A.M. Best Assigns Ratings to Sun Life Assurance Company of Canada 's Funding Agreement-Backed Securities Program

Business Wire, June 2, 2006

OLDWICK, N.J. -- A.M. Best Co. has assigned a debt rating of "aa " to the funding agreement-backed securities (FABS) program established by Sun Life Assurance Company of Canada (U.S.) (Sun Life US) (Wilmington, DE) A.M. Best has also assigned a debt rating of "aa " to Sun Life Financial Global Funding ll, L.P.'s (SLGF) $900 million floating rate secured notes, due 2011. The outlook for both ratings is stable. All other ratings remain unchanged.

Through its global medium-term note (GMTN) program, SLGF issued $900 million in floating rate notes on a private placement basis. The notes are ultimately secured by one or more funding agreements issued by Sun Life US, which is domiciled under the laws of Delaware. The notes are limited recourse obligations of SLGF. Based on A.M. Best's analysis of the rather complex FABS structure utilized by Sun Life US, the program and notes carry Sun Life US' ICR of "aa ". A.M. Best notes that although there is no Delaware case law upon which to rely--which definitively defines the ranking of funding agreements--A.M. Best would reasonably expect the funding agreements to rank pari passu with other insurance products issued by Sun Life US in the remote event of liquidation.

Sun Life US is a wholly owned subsidiary of Sun Life Financial Inc. (Sun Life) (NYSE: SLF), a Canadian-based holding company with a top three market position in the Canadian life market, along with strong operations in the U.S. life insurance and financial services market segments.

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.

Despite overall improved earnings performance, A.M. Best believes Sun Life will remain challenged to significantly improve the operating performance of its U.S. annuities businesses, where spread compression and volatile equity markets have impacted its fixed annuity and equity-based annuity businesses.

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