    24.75
    
    
    
    24.75
    
    
    
    214May
    
    
    25.00
    
    
    
    23.90
    
    
    
    24.72
    
    
    
    489
    
    
    
    25.10
    
    
    
    24.25
    
    
    
    24.60
    
    
    
    251June
    
    
    25.10
    
    
    
    24.50
    
    
    
    24.71
    
    
    
    299
    
    
    
    25.05
    
    
    
    24.55
    
    
    
    24.70
    
    
    
    346July
    
    
    24.98
    
    
    
    24.66
    
    
    
    24.90
    
    
    
    164
    
    
    
    25.15
    
    
    
    24.47
    
    
    
    25.00
    
    
    
    311August
    
    
    25.49
    
    
    
    24.56
    
    
    
    25.15
    
    
    
    540
    
    
    
    25.46
    
    
    
    24.98
    
    
    
    25.30
    
    
    
    460September
    
    
    25.60
    
    
    
    25.05
    
    
    
    25.51
    
    
    
    146
    
    
    
    25.67
    
    
    
    25.27
    
    
    
    25.60
    
    
    
    502October
    
    
    25.84
    
    
    
    25.40
    
    
    
    25.62
    
    
    
    360
    
    
    
    25.73
    
    
    
    25.35
    
    
    
    25.64
    
    
    
    573November
    
    
    25.99
    
    
    
    25.25
    
    
    
    25.98
    
    
    
    499
    
    
    
    26.19
    
    
    
    25.28
    
    
    
    25.75
    
    
    
    372December
    
    
    25.99
    
    
    
    25.43
    
    
    
    25.99
    
    
    
    254
    
    
    
    26.10
    
    
    
    25.57
    
    
    
    26.00
    
    
    
    207
 Series 3
    
    Series 4Price ($)
    
    Trading
    
    Price ($)
    
    TradingHigh
    
    Low
    
    Close
    
    Volume
    
    High
    
    Low
    
    Close
    
    Volume(thousands)
    
    
    
    
    
    
    
    
    
    
    
    
    
    (thousands)January
    
    
    24.89
    
    
    
    24.30
    
    
    
    24.30
    
    
    
    802
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    February
    
    
    24.64
    
    
    
    24.20
    
    
    
    24.50
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    March
    
    
    24.99
    
    
    
    24.40
    
    
    
    24.61
    
    
    
    715
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    April
    
    
    25.06
    
    
    
    23.85
    
    
    
    23.95
    
    
    
    363
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    May
    
    
    24.39
    
    
    
    23.63
    
    
    
    24.12
    
    
    
    271
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    June
    
    
    24.52
    
    
    
    23.80
    
    
    
    24.25
    
    
    
    452
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    July
    
    
    24.45
    
    
    
    24.00
    
    
    
    24.15
    
    
    
    447
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    August
    
    
    24.75
    
    
    
    24.11
    
    
    
    24.40
    
    
    
    475
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    September
    
    
    24.94
    
    
    
    24.40
    
    
    
    24.70
    
    
    
    190
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    October
    
    
    24.75
    
    
    
    24.26
    
    
    
    24.45
    
    
    
    517
    
    
    
    24.99
    
    
    
    23.94
    
    
    
    24.05
    
    
    
    2,072November
    
    
    24.75
    
    
    
    24.07
    
    
    
    24.60
    
    
    
    587
    
    
    
    24.55
    
    
    
    24.00
    
    
    
    24.32
    
    
    
    1,277December
    
    
    25.00
    
    
    
    24.25
    
    
    
    24.79
    
    
    
    324
    
    
    
    24.89
    
    
    
    24.26
    
    
    
    24.86
    
    
    
    852
    8
    
    Sun Life Financial Inc. | sunlife.com




---



##### 



Dividends Declared
 2006
    
    
    2005
    
    2004Common Shares
    
    $
    1.15
    
    
    
    $
    0.99
    
    
    $
    0.86Class A Preferred SharesSeries 1
    
    $
    1.187500
    
    
    
    $
    1.000
    
    
    
    Series 2
    
    $
    1.200000
    
    
    
    $
    0.553
    
    
    
    Series 3
    
    $
    1.069067
    
    
    
    
    
    
    
    
    Series 4
    
    $
    0.249932
    
    
    
    
    
    
    
    
    Series 5
    
    
    
    
    
    
    
    
    
    
    
    
     Sun Life Financial Inc. | sunlife.com
    
    
    9




---



##### 



Security Ratings
 DBRS1
    
    S & P2Rating
    
    Rank
    
    Rating
    
    RankClass A Preferred SharesSeries 1-5
    
    Pfd-1 (low)
    
    1 of 6
    
    P-1 (low)/A
    
    1 of 53Senior Unsecured DebenturesSeries A-C
    
    AA (low)
    
    2 of 10
    
    AA-
    
    2 of 10
 1
    
    Dominion Bond Rating Service (DBRS)2
    
    Standard & Poors, a division of The McGraw-Hill Companies, Inc. (S&P)3
    
    Reflects Canadian scale, corresponds to 4 of 20 on Global scale
 Dominion Bond Rating Service
   Standard
& Poors
     10
    
    Sun Life Financial Inc. | sunlife.com




---



##### 



Transfer agents and registers
  Country
    
    Transfer Agent and Location of RegistersCanada and the
    
    CIBC Mellon Trust CompanyUnited States
    
    P.O. Box 7010, Adelaide Street Postal Station,Toronto, Ontario, Canada, M5C 2W9United Kingdom
    
    Capita IRG PlcBourne House, 34 Beckenham Road,Beckenham, Kent,United Kingdom BR3 4TUPhilippines
    
    The Hongkong and Shanghai Banking Corp. Ltd.30/F The Discovery Suites, #25 ADB Avenue,Ortigas Centre, Pasig,Metro Manila, PhilippinesHong Kong
    
    Computershare Hong Kong Investor Services Limited18th Floor, Rooms 1806  1807, Hopewell Centre,183 Queens Road East,Wanchai, Hong Kong
  Sun Life Financial Inc. | sunlife.com
    
    
    11




---



##### 



Directors and executive officers
    Name andProvince/State and
    
    Principal
    
    DirectorCountry of Residence
    
    Occupation
    
    Since
    
    Board Committee MembershipJames C. Baillie
    
    of Counsel, Torys LLP
    
    
    2000
    
    
    Audit and Conduct ReviewOntario, Canada
    
    
    
    
    
    
    
    Risk ReviewGeorge W. Carmany, III
    
    President, G.W. Carmany and Company,
    
    
    2004
    
    
    Management ResourcesMassachusetts, USA
    
    Inc.
    
    
    
    
    
    Risk ReviewJohn H. Clappison
    
    Corporate Director
    
    
    2006
    
    
    Audit and Conduct ReviewOntario, Canada
    
    
    
    
    
    
    
    Risk ReviewDavid A. Ganong
    
    President, Ganong Bros. Limited
    
    
    2002
    
    
    Governance1New Brunswick, Canada
    
    
    
    
    
    
    
    Management ResourcesRisk Review1Germaine Gibara
    
    President, Avvio Management Inc.
    
    
    2002
    
    
    Audit and Conduct ReviewQuebec, Canada
    
    
    
    
    
    
    
    GovernanceKrystyna T. Hoeg
    
    Corporate Director
    
    
    2002
    
    
    Audit and Conduct ReviewOntario, Canada
    
    
    
    
    
    
    
    Risk ReviewDavid W. Kerr
    
    Corporate Director
    
    
    2004
    
    
    Audit and Conduct ReviewOntario, Canada
    
    
    
    
    
    
    
    Management ResourcesIdalene F. Kesner
    
    Chairperson, Department of
    
    
    2002
    
    
    GovernanceIndiana, USA
    
    Management,
    
    
    
    
    
    Risk ReviewFrank P. Popoff Chair of StrategicManagement, Kelley School of Business,Indiana UniversityBertin F. Nadeau
    
    Chairman and Chief Executive Officer,
    
    
    1999
    
    
    GovernanceQuebec, Canada
    
    GescoLynx Inc.
    
    
    
    
    
    Management ResourcesRonald W. Osborne
    
    Chairman SLF Inc. and Sun Life
    
    
    1999
    
    
    Audit and Conduct Review2Ontario, Canada
    
    Assurance
    
    
    
    
    
    GovernanceManagement Resources2Risk Review2Donald A. Stewart
    
    Chief Executive Officer, SLF Inc. and
    
    
    1999
    
    
    (none)Ontario, Canada
    
    Sun Life AssuranceW. Vickery Stoughton
    
    President and Chief Executive Officer,
    
    
    1999
    
    
    GovernanceCalifornia, USA
    
    Magnevu Inc.
    
    
    
    
    
    Management Resources
 
 1
    
    Mr. Ganong resigned from the Governance Committee and joined the Risk Review Committee
effective December 6, 20062
    
    Mr. Osborne is an ex-officio member of these committees. 12
    
    
    
    Sun Life Financial Inc. |  sunlife.com




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##### 



(i)
    
    Professor Kesner, a director of SLF Inc., was a director of Harriet & Henderson Yarns, Inc.
until May 2003. In July 2003 Harriet & Henderson Yarns, Inc. filed a voluntary petition under
Chapter 11 of the Bankruptcy Code in the United States. Ms. Kesner is no longer a director of
Harriet & Henderson Yarns, Inc.;(ii)
    
    Messrs. Ganong and Osborne, directors of SLF Inc., were directors of Air Canada when it filed
for protection under the Companies Creditors Arrangement Act in April 2003. Air Canada
successfully emerged from those proceedings and was restructured pursuant to a plan of arrangement
in September 2004. Messrs. Ganong and Osborne are no longer directors of Air Canada;(iii)
    
    Mr. Stoughton, a director of SLF Inc., was a director of Careside, Inc. when it filed a
voluntary petition under Chapter 11 of the Bankruptcy Code in the United States in October 2002.
Mr. Stoughton is no longer a director of Careside, Inc.; and(iv)
    
    Mr. Osborne was a director of Nortel Networks Corporation and Nortel Networks Limited
(collectively, Nortel) when on April 10, 2006 the Ontario Securities Commission (OSC) issued a
management cease trade order prohibiting all directors, officers and certain other current and
former employees of Nortel from trading in securities of Nortel until two business days following
receipt by the OSC of all filings required to be made by Nortel pursuant to Ontario securities
laws. This order resulted from Nortels need to restate certain previously reported financial
results and related delays in filing certain of its 2005 financial results. This order was revoked
effective June 8, 2006. Mr. Osborne is no longer a director of Nortel.
     Sun Life Financial Inc. | sunlife.com
    
    
    
    13




---



##### 



14
    
    
    
    Sun Life Financial Inc. | sunlife.com




---



##### 



Executive Officers
 Name and Province/State andCountry of Residence
    
    PositionDonald A. Stewart
    
    Chief Executive OfficerOntario, CanadaJames M.A. Anderson
    
    Executive Vice-President andOntario, Canada
    
    Chief Investment OfficerThomas A. Bogart
    
    Executive Vice-President andOntario, Canada
    
    Chief Legal OfficerDean A. Connor
    
    Executive Vice-PresidentOntario, CanadaPaul W. Derksen
    
    Executive Vice-President andOntario, Canada
    
    Chief Financial OfficerKevin P. Dougherty
    
    President, SLF CanadaOntario, CanadaRobert W. Mansbridge
    
    Executive Vice-President andOntario, Canada
    
    Chief Information OfficerRichard P. McKenney
    
    Executive Vice-PresidentOntario, CanadaStephan Rajotte
    
    President, SLF AsiaHong KongRobert C. Salipante
    
    President, SLF U.S.Massachusetts, USAMichael P. Stramaglia
    
    Executive Vice-President andOntario, Canada
    
    Chief Risk Officer
      Sun Life Financial Inc. | sunlife.com
    
    
    
    15




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##### 



Audit Fees
 Year Ended December 31($ millions)
    
    2006
    
    
    2005
    
    2004Audit Services
    
    
    21.1
    
    
    
    
    13.6
    
    
    
    10.2Audit-Related Services
    
    
    2.5
    
    
    
    
    3.6
    
    
    
    3.5Tax Services
    
    
    0.1
    
    
    
    
    0.6
    
    
    
    2.2Other Services
    
    
    0.6
    
    
    
    
    0.7
    
    
    
    0.4
     Interests of experts
   16
    
    
    
    Sun Life Financial Inc. | sunlife.com




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##### 



Regulatory matters
   General
  
    
    banking services,
    
    investment counseling and
portfolio management,
    
    mutual funds,
    
    trust services,
    
    real property brokerage and appraisal, and
    
    merchant banking services.
   Investment powers
  Capital and surplus requirements
   Sun Life Financial Inc. | sunlife.com
    
    
    
    17




---



##### 



Restrictions on dividends and capital transactions
   Restrictions on ownership
  
    
    No person is permitted to acquire any shares of SLF Inc. if the acquisition would
cause the person to have a significant interest in any class of shares of SLF Inc.,
without the prior approval of the Minister of Finance of Canada.
    
    SLF Inc. is not permitted to record any transfer or issue of shares of SLF Inc. if
the transfer or issue would cause the person to have a significant interest in SLF Inc.,
unless prior approval is obtained from the Minister of Finance of Canada.
    
    No person who has a significant interest in SLF Inc. may exercise any voting rights
attached to the shares held by that person, unless prior approval of the Minister of
Finance of Canada is obtained. A person has a significant interest in a class of shares
where the aggregate of any shares of that class beneficially owned by that person, any
entity controlled by that person and any person acting jointly or in concert with that
person exceeds 10% of all of the outstanding shares of that class of shares.
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Appointed Actuary
  
    the value of the Companys consolidated policy liabilities as at the
end of each period in accordance with accepted actuarial practices, including the selection of
appropriate assumptions and methods,
    whether the amount of policy liabilities makes
appropriate provisions for all obligations to policyholders, and
    whether the
valuation of liabilities is fairly presented in the consolidated financial statements.
  Provincial/territorial insurance regulation
  Privacy of customer information
  Securities laws
   General regulation at the state level
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Restrictions on dividends
  NAIC IRIS ratios
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Statutory investment and other valuation reserves
 Minimum Statutory Surplus and Capital
   Risk-based capital requirements
  Minimum statutory surplus and capital
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Regulation of investments
  Assessments against insurers
  General regulation of insurance at federal level
  Pension Protection Act of 2006 Internal Revenue Code Employee Retirement Income Security Act of 1974
 The National Insurance Act of 2006
 The Retirement Security for Life Act of 2005
 American Jobs Creation Act of 2004
 USA PATRIOT Act of 2001
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Privacy of customer information
  Securities laws
  Investment Advisers Act of 1940  Investment Company Act of 1940 Securities Exchange Act of 1934 Securities Act of 1933
    Insurance regulation
 Financial Services and Markets Act 2000 FSA Handbook of
Rules and Guidance Principles for Businesses High
Level Standards
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Long-term assets and liabilities
  Capital resources requirements
   Restrictions on dividends and capital transactions
 Companies Act
1985
 Financial Ombudsman Service
  Financial Services Compensation Scheme
  Intervention
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Reform proposals
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Risk factors
 Risk Management
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Legal,
regulatory and market conduct matters
  Financial position and liquidity  commitments,
guarantees, contingencies and reinsurance matters
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Legal and regulatory proceedings
     Additional information
   (i)
    
    this AIF and any document or the pertinent pages of any document incorporated by
reference herein,(ii)
    
    the comparative consolidated financial statements of SLF Inc. for the most recently
completed financial year with the accompanying auditors report,(iii)
    
    any interim consolidated financial statements of SLF Inc. subsequent to the
financial statements for its most recently completed financial year,(iv)
    
    SLF Inc.s most recent proxy circular, and(v)
    
    any other documents incorporated by reference into a preliminary short form
prospectus or a short form prospectus. When SLF Inc. has not filed a preliminary short
form prospectus or is not in the course of a distribution, it shall provide copies of any
of the foregoing Disclosure Documents subject to its right to require persons who are not
security holders to pay a reasonable charge.
 th
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APPENDIX
A - Charter of the Audit and Conduct Review Committee
   1.
    
    The integrity of financial statements and information provided to shareholders and others.2.
    
    The Corporations compliance with financial regulatory requirements.3.
    
    The adequacy and effectiveness of the internal control environment implemented and
maintained by management.4.
    
    The qualifications, independence and performance of the External Auditor who is accountable
to the Audit and Conduct Review Committee, the Board of Directors and the shareholders.
      Insurance Companies Act (Canada)
    1.
    
    Reviews with management and the External Auditors the interim unaudited consolidated
financial statements and Managements Discussion and Analysis, including a discussion with the
External Auditors of those matters required to be discussed under generally accepted auditing
standards applicable to the Corporation.2.
    
    Reviews the Corporations earnings press releases.3.
    
    Reviews with management and the External Auditors following completion of th e
annual audit:
 a.
    
    the annual audited consolidated financial statements;b.
    
    the External Auditors audit of the annual consolidated financial
statements and their report;c.
    
    Managements Discussion and Analysis;d.
    
    any significant changes that were required in the external audit plan;
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(e)
    
    any significant issues raised with management during the course of the audit, including
any restrictions on the scope of activities or access to information; and(f)
    
    those matters related to the conduct of the audit that are required to be discussed
under generally accepted auditing standards applicable to the Corporation.
 4.
    
    Receives a report from management of their quarterly and annual review of financial
statements, Managements Discussion and Analysis and earnings press releases and discusses
with the Chief Executive Officer and the Chief Financial Officer the certifications relating
to financial disclosure and controls that those officers are required by law to file with
securities regulatory authorities.5.
    
    Assures itself that the External Auditor is satisfied that the accounting estimates and
judgements made by management, and managements selection of accounting principles, reflect an
appropriate application of generally accepted accounting principles.6.
    
    Discusses with the Chief Actuary the parts of the annual audited consolidated financial
statements prepared by that officer.7.
    
    Reviews with management and the External Auditor the Corporations principal accounting
practices and policies.8.
    
    Reviews the independence of the Chief Auditor and the External Auditor, including the
requirements relating to such independence of the laws governing the Corporation and the
applicable rules of stock exchanges on which the Corporations securities are listed. At least
annually, the Committee receives from and reviews with the External Auditor their written
statement delineating relationships with the Corporation and, if necessary, recommends that
the Board take appropriate action to satisfy itself of the External Auditors independence and
accountability to the Committee and the Board.9.
    
    Reviews and approves the Policy Restricting the Use of External Auditors which outlines the services for which the External Auditor can be engaged and the policy regarding
the employment of former employees of the External Auditor.10.
    
    Appraises the performance of the External Auditor and recommends to the Board th e
appointment or, if so determined by the Committee, the replacement of the External
Auditor, subject to the approval of the shareholders.11.
    
    Determines, reviews and approves the services to be performed by the External Auditor
and the fees to be paid to the External Auditors for audit, audit-related and other
services permitted by law and in accordance with the policy issued by the Board
restricting the use of the External Auditor.12.
    
    Reviews with the External Auditor and management the overall scope of the annual
audit plan, quality control procedures and the resources that the External Auditor will
devote to the audit.13.
    
    Reviews with the External Auditor any regulatory investigations that pertain to the
External Auditor.14.
    
    Requires management to implement and maintain appropriate internal control
procedures, and reviews, evaluates and approves the procedures.15.
    
    Reviews managements reports on the effectiveness of Sun Life Financials disclosure
controls and procedures and its internal control over financial reporting16.
    
    Reviews the attestation by the External Auditor on managements assessment of th e
effectiveness of Sun Life Financials internal control over financial reporting.17.
    
    Reviews with management and the Chief Auditor:
 (a)
    
    the overall scope of the annual internal audit plan, including its
coordination with the External Auditors audit plan, and the adequacy of the resources
available to the Chief Auditor; and(b)
    
    the effectiveness of the internal control procedures, including a report
thereon received from the Chief Auditor that includes disclosure of any significant
changes that were required in the internal audit plan and any significant issues
raised with management during the course of the internal audit, including any
restrictions on the scope of activities or access to information.
 18.
    
    Reviews investments and transactions that could adversely affect the well-being of
the Corporation as the External Auditors or management may bring to the attention of the
Committee, and meets with the External Auditor to discuss any such investments and
transactions.19.
    
    Reviews, and discusses with the External Auditor and the Chief Actuary suchre ports
and regulatory returns of the Corporation as may be specified by law.20.
    
    Reviews matters within its mandate that are addressed in the regular examination and
similar reports received from regulatory agencies.21.
    
    Discusses the qualifications for and determines whether a member of the Committee is
a financial expert and in conjunction with the Governance Committee ensures the ongoing
financial literacy of Committee members.22.
    
    Approves procedures established to handle complaints, and anonymous employee
submissions, with respect to matters and concerns regarding accounting, internal control
and auditing.23.
    
    Requires management to establish procedures for complying with the related party
rules contained in the Insurance Companies Act (Canada) and reviews their effectiveness.24.
    
    Reviews the practices of the Corporation to ensure that any related party transaction that may have a material effect on the stability or solvency of the Corporation is
identified.25.
    
    Reports to the Superintendent of Financial Institutions on the procedures for
complying with the related party rules.26.
    
    Performs such other duties and exercises such other powers as may, from time to time, be assigned to or vested in the Committee by the
Board, and such other functions as may be required of an audit committee by law,
regulations or applicable stock exchange rules.
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APPENDIX
B - Policy restricting the use of external auditors
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a)
    
    bookkeeping or other services related to the accounting records or financial statements;b)
    
    financial information systems design and implementation;c)
    
    appraisal or valuation services, fairness opinions, or contribution in-kind report s;d)
    
    actuarial services;e)
    
    internal audit outsourcing services;f)
    
    management functions or human resources;g)
    
    broker or dealer, investment adviser, or investment banking services;h)
    
    legal services and expert services unrelated to the audit;i)
    
    any service for which no fee is payable unless a specific result is obtained
(contingent fees or commissions);j)
    
    any non-audit tax services that recommend the Corporation engage in confidential
transactions or aggressive tax position transactions, as defined by the U.S. Public Company
Accountability Oversight Board ; andk)
    
    any other service that governing regulators or professional bodies determine to be impermissible.
   §
    
    Chief Executive Officer§
    
    Chief Operating Officer§
    
    President§
    
    Executive Vice-President and Chief Financial Officer§
    
    Executive Vice-President and Chief Legal Officer§
    
    Senior Vice-President, Finance§
    
    Senior Vice-President and Chief Actuary§
    
    Vice-President and Chief Accountant§
    
    Vice-President and Chief Auditor§
    
    Vice-President, Corporate Capital§
    
    Vice-President, Tax§
    
    Assistant Vice-President, Financial Reporting Standards
 
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