##### 



MANAGEMENTS DISCUSSION & ANALYSIS  Dated April 28, 2005 Earnings and Profitability FINANCIAL SUMMARY (Unaudited)
    
    Quarterly ResultsQ105
    
    
    Q404
    
    
    Q304
    
    
    Q204
    
    
    Q104Revenues ($ millions)
    
    
    5,119
    
    
    
    5,269
    
    
    
    5,390
    
    
    
    5,551
    
    
    
    5,538Common Shareholders Net Income ($ millions)
    
    
    458
    
    
    
    438
    
    
    
    439
    
    
    
    438
    
    
    
    365Operating Earnings(2)($ millions)
    
    
    458
    
    
    
    438
    
    
    
    439
    
    
    
    438
    
    
    
    424Earnings Per Common Share (EPS) ($)
    
    
    0.77
    
    
    
    0.74
    
    
    
    0.73
    
    
    
    0.73
    
    
    
    0.61Operating EPS(2)($)
    
    
    0.77
    
    
    
    0.74
    
    
    
    0.73
    
    
    
    0.73
    
    
    
    0.71Fully diluted operating EPS(2)($)
    
    
    0.77
    
    
    
    0.73
    
    
    
    0.73
    
    
    
    0.72
    
    
    
    0.70Return on Common Equity (ROE) (%)
    
    
    12.6
    
    
    
    12.1
    
    
    
    11.9
    
    
    
    12.0
    
    
    
    10.3Operating ROE(2)(%)
    
    
    12.6
    
    
    
    12.1
    
    
    
    11.9
    
    
    
    12.0
    
    
    
    12.0Average Common Shares Outstanding (millions)
    
    
    591.8
    
    
    
    595.2
    
    
    
    598.7
    
    
    
    600.7
    
    
    
    600.0S&P500 Index (daily average)
    
    
    1,192
    
    
    
    1,162
    
    
    
    1,104
    
    
    
    1,123
    
    
    
    1,132S&P500 Index (close)
    
    
    1,181
    
    
    
    1,212
    
    
    
    1,115
    
    
    
    1,141
    
    
    
    1,126
  Sun Life Financial Inc.(1) reported a $34 million increase in operating earnings(2) for the first quarter ended March 31, 2005 compared to the first quarter of 2004.
Earnings were up despite a decrease of $13 million, or 3 cents per share, due to the depreciation
of foreign currencies against the Canadian dollar compared to first quarter 2004 exchange rates. As a result of the increase
in operating earnings and Sun Life Financial Inc.s share repurchase program,
operating EPS grew from $0.71 per share for the first quarter of 2004 to $0.77 per share for the same period in 2005, a 9%
increase, and operating ROE increased 60 basis points, from 12.0% for the first quarter
of 2004 to 12.6% for the first quarter of 2005. Common shareholders net income of $458 million for the first quarter of 2005 was up $93 million
compared to the first quarter of 2004. EPS was $0.77 per share, up $0.16 per share
compared to the first quarter of 2004. As previously disclosed, common shareholders net income in
the first quarter of 2004 included regulatory charges against MFS. Performance by Business Group The Company has five reportable segments: SLF Canada, SLF U.S.,
MFS, SLF Asia, and Corporate. Effective January 1, 2005, the Company realigned
certain of its reportable segments whereby the Reinsurance business unit, previously reported as
part of SLF Canada, and SLF U.K. are reported as part of Corporate. This change
reflects the ongoing evolution of Sun Life Financials businesses and has no impact on the
Companys consolidated results. The discussion in the remainder
of this MD&A is based on
the current segmentation reflecting the realignment of reportable segments described above. Prior
period results have been restated on this basis to facilitate comparison. Where appropriate,
information on a reportable segment has been presented both in Canadian dollars and the segments
functional currency to facilitate the analysis of underlying business trends. ROE for the
business segments is a non-GAAP financial measure as outlined under Use of Non-GAAP
Financial Measures. Additional details of the segments and the purpose and use of the
segmented information are outlined in Note 5 to Sun Life Financial Inc.s first quarter 2005
Interim Consolidated Financial Statements, which are prepared in accordance with Canadian
GAAP .  (1)
    
    Or together with its subsidiaries and
joint ventures the Company or Sun Life Financial.(2)
    
    See Use of Non-GAAP Financial
Measures. First Quarter 2005  |  www.sunlife.com     3




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##### 



Managements Discussion and Analysis SLF CANADA Quarterly ResultsQ105
    
    
    Q404
    
    
    Q304
    
    
    Q204
    
    
    Q104Revenues
($ millions)
    
    
    2,146
    
    
    
    2,029
    
    
    
    1,960
    
    
    
    2,032
    
    
    
    2,141Common Shareholders Net Income ($ millions)Individual Insurance & Investments
    
    
    168
    
    
    
    126
    
    
    
    121
    
    
    
    139
    
    
    
    125Group Benefits
    
    
    38
    
    
    
    63
    
    
    
    66
    
    
    
    47
    
    
    
    76Group Retirement Services & Institutional Investments
    
    
    39
    
    
    
    35
    
    
    
    34
    
    
    
    34
    
    
    
    29Total
    
    
    245
    
    
    
    224
    
    
    
    221
    
    
    
    220
    
    
    
    230ROE (%)
    
    
    14.8
    
    
    
    13.7
    
    
    
    13.4
    
    
    
    13.2
    
    
    
    13.7
  In the first quarter of 2005, SLF Canadas earnings increased 7% over the first
quarter of 2004 primarily due to favourable annuity mortality experience, the benefits of reduced
unit expenses, increased fee income and favourable credit experience, partially offset by lower
Group Benefits results. Premiums and deposits for the first quarter of 2005 were $5.4 billion, up
19% over the first quarter of 2004. Earnings increased 9% over the fourth quarter of 2004 for the reasons mentioned above as well as
increased earnings from the investment in CI Funds Management Inc. (CI Funds).
ROE of 14.8% for the quarter increased 110 basis points over both the first and fourth
quarters of 2004. l

Individual Insurance & Investments earnings increased 34% over the first quarter
of 2004 due to favourable annuity mortality and credit experience in individual wealth and
the benefits of reduced unit expenses in individual life insurance. Earnings increased 33%
over the fourth quarter of 2004 and included increased earnings from the investment in
CI Funds in addition to the above-mentioned items.l

First quarter 2005 earnings for Group Benefits were lower than in the first and
fourth quarters of 2004. The earnings in the first quarter of 2004 reflected exceptional
mortality experience which did not recur in the first quarter of 2005. In comparison with
the fourth quarter of 2004, earnings in the first quarter of 2005 were negatively affected
by seasonal factors in health and morbidity experience. First quarter 2005 results were
also affected by additional investments to further enhance customer service.l

Group Retirement Services & Institutional Investments earnings increased 34% over
the first quarter of 2004 partially due to improvements in fee income and favourable
credit experience. Assets under management for Group
Retirement Services & Institutional Investments, including McLean Budden Limited, continued
to increase as a result of strong sales in the first quarter of 2005 and higher equity
market levels. SLF U.S. Quarterly ResultsQ105
    
    
    Q404
    
    
    Q304
    
    
    Q204
    
    
    Q104Revenues (US$ millions)
    
    
    1,539
    
    
    
    1,825
    
    
    
    1,832
    
    
    
    1,807
    
    
    
    1,781Revenues (C$ millions)
    
    
    1,889
    
    
    
    2,228
    
    
    
    2,399
    
    
    
    2,453
    
    
    
    2,349Common Shareholders Net Income (US$ millions)Annuities
    
    
    34
    
    
    
    45
    
    
    
    44
    
    
    
    33
    
    
    
    62Individual Life
    
    
    25
    
    
    
    19
    
    
    
    19
    
    
    
    33
    
    
    
    10Group Life & Health
    
    
    6
    
    
    
    12
    
    
    
    7
    
    
    
    14
    
    
    
    2Total (US$ millions)
    
    
    65
    
    
    
    76
    
    
    
    70
    
    
    
    80
    
    
    
    74Total (C$ millions)
    
    
    81
    
    
    
    93
    
    
    
    92
    
    
    
    109
    
    
    
    97ROE (%)
    
    
    8.6
    
    
    
    10.5
    
    
    
    9.9
    
    
    
    11.2
    
    
    
    10.0
  The appreciation of the Canadian dollar against the U.S. dollar reduced earnings in
SLF U.S. by CDN$6 million in the first quarter of 2005 compared to the first
quarter of 2004. First quarter 2005 earnings
of US$65 million were 12% lower than in the first quarter of
2004. The first quarter of 2004 benefited from rising equity markets and an adjustment of prior
year tax accruals. However, the decline in equity markets in the first quarter of 2005 necessitated
a reserve increase of US$22 million. The decrease in first quarter 2005 earnings relative to the fourth quarter of 2004 also reflected
the impact of a decline in closing equity markets and adverse mortality partially offset by
improved credit experience. In addition, positive claims experience in the Group Life & Health
division benefited the fourth quarter of 2004. 4     Sun Life Financial Inc.  |  First Quarter 2005




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##### 



Managements Discussion and Analysis l

Annuities earnings decreased US$28 million compared to the first quarter of 2004
primarily as a result of declining equity markets during the first quarter of 2005
compared to rising equity markets in the first quarter of 2004 and an adjustment of prior
year tax accruals in 2004. The lower value of equity markets at March 31, 2005 compared to
December 31, 2004 contributed significantly to the decline in earnings from the fourth
quarter of 2004.l

Individual Life earnings were US$15 million higher in the first quarter of 2005
compared to the first quarter of 2004 primarily due to the offshore universal life
business. Earnings in the first quarter of 2004 were adversely affected by the impact of
the low interest environment on universal life products prior to the implementation of a
hedging program in the second quarter of 2004. Earnings in the first quarter of 2005 were
adversely affected by unfavourable mortality experience and earnings strain resulting from
strong sales of corporate-owned life insurance.l

Group Life & Health earnings increased US$4 million in the first quarter of 2005
compared to the first quarter of 2004 primarily due to adjustments in the first quarter of
2004. Unfavourable Group Life mortality in the first quarter of 2005 was a major driver of
the decline in earnings as compared to the fourth quarter of 2004. Sun Life Financial Inc. and its U.S. subsidiaries are cooperating with the SEC
and other regulators in their continuing investigations and examinations with respect to
various issues, including market timing related issues, directed brokerage and revenue sharing
arrangements with distributors, and recordkeeping requirements. No regulatory proceedings have been
commenced as a result of these investigations and examinations, but Sun Life Financial Inc. and
certain of its U.S. subsidiaries are engaged in discussions with the SEC that
may lead to settled administrative actions involving those subsidiaries and a provision for the
estimated losses for such matters has been made in the Corporate segment. While it is not possible
to predict the final resolution of these discussions, management expects that the ultimate
liability with respect to such matters will not be material to the consolidated financial condition
of the Company. MFS INVESTMENT MANAGEMENT Quarterly ResultsQ105
    
    
    Q404
    
    
    Q304
    
    
    Q204
    
    
    Q104Revenues (US$ millions)
    
    
    332
    
    
    
    330
    
    
    
    316
    
    
    
    319
    
    
    
    341Revenues (C$ millions)
    
    
    407
    
    
    
    402
    
    
    
    414
    
    
    
    434
    
    
    
    450Common Shareholders Net Income/(Loss) (US$ millions)
    
    
    37
    
    
    
    36
    
    
    
    32
    
    
    
    30
    
    
    
    (10
    )Operating Earnings (US$ millions)
    
    
    37
    
    
    
    36
    
    
    
    32
    
    
    
    30
    
    
    
    35Common Shareholders Net Income/(Loss) (C$ millions)
    
    
    46
    
    
    
    44
    
    
    
    42
    
    
    
    41
    
    
    
    (13
    )Operating Earnings (C$ millions)
    
    
    46
    
    
    
    44
    
    
    
    42
    
    
    
    41
    
    
    
    46Average Net Assets (US$ billions)
    
    
    145
    
    
    
    140
    
    
    
    132
    
    
    
    138
    
    
    
    144Assets Under Management (US$ billions)
    
    
    145
    
    
    
    146
    
    
    
    134
    
    
    
    137
    
    
    
    142Net New Sales/(Redemptions) (US$ billions)
    
    
    0.7
    
    
    
    0.1
    
    
    
    (2.5
    )
    
    
    (5.3
    )
    
    
    (1.2
    )Market Movement (US$ billions)
    
    
    (2.4
    )
    
    
    12.1
    
    
    
    (0.9
    )
    
    
    0.5
    
    
    
    3.1S&P 500 Index (daily average)
    
    
    1,192
    
    
    
    1,162
    
    
    
    1,104
    
    
    
    1,123
    
    
    
    1,132
 MFS contributed net
income of CDN$46 million for the first quarter of 2005. The
appreciation of the Canadian dollar against the U.S. dollar reduced earnings for MFS
by CDN$3 million in the first quarter of 2005 compared to the first quarter of
2004. Net new sales
at MFS improved to US$728 million in the first quarter of 2005
compared to net new sales of US$139 million in the previous quarter and redemptions of
US$1.2 billion during the first quarter a year ago. Strong positive net flows from
institutional clients more than offset outflows of assets in retail mutual funds and annuities.
Assets under management declined 1% to US$145 billion due to negative market activity in
the first quarter. MFSs contribution to Sun Life Financials earnings in the first quarter of 2005 was
US$37 million, up US$2 million from the first quarter of 2004. As previously disclosed, a number of lawsuits have been commenced in the United States against Sun
Life Financial Inc., MFS, various MFS Funds and certain of their directors,
officers and fund trustees relating to the matters that led to the settlements between MFS
and federal and state regulators in 2004. Additional information concerning these actions is
provided in Sun Life Financial Inc.s annual MD&A and
annual and interim financial statements. These actions are
at an early stage and Sun Life Financial Inc. cannot predict their outcome at this time. First Quarter 2005  |  www.sunlife.com     5




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Managements Discussion and Analysis SLF ASIA Quarterly ResultsQ105
    
    
    Q404
    
    
    Q304
    
    
    Q204
    
    
    Q104Revenues ($ millions)
    
    
    214
    
    
    
    239
    
    
    
    189
    
    
    
    182
    
    
    
    158Common Shareholders Net Income ($ millions)
    
    
    6
    
    
    
    18
    
    
    
    10
    
    
    
    10
    
    
    
    7ROE (%)
    
    
    5.4
    
    
    
    16.8
    
    
    
    9.3
    
    
    
    9.0
    
    
    
    6.2
  Revenues in the first quarter of 2005 grew 35% compared to the first quarter of 2004, largely
due to strong single premium life insurance sales during the quarter and increased volume of
in-force business. First quarter 2005 sales were up 19% over 2004. Net income was down $1 million for the first quarter 2005 compared to the first quarter of 2004,
due to lower investment income. Net income was down from the fourth quarter of 2004 which benefited
from the favourable effect of productivity improvement initiatives on actuarial liabilities in the
Philippines. CORPORATE Corporate includes the results of SLF U.K., the Reinsurance business unit and Run-off
Reinsurance as well as investment income, expenses, capital and other items not allocated to Sun
Life Financials other business groups. Run-off Reinsurance is included in Other operations. Quarterly ResultsQ105
    
    
    Q404
    
    
    Q304
    
    
    Q204
    
    
    Q104Revenues ($ millions)
    
    
    530
    
    
    
    477
    
    
    
    534
    
    
    
    576
    
    
    
    550Common Shareholders Net Income/(Loss) ($ millions)SLF U.K.
    
    
    47
    
    
    
    45
    
    
    
    39
    
    
    
    42
    
    
    
    47Reinsurance
    
    
    14
    
    
    
    26
    
    
    
    21
    
    
    
    10
    
    
    
    15Other
    
    
    19
    
    
    
    (12
    )
    
    
    14
    
    
    
    6
    
    
    
    (18
    )Total
    
    
    80
    
    
    
    59
    
    
    
    74
    
    
    
    58
    
    
    
    44
  Common shareholders net income in the Corporate segment of $80 million was $36 million
higher than in the first quarter of 2004. Earnings for SLF U.K. and Reinsurance were
virtually unchanged for the first quarter of 2005 compared to the first quarter of 2004 while
earnings in Other increased by $37 million. Earnings in Other benefited by $16 million in the first
quarter of 2005 as the result of a favourable resolution of outstanding tax issues. The Company
also recorded a $53 million foreign exchange gain on the repatriation of capital from the U.K.
which was offset by an increase in costs related to the write-off of redundant software, a
provision for the resolution of certain regulatory matters in the U.S. and the impact of
equity markets on the run-off reinsurance business. In addition to the previously mentioned
variances between the first quarter of 2005 and the first quarter of 2004, the fourth quarter 2004
results included the impact of favourable mortality in Reinsurance. Additional Financial Disclosure REVENUE  Revenues were $5.1 billion in the first quarter of 2005 compared to $5.5 billion in the comparable
period a year ago. The decrease of $419 million was primarily due to lower fixed annuity premiums
in the U.S. and an unfavourable impact of $211 million due to the strengthening of the
Canadian dollar against foreign currencies. These decreases were partially offset by higher
premiums in SLF Asia as a result of business growth. Premium revenue was $2.9 billion in the first quarter of 2005, compared to $3.3 billion in the
comparable period of 2004. Excluding the unfavourable impact of $119 million due to the
strengthening of the Canadian dollar against foreign currencies, premium revenue was down 6%. The
decrease was primarily due to lower annuity premiums in the U.S. as a result of
particularly strong 2004 sales of equity-indexed annuities, partially offset by higher life
insurance premiums in SLF Asia as a result of business growth. 6     Sun Life Financial Inc.  |  First Quarter 2005




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Managements Discussion and Analysis First quarter 2005 investment income was down $43 million or 3% from the first quarter of
2004, primarily reflecting fluctuations in equity market and interest rate levels. A foreign
exchange gain in the first quarter of 2005 relating to the repatriation of capital from the
U.K. operations was mostly offset by an unfavourable impact of $50 million due to the
strengthening of the Canadian dollar against foreign currencies. Fee income of $714 million in the first quarter of 2005 was down $62 million from the same period
in the previous year mainly due to a reduction of $43 million from the strengthening of the
Canadian dollar against foreign currencies. Before the impact of currency exchange, MFS
first quarter fee income declined $11 million compared to a year ago, primarily reflecting
the full quarter impact of fee reductions as agreed to in regulatory settlements in early 2004. ASSETS UNDER MANAGEMENT 
 (i)

an increase of $3.7 billion due to fluctuation in currency
exchange rates; and(ii)

net sales of mutual, managed and
segregated funds of $2.5 billion; partly offset by(iii)

a decrease of $2.1 billion from equity market declines. AUM decreased $3.9 billion between March 31, 2004, and March 31, 2005. Continued business
growth and an increase of $17.0 billion from increases in equity markets were more than offset by
reductions of: (i)

$17.2 billion from the strengthening of the Canadian dollar against
foreign currencies; and(ii)

$6.7 billion of net redemptions of mutual,
managed and segregated funds. CHANGES IN THE BALANCE SHEET AND SHAREHOLDERS EQUITY  Total general fund assets at March 31, 2005, were $2.7 billion higher than December 31, 2004,
mostly due to business growth and investment activity in SLF Canada and SLF U.S.
and an increase of $618 million from the strengthening of foreign currencies against the
Canadian dollar. Actuarial and other policy liabilities of $76.7 billion at March 31, 2005, were $1.3 billion lower
than March 31, 2004. An increase of $1.7 billion primarily due to the growth in the SLF U.S.
operations was more than offset by a reduction of $2.9 billion due to the strengthening of
the Canadian dollar against foreign currencies. Actuarial and other policy liabilities were $627 million higher at March 31, 2005, compared to
December 31, 2004, primarily due to growth in SLF U.S. and a $469 million increase due to
the strengthening of foreign currencies against the Canadian dollar during the quarter. Shareholders equity, including the Companys preferred share capital, was $14.9 billion at March
31, 2005, $606 million higher than December 31, 2004. Shareholders net income, before preferred
share dividends of $2 million, contributed $460 million to equity, while the issuance of preferred
shares added $394 million. The strengthening of foreign currencies against the Canadian dollar
further increased equity by $87 million which was partly offset by the adjustment to the currency
translation account for the foreign currency gain of $53 million, as outlined in Note 10 of the
first quarter interim financial statements. The increase in equity was partly offset by dividend
payments on common shares of $142 million and $140 million for the cost of common shares
repurchased and cancelled, net of new issues for stock options. At March 31, 2005, Sun Life Financial Inc. had 588,974,846 common shares and 16,000,000 preferred
shares outstanding. Sun Life Assurance Company of Canada has announced its intention to redeem its
Non-Cumulative Redeemable Class E Preferred Shares, Series 1. First Quarter 2005  |  www.sunlife.com     7




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Managements Discussion and Analysis CASH FLOWS Quarterly Results($ millions)
    
    Q105
    
    
    Q104Cash and cash equivalents, beginning of period
    
    
    3,748
    
    
    
    3,175Cash flows provided by (used in):Operating activities
    
    
    791
    
    
    
    54Financing activities
    
    
    148
    
    
    
    10Investing activities
    
    
    (710
    )
    
    
    138Changes due to fluctuations in exchange rates
    
    
    (16
    )
    
    
    9Increase in cash and cash equivalents
    
    
    213
    
    
    
    211Cash and cash equivalents, end of period
    
    
    3,961
    
    
    
    3,386Short-term securities, end of period
    
    
    1,903
    
    
    
    1,775Total cash, cash equivalents and short-term securities
    
    
    5,864
    
    
    
    5,161
  Net cash, cash equivalents and short-term securities at the end of the first quarter of 2005
increased $703 million from the first quarter of 2004 primarily due to U.S. individual
life insurance premiums exceeding client disbursements and a reduction in the level of investments
in long-term assets during the past 12 months. The $213 million increase in cash and cash
equivalents during the first quarter of 2005 was comparable to the same period in the prior year.
The increase in cash flow generated from operating activities was partly due to improved net flows
of U.S. fixed annuities in the first quarter of 2005 compared to the first quarter of
2004. The increase in cash used in investing activities reflected in part the increase in
investments relative to the prior year to support the fixed annuity business. Cash provided by
financing activities increased $138 million in the first quarter of 2005 compared to 2004 primarily
due to the issuance of $400 million of Sun Life Financial Inc.s Class A Non-Cumulative Perpetual
Preferred Shares, partially offset by common share dividends of $142 million and common share
repurchases of $161 million during the first quarter of 2005. ACCOUNTING CHANGES  RISK MANAGEMENT  Through its ongoing risk management procedures, Sun Life Financial reviews the various risk factors
identified in the framework and reports to senior management on a monthly basis and to the Risk
Review Committee of the Board quarterly. Sun Life Financials risk management procedures and risk
factors are described in Sun Life Financial Inc.s annual MD&A and Annual Information Form (AIF).
Interest rate and equity market sensitivities are disclosed in the MD&A, but change as
market levels change, new business is added, or as management actions are taken. OUTLOOK  8     Sun Life Financial Inc.  |  First Quarter 2005




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Managements Discussion and Analysis REGULATORY MATTERS  FORWARD-LOOKING STATEMENTS  Forward-looking statements are not guarantees of future performance and involve certain risks and
uncertainties that are difficult to predict. The future results and
stockholder value of Sun Life Financial Inc. may differ materially from those expressed in these forward-looking statements due to,
among other factors, the matters set out under Risk
Factors in Sun Life Financial Inc.s AIF
and the factors detailed in its other filings with Canadian and
U.S. securities
regulators, including its annual MD&A, and annual and interim financial statements which are
available for review at www.sedar.com. Factors that could cause actual results to differ materially from expectations include, but are not
limited to: external factors, including changes in equity market performance, interest rates,
currency exchange rates and government regulations; the amount and composition of assets under
management; the management of product pricing; mortality and morbidity rates;
expense management; the maintenance of spreads between credited rates and investment returns;
surrender and lapse rates; the management of market and credit risks; the management of risks
inherent in products with guaranteed benefit options; and the results of regulatory investigations
into the practices of the mutual fund, insurance, annuity and financial product distribution
industries, including private legal proceedings and class actions
that have been commenced or threatened in connection with these practices. The Company does not
undertake any obligation to update or release any revisions to these forward-looking statements to
reflect events or circumstances after the date of this presentation or to reflect the occurrence of
unanticipated events, except as required by law. First Quarter 2005  |  www.sunlife.com     9