Exhibit 1
  Managements
 Discussion
and
 Analysis
 Sun Life Financial Inc.
 For the Year Ended December 31, 2008
 February 11, 2009
 Lifes brighter under the sun




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TABLE OF CONTENTS
 Enterprise Mission, Vision, Values and Strategy
    
    
    4Financial Performance and Objectives
    
    
    5Business Overview
    
    
    6Business Segment Overview
    
    
    7Outlook
    
    
    11Corporate Developments
    
    
    11Critical Accounting Estimates
    
    
    12Accounting Policies
    
    
    17Non-GAAP Financial Measures
    
    
    18Financial Highlights
    
    
    20Consolidated Results of Operations
    
    
    21Investments
    
    
    28Business Segment Results
    
    
    33SLF Canada
    
    
    34SLF U.S.
    
    
    38MFS
    
    
    42SLF Asia
    
    
    44Corporate
    
    
    47Risk Management
    
    
    48Financial Position and Liquidity
    
    
    53Legal and Regulatory Proceedings
    
    
    60Controls and Procedures
    
    
    60
 Sun Life Financial Inc.
    
    1




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Use of Non-GAAP Financial Measures
  Forward-looking Statements
   Sun Life Financial Inc.
    
    2




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Sun Life Financial Inc.
    
    3




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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 in contributing to the full extent of their potential.Customer Focus

    
    We provide sound financial
solutions for our customers and
always 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:PrioritiesGenerate
value-building growth

    
    Sustain profitable top-line growth
and deliver on key medium-term
financial targets.Intensify
customer focus

    
    Meet the needs of our 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

    
    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.
    
    4




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Financial Performance and Objectives
 (1)
   Factor
    
    
    Assumption
    
    
    2008 ExperienceEquity Markets
    
    
    A rise in the annual level of equity market
indices, primarily the S&P 500, by
approximately 7%-8%
    
    
    The S&P 500 fell by 38%, while the
S&P/TSX Composite Index fell by 36%.
Steep declines in equity markets resulted in
charges of $1,051 million to net incomeInterest 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
    
    
    Interest rates on government treasuries in
Canada and the U.S. fell by a range of 67 basis points (bps)
to 316 bps. Declining interest rates resulted
in charges of $43 million to net incomeCredit
    
    
    A credit environment within historical
norms
    
    
    Asset impairments, credit-related losses and
the impact of wider credit spreads resulted
in charges of $1,264 million to net incomeCurrency
    
    
    Stability in exchange rates between the
Canadian dollar and foreign currencies,
primarily the U.S. dollar and the British
pound sterling
    
    
    The change in the Canadian dollar relative
to foreign currencies reduced the
Companys net income by $214 million
  
    
 (1)
    
    Operating EPS and operating ROE are non-GAAP financial measures. For additional information, see
the section under the heading Non-GAAP Financial Measures on page 18. Sun Life Financial Inc.
    
    5




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Business Overview
    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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Business Segment Overview
 SLF
Canada
 2008 Priorities
 
  Continue to increase Individual Insurance and Investment sales through the Sun Life
Financial Advisor Sales Force and the Wholesale distribution channel by enhancing
distribution capabilities with a focus on lifetime relationships and holistic advice
  Continue to build and expand the retirement rollover business by providing advice and
incorporating group life and health products
  
Continue to increase market share in the small to medium-sized group business market segments
  
Continue to maintain disciplined focus on expense management  2008 Achievements
   
SunWise Elite Plus was enhanced to include guaranteed income for life to help meet the
needs of Canadians who are focused on the income phase of their retirement planning. This
new product contributed to an overall increase of 44% in Individual segregated fund sales
over 2007
  
The Sun Life Financial Advisor Sales Force grew in 2008, with a net gain of 91 advisors
  
Group Retirement Services (GRS) grew its sales by 18% compared to 2007 as a result of
the increased placement of large plans. 2008 sales also included $736 million of retained
assets from members leaving their employers defined contribution plans, representing a
record retention rate of 42%
  
Sales in the small and medium-sized group business segments were maintained at 2007
levels despite the challenging competitive environment, reflecting SLF Canadas solid
position in these markets
  
Overall operating expenses decreased 3% from 2007 levels, demonstrating productivity
improvements while achieving client satisfaction targets
  2009
Priorities
   
Increase Individual Insurance and Investment sales through the Sun Life Financial
Advisor Sales Force and Wholesale distribution partners, including CI Financial, with a
focus on lifetime relationships, holistic advice and product development  
Build sales by leveraging product and service capabilities and the relationship with
group plan members through voluntary benefit offerings, expanding the retirement rollover
business with new life and health products
  
Continue to emphasize risk management including de-risking the
segregated fund products where appropriate to better align fees,
benefits and hedging strategies
  
Continue to focus on improving productivity through disciplined expense management,
while maintaining a high level of customer satisfaction
 Sun Life Financial Inc.
    
    7




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SLF U.S.2008 Priorities
  
Grow sales by maintaining and increasing product competitiveness across all lines of
business through innovation and quality service
  
Integrate the Genworth Employee Business Group (EBG) business, leveraging the expanded
distribution force
  
Deepen distribution relationships through improved service and enhanced marketing
  
Leverage product and innovation skills to expand in global markets2008 Achievements
  
SLF U.S. delivered innovative products to the marketplace, introducing additional
proprietary life products and new annuity living benefits. Although gross sales were down
in the face of a challenging economic environment, redemption experience improved
  
The Genworth EBG business was successfully integrated during the year, resulting in
overall growth in the Employee Benefits Group business, with common shareholders net
income up 6% and overall sales increased by 22% in 2008 over 2007
  
Bermuda International operations launched its next generation investment product, Sun
Secured Advantage, offering high net worth clients in Latin America, Asia and the Middle
East a wide range of investment options from around the world to help build, preserve and
transfer their wealth2009 Priorities
  
Implement recommendations from a strategic review initiated in the fourth quarter of
2008, including rationalizing Individual Insurance and Annuity product lines to focus on
core products



  
De-risk the variable annuity products through redesign to better align fees, benefits and hedging strategies
and to simplify the product suite



  
Implement a new, industry-leading customer acquisition and policy administration system
in the Employee Benefits Group business
  
Continue to enhance risk and capital management activities to preserve financial
strength amidst ongoing economic uncertainty
  
Create a centralized distribution platform and work to better align the distribution
strategy with the target markets and channels of each product
  
Invest in strengthening marketing capabilities and creating stronger brand awareness
  
Monitor and respond to the economic environment, including continued focus on managing
expenses and improving efficiency to better align with pricing allowances
  
Continue value-building growth both organically and through the pursuit of merger and
acquisition opportunities
 Sun Life Financial Inc.
    
    8




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MFS2008 Priorities     Sustain long-term investment performance       Improve U.S. domestic mutual fund net sales
  
Continue expansion of institutional distribution footprint2008 Achievements  
U.S. retail investment performance improved during 2008, with 86% of MFSs fund assets
ranking in the top half of their respective three-year Lipper categories as at December 31, 2008,
compared with 75% as at December 31, 2007. MFS domestic retail funds with Class A share assets
that rated 4 or 5 stars according to Morningstar more than
doubled at December 31, 2008 compared with December 31, 2007  
MFS ranked fourth overall out of 59 firms for
one-year asset-weighted returns in the 2008 Lipper/Barrons Best Fund Family Survey. MFS also had overall rankings of fourth for five years and fifth for ten years in the survey. MFS was the only fund family mentioned as
having a top five or better finish for one, five and ten years in the 2008 rankings      MFS improved U.S. domestic net redemptions by approximately US$100 million in a year when the U.S. mutual fund industry experienced US$180 billion in net outflows compared with US$216 billion in net inflows during 2007   MFS
continued its non-U.S. distribution expansion, opening new offices in Australia and Hong Kong, and expanding the
institutional sales force coverage in Western Europe, Taiwan and Japan2009 Priorities   Sustain long-term investment performance   Expand institutional product offerings and sales   Improve U.S. domestic mutual fund net sales   Maintain competitive profit margins by managing discretionary expenses
 Sun Life Financial Inc.
    
    
    9




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SLF Asia2008 Priorities    Achieve operational efficiencies through regional centres of excellence
    Expand product offerings, including innovative health insurance solutions
    Leverage global expertise to explore wealth management opportunities in new markets
    Strengthen distribution management and expand alternate distribution by leveraging regional
expertise
    Increase opportunities to cross-sell to existing customers
    Continue
accelerated expansion in India2008 Achievements    Established the Regional Office centre of excellence to roll out best practices in operational processes. In India, the centre of excellence provides professional support (such as underwriting) to the India joint venture
    Launched a series of innovative products in response to
lowering demand for investment-linked products, including health products and riders
    Launched principal protect products in India and in the Philippines, leveraging Sun Lifes global wealth management expertise
    Established several new telemarketing relationships with large banks in Indonesia, expanded the telemarketing channel in China with the opening of a second call centre in Tianjin
    Expanded
the India life insurance joint ventures reach with the opening of 261 branches,
bringing the total to 600 branches, and the asset management joint venture opened 42
branches to expand its distribution reach to 116 branches2009 Priorities    Leverage consumer insights to launch innovative products reflecting each markets specific needs    Make it easier for customers to do business with the Company by providing Internet services, enabling the Company to create better customer experiences    Deliver products to customers through direct channels, such as telemarketing, and leverage call centre capabilities for cross-selling opportunities    Enhance distribution management, implementing best practices in such areas as agency recruitment and training    Enhance operational efficiencies and productivity by sharing best practices and leveraging regional technology
 Sun Life Financial Inc.
    
    10




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Outlook
   Scenario
    
    
    Equity
    
    
    CreditRecovery to
pre-crisis levels
    
    

     Release reserves
for fees and guarantees
     Asset management
fees improve
    
    

     Lower levels of defaults
     Release reserves on
narrower credit spreadsReset growth from
current levels
    
    
         Stable reserve levels

     Lower fee income on
stable asset base
    
    

     Defaults in line with
historical averages
     Credit spreads
narrowing to historical levelsFurther
deterioration of
the macro
environment
    
    

     Increased reserves
for guarantee benefits, net of
hedging and lower fee income
    
Lower fee income on a reduced asset base
    
    
         More
defaults/impairments
     Increased reserves for
defaults
     Impact of wider credit
spreads continues
  
 Corporate Developments
  CI Financial Disposal
  Share Repurchase Program
  Quarterly
Shareholders Dividends
  Sun Life Financial Inc.
    
    11




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Financing Arrangements
    Critical Accounting 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.
    

12




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Critical
AccountingEstimate
    
    
    Determination Methodology andAssumptions
    
    
    Financial Significance(measured
as at December 31, 2008)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 adequate provisions to
absorb 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, a large portion of the
effect of equity market changes
is passed through to
policyholders as changes in the
amounts of dividends declared or
in the rate of interest credited
    Products such as
segregated fund and annuity
option guarantees are affected by
equity movements even though
mitigating hedging programs are
in place
    An immediate 10% increase
across all equity and real estate
markets would result in an
estimated increase in net income
of $250 million to $300 million
    An immediate 10% decrease
across all equity and real estate
markets would result in an
estimated decrease in net income
of $275 million to $350 million
    A 100 basis point
reduction in assumed future
equity and real estate returns
would result in an estimated
decrease in net income of $500 million to $600 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
adequate provisions to absorb 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
liabilities
    
    
        For certain product
types, 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 as changes in the
amount of dividends declared or
in the rate of interest credited    An
immediate 1% parallel
increase in interest rates across
the entire yield curve would
result in an estimated increase
in net income of $100 million to
$150 million
    An immediate 1% parallel
decrease in interest rates would
result in an estimated decrease
in net income of $150 million to
$200 millionAsset defaultprovisions
are included in actuarial
liabilities for possible
future asset defaults and
loss of asset value 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. For bonds they are
based on total U.S. market experience and
for mortgages on company experience
    
    
        Asset default provisions
included in actuarial liabilities
amounted to $2.3 billion on a
pre-tax basis as at December 31,
2008. The amount excludes
defaults that can be passed
through to participating
policyholders and the projected
reductions in the value of equity
and real estate assets supporting
actuarial liabilities.
 Sun Life Financial Inc.
    
    13




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Critical AccountingEstimate
    
    
    Determination Methodology andAssumptions
    
    
    Financial Significance(measured
as at December 31, 2008)Mortality the
rate of death for
defined groups of
people
    
    
        Generally based on the Companys average five-year
experience
    Industry experience considered where the Companys
experience is not sufficient
    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 $120 million
    For life insurance
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 $10 million
    For annuities 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
    
    
        Generally based on the Companys average five-year
experience
    Industry experience considered where the Companys
experience is not sufficient
    Long-term care and critical illness insurance assumptions
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 that assumption would reduce
net income by about $120 millionPolicy termination
rates  the rates
at which policies
terminate prior to
the end of the
contractual
coverage periods
    
    
        Generally based on the Companys average five-year
experience
    Industry studies used where the Companys experience is not
sufficient
    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 required for universal life contracts
    
    
        For products for which
fewer terminations would be
financially adverse to the
Company, net income would
decrease by about $190 million
if the termination rate
assumption were reduced by 10%
    For products for which
more terminations would be
financially adverse to the
Company, net income would
decrease by about $180 million if
the termination rate assumption
were increased by 10%Operating expenses
and inflation
actuarial
liabilities provide
for future
policy-related
expenses
    
    
        Mainly based on recent Company experience using an internal
expense allocation methodology
    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 Company-wide would
result in a decrease in net
income of about $140 million
 Sun Life Financial Inc.
    
    14




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Fair Value of Investments
        .
 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
     Sun Life Financial Inc.
    
    16




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Income Taxes
  Pension Plans and Other
Post-Retirement Benefits
    Sensitivity
of Key Assumptions
 ($ millions)
    
    Pension
    
    Other post-retirementObligation
    
    Expense
    
    Obligation
    
    ExpenseImpact of a 1% change in key assumptionsDiscount rateDecrease in assumption
    
    $
    383
    
    
    $
    39
    
    
    $
    30
    
    
    $
    3Increase in assumption
    
    
    (328
    )
    
    
    (38
    )
    
    
    (26
    )
    
    
    (2
    )Expected long-term rate of return on plan assetsDecrease in assumption
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    Increase in assumption
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    Rate of compensation increaseDecrease in assumption
    
    
    (64
    )
    
    
    (13
    )
    
    
    
    
    
    
    Increase in assumption
    
    
    69
    
    
    
    14
    
    
    
    
    
    
    
    
 
 Accounting Policies
 Changes in
Accounting Policies in 2008
  Sun Life Financial Inc.
    
    17




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Capital
Disclosures and Financial Instruments  Disclosure and
Presentation
  Future Adoption
 Goodwill
and Intangible Assets
  International Financial Reporting Standards (IFRS):
  
    
    Education and training requirements
    
    Accounting policy changes
    
    Information technology and data systems impacts
    
    Impacts on business activities
    
    Financial reporting requirements
    
    Internal control over financial reporting
     
 Non-GAAP Financial Measures
  Sun Life Financial Inc.
    
    18




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Non-GAAP Items
     Reconciliation of Operating Earnings($ millions)
    
    
    2008
    
    
    2007
    
    
    2006Q4
    
    Q3
    
    Q2
    
    Q1
    
    Total
    
    
    Q4
    
    Q3
    
    Q2
    
    Q1
    
    Total
    
    
    TotalReported earnings (loss) (GAAP)
    
    
    
    129
    
    
    
    (396
    )
    
    
    519
    
    
    
    533
    
    
    
    785
    
    
    
    
    555
    
    
    
    577
    
    
    
    590
    
    
    
    497
    
    
    
    2,219
    
    
    
    
    2,089After-tax gains (losses) on special itemsGain on sale of interest in CI Financial
    
    
    
    825
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    825
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Intangible asset write-down for Clarica brand
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43
    )
    
    
    (43
    )
    
    
    
    Premium to redeem Partnership Capital Securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18
    )
    
    
    (18
    )
    
    
    
    Re-branding expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    (5
    )
    
    
    (2
    )
    
    
    
    
    
    
    (10
    )
    
    
    
    Genworth EBG business integration costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    
    
    
    
    (4
    )
    
    
    
    Hong Kong integration costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )Total special items
    
    
    
    825
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    825
    
    
    
    
    (5
    )
    
    
    (6
    )
    
    
    (3
    )
    
    
    (61
    )
    
    
    (75
    )
    
    
    
    (2
    )Operating earnings (loss)
    
    
    
    (696
    )
    
    
    (396
    )
    
    
    519
    
    
    
    533
    
    
    
    (40
    )
    
    
    
    560
    
    
    
    583
    
    
    
    593
    
    
    
    558
    
    
    
    2,294
    
    
    
    
    2,091
  Impact of Special Items on Fully Diluted Operating EPS
 ($ per share)
    
    2008
    
    
    2007
    
    2006EPS(1) Reported (GAAP)
    
    
    1.37
    
    
    
    
    3.85
    
    
    
    3.58Net gains (losses) on special items
    
    
    1.47
    
    
    
    
    (0.13
    )
    
    
    EPS(1)  Operating
    
    
    (0.10
    )
    
    
    
    3.98
    
    
    
    3.58
 (1)
    
    EPS refers to fully diluted earnings per share in the table.


Sun
Life Financial Inc.
    

19






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Financial Highlights
 ($ millions, unless otherwise noted)
    
    2008
    
    
    
    2007
    
    
    2006Common shareholders net income (loss)Operating(1)
    
    
    (40
    )
    
    
    
    2,294
    
    
    
    2,091Reported
    
    
    785
    
    
    
    
    2,219
    
    
    
    2,089Basic reported EPS ($)
    
    
    1.40
    
    
    
    
    3.90
    
    
    
    3.62Fully diluted EPS ($)Operating(1)
    
    
    (0.10
    )
    
    
    
    3.98
    
    
    
    3.58Reported
    
    
    1.37
    
    
    
    
    3.85
    
    
    
    3.58ROE (%)Operating(1)
    
    
    -0.3
    %
    
    
    
    14.3
    %
    
    
    13.8
    %Reported
    
    
    5.1
    %
    
    
    
    13.8
    %
    
    
    13.8
    %Dividends per common share ($)
    
    
    1.44
    
    
    
    
    1.32
    
    
    
    1.15Dividend payout ratio(1) (%)
    
    
    103
    %
    
    
    
    34
    %
    
    
    32
    %Dividend yield(2)(%)
    
    
    3.8
    %
    
    
    
    2.5
    %
    
    
    2.5
    %Total revenue
    
    
    15,563
    
    
    
    
    21,188
    
    
    
    24,287Premiums, deposits and fund salesPremium revenue, including administration services onlypremium equivalents
    
    
    16,799
    
    
    
    
    16,124
    
    
    
    17,327Segregated fund deposits
    
    
    10,919
    
    
    
    
    13,320
    
    
    
    8,753Mutual fund sales
    
    
    20,352
    
    
    
    
    22,586
    
    
    
    20,412Managed fund sales
    
    
    20,944
    
    
    
    
    27,613
    
    
    
    26,116Total premiums, deposits and fund sales
    
    
    69,014
    
    
    
    
    79,643
    
    
    
    72,608Assets under management (AUM)(as at December 31)General fund assets
    
    
    119,833
    
    
    
    
    114,291
    
    
    
    117,831Segregated fund net assets
    
    
    65,762
    
    
    
    
    73,205
    
    
    
    70,789Mutual fund assets
    
    
    83,602
    
    
    
    
    101,858
    
    
    
    110,186Managed fund assets
    
    
    110,405
    
    
    
    
    134,297
    
    
    
    140,551Other AUM
    
    
    1,490
    
    
    
    
    1,613
    
    
    
    2,075Total AUM
    
    
    381,092
    
    
    
    
    425,264
    
    
    
    441,432Capital(as at December 31)Subordinated
debt and other capital(3)
    
    
    3,726
    
    
    
    
    2,946
    
    
    
    3,305Participating policyholders equity
    
    
    106
    
    
    
    
    95
    
    
    
    92Total shareholders equity
    
    
    17,303
    
    
    
    
    17,122
    
    
    
    17,092Total capital
    
    
    21,135
    
    
    
    
    20,163
    
    
    
    20,489
 (1)
    
    Operating earnings, fully diluted operating EPS, operating ROE and dividend payout ratio are non-GAAP
measures and exclude certain items described on page 19 under the heading Non-GAAP Financial Measures.
The dividend payout ratio represents the ratio of common
shareholders dividends to common shareholders net income.(2)
    
    The dividend yield represents the common dividend per share as a percentage of the average of the high
and low share price.(3)
    
    Other capital refers to Partnership Capital Securities and Sun Life ExchangEable Capital Securities
(SLEECS). These securities qualify as capital for Canadian regulatory purposes. The Partnership Capital
Securities were redeemed in May 2007. Additional information is available on page 54 under the heading
Liquidity and on page 55 under the heading Capital.
 Sun Life Financial Inc.
    
    
    
    20




---



##### 



Consolidated Results of Operations
 Common Shareholders Net Income
  Earnings and EPS
 ($ millions, unless otherwise noted)
    
    
    2008
    
    
    
    2007
    
    
    2006Total net income
    
    
    
    857
    
    
    
    
    2,290
    
    
    
    2,144Less:Participating policyholders net income
    
    
    
    2
    
    
    
    
    2
    
    
    
    7Dividends paid to preferred shareholders
    
    
    
    70
    
    
    
    
    69
    
    
    
    48Common shareholders net income
    
    
    
    785
    
    
    
    
    2,219
    
    
    
    2,089Adjusted for special items(1)
    
    
    
    (825
    )
    
    
    
    75
    
    
    
    2Operating earnings (loss)
    
    
    
    (40
    )
    
    
    
    2,294
    
    
    
    2,091Basic EPS ($) from:Common shareholders net income
    
    
    
    1.40
    
    
    
    
    3.90
    
    
    
    3.62Operating earnings (loss)(1)
    
    
    
    (0.07
    )
    
    
    
    4.03
    
    
    
    3.62Diluted EPS ($) from:Common shareholders net income
    
    
    
    1.37
    
    
    
    
    3.85
    
    
    
    3.58Operating earnings (loss)(1)
    
    
    
    (0.10
    )
    
    
    
    3.98
    
    
    
    3.58Common shareholders net income (loss) by segmentSLF Canada
    
    
    
    645
    
    
    
    
    1,050
    
    
    
    995SLF U.S.
    
    
    
    (1,016
    )
    
    
    
    581
    
    
    
    448MFS
    
    
    
    194
    
    
    
    
    281
    
    
    
    234SLF Asia
    
    
    
    33
    
    
    
    
    123
    
    
    
    101Corporate
    
    
    
    929
    
    
    
    
    184
    
    
    
    311Total
    
    
    
    785
    
    
    
    
    2,219
    
    
    
    2,089
 (1)
    
    The impact of items not included in operating earnings is described on page 19 under the heading Non-GAAP Financial Measures.
 Impact of Economic Environment
   Capital Market Impact on Earnings
    
    Net Income ($ millions)
    
    
    EPS ($)Asset impairments & credit-related losses
    
    
    (1,264
    )
    
    
    (2.26
    )Equity markets (net of hedging)
    
    
    (1,051
    )
    
    
    (1.88
    )Interest Rates (net of hedging)
    
    
    (43
    )
    
    
    (0.08
    )Total
    
    
    (2,358
    )
    
    
    (4.22
    )
 Sun Life Financial Inc.
    
    
    
    21




---



##### 



Performance by Business Group
      Return on Equity
  Assets Under Management
   Sun Life Financial Inc.
    
    
    
    22




---



##### 



Revenue
   Total Revenue
 ($ millions)
    
    2008
    
    
    
    2007
    
    
    2006PremiumsAnnuities
    
    
    3,592
    
    
    
    
    3,530
    
    
    
    5,380Life insurance
    
    
    5,928
    
    
    
    
    6,010
    
    
    
    6,168Health insurance
    
    
    4,067
    
    
    
    
    3,584
    
    
    
    3,061Total premiums
    
    
    13,587
    
    
    
    
    13,124
    
    
    
    14,609Gain (loss) on sale of available-for-sale assets
    
    
    (241
    )
    
    
    
    101
    
    
    
    Net investment income (loss)
    
    
    (526
    )
    
    
    
    4,751
    
    
    
    6,664Fee income
    
    
    2,743
    
    
    
    
    3,212
    
    
    
    3,014Total
    
    
    15,563
    
    
    
    
    21,188
    
    
    
    24,287
  Sun Life Financial Inc.
    
    
    
    23




---



##### 



Adjusted Revenue
 ($ millions)
    
    2008
    
    
    
    2007SLF Canada
    
    
    7,927
    
    
    
    
    9,285SLF U.S.
    
    
    3,817
    
    
    
    
    7,830MFS
    
    
    1,381
    
    
    
    
    1,687SLF Asia
    
    
    498
    
    
    
    
    977Corporate
    
    
    1,940
    
    
    
    
    1,409Total as reported
    
    
    15,563
    
    
    
    
    21,188Impact of currency and changes in the fair value of
held-for-trading assets and derivative instruments
    
    
    (6,696
    )
    
    
    
    (1,483
    )Total
adjusted revenue(1)
    
    
    22,259
    
    
    
    
    22,671
 (1)
    
    Total adjusted revenue is a non-GAAP financial measure. See
non-GAAP financial measures on page 18
       Policy Benefits
  Policy Benefits
 ($ millions)
    
    2008
    
    
    
    2007
    
    
    2006Payments to policyholders, beneficiaries and depositors
    
    
    13,775
    
    
    
    
    14,244
    
    
    
    12,895Net transfers to segregated funds
    
    
    539
    
    
    
    
    952
    
    
    
    835Increase (decrease) in actuarial liabilities
    
    
    (4,429
    )
    
    
    
    (2,515
    )
    
    
    2,525Total
    
    
    9,885
    
    
    
    
    12,681
    
    
    
    16,255
  Sun Life Financial Inc.
    
    
    
    24




---



##### 



Expenses and Other
  Expenses and Other
 ($ millions)
    
    2008
    
    
    
    2007
    
    
    2006Commissions
    
    
    1,545
    
    
    
    
    1,811
    
    
    
    1,916Operating expenses
    
    
    2,979
    
    
    
    
    3,183
    
    
    
    3,003Intangibles amortization
    
    
    24
    
    
    
    
    77
    
    
    
    25Premium taxes
    
    
    227
    
    
    
    
    240
    
    
    
    205Interest expenses
    
    
    366
    
    
    
    
    349
    
    
    
    323Income taxes
    
    
    (343
    )
    
    
    
    522
    
    
    
    389Non-controlling interests in net income of
subsidiaries
    
    
    23
    
    
    
    
    35
    
    
    
    27Participating policyholders net income (loss)
    
    
    2
    
    
    
    
    2
    
    
    
    7Dividends to preferred shareholders
    
    
    70
    
    
    
    
    69
    
    
    
    48Total
    
    
    4,893
    
    
    
    
    6,288
    
    
    
    5,943
     Quarterly Information
  Sun Life Financial Inc.
    
    
    
    25




---



##### 



($ millions, unless otherwise noted)
    
    2008
    
    
    
    2007Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1
    
    
    
    Q4
    
    
    Q3
    
    
    Q2
    
    
    Q1Common shareholders net income (loss)Operating(1)
    
    
    (696
    )
    
    
    (396
    )
    
    
    519
    
    
    
    533
    
    
    
    
    560
    
    
    
    583
    
    
    
    593
    
    
    
    558Reported
    
    
    129
    
    
    
    (396
    )
    
    
    519
    
    
    
    533
    
    
    
    
    555
    
    
    
    577
    
    
    
    590
    
    
    
    497Fully diluted EPS (in dollars)Operating(1)
    
    
    (1.25
    )
    
    
    (0.71
    )
    
    
    0.91
    
    
    
    0.93
    
    
    
    
    0.98
    
    
    
    1.01
    
    
    
    1.03
    
    
    
    0.96Reported
    
    
    0.23
    
    
    
    (0.71
    )
    
    
    0.91
    
    
    
    0.93
    
    
    
    
    0.97
    
    
    
    1.00
    
    
    
    1.02
    
    
    
    0.86Basic reported EPS (in dollars)
    
    
    0.23
    
    
    
    (0.71
    )
    
    
    0.92
    
    
    
    0.95
    
    
    
    
    0.98
    
    
    
    1.02
    
    
    
    1.03
    
    
    
    0.87Return on Shareholders Equity (ROE) (annualized)Operating(1)
    
    
    -17.9
    %
    
    
    -10.2
    %
    
    
    12.9
    %
    
    
    13.4
    %
    
    
    
    14.3
    %
    
    
    14.8
    %
    
    
    14.6
    %
    
    
    13.5
    %Reported
    
    
    3.3
    %
    
    
    -10.2
    %
    
    
    12.9
    %
    
    
    13.4
    %
    
    
    
    14.2
    %
    
    
    14.7
    %
    
    
    14.5
    %
    
    
    12.0
    %Business Groups common shareholders net income (loss)SLF Canada
    
    
    (55
    )
    
    
    157
    
    
    
    296
    
    
    
    247
    
    
    
    
    263
    
    
    
    257
    
    
    
    280
    
    
    
    250SLF U.S.
    
    
    (679
    )
    
    
    (533
    )
    
    
    83
    
    
    
    113
    
    
    
    
    157
    
    
    
    170
    
    
    
    156
    
    
    
    98MFS
    
    
    30
    
    
    
    49
    
    
    
    56
    
    
    
    59
    
    
    
    
    73
    
    
    
    68
    
    
    
    68
    
    
    
    72SLF Asia
    
    
    16
    
    
    
    (8
    )
    
    
    12
    
    
    
    13
    
    
    
    
    38
    
    
    
    30
    
    
    
    17
    
    
    
    38Corporate
    
    
    817
    
    
    
    (61
    )
    
    
    72
    
    
    
    101
    
    
    
    
    24
    
    
    
    52
    
    
    
    69
    
    
    
    39Total
    
    
    129
    
    
    
    (396
    )
    
    
    519
    
    
    
    533
    
    
    
    
    555
    
    
    
    577
    
    
    
    590
    
    
    
    497Total revenue
    
    
    4,706
    
    
    
    2,560
    
    
    
    4,411
    
    
    
    3,886
    
    
    
    
    5,405
    
    
    
    5,699
    
    
    
    4,500
    
    
    
    5,584Total AUM ($ billions)
    
    
    381
    
    
    
    389
    
    
    
    413
    
    
    
    415
    
    
    
    
    425
    
    
    
    427
    
    
    
    440
    
    
    
    451
 (1)
    
    Operating earnings, fully diluted operating EPS and operating ROE are non-GAAP measures and exclude the items described under the heading
Non-GAAP Financial Measures on page 19.
 Fourth Quarter 2008 Performance
    Impact of Currency
   Sun Life Financial Inc.
    
    
    
    26




---



##### 



Performance by Business Group
           Sun Life Financial Inc.
    
    
    
    27




---



##### 



(i)
    
    unfavourable market movements of $40.5 billion,(ii)
    
    a decrease of $2.2 billion from the change in value of held-for-trading assets and(iii)
    
    net redemptions of mutual, managed and segregated funds of $2.5 billion partly offset by(iv)
    
    an increase of $35.4 billion from a weaker Canadian dollar compared to the prior period
currency exchange rates and(v)
    
    business growth.
 
 Investments
  Investment Profile
   Investments
 ($ millions)
    
    2008
    
    
    
    2007% of total
    
    
    
    
    
    
    
    
    
    
    
    % of totalCarrying
    
    
    
    
    
    carrying
    
    
    
    Carrying
    
    
    
    
    
    carryingvalue
    
    
    Fair value
    
    
    value
    
    
    
    value
    
    
    Fair value
    
    
    valueHeld-for-trading bonds
    
    
    48,458
    
    
    
    48,458
    
    
    
    45
    
    
    
    
    50,608
    
    
    
    50,608
    
    
    
    49Available-for-sale bonds
    
    
    10,616
    
    
    
    10,616
    
    
    
    10
    
    
    
    
    9,148
    
    
    
    9,148
    
    
    
    9Mortgages and corporate loans
    
    
    22,302
    
    
    
    22,485
    
    
    
    21
    
    
    
    
    20,742
    
    
    
    21,046
    
    
    
    20Held-for-trading stocks
    
    
    3,440
    
    
    
    3,440
    
    
    
    3
    
    
    
    
    4,438
    
    
    
    4,438
    
    
    
    4Available-for-sale stocks
    
    
    1,018
    
    
    
    1,020
    
    
    
    1
    
    
    
    
    788
    
    
    
    788
    
    
    
    1Real estate
    
    
    4,908
    
    
    
    5,812
    
    
    
    5
    
    
    
    
    4,303
    
    
    
    5,183
    
    
    
    4Policy loans
    
    
    3,401
    
    
    
    3,401
    
    
    
    3
    
    
    
    
    2,959
    
    
    
    2,959
    
    
    
    3Cash, cash equivalents and short-term
securities
    
    
    8,879
    
    
    
    8,879
    
    
    
    8
    
    
    
    
    5,500
    
    
    
    5,500
    
    
    
    5Derivative assets
    
    
    2,669
    
    
    
    2,669
    
    
    
    3
    
    
    
    
    1,947
    
    
    
    1,947
    
    
    
    2Other invested assets including
held-for-trading and available-for-sale
other invested assets
    
    
    1,187
    
    
    
    1,230
    
    
    
    1
    
    
    
    
    2,587
    
    
    
    4,295
    
    
    
    3Total invested assets
    
    
    106,878
    
    
    
    108,010
    
    
    
    100
    
    
    
    
    103,020
    
    
    
    105,912
    
    
    
    100
 Bonds
   Sun Life Financial Inc.
    
    
    
    28




---



##### 



(BAR GRAPH)
    
    (PIE CHART)
     ($ millions)
    
    2008
    
    
    2007Fair
    
    
    Investment
    
    
    Fair
    
    
    InvestmentValue
    
    
    Grade %
    
    
    Value
    
    
    Grade %Commercial mortgage-backed securities
    
    
    1,889
    
    
    
    99.7
    
    
    
    2,523
    
    
    
    99.6Residential mortgage-backed securities: Non-Agency
    
    
    1,092
    
    
    
    98.4
    
    
    
    1,486
    
    
    
    99.9Residential mortgage-backed securities: Agency
    
    
    1,138
    
    
    
    100.0
    
    
    
    1,112
    
    
    
    100.0Collateralized debt obligations
    
    
    215
    
    
    
    80.8
    
    
    
    422
    
    
    
    97.5Other
    
    
    754
    
    
    
    97.3
    
    
    
    1,075
    
    
    
    99.6Total
    
    
    5,088
    
    
    
    98.3
    
    
    
    6,618
    
    
    
    99.6
  Sun Life Financial Inc.
    
    
    
    29




---



##### 



RMBS -
    
    RMBS -As at December 31, 2008
    
    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
    %
 RMBS -
    
    RMBS -As at December 31, 2007
    
    CMBS
    
    Agency
    
    Non-Agency
    
    CDOs
    
    OtherRatingAAA
    
    
    63.2
    %
    
    
    100.0
    %
    
    
    31.8
    %
    
    
    43.8
    %
    
    
    35.0
    %AA
    
    
    8.3
    %
    
    
    0.0
    %
    
    
    48.2
    %
    
    
    41.4
    %
    
    
    22.5
    %A
    
    
    10.5
    %
    
    
    0.0
    %
    
    
    14.7
    %
    
    
    11.7
    %
    
    
    28.4
    %BBB
    
    
    17.6
    %
    
    
    0.0
    %
    
    
    5.2
    %
    
    
    0.6
    %
    
    
    13.7
    %BB & Below
    
    
    0.4
    %
    
    
    0.0
    %
    
    
    0.1
    %
    
    
    2.5
    %
    
    
    0.4
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Vintage2005 & Prior
    
    
    79.9
    %
    
    
    68.6
    %
    
    
    84.7
    %
    
    
    61.5
    %
    
    
    80.4
    %2006
    
    
    15.3
    %
    
    
    10.3
    %
    
    
    12.6
    %
    
    
    21.0
    %
    
    
    15.9
    %2007
    
    
    4.8
    %
    
    
    21.1
    %
    
    
    2.7
    %
    
    
    17.5
    %
    
    
    3.7
    %Total
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
   Mortgages and Corporate Loans


Sun Life Financial Inc.
    
    
    
    30




---



##### 



Mortgages by Type and Location
 ($ millions)
    
    Residential
    
    
    Non-residential
    
    
    Total2008Canada
    
    
    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
    
    
    
    
    
    
    
    
    
    
    22,3022007Canada
    
    
    2,723
    
    
    
    6,382
    
    
    
    9,105United States
    
    
    274
    
    
    
    6,005
    
    
    
    6,279United Kingdom
    
    
    
    
    
    
    84
    
    
    
    84Total mortgages
    
    
    2,997
    
    
    
    12,471
    
    
    
    15,468Corporate loans
    
    
    
    
    
    
    
    
    
    
    5,274Total mortgages and corporate loans
    
    
    
    
    
    
    
    
    
    
    20,742
 Stocks
  Real Estate
   Derivative Financial Instruments and Risk Mitigation
    Sun Life Financial Inc.
    
    
    
    31




---



##### 



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
    
    
    Interest rate options and
swaps
and 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 index; 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; interest
rate swaps; currency swapsCurrency 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)
    
    2008
    
    
    
    2007As at December 31Net fair value
    
    
    (550
    )
    
    
    
    1,309Total notional amount
    
    
    50,796
    
    
    
    
    42,642Credit equivalent amount
    
    
    1,260
    
    
    
    
    2,351Risk-weighted credit equivalent amount
    
    
    28
    
    
    
    
    56
     Sun Life Financial Inc.
    
    
    
    32




---



##### 



Impaired Assets
       
 Business Segment Results


Sun Life Financial Inc.
    
    
    
    33




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 
 SLF Canada
 Business Highlights
 
    
    Individual Wealth segregated fund sales in Canada, including sales of SunWise Elite Plus
with the guaranteed minimum withdrawal benefit rider, increased by 44% to $2.5 billion for
the full year 2008 over 2007
    
    Group Retirement Services(GRS) had another outstanding year of market-leading sales
results, capturing 53% of the defined contribution (DC) industrys new sales, and 56% of
total DC market activity, as reported by LIMRA for the first nine months of 2008. All regions
delivered strong results, with overall sales increasing to $3.9 billion, 18% over 2007,
including the installation of plans for Imperial Oil Limited and EnCana
    
    Based on the Fraser Study at December 2007, Group Benefits attained the number two
market share position for overall business in-force in Canada through strong sales and
outstanding client retention
 
 Business Profile
  
 Industry Profile
  
 Business Strength
  Strengths
 
    
    Well-capitalized with market leadership positions in Individual and Group businesses including
relationships with 6 million Canadians
    
    A broad product portfolio across life, health and wealth to meet the lifetime financial needs of
customers
    
    A multi-distribution strategy for Individual Insurance & Investments, with Sun Life Financial Advisors
providing a stable level of insurance and wealth sales and the growing wholesale channel focusing on the
affluent market
    
    The group businesses differentiate themselves from the competition with long-standing customer
relationships evidenced by industry-leading retention rates, technology leadership and innovative solutions
    
    Leading provider in the asset retention rollover business, which is a growing market segment
    
    Strong ability to work across business units to serve customers, as demonstrated by the Total Benefits
offering that allows for integrated access to group products and services by plan members and sponsors
    
    Solid risk management focus to maintain the Companys strong financial positionOpportunities
    
    Leverage SLF Canadas strengths across its businesses to capitalize on increasing retirement needs and
the transfer of health care costs to individuals
    
    Generate profitable growth in the Wholesale channel through innovation in individual insurance and
wealth solutions, and through outstanding service
    
    Build lifelong relationships with Canadians by offering expanded services to plan members, including
both in-plan voluntary benefits and transition solutions (such as asset retention for retirement assets and
personal life and health benefits)
    
    Introduce new product extensions to plan sponsors to manage costs and reduce risk while maintaining the
value of the benefits for members
 
 Sun Life Financial Inc.
    
    34




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 Strategy
  Financial and Business Results
 Summary Statement of Operations
 (C$ millions)
    
    2008
    
    
    
    2007
    
    
    2006Premiums
    
    
    6,273
    
    
    
    
    6,004
    
    
    
    5,721Net investment income
    
    
    966
    
    
    
    
    2,586
    
    
    
    2,993Fee income
    
    
    688
    
    
    
    
    695
    
    
    
    619Total revenue
    
    
    7,927
    
    
    
    
    9,285
    
    
    
    9,333Client disbursements and change
in actuarial liabilities
    
    
    4,986
    
    
    
    
    6,149
    
    
    
    6,277Commissions and other expenses
    
    
    1,846
    
    
    
    
    1,868
    
    
    
    1,774Income taxes
    
    
    435
    
    
    
    
    200
    
    
    
    262Non-controlling interests in net income of
subsidiaries and par policyholders income
    
    
    15
    
    
    
    
    18
    
    
    
    25Common shareholders net income
    
    
    645
    
    
    
    
    1,050
    
    
    
    995
    (BAR GRAPH)
    
    (BAR GRAPH)


Sun Life Financial Inc.
    
    35




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 (1)
 Results by Business Unit
 Individual Insurance & Investments
   
    Group Benefits
 (2) Returns TM
 
 (1)
    
    ROE for the business segments is a non-GAAP measure.(2)
    
    As measured by the Fraser Group Universe Report published 
July
2008.


Sun Life Financial Inc.
    
    36




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
   Group Wealth
 (1)
     
 (1)
    
    As measured by Benefits Canada magazines 2008
Defined Contribution Plan Survey release in December 2008.


Sun Life Financial Inc.
    
    37




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 SLF U.S.
 Business Highlights
 
    
    In January 2009, SLF U.S. completed a comprehensive review of its business lines,
organizational structure and expenses. The review analyzed the market potential of each of
the businesses and the critical success factors for each of their markets. Core businesses
were identified and an operating model was developed that aligns capabilities, including the
functions that support the SLF U.S. strategy and growth objectives. The review also created a
centralized marketing organization and developed plans to reduce overall expenses to better
match current business volumes
    
    SLF U.S. launched the Sun Life UnretirementSM Index to track the changing
attitudes and expectations American workers have regarding retirement and to help Sun Life
Financial better understand customer needs
    
    During the fourth quarter of 2008, Jon A. Boscia joined the Company as President, Sun Life
Financial, with overall responsibility for the Companys U.S. business as well as worldwide
marketing. Also joining the company were Westley V. Thompson and Terrence J. Mullen who
serve as President, SLF U.S. and President, Sun Life Financial Distributors, respectively
 
 Business Profile
  
 Industry Profile
   
 Business Strength
  Strengths
 
    
    Sun Life Financials financial strength and reputation
    
    Broad distribution network
    
    Disciplined risk management
    
    Award-winning customer service and underwriting
 Opportunities
 
    
    Implementation of the strategic review recommendations
    
    Increased focus on market driven customer solutions
    
    Centralized distribution and relationship management
    
    Investment in marketing capabilities and brand awareness
    
    Mergers and acquisitions to complement organic growth
 
 Sun Life Financial Inc.
    
    38




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 Strategy
     Financial and Business Results
 (C$ millions)
    
    2008
    
    
    
    2007
    
    
    2006Premiums
    
    
    5,737
    
    
    
    
    5,528
    
    
    
    7,261Net investment income
    
    
    (2,472
    )
    
    
    
    1,560
    
    
    
    2,512Fee income
    
    
    552
    
    
    
    
    742
    
    
    
    692Total revenue
    
    
    3,817
    
    
    
    
    7,830
    
    
    
    10,465Client disbursements and change in actuarial liabilities
    
    
    3,697
    
    
    
    
    5,057
    
    
    
    8,054Commissions and other expenses
    
    
    1,784
    
    
    
    
    2,047
    
    
    
    1,941Income taxes
    
    
    (648
    )
    
    
    
    142
    
    
    
    21Non-controlling interests in net income of
subsidiaries and par policyholders income
    
    
    
    
    
    
    
    3
    
    
    
    1Common shareholders net income (loss)
    
    
    (1,016
    )
    
    
    
    581
    
    
    
    448Selected financial information
(US$ millions)Total revenue
    
    
    3,638
    
    
    
    
    7,276
    
    
    
    9,248Common shareholders net income (loss)
    
    
    (883
    )
    
    
    
    553
    
    
    
    395


Sun Life Financial Inc.
    
    39




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 (BAR GRAPH)
    
    (BAR GRAPH)
 Results by Business Unit
 Annuities
   
 SM
 Individual Insurance


Sun Life Financial Inc.
    
    40




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 Employee Benefits Group
     Sun Life Financial Inc.
    
    41




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 MFS
 Business Highlights
 
    
    Relative investment performance remained strong with 86% of MFSs fund assets ranked in the top half of their respective three-year Lipper
categories as at December 31,2008 compared with 75% as at December 31, 2007
    
    MFS ranked fourth overall out of 59 firms for one-year asset-weighted returns in the 2008
Lipper/Barrons Best Fund Family Survey. MFS also had overall rankings of fourth for five
years and fifth for ten years in the survey. MFS was the only fund family mentioned as having
a top five or better finish for one, five and ten years in the 2008 rankings
    
    The number of MFS domestic retail funds with Class A share assets that rated 4 or 5 stars
according to Morningstar more than doubled at December 31, 2008 compared with December 31,
2007
 
 Business Profile
  
 Industry Profile
     
 Business Strength
  Strengths
 
    
    Strong long-term performance in a number of key investment styles
    
    Diversified investment platform that can counteract the volatility of an investment performance strategy
    
    Breadth of product
    
    Strong client/wholesaler relationships
    
    Its global investment platform distinguishes MFS in the global institutional marketplace
 Opportunities
 
    
    More products with stronger investment performance records should provide additional opportunities in
the institutional marketplace globally
    
    Strong U.S. Equity performance provides an opportunity for improved net sales in U.S. mutual funds
    
    Investment performance missteps by a number of competitors may result in an increase in new
opportunities
 
 Sun Life Financial Inc.
    
    42




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 Strategy
   Financial and Business Results
 (C$ millions)
    
    2008
    
    
    
    2007
    
    
    2006Total revenue
    
    
    1,381
    
    
    
    
    1,687
    
    
    
    1,662Commissions and other expenses
    
    
    1,045
    
    
    
    
    1,206
    
    
    
    1,271Income taxes
    
    
    133
    
    
    
    
    185
    
    
    
    150Non-controlling interests in net income of subsidiaries
    
    
    9
    
    
    
    
    15
    
    
    
    7Common shareholders net income
    
    
    194
    
    
    
    
    281
    
    
    
    234Selected financial information
(US$ millions, unless otherwise 
     noted)Total revenue
    
    
    1,308
    
    
    
    
    1,573
    
    
    
    1,464Common shareholders net income
    
    
    186
    
    
    
    
    262
    
    
    
    206Sales(US$ billions)Gross
    
    
    36.0
    
    
    
    
    42.7
    
    
    
    37.0Net
    
    
    (5.8
    )
    
    
    
    (4.0
    )
    
    
    0.2Pre-tax operating profit margin ratio
    
    
    30
    %
    
    
    
    36
    %
    
    
    29
    %Average net assets(US$ billions)
    
    
    172
    
    
    
    
    198
    
    
    
    172
     
 Sun Life Financial Inc.
    
    43




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 SLF Asia
 Business Highlights
 
    
    In India, Birla Sun Life Insurance Company Limited (Birla Sun Life) opened 261 branches
during 2008, growing the operation to 600 branches, with individual life insurance sales up
68% in local currency driven by the expanded distribution. Birla Sun Life Asset Management
Company Limited maintained the overall fifth rank in the industry, with AUM and gross sales
growth of 9% and 78%, respectively, over 2007 on a local currency basis
    
    Sun Life Financials Philippines operations received six awards from the Investment
Company Association of the Philippines in June 2008 for the performance of three of its seven
mutual funds and the Philippines asset management operations retained the number two position
in terms of AUM and gross sales
    
    In China, Sun Life Everbright Insurance Company Limited opened the Guangzhou branch in
September. The Companys telemarketing sales channel, established at the end of 2007,
expanded with the establishment of a call centre in Tianjin. The Companys new critical
illness product received three awards, including the Best Critical Illness and Best
Innovation awards in a national insurance product online voting survey
 
 Business Profile
   
 Industry Profile
    
 Business Strength
  Strengths
 
    
    Solid foundations in Hong Kong and the Philippines to support SLF Asias growth in developing markets
    
    Superior investment performance in the Philippines and India
    
    Leader in telemarketing in Indonesia
    
    Ability to leverage the Companys international resources and expertise to develop innovative, value-added
products and leading-edge technology to better serve customers and distributors
    
    Strong capital position and robust risk management practices to support the expansion of its business
operations
 Opportunities
 
    
    Intensive competition for agent recruitment combined with increased public acceptance of alternate
distribution channels provide opportunities to leverage SLF Asias telemarketing expertise
    
    The financial challenges facing a number of competitors in Asia have created opportunities as distributors
look for new strong partners
    
    Leveraging a more balanced product portfolio as consumer demands shift to protection from investment products
    
    Expansion of e-services as consumers demand more efficient and convenient services
 
 Sun Life Financial Inc.
    
    44




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 Strategy
  Financial and Business Results
 Summary Statement of Operations(C$ millions)
    
    2008
    
    
    
    2007
    
    
    2006Premiums
    
    
    726
    
    
    
    
    629
    
    
    
    640Net investment income (loss)
    
    
    (318
    )
    
    
    
    255
    
    
    
    318Fee income
    
    
    90
    
    
    
    
    93
    
    
    
    64Total revenue
    
    
    498
    
    
    
    
    977
    
    
    
    1,022Client disbursements and change in actuarial liabilities
    
    
    64
    
    
    
    
    501
    
    
    
    621Commissions and other expenses
    
    
    379
    
    
    
    
    330
    
    
    
    283Income taxes
    
    
    22
    
    
    
    
    23
    
    
    
    17Common shareholders net income
    
    
    33
    
    
    
    
    123
    
    
    
    101
  (1)
   
 (1)
    
    ROE for the business segments is a non-GAAP measure. 
 
 
 (1)
    
    Includes 100% of sales for joint ventures. Sun Life Financial Inc.
    
    45




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
  Results by Business Unit
 Hong Kong
   Philippines
   India
     China
   Indonesia
  Sun Life Financial Inc.
    
    46




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 
 Corporate
  Financial and Business Results
 Summary Statement of Operations(1)(C$ millions)
    
    2008
    
    
    
    2007
    
    
    2006Premiums
    
    
    851
    
    
    
    
    963
    
    
    
    987Net investment income
    
    
    1,056
    
    
    
    
    421
    
    
    
    802Fee income
    
    
    33
    
    
    
    
    25
    
    
    
    16Total revenue
    
    
    1,940
    
    
    
    
    1,409
    
    
    
    1,805Client disbursements and change in actuarial liabilities
    
    
    1,138
    
    
    
    
    974
    
    
    
    1,303Commissions and other expenses
    
    
    87
    
    
    
    
    209
    
    
    
    203Income taxes
    
    
    (285
    )
    
    
    
    (28
    )
    
    
    (61
    )Non-controlling interests in net income of subsidiaries
    
    
    1
    
    
    
    
    1
    
    
    
    1Dividends paid to preferred shareholders
    
    
    70
    
    
    
    
    69
    
    
    
    48Common shareholders net income
    
    
    929
    
    
    
    
    184
    
    
    
    311Plus: Special items(2)
    
    
    (825
    )
    
    
    
    61
    
    
    
    Operating earnings
    
    
    104
    
    
    
    
    245
    
    
    
    311
 
 (1)
    
    Including consolidation adjustments related to activities between segments.(2)
    
    The impact of special items on earnings is described on page 19 under the heading
Non-GAAP Financial Measures.  
 SLF U.K.
  Sun Life Financial Inc.
    
    47




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##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
  Risk Management
 Risk Management Framework
    Risk Philosophy and Principles
  Strategic Alignment
  ,
   Stakeholder Interests
  Sun Life Financial Inc.
    
    48




---



##### 



MANAGEMENTS DISCUSSION AND ANALYSIS
 Capability Alignment
  Risk Budgeting
  Portfolio Perspective
  Risk to Reputation
  Accountability
     Sun Life Financial Inc.
    
    49




---



##### 



Risk Management Policies
  Risk Categories
  Credit Risk
 Risk Description
  Credit Risk Management Governance and Control
  
    
    Detailed credit and underwriting policies
    
    Specific diversification requirements such as asset class, geography and industry
    
    Comprehensive due diligence and ongoing credit analysis
    
    Establishing and reviewing credit quality ratings for portfolio investments
    
    Aggregate single and group counterparty exposure limits
    
    The Company has established target capital levels that exceed regulatory minimums
    
    Reserve provisions are established in accordance with standards set forth by the Canadian
Institute of Actuaries
    
    Ongoing monitoring and reporting against pre-established limits
    
    For certain classes of in-force business (participating, experience rated and
non-guaranteed), a portion of evolving adverse experience may be reflected through premium
increases and/or benefit reductions
    
    Effects of large and sustained adverse credit developments are measured through Dynamic
Capital Adequacy Testing and other stress-testing techniques
  Market Risk
 Risk Description
  Market Risk Management Governance and Control
  
    
    Enterprise-wide equity risk management policies
    
    Product development and pricing policies requiring detailed risk assessment and provision
for material market risks
 Sun Life Financial Inc.
    
    
    
    50




---



##### 




    
    Hedging and asset/liability management programs are maintained in respect of key selected
market risks (see Hedging and Asset/Liability Management below)
    
    The Company has established target capital levels that exceed regulatory minimums
 
    
    Reserve provisions are established in accordance with standards set forth by the Canadian
Institute of Actuaries
    
    For certain classes of in-force business (participating, experience rated and
non-guaranteed), a portion of evolving adverse experience may be reflected through premium
increases and/or benefit reductions
    
    Ongoing monitoring and reporting against pre-established limits
    
    Effects of large and sustained adverse market movement are measured through Dynamic
Capital Adequacy Testing and other stress-testing techniques
 Hedging and Asset/Liability Management
        Sun Life Financial Inc.
    
    
    
    51




---



##### 



Sensitivity measures
 Risk Measurement  Sensitivity of Earnings
   Increase
(Decrease) in Earnings (1)($ millions)Interest Rate Sensitivity (2)1% Increase
    
    
    100 to 1501% Decrease
    
    (150) to (200
    )Equity Market Sensitivity (3)10% Increase
    
    
    250 to 30010% Decrease
    
    (275) to (350
    )
 (1)
    
    Reflects business and asset portfolios at December 31, 2008.(2)
    
    Represents a 100 basis point parallel shift in assumed interest rates across
the entire yield curve.(3)
    
    Represents a 10% change in equity markets.
  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
    
    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
    
    Principle of diversification and risk pooling applies with aggregation of broad exposures
across product lines, geography, distribution channels, etc.
    
    The Company has established target capital levels that exceed regulatory minimums
    
    Reserve provisions are established in accordance with standards set forth by the Canadian
Institute of Actuaries
 Sun Life Financial Inc.
    
    
    
    52




---



##### 




    
    For certain classes of in-force business (participating, experience rated and
non-guaranteed), a portion of evolving adverse experience may be reflected through premium
increases and/or benefit reductions
    
    Effects of large and sustained adverse market movement are measured through Dynamic
Capital Adequacy Testing and other stress-testing techniques
    
    Board-approved maximum retention limits (amounts issued in excess of these limits are
reinsured)
    
    Experience studies (both Company specific and industry level) and Earnings-by-Source
analysis are continuously monitored and factored into ongoing valuation, renewal and new
business basis setting processes
    
    Sun Life Financial purchases reinsurance for certain risks underwritten by its various
insurance businesses. 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
  Operational Risk Management Governance and Control
  
    
    Enterprise-wide policies for all significant operational risks, supported by an annual
compliance self-assessment process
    
    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.
 
    
    Privacy policies, privacy officers and processes have been established to provide
guidance on handling private and confidential information for reporting of privacy issues to
appropriate management for response and resolution
    
    Ongoing monitoring and reporting, including regular briefings to the Audit and Risk
Review Committees of the Board of Directors
    
    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
  Sun Life Financial Inc.
    
    
    
    53




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##### 



Financial Position and Liquidity
  Principal Sources of Funds
    ($ millions)
    
    2008
    
    
    2007
    
    2006Net cash provided by operating activities
    
    
    1,737
    
    
    
    
    1,068
    
    
    
    4,469Net cash provided by (used in) financing activities
    
    
    (499
    )
    
    
    
    (92
    )
    
    
    356Net cash provided by (used in) investing activities
    
    
    1,780
    
    
    
    
    (2,010
    )
    
    
    (2,647
    )Changes due to fluctuations in exchange rates
    
    
    642
    
    
    
    
    (299
    )
    
    
    18Increase (decrease) in cash and cash equivalents
    
    
    3,660
    
    
    
    
    (1,333
    )
    
    
    2,196Cash and cash equivalents, beginning of year
    
    
    3,603
    
    
    
    
    4,936
    
    
    
    2,740Cash and cash equivalents, end of year
    
    
    7,263
    
    
    
    
    3,603
    
    
    
    4,936Short-term securities, end of year
    
    
    1,616
    
    
    
    
    1,897
    
    
    
    1,303Cash, cash equivalents and short-term securities, end of year
    
    
    8,879
    
    
    
    
    5,500
    
    
    
    6,239
 Sun Life Financial Inc.
    
    
    
    54




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##### 



Liquidity
  
    
    Capital levels
    
    Asset levels
    
    Matching position
    
    Diversification and credit quality of its investments
    
    Cash forecasts and actual amounts against established targets
 
        Capital
   Sun Life Financial Inc.
    
    
    
    55




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##### 



Source of Capital
 ($ millions)
    
    2008
    
    2007
    
    2006Subordinated debt
    
    
    2,576
    
    
    
    1,796
    
    
    
    1,456Trust Securities(1)
    
    
    1,150
    
    
    
    1,150
    
    
    
    1,849EquityParticipating policyholders equity
    
    
    106
    
    
    
    95
    
    
    
    92Preferred shareholders equity
    
    
    1,495
    
    
    
    1,495
    
    
    
    1,250Common shareholders equity
    
    
    15,808
    
    
    
    15,627
    
    
    
    15,842Total Equity
    
    
    17,409
    
    
    
    17,217
    
    
    
    17184Total Capital
    
    
    21,135
    
    
    
    20.163
    
    
    
    20,489Ratio of debt to total capital
    
    
    17.6
    %
    
    
    14.6
    %
    
    
    16,.1
    %Ratio of debt plus preferred shares to total capital
    
    
    24.7
    %
    
    
    22.0
    %
    
    
    22.2
    %
 (1)
    
    Includes SLEECS and Partnership Capital Securities(PCS). The PCS were redeemed in May 2007
       Sun Life Financial Inc.
    
    
    
    56




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##### 



Number of Common Shares Outstanding(in millions)
    
    2008
    
    2007
    
    2006Balance, beginning of year
    
    
    564.1
    
    
    
    571.8
    
    
    
    582.0Stock options exercised
    
    
    0.4
    
    
    
    2.1
    
    
    
    2.2Shares repurchased
    
    
    (4.8
    )
    
    
    (9.8
    )
    
    
    (12.4
    )Balance, end of year
    
    
    559.7
    
    
    
    564.1
    
    
    
    571.8Number of Stock Options Outstanding(in millions)
    
    2008
    
    2007
    
    2006Balance, beginning of year
    
    
    8.2
    
    
    
    9.1
    
    
    
    10.0Options issued
    
    
    2.3
    
    
    
    1.3
    
    
    
    1.5Options exercised or cancelled
    
    
    (0.5
    )
    
    
    (2.2
    )
    
    
    (2.4
    )Balance, end of year
    
    
    10.0
    
    
    
    8.2
    
    
    
    9.1
 Shareholders Dividends
   Dividends Declared for 2008Amount 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
    
    $
    1.125000
 Capital Adequacy
     Sun Life Financial Inc.
    
    
    
    57




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##### 



Sun Life Assurance MCCSR($ million)
    
    2008
    
    
    2007
    
    
    2006Capital availableRetained earnings and contributed surplus
    
    
    10,117
    
    
    
    9,957
    
    
    
    9,148Other comprehensive income
    
    
    (841
    )
    
    
    (1,521
    )
    
    
    (838
    )Common and preferred shares
    
    
    1,996
    
    
    
    1,446
    
    
    
    1,446Innovative instruments and subordinated debt
    
    
    2,600
    
    
    
    2,400
    
    
    
    2,399Other
    
    
    219
    
    
    
    531
    
    
    
    1,096Less:Goodwill and intangibles in excess of limit
    
    
    1,893
    
    
    
    1,607
    
    
    
    1,501Non-life investments and other
    
    
    1,585
    
    
    
    1,555
    
    
    
    1,686Total capital available
    
    
    10,613
    
    
    
    9,651
    
    
    
    10,064Required capitalAsset default and market risks
    
    
    2,620
    
    
    
    2,497
    
    
    
    2,532Insurance risks
    
    
    1,279
    
    
    
    1,276
    
    
    
    1,198Interest rate risks
    
    
    683
    
    
    
    861
    
    
    
    812Other
    
    
    
    
    
    
    (110
    )
    
    
    Total capital required
    
    
    4,582
    
    
    
    4,524
    
    
    
    4,542MCCSR ratio
    
    
    232
    %
    
    
    213
    %
    
    
    222
    %
   Sun Life Financial Inc.
    
    
    
    58




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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)
    
    2008
    
    
    
    2007As at December 31Securitized assets under management
    
    
    2,269
    
    
    
    
    1,939The Companys retained interests
    
    
    70
    
    
    
    
    91For the year ended December 31Cash flow received on retained interests and servicing
fees
    
    
    12
    
    
    
    
    14
 Securities Lending
  Commitments, Guarantees, Contingencies and Reinsurance Matters
   Sun Life Financial Inc.
    
    
    
    59




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##### 



Financial Liabilities and Contractual Obligations
 Payments due by period($ millions)
    
    Total
    
    
    Within 1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    Over 5 yearsSenior debentures and unsecured financing
(1)
    
    
    6,345
    
    
    
    200
    
    
    
    1,661
    
    
    
    239
    
    
    
    4,245Subordinated debt(1)
    
    
    4,061
    
    
    
    154
    
    
    
    307
    
    
    
    1,375
    
    
    
    2,225Bond repurchase agreements and securities lending
transactions
    
    
    2,376
    
    
    
    2,376
    
    
    
    
    
    
    
    
    
    
    
    Accounts payable and accrued expenses
    
    
    2,787
    
    
    
    2,787
    
    
    
    
    
    
    
    
    
    
    
    Borrowed funds(1)
    
    
    435
    
    
    
    66
    
    
    
    158
    
    
    
    145
    
    
    
    66General fund policyholder liabilities(2)
    
    
    206,833
    
    
    
    13,078
    
    
    
    14,216
    
    
    
    11,536
    
    
    
    168,003Total liabilities
    
    
    222,837
    
    
    
    18,661
    
    
    
    16,342
    
    
    
    13,295
    
    
    
    174,539Contractual Commitments(3):Contractual loan, equity and real estate
    
    
    1,072
    
    
    
    444
    
    
    
    551
    
    
    
    27
    
    
    
    50Operating leases
    
    
    425
    
    
    
    102
    
    
    
    161
    
    
    
    104
    
    
    
    58Total contractual commitments
    
    
    1,497
    
    
    
    546
    
    
    
    712
    
    
    
    131
    
    
    
    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 surrenders, 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 policy liabilities. These amounts are undiscounted
and do not reflect recoveries from reinsurance agreements. The actuarial and other policy liability amounts
included in the SLF Inc.s 2008 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
  Controls and Procedures
 Disclosure Controls and Procedures
   Internal Control Over Financial Reporting
    Sun Life Financial Inc.
    
    
    
    60