----

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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 **September                30, 2006** | 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 SEPTEMBER 30,      2006**

**TABLE      OF CONTENTS**

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

| **PART                I -** | **Financial                Information**                                                                                                                                                  |   |
|-----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                        |                                                                                                                                                                                      |   |
| Item                1.      | Financial                Statements:                                                                                                                                                      |   |
|                        |                                                                                                                                                                                      |   |
|                        | Condensed                Consolidated Statements of Income for the nine-month periods ended                September 30,                2006 and 2005 (Unaudited)                         | 3      |
|                        |                                                                                                                                                                                      |   |
|                        | Condensed                Consolidated Statements of Income for the three-month periods ended                September 30,                2006 and 2005 (Unaudited)                        | 4      |
|                        |                                                                                                                                                                                      |   |
|                        | Condensed                Consolidated Balance Sheets as of September 30, 2006 and December                31,2005                (Unaudited)                                              | 5      |
|                        |                                                                                                                                                                                      |   |
|                        | Condensed                Consolidated Statements of Comprehensive Income for the nine and                three-month periods                ended September 30, 2006 and 2005 (Unaudited) | 6      |
|                        |                                                                                                                                                                                      |   |
|                        | Condensed                Consolidated Statements of Stockholder’s Equity for the nine-month periods                ended September 30, 2006 and 2005 (Unaudited)                    | 7      |
|                        |                                                                                                                                                                                      |   |
|                        | Condensed                Consolidated Statements of Cash Flows for the nine-month periods                ended                September 30, 2006 and 2005 (Unaudited)                     | 8      |
|                        |                                                                                                                                                                                      |   |
|                        | Notes                to Unaudited Condensed Consolidated Financial Statements                                                                                                             | 10     |
|                        |                                                                                                                                                                                      |   |
| Item                2.      | Management's                Discussion and Analysis of Financial Condition and Results of                Operations                                                                       | 26     |
|                        |                                                                                                                                                                                      |   |
| Item                3.      | Quantitative                and Qualitative Disclosures About Market Risk                                                                                                                 | 38     |
|                        |                                                                                                                                                                                      |   |
| Item                4.      | Controls                and Procedures                                                                                                                                                    | 38     |

| **PART                II -** | **Other                Information**                                       |   |
|------------------------------|----------------------------------------------------------------------------|--------|
|                         |                                                                       |   |
| Item                1.       | Legal                Proceedings                                           | 38     |
|                         |                                                                       |   |
| Item                1A.      | Risk                Factors                                                | 38     |
|                         |                                                                       |   |
| Item                2.       | Unregistered                Sales of Equity Securities and Use of Proceeds | 38     |
|                         |                                                                       |   |
| Item                3.       | Defaults                Upon Senior Securities                             | 38     |
|                         |                                                                       |   |
| Item                4.       | Submission                of Matters to a Vote of Security Holders         | 38     |
|                         |                                                                       |   |
| Item                5.       | Other                Information                                           | 38     |
|                         |                                                                       |   |
| Item                6.       | Exhibits                                                                   | 39     |

----

**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**  |
|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|----------------|
|   |                                                                                                                            |   |  **2006** |   |  **2005** |
|   |                                                                                                                            |   |           |   |   |
|   | **Revenues**                                                                                                                    |   |           |   |   |
|   |                                                                                                                            |   |           |   |   |
|   | Premiums                and annuity considerations                                                                              | $      | 45,753         | $ | 40,296 |
|   | Net                investment income                                                                                            |   | 898,397        |   | 834,733 |
|   | Net                derivative income                                                                                            |   | 6,621          |   | 13,864 |
|   | Net                realized investment (losses) gains                                                                           |   | (35,332)       |   | 22,591 |
|   | Fee                and other income                                                                                             |   | 295,238        |   | 269,629 |
|   |                                                                                                                            |   |           |   |   |
|   | Total                revenues                                                                                                   |   | 1,210,677      |   | 1,181,113 |
|   |                                                                                                                            |   |           |   |   |
|   | **Benefits                and Expenses**                                                                                        |   |           |   |   |
|   |                                                                                                                            |   |           |   |   |
|   | Interest                credited                                                                                                |   | 463,321        |   | 479,559 |
|   | Interest                expense                                                                                                 |   | 96,369         |   | 92,096 |
|   | Policyowner                benefits                                                                                             |   | 116,179        |   | 121,156 |
|   | Other                operating expenses                                                                                         |   | 174,159        |   | 141,429 |
|   | Amortization                of deferred policy acquisition costs ("DAC") and                value of business acquired ("VOBA") |   |  253,363  |   |  150,350 |
|   |                                                                                                                            |   |           |   |   |
|   | Total                benefits and expenses                                                                                      |   | 1,103,391      |   | 984,590 |
|   |                                                                                                                            |   |           |   |   |
|   | Income                before income tax expense and minority interest                                                           |   | 107,286        |   | 196,523 |
|   |                                                                                                                            |   |           |   |   |
|   | Income                tax expense                                                                                               |   | 18,618         |   | 55,613 |
|   |                                                                                                                            |   |           |   |   |
|   | Income                before minority interest                                                                                  |   | 88,668         |   | 140,910 |
|   |                                                                                                                            |   |           |   |   |
|   | Minority                interest share of loss                                                                                  |   | -              |   | (1,214) |
|   |                                                                                                                            |   |           |   |   |
|   | Net                income                                                                                                       | $      | 88,668         | $ | 142,124 |

*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** |
|--------|------------------------------------------------------------------|--------|---------------|
|   |                                                             |   | **2006**      |   | **2005** |
|   |                                                             |   |          |   |   |
|   | **Revenues**                                                     |   |          |   |   |
|   |                                                             |   |          |   |   |
|   | Premiums                and annuity considerations               | $      | 15,125        | $ | 14,960 |
|   | Net                investment income                             |   | 384,445       |   | 253,103 |
|   | Net                derivative (loss) income                      |   | (219,413)     |   | 134,803 |
|   | Net                realized investment (losses) gains            |   | (12,890)      |   | 59 |
|   | Fee                and other income                              |   | 104,682       |   | 90,288 |
|   |                                                             |   |          |   |   |
|   | Total                revenues                                    |   | 271,949       |   | 493,213 |
|   |                                                             |   |          |   |   |
|   | **Benefits                and Expenses**                         |   |          |   |   |
|   |                                                             |   |          |   |   |
|   | Interest                credited                                 |   | 161,058       |   | 159,727 |
|   | Interest                expense                                  |   | 33,118        |   | 31,012 |
|   | Policyowner                benefits                              |   | 44,981        |   | 52,648 |
|   | Other                operating expenses                          |   | 60,383        |   | 46,654 |
|   | Amortization                of DAC and VOBA                      |   | 63,151        |   | 51,522 |
|   |                                                             |   |          |   |   |
|   | Total                benefits and expenses                       |   | 362,691       |   | 341,563 |
|   |                                                             |   |          |   |   |
|   | (Loss)                income before income tax (benefit) expense |   | (90,742)      |   | 151,650 |
|   |                                                             |   |          |   |   |
|   | Income                tax (benefit) expense                      |   | (42,781)      |   | 48,376 |
|   |                                                             |   |          |   |   |
|   | Net                (loss) income                                 | $      | (47,961)      | $ | 103,274 |

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

----

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

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

**CONDENSED      CONSOLIDATED BALANCE SHEETS**

|                                                                                                                                                             |    | **Unaudited**                         |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|---------------------------------------|
| **ASSETS**                                                                                                                                                       |    | **September                30, 2006** |   | **December                31, 2005** |
| Investments                                                                                                                                                      |    |                                  |   |   |
| Available-for-sale                fixed maturities at fair value (amortized cost of $13,985,254                and $15,620,827 in 2006 and 2005, respectively)   |  $ |  13,991,597                      |  $ |  15,677,148 |
| Trading                fixed maturities at fair value (amortized cost of $3,901,724 and                $1,982,762                in 2006 and 2005, respectively) |    | 3,916,937                             |   | 1,984,848 |
| Subordinated                note from affiliate held-to-maturity (fair value of $633,002 and                $645,755 in 2006 and 2005, respectively)             |    |  600,000                         |   |  600,000 |
| Mortgage                loans                                                                                                                                    |    | 2,181,509                             |   | 1,739,370 |
| Derivative                instruments - receivable                                                                                                               |    | 588,189                               |   | 487,947 |
| Limited                partnerships                                                                                                                              |    | 202,846                               |   | 222,148 |
| Real                estate                                                                                                                                       |    | 168,087                               |   | 170,510 |
| Policy                loans                                                                                                                                      |    | 704,196                               |   | 701,769 |
| Other                invested assets                                                                                                                             |    | 1,222,439                             |   | 554,917 |
| Cash                and cash equivalents                                                                                                                         |    | 840,882                               |   | 347,654 |
| Total                investments                                                                                                                                 |    | 24,416,682                            |   | 22,486,311 |
|                                                                                                                                                             |    |                                  |   |   |
| Accrued                investment income                                                                                                                         |    | 299,878                               |   | 261,507 |
| Deferred                policy acquisition costs                                                                                                                 |    | 1,302,433                             |   | 1,341,377 |
| Value                of business acquired                                                                                                                        |    | 48,245                                |   | 53,670 |
| Deferred                federal income taxes                                                                                                                     |    | -                                     |   | 4,360 |
| Goodwill                                                                                                                                                         |    | 701,451                               |   | 701,451 |
| Receivable                for investments sold                                                                                                                   |    | 64,252                                |   | 79,860 |
| Reinsurance                receivable                                                                                                                            |    | 1,828,469                             |   | 1,860,680 |
| Other                assets                                                                                                                                      |    | 115,390                               |   | 122,239 |
| Separate                account assets                                                                                                                           |    | 20,153,986                            |   | 19,095,391 |
|                                                                                                                                                             |    |                                  |   |   |
| Total                assets                                                                                                                                      | $       | 48,930,786                            | $ | 46,006,846 |
|                                                                                                                                                             |    |                                  |   |   |
| **LIABILITIES**                                                                                                                                                  |    |                                  |   |   |
|                                                                                                                                                             |    |                                  |   |   |
| Contractholder                deposit funds and other policy liabilities                                                                                         | $       | 19,466,811                            | $ | 18,668,578 |
| Future                contract and policy benefits                                                                                                               |    | 759,541                               |   | 768,297 |
| Payable                for investments purchased                                                                                                                 |    | 588,460                               |   | 248,733 |
| Accrued                expenses and taxes                                                                                                                        |    | 75,547                                |   | 150,318 |
| Deferred                federal income taxes                                                                                                                     |    | 94,566                                |   | - |
| Debt                payable to affiliates                                                                                                                        |    | 1,325,000                             |   | 1,125,000 |
| Partnership                capital securities                                                                                                                    |    | 620,615                               |   | 607,826 |
| Reinsurance                payable to affiliate                                                                                                                  |    | 1,611,106                             |   | 1,652,517 |
| Derivative                instruments - payable                                                                                                                  |    | 181,948                               |   | 197,765 |
| Other                liabilities                                                                                                                                 |    | 1,449,577                             |   | 766,657 |
| Separate                account liabilities                                                                                                                      |    | 20,153,986                            |   | 19,095,391 |
|                                                                                                                                                             |    |                                  |   |   |
| Total                liabilities                                                                                                                                 |    | 46,327,157                            |   | 43,281,082 |
|                                                                                                                                                             |    |                                  |   |   |
| 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                                                                                                                        |    | 2,142,827                             |   | 2,138,880 |
| Accumulated                other comprehensive income                                                                                                            |    | 4,510                                 |   | 19,260 |
| Retained                earnings                                                                                                                                 |    | 449,855                               |   | 561,187 |
|                                                                                                                                                             |    |                                  |   |   |
| Total                stockholder’s equity                                                                                                                  |    | 2,603,629                             |   | 2,725,764 |
|                                                                                                                                                             |    |                                  |   |   |
| Total                liabilities and stockholder’s equity                                                                                                  | $       | 48,930,786                            | $ | 46,006,846 |

*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**  |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|
|                                                                                                                                            |   |  **2006** |   |  **2005** |
|                                                                                                                                            |   |           |   |   |
| Net                income                                                                                                                       | $      | 88,668         | $ | 142,124 |
|                                                                                                                                            |   |           |   |   |
| Other                comprehensive (loss) income:                                                                                               |   |           |   |   |
| Net                change in unrealized holding losses on available-for-sale                securities, net of tax and policyholder amounts (1) |   |  (69,371) |   |  (54,443) |
| Minimum                pension liability adjustment, net of tax (2)                                                                             |   | 1,289          |   | - |
| Reclassification                adjustments of realized investment losses (gains)into                net income(3)                              |   |  53,332   |   |  (54,270) |
| Other                comprehensive loss                                                                                                         |   | (14,750)       |   | (108,713) |
|                                                                                                                                            |   |           |   |   |
| Comprehensive                income                                                                                                             | $      | 73,918         | $ | 33,411 |

| (1)   | Net                change in unrealized holding (losses) gains on available-for-sale                securities is reflected net of tax benefit of $37.4 million and $29.3                million for the nine-month periods ended September 30, 2006 and 2005,                respectively. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Minimum                pension liability adjustment is reflected net of tax (expense) of                $(0.7)                million for the nine-month period ended September 30,                2006. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3)   | Reclassification                adjustment of realized investment losses (gains) is reflected net                of tax                (benefit) expense of $(28.7) million and $29.2 million for the nine-month                periods ended September 30, 2006 and 2005, respectively. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                    |   | **Unaudited**  |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------|
|                                                                                                                                                    |   |  **2006** |   |  **2005** |
|                                                                                                                                                    |   |           |   |   |
| Net                (loss) income                                                                                                                        | $      | (47,961)       | $ | 103,274 |
|                                                                                                                                                    |   |           |   |   |
| Other                comprehensive (loss) income:                                                                                                       |   |           |   |   |
| Net                change in unrealized holding gains (losses) on available-for-sale                securities, net of tax and policyholder amounts (4) |   |  107,827  |   |  (94,181) |
| Reclassification                adjustments of realized investment losses (gains)into                net income (5)                                     |   |  30,567   |   |  (19,111) |
| Other                comprehensive income (loss)                                                                                                        |   | 138,394        |   | (113,292) |
|                                                                                                                                                    |   |           |   |   |
| Comprehensive                income (loss)                                                                                                              | $      | 90,433         | $ | (10,018) |

| (4)   | Net                change in unrealized holding (losses) gains on available-for-sale                securities is reflected net of tax (expense)benefit of $(58.1) million                and                $50.7 million for the nine-month periods ended September 30, 2006                and                2005, respectively. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | Reclassification                adjustment of realized investment losses (gains) is reflected net                of tax                (benefit) expense of $(16.5) million and $10.3 million for the nine-month                periods ended September 30, 2006 and 2005, 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**    |   | **(Loss)                Income** |   | **Earnings** |   | **Equity**        |
|   |                                         |   |       |   |           |   |                             |   |         |   |              |
|   | Balance                at December 31, 2004  | $      | 6,437      | $      | 2,131,888      | $      | 180,638                          | $      | 628,035      | $      | 2,946,998         |
|   |                                         |   |       |   |           |   |                             |   |         |   |              |
|   | Net                income                    |   |       |   |           |   |                             |   | 142,124      |   | 142,124           |
|   | Dividends                                    |   |       |   |           |   |                             |   | (75,000)     |   | (75,000)          |
|   | Additional                paid-in-capital    |   |       |   | 5,114          |   |                             |   |         |   | 5,114             |
|   | Other                comprehensive loss      |   |       |   |           |   | (108,713)                        |   |         |   | (108,713)         |
|   |                                         |   |       |   |           |   |                             |   |         |   |              |
|   | Balance                at September 30, 2005 | $      | 6,437      | $      | 2,137,002      | $      | 71,925                           | $      | 695,159      | $      | 2,910,523         |
|   |                                         |   |       |   |           |   |                             |   |         |   |              |
|   |                                         |   |       |   |           |   |                             |   |         |   |              |
|   |                                         |   |       |   |           |   |                             |   |         |   |              |
|   | Balance                at December 31, 2005  | $      | 6,437      | $      | 2,138,880      | $      | 19,260                           | $      | 561,187      | $      | 2,725,764         |
|   |                                         |   |       |   |           |   |                             |   |         |   |              |
|   | Net                income                    |   |       |   |           |   |                             |   | 88,668       |   | 88,668            |
|   | Dividends                                    |   |       |   |           |   |                             |   | (200,000)    |   | (200,000)         |
|   | Additional                paid-in-capital    |   |       |   | 3,947          |   |                             |   |         |   | 3,947             |
|   | Other                comprehensive loss      |   |       |   |           |   | (14,750)                         |   |         |   | (14,750)          |
|   |                                         |   |       |   |           |   |                             |   |         |   |              |
|   | Balance                at September 30, 2006 | $      | 6,437      | $      | 2,142,827      | $      | 4,510                            | $      | 449,855      | $      | 2,603,629         |

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

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

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

**CONDENSED      CONSOLIDATED STATEMENTS OF CASH FLOWS**

|                                                                                 |                                                                       |      |        | **Unaudited**  |
|--------------------------------------------------------------------------------------|----------------------------------------------------------------------------|-----------|-------------|----------------|
|                                                                                 |                                                                       |      |        |  **2006** |   |  **2005** |
| **Cash                Flows From Operating Activities:**                             |                                                                       |      |        |           |
| Net                income                                                            | $                                                                          | 88,668    | $           | 142,124        |
| Adjustments                to reconcile net income to net cash (used in) provided by |                                                                       |      |        |           |
|                                                                                 | operating                activities:                                       |      |        |           |   |
|                                                                                 | Minority                interest share                                     |      | -           |           | (1,214) |
|                                                                                 | Amortization                of discount and premiums                       |      | 43,157      |           | 41,539 |
|                                                                                 | Amortization                of DAC and VOBA                                |      | 253,363     |           | 150,350 |
|                                                                                 | Depreciation                and amortization                               |      | 3,494       |           | 2,832 |
|                                                                                 | Non                cash derivative activity                                |      | (18,537)    |           | 77,634 |
|                                                                                 | Net                realized losses (gains) on investments                  |      | 35,332      |           | (22,591) |
|                                                                                 | Net                unrealized (gains) losses on trading investments        |      | (13,128)    |           | 67,125 |
|                                                                                 | Net                change in unrealized and undistributed gains in private |      |        |           |   |
|                                                                                 | equity                limited partnerships                                 |      | (26,079)    |           | (45,363) |
|                                                                                 | Interest                credited to contractholder deposits                |      | 463,321     |           | 479,559 |
|                                                                                 | Deferred                federal income taxes                               |      | 107,471     |           | 81,120 |
| Changes                in assets and liabilities:                                    |                                                                       |      |        |           |
|                                                                                 | Deferred                acquisition costs                                  |      | (187,679)   |           | (202,944) |
|                                                                                 | Accrued                investment income                                   |      | (38,371)    |           | (8,999) |
|                                                                                 | Future                contract and policy benefits                         |      | (4,801)     |           | (4,710) |
|                                                                                 | Other,                net                                                  |      | 35,903      |           | 90,376 |
|                                                                                 | Net                purchases of trading fixed maturities                   |      | (1,627,782) |           | (675,578) |
|                                                                                 |                                                                       |      |        |           |   |   |
| Net                cash (used in) provided by operating activities                   |                                                                       | (885,668) |        | 171,260        |
|                                                                                 |                                                                       |      |        |           |   |   |
| **Cash                Flows From Investing Activities:**                             |                                                                       |      |        |           |
| Sales,                maturities and repayments of:                                  |                                                                       |      |        |           |
|                                                                                 | Available-for-sale                fixed maturities                         |      | 4,603,225   |           | 4,487,776 |
|                                                                                 | Mortgage                loans                                              |      | 150,981     |           | 87,092 |
|                                                                                 | Real                estate                                                 |      | -           |           | 946 |
|                                                                                 | Other                invested assets                                       |      | 106,037     |           | 424,201 |
|                                                                                 | Net                cash in disposition of subsidiary                       |      | -           |           | 17,040 |
| Purchases                of:                                                         |                                                                       |      |        |           |
|                                                                                 | Available-for-sale                fixed maturities                         |      | (3,017,843) |           | (4,321,581) |
|                                                                                 | Mortgage                loans                                              |      | (591,627)   |           | (187,750) |
|                                                                                 | Real                estate                                                 |      | (794)       |           | (4,307) |
|                                                                                 | Other                invested assets                                       |      | (732,208)   |           | (166,900) |
| Changes                in other investing activities                                 |                                                                       | 671,968   |        | (227,890)      |
| Net                change in policy loans                                            |                                                                       | (2,427)   |        | (3,761)        |
| Net                change in short term investments                                  |                                                                       | -         |        | (4,568)        |
|                                                                                 |                                                                       |      |        |           |   |   |
| Net                cash provided by investing activities                             | $                                                                          | 1,187,312 | $           | 100,298        |

*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**  |
|---------------------------------------------------------------|--------------------------------------------------------------|-----------|-------------|----------------|
|                                                          |                                                         |      |        |  **2006** |   |  **2005** |
|                                                          |                                                         |      |        |           |   |   |
| **Cash                Flows From Financing Activities:**      |                                                         |      |        |           |
| Deposits                to contractholder deposit funds       | $                                                            | 2,948,755 | $           | 2,335,190      |
|                                                          | Withdrawals                from contractholder deposit funds |      | (2,761,118) |           | (2,847,854) |
|                                                          | Dividends                paid to stockholder                 |      | (200,000)   |           | (75,000) |
|                                                          | Debt                proceeds                                 |      | 200,000     |           | 100,000 |
|                                                          | Other,                net                                    |      | 3,947       |           | 5,114 |
|                                                          |                                                         |      |        |           |   |
| Net                cash used in financing activities          |                                                         | 191,584   |        | (482,550)      |
|                                                          |                                                         |      |        |           |   |
| Net                change in cash and cash equivalents        |                                                         | 493,228   |        | (210,992)      |
|                                                          |                                                         |      |        |           |   |
| Cash                and cash equivalents, beginning of period |                                                         | 347,654   |        | 552,949        |
|                                                          |                                                         |      |        |           |   |
| Cash                and cash equivalents, end of period       | $                                                            | 840,882   | $           | 341,957        |

**Supplemental      Schedule of non-cash investing and financing activities**

*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**

----

**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)**

**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)**

----

**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)**

**3.      SEGMENT INFORMATION**

**Wealth      Management**

**Individual      Protection**

**Group      Protection**

**Corporate**

----

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

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

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

**3.      SEGMENT INFORMATION (continued)**

|                                                                                        | **Nine-month                period ended September 30, 2006** |   |           |
|---------------------------------------------------------------------------------------------|---------------------------------------------------------------|--------|----------------|
|                                                                                        |                                                          |   |           |   |   |   |   |   |   |
|                                                                                        | **Wealth**                                                    |   | **Individual** |   | **Group** |   |   |   |   |
|                                                                                        | **Management**                                                |   | **Protection** |   | **Protection** |   | **Corporate** |   | **Totals** |
|                                                                                        |                                                          |   |           |   |   |   |   |   |   |
| Total                Revenues                                                               | $                1,030,911                                    | $      | 74,233         | $ | 29,125 | $ | 76,408 | $ | 1,210,677 |
| Total                Expenditures                                                           | 952,366                                                       |   | 72,383         |   | 27,663 |   | 50,979 |   | 1,103,391 |
| Income                before income                tax expense and minority interest        | 78,545                                                        |   | 1,850          |   | 1,462 |   | 25,429 |   | 107,286 |
|                                                                                        |                                                          |   |           |   |   |   |   |   |   |
| Net                income                                                                   | $                66,206                                       | $      | 1,307          | $ | 950 | $ | 20,205 | $ | 88,668 |
|                                                                                        |                                                          |   |           |   |   |   |   |   |   |
|                                                                                        |                                                          |   |           |
|                                                                                        | **Nine-month                period ended September 30, 2005** |   |           |
|                                                                                        |                                                          |   |           |   |   |   |   |   |   |
| Total                Revenues                                                               | $                1,003,283                                    | $      | 56,550         | $ | 25,013 | $ | 96,267 | $ | 1,181,113 |
| Total                Expenditures                                                           | 858,122                                                       |   | 52,725         |   | 26,198 |   | 47,545 |   | 984,590 |
| Income                (loss) before income                tax expense and minority interest | 145,161                                                       |   | 3,825          |   | (1,185) |   | 48,722 |   | 196,523 |
|                                                                                        |                                                          |   |           |   |   |   |   |   |   |
| Net                income (loss)                                                            | $                102,432                                      | $      | 2,591          | $ | (770) | $ | 37,871 | $ | 142,124 |

----

**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 September 30, 2006** |   |           |
|-------------------------------------------------------------------------------------------------|------------------------------------------------------------------|--------|----------------|
|                                                                                            |                                                             |   |           |
|                                                                                            | **Wealth**                                                       |   | **Individual** |   | **Group** |   |   |   |   |
|                                                                                            | **Management**                                                   |   | **Protection** |   | **Protection** |   | **Corporate** |   | **Totals** |
|                                                                                            |                                                             |   |           |   |   |   |   |   |   |
| Total                  Revenues                                                                 | $                  204,984                                       | $      | 30,936         | $ | 9,701 | $ | 26,328 | $ | 271,949 |
| Total                  Expenditures                                                             | 308,769                                                          |   | 29,589         |   | 9,137 |   | 15,196 |   | 362,691 |
| (Loss)                  income before income                  tax expense and minority interest | (103,785)                                                        |   | 1,347          |   | 564 |   | 11,132 |   | (90,742) |
|                                                                                            |                                                             |   |           |   |   |   |   |   |   |
| Net                  (loss) income                                                              | $                  (57,814)                                      | $      | 910            | $ | 366 | $ | 8,577 | $ | (47,961) |
|                                                                                            |                                                             |   |           |   |   |   |   |   |   |
|                                                                                            |                                                             |   |           |
|                                                                                            | **Three-month                  period ended September 30, 2005** |   |           |
|                                                                                            |                                                             |   |           |   |   |   |   |   |   |
| Total                  Revenues                                                                 | $                  439,649                                       | $      | 16,818         | $ | 7,827 | $ | 28,919 | $ | 493,213 |
| Total                  Expenditures                                                             | 302,671                                                          |   | 16,113         |   | 7,949 |   | 14,830 |   | 341,563 |
| Income                  (loss) before income                  tax expense and minority interest | 136,978                                                          |   | 705            |   | (122) |   | 14,089 |   | 151,650 |
|                                                                                            |                                                             |   |           |   |   |   |   |   |   |
| Net                  income (loss)                                                              | $                  91,561                                        | $      | 493            | $ | (80) | $ | 11,300 | $ | 103,274 |

| **Nine-month                period ended September 30, 2006**                                                             |
|---------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                      |
|                                                                                                                      | **Wealth** |   | **Individual** |   | **Group** |   |   |   |   |
|                                                                                                                      | **Management** |   | **Protection** |   | **Protection** |   | **Corporate** |   | **Totals** |
| Income                (loss) before                income tax                expense and minority                interest | $ | 29,740 |   | $ | 3,644 |   | $ | 564 |   | $ | (33,948) |   | $ | - |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Nine-month                period ended September 30, 2005**                                                             |
|                                                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                (loss)before                income tax                expense and minority                interest  | $ | 27,386 |   | $ | 1,048 |   | $ | 268 |   | $ | (28,702) |   | $ | - |

----

**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 September 30, 2006**                       |
|--------------------------------------------------------------------------------------|
|                                                                                 |
|                                                                                 | **Wealth** |   | **Individual** |   | **Group** |   |   |   |   |
|                                                                                 | **Management** |   | **Protection** |   | **Protection** |   | **Corporate** |   | **Totals** |
| Income                (loss) before                income tax                expense | $ | 9,689 |   | $ | 1,430 |   | $ | 201 |   | $ | (11,320) |   | $ | - |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Three-month                period ended September 30, 2005**                       |
|                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                (loss) before                income tax                expense | $ | 9,740 |   | $ | 359 |   | $ | 97 |   | $ | (10,196) |   | $ | - |

**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**

|                                                                            |                     | **2006**                            | **2005**                          |
|---------------------------------------------------------------------------------|--------------------------|-------------------------------------|-----------------------------------|
|                                                                            |                     | **Pension                Benefits** | **Other                Benefits** | **Pension                Benefits** | **Other                Benefits** |
| Components                of net periodic benefit cost:                         |                     |                                |                              |   |
| Service                cost                                                     | $                4,193   | $                983                | $                8,211            | $                1,000 |
| Interest                cost                                                    | 10,079                   | 2,225                               | 10,380                            | 2,245 |
| Expected                return on plan assets                                   | (16,254)                 | -                                   | (15,069)                          | - |
| Amortization                of transition obligation asset                      | (1,570)                  | -                                   | (2,288)                           | - |
| Amortization                of prior service cost (credit)                      | 207                      | (396)                               | 642                               | (180) |
| Curtailment                Charge                                               | -                        | -                                   | 4,944                             | - |
| Recognized                net actuarial loss                                    | 123                      | 1,088                               | 1,438                             | 955 |
| Net                periodic benefit (benefit) cost                              | $                (3,222) | $                3,900              | $                8,258            | $                4,020 |
| The                Company’s share of net periodic benefit (benefit) cost | $                (3,222) | $                3,369              | $                9,459            | $                3,453 |

|                                                                            |                     | **2006**                            | **2005**                          |
|---------------------------------------------------------------------------------|--------------------------|-------------------------------------|-----------------------------------|
|                                                                            |                     | **Pension                Benefits** | **Other                Benefits** | **Pension                Benefits** | **Other                Benefits** |
| Components                of net periodic benefit cost:                         |                     |                                |                              |   |
| Service                cost                                                     | $                1,397   | $                327                | $                2,737            | $                333 |
| Interest                cost                                                    | 3,359                    | 741                                 | 3,460                             | 748 |
| Expected                return on plan assets                                   | (5,418)                  | -                                   | (5,023)                           | - |
| Amortization                of transition obligation asset                      | (524)                    | -                                   | (763)                             | - |
| Amortization                of prior service cost (credit)                      | 69                       | (132)                               | 214                               | (60) |
| Curtailment                Charge                                               | -                        | -                                   | 4,944                             | - |
| Recognized                net actuarial loss                                    | 41                       | 362                                 | 479                               | 318 |
| Net                periodic benefit (benefit) cost                              | $                (1,076) | $                1,298              | $                6,048            | $                1,339 |
| The                Company’s share of net periodic benefit (benefit) cost | $                (1,076) | $                1,126              | $                5,796            | $                1,149 |

----

**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.      SALE OF VARIABLE INTEREST ENTITY**

**8.      GOODWILL**

----

**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)**

**9.      LIABILITIES FOR CONTRACT GUARANTEES**

|  **Benefit                Type**             |   | **Account                Balance** | **Net                Amount****at                Risk****1** | **Average****Attained                Age** |
|---------------------------------------------------|--------|------------------------------------|--------------------------------------------------------------|--------------------------------------------|
| Minimum                Death                      |   | $                                  | 16,181,909                                                   | $                                          | 1,843,125 | 66.6 |
| Minimum                Income                     |   | $                                  | 387,700                                                      | $                                          | 65,620 | 59.9 |
| Minimum                Accumulation or Withdrawal |   |  $                            |  2,563,855                                              |  $                                    |  169 |  62.0 |

|                                                                    | **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)                                                   |   | 5,320                                                      |   | 187                     |
| Incurred                guaranteed benefits                             | 26,827                                                    |   | 1,350                                                      |   | 28,177                  |
| Paid                guaranteed benefits                                 | (25,880)                                                  |   | -                                                          |   | (25,880)                |
| Interest                                                                | 1,026                                                     |   | 336                                                        |   | 1,362                   |
|                                                                    |                                                      |   |                                                       |   |                    |
| Balance                at September 30, 2006                            | $                38,589                                   |   | $                10,006                                    |   | $                48,595 |

*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)**

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

|                                                     | **Guaranteed****Minimum****Death                Benefit** |   | **Guaranteed****Minimum****Income                Benefit** |   | **Total**               |
|----------------------------------------------------------|-----------------------------------------------------------|--------|------------------------------------------------------------|--------|-------------------------|
|                                                     |                                                      |   |                                                       |   |                    |
| Balance                at January 1, 2005                | $                28,313                                   |   | $                2,422                                     |   | $                30,735 |
|                                                     |                                                      |   |                                                       |   |                    |
| Benefit                Ratio Change / Assumption Changes | 15,205                                                    |   | -                                                          |   | 15,205                  |
| Incurred                guaranteed benefits              | 24,732                                                    |   | 560                                                        |   | 25,292                  |
| Paid                guaranteed benefits                  | (28,050)                                                  |   | -                                                          |   | (28,050)                |
| Interest                                                 | 1,574                                                     |   | 143                                                        |   | 1,717                   |
|                                                     |                                                      |   |                                                       |   |                    |
| Balance                at September 30, 2005             | $                 41,774                             |   | $                3,125                                     |   | $                44,899 |

**10.      SUBSEQUENT EVENT**

----

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

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

**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**

***Goodwill***

***Deferred      Acquisition Costs***

----

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

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

**CRITICAL      ACCOUNTING POLICIES (continued)**

**Deferred**
***Acquisition Costs (continued)***

***Value      of Business Acquired***

**RESULTS      OF OPERATIONS**

***Nine-month      period ended September 30, 2006 compared to the Nine-month period ended      September 30, 2005:***

**Net      Income**

**REVENUES**

***Premium      and annuity considerations***

----

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

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

**RESULT      OF OPERATIONS (Continued)**

**REVENUES      (continued)**

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

***Net      derivative income***

----

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

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

**RESULT      OF OPERATIONS (Continued)**

**REVENUES      (continued)**

|                                                                                                        | **Nine-month                periods ended September 30,** |
|-------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------|
|                                                                                                        | **2006**                                                  | **2005** |
|                                                                                                        |                                                      |   |
| Net                expense on swap agreements                                                               | $                (10,605)                                 | $                (50,766) |
| Change                in fair value of swap agreements (interest                rate, currency, and equity) | 7,114                                                     | 88,499 |
| Change                in fair value of options, futures and embedded                derivatives             | 10,112                                                    | (23,869) |
|                                                                                                        |                                                      |   |
| Total                derivative income                                                                      | $                6,621                                    | $                13,864 |

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

***Fees      and other income***

**BENEFITS      AND EXPENSES**

***Interest      credited***

----

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

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

**RESULT      OF OPERATIONS (Continued)**

**BENEFITS      AND EXPENSES (continued)**

***Interest      expense***

***Policyholder      benefits***

***Other      operating expenses***
*** ***

***Amortization      of DAC***
*** ***

***Amortization      of VOBA***

**Results      of Operations by Segment**

***Wealth      Management Segment***

----

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

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

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

***Fixed      Annuities***
*      -*

***Variable      Annuities***
*      -*

***Fixed      Indexed Annuities***
* *

***Institutional      Investment Contracts***
* *

----

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

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

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

***Other***

----

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

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

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

|                                  | **2006**                   |   | **2005**                       |
|---------------------------------------|----------------------------|--------|--------------------------------|
|                                  |                       |   |                           |
| **Total                Revenues**     | $                1,030,911 |   | $1,003,283                     |
| **Total                Expenditures** | 952,366                    |   | 858,122                        |
| **Pretax                Income**      | 78,545                     |   | 145,161                        |
|                                  |                       |   |                           |
| **Net                Income**         | $                66,206    |   | $                 102,432 |

**REVENUES**

----

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

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

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

**REVENUES      (continued)**

***Net      Investment incom***
**e**

***Net      Derivative income***

|                                                                                                        | **Nine-month                periods ended September 30,** |
|-------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------|
|                                                                                                        | **2006**                                                  | **2005** |
|                                                                                                        |                                                      |   |
| Net                expense on swap agreements                                                               | $                (9,654)                                  | $                (52,715) |
| Change                in fair value of swap agreements (interest                rate, currency, and equity) |  4,680                                               |  93,749 |
| Change                in fair value of options, futures and embedded                derivatives             |  10,112                                              |  (23,869) |
|                                                                                                        |                                                      |   |
| Total                derivative income                                                                      | $                5,138                                    | $                17,165 |

***Net      Realized investment (losses) gains***

***Fees      and other income***

----

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

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

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

**REVENUES      (continued)**

**BENEFITS      AND EXPENSES**

***Interest      credited***

***Interest      expense***

***Policyholder      benefits***

***Other      operating expenses***
*** ***

***Amortization      of DAC***

***Amortization      of VOBA***

***Individual      Protection Segment***

----

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

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

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

|                                  | **2006**                |   | **2005**                     |
|---------------------------------------|-------------------------|--------|------------------------------|
|                                  |                    |   |                         |
| **Total                Revenues**     | $                74,233 |   | $                56,550      |
| **Total                Expenditures** | 72,383                  |   | 52,725                       |
| **Pretax                Income**      | 1,850                   |   | 3,825                        |
|                                  |                    |   |                         |
| **Net                Income**         | $                1,307  |   | $                 2,591 |

***Group      Protection Segment***

|                                    | **2006**                |   | **2005**                     |
|-----------------------------------------|-------------------------|--------|------------------------------|
|                                    |                    |   |                         |
| **Total                Revenues**       | $                29,125 |   | $                25,013      |
| **Total                Expenditures**   | 27,663                  |   | 26,198                       |
| **Pretax                Income (Loss)** | 1,462                   |   | (1,185)                      |
|                                    |                    |   |                         |
| **Net                Income (Loss)**    | $                950    |   | $                 (770) |

----

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

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

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

***Corporate      Segment***

|                                  | **2006**                |   | **2005**                |
|---------------------------------------|-------------------------|--------|-------------------------|
|                                  |                    |   |                    |
| **Total                Revenues**     | $                76,408 |   | $                96,267 |
| **Total                Expenditures** | 50,979                  |   | 47,545                  |
| **Pretax                Income**      | 25,429                  |   | 48,722                  |
|                                  |                    |   |                    |
| **Net                Income**         | $                20,205 |   | $                37,871 |

----

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

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

**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.**

----

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

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

**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) |
|--------|------------------------------------------------------------------------|

| November                10, 2006 | */s/                Robert C. Salipante*      |
|----------------------------------|-----------------------------------------------|
| Date                             | Robert                C. Salipante, President |
|                             | (principal                executive officer)  |

| November                10, 2006 | */s/                Michael K. Moran*                                                                   |
|----------------------------------|---------------------------------------------------------------------------------------------------------|
| Date                             | Michael                K. Moran, Vice President, Chief Accounting Officer and                Controller |
|                             | (chief                accounting officer)                                                               |