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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**June                30, 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, and                333-39034** |
|-------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**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 JUNE 30, 2007**

**TABLE      OF CONTENTS**

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

| **PART                I -** | **Financial                Information**                                                                                                                                           |    |
|-----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|
|                        |                                                                                                                                                                               |    |
| Item                1.      | Financial                Statements:                                                                                                                                               |    |
|                        |                                                                                                                                                                               |    |
|                        | Condensed                Consolidated Statements of Income for the six-month periods ended                June 30,                2007and                2006 (Unaudited)          |  3 |
|                        |                                                                                                                                                                               |    |
|                        | Condensed                Consolidated Statements of Income for the three-month periods ended                June                30,2007                and 2006 (Unaudited)        |  4 |
|                        |                                                                                                                                                                               |    |
|                        | Condensed                Consolidated Balance Sheets as of June 30, 2007 and December                31,2006                (Unaudited)                                            |  5 |
|                        |                                                                                                                                                                               |    |
|                        | Condensed                Consolidated Statements of Comprehensive Income for the six and                three-monthperiods                ended June 30, 2007 and 2006 (Unaudited) |  6 |
|                        |                                                                                                                                                                               |    |
|                        | Condensed                Consolidated Statements of Stockholder’s Equity for the six-month periods                endedJune                30, 2007 and 2006 (Unaudited)     |  7 |
|                        |                                                                                                                                                                               |    |
|                        | Condensed                Consolidated Statements of Cash Flows for the six-month periods ended                June                30,2007                and 2006 (Unaudited)      |  8 |
|                        |                                                                                                                                                                               |    |
|                        | Notes                to Unaudited Condensed Consolidated Financial Statements                                                                                                      | 10      |
|                        |                                                                                                                                                                               |    |
| Item                2.      | Management's                Discussion and Analysis of Financial Condition and Results of                Operations                                                                | 25      |
|                        |                                                                                                                                                                               |    |
| Item                3.      | Quantitative                and Qualitative Disclosures About Market Risk                                                                                                          | 36      |
|                        |                                                                                                                                                                               |    |
| Item                4.      | Controls                and Procedures                                                                                                                                             | 36      |

| **PART                II -** | **Other                Information**                                       |   |
|------------------------------|----------------------------------------------------------------------------|--------|
|                         |                                                                       |   |
| Item                1.       | Legal                Proceedings                                           | 36     |
|                         |                                                                       |   |
| Item                1A.      | Risk                Factors                                                | 36     |
|                         |                                                                       |   |
| Item                2.       | Unregistered                Sales of Equity Securities and Use of Proceeds | 36     |
|                         |                                                                       |   |
| Item                3.       | Defaults                Upon Senior Securities                             | 36     |
|                         |                                                                       |   |
| Item                4.       | Submission                of Matters to a Vote of Security Holders         | 36     |
|                         |                                                                       |   |
| Item                5.       | Other                Information                                           | 36     |
|                         |                                                                       |   |
| Item                6.       | Exhibits                                                                   | 37     |

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**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                                                                                                                  | $      | 30,793         | $ | 30,628 |
| Net                investment income                                                                                                                                |   | 533,126        |   | 513,952 |
| Net                derivative income                                                                                                                                |   | 195,301        |   | 226,034 |
| Net                realized investment gains (losses)                                                                                                               |   | 4,123          |   | (22,442) |
| Fee                and other income                                                                                                                                 |   | 222,885        |   | 190,556 |
|    Subordinated                notes early redemption premium                                                                                        |   | 25,578         |   | - |
|                                                                                                                                                                |   |           |   |   |
| Total                revenues                                                                                                                                       |   | 1,011,806      |   | 938,728 |
|                                                                                                                                                                |   |           |   |   |
| **Benefits                and Expenses**                                                                                                                            |   |           |   |   |
|                                                                                                                                                                |   |           |   |   |
| Interest                credited                                                                                                                                    |   | 325,468        |   | 302,263 |
| Interest                expense                                                                                                                                     |   | 61,297         |   | 63,251 |
| Policyowner                benefits                                                                                                                                 |   | 80,089         |   | 71,198 |
|    Amortization                of deferred policy acquisition costs      and                value of business acquired |   |  166,285  |   |  190,212 |
| Other                operating expenses                                                                                                                             |   | 126,028        |   | 113,776 |
|    Partnership                capital securities early redemption payment                                                                            |   | 25,578         |   | - |
|                                                                                                                                                                |   |           |   |   |
| Total                benefits and expenses                                                                                                                          |   | 784,745        |   | 740,700 |
|                                                                                                                                                                |   |           |   |   |
| Income                before income tax expense                                                                                                                     |   | 227,061        |   | 198,028 |
|                                                                                                                                                                |   |           |   |   |
| Income                tax expense                                                                                                                                   |   | 68,986         |   | 61,399 |
|                                                                                                                                                                |   |           |   |   |
| Net                income                                                                                                                                           | $      | 158,075        | $ | 136,629 |

*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 INCOME**

|                                                                                                                            |   | **Unaudited** |
|---------------------------------------------------------------------------------------------------------------------------------|--------|---------------|
|                                                                                                                            |   | **2007**      |   | **2006** |
|                                                                                                                            |   |          |   |   |
| **Revenues**                                                                                                                    |   |          |   |   |
|                                                                                                                            |   |          |   |   |
| Premiums                and annuity considerations                                                                              | $      | 16,143        | $ | 15,490 |
| Net                investment income                                                                                            |   | 226,459       |   | 270,372 |
| Net                derivative income                                                                                            |   | 204,266       |   | 101,506 |
| Net                realized investment losses                                                                                   |   | (1,492)       |   | (22,365) |
| Fee                and other income                                                                                             |   | 111,215       |   | 99,109 |
|    Subordinated                notes early redemption premium                                                    |   | 25,578        |   | - |
|                                                                                                                            |   |          |   |   |
| Total                revenues                                                                                                   |   | 582,169       |   | 464,112 |
|                                                                                                                            |   |          |   |   |
| **Benefits                and Expenses**                                                                                        |   |          |   |   |
|                                                                                                                            |   |          |   |   |
| Interest                credited                                                                                                |   | 159,058       |   | 144,638 |
| Interest                expense                                                                                                 |   | 25,631        |   | 31,977 |
| Policyowner                benefits                                                                                             |   | 42,351        |   | 35,561 |
| Amortization                of deferred policy acquisition costs   and                value of business acquired |   |  91,510  |   |  84,937 |
| Other                operating expenses                                                                                         |   | 56,872        |   | 60,958 |
|    Partnership                capital securities early redemption payment                                        |   | 25,578        |   | - |
|                                                                                                                            |   |          |   |   |
| Total                benefits and expenses                                                                                      |   | 401,000       |   | 358,071 |
|                                                                                                                            |   |          |   |   |
|  Income                before income tax expense                                                                           |   | 181,169       |   | 106,041 |
|                                                                                                                            |   |          |   |   |
| Income                tax expense                                                                                               |   | 58,418        |   | 33,073 |
|                                                                                                                            |   |          |   |   |
| Net                income                                                                                                       | $      | 122,751       | $ | 72,968 |

*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 BALANCE SHEETS**

|                                                                                                                                                                                                                                                                                                 |          | **Unaudited**                    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------|----------------------------------|
| **ASSETS**                                                                                                                                                                                                                                                                                           |          | **June                30, 2007** |   | **December                31, 2006** |
| Investments                                                                                                                                                                                                                                                                                          |          |                             |   |   |
| Available-for-sale                fixed maturities at fair value (amortized cost of    $12,437,039                and $13,623,450 at 2007 and 2006, respectively; fair value                option    elected                for  $9,450 in 2007 ) |   $ | 12,220,516                       |  $ | 13,637,973 |
| Trading                fixed maturities at fair value (amortized cost of $3,437,723                and    $3,838,732                at 2007 and 2006, respectively)                                                                                                              |          | 3,401,717                        |   | 3,856,053 |
| Subordinated                note from affiliate held-to-maturity (fair value of                    $630,751 at  2006)                                                                                                                                                  |          | -                                |   | 600,000 |
| Mortgage                loans                                                                                                                                                                                                                                                                        |          | 2,377,014                        |   | 2,273,176 |
| Derivative                instruments – receivable                                                                                                                                                                                                                                             |          | 686,561                          |   | 653,854 |
| Limited                partnerships                                                                                                                                                                                                                                                                  |          | 184,235                          |   | 193,728 |
| Real                estate                                                                                                                                                                                                                                                                           |          | 201,403                          |   | 186,891 |
| Policy                loans                                                                                                                                                                                                                                                                          |          | 705,564                          |   | 709,626 |
| Other                invested assets                                                                                                                                                                                                                                                                 |          | 784,417                          |   | 950,226 |
| Cash                and cash equivalents                                                                                                                                                                                                                                                             |          | 734,494                          |   | 578,080 |
| Total                investments and cash                                                                                                                                                                                                                                                            |          | 21,295,921                       |   | 23,639,607 |
|                                                                                                                                                                                                                                                                                                 |          |                             |   |   |
| Accrued                investment income                                                                                                                                                                                                                                                             |          | 275,329                          |   | 291,218 |
| Deferred                policy acquisition costs                                                                                                                                                                                                                                                     |          | 1,317,648                        |   | 1,234,206 |
| Value                of business acquired                                                                                                                                                                                                                                                            |          | 41,183                           |   | 47,744 |
| Deferred                federal income taxes                                                                                                                                                                                                                                                         |          | 41,899                           |   | 3,597 |
| Goodwill                                                                                                                                                                                                                                                                                             |          | 701,451                          |   | 701,451 |
| Receivable                for investments sold                                                                                                                                                                                                                                                       |          | 44,332                           |   | 33,241 |
| Reinsurance                receivable                                                                                                                                                                                                                                                                |          | 1,800,395                        |   | 1,817,999 |
| Other                assets                                                                                                                                                                                                                                                                          |          | 185,326                          |   | 153,230 |
| Separate                account assets                                                                                                                                                                                                                                                               |          | 22,876,059                       |   | 21,060,255 |
|                                                                                                                                                                                                                                                                                                 |          |                             |   |   |
| Total                assets                                                                                                                                                                                                                                                                          | $             | 48,579,543                       | $ | 48,982,548 |
|                                                                                                                                                                                                                                                                                                 |          |                             |   |   |
| **LIABILITIES**                                                                                                                                                                                                                                                                                      |          |                             |   |   |
|                                                                                                                                                                                                                                                                                                 |          |                             |   |   |
| Contractholder                deposit funds and other policy liabilities                                                                                                                                                                                                                             | $             | 18,377,452                       | $ | 19,428,625 |
| Future                contract and policy benefits                                                                                                                                                                                                                                                   |          | 725,774                          |   | 750,112 |
| Payable                for investments purchased                                                                                                                                                                                                                                                     |          | 161,694                          |   | 218,465 |
| Accrued                expenses and taxes                                                                                                                                                                                                                                                            |          | 163,842                          |   | 144,695 |
| Debt                payable to affiliates                                                                                                                                                                                                                                                            |          | 945,000                          |   | 1,325,000 |
| Partnership                capital securities                                                                                                                                                                                                                                                        |          | -                                |   | 607,826 |
| Reinsurance                payable to affiliate                                                                                                                                                                                                                                                      |          | 1,610,565                        |   | 1,605,626 |
| Derivative                instruments – payable                                                                                                                                                                                                                                                |          | 86,662                           |   | 160,504 |
| Other                liabilities                                                                                                                                                                                                                                                                     |          | 1,055,610                        |   | 1,178,086 |
| Separate                account liabilities                                                                                                                                                                                                                                                          |          | 22,876,059                       |   | 21,060,255 |
|                                                                                                                                                                                                                                                                                                 |          |                             |   |   |
| Total                liabilities                                                                                                                                                                                                                                                                     |          | 46,002,658                       |   | 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                                                                                                                                                                                                                                                            |          | 2,144,850                        |   | 2,143,408 |
| Accumulated                other comprehensive  (loss) income                                                                                                                                                                                                                              |          | (77,132)                         |   | 14,030 |
| Retained                earnings                                                                                                                                                                                                                                                                     |          | 502,730                          |   | 339,479 |
|                                                                                                                                                                                                                                                                                                 |          |                             |   |   |
| Total                stockholder’s equity                                                                                                                                                                                                                                                      |          | 2,576,885                        |   | 2,503,354 |
|                                                                                                                                                                                                                                                                                                 |          |                             |   |   |
| Total                liabilities and stockholder’s equity                                                                                                                                                                                                                                      | $             | 48,579,543                       | $ | 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**

|                                                                                                                                                              |   | **Unaudited**  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|
|                                                                                                                                                              |   |  **2007** |   |  **2006** |
|                                                                                                                                                              |   |           |   |   |
| Net                income                                                                                                                                         | $      | 158,075        | $ | 136,629 |
|                                                                                                                                                              |   |           |   |   |
| Other                comprehensive loss:                                                                                                                          |   |           |   |   |
| Net                change in unrealized holding losses on available-for-   sale                securities, net of tax and policyholder amounts (1) |   |  (93,240) |   |  (177,198) |
| Minimum                pension liability adjustment, net of tax (2)                                                                                               |   | -              |   | 1,289 |
| Reclassification                adjustments of realized investment losses   into                net income (3)                                     |   |  2,078    |   |  22,765 |
| Other                comprehensive loss                                                                                                                           |   | (91,162)       |   | (153,144) |
|                                                                                                                                                              |   |           |   |   |
| Comprehensive                income (loss)                                                                                                                        | $      | 66,913         | $ | (16,515) |

| (1)   | Net                of tax of $50.8 million and                $95.4                                                                      million for the six-month periods ended June 30, 2007 and 2006,                respectively. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Net                of tax of $0.7 million for the six-month period ended June 30,                2006. |
|-----------------|--------------------------------------------------------------------------------------------------------|

| (3)   | Net                of tax of $1.1 million and $12.3 million for the six-month periods                ended                June 30, 2007 and 2006,                respectively. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                              |   | **Unaudited**  |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|
|                                                                                                                                                              |   |  **2007** |   |  **2006** |
|                                                                                                                                                              |   |           |   |   |
| Net                income                                                                                                                                         | $      | 122,751        | $ | 72,968 |
|                                                                                                                                                              |   |           |   |   |
| Other                comprehensive loss:                                                                                                                          |   |           |   |   |
| Net                change in unrealized holding losses on available-for-   sale                securities, net of tax and policyholder amounts (4) |   | (97,380)       |   |  (78,023) |
| Reclassification                adjustments of realized investment losses   into                net income (5)                                     |   | 1,286          |   |  16,392 |
| Other                comprehensive loss                                                                                                                           |   | (96,094)       |   | (61,631) |
|                                                                                                                                                              |   |           |   |   |
| Comprehensive                income                                                                                                                               | $      | 26,657         | $ | 11,337 |

| (4)   | Net                of tax of $53.8 million and $42.0 million for the three-month periods                ended June 30, 2007 and 2006,                respectively. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | Net                of tax of $0.7 million and $8.8 million for the three-month periods                ended                June 30, 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 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                                                     |   |                                |   |                        |   |                             |   | 136,629      |   | 136,629           |
|   | Dividends                                                                     |   |                                |   |                        |   |                             |   | (100,000)    |   | (100,000)         |
|   | Tax                benefit from stock options                                 |   |                                |   | 3,052                       |   |                             |   |         |   | 3,052             |
|   | Other                comprehensive loss                                       |   |                                |   |                        |   | (153,144)                        |   |         |   | (153,144)         |
|   |                                                                          |   |                                |   |                        |   |                             |   |         |   |              |
|   | Balance                at June 30, 2006                                       | $      | 6,437                               | $      | 2,141,932                   | $      | (133,884)                        | $      | 597,816      | $      | 2,612,301         |
|   |                                                                          |   |                                |   |                        |   |                             |   |         |   |              |
|   |                                                                          |   |                                |   |                        |   |                             |   |         |   |              |
|   | 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                                                     |   |                                |   |                        |   |                             |   | 158,075      |   | 158,075           |
|   | Tax                benefit from stock options                                 |   |                                |   | 1,442                       |   |                             |   |         |   | 1,442             |
|   | Other                comprehensive loss                                       |   |                                |   |                        |   | (91,162)                         |   |         |   | (91,162)          |
|   |                                                                          |   |                                |   |                        |   |                             |   |         |   |              |
|   | Balance                at June 30, 2007                                       | $      | 6,437                               | $      | 2,144,850                   | $      | (77,132)                         | $      | 502,730      | $      | 2,576,885         |

*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**

|                                                                                 |                                                                                                                            |          | **Unaudited**                                                                    |
|--------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|---------------|----------------------------------------------------------------------------------|
|                                                                                 |                                                                                                                            |          |  **2007**                                                                   |   |  **2006** |
|                                                                                 |                                                                                                                            |          |                                                                             |   |   |
| **Cash                Flows From Operating Activities:**                             |                                                                                                                            |          |                                                                             |
| Net                income from operations                                            | $         158,075                                                             |          | $           136,629       |
| Adjustments                to reconcile net income to net cash provided by (used in) |                                                                                                                            |          |                                                                             |
|                                                                                 |   operating                activities:                                                                                |          |                                                                             |   |
|                                                                                 | Amortization                of discount and premiums                                                                            | 17,121        |                                                                             | 33,682 |
|                                                                                 | Amortization                of deferred policy acquisition costs   and                value of business acquired |  166,285 |                                                                             |  190,212 |
|                                                                                 | Depreciation                and amortization                                                                                    | 2,441         |                                                                             | 2,411 |
|                                                                                 | Non                cash derivative activity                                                                                     | (191,058)     |                                                                             | (237,874) |
|                                                                                 | Net                realized (gains) losses on investments                                                                       | (4,123)       |                                                                             | 22,442 |
|                                                                                 | Net                unrealized losses on trading investments                                                                     | 53,327        |                                                                             | 50,466 |
|                                                                                 | Net                realized gains on trading investments                                                                        | (3,885)       |                                                                             | - |
|                                                                                 | Net                change in unrealized and undistributed gains in private                                                      |          |                                                                             |   |
|                                                                                 |   equity                limited partnerships                                                                          | (15,282)      |                                                                             | (17,882) |
|                                                                                 | Interest                credited to contractholder deposits                                                                     | 325,468       |                                                                             | 302,263 |
|                                                                                 | Deferred                federal income taxes                                                                                    | 11,386        |                                                                             | 86,084 |
| Changes                in assets and liabilities:                                    |                                                                                                                            |          |                                                                             |
|                                                                                 | Deferred                acquisition cost additions                                                                              | (160,292)     |                                                                             | (124,117) |
|                                                                                 | Accrued                investment income                                                                                        | 15,889        |                                                                             | (14,855) |
|                                                                                 | Future                contract and policy benefits                                                                              | (18,244)      |                                                                             | (6,624) |
|                                                                                 | Other,                net                                                                                                       | 45,980        |                                                                             | (35,607) |
|                                                                                 | Net                sales (purchases) of trading fixed maturities                                                                | 400,720       |                                                                             | (936,339) |
|                                                                                 |                                                                                                                            |          |                                                                             |   |   |
| Net                cash provided by (used in) operating activities                   | 803,808                                                                                                                         |          | (549,109)                                                                        |
|                                                                                 |                                                                                                                            |          |                                                                             |   |   |
| **Cash                Flows From Investing Activities:**                             |                                                                                                                            |          |                                                                             |
| Sales,                maturities and repayments of:                                  |                                                                                                                            |          |                                                                             |
|                                                                                 | Available-for-sale                fixed maturities                                                                              | 2,678,449     |                                                                             | 3,041,711 |
|                                                                                 | Mortgage                loans                                                                                                   | 129,781       |                                                                             | 113,811 |
|                                                                                 | Other                invested assets                                                                                            | 346,357       |                                                                             | 59,231 |
|                                                                                 | Redemption                of subordinated note from affiliate                                                                   | 600,000       |                                                                             | - |
| Purchases                of:                                                         |                                                                                                                            |          |                                                                             |
|                                                                                 | Available-for-sale                fixed maturities                                                                              | (1,544,762)   |                                                                             | (2,078,597) |
|                                                                                 | Mortgage                loans                                                                                                   | (233,380)     |                                                                             | (359,197) |
|                                                                                 | Real                estate                                                                                                      | (16,770)      |                                                                             | (655) |
|                                                                                 | Other                invested assets                                                                                            | (45,948)      |                                                                             | (568,908) |
| Early                redemption premium                                              | 25,578                                                                                                                          |          | -                                                                                |
| Net                change in other investing activities                              | (148,065)                                                                                                                       |          | 536,620                                                                          |
| Net                change in policy loans                                            | 4,062                                                                                                                           |          | 2,117                                                                            |
|                                                                                 |                                                                                                                            |          |                                                                             |   |   |
| Net                cash provided by investing activities                             | $        1,795,302                                                                      |          | $            746,133 |

*Continued      on next page*

*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             | $           978,321 |   | $       1,658,030 |
|                                                          | Withdrawals                from contractholder deposit funds         | (2,416,881) |   | (1,880,882) |
|                                                          | Repayments                of debt                                    | (980,000) |   | - |
|                                                          | Early                redemption payment                              | (25,578) |   | - |
|                                                          | Debt                proceeds                                         | - |   | 100,000 |
|                                                          | Dividends                                                            | - |   | (100,000) |
|                                                          | Other,                net                                            | 1,442 |   | 3,052 |
|                                                          |                                                                 |   |   |   |   |
| Net                cash used in financing activities          | (2,442,696)                                                          |   | (219,800) |
|                                                          |                                                                 |   |   |   |   |
| Net                change in cash and cash equivalents        | 156,414                                                              |   | (22,776) |
|                                                          |                                                                 |   |   |   |   |
| Cash                and cash equivalents, beginning of period | 578,080                                                              |   | 347,654 |
|                                                          |                                                                 |   |   |   |   |
| Cash                and cash equivalents, end of period       | $          734,494 |   | $            324,878 |

*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**

**NEW      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)**

----

**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**

**Wealth      Management**

**Individual      Protection**

----

**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)**

**Group      Protection**

**Corporate**

|                                                                          | **Six-month                period ended June 30, 2007**        |   |            |
|-------------------------------------------------------------------------------|----------------------------------------------------------------|--------|-----------------|
|                                                                          |                                                           |   |            |   |   |   |   |   |   |
|                                                                          | **Wealth**                                                     |   | **Individual**  |   | **Group** |   |   |   |   |
|                                                                          | **Management**                                                 |   | **Protection**  |   | **Protection** |   | **Corporate** |   | **Totals** |
|                                                                          |                                                           |   |            |   |   |   |   |   |   |
| Total                revenues                                                 | $         853,908 | $      | 63,072          | $ | 23,417 | $ | 71,409 | $ | 1,011,806 |
| Total                benefits andexpenses                                     |  639,260                                                  |   |  62,615    |   |  25,473 |   |  57,397 |   |  784,745 |
| Income                (loss) beforeincome                tax expense(benefit) |   214,648                                            |   |   457 |   |   (2,056) |   |   14,012 |   |   227,061 |
|                                                                          |                                                           |   |            |   |   |   |   |   |   |
| Net                income (loss)                                              | $         147,376 | $      | 367             | $ | (1,337) | $ | 11,669 | $ | 158,075 |

|                                                          | **Six-month                period ended June 30, 2006**        |   |         |
|---------------------------------------------------------------|----------------------------------------------------------------|--------|--------------|
|                                                          |                                                           |   |         |   |   |   |   |   |   |
| Total                revenues                                 | $         825,927 | $      | 43,297       | $ | 19,424 | $ | 50,080 | $ | 938,728 |
| Total                benefits andexpenses                     |  643,597                                                  |   |  42,794 |   |  18,526 |   |  35,783 |   |  740,700 |
| Income                beforeincome                tax expense |  182,330                                                  |   |  503    |   |  898 |   |  14,297 |   |  198,028 |
|                                                          |                                                           |   |         |   |   |   |   |   |   |
| Net                income                                     | $         124,020 | $      | 397          | $ | 584 | $ | 11,628 | $ | 136,629 |

----

**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-month                period ended June  30, 2007** |   |           |
|-------------------------------------------------------------------------------|----------------------------------------------------------------------------|--------|----------------|
|                                                                          |                                                                       |   |           |
|                                                                          |                                                                       |   |           |   |   |   |   |   |   |
|                                                                          | **Wealth**                                                                 |   | **Individual** |   | **Group** |   |   |   |   |
|                                                                          | **Management**                                                             |   | **Protection** |   | **Protection** |   | **Corporate** |   | **Totals** |
|                                                                          |                                                                       |   |           |   |   |   |   |   |   |
| Total                revenues                                                 | $       487,223                         | $      | 27,945         | $ | 12,210 | $ | 54,791 | $ | 582,169 |
| Total                benefits andexpenses                                     |  324,471                                                              |   |  25,867   |   |  12,356 |   |  38,306 |   |  401,000 |
| Income                (loss) beforeincome                tax expense(benefit) | 162,752                                                                    |   | 2,078          |   | (146) |   | 16,485 |   | 181,169 |
|                                                                          |                                                                       |   |           |   |   |   |   |   |   |
| Net                income (loss)                                              | $       109,453                         | $      | 1,386          | $ | (96) | $ | 12,008 | $ | 122,751 |

|                                                                          | **Three-month                period ended June 30, 2006**     |   |         |
|-------------------------------------------------------------------------------|---------------------------------------------------------------|--------|--------------|
|                                                                          |                                                          |   |         |   |   |   |   |   |   |
| Total                revenues                                                 | $       398,891            | $      | 23,119       | $ | 9,779 | $ | 32,323 | $ | 464,112 |
| Total                benefits andexpenses                                     |  307,868                                                 |   |  24,581 |   |  8,557 |   |  17,065 |   |  358,071 |
| Income                (loss) beforeincome                tax expense(benefit) | 91,023                                                        |   | (1,462)      |   | 1,222 |   | 15,258 |   | 106,041 |
|                                                                          |                                                          |   |         |   |   |   |   |   |   |
| Net                income (loss)                                              | $         61,821 | $      | (880)        | $ | 794 | $ | 11,233 | $ | 72,968 |

----

**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**

----

**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)**

| **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 pension (benefit) cost:               |                                                                                                               |                                                                                                                                     |                                                                                                                     |   |
| Service                cost                                                     | $                  2,054 | $                      526 | $                   2,796 | $                  656 |
| Interest                cost                                                    | 7,878                                                                                                              | 1,391                                                                                                                                    | 6,720                                                                                                                    | 1,484 |
| Expected                return on plan assets                                   | (10,938)                                                                                                           | -                                                                                                                                        | (10,836)                                                                                                                 | - |
| Amortization                of transition obligation asset                      | (1,046)                                                                                                            | -                                                                                                                                        | (1,046)                                                                                                                  | - |
| Amortization                of prior service cost (credit)                      | 168                                                                                                                | (264)                                                                                                                                    | 138                                                                                                                      | (264) |
| Recognized                net actuarial (gains) losses                          | (54)                                                                                                               | 456                                                                                                                                      | 82                                                                                                                       | 726 |
| Net                periodic pension (benefit) cost                              | $                (1,938)           | $                                 2,109             | $                (2,146)                 | $                             2,602 |
| The                Company’s share of net periodic pension (benefit) cost | $                (1,938)           | $                  1,798                       | $                (2,146)                 | $              2,243 |

|                                                                            |                                                                                                   | **2007**                                                                                                                     | **2006**                                                                                                                 |
|---------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|
|                                                                            |                                                                                                   | **Pension                Benefits**                                                                                          | **Other                Benefits**                                                                                        | **Pension                Benefits** | **Other                Benefits** |
|                                                                            |                                                                                                   |                                                                                                                         |                                                                                                                     |   |   |
| Components                of net periodic pension (benefit) cost:               |                                                                                                   |                                                                                                                         |                                                                                                                     |   |
| Service                cost                                                     | $                1,027 | $                    281 | $                   1,398 | $                 328 |
| Interest                cost                                                    | 3,939                                                                                                  | 709                                                                                                                          | 3,360                                                                                                                    | 742 |
| Expected                return on plan assets                                   | (5,469)                                                                                                | -                                                                                                                            | (5,418)                                                                                                                  | - |
| Amortization                of transition obligation asset                      | (523)                                                                                                  | -                                                                                                                            | (523)                                                                                                                    | - |
| Amortization                of prior service cost (credit)                      | 84                                                                                                     | (132)                                                                                                                        | 69                                                                                                                       | (132) |
| Recognized                net actuarial (gains) losses                          | (27)                                                                                                   | 228                                                                                                                          | 41                                                                                                                       | 363 |
| Net                periodic pension (benefit) cost                              | $                (969) | $                1,086                       | $               (1,073)                       | $             1,301 |
| The                Company’s share of net periodic pension (benefit) cost | $                (969) | $                   930       | $               (1,073)                       | $                            1,126 |

----

**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 (continued)**

**7.  GOODWILL**

**8.  LIABILITIES      FOR CONTRACT GUARANTEES**

| **Benefit                Type**                   | **Account                Balance**                                                           | **Net                Amount at Risk 1**                                                                                | **Average                Attained Age** |
|---------------------------------------------------|----------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|
| Minimum                death                      | $         17,741,516                            | $         1,378,033                                                       | 66.9                                    |
| Minimum                income                     | $              378,456 | $              43,079                            | 60.1                                    |
| Minimum                accumulation andwithdrawal | $           4,231,064                 | $                   434 | 62.6                                    |

*Net      amount at risk represents the difference between the guaranteed benefits and      the      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)**

**8.  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 |  (4,861)                                                                                                       |   |  3,706                                                                                                |   |  (1,155)                                                                         |
| Incurred                guaranteed benefits                            | 14,991                                                                                                              |   | 287                                                                                                        |   | 15,278                                                                                |
| Paid                guaranteed benefits                                | (17,545)                                                                                                            |   | (4,796)                                                                                                    |   | (22,341)                                                                              |
| Interest                                                               | 999                                                                                                                 |   | 46                                                                                                         |   | 1,045                                                                                 |
|                                                                   |                                                                                                                |   |                                                                                                       |   |                                                                                  |
| Balance                at June 30, 2007                                | $               33,507                   |   | $                 691 |   | $             34,198 |

|                                                                   | **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)                                                                                                       |   |  (355)                                                                                      |   |  (5,488)                                                                         |
| Incurred                guaranteed benefits                            | 18,228                                                                                                              |   | 302                                                                                              |   | 18,530                                                                                |
| Paid                guaranteed benefits                                | (16,649)                                                                                                            | 0      | -                                                                                                |   | (16,649)                                                                              |
| Interest                                                               | 678                                                                                                                 |   | 53                                                                                               |   | 731                                                                                   |
|                                                                   |                                                                                                                |   |                                                                                             |   |                                                                                  |
| Balance                at June 30, 2006                                | $               38,873                   |   | $              3,000       |   | $             41,873 |

----

**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)**

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

----

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

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

***CAUTIONARY      STATEMENT***

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

**CRITICAL      ACCOUNTING POLICIES**

----

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

**RESULTS      OF OPERATIONS**

***Six-month      period ended June 30, 2007 compared to the six-month period ended June 30,      2006:***

**Net      Income**

**REVENUES**

***Premium      and annuity considerations***

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

----

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

**RESULT      OF OPERATIONS (Continued)**

**REVENUES      (continued)**

***Net      derivative income***

|                                                                                                       | **Six-month                periods ended June 30,**                                                                                                                      |
|------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                       | **2007**                                                                                                                                                                 | **2006** |
| Net                income (expense) on swap agreements                                                     | $                           7,323 | $                      (11,277) |
| Change                in fair value of swap agreements(interest                rate, currency, and equity) | 161,699                                                                                                                                                                  | 231,883 |
| Change                in fair value of options, futures andembedded                derivatives             |  26,279                                                                                                                                                             |  5,428 |
|                                                                                                       |                                                                                                                                                                     |   |
| Net                derivative income                                                                       | $                      195,301                             | $                      226,034 |

----

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

**RESULT      OF OPERATIONS (Continued)**

**REVENUES      (continued)**

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

***Fee      and other income***

***Subordinated      notes early redemption premium –***

**BENEFITS      AND EXPENSES**

***Interest      credited***

***Interest      expense***

----

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

**RESULT      OF OPERATIONS (Continued)**

**BENEFITS      AND EXPENSES (continued)**

***Policyholder      benefits***

***Other      operating expenses -***

***Amortization      of DAC -***

***Amortization      of VOBA***

***Partnership      capital securities early redemption payment –***

**Results      of Operations by Segment**

***Wealth      Management Segment***

----

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

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

***Fixed      Annuities***
* -*

***Variable      Annuities***
* -*

***Fixed      Index Annuities***
* *

***Institutional      Investment Contracts -***
* *

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

----

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

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

|                                              | **2007**                                                                                           |   | **2006**                                                                                          |
|---------------------------------------------------|----------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------|
|                                              |                                                                                               |   |                                                                                              |
| **Total                revenues**                 | $               853,908 | $      |                825,927 |
| **Total                benefits and expenses**    | 639,260                                                                                            |   | 643,597                                                                                           |
| ** Income                before income tax** | 214,648                                                                                            |   | 182,330                                                                                           |
|                                              |                                                                                               |   |                                                                                              |
| **Net                income**                     | $               147,376 | $      |               124,020       |

**REVENUES**

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

----

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

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

***Net      derivative income***
** **

|                                                                                                       | **Six-month                periods ended June 30,**                                                                                                                      |
|------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                       | **2007**                                                                                                                                                                 | **2006** |
| Net                income (expense) on swap agreements                                                     | $                           5,283 | $                     (10,523) |
| Change                in fair value of swap agreements(interest                rate, currency, and equity) |  166,425                                                                                                                                                            |  228,447 |
| Change                in fair value of options, futures andembedded                derivatives             |  26,279                                                                                                                                                             |  5,428 |
|                                                                                                       |                                                                                                                                                                     |   |
| Net                derivative income                                                                       | $                      197,987                             | $                    223,352 |

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

***Fee      and other income***

**BENEFITS      AND EXPENSES**

***Interest      credited -***

----

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

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

***Interest      expense***

***Policyholder      benefits***

***Other      operating expenses –***

***Amortization      of DAC***

***Amortization      of VOBA***

***Individual      Protection Segment***

|                                           | **2007**                                                                                                                                                   |   | **2006**                                                                                                                                 |
|------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------|
|                                           |                                                                                                                                                       |   |                                                                                                                                     |
| **Total                revenues**              | $                    63,072                            | $      | $                 43,297                            |
| **Total                benefits and expenses** | 62,615                                                                                                                                                     |   | 42,794                                                                                                                                   |
| **Income                before income tax**    | 457                                                                                                                                                        |   | 503                                                                                                                                      |
|                                           |                                                                                                                                                       |   |                                                                                                                                     |
| **Net                income**                  | $                         367 | $      | $                      397 |

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

***Individual      Protection Segment (continued)***

***Group      Protection Segment***

|                                                                                   | **2007**                                                                                                                                    |   | **2006**                                                                                                                                      |
|----------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                   |                                                                                                                                        |   |                                                                                                                                          |
| **Total                revenues**                                                      | $                      23,417 | $      |                    19,424                      |
| **Total                benefits and expenses**                                         | 25,473                                                                                                                                      |   | 18,526                                                                                                                                        |
| **(Loss)                income before income tax****(benefit)                expense** |  (2,056)                                                                                                                               |   |  898                                                                                                                                     |
|                                                                                   |                                                                                                                                        |   |                                                                                                                                          |
| **Net                (loss) income**                                                   | $                    (1,337)            | $      |                        584 |

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

***Corporate      Segment***

|                                           | **2007**                                                                                                                  |   | **2006**                                                                                                |
|------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------|
|                                           |                                                                                                                      |   |                                                                                                    |
| **Total                revenues**              | $                   71,409 | $      | $                50,080 |
| **Total                benefits and expenses** | 57,397                                                                                                                    |   | 35,783                                                                                                  |
| **Income                before income tax**    | 14,012                                                                                                                    |   | 14,297                                                                                                  |
|                                           |                                                                                                                      |   |                                                                                                    |
| **Net                income**                  | $                  11,669       | $      | $                11,628 |

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**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.**

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

**Item      6. Exhibits.**

| Exhibit                No. | Description |
|----------------------------|-------------|

| 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) |
|--------|------------------------------------------------------------------------|

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

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

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