A.M. Best Affirms Sun Life's Financial Strength and Debt Ratings; Assigns Rating To Non-Cumulative Preferred Share Issue

Business Wire, June 30, 2005

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Superior) of Sun Life Assurance Company of Canada (Sun Life) (Toronto) and its primary subsidiaries, Sun Life Assurance Company of Canada (U.S.) (Wilmington, DE) and Sun Life Insurance and Annuity Company of New York. Concurrently, A.M. Best has affirmed all of Sun Life's existing debt ratings and its issuer credit rating (ICR) of "aa ". A.M. Best has also affirmed the ICR of "aa-" of Sun Life Financial Inc's (Sun Life Financial) (Toronto, Canada) and has assigned a debt rating of "a" to its issuance of CAD 300 million Class A Non-Cumulative Preferred Shares Series 2. All ratings have a stable outlook. (See link below for a complete list of the ratings.)

The proceeds from the offering may be used to redeem Sun Life's CAD 150 million preferred share issue on June 30, 2005, and for general corporate purposes. The offering does not significantly increase Sun Financial's leverage or fixed charge coverage, which remain within acceptable ranges for the company's rating.

The ratings reflect Sun Life's diversified and profitable operations, favorable risk-adjusted capitalization and very strong market position in all major business segments in Canada, complemented by growth outside of North America.

Sun Life has strong debt servicing capabilities underpinned by its favorable liquidity posture, high quality investment portfolio and continued growth in operating earnings. Sun Life's earnings are supported by its diverse operations and have been enhanced from expense synergies arising from earlier acquisitions. Operating earnings are anchored by its very strong franchise in the Canadian market, along with a favorable position in the U.S. annuity area. Accordingly, Sun Life enjoys a good balance between its wealth management and protection business, along with a reduced historical reliance on earnings from its mutual fund operation, Massachusetts Financial Services Company (MFS), which has experienced volatility in recent years.

Despite overall improved earnings performance, A.M. Best believes Sun Life will remain challenged to significantly improve the operating performance of its U.S. wealth management businesses, where spread compression and volatile equity markets have impacted its fixed annuity and equity-based wealth management businesses. In addition, the future earnings contribution from international businesses may be subject to uncertainty reflecting a number of risks inherent in emerging economies.

A.M Best has also affirmed the FSR of A (Superior) of Independence Life and Annuity Company (Lincoln, RI), a Sun Life subsidiary.

For a complete list of Sun Life Assurance Company of Canada's financial strength and debt ratings, please visit http://www.ambest.com/press/063003sunlife.pdf.> For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.> A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.