1. CIA Annual Meeting LOOKING BACK…focused on the future

2. Sources of Earnings Session 5609 Robert Sharkey Sun Life Financial June 29, 2005

3. LOOKING BACK…focused on the future Sources of Earnings Outline Relevancy to Management -Impact and value to management -Differences by business line -Future Quality and Control High Level Issues Impact of OSFI Guideline

4. LOOKING BACK…focused on the future Relevancy to Management 1.Impact on Management: More focus on key performance drivers at all levels of company. Important planning, communication and measurement tool. Diagnostic and control tool. 2.Value to Management: Do in sufficient granularity. Do bottom up. Presentation and commentary critical: not an actuarial exercise. Supplementary analysis important: against plan, actual to expected expenses and sales, taxes. Classification of reserve changes not relevant to managing. Consistency with EV.

5. LOOKING BACK…focused on the future Relevancy to Management 3.Differences by Business Line: Emphasis on NB G/L fits some, but not all (Ind. Life). Distribution costs (Ind. Life, asset management). Reserve strain at issue (Ind. Life). PfAD releases: (Ind. Life). Renewal/repricing (Accumulation Annuities, Group). Fee for service (ASO, asset management). Interest spread (Amounts on deposit). Open/closed par blocks. 4.Future of SOE: Accounting changes that create more volatile and less meaningful income (FIAC, fair value). SOE not significant disclosure in U.S. and elsewhere. Canadian analysts will shape future direction.

6. LOOKING BACK…focused on the future Quality/Control Standards Disclosure and importance as management tool lead to emphasis on quality/controls. Statement of Reporting and Operating principles covers principles, methodology classification, reporting, controls, documentation. Internal sign-off re compliance with Statement. Steering Committee Reports, controls, templates grounded in & reconciled to Canadian GAAP income. Bottom up analysis provides detailed breakdown. Trend analysis with explanatory comments at detailed level. Cross check to one-time item and AA reporting processes. Documentation.

7. LOOKING BACK…focused on the future High Level Issues 1.Expected Profit: Val n Systems provide only partial answer PfAD releases: Many other sources. Term of Liability: A reserve concept not relevant to SOE. Repricing/Renewals: Must be included. Fee for service business: Must be included. Use “expected” conversion rate. 2.New Business Gain or Loss: Definition of New Business: Consistent with other disclosure. Expense Gaps: Use actual not plan/expected. Prior Period Sales: Use actual not plan/expected. Assumptions: Use actual not plan/expected. Profit after point of sale: Exclude material experience variations. Consistent approach over time.

8. LOOKING BACK…focused on the future High Level Issues 3.Classification as Experience or Assumption: Not just about reserve change classification. Distinction often blurred. Significance often obscure, over emphasized, misunderstood. Management actions tangled & difficult to measure. 4.Other: Frequency of analysis matters: Update of assumptions and expectations. Order of quantification matters. Non-controlling interests: Follow accounting.

9. LOOKING BACK…focused on the future Impact of OSFI Guideline Concern with draft mandating inclusion in financial statement or MD&A. Audit/review, cost, certification, legal liability. Inconsistency with first 3 quarters of 2004. Timing of final requirements problematic. Most changes immaterial or easy to explain. Increased focus on reserve change classification issues. Increase in reporting consistency. Increase in analyst attention.