A.M. Best Affirms Sun Life's Financial Strength and Debt Ratings; Assigns Rating to Senior Unsecured Debentures

Business Wire, July 10, 2006

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Superior) and the issuer credit ratings (ICR) of "aa " for Sun Life Assurance Company of Canada (Sun Life) (Toronto), Sun Life Assurance Company of Canada (U.S.) (Wilmington, DE) and Sun Life Insurance and Annuity Company of New York (New York, NY). Concurrently, A.M. Best has affirmed all existing debt ratings for Sun Life Financial Inc. (SLF) (Toronto, Canada) and its subsidiaries. A.M. Best has also affirmed the ICR of "aa-" of SLF and has assigned a debt rating of "aa-" to SLF's issuance of up to CAD 300 million senior unsecured fixed/floating debentures Series C, due 2031. The outlook for all ratings is stable. (See link below for a complete list of the ratings.)

The proceeds from the offering will be used for general corporate purposes, including investments in the subsidiaries. The offering does not significantly increase SLF's leverage or fixed charge coverage, which remain within acceptable ranges for the company's ratings.

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 a favorable liquidity position, along with a 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 businesses and is now less reliant upon earnings from its mutual fund operation, Massachusetts Financial Services Company (MFS), which had 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 and protection businesses, which remain exposed to both interest rate risk and volatility in the equity markets. Moreover, the future earnings from international businesses may be subject to uncertainty, reflecting a number of risks inherent in emerging economies as well as changes in currency valuations.

For a complete list of Sun Life Assurance Company of Canada's FSRs, ICRs and debt ratings, please visit www.ambest.com/press/071001sunlife.pdf.> For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit 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 www.ambest.com.