----

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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-Q**

**QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d)**

**OF      THE SECURITIES EXCHANGE ACT 0F 1934**

| For                the quarterly period ended **March                31, 2007** | Commission                File Numbers: **2-99959,                33-29851, 33-31711, 33-41858, 33-43008, 33-58853, 333-11699, 333-77041,                333-62837, 333-45923, 333-88069, 333-39306, 333-46566, 333-82816,                333-82824, 333-111636, 333-130699, 333-130703, 333-130704, 333-133684,                333-133685, 333-133686, 333-39034, and                333-139387-01** |
|---------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

| **Delaware**                                                                  | **04-2461439**                                   |
|-------------------------------------------------------------------------------|--------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) | (IRS                Employer Identification No.) |

| **One                Sun Life Executive Park, Wellesley Hills, MA** | **02481**                 |
|---------------------------------------------------------------------|---------------------------|
| (Address                of principal executive offices)             | (Zip                Code) |

**(781)      237-6030**

**NONE**

| Large                accelerated filer p  | Accelerated                filer p  | Non-accelerated                filer x  |
|------------------------------------------------|------------------------------------------|----------------------------------------------|

**THE      REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H(1) (a)      AND      (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE      FORMAT PERMITTED BY GENERAL INSTRUCTION H.**

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**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**QUARTERLY      REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2007**

**TABLE      OF CONTENTS**

|   | Page |
|--------|------|

| **PART                I - FINANCIAL INFORMATION** |
|---------------------------------------------------|
|                                              |   |   |
| Item                1.                            | Financial                Statements: |   |
|                                              |   |   |
|                                              | Condensed                Consolidated Statements of Income for the three months ended March                31,                2007 and 2006 (Unaudited) | 3 |
|                                              |   |   |
|                                              | Condensed                Consolidated Balance Sheets as of March 31, 2007 and December 31,                2006                (Unaudited) |  4 |
|                                              |   |   |
|                                              | Condensed                Consolidated Statements of Comprehensive Income (Loss) for the three                months ended                March 31, 2007 and 2006 (Unaudited) |  5 |
|                                              |   |   |
|                                              | Condensed                Consolidated Statements of Changes in Stockholder’s Equity for the three                months ended March 31, 2007 and 2006 (Unaudited) | 6 |
|                                              |   |   |
|                                              | Condensed                Consolidated Statements of Cash Flows for the three months ended                March 31,                2007 and 2006 (Unaudited) | 7 |
|                                              |   |   |
|                                              | Notes                to the Unaudited Condensed Consolidated Financial Statements | 9 |
|                                              |   |   |
| Item                2.                            | Management's                Discussion and Analysis of Financial Condition and Results of                Operations | 21 |
|                                              |   |   |
| Item                3.                            | Quantitative                and Qualitative Disclosures About Market Risk | 31 |
|                                              |   |   |
| Item                4.                            | Controls                and Procedures | 31 |

| **PART                II - OTHER INFORMATION** |
|------------------------------------------------|
|                                           |   |   |
| Item                1.                         | Legal                Proceedings | 31 |
|                                           |   |   |
| Item                1A.                        | Risk                Factors | 31 |
|                                           |   |   |
| Item                2.                         | Unregistered                Sales of Equity Securities and Use of Proceeds | 31 |
|                                           |   |   |
| Item                3.                         | Defaults                Upon Senior Securities | 31 |
|                                           |   |   |
| Item                4.                         | Submission                of Matters to a Vote of Security Holders | 31 |
|                                           |   |   |
| Item                5.                         | Other                Information | 31 |
|                                           |   |   |
| Item                6.                         | Exhibits | 32 |

----

**PART      I - FINANCIAL INFORMATION**

**Item      1. Financial Statements.**

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**CONDENSED      CONSOLIDATED STATEMENTS OF INCOME**

|                                                                                                                            | **Unaudited**                                                     |
|---------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------|
|                                                                                                                            |  **2007**                                                    |   |  **2006** |
|                                                                                                                            |                                                              |   |   |
| **Revenues**                                                                                                                    |                                                              |   |   |
|                                                                                                                            |                                                              |   |   |
| Premiums                and annuity considerations                                                                              | $                       14,650 |   | $                       15,138 |
| Net                investment income                                                                                            | 306,667                                                           |   | 243,580 |
| Net                derivative (loss) income                                                                                     | (8,965)                                                           |   | 124,528 |
| Net                realized investment gains (losses)                                                                           | 5,615                                                             |   | (77) |
| Fee                and other income                                                                                             | 111,670                                                           |   | 91,447 |
|                                                                                                                            |                                                              |   |   |
| Total                revenues                                                                                                   | 429,637                                                           |   | 474,616 |
|                                                                                                                            |                                                              |   |   |
| **Benefits                and Expenses**                                                                                        |                                                              |   |   |
|                                                                                                                            |                                                              |   |   |
| Interest                credited                                                                                                | 166,410                                                           |   | 157,625 |
| Interest                expense                                                                                                 | 35,666                                                            |   | 31,274 |
| Policyowner                benefits                                                                                             | 37,738                                                            |   | 35,637 |
| Amortization                of deferred policy acquisition costs ("DAC") and value of business                acquired ("VOBA") |  74,775                                                      |   |  105,275 |
| Other                operating expenses                                                                                         | 69,156                                                            |   | 52,818 |
|                                                                                                                            |                                                              |   |   |
| Total                benefits and expenses                                                                                      | 383,745                                                           |   | 382,629 |
|                                                                                                                            |                                                              |   |   |
| Income                before income tax expense                                                                                 | 45,892                                                            |   | 91,987 |
|                                                                                                                            |                                                              |   |   |
| Income                tax expense                                                                                               | 10,568                                                            |   | 28,326 |
|                                                                                                                            |                                                              |   |   |
| Net                income                                                                                                       | $                35,324                                           |   | $                63,661 |

*The      accompanying notes are an integral part of the condensed consolidated financial      statements.*

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

|                                                                                                                                                                                     |    | **Unaudited**                     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|-----------------------------------|
| **ASSETS**                                                                                                                                                                               |    | **March                31, 2007** |   | **December                31, 2006** |
| Investments                                                                                                                                                                              |    |                              |   |   |
| Available-for-sale                fixed maturities at fair value (amortized cost of     $13,326,643                and $13,623,450 in 2007 and 2006, respectively)   |  $ | 13,363,938                        |  $ | 13,637,973 |
| Trading                fixed maturities at fair value (amortized cost of $3,458,405 and                    $3,838,732                in 2007 and 2006, respectively) |    | 3,484,880                         |   | 3,856,053 |
| Subordinated                note from affiliate held-to-maturity (fair value of $625,596     and                $630,751 in 2007 and 2006, respectively)             |    | 600,000                           |   | 600,000 |
| Mortgage                loans                                                                                                                                                            |    | 2,331,894                         |   | 2,273,176 |
| Derivative                instruments - receivable                                                                                                                                       |    | 550,976                           |   | 653,854 |
| Limited                partnerships                                                                                                                                                      |    | 178,898                           |   | 193,728 |
| Real                estate                                                                                                                                                               |    | 202,097                           |   | 186,891 |
| Policy                loans                                                                                                                                                              |    | 710,495                           |   | 709,626 |
| Other                invested assets                                                                                                                                                     |    | 873,532                           |   | 950,226 |
| Cash                and cash equivalents                                                                                                                                                 |    | 900,785                           |   | 578,080 |
| Total                investments and cash                                                                                                                                                |    | 23,197,495                        |   | 23,639,607 |
|                                                                                                                                                                                     |    |                              |   |   |
| Accrued                investment income                                                                                                                                                 |    | 301,692                           |   | 291,218 |
| Deferred                policy acquisition costs                                                                                                                                         |    | 1,222,164                         |   | 1,234,206 |
| Value                of business acquired                                                                                                                                                |    | 43,934                            |   | 47,744 |
| Deferred                federal income taxes                                                                                                                                             |    | 38,053                            |   | 3,597 |
| Goodwill                                                                                                                                                                                 |    | 701,451                           |   | 701,451 |
| Receivable                for investments sold                                                                                                                                           |    | 101,045                           |   | 33,241 |
| Reinsurance                receivable                                                                                                                                                    |    | 1,808,151                         |   | 1,817,999 |
| Other                assets                                                                                                                                                              |    | 140,958                           |   | 153,230 |
| Separate                account assets                                                                                                                                                   |    | 21,920,245                        |   | 21,060,255 |
|                                                                                                                                                                                     |    |                              |   |   |
| Total                assets                                                                                                                                                              | $       | 49,475,188                        | $ | 48,982,548 |
|                                                                                                                                                                                     |    |                              |   |   |
| **LIABILITIES**                                                                                                                                                                          |    |                              |   |   |
|                                                                                                                                                                                     |    |                              |   |   |
| Contractholder                deposit funds and other policy liabilities                                                                                                                 | $       | 19,130,622                        | $ | 19,428,625 |
| Future                contract and policy benefits                                                                                                                                       |    | 744,119                           |   | 750,112 |
| Payable                for investments purchased                                                                                                                                         |    | 150,262                           |   | 218,465 |
| Accrued                expenses and taxes                                                                                                                                                |    | 141,387                           |   | 144,695 |
| Debt                payable to affiliates                                                                                                                                                |    | 1,325,000                         |   | 1,325,000 |
| Partnership                capital securities                                                                                                                                            |    | 620,615                           |   | 607,826 |
| Reinsurance                payable to affiliate                                                                                                                                          |    | 1,601,519                         |   | 1,605,626 |
| Derivative                instruments - payable                                                                                                                                          |    | 162,839                           |   | 160,504 |
| Other                liabilities                                                                                                                                                         |    | 1,129,222                         |   | 1,178,086 |
| Separate                account liabilities                                                                                                                                              |    | 21,920,245                        |   | 21,060,255 |
|                                                                                                                                                                                     |    |                              |   |   |
| Total                liabilities                                                                                                                                                         |    | 46,925,830                        |   | 46,479,194 |
|                                                                                                                                                                                     |    |                              |   |   |
| Commitments                and contingencies - Note 5                                                                                                                                    |    |                              |   |   |
|                                                                                                                                                                                     |    |                              |   |   |
| **STOCKHOLDER’S                EQUITY**                                                                                                                                            |    |                              |   |   |
|                                                                                                                                                                                     |    |                              |   |   |
| Common                stock, $1,000 par value - 10,000 shares authorized; 6,437 shares                issued                and outstanding                                              |  $ | 6,437                             |  $ | 6,437 |
| Additional                paid-in capital                                                                                                                                                |    | 2,143,980                         |   | 2,143,408 |
| Accumulated                other comprehensive income                                                                                                                                    |    | 18,962                            |   | 14,030 |
| Retained                earnings                                                                                                                                                         |    | 379,979                           |   | 339,479 |
|                                                                                                                                                                                     |    |                              |   |   |
| Total                stockholder’s equity                                                                                                                                          |    | 2,549,358                         |   | 2,503,354 |
|                                                                                                                                                                                     |    |                              |   |   |
| Total                liabilities and stockholder’s equity                                                                                                                          | $       | 49,475,188                        | $ | 48,982,548 |

*The      accompanying notes are an integral part of the condensed consolidated financial      statements.*

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**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**CONDENSED      CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)**

|                                                                                                                                                                                            | **Unaudited**           |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------|
|                                                                                                                                                                                            |  **2007**          |   |  **2006** |
|                                                                                                                                                                                            |                    |   |   |
| Net                income                                                                                                                                                                       | $                35,324 |   | $                   63,661 |
| Other                comprehensive loss:                                                                                                                                                        |                    |   |   |
|                                                                                                                                                                                            |                    |   |   |
| Net                change in unrealized holding gains (losses) on available-                    for-sale securities, net of tax and policyholder amounts                (1) |  4,140             |   |  (99,175) |
|                                                                                                                                                                                            |                    |   |   |
| Minimum                pension liability adjustment, net of tax (2)                                                                                                                             | -                       |   | 1,289 |
|                                                                                                                                                                                            |                    |   |   |
| Reclassification                adjustments of realized investment lossesinto net income, net of tax                (3)                                                                         |  792               |   |  6,373 |
| Other                comprehensive income (loss)                                                                                                                                                | 4,932                   |   | (91,513) |
|                                                                                                                                                                                            |                    |   |   |
| Comprehensive                income (loss)                                                                                                                                                      | $                40,256 |   | $                 (27,852) |

| (1)   | Net                of tax expense (benefit) of $3.0 million and $(53.4) million for                the three                months ended March 31, 2007 and 2006,                respectively. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Net                of tax expense of $0.7 million for the three months ended March 31,                2006. |
|-----------------|-------------------------------------------------------------------------------------------------------------|

| (3)   | Net                of tax benefit of $0.4 million and $3.4 million for the three months                ended                March 31, 2007 and 2006, respectively. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*The      accompanying notes are an integral part of the condensed consolidated financial      statements.*

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**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**CONDENSED      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY**

**Unaudited**

|   |                                                                              |   |       |   |           |   | **Accumulated**                  |   |         |   |              |
|--------|-----------------------------------------------------------------------------------|--------|------------|--------|----------------|--------|----------------------------------|--------|--------------|--------|-------------------|
|   |                                                                              |   |       |   | **Additional** |   | **Other**                        |   |         |   | **Total**         |
|   |                                                                              |   | **Common** |   | **Paid-In**    |   | **Comprehensive**                |   | **Retained** |   | **Stockholder's** |
|   |                                                                              |   | **Stock**  |   | **Capital**    |   | **Income                (Loss)** |   | **Earnings** |   | **Equity**        |
|   |                                                                              |   |       |   |           |   |                             |   |         |   |              |
|   | Balance                at December 31, 2005                                       | $      | 6,437      | $      | 2,138,880      | $      | 19,260                           | $      | 561,187      | $      | 2,725,764         |
|   |                                                                              |   |       |   |           |   |                             |   |         |   |              |
|   | Net                income                                                         |   |       |   |           |   |                             |   | 63,661       |   | 63,661            |
|   | Tax                benefit from stock options                                     |   |       |   | 2,084          |   |                             |   |         |   | 2,084             |
|   | Other                comprehensive loss                                           |   |       |   |           |   | (91,513)                         |   |         |   | (91,513)          |
|   |                                                                              |   |       |   |           |   |                             |   |         |   |              |
|   | Balance                at March 31, 2006                                          | $      | 6,437      | $      | 2,140,964      | $      | (72,253)                         | $      | 624,848      | $      | 2,699,996         |
|   |                                                                              |   |       |   |           |   |                             |   |         |   |              |
|   |                                                                              |   |       |   |           |   |                             |   |         |   |              |
|   |                                                                              |   |       |   |           |   |                             |   |         |   |              |
|   |                                                                              |   |       |   |           |   |                             |   |         |   |              |
|   | Balance                at December 31, 2006                                       | $      | 6,437      | $      | 2,143,408      | $      | 14,030                           | $      | 339,479      | $      | 2,503,354         |
|   |                                                                              |   |       |   |           |   |                             |   |         |   |              |
|   | Cumulative                effect of accounting                changes, net of tax |   |       |   |           |   |                             |   |  5,176  |   |  5,176       |
|   | Net                income                                                         |   |       |   |           |   |                             |   | 35,324       |   | 35,324            |
|   | Tax                benefit from stock options                                     |   |       |   | 572            |   |                             |   |         |   | 572               |
|   | Other                comprehensive income                                         |   |       |   |           |   | 4,932                            |   |         |   | 4,932             |
|   |                                                                              |   |       |   |           |   |                             |   |         |   |              |
|   | Balance                at March 31, 2007                                          | $      | 6,437      | $      | 2,143,980      | $      | 18,962                           | $      | 379,979      | $      | 2,549,358         |

*The      accompanying notes are an integral part of the condensed consolidated financial      statements.*

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**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

|                                                                       |                                                                                               |      | **Unaudited**            |
|----------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|-----------|--------------------------|
|                                                                       |                                                                                               |      |  **2007**           |   |  **2006** |
|                                                                       |                                                                                               |      |                     |   |   |
| **Cash                Flows From Operating Activities:**                   |                                                                                               |      |                     |
| Net                income                                                  | $                35,324                                                                            |      | $                63,661  |
| Adjustments                to reconcile net income to net cash provided by |                                                                                               |      |                     |
|                                                                       | operating                activities:                                                               |      |                     |   |
|                                                                       | Net                amortization of premiums on investments                                         | 11,572    |                     | 21,771 |
|                                                                       | Amortization                of DAC and VOBA                                                        | 74,775    |                     | 105,275 |
|                                                                       | Depreciation                and amortization                                                       | 1,201     |                     | 1,330 |
|                                                                       | Non                cash derivative activity                                                        | 7,012     |                     | (137,607) |
|                                                                       | Net                realized (gains) losses on investments                                          | (5,615)   |                     | 77 |
|                                                                       | Net                unrealized (gains) losses on trading investments                                | (9,154)   |                     | 24,922 |
|                                                                       | Net                realized gains on trading investments                                           | (5,659)   |                     | - |
|                                                                       | Net                change in unrealized and undistributed losses (gains) in                private |      |                     |   |
|                                                                       | equity                limited partnerships                                                         | 2,915     |                     | (1,126) |
|                                                                       | Interest                credited to contractholder deposits                                        | 166,410   |                     | 157,625 |
|                                                                       | Deferred                federal income taxes                                                       | 3,439     |                     | 53,649 |
| Changes                in assets and liabilities:                          |                                                                                               |      |                     |
|                                                                       | Deferred                acquisition cost additions                                                 | (71,353)  |                     | (63,026) |
|                                                                       | Accrued                investment income                                                           | (10,474)  |                     | (22,684) |
|                                                                       | Future                contract and policy benefits                                                 | (7,813)   |                     | (5,297) |
|                                                                       | Other,                net                                                                          | 11,907    |                     | 9,801 |
|                                                                       | Net                sales of trading fixed maturities                                               | 386,227   |                     | 17,678 |
|                                                                       |                                                                                               |      |                     |   |   |
| Net                cash provided by operating activities                   | 590,714                                                                                            |      | 226,049                  |
|                                                                       |                                                                                               |      |                     |   |   |
| **Cash                Flows From Investing Activities:**                   |                                                                                               |      |                     |
| Sales,                maturities and repayments of:                        |                                                                                               |      |                     |
|                                                                       | Available-for-sale                fixed maturities                                                 | 1,033,087 |                     | 1,403,174 |
|                                                                       | Mortgage                loans                                                                      | 53,473    |                     | 50,906 |
|                                                                       | Other                invested assets                                                               | 159,929   |                     | 47,215 |
| Purchases                of:                                               |                                                                                               |      |                     |
|                                                                       | Available-for-sale                fixed maturities                                                 | (851,472) |                     | (987,751) |
|                                                                       | Mortgage                loans                                                                      | (112,222) |                     | (105,822) |
|                                                                       | Real                estate                                                                         | (16,316)  |                     | (292) |
|                                                                       | Other                invested assets                                                               | (16,663)  |                     | (321,616) |
| Net                changes in other investing activities                   | (75,741)                                                                                           |      | 299,042                  |
| Net                change in policy loans                                  | (869)                                                                                              |      | 3,215                    |
|                                                                       |                                                                                               |      |                     |   |   |
| Net                cash provided by investing activities                   | $                173,206                                                                           |      | $                388,071 |

*The      accompanying notes are an integral part of the condensed consolidated financial      statements.*

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)**

|                                                          | **Unaudited**                                                |
|---------------------------------------------------------------|--------------------------------------------------------------|
|                                                          |  **2007**                                               |   |  **2006** |
|                                                          |                                                         |   |   |
| **Cash                Flows From Financing Activities:**      |                                                         |   |   |
|                                                          | Additions                to contractholder deposit funds     | $                478,042 |   | $                388,218 |
|                                                          | Withdrawals                from contractholder deposit funds | (919,829) |   | (908,912) |
|                                                          | Other,                net                                    | 572 |   | 2,084 |
|                                                          |                                                         |   |   |   |   |
| Net                cash used in financing activities          | (441,215)                                                    |   | (518,610) |
|                                                          |                                                         |   |   |   |   |
| Net                change in cash and cash equivalents        | 322,705                                                      |   | 95,510 |
|                                                          |                                                         |   |   |   |   |
| Cash                and cash equivalents, beginning of period | 578,080                                                      |   | 347,654 |
|                                                          |                                                         |   |   |   |   |
| Cash                and cash equivalents, end of period       | $                900,785                                     |   | $                443,164 |

*The      accompanying notes are an integral part of the condensed consolidated financial      statements.*

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL      STATEMENTS**

**1.      DESCRIPTION OF BUSINESS **

**GENERAL**

**BASIS      OF PRESENTATION**

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (continued)**

**BASIS      OF PRESENTATION (continued)**

**USE      OF ESTIMATES**

**ACCOUNTING      PRONOUNCEMENTS**

***New      Accounting Pronouncements***

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (continued)**

**ACCOUNTING      PRONOUNCEMENTS (continued)**

***Adoption      of New Accounting Pronouncements***

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (continued)**

**ACCOUNTING      PRONOUNCEMENTS (continued)**

***Adoption      of New Accounting Pronouncements (continued)***

**2.**
**TRANSACTIONS      WITH AFFILIATES **

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (continued)**

**2.**
**TRANSACTIONS      WITH AFFILIATES (continued)**

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (continued)**

**2.**
**TRANSACTIONS      WITH AFFILIATES (continued)**

**3.      SEGMENT INFORMATION**

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (continued)**

**3.      SEGMENT INFORMATION (continued)**

**Wealth      Management**

**Individual      Protection**

**Group      Protection**

**Corporate**

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (continued)**

**3.      SEGMENT INFORMATION (continued)**

|                                                                            | **Three                months ended March 31, 2007** |   |                     |
|---------------------------------------------------------------------------------|------------------------------------------------------|--------|--------------------------|
|                                                                            |                                                 |   |                     |   |   |   |   |   |   |
|                                                                            | **Wealth**                                           |   | **Individual**           |   | **Group** |   |   |   |   |
|                                                                            | **Management**                                       |   | **Protection**           |   | **Protection** |   | **Corporate** |   | **Totals** |
| Total                revenues                                                   | $                366,685                             |   | $                35,127  |   | $                11,207 |   | $                16,618 |   | $                429,637 |
| Total                benefits and expenses                                      | 314,789                                              |   | 36,748                   |   | 13,117 |   | 19,091 |   | 383,745 |
| Income                (loss) before income                tax expense (benefit) | 51,896                                               |   | (1,621)                  |   | (1,910) |   | (2,473) |   | 45,892 |
| Net                income (loss)                                                | $                37,923                              |   | $                (1,019) |   | $                (1,241) |   | $                (339) |   | $                35,324 |

|                                                                            | **Three                months ended March 31, 2006** |   |                    |
|---------------------------------------------------------------------------------|------------------------------------------------------|--------|-------------------------|
|                                                                            |                                                 |   |                    |   |   |   |   |   |   |
|                                                                            | **Wealth**                                           |   | **Individual**          |   | **Group** |   |   |   |   |
|                                                                            | **Management**                                       |   | **Protection**          |   | **Protection** |   | **Corporate** |   | **Totals** |
| Total                revenues                                                   | $                427,036                             |   | $                20,178 |   | $                9,645 |   | $                17,757 |   | $                474,616 |
| Total                benefits and expenses                                      | 335,729                                              |   | 18,213                  |   | 9,969 |   | 18,718 |   | 382,629 |
| Income                (loss) before income                tax expense (benefit) | 91,307                                               |   | 1,965                   |   | (324) |   | (961) |   | 91,987 |
| Net                income (loss)                                                | $                62,199                              |   | $                1,277  |   | $                (210) |   | $                395 |   | $                63,661 |

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (continued)**

**4.      REINSURANCE**

**5.**
**COMMITMENTS      AND CONTINGENT LIABILITIES**

**Regulation      and Regulatory Developments**

**Litigation,      Income Taxes and Other Matters**

**Indemnities**

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (continued)**

**6.      RETIREMENT PLANS**

|                                                                            |                   | **2007**                            | **2006**                          |
|---------------------------------------------------------------------------------|------------------------|-------------------------------------|-----------------------------------|
|                                                                            |                   | **Pension                Benefits** | **Other                Benefits** | **Pension                Benefits** | **Other                Benefits** |
|                                                                            |                   |                                |                              |   |   |
| Components                of net periodic benefit cost:                         |                   |                                |                              |   |
| Service                cost                                                     | $                1,027 | $                245                | $                1,398            | $                328 |
| Interest                cost                                                    | 3,939                  | 682                                 | 3,360                             | 742 |
| Expected                return on plan assets                                   | (5,469)                | -                                   | (5,418)                           | - |
| Amortization                of transition obligation asset                      | (523)                  | -                                   | (523)                             | - |
| Amortization                of prior service cost                               | 84                     | (132)                               | 69                                | (132) |
| Recognized                net actuarial (gains) loss                            | (27)                   | 228                                 | 41                                | 363 |
| Net                periodic (benefit) cost                                      | $                (969) | $                1,023              | $                (1,073)          | $                1,301 |
| The                Company’s share of net periodic benefit (benefit) cost | $                (969) | $                868                | $                (1,073)          | $                1,117 |

**7.      LIABILITIES FOR CONTRACT GUARANTEES**

| **Benefit                Type**                    | **Account                Balance** | **Net                Amount at Risk****1** | **Average                Attained Age** |
|----------------------------------------------------|------------------------------------|--------------------------------------------|-----------------------------------------|
| Minimum                death                       | $                16,989,263        | $                1,542,712                 | 67.2                                    |
| Minimum                income                      | $                385,540           | $                53,927                    | 60.1                                    |
| Minimum                accumulation and withdrawal |  $                3,474,227   |  $                1,792               |  62.7                              |

*Net      amount at risk represents the difference between guaranteed benefits and account      balance.*

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (continued)**

**7.      LIABILITIES FOR CONTRACT GUARANTEES (continued)**

|                                                                    | **Guaranteed****Minimum****Death                Benefit** |   | **Guaranteed****Minimum****Income                Benefit** |   |   **Total**         |
|-------------------------------------------------------------------------|-----------------------------------------------------------|--------|------------------------------------------------------------|--------|-------------------------------|
| Balance                at January 1, 2007                               | $                39,923                              |   | $                1,448                                |   | $                41,371  |
|                                                                    |                                                      |   |                                                       |   |                          |
| Benefit                ratio change / Assumption                changes |  511                                                 |   |  1,135                                                |   |  1,646                   |
| Incurred                guaranteed benefits                             | 6,462                                                     |   | 80                                                         |   | 6,542                         |
| Paid                guaranteed benefits                                 | (6,591)                                                   |   | (1,673)                                                    |   | (8,264)                       |
| Interest                                                                | 467                                                       |   | 10                                                         |   | 477                           |
|                                                                    |                                                      |   |                                                       |   |                          |
| Balance                at March 31, 2007                                | $                40,772                                   |   | $                1,000                                     |   | $                41,772       |

|                                                                    | **Guaranteed****Minimum****Death                Benefit** |   | **Guaranteed****Minimum****Income                Benefit** |   |   **Total**   |
|-------------------------------------------------------------------------|-----------------------------------------------------------|--------|------------------------------------------------------------|--------|-------------------------|
| Balance                at January 1, 2006                               | $                41,749                                   |   | $                3,000                                     |   | $                44,749 |
|                                                                    |                                                      |   |                                                       |   |                    |
| Benefit                ratio change / Assumption                changes |  (5,133)                                             |   |  (214)                                                |   |  (5,347)           |
| Incurred                guaranteed benefits                             | 12,870                                                    |   | 162                                                        |   | 13,032                  |
| Paid                guaranteed benefits                                 | (12,422)                                                  |   | -                                                          |   | (12,422)                |
| Interest                                                                | 822                                                       |   | 52                                                         |   | 874                     |
|                                                                    |                                                      |   |                                                       |   |                    |
| Balance                at March 31, 2006                                | $                37,886                                   |   | $                3,000                                     |   | $                40,886 |

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**(A      Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings,      Inc.)**

**NOTES      TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS      (continued)**

**7.      LIABILITIES FOR CONTRACT GUARANTEES (continued)**

**8.      GOODWILL**

**9.      SUBSEQUENT EVENT**

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**Item      2. Management’s Discussion and Analysis of Financial Condition and Results of      Operations.**

***CAUTIONARY      STATEMENT***

| ● | Heightened                competition, particularly in terms of price, product features and                distribution capability, which could constrain the Company’s growth and                profitability. |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                   |
| ● | Changes                in interest rates and market conditions.                                                                                                                                                        |
|    |                                                                                                                                                                                                                   |
| ● | Regulatory                and legislative developments.                                                                                                                                                                |
|    |                                                                                                                                                                                                                   |
| ● | Developments                in consumer preferences and behavior                patterns.                                                                                                                              |

**CRITICAL      ACCOUNTING POLICIES**

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**RESULTS      OF OPERATIONS**

***Three      months ended March 31, 2007 compared to the three months ended March 31,      2006:***

**Net      Income**

**REVENUES**

***Premium      and annuity considerations***

***Net      investment incom***
**e**

***Net      derivative (loss) income***

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**RESULT      OF OPERATIONS (Continued)**

|                                                                                                        | **Three                months ended March 31,** |
|-------------------------------------------------------------------------------------------------------------|-------------------------------------------------|
|                                                                                                        | **2007**                                        | **2006** |
| Net                income (expense) on swap agreements                                                      | $                2,175                          | $                (9,973) |
| Change                in fair value of swap agreements (interest                rate, currency, and equity) |  (23,650)                                  |  131,256 |
| Change                in fair value of options, futures and embedded                derivatives             |  12,510                                    |  3,245 |
|                                                                                                        |                                            |   |
| Total                derivative (loss) income                                                               | $                (8,965)                        | $                124,528 |

***Net      realized investment gains (losses)***

***Fees      and other income***

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**RESULT      OF OPERATIONS (Continued)**

**BENEFITS      AND EXPENSES**

***Interest      credited***

***Interest      expense***

***Policyholder      benefits***

***Other      operating expenses -***

***Amortization      of DAC -***

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**RESULT      OF OPERATIONS (Continued)**

***Amortization      of VOBA***

**Results      of Operations by Segment**

***Wealth      Management Segment***

***Fixed      Annuities***
*      -*

***Variable      Annuities***
*      -*

***Fixed      Index Annuities***
* *

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

***Wealth      Management Segment (continued)***

***Institutional      Investment Contracts***
* *

***Other***
**-**

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

***Wealth      Management Segment (continued)***

|                                                | **2007**                 |   | **2006**                 |
|-----------------------------------------------------|--------------------------|--------|--------------------------|
| **Total                revenues**                   | $                366,685 |   | $                427,036 |
| **Total                benefits and expenses**      | 314,789                  |   | 335,729                  |
| **Income                before income tax expense** |  51,896             |   |  91,307             |
|                                                |                     |   |                     |
| **Net                Income**                       | $                37,923  |   | $                62,199  |

**REVENUES**

***Net      investment incom***
**e**

***Net      derivative (loss) income***

|                                                                                                        | **2007**                 | **2006**                 |
|-------------------------------------------------------------------------------------------------------------|--------------------------|--------------------------|
| Net                income (expense) on swap agreements                                                      | $                1,337   | $                (9,498) |
| Change                in fair value of swap agreements (interest                rate, currency, and equity) |  (22,337)           |  130,641            |
| Change                in fair value of options, futures and embedded                derivatives             |  12,510             |  3,245              |
|                                                                                                        |                     |                     |
| Total                derivative (loss) income                                                               | $                (8,490) | $                124,388 |

***Net      realized investment gains***
** **

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

***Wealth      Management Segment (continued)***

**REVENUES      (continued)**

***Fees      and other income***

**BENEFITS      AND EXPENSES**

***Interest      credited -***

***Interest      expense***

***Policyholder      benefits***

***Other      operating expenses -***

***Amortization      of DAC***

***Amortization      of VOBA***

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

***Individual      Protection Segment***

|                                                                 | **2007**                 |   | **2006**                |
|----------------------------------------------------------------------|--------------------------|--------|-------------------------|
| **Total                revenues**                                    | $                35,127  |   | $                20,178 |
| **Total                benefits and expenses**                       | 36,748                   |   | 18,213                  |
| **(Loss)                income before income tax expense (benefit)** |  (1,621)            |   |  1,965             |
|                                                                 |                     |   |                    |
| **Net                (loss) income**                                 | $                (1,019) |   | $                1,277  |

***Group      Protection Segment***

|                                              | **2007**                 |   | **2006**               |
|---------------------------------------------------|--------------------------|--------|------------------------|
| **Total                revenues**                 | $                11,207  |   | $                9,645 |
| **Total                benefits and expenses**    | 13,117                   |   | 9,969                  |
| **Loss                before income tax benefit** | (1,910)                  |   | (324)                  |
|                                              |                     |   |                   |
| **Net                loss**                       | $                (1,241) |   | $                (210) |

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

***Group      Protection Segment (continued)***

***Corporate      Segment***

|                                              | **2007**                |   | **2006**                |
|---------------------------------------------------|-------------------------|--------|-------------------------|
| **Total                revenues**                 | $                16,618 |   | $                17,757 |
| **Total                benefits and expenses**    | 19,091                  |   | 18,718                  |
| **Loss                before income tax benefit** | (2,473)                 |   | (961)                   |
|                                              |                    |   |                    |
| **Net                (loss) income**              | $                (339)  |   | $                395    |

----

**SUN      LIFE ASSURANCE COMPANY OF CANADA (U.S.)**

**Item      3. Quantitative and Qualitative Disclosures About Market      Risk.**

**Item      4. Controls and Procedures.**

**PART      II - OTHER INFORMATION**

**Item      1. Legal Proceedings.**

**Item      1A. Risk Factors.**

**Item      2. Unregistered Sales of Equity Securities and Use of      Proceeds.**

**Item      3. Defaults Upon Senior Securities.**

**Item      4. Submission of Matters to a Vote of Security Holders.**

**Item      5. Other Information.**

----

**Item      6. Exhibits.**

| 31.1   | Certification                pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to                Section                302 of the Sarbanes-Oxley Act of 2002 |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                      |
| 31.2   | Certification                pursuant to Rule 13a-14(a) and 15d-14(a), as adopted pursuant to                Section                302 of the Sarbanes-Oxley Act of 2002 |
|   |                                                                                                                                                                      |
| 32.1   | Certification                pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002       |
|   |                                                                                                                                                                      |
| 32.2   | Certification                Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section                906 of                the Sarbanes-Oxley Act of 2002       |

----

**SIGNATURES**

|   | Sun                Life Assurance Company of Canada (U.S.)(Registrant) |
|--------|------------------------------------------------------------------------|

| May                14, 2007 | */s/                Robert C. Salipante*      |
|-----------------------------|-----------------------------------------------|
| Date                        | Robert                C. Salipante, President |
|                        | (Principal                Executive Officer)  |

| May                14, 2007 | */s/                Ronald H. Friesen*                                                              |
|-----------------------------|-----------------------------------------------------------------------------------------------------|
| Date                        | Ronald                H. Friesen , Senior Vice President and Chief Financial                Officer |
|                        | (Principal                Financial Officer)                                                        |