q22025shareholdersreport.htm

EX-99.1 2 q22025shareholdersreport.htm EX-99.1 q22025shareholdersreport.htm




			CANADIAN RESIDENTS PARTICIPATING IN THE SHARE ACCOUNT Shareholders holding shares in the Canadian Share Account can sell their shares for $15 plus 3 cents per share. For more information call TSX Trust Company at 1 877 224-1760.

Sun Life Reports Second Quarter 2025 Results

Sun Life Financial Inc. ("SLF Inc."), its subsidiaries and, where applicable, its joint ventures and associates are collectively referred to as "the Company", "Sun Life", "we", "our", and "us". We manage our operations and report our financial results in five business segments: Asset Management, Canada, United States ("U.S."), Asia, and Corporate. The information in this document is based on the unaudited interim financial results of SLF Inc. for the period ended June 30, 2025 and should be read in conjunction with the interim management's discussion and analysis ("MD&A") and our unaudited interim consolidated financial statements and accompanying notes ("Interim Consolidated Financial Statements") for the period ended June 30, 2025, prepared in accordance with International Financial Reporting Standards ("IFRS"). We report certain financial information using non-IFRS financial measures. For more details, refer to the Non-IFRS Financial Measures section in this document. Additional information relating to SLF Inc. is available on www.sunlife.com under Investors – Financial results and reports, on the SEDAR+ website at www.sedarplus.ca, and on the U.S. Securities and Exchange Commission's website at www.sec.gov. Reported net income (loss) refers to Common shareholders' net income (loss) determined in accordance with IFRS. Unless otherwise noted, all amounts are in Canadian dollars. Amounts in this document may be impacted by rounding.

TORONTO, ON - (August 7, 2025) - Sun Life Financial Inc. (TSX: SLF) (NYSE: SLF) announced its results for the second quarter ended
June 30, 2025.

•Underlying net income(1) of $1,015 million increased $15 million or 2% from Q2'24; underlying return on equity ("ROE")(1) was 17.6%.

◦Asset management & wealth(2) underlying net income(1): $455 million, in line with the prior year.

◦Group - Health & Protection underlying net income(1): $326 million, up $21 million or 7%.

◦Individual - Protection underlying net income(1)(3): $299 million, down $33 million or 10%.

◦Corporate expenses & other(1)(3): $(65) million net loss, decrease in net loss of $27 million or 29%.

•Reported net income of $716 million increased $70 million or 11% from Q2'24; reported ROE(1) was 12.4%.

•Assets under management ("AUM")(1) of $1,541 billion increased $76 billion or 5% from Q2'24.

“Sun Life’s Q2 results were driven by record underlying net income in Asia with strong protection business growth, higher wealth management and investment earnings. We also saw a 15% increase in bancassurance sales across several of our Asia markets, including Hong Kong, India and the Philippines, as well as continued growth in SLC Management flows, demonstrating resilience in our business mix,” said Kevin Strain, President and CEO of Sun Life. “Driving business and Client outcomes through digital initiatives remains one of our strategic priorities. Innovative GenAI tools are accelerating progress across all of our four pillars, enhancing Client experience and interactions, decreasing processing times for claims, and driving productivity savings.”

Strain added, “We maintained a strong capital position with a LICAT ratio of 151% providing stability and flexibility to invest, grow and create long-term value for our stakeholders, while navigating an uncertain external environment. We continue to be active in our share buy-back program purchasing nearly $400 million of shares in the quarter.”

Financial and Operational Highlights


		Quarterly results		Year-to-date
Profitability		Q2'25	Q2'24	2025	2024
	Underlying net income ($ millions)(1)	1,015	1,000	2,060	1,875
	Reported net income - Common shareholders ($ millions)	716	646	1,644	1,464
	Underlying EPS ($)(1)(4)	1.79	1.72	3.62	3.22
	Reported EPS ($)(4)	1.26	1.11	2.89	2.51
	Underlying ROE(1)	17.6%	18.1%	17.7%	17.1%
	Reported ROE(1)	12.4%	11.7%	14.1%	13.4%

Growth		Q2'25	Q2'24	2025	2024
	Asset management gross flows & wealth sales ($ millions)(1)	52,712	46,262	114,933	93,160
	Group - Health & Protection sales ($ millions)(1)	535	494	1,115	1,022
	Individual - Protection sales ($ millions)(1)	863	753	1,737	1,510
	Assets under management ("AUM") ($ billions)(1)(5)	1,541	1,465	1,541	1,465
	New business Contractual Service Margin ("CSM") ($ millions)(1)	435	437	841	784

Financial Strength		Q2'25	Q2'24
	LICAT ratios (at period end)(6)
	Sun Life Financial Inc.	151%	150%
	Sun Life Assurance(7)	141%	142%
	Financial leverage ratio (at period end)(1)(8)	20.4%	22.6%

(1)Represents a non-IFRS financial measure. For more details, see the Non-IFRS Financial Measures section in this document and in Q2'25 MD&A.

(2)Effective Q1'25, the Wealth & asset management business type was renamed to Asset management & wealth.

(3)Effective Q1'25, Regional Office in Asia was moved from the Corporate expenses & other business type to the Individual - Protection business type, reflecting a reporting refinement. Prior period amounts reflect current presentation.

(4)All earnings per share ("EPS") measures refer to fully diluted EPS, unless otherwise stated.

(5)Prior period amounts have been updated.

(6)Life Insurance Capital Adequacy Test ("LICAT") ratio. Our LICAT ratios are calculated in accordance with the OSFI-mandated guideline, Life Insurance Capital Adequacy Test.

(7)Sun Life Assurance Company of Canada ("Sun Life Assurance") is SLF Inc.'s principal operating life insurance subsidiary.

(8)The calculation for the financial leverage ratio includes the CSM balance (net of taxes) in the denominator. The CSM (net of taxes) was $10.6 billion as at June 30, 2025 (June 30, 2024 - $9.6 billion).

EARNINGS NEWS RELEASE Sun Life Financial Inc. Second Quarter 2025 1

Financial and Operational Highlights - Quarterly Comparison (Q2'25 vs. Q2'24)


($ millions)	Q2'25
Underlying net income by business type(1)(2):	Sun Life	Asset Management	Canada	U.S.	Asia	Corporate
Asset management & wealth	455	300	125	—	30	—
Group - Health & Protection	326	—	153	173	—	—
Individual - Protection(3)	299	—	101	22	176	—
Corporate expenses & other(3)	(65)	—	—	—	—	(65)
Underlying net income(1)	1,015	300	379	195	206	(65)
Reported net income (loss) - Common shareholders	716	254	330	103	98	(69)
Change in underlying net income (% year-over-year)	2%	(2)%	(6)%	(4)%	15%	nm(4)
Change in reported net income (% year-over-year)	11%	(7)%	13%	(19)%	(35)%	nm(4)
Asset management gross flows & wealth sales(1)	52,712	45,512	4,696	—	2,504	—
Group - Health & Protection sales(1)	535	—	201	313	21	—
Individual - Protection sales(1)	863	—	136	—	727	—
Change in asset management gross flows & wealth sales (% year-over-year)	14%	17%	(13)%	—	25%	—
Change in group sales (% year-over-year)	8%	—	41%	(6)%	11%	—
Change in individual sales (% year-over-year)	15%	—	(19)%	—	24%	—

(1)Represents a non-IFRS financial measure. For more details, see the Non-IFRS Financial Measures section in this document and in the Q2'25 MD&A.

(2)For more information about the business types in Sun Life's business groups, see section A - How We Report Our Results in the Q2'25 MD&A.

(4)Not meaningful.

Underlying net income(1) of $1,015 million increased $15 million or 2% from prior year, driven by:

•Asset management & wealth(1) was in line with the prior year as higher fee-related earnings in SLC Management reflecting strong capital raising, and higher fee income in Asia from higher AUM, was offset by lower fee income in MFS(2) from lower average net assets ("ANA"), and lower investment contributions from lower yields.

•Group - Health & Protection(1) up $21 million: Improved U.S. Dental results primarily reflecting Medicaid repricing, higher fee income and management actions, and favourable mortality experience in Canada.

•Individual - Protection(1)(3) down $33 million: Higher expenses in Asia primarily reflecting continued investments in the business, and unfavourable mortality experience in Canada and the U.S., partially offset by business growth in Asia.

•Corporate expenses & other(1)(3) $27 million decrease in net loss primarily driven by timing of strategic investment spend, and lower incentive compensation.

Reported net income of $716 million increased $70 million or 11% from prior year, driven by:

•A prior year restructuring charge of $108 million in Corporate(4); and

•The increase in underlying net income; partially offset by

•An impairment charge of $61 million on a customer relationship intangible asset from the early termination of a U.S. group dental contract; and

•Unfavourable other market-related impacts driven across Asia and Canada, partially offset by favourable interest rate impacts primarily from non-parallel curve changes in Canada, and improved real estate experience(5).

Underlying ROE was 17.6% and reported ROE was 12.4% (Q2'24 - 18.1% and 11.7%, respectively). SLF Inc. ended the quarter with a LICAT ratio of 151%.

(1)Refer to section C - Profitability in the Q2'25 MD&A for more information on notable items attributable to reported and underlying net income items and the Non-IFRS Financial Measures in this document for a reconciliation between reported net income and underlying net income. For more information about the business types in Sun Life's operating segments/business groups, see section A - How We Report Our Results in the Q2'25 MD&A.

(2)MFS Investment Management ("MFS").

(4)A restructuring charge of $108 million (pre-tax $138 million) recorded in Q2'24 reflecting actions taken to improve financial discipline and productivity, consistent with our Client Impact Strategy, supporting our Medium-Term Financial Objective for underlying EPS growth ("prior year restructuring charge in Corporate"). We expect these actions to result in annual savings of approximately $200 million (pre-tax) by 2026.

(5)Real estate experience reflects the difference between the actual value of real estate investments compared to management's longer-term expected returns supporting insurance contract liabilities ("real estate experience").

2 Sun Life Financial Inc. Second Quarter 2025 EARNINGS NEWS RELEASE

Business Group Highlights

Asset Management: A global leader in both public and alternative asset classes through MFS and SLC Management

Asset Management underlying net income of $300 million decreased $7 million or 2% from prior year, driven by:

•MFS down $10 million (down $10 million on a U.S. dollar basis): Reflecting lower fee income from lower ANA. Pre-tax net operating profit margin(1) was 35.1% for Q2'25, compared to 36.5% in the prior year, from lower ANA and lower net investment income.

•SLC Management up $3 million: Higher fee-related earnings mostly offset by lower net seed investment income. Fee-related earnings(1) increased 37% driven by strong capital raising and lower expenses. Fee-related earnings margin(1) was 25.9% for Q2'25, compared to 24.0% in the prior year.

Reported net income of $254 million decreased $20 million or 7% from prior year, driven by market-related impacts in SLC Management.

Foreign exchange translation led to an increase of $3 million in underlying net income and reported net income, respectively.

Total AUM(1) at Q2'25 was $1,114 billion, consisting of $865 billion (US$635 billion) in MFS and $250 billion in SLC Management. Total Asset Management net outflows of $15.7 billion in Q2'25 reflected MFS net outflows of $19.8 billion (US$14.3 billion) driven primarily by institutional portfolio rebalancing and retail net outflows reflecting continued uncertainty in equity markets, partially offset by SLC Management net inflows of $4.1 billion from strong capital raising.

MFS was named Best New ETF Issuer at the 2025 etf.com Awards(2) highlighting its new suite of innovative products, with MFS' active exchange traded fund ("ETF") net inflows reaching approximately US$585 million since the launch in late 2024. MFS continued to experience solid fixed income flows, generating US$1.6 billion in net inflows for the quarter, up 60% compared to the prior year.

BentallGreenOak (“BGO”) ranked fourth among the world’s top private real estate managers in the 2025 PERE 100 rankings(3). The achievement reflects BGO’s increase in fundraising over the prior year and its commitment to providing tailored, risk-conscious investment solutions for Clients.

In April 2025, Crescent Capital Group LP (“Crescent”) closed its third European specialty lending fund, raising approximately €3 billion. This fundraise represents a significant increase from its predecessor fund and continues Crescent’s strategy of investing primarily in a diversified portfolio of private secured debt securities issued by European companies.

Canada: A leader in health, wealth, and insurance

Canada underlying net income of $379 million decreased $23 million or 6% from prior year, reflecting:

•Asset management & wealth down $5 million: Lower investment contributions reflecting relatively lower yields on investment contracts.

•Group - Health & Protection up $1 million: Favourable group life mortality experience mostly offset by less favourable morbidity experience in disability.

•Individual - Protection down $19 million: Unfavourable mortality experience.

Reported net income of $330 million increased $38 million or 13% from prior year, driven by market-related impacts partially offset by the decrease in underlying net income. Market-related impacts were primarily driven by favourable equity market impacts and interest rate impacts primarily from non-parallel curve changes, partially offset by other market impacts.

Canada's sales(4):

•Asset management gross flows & wealth sales of $5 billion were down 13%, driven by lower defined benefit solution sales in Group Retirement Services ("GRS") reflecting a $1.2 billion transaction in the prior year, partially offset by higher defined contribution sales in GRS from higher large case sales.

•Group - Health & Protection sales of $201 million were up 41%, driven by higher large case sales.

•Individual - Protection sales of $136 million were down 19%, reflecting lower third-party sales.

We marked a significant milestone in our health business with the one-year anniversary of administering the Canadian Dental Care Plan ("CDCP"). With the recent expansion to include eligible adults aged 18-64, the CDCP is expected to make oral health care more accessible and affordable for up to nine million Canadian residents. To date, the plan has supported access to dental care for 5.2 million approved Canadians, with nearly 2.2 million already receiving care.

We transitioned our Medical Second Opinion services into the Lumino Health Virtual Care platform offered by Dialogue. The service offers plan members and their families, across both Sun Life Health and Individual Insurance, access to expert reviews of diagnoses and treatment plans for physical and mental health conditions. Available via mobile app, web, or a phone line, the service ensures timely, confidential, and personalized support during critical health decisions.

(1)Represents a non-IFRS financial measure. For more details, see the Non-IFRS Financial Measures section in this document and in the Q2'25 MD&A.

(2)The etf.com Awards honour the most influential, innovative, and impactful global players in the ETF industry.

(3)Private Equity Real Estate ("PERE"). Based on 2025 PERE 100 ranking of the world's largest private real estate companies.

(4)Compared to the prior year.

EARNINGS NEWS RELEASE Sun Life Financial Inc. Second Quarter 2025 3

U.S.: A leader in health and benefits

U.S. underlying net income of US$143 million decreased US$6 million or 4% ($195 million decreased $9 million or 4%) from prior year, driven by:

•Group - Health & Protection up US$11 million: Improved Dental results primarily driven by Medicaid repricing, higher fee income and management actions, while results reflect an increase in claims and utilization.

•Individual - Protection down US$17 million: Unfavourable mortality and credit experience.

Reported net income of US$74 million decreased US$17 million or 19% ($103 million decreased $24 million or 19%) from prior year, driven by an impairment charge of US$45 million on a customer relationship intangible asset from the early termination of a U.S. group dental contract, partially offset by market-related impacts primarily driven by improved real estate experience and favourable interest rate impacts.

Foreign exchange translation led to an increase of $2 million in underlying net income and an increase of $1 million in reported net income.

U.S. group sales of US$226 million were down 7% ($313 million, down 6%), driven by lower medical stop-loss sales in Group Benefits reflecting pricing discipline in a competitive market, partially offset by higher Medicaid and commercial sales in Dental.

Sun Life U.S. Employee Benefits partnered with Wellthy, a personalized care concierge platform, to make it easier for life insurance members and their families to navigate the complex challenges associated with bereavement and end-of-life care. The service offered through this partnership will help our members and their families through some of life's hardest experiences.

In Health and Risk Solutions, we launched the Expert Cancer Review service, which provides members facing a cancer diagnosis with access to an objective, documented second opinion from an independent oncology specialist through the clinical expertise of Health Navigator, Sun Life’s healthcare navigation and advocacy service. Sun Life's annual high-cost claims report shows that cancer consistently ranks as the most common and costly condition across the country. Second opinions can have significant impact on the patient’s health journey, potentially avoiding misdiagnoses, sparing people from unnecessary treatments, uncovering better-tailored therapies, and reducing medical costs.

Asia: A regional leader focused on fast-growing markets

Asia underlying net income of $206 million increased $27 million or 15% from prior year, driven by:

•Asset management & wealth up $12 million: Higher fee income primarily driven by higher AUM reflecting market movements and net inflows.

•Individual - Protection(1) up $15 million: Good sales momentum and in-force business growth, and higher investment contributions, partially offset by higher expenses reflecting continued investments in the business.

Reported net income of $98 million decreased $53 million or 35% from prior year, reflecting market-related impacts primarily driven by unfavourable other market and equity market impacts, partially offset by the increase in underlying net income and the prior year impact of a Pillar Two global minimum tax adjustment(2).

Foreign exchange translation led to an increase of $4 million in underlying net income and an increase of $3 million in reported net income.

Asia's sales(3):

•Individual sales of $727 million were up 24%, driven by higher sales in:

◦Hong Kong from growth across all channels;

◦Indonesia from the bancassurance channel; and

◦India from the agency and bancassurance channels.

•Asset management gross flows & wealth sales of $3 billion were up 25%, driven by higher fixed income fund sales in India.

New business CSM of $299 million in Q2'25 was up from $220 million in the prior year, primarily driven by strong profit margins and higher sales in Hong Kong.

On July 15, 2025, we acquired an additional ownership interest in Bowtie Life Insurance Company Limited ("Bowtie"). The investment reinforces Sun Life’s long-term partnership with Bowtie, and our shared goal to make health insurance simple, accessible and affordable. Bowtie is Hong Kong’s first virtual insurer with a leading position(4) in Hong Kong’s direct sales channel.

We’ve made significant investments in digitization and analytics to enhance the Client experience. In India, our joint venture, Aditya Birla Sun Life Insurance Company Limited, leveraged a new business digital adoption rate of 100% to add over 100,000 new Clients(5) through a digital first streamlined onboarding process.

(1)Effective Q1'25, Regional office expenses & other was moved to the Individual - Protection business type, reflecting a reporting refinement. Prior period amounts reflect current presentation.

(2)For additional information refer to Note 8 of our Interim Consolidated Financial Statements for the period ended June 30, 2025 and section D - Profitability in the 2024 Annual MD&A.

(3)Compared to the prior year.

(4)According to Insurance Authority’s Provisional Statistics for Long Term Business 2024, in the fourth quarter of 2024, Bowtie Life ranked first in terms of the number of new individual non-single premium policies sold through Direct channel in Hong Kong.

(5)Added 118,000 Clients since Q2'24.

4 Sun Life Financial Inc. Second Quarter 2025 EARNINGS NEWS RELEASE

Corporate

Underlying net loss was $65 million compared to underlying net loss of $92 million in the prior year, driven by timing of strategic investment spend, and lower incentive compensation.

Reported net loss was $69 million compared to reported net loss of $198 million in the prior year, reflecting a prior year restructuring charge of $108 million, and the change in underlying net loss.

EARNINGS NEWS RELEASE Sun Life Financial Inc. Second Quarter 2025 5

Sun Life Financial Inc.

Management's Discussion and Analysis

For the period ended June 30, 2025

Dated August 7, 2025


Table of Contents
A.	How We Report Our Results	7
B.	Financial Summary	9
C.	Profitability	10
D.	Growth	14
E.	Contractual Service Margin	16
F.	Financial Strength	17
G.	Performance by Business Segment	19
	1. Asset Management	20
	2. Canada	22
	3. U.S.	23
	4. Asia	24
	5. Corporate	25
H.	Investments	26
I.	Risk Management	29
J.	Additional Financial Disclosure	34
K.	Legal and Regulatory Proceedings	38
L.	Changes in Accounting Policies	38
M.	Internal Control Over Financial Reporting	38
N.	Non-IFRS Financial Measures	39
O.	Forward-looking Statements	50

6 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

About Sun Life

Sun Life is a leading international financial services organization providing asset management, wealth, insurance and health solutions to individual and institutional Clients. Sun Life has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. As of June 30, 2025, Sun Life had total assets under management ("AUM") of $1.54 trillion. For more information, please visit www.sunlife.com.

Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under the ticker symbol SLF.


A. How We Report Our Results

Sun Life Financial Inc. ("SLF Inc."), its subsidiaries and, where applicable, its joint ventures and associates are collectively referred to as "the Company", "Sun Life", "we", "our", and "us". We manage our operations and report our financial results in five business segments: Asset Management, Canada, United States ("U.S."), Asia, and Corporate. Information concerning these segments is included in our annual and interim consolidated financial statements and accompanying notes ("Annual Consolidated Financial Statements" and "Interim Consolidated Financial Statements", respectively, and "Consolidated Financial Statements" collectively) and interim and annual management's discussion and analysis ("MD&A"). We prepare our unaudited Interim Consolidated Financial Statements using International Financial Reporting Standards ("IFRS"), the accounting requirements of the Office of the Superintendent of Financial Institutions ("OSFI") and in accordance with the International Accounting Standard ("IAS") 34 Interim Financial Reporting. Reported net income (loss) refers to Common shareholders' net income (loss) determined in accordance with IFRS.

Unless otherwise noted, all amounts are in Canadian dollars. Amounts in this document may be impacted by rounding.

Underlying net income by Business Types

Sun Life has a diversified mix of businesses and our earnings by business type supports the analysis of our results:

•Asset management & wealth(1): Sun Life’s asset management & wealth businesses generate fee income and/or spread on investment products.

•Group - Health & Protection: Group businesses provide health and protection benefits to employer and government plan members. The products generally have shorter-term coverage periods, and more frequent repricing. The revenues are driven by premiums for coverage provided as well as fee-based earnings (i.e., Administrative Services Only plans, and dental fees).

•Individual - Protection: Generally, individual protection businesses have a longer-term profitability profile and are more sensitive to experience trends. The premiums include a margin for providing protection and are invested to earn a return over the expected amounts required to fulfill insurance liabilities.

The following provides an overview of the business types in Sun Life's business segments/business groups:

(1)Effective Q1'25, the Wealth & asset management business type was renamed to Asset management & wealth.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 7

1. Use of Non-IFRS Financial Measures

We report certain financial information using non-IFRS financial measures, as we believe that these measures provide information that is useful to investors in understanding our performance and facilitate a comparison of our quarterly and full year results from period to period. These non-IFRS financial measures do not have any standardized meaning and may not be comparable with similar measures used by other companies. For certain non-IFRS financial measures, there are no directly comparable amounts under IFRS. These non-IFRS financial measures should not be viewed in isolation from or as alternatives to measures of financial performance determined in accordance with IFRS. Additional information concerning non-IFRS financial measures and, if applicable, reconciliations to the closest IFRS measures are available in section N - Non-IFRS Financial Measures in this document and the Supplementary Financial Information package on www.sunlife.com under Investors - Financial results and reports.

2. Forward-looking Statements

Certain statements in this document are forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Additional information concerning forward-looking statements and important risk factors that could cause our assumptions, estimates, expectations and projections to be inaccurate and our actual results or events to differ materially from those expressed in or implied by such forward-looking statements can be found in section O - Forward-looking Statements in this document.

3. Additional Information

Additional information about SLF Inc. can be found in the Consolidated Financial Statements, the annual and interim MD&A, and SLF Inc.'s Annual Information Form ("AIF") for the year ended December 31, 2024. These documents are filed with securities regulators in Canada and are available at www.sedarplus.ca. SLF Inc.'s Annual Consolidated Financial Statements, annual MD&A and AIF are filed with the United States Securities and Exchange Commission ("SEC") in SLF Inc.'s annual report on Form 40-F and SLF Inc.'s interim MD&A and Interim Consolidated Financial Statements are furnished to the SEC on Form 6-Ks and are available at www.sec.gov.

8 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS


B. Financial Summary


($ millions, unless otherwise noted)		Quarterly results			Year-to-date

Profitability		Q2'25	Q1'25	Q2'24	2025	2024
	Net income (loss)
	Underlying net income (loss)(1)	1,015	1,045	1,000	2,060	1,875
	Reported net income (loss) - Common shareholders	716	928	646	1,644	1,464
	Diluted earnings per share ("EPS") ($)
	Underlying EPS (diluted)(1)	1.79	1.82	1.72	3.62	3.22
	Reported EPS (diluted)	1.26	1.62	1.11	2.89	2.51
	Return on equity ("ROE") (%)
	Underlying ROE(1)	17.6%	17.7%	18.1%	17.7%	17.1%
	Reported ROE(1)	12.4%	15.7%	11.7%	14.1%	13.4%

Growth		Q2'25	Q1'25	Q2'24	2025	2024
	Sales
	Asset management gross flows & wealth sales(1)	52,712	62,221	46,262	114,933	93,160
	Group - Health & Protection sales(1)	535	580	494	1,115	1,022
	Individual - Protection sales(1)	863	874	753	1,737	1,510
	Total AUM ($ billions)(1)(2)	1,541.2	1,551.6	1,465.4	1,541.2	1,465.4
	New business Contractual Service Margin ("CSM")(1)	435	406	437	841	784

Financial Strength		Q2'25	Q1'25	Q2'24
	LICAT ratios(3)
	Sun Life Financial Inc.	151%	149%	150%
	Sun Life Assurance(4)	141%	141%	142%
	Financial leverage ratio(1)(5)	20.4%	20.1%	22.6%
	Book value per common share ($)	39.57	40.84	37.70
	Weighted average common shares outstanding for basic EPS (millions)	565	572	581
	Closing common shares outstanding (millions)	563	568	578

(1)Represents a non-IFRS financial measure. For more details, see section N - Non-IFRS Financial Measures in this document.

(2)Prior period amounts have been updated.

(3)Life Insurance Capital Adequacy Test ("LICAT") ratio. Our LICAT ratios are calculated in accordance with the OSFI-mandated guideline, Life Insurance Capital Adequacy Test.

(4)Sun Life Assurance is SLF Inc.’s principal operating life insurance subsidiary.

(5)The calculation for the financial leverage ratio includes the CSM balance (net of taxes) in the denominator. The CSM (net of taxes) was $10.6 billion as at June 30, 2025 (March 31, 2025 - $10.5 billion; June 30, 2024 - $9.6 billion).

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 9

C. Profitability

The following table reconciles our Common shareholders' net income ("reported net income") and underlying net income. All factors discussed in this document that impact underlying net income are also applicable to reported net income. Certain adjustments and notable items also impact the CSM, such as mortality experience and assumption changes; see section E - Contractual Service Margin in this document for more information.


	Quarterly results			Year-to-date
($ millions, after-tax)	Q2'25	Q1'25	Q2'24	2025	2024
Underlying net income (loss) by business type(1):
Asset management & wealth	455	487	455	942	863
Group - Health & Protection	326	330	305	656	585
Individual - Protection(2)	299	325	332	624	602
Corporate expenses & other(2)	(65)	(97)	(92)	(162)	(175)
Underlying net income(1)	1,015	1,045	1,000	2,060	1,875
Add: Market-related impacts	(166)	(22)	(153)	(188)	(223)
Assumption changes and management actions ("ACMA")	3	(4)	16	(1)	9
Other adjustments	(136)	(91)	(217)	(227)	(197)
Reported net income - Common shareholders	716	928	646	1,644	1,464
Underlying ROE(1)	17.6%	17.7%	18.1%	17.7%	17.1%
Reported ROE(1)	12.4%	15.7%	11.7%	14.1%	13.4%
Notable items attributable to reported and underlying net income(1):
Mortality	29	5	35	34	30
Morbidity	(22)	19	(11)	(3)	(8)
Lapse and other policyholder behaviour ("policyholder behaviour")	(7)	(2)	(12)	(9)	(20)
Expenses	(37)	(26)	(23)	(63)	(35)
Net credit(3)	3	8	17	11	24
Other(4)	22	51	11	73	45

(1)Represents a non-IFRS financial measure. For more details, see section N - Non-IFRS Financial Measures in this document. For more information about business types in Sun Life's business groups, see section A - How We Report Our Results in this document.

(2)Effective Q1'25, Regional Office in Asia was moved from the Corporate expenses & other business type to the Individual - Protection business type, reflecting a reporting refinement. Prior period amounts reflect current presentation.

(3)Credit includes rating changes on assets measured at Fair value through profit or loss ("FVTPL"), and the Expected credit loss ("ECL") impact for assets measured at Fair value through other comprehensive income ("FVOCI"). Effective Q1'25, the release of credit risk adjustments, which are reported in Expected Investment Earnings in the Driver of Earnings analysis, are included in this balance. Prior period amounts reflect current presentation.

(4)Other notable items are recorded in Net Insurance Service Result and Net Investment Result in the Drivers of Earnings analysis. For more details, see section N - Non-IFRS Financial Measures in this document.

Quarterly Comparison - Q2'25 vs. Q2'24

Underlying net income(1) of $1,015 million increased $15 million or 2%, driven by:

•Corporate expenses & other(1)(3) $27 million decrease in net loss primarily driven by timing of strategic investment spend, and lower incentive compensation.

(1)Refer to section N - Non-IFRS Financial Measures in this document for a reconciliation between reported net income and underlying net income.

(2)MFS Investment Management ("MFS").

10 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

Reported net income of $716 million increased $70 million or 11%, driven by:

•A prior year restructuring charge of $108 million in Corporate(1); and

•The increase in underlying net income; partially offset by

•An impairment charge of $61 million on a customer relationship intangible asset from the early termination of a U.S. group dental contract; and

Foreign exchange translation led to an increase of $9 million in underlying net income and an increase of $7 million in reported net income.

Underlying ROE was 17.6% and reported ROE was 12.4% (Q2'24 - 18.1% and 11.7%, respectively).

1.Market-related impacts

Market-related impacts represent the difference between actual versus expected market movements(3). Market-related impacts resulted in a decrease of $166 million to reported net income, reflecting unfavourable real estate experience and unfavourable other market-related impacts driven across Asia and Canada.

2.Assumption changes and management actions

The net impact of assumption changes and management actions was an increase of $3 million to reported net income and includes methods and assumptions changes on insurance contracts as well as related impacts. These included various small enhancements.

3.Other adjustments

Other adjustments decreased reported net income by $136 million, driven by:

•An impairment charge of $61 million on a customer relationship intangible asset from the early termination of a U.S. group dental contract;

•DentaQuest acquisition, integration and restructuring costs and amortization of acquired intangible assets; and

•Changes in SLC Management's acquisition-related liabilities(4).

4.Experience-related items

In the second quarter of 2025, notable experience items included:

•Favourable mortality experience primarily in Asia and Canada;

•Unfavourable morbidity experience primarily in the U.S. partially offset by favourable morbidity experience in Canada;

•Unfavourable expense experience largely in the U.S. and Asia; and

•Other experience was favourable primarily from the U.S.

5.Income taxes

The statutory tax rate is impacted by various tax items, such as lower taxes on income subject to tax in foreign jurisdictions, tax-exempt or low-taxed investment income, and other sustainable tax benefits.

Global Minimum Tax ("GMT") rules applied to Sun Life effective January 1, 2024:

•Canadian GMT legislation requires the ultimate parent entity of a group to pay top-up tax, on a jurisdiction-by-jurisdiction basis, on profits of its subsidiaries that are taxed below 15%. Some jurisdictions have enacted a Qualifying Domestic Minimum Top-Up Tax ("QDMTT") which requires the GMT top-up tax to be paid locally rather than to the ultimate parent entity's jurisdiction.

•In response to the GMT rules, Bermuda enacted a Corporate Income Tax ("CIT") regime, including a corporate income tax rate of 15%, which applies to Sun Life effective January 1, 2025. The Bermuda CIT is not a QDMTT for the purposes of GMT.

•Other Sun Life subsidiaries that are currently subject to a statutory tax rate or to a tax regime that could result in taxing profits at a rate below 15% include those in Hong Kong and Ireland, which have both enacted a QDMTT.

•For additional information, refer to Note 8 in our Interim Consolidated Financial Statements for the period ended June 30, 2025.

The Q2'25 effective income tax rate(5) on underlying net income and reported net income was 18.5% and 20.3% respectively.

6.Impacts of foreign exchange translation

Foreign exchange translation led to an increase of $9 million in underlying net income and an increase of $7 million in reported net income.

(1)A restructuring charge of $108 million (pre-tax $138 million) recorded in Q2'24 reflecting actions taken to improve financial discipline and productivity, consistent with our Client Impact Strategy, supporting our Medium-Term Financial Objective for underlying EPS growth ("prior year restructuring charge in Corporate"). We expect these actions to result in annual savings of approximately $200 million (pre-tax) by 2026.

(2)Real estate experience reflects the difference between the actual value of real estate investments compared to management's longer-term expected returns supporting insurance contract liabilities ("real estate experience").

(3)Except for risk free rates which are based on current rates, expected market movements are based on our medium-term outlook which is reviewed annually.

(4)Amounts relate to acquisition costs for our SLC Management affiliates, BentallGreenOak, Crescent Capital Group LP and Advisors Asset Management, Inc, which include the unwinding of the discount for Other financial liabilities.

(5)Our effective income tax rate on reported net income is calculated using Total income (loss) before income taxes, as detailed in Note 8 in our
Interim Consolidated Financial Statements for the period ended June 30, 2025. Our effective income tax rate on underlying net income is calculated using pre-tax underlying net income, as detailed in section N - Non-IFRS Financial Measures in this document, and the associated income tax expense.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 11

Year-to-Date Comparison - Q2'25 vs. Q2'24

Underlying net income of $2,060 million increased $185 million or 10%, driven by:

•Asset management & wealth up $79 million: Higher fee-related earnings from catch-up fees and strong performance of net seed investment income in SLC Management, and higher fee income in Asia and Canada driven by higher AUM.

•Group - Health & Protection up $71 million: Higher U.S. Dental results reflecting improved claims experience primarily from Medicaid repricing, and management actions, and business growth and favourable mortality experience in Canada, partially offset by moderately unfavourable morbidity experience in U.S. medical stop-loss.

•Individual - Protection(1) up $22 million: Business growth and higher contributions from joint ventures in Asia, partially offset by higher expenses in Asia primarily reflecting continued investments in the business.

•Corporate expenses & other(1) $13 million decrease in net loss primarily driven by timing of strategic investment spend, and lower incentive compensation, partially offset by lower investment income from lower surplus asset balances.

Reported net income of $1,644 million increased $180 million or 12%, driven by:

•The increase in underlying net income;

•A prior year restructuring charge of $108 million in Corporate; and

•Market-related impacts driven by favourable interest rate impacts primarily from non-parallel curve changes, and improved real estate experience, mostly offset by unfavourable other market-related impacts driven across Asia and Canada, and unfavourable equity market impacts; partially offset by

•Prior year gains on partial sale of ABSLAMC(2) and the early termination of a distribution agreement in Asset Management; and

•An impairment charge of $61 million on a customer relationship intangible asset from the early termination of a U.S. group dental contract.

Foreign exchange translation led to an increase of $48 million in underlying net income and reported net income, respectively.

Underlying ROE was 17.7% and reported ROE was 14.1% (2024 - 17.1% and 13.4%, respectively).

1.Market-related impacts

Market-related impacts represent the difference between actual versus expected market movements(3). Market-related impacts resulted in a decrease of $188 million to reported net income, reflecting unfavourable real estate experience, unfavourable other market-related impacts from Asia, and unfavourable equity market impacts, partially offset by favourable interest rate impacts primarily from non-parallel curve changes during the year.

2.Assumption changes and management actions

The net impact of assumption changes and management actions was a decrease of $1 million to reported net income and includes methods and assumptions changes on insurance contracts as well as related impacts. These included various small enhancements.

3.Other adjustments

Other adjustments decreased reported net income by $227 million, driven by:

•DentaQuest acquisition, integration and restructuring costs and amortization of acquired intangible assets;

•An impairment charge of $61 million on a customer relationship intangible asset from the early termination of a U.S. group dental contract; and

•Changes in SLC Management's acquisition-related liabilities(4).

4. Experience-related items

Notable experience items in the current year included:

•Favourable mortality experience primarily in Canada and Asia;

•Favourable morbidity experience in Canada was offset by unfavourable morbidity experience in the U.S.;

•Unfavourable expense experience largely in the U.S., Canada and Asia; and

•Other experience was favourable primarily from the U.S., Canada, and Asia.

(1)Effective Q1'25, Regional Office in Asia was moved from the Corporate expenses & other business type to the Individual - Protection business type, reflecting a reporting refinement. Prior period amounts reflect current presentation.

(2)To meet regulatory obligations, on March 21, 2024, we sold 6.3% of our ownership interest in Aditya Birla Sun Life AMC Limited (“partial sale of ABSLAMC”), generating a gain of $84 million. As a result of this transaction, our ownership interest in ABSLAMC was reduced from 36.5% to 30.2% for gross proceeds of $136 million. Subsequently, on May 31, 2024, we sold an additional 0.2% of our ownership interest.

(3)Except for risk free rates which are based on current rates, expected market movements are based on our medium-term outlook which is reviewed annually.

12 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

5.Income taxes

The statutory tax rate is impacted by various items, such as lower taxes on income subject to tax in foreign jurisdictions, tax-exempt or low-taxed investment income, and other sustainable tax benefits.

GMT rules applied to Sun Life effective January 1, 2024:

•Canadian GMT legislation requires the ultimate parent entity of a group to pay top-up tax, on a jurisdiction-by-jurisdiction basis, on profits of its subsidiaries that are taxed below 15%. Some jurisdictions have enacted a QDMTT which requires the GMT top-up tax to be paid locally rather than to the ultimate parent entity's jurisdiction.

•In response to the GMT rules, Bermuda enacted a CIT regime, including a corporate income tax rate of 15%, which applies to Sun Life effective January 1, 2025. The Bermuda CIT is not a QDMTT for the purposes of GMT.

•For additional information, refer to Note 8 in our Interim Consolidated Financial Statements for the period ended June 30, 2025.

The effective income tax rate(1) for the current year on underlying net income and reported net income was 18.6% and 19.8%, respectively.

6. Impacts of foreign exchange translation

Foreign exchange translation led to an increase of $48 million in underlying net income and reported net income, respectively.

(1)Our effective income tax rate on reported net income is calculated using Total income (loss) before income taxes, as detailed in Note 8 in our
Interim Consolidated Financial Statements for the period ended June 30, 2025. Our effective income tax rate on underlying net income is calculated using pre-tax underlying net income, as detailed in section N - Non-IFRS Financial Measures in this document, and the associated income tax expense.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 13


D. Growth

1. Sales and Gross Flows


	Quarterly results			Year-to-date
($ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Asset management gross flows & wealth sales by business segment(1)
Asset Management gross flows	45,512	52,521	38,882	98,033	79,600
Canada asset management gross flows & wealth sales	4,696	6,527	5,372	11,223	9,451
Asia asset management gross flows & wealth sales	2,504	3,173	2,008	5,677	4,109
Total asset management gross flows & wealth sales(1)	52,712	62,221	46,262	114,933	93,160
Group - Health & Protection sales by business segment(1)
Canada	201	375	143	576	454
U.S.	313	176	332	489	523
Asia(2)	21	29	19	50	45
Total group sales(1)	535	580	494	1,115	1,022
Individual - Protection sales by business segment(1)
Canada	136	139	167	275	297
Asia	727	735	586	1,462	1,213
Total individual sales(1)	863	874	753	1,737	1,510
CSM - Impact of new insurance business ("New business CSM")(1)	435	406	437	841	784

(1)Represents a non-IFRS financial measure. For more details, see section N - Non-IFRS Financial Measures in this document.

(2)In underlying net income by business type, Group businesses in Asia have been included with Individual - Protection. For more information about business types in Sun Life's business groups, see section A - How We Report Our Results in this document.

Total asset management gross flows & wealth sales increased $6.5 billion or 14% from prior year ($5.9 billion(1) or 13%(1), excluding foreign exchange translation).

•Asset Management gross flows increased $6.1 billion(1) or 16%(1), from higher gross flows in MFS and SLC Management.

•Canada asset management gross flows & wealth sales decreased $0.7 billion or 13%, driven by lower defined benefit solution sales in Group Retirement Services ("GRS") reflecting a $1.2 billion transaction in the prior year, partially offset by higher defined contribution sales in GRS from higher large case sales.

•Asia asset management gross flows & wealth sales increased $0.5 billion(1) or 25%(1), driven by higher fixed income fund sales in India.

Total group health & protection sales increased $41 million or 8% from prior year ($37 million(1) or 7%(1), excluding foreign exchange translation).

•Canada group sales increased $58 million or 41%, driven by higher large case sales.

•U.S. group sales decreased $23 million(1) or 7%(1), driven by lower medical stop-loss sales in Group Benefits reflecting pricing discipline in a competitive market, partially offset by higher Medicaid and commercial sales in Dental.

Total individual protection sales increased $110 million or 15% from prior year ($99 million(1) or 13%(1), excluding foreign exchange translation).

•Canada individual sales decreased $31 million or 19%, reflecting lower third-party sales.

•Asia individual sales increased $130 million(1) or 22%(1), driven by higher sales in:

◦Hong Kong from growth across all channels;

◦Indonesia from the bancassurance channel; and

◦India from the agency and bancassurance channels.

New business CSM represents growth derived from sales activity in the period. The impact of new insurance business drove a $435 million increase in CSM, compared to new business CSM of $437 million in the prior year, primarily driven by strong profit margins and sales in Hong Kong, and individual protection sales in Canada.

(1)This change excludes the impacts of foreign exchange translation. For more information about these non-IFRS financial measures, see section
N - Non-IFRS Financial Measures in this document.

14 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

2. Assets Under Management

AUM consists of general funds, the investments for segregated fund holders ("segregated funds") and third-party assets managed by the Company. Third-party AUM is comprised of institutional and managed funds, as well as other AUM related to our joint ventures.


	Quarterly results
($ millions)	Q2'25	Q1'25	Q4'24	Q3'24	Q2'24
Assets under management(1)(2)
General fund assets	220,671	223,310	221,935	216,180	207,545
Segregated funds	155,616	149,650	148,786	145,072	136,971
Third-party assets under management(1)
Retail	647,193	645,183	648,515	633,767	607,727
Institutional, managed funds and other	567,290	579,587	568,437	562,565	553,798
Total third-party AUM(1)	1,214,483	1,224,770	1,216,952	1,196,332	1,161,525
Consolidation adjustments(2)	(49,564)	(46,092)	(45,057)	(42,381)	(40,660)
Total assets under management(1)(2)	1,541,206	1,551,638	1,542,616	1,515,203	1,465,381

(1)Represents a non-IFRS financial measure. See section N - Non-IFRS Financial Measures in this document.

(2)Prior period amounts have been updated.

AUM decreased $1.4 billion from December 31, 2024, primarily driven by:

(i)a decrease of $60.9 billion from foreign exchange translation (excluding the impacts of general fund assets);

(ii)net outflows from segregated funds and third-party AUM of $20.3 billion;

(iii)Client distributions of $3.4 billion; and

(iv)a decrease in AUM of general fund assets of $1.3 billion primarily driven by unfavourable impacts from foreign exchange translation, partially offset by general operating activities and net fair value growth from changes in interest rates and credit spreads; partially offset by

(v)favourable market movements on the value of segregated, retail, institutional and managed funds of $80.8 billion; and

(vi)an increase of $3.6 billion from other business activities.

Segregated fund and third-party AUM net outflows of $13.9 billion during the quarter were comprised of:


	Quarterly results
($ billions)	Q2'25	Q1'25	Q4'24	Q3'24	Q2'24
Net flows for Segregated fund and Third-party AUM:
MFS	(19.8)	(11.6)	(28.5)	(19.1)	(20.2)
SLC Management	4.1	2.9	14.1	1.7	(0.7)
Canada, Asia and other	1.8	2.3	0.8	0.5	1.1
Total net flows for Segregated fund and Third-party AUM	(13.9)	(6.4)	(13.6)	(16.9)	(19.8)

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 15


E. Contractual Service Margin

Contractual Service Margin represents a source of stored value for future insurance profits and qualifies as available capital for LICAT purposes. CSM is a component of insurance contract liabilities. The following table shows the change in CSM including its recognition into net income in the period, as well as the growth from new insurance sales activity.


	For the six months ended	For the full year ended
($ millions)	June 30, 2025	December 31, 2024
Beginning of Period	13,366	11,786
Impact of new insurance business(1)	841	1,473
Expected movements from asset returns & locked-in rates(1)	376	703
Insurance experience gains/losses(1)	(10)	(77)
CSM recognized for services provided	(616)	(1,135)
Organic CSM Movement(1)(2)	591	964
Impact of markets & other(1)	110	124
Impact of change in assumptions(1)	(20)	30
Currency impact	(372)	462

Total CSM Movement	309	1,580
Contractual Service Margin, End of Period(3)	13,675	13,366

(1)Represents a non-IFRS financial measure. For more details, see section N - Non-IFRS Financial Measures in this document.

(2)Organic CSM movement is a component of both total CSM movement and organic capital generation.

(3)Total company CSM presented above is comprised of CSM on Insurance contracts issued of $13,325 million (December 31, 2024 - $13,028 million), net of CSM Reinsurance contracts held of $(350) million (December 31, 2024 - $(338) million).

Total CSM ended Q2'25 at $13.7 billion, an increase of $0.3 billion or 2% for the first six months of 2025.

•Organic CSM movement was driven by the impact of new insurance business, reflecting strong profit margins and sales in Asia, primarily in Hong Kong, and individual protection sales in Canada.

•Favourable impact of markets and other driven by interest experience.

•Unfavourable currency impacts in Asia and the U.S.

16 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS


F. Financial Strength


	Quarterly results
($ millions, unless otherwise stated)	Q2'25	Q1'25	Q4'24	Q3'24	Q2'24
LICAT ratio(1)
Sun Life Financial Inc.	151%	149%	152%	152%	150%
Sun Life Assurance	141%	141%	146%	147%	142%
Capital
Subordinated debt	6,180	6,179	6,179	6,177	6,926
Innovative capital instruments(2)	200	200	200	200	200
Equity in the participating account	600	547	496	621	567
Non-controlling interests	61	74	76	79	92
Preferred shares and other equity instruments	2,239	2,239	2,239	2,239	2,239
Common shareholders' equity(3)	22,284	23,179	23,318	22,989	21,803
Contractual Service Margin(4)	13,675	13,619	13,366	12,836	12,512
Total capital	45,239	46,037	45,874	45,141	44,339
Financial leverage ratio(4)(5)	20.4%	20.1%	20.1%	20.4%	22.6%
Dividend
Underlying dividend payout ratio(5)	49%	46%	50%	46%	47%
Dividends per common share ($)	0.880	0.840	0.840	0.810	0.810
Book value per common share ($)	39.57	40.84	40.63	39.88	37.70

(1)Our LICAT ratios are calculated in accordance with the OSFI-mandated guideline, Life Insurance Capital Adequacy Test.

(2)Innovative capital instruments consist of Sun Life ExchangEable Capital Securities ("SLEECS"), see section J - Capital and Liquidity Management in the 2024 Annual MD&A.

(3)Common shareholders’ equity is equal to Total shareholders’ equity less Preferred shares and other equity instruments.

(4)The calculation for the financial leverage ratio includes the CSM balance (net of taxes) in the denominator. The CSM (net of taxes) was $10.6 billion as at June 30, 2025 (March 31, 2025 - $10.5 billion; December 31, 2024 - $10.3 billion; September 30, 2024 - $9.9 billion; June 30, 2024 - $9.6 billion).

(5)Represents a non-IFRS financial measure. For more details, see section N - Non-IFRS Financial Measures in this document.

1. Life Insurance Capital Adequacy Test

The Office of the Superintendent of Financial Institutions has developed the regulatory capital framework referred to as the Life Insurance Capital Adequacy Test for Canada. LICAT measures the capital adequacy of an insurer using a risk-based approach and includes elements that contribute to financial strength through periods when an insurer is under stress as well as elements that contribute to policyholder and creditor protection wind-up.

SLF Inc. is a non-operating insurance company and is subject to the LICAT guideline. Sun Life Assurance, SLF Inc.'s principal operating life insurance subsidiary, is also subject to the LICAT guideline.

SLF Inc.'s LICAT ratio of 151% as at June 30, 2025 decreased one percentage point compared to December 31, 2024, driven by share buybacks and M&A(1) activity, mostly offset by ACMA and organic capital generation, net of shareholder dividend payments.

Sun Life Assurance's LICAT ratio of 141% as at June 30, 2025 decreased five percentage points compared to December 31, 2024, driven by organic capital generation, net of dividend payments to SLF Inc., and M&A activity, partially offset by ACMA.

The Sun Life Assurance LICAT ratios in both periods are well above OSFI's supervisory ratio of 100% and regulatory minimum ratio of 90%.

(1)Mergers & Acquisitions ("M&A").

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 17

2. Capital

Our total capital consists of subordinated debt and other capital instruments, CSM, equity in the participating account and total shareholders' equity which includes common shareholders' equity, preferred shares and other equity instruments, and non-controlling interests. As at June 30, 2025, our total capital was $45.2 billion, a decrease of $0.6 billion compared to December 31, 2024. The decrease to total capital included the payment of $976 million of dividends on common shares of SLF Inc. ("common shares"), unfavourable impacts from foreign exchange translation of $967 million included in other comprehensive income (loss) ("OCI"), and a decrease of $918 million from the repurchase and cancellation of common shares, which is detailed below. This was partially offset by reported net income of $1,644 million, an increase of $309 million in CSM, and net unrealized gains on FVOCI assets of $150 million.

In Q2'25, organic capital generation(1) was $673 million, which measures the change in capital, net of dividends, above LICAT requirements excluding the impacts of markets and other non-recurring items. Organic capital generation was driven by growth in underlying net income and new business CSM.

Our capital and liquidity positions remain strong with a LICAT ratio of 151% at SLF Inc., a financial leverage ratio of 20.4%(1) and $1.1 billion in cash and other liquid assets(1) as at June 30, 2025 in SLF Inc.(2) (December 31, 2024 - $1.4 billion).

Capital Transactions

On June 30, 2025, 2,664,916 of the 4,982,669 Class A Non-cumulative Floating Rate Preferred Shares Series 9QR (the "Series 9QR Shares") were converted into Class A Non-Cumulative Rate Reset Preferred Shares Series 8R (the "Series 8R Shares") on a one-for-one basis and 1,400 of its 6,217,331 Series 8R Shares were converted into Series 9QR Shares on a one-for-one basis. As a result, as of June 30, 2025, SLF Inc. has 8,880,847 Series 8R Shares and 2,319,153 Series 9QR Shares issued and outstanding.

Normal Course Issuer Bids

On August 29, 2024, SLF Inc. commenced a normal course issuer bid, which was in effect until June 6, 2025 (the "2024 NCIB").

On June 4, 2025, SLF Inc. announced that OSFI and the Toronto Stock Exchange (“TSX”) had approved its previously announced early renewal of its normal course issuer bid. As of June 4, 2025, SLF Inc. had purchased on the TSX, other Canadian stock exchanges and/or alternative Canadian trading platforms 14,429,085 of the 15,000,000 common shares that it was authorized to repurchase under the 2024 NCIB. Under SLF Inc.'s renewed normal course issuer bid (the "2025 NCIB"), it is permitted to purchase up to 10,570,915 common shares, being equal to the remaining 570,915 common shares that it had not repurchased under the 2024 NCIB plus an additional 10,000,000 common shares. The 2025 NCIB commenced on June 9, 2025 and will continue until May 21, 2026 or such earlier date as SLF Inc. may determine. Any common shares purchased by SLF Inc. pursuant to the 2025 NCIB will be cancelled or used in connection with certain equity settled incentive arrangements.

Shares purchased and subsequently cancelled under both bids were as follows:


	Quarterly results		Year-to-date		Aggregate(1)
	Q2'25		2025
	Common shares purchased (millions)	Amount ($ millions)(2)	Common shares purchased (millions)	Amount ($ millions)(2)	Common shares purchased (millions)	Amount ($ millions)(2)
2024 NCIB (ended June 6, 2025)	4.2	343	10.6	863	14.4	1,172
2025 NCIB	0.6	55	0.6	55	0.6	55
Total	4.8	398	11.2	918

(1)Represents the balance of common shares purchased and subsequently cancelled under the life of the normal course issuer bid to-date.

(2)Excludes the impact of excise tax on net repurchases of equity.

Subsequent Events

On July 15, 2025, we invested $55 million cash in Bowtie Life Insurance Company Limited ("Bowtie"), which resulted in an increase in ownership, excluding dilution, of approximately 11%. The investment reinforces Sun Life’s long-term partnership with Bowtie, and our shared goal to make health insurance simple, accessible and affordable. Bowtie is Hong Kong’s first virtual insurer with a leading position(3) in Hong Kong’s direct sales channel.

(1)Represents a non-IFRS financial measure. For more details, see section N - Non-IFRS Financial Measures in this document.

(2)SLF Inc. (the ultimate parent company) and its wholly-owned holding companies.

(3)According to Insurance Authority’s Provisional Statistics for Long Term Business 2024, in the fourth quarter of 2024, Bowtie Life ranked first in terms of the number of new individual non-single premium policies sold through Direct channel in Hong Kong.

18 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS


G. Performance by Business Segment


	Quarterly results			Year-to-date
($ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Underlying net income (loss)(1)
Asset Management	300	351	307	651	589
Canada	379	376	402	755	712
U.S.	195	218	204	413	393
Asia	206	197	179	403	356
Corporate	(65)	(97)	(92)	(162)	(175)
Total underlying net income (loss)(1)	1,015	1,045	1,000	2,060	1,875
Reported net income (loss) - Common shareholders
Asset Management	254	326	274	580	558
Canada	330	351	292	681	582
U.S.	103	186	127	289	224
Asia	98	166	151	264	386
Corporate	(69)	(101)	(198)	(170)	(286)
Total reported net income (loss) - Common shareholders	716	928	646	1,644	1,464

(1)Represents a non-IFRS financial measure. For more details, see section N - Non-IFRS Financial Measures in this document.

All factors discussed in this document that impact our underlying net income are also applicable to reported net income.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 19

1. Asset Management


	Quarterly results			Year-to-date
Asset Management (C$ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Underlying net income(1)	300	351	307	651	589
Add: Market-related impacts	(22)	(7)	(1)	(29)	—
MFS shares owned by management	(1)	5	—	4	(12)
Acquisition, integration and restructuring(2)	(16)	(16)	(26)	(32)	(53)
Intangible asset amortization	(7)	(7)	(6)	(14)	(12)
Other	—	—	—	—	46
Reported net income - Common shareholders	254	326	274	580	558
Assets under management (C$ billions)(1)	1,114.2	1,123.7	1,072.1	1,114.2	1,072.1
Gross flows (C$ billions)(1)	45.5	52.5	38.9	98.0	79.6
Net flows (C$ billions)(1)	(15.7)	(8.7)	(21.0)	(24.4)	(31.1)
MFS (C$ millions)
Underlying net income(1)	255	266	265	521	519
Add: MFS shares owned by management	(1)	5	—	4	(12)
Reported net income - Common shareholders	254	271	265	525	507
Assets under management (C$ billions)(1)	864.7	868.7	845.3	864.7	845.3
Gross flows (C$ billions)(1)	37.1	45.7	33.1	82.8	68.2
Net flows (C$ billions)(1)	(19.8)	(11.6)	(20.2)	(31.4)	(31.9)
MFS (US$ millions)
Underlying net income(1)	184	186	194	370	383
Add: MFS shares owned by management	(1)	4	—	3	(9)
Reported net income - Common shareholders	183	190	194	373	374
Pre-tax net operating margin for MFS(1)	35.1%	35.4%	36.5%	35.2%	36.8%
Average net assets (US$ billions)(1)	607.5	615.9	620.2	611.7	614.8
Assets under management (US$ billions)(1)(3)	635.4	603.8	618.1	635.4	618.1
Gross flows (US$ billions)(1)	26.8	31.9	24.2	58.7	50.3
Net flows (US$ billions)(1)	(14.3)	(8.1)	(14.8)	(22.4)	(23.4)
Asset appreciation (depreciation) (US$ billions)	46.0	6.0	3.2	52.0	42.9
SLC Management (C$ millions)
Underlying net income(1)	45	85	42	130	70
Add: Market-related impacts	(22)	(7)	(1)	(29)	—
Acquisition, integration and restructuring(2)	(16)	(16)	(26)	(32)	(53)
Intangible asset amortization	(7)	(7)	(6)	(14)	(12)
Other	—	—	—	—	46
Reported net income - Common shareholders	—	55	9	55	51
Fee-related earnings(1)	89	99	65	188	134
Pre-tax fee-related earnings margin(1)(4)	25.9%	24.3%	24.0%	25.9%	24.0%
Pre-tax net operating margin(1)(4)	26.4%	25.5%	21.6%	26.4%	21.6%
Assets under management (C$ billions)(1)	249.5	255.0	226.8	249.5	226.8
Gross flows - AUM (C$ billions)(1)	8.4	6.8	5.8	15.2	11.4
Net flows - AUM (C$ billions)(1)	4.1	2.9	(0.7)	7.0	0.8
Fee earning assets under management ("FE AUM") (C$ billions)(1)	193.9	201.0	177.9	193.9	177.9
Gross flows - FE AUM (C$ billions)(1)	7.8	13.1	7.3	20.9	14.3
Net flows - FE AUM (C$ billions)(1)	4.4	9.8	1.1	14.2	4.1
Assets under administration ("AUA") (C$ billions)(1)	16.0	15.8	11.5	16.0	11.5
Capital raising (C$ billions)(1)	6.0	4.4	3.0	10.4	6.6
Deployment (C$ billions)(1)	6.0	10.6	6.0	16.6	11.6

(1)Represents a non-IFRS financial measure. For more details, see section N - Non-IFRS Financial Measures in this document.

(2)Amounts relate to acquisition costs for our SLC Management affiliates, BentallGreenOak, InfraRed Capital Partners, Crescent Capital Group LP and Advisors Asset Management, Inc, which include the unwinding of the discount for Other financial liabilities of $15 million in Q2'25 and $29 million for the first six months of 2025 (Q1'25 - $14 million; Q2'24 - $22 million; for the first six months of 2024 - $44 million).

(3)Monthly information on AUM is provided by MFS in its Corporate Fact Sheet, which can be found at www.mfs.com/CorpFact. The Corporate Fact Sheet also provides MFS' U.S. GAAP assets and liabilities as at December 31, 2024.

(4)Based on a trailing 12-month basis. For more details, see section N - Non-IFRS Financial Measures in this document.

20 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

Profitability

Quarterly Comparison - Q2'25 vs. Q2'24

Asset Management underlying net income of $300 million decreased $7 million or 2%, driven by:

Reported net income of $254 million decreased $20 million or 7%, driven by market-related impacts in SLC Management.

Foreign exchange translation led to an increase of $3 million in underlying net income and reported net income, respectively.

Year-to-Date Comparison - Q2'25 vs. Q2'24

Asset Management underlying net income of $651 million increased $62 million or 11% driven by:

•MFS up $2 million (down $13 million on a U.S. dollar basis): Lower expenses and the impacts from favourable foreign exchange translation were offset by a decrease in net investment income, the effect of one less calendar day in the year, and lower fee income from lower ANA.

•SLC Management up $60 million: Higher fee-related earnings and strong performance of net seed investment income. Fee-related earnings(1) increased 40% driven by strong capital raising and higher catch-up fees, partially offset by higher expenses.

Reported net income of $580 million increased $22 million or 4%, driven by the increase in underlying net income and fair value changes in MFS shares owned by management, partially offset by a prior year gain on the early termination of a distribution agreement and market-related impacts in SLC Management.

Foreign exchange translation led to an increase of $19 million in underlying net income and an increase of $23 million in reported net income.

Growth

Asset Management AUM of $1,114.2 billion decreased $7.1 billion from December 31, 2024, driven by:

•Net outflows of $24.4 billion; and

•Client distributions of $3.4 billion; partially offset by

•Net asset value changes of $20.7 billion.

MFS' AUM increased US$29.6 billion or 5% from December 31, 2024, driven by:

•The increase in asset values from higher equity markets of US$52.0 billion partially offset by net outflows of US$22.4 billion.

In Q2'25, 90%, 32%, and 38% of MFS' U.S. retail mutual fund assets ranked in the top half of their Morningstar categories based on ten-, five- and three-year performance, respectively.

SLC Management's AUM decreased $0.5 billion from December 31, 2024, driven by:

•Asset value changes of $4.2 billion and Client distributions of $3.4 billion, partially offset by net inflows of $7.0 billion.

•Net inflows were comprised of capital raising and Client contributions, totaling $15.2 billion, partially offset by outflows of

$8.2 billion.

SLC Management's FE AUM increased $1.2 billion from December 31, 2024, driven by:

•Net inflows of $14.2 billion mostly offset by asset value changes of $5.9 billion and Client distributions of $7.1 billion.

•Net inflows were comprised of capital deployment and Client contributions, totaling $20.9 billion, partially offset by outflows of
$6.8 billion.

(1)Represents a non-IFRS financial measure. For more details, see section N - Non-IFRS Financial Measures in this document.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 21

2. Canada


	Quarterly results			Year-to-date
($ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Asset management & wealth(1)	125	112	130	237	239
Group - Health & Protection(1)	153	145	152	298	266
Individual - Protection(1)	101	119	120	220	207
Underlying net income(1)	379	376	402	755	712
Add: Market-related impacts	(44)	(7)	(109)	(51)	(118)
ACMA	1	(1)	6	—	1
Acquisition, integration and restructuring	—	(11)	—	(11)	—
Intangible asset amortization	(6)	(6)	(7)	(12)	(13)

Reported net income - Common shareholders	330	351	292	681	582
Underlying ROE (%)(1)	25.9%	25.3%	25.0%	25.6%	22.1%
Reported ROE (%)(1)	22.5%	23.6%	18.1%	23.1%	18.0%
Asset management gross flows & wealth sales(1)	4,696	6,527	5,372	11,223	9,451
Group - Health & Protection sales(1)	201	375	143	576	454
Individual - Protection sales(1)	136	139	167	275	297

Profitability

Quarterly Comparison - Q2'25 vs. Q2'24

Underlying net income of $379 million decreased $23 million or 6%, reflecting:

•Asset management & wealth down $5 million: Lower investment contributions reflecting relatively lower yields on investment contracts.

•Group - Health & Protection up $1 million: Favourable group life mortality experience mostly offset by less favourable morbidity experience in disability.

•Individual - Protection down $19 million: Unfavourable mortality experience.

Reported net income of $330 million increased $38 million or 13%, driven by market-related impacts partially offset by the decrease in underlying net income. Market-related impacts were primarily driven by favourable equity market impacts and interest rate impacts primarily from non-parallel curve changes, partially offset by other market impacts.

Year-to-Date Comparison - Q2'25 vs. Q2'24

Underlying net income of $755 million increased $43 million or 6%, reflecting:

•Asset management & wealth down $2 million: Lower investment contributions reflecting relatively lower yields on investment contracts offset by higher fee income driven by higher AUM reflecting market movements and strong net inflows.

•Group - Health & Protection up $32 million: Business growth and favourable group life mortality experience.

•Individual - Protection up $13 million: Improved insurance experience and higher investment contributions.

Reported net income of $681 million increased $99 million or 17% driven by market-related impacts and the increase in underlying net income. Market-related impacts were primarily driven by favourable interest rate impacts primarily from non-parallel curve changes, and improved real estate experience, partially offset by other market impacts.

Growth

Quarterly Comparison - Q2'25 vs. Q2'24

Canada's sales included:

•Asset management gross flows & wealth sales of $4.7 billion were down 13%, driven by lower defined benefit solution sales in GRS reflecting a $1.2 billion transaction in the prior year, partially offset by higher defined contribution sales in GRS from higher large case sales.

•Group - Health & Protection sales of $201 million were up 41%, driven by higher large case sales.

•Individual - Protection sales of $136 million were down 19%, reflecting lower third-party sales.

Year-to-Date Comparison - Q2'25 vs. Q2'24

Canada's sales included:

•Asset management gross flows & wealth sales of $11.2 billion were up 19%, driven by higher defined contribution sales in GRS from higher large case sales, and higher mutual fund sales in Individual Wealth, partially offset by lower defined benefit solution sales in GRS reflecting a $1.2 billion transaction in the prior year.

•Group - Health & Protection sales of $576 million were up 27%, driven by higher large case sales.

•Individual - Protection sales of $275 million were down 7%, reflecting lower third-party sales.

22 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

3. U.S.


	Quarterly results			Year-to-date
(US$ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Group - Health & Protection(1)	123	129	112	252	236
Individual - Protection(1)	20	22	37	42	54
Underlying net income(1)	143	151	149	294	290
Add: Market-related impacts	1	10	(22)	11	(54)
ACMA	—	—	—	—	1
Acquisition, integration and restructuring(2)	(13)	(16)	(21)	(29)	(43)
Intangible asset amortization	(57)	(16)	(15)	(73)	(32)

Reported net income - Common shareholders	74	129	91	203	162
Underlying ROE (%)(1)	11.7%	12.6%	12.9%	12.1%	12.5%
Reported ROE (%)(1)	6.1%	10.7%	7.9%	8.4%	7.0%
After-tax profit margin for Group Benefits (%)(1)(3)	7.9%	8.0%	9.6%	7.9%	9.6%
Group - Health & Protection sales(1)	226	123	243	349	385

(2)Includes acquisition, integration and restructuring costs associated with DentaQuest, acquired on June 1, 2022.

(3)Based on underlying net income, on a trailing four-quarter basis. For more details, see section N - Non-IFRS Financial Measures in this document.

Profitability

Quarterly Comparison - Q2'25 vs. Q2'24

Underlying net income of US$143 million decreased US$6 million or 4%, driven by:

•Individual - Protection down US$17 million: Unfavourable mortality and credit experience.

Reported net income of US$74 million decreased US$17 million or 19%, driven by an impairment charge of US$45 million on a customer relationship intangible asset from the early termination of a U.S. group dental contract, partially offset by market-related impacts primarily driven by improved real estate experience and favourable interest rate impacts.

Foreign exchange translation led to an increase of $2 million in underlying net income and an increase of $1 million in reported net income.

Year-to-Date Comparison - Q2'25 vs. Q2'24

Underlying net income of US$294 million increased US$4 million, driven by:

•Group - Health & Protection up US$16 million: Higher Dental results primarily reflecting improved claims experience driven by the impact of Medicaid repricing and the prior year impacts following the end of the Public Health Emergency, and management actions, partially offset by moderately unfavourable morbidity experience in medical stop-loss reflecting less favourable loss ratios.

•Individual - Protection down US$12 million: Unfavourable mortality experience.

Reported net income of US$203 million increased US$41 million or 25%, driven by market-related impacts partially offset by an impairment charge of US$45 million on a customer relationship intangible asset from the early termination of a U.S. group dental contract. The market-related impacts were primarily from improved real estate experience and favourable interest rate impacts, partially offset by unfavourable equity market impacts.

Foreign exchange translation led to an increase of $15 million in underlying net income and an increase of $12 million in reported net income.

Growth

Quarterly Comparison - Q2'25 vs. Q2'24

U.S. group sales of US$226 million were down 7%, driven by lower medical stop-loss sales in Group Benefits reflecting pricing discipline in a competitive market, partially offset by higher Medicaid and commercial sales in Dental.

Year-to-Date Comparison - Q2'25 vs. Q2'24

U.S. group sales of US$349 million were down 9%, driven by lower medical stop-loss sales in Group Benefits reflecting pricing discipline in a competitive market, partially offset by higher Medicaid sales in Dental.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 23

4. Asia


	Quarterly results			Year-to-date
($ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Asset management & wealth(1)	30	24	18	54	35
Individual - Protection(1)(2)(3)	176	173	161	349	321
Underlying net income(1)	206	197	179	403	356
Add: Market-related impacts	(105)	(18)	(20)	(123)	(35)
ACMA	2	(3)	10	(1)	7
Acquisition, integration and restructuring	(3)	(4)	(2)	(7)	76
Intangible asset amortization	(2)	(3)	(2)	(5)	(4)
Other	—	(3)	(14)	(3)	(14)
Reported net income - Common shareholders	98	166	151	264	386
Underlying ROE (%)(1)	15.2%	14.6%	13.2%	14.9%	13.1%
Reported ROE (%)(1)	7.2%	12.3%	11.1%	9.8%	14.2%
Asset management gross flows & wealth sales(1)	2,504	3,173	2,008	5,677	4,109
Individual - Protection sales(1)	727	735	586	1,462	1,213
Group - Health & Protection sales(1)(2)	21	29	19	50	45
New business CSM(1)	299	273	220	572	450

(2)In underlying net income by business type, Group businesses in Asia have been included with Individual - Protection.

(3)Effective Q1'25, Regional office expenses & other was moved to the Individual - Protection business type, reflecting a reporting refinement. Prior period amounts reflect current presentation.

Profitability

Quarterly Comparison - Q2'25 vs. Q2'24

Underlying net income of $206 million increased $27 million or 15%, driven by:

•Asset management & wealth up $12 million: Higher fee income primarily driven by higher AUM reflecting market movements and net inflows.

Reported net income of $98 million decreased $53 million or 35%, reflecting market-related impacts primarily driven by unfavourable other market and equity market impacts, partially offset by the increase in underlying net income and the prior year impact of a Pillar Two global minimum tax adjustment(2).

Foreign exchange translation led to an increase of $4 million in underlying net income and an increase of $3 million in reported net income.

Year-to-Date Comparison - Q2'25 vs. Q2'24

Underlying net income of $403 million increased $47 million or 13%, driven by:

•Asset management & wealth up $19 million: Higher fee income primarily driven by higher AUM reflecting market movements and net inflows.

•Individual - Protection(1) up $28 million: Good sales momentum and in-force business growth, higher contributions from joint ventures, and higher investment contributions, partially offset by higher expenses primarily reflecting continued investments in the business, lower earnings on surplus primarily reflecting realized losses, and less favourable mortality experience in International.

Reported net income of $264 million decreased $122 million or 32%, reflecting market-related impacts and a prior year gain on partial sale of ABSLAMC, partially offset by the increase in underlying net income and the prior year impact of a Pillar Two global minimum tax adjustment(2). The market-related impacts were primarily from unfavourable other market and equity market impacts, partially offset by improved real estate experience.

Foreign exchange translation led to an increase of $14 million in underlying net income and an increase of $11 million in reported net income.

(1)Effective Q1'25, Regional office expenses & other was moved to the Individual - Protection business type, reflecting a reporting refinement. Prior period amounts reflect current presentation.

(2)For additional information refer to Note 8 of our Interim Consolidated Financial Statements for the period ended June 30, 2025 and section D - Profitability in the 2024 Annual MD&A.

24 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

Growth

Quarterly Comparison - Q2'25 vs. Q2'24

Asia's sales included:

•Individual sales of $727 million were up 22%(1), driven by higher sales in:

◦Hong Kong from growth across all channels;

◦Indonesia from the bancassurance channel; and

◦India from the agency and bancassurance channels.

•Asset management gross flows & wealth sales of $2.5 billion were up 25%(1), driven by higher fixed income fund sales in India.

New business CSM of $299 million in Q2'25, was up from $220 million in the prior year, primarily driven by strong profit margins and higher sales in Hong Kong.

Year-to-Date Comparison - Q2'25 vs. Q2'24

Asia's sales included:

•Individual sales of $1.5 billion were up 16%(1), driven by higher sales in:

◦Hong Kong from growth across all channels;

◦India reflecting growth primarily in the bancassurance channel; and

◦Indonesia from the bancassurance channel.

•Asset management gross flows & wealth sales of $5.7 billion were up 36%(1), driven by higher fixed income fund sales in India.

New business CSM of $572 million was up from $450 million in the prior year, primarily driven by strong profit margins and higher sales in Hong Kong.

5. Corporate


	Quarterly results			Year-to-date
($ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Corporate expenses & other(1)	(65)	(97)	(92)	(162)	(175)
Underlying net income (loss)(1)	(65)	(97)	(92)	(162)	(175)
Add: Market-related impacts	(4)	(4)	3	(8)	(2)

Acquisition, integration and restructuring	—	—	(108)	—	(108)

Other	—	—	(1)	—	(1)
Reported net income (loss) - Common shareholders	(69)	(101)	(198)	(170)	(286)

Profitability

Quarterly Comparison - Q2'25 vs. Q2'24

Underlying net loss was $65 million compared to underlying net loss of $92 million in the prior year, driven by timing of strategic investment spend, and lower incentive compensation.

Reported net loss was $69 million compared to reported net loss of $198 million in the prior year, reflecting a prior year restructuring charge of $108 million, and the change in underlying net loss.

Year-to-Date Comparison - Q2'25 vs. Q2'24

Underlying net loss was $162 million compared to underlying net loss of $175 million in the prior year, driven by timing of strategic investment spend, and lower incentive compensation, partially offset by lower investment income from lower surplus asset balances.

Reported net loss was $170 million compared to reported net loss of $286 million in the prior year, primarily reflecting a prior year restructuring charge of $108 million, and the change in underlying net loss.

(1)This change excludes the impacts of foreign exchange translation. For more information about these non-IFRS financial measures, see section
N - Non-IFRS Financial Measures in this document.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 25


H. Investments

Total general fund invested assets of $189.2 billion as at June 30, 2025, were down $0.6 billion from December 31, 2024. The decrease was primarily from unfavourable impacts from foreign exchange translation, partially offset by general operating activities and net fair value growth from changes in interest rates and credit spreads. Our general fund invested assets are well-diversified across investment types, geographies and sectors with the majority of our portfolio invested in high quality fixed income assets.

The following table sets out the composition of our general fund invested assets(1):


	June 30, 2025		December 31, 2024
($ millions)	Carrying value	% of Total carrying value	Carrying value	% of Total carrying value
Cash, cash equivalents and short-term securities	11,202	6%	13,873	7%
Debt securities	83,142	44%	81,955	43%
Equity securities	10,603	6%	9,974	5%
Mortgages and loans	57,810	30%	57,619	31%
Derivative assets	2,049	1%	1,971	1%
Other invested assets	15,155	8%	15,135	8%
Investment properties	9,230	5%	9,290	5%
Total invested assets	189,191	100%	189,817	100%

(1)The values and ratios presented are based on the fair value of the respective asset categories. Generally, the carrying values for invested assets are equal to their fair values. For invested assets supporting insurance contracts, in the event of default, if the amounts recovered are insufficient to satisfy the related insurance contract liability cash flows that the assets are intended to support, credit exposure may be greater than the carrying value of the assets.

1. Debt Securities

The debt securities portfolio is actively managed through a regular program of purchases and sales aimed at optimizing yield, quality, and liquidity, while ensuring that it remains well-diversified and duration-matched to insurance contract liabilities. As at June 30, 2025, with the exception of certain countries where we have business operations, including Canada, the United States, the United Kingdom and the Philippines, our exposure to debt securities from any single country did not exceed 1% of total invested assets.

Debt Securities by Geography

The carrying value of our debt securities by geographic location is presented in the following table.


	June 30, 2025				December 31, 2024
($ millions)	FVTPL debt securities	FVOCI debt securities	Total	% of Total	FVTPL debt securities	FVOCI debt securities	Total	% of Total
Debt securities by geography:
Canada	35,093	3,958	39,051	47%	34,472	3,614	38,086	46%
United States	21,613	6,415	28,028	34%	20,986	6,486	27,472	34%
Europe	3,915	1,453	5,368	6%	4,145	1,664	5,809	7%
Asia	6,689	1,032	7,721	9%	6,891	950	7,841	10%
Other	1,709	1,265	2,974	4%	1,612	1,135	2,747	3%
Total debt securities	69,019	14,123	83,142	100%	68,106	13,849	81,955	100%

Our gross unrealized losses as at June 30, 2025 for FVTPL and FVOCI debt securities were $6,363 million and $352 million, respectively (December 31, 2024 - $6,775 million and $508 million, respectively). The decrease in gross unrealized losses was largely due to the impact from declining interest rates.

Debt Securities by Credit Rating

Debt securities with a credit rating of "A" or higher represented 77% of the total debt securities as at June 30, 2025 (December 31, 2024 - 75%). Debt securities with a credit rating of "BBB" or higher represented 99% of total debt securities as at June 30, 2025 (December 31, 2024 - 99%).

26 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

2. Mortgages and Loans

Our mortgage portfolio consisted almost entirely of first mortgages and our loan portfolio consisted of private placement loans.

Mortgages and Loans by Geography

The carrying value of mortgages and loans by geographic location is presented in the following table.(1)


	June 30, 2025			December 31, 2024
($ millions)	Mortgages	Loans	Total	Mortgages	Loans	Total
Canada	9,414	12,627	22,041	9,402	12,560	21,962
United States	4,401	19,177	23,578	4,828	18,856	23,684
Europe	221	8,677	8,898	208	8,488	8,696
Asia	—	639	639	—	680	680
Other	—	2,654	2,654	—	2,597	2,597
Total mortgages and loans	14,036	43,774	57,810	14,438	43,181	57,619
% of Total invested assets	7%	23%	30%	8%	23%	31%

(1)The geographic location for mortgages is based on the location of the property and for loans it is based on the country of the creditor's parent.

Mortgage Portfolio

As at June 30, 2025, we held $14.0 billion of mortgages (December 31, 2024 - $14.4 billion). Our mortgage portfolio consists entirely of commercial mortgages, as presented in the following table.


	June 30, 2025			December 31, 2024
($ millions)	Insured	Uninsured	Total	Insured	Uninsured	Total
Mortgages:
Retail	—	2,360	2,360	—	2,567	2,567
Office	—	2,465	2,465	—	2,633	2,633
Multi-family residential	3,167	1,175	4,342	3,205	1,294	4,499
Industrial	—	3,758	3,758	—	3,683	3,683
Other	418	693	1,111	425	631	1,056
Total mortgages	3,585	10,451	14,036	3,630	10,808	14,438
% of Total mortgages	26%	74%	100%	25%	75%	100%

Our mortgage portfolio consists entirely of commercial mortgages, including retail, office, multi-family, and industrial properties. As at June 30, 2025, 31% of our commercial mortgage portfolio consisted of multi-family residential mortgages; there are no single-family residential mortgages. Our uninsured commercial portfolio had a weighted average loan-to-value ratio of approximately 53% as at June 30, 2025 (December 31, 2024 - 54%). While we generally limit the maximum loan-to-value ratio to 75% at issuance, we may invest in mortgages with a higher loan-to-value ratio in Canada if the mortgage is insured by the Canada Mortgage and Housing Corporation ("CMHC"). The estimated weighted average debt service coverage for our uninsured commercial portfolio is 1.77 times. Of the $3.4 billion of multi-family residential mortgages in the Canadian commercial mortgage portfolio, 92% were insured by the CMHC.

As at June 30, 2025, we held $43.8 billion of loans (December 31, 2024 - $43.2 billion). Private placement loans provide diversification by type of loan, industry segment and borrower credit quality. The private placement loan portfolio consists of senior secured and unsecured loans to large- and mid-market corporate borrowers, securitized lease/loan obligations secured by a variety of assets, and project finance loans in sectors such as power and infrastructure.

As at June 30, 2025, our impaired mortgages and loans, net of allowances for losses, were $22 million (December 31, 2024 - $30 million).

3. Derivatives

The values associated with our derivative instruments are presented in the following table. Notional amounts serve as the basis for payments calculated under derivatives contracts and are generally not exchanged.


($ millions)	June 30, 2025	December 31, 2024
Net fair value asset (liability)	192	(106)
Total notional amount	81,600	74,954
Credit equivalent amount(1)	1,516	1,347
Risk-weighted credit equivalent amount(1)	32	30

(1)Amounts presented are net of collateral received.

The net fair value of derivatives was an asset of $192 million as at June 30, 2025 (December 31, 2024 - liability of $106 million). The increase in net fair value was driven by an increase in foreign exchange contracts due to appreciation of the Canadian dollar against US dollar, partially offset by a decrease in interest rate contracts primarily due to upward shift in Canadian yield curves for longer maturing deals.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 27

The total notional amount of our derivatives increased to $81.6 billion as at June 30, 2025 (December 31, 2024 - $75.0 billion). The change in notional amount is mainly attributable to an increase in interest rate contracts used for duration matching and replication of fixed income exposure.

4. Investment Properties

As at June 30, 2025, we held $9.2 billion of investment properties (December 31, 2024 - $9.3 billion). The decrease in our investment property portfolio is predominantly driven by unfavourable impacts from foreign exchange translation, partially offset by net property purchases in Canada.

Investment Properties by Type and Geography


	June 30, 2025
($ millions)	Office	Industrial	Retail	Multi-family residential	Other	Total	% of Total by Geography
Canada	1,466	3,429	953	1,484	518	7,850	85%
United States	320	910	112	36	2	1,380	15%
Total	1,786	4,339	1,065	1,520	520	9,230	100%
% of Total by Type	19%	47%	12%	16%	6%	100%

	December 31, 2024
($ millions)	Office	Industrial	Retail	Multi-family residential	Other	Total	% of Total by Geography
Canada	1,476	3,496	933	1,469	448	7,822	84%
United States	347	965	118	36	2	1,468	16%
Total	1,823	4,461	1,051	1,505	450	9,290	100%
% of Total by Type	20%	48%	11%	16%	5%	100%

5. Loss Allowance and Provision for Credit Losses

The balance of the total loss allowance was $89 million as at June 30, 2025 (December 31, 2024 - $88 million) and the provision for credit losses increased by $8 million for the six months ended June 30, 2025 (decreased by $3 million for the six months ended June 30, 2024).

28 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS


I. Risk Management

We have established a Risk Management Framework to assist in identifying, measuring, managing, monitoring and reporting risks. The Risk Management Framework covers all risks and these have been grouped into six major categories: market, insurance, credit, business and strategic, operational and liquidity risks. Through our enterprise risk management processes, we oversee the various risk factors identified in the Risk Management Framework and provide reports to senior management and to the Board Committees at least quarterly. Our enterprise risk management processes and risk factors are described in our 2024 Annual MD&A.

This section includes our disclosure on market risks and should be read in conjunction with our unaudited Interim Consolidated Financial Statements for the quarter ended June 30, 2025. When referring to segregated funds in this section, it is inclusive of segregated fund guarantees, variable annuities and investment products.

Equity Risk

Equity risk is the potential for financial loss arising from declines or volatility in public or private equity market prices. We are exposed to equity risk from a number of sources.

We generate revenue in our asset management businesses and from certain protection and wealth contracts where fees are levied on account balances that are affected directly by equity market levels. Accordingly, we have further exposure to equity risk as adverse fluctuations in the market value of such assets will result in corresponding adverse impacts on revenue, income, the contractual service margin, and capital. In addition, declining and volatile equity markets may have a negative impact on sales and redemptions (surrenders) in these businesses, and this may result in further adverse impacts on net income, the contractual service margin, and capital.

A portion of our exposure to equity risk arises in connection with benefit guarantees on segregated fund products, some participating insurance contracts, some adjustable insurance contracts, and some universal life contracts. These benefit guarantees may be triggered upon death, maturity, withdrawal or annuitization. The cost of providing these guarantees is uncertain and depends upon a number of factors, including general capital market conditions, our hedging strategies, policyholder behaviour and mortality experience, each of which may result in negative impacts on net income, the contractual service margin, and capital.

We also have direct exposure to equity markets from the investments supporting other general account liabilities, surplus, and employee benefit plans. These exposures fall within our risk-taking philosophy and appetite, and are therefore generally not hedged.

Interest Rate and Spread Risk

Interest rate and spread risk includes the potential for financial loss arising from changes in the value of insurance and investment contract liabilities and financial assets due to changes or volatility in interest rates or spreads. In practice, when asset cash flows and the policy obligations they support are not matched, this may result in the need to either sell assets to meet policy payments and expenses or reinvest excess asset cash flows in unfavourable interest rate or credit spread environments. This risk is managed in our asset-liability management program. Details of the asset-liability management program are discussed under the heading "Market Risk Management Strategies" in section K - Risk Management in the 2024 Annual MD&A.

Our primary exposure to interest rate and spread risk arises from insurance and investment contracts that contain guarantees in the form of minimum crediting rates, maximum premium rates, settlement options, guaranteed annuitization options and minimum benefits. If investment returns fall below guaranteed levels, we may be required to increase liabilities or capital in respect of these contracts. The guarantees attached to these products may be applicable to both past premiums collected and future premiums not yet received. Segregated fund contracts provide benefit guarantees that are linked to underlying fund performance and may be triggered upon death, maturity, withdrawal or annuitization. Exposure to guarantees is managed within our risk appetite limits through our asset-liability management program, which may include the use of hedging strategies utilizing interest rate derivatives such as interest rate floors, swaps, futures and swaptions. The impact of these guarantees on net income, contractual service margin, and capital are included in the disclosed market risk sensitivities.

Significant changes or volatility in interest rates or spreads could have a negative impact on sales of certain protection and wealth products, and adversely impact the expected pattern of redemptions (surrenders) on existing policies.

•Increases in interest rates or widening credit spreads may increase the risk that policyholders will surrender their contracts, potentially forcing us to liquidate assets at a loss. While we have established hedging programs in place and our protection and wealth products often contain surrender mitigation features, these may not be sufficient to fully offset the adverse impact of changes in interest rates or spreads.

•Declines in interest rates or narrowing spreads can result in compression of the net spread between interest earned on investments and interest credited to policyholders, increased asset calls, mortgage and structured security prepayments, and net reinvestment of positive cash flows at lower yields, and therefore can adversely impact our profitability and financial position.

•Negative interest rates may additionally result in losses on our cash and short-term deposits and low or negative returns on our fixed income assets impacting our profitability.

•A sustained low interest rate environment may additionally adversely impact our net income, CSM, capital, and our ability to implement our business strategy and plans. This may be realized through lower sales, less profitable new business, changes in the pattern of redemptions on existing policies, among other impacts.

We also have direct exposure to interest rates and spreads from investments supporting other general account liabilities, surplus and employee benefit plans. Higher interest rates or wider spreads will reduce the value of our existing assets. Conversely, lower interest rates or a narrowing of spreads will result in reduced investment income on new fixed income asset purchases. These exposures fall within our risk-taking philosophy and appetite and are therefore generally not hedged.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 29

Real Estate Risk

Real estate risk is the potential for financial loss arising from fluctuations in the value of, or future cash flows from, our investments in real estate. We are exposed to real estate risk and may experience financial losses resulting from the direct ownership of real estate investments or indirectly through fixed income investments secured by real estate property, leasehold interests, ground rents, and purchase and leaseback transactions.

Real estate price risk may arise from external market conditions, inadequate property analysis, inadequate insurance coverage, inappropriate real estate appraisals, or from environmental risk exposures.

We hold real estate investments that support general account liabilities and surplus, and fluctuations in value will affect our net income, CSM, and capital. A material and sustained increase in interest rates may lead to deterioration in real estate values.

Foreign Currency Risk

Foreign currency risk is the result of mismatches in the currency of our assets and liabilities (inclusive of capital), and cash flows. This risk may arise from a variety of sources such as foreign currency transactions and services, foreign currency hedging, investments denominated in foreign currencies, investments in foreign subsidiaries and net income from foreign operations. Changes or volatility in foreign exchange rates, including a change to currencies that are fixed in value to another currency, could adversely affect our net income, contractual service margin and capital.

As an international provider of financial services, we operate in a number of countries, with revenues and expenses denominated in several local currencies. In each country in which we operate, we generally maintain the currency profile of assets to match the currency of liabilities and required capital. This approach provides an operational hedge against disruptions in local operations caused by currency fluctuations. Foreign currency derivative contracts such as currency swaps and forwards are used as a risk management tool to manage the currency exposure in accordance with our Asset Liability Management Policy. As at June 30, 2025 and December 31, 2024, the Company did not have a material foreign currency risk exposure.

Changes in exchange rates can affect our net income and surplus when financial results in functional currencies are translated into Canadian dollars. Net income earned outside of Canada is generally not currency hedged and a weakening in the local currency of our foreign operations relative to the Canadian dollar can have a negative impact on our net income reported in Canadian currency. A strengthening in the local currency of our foreign operations relative to the Canadian dollar would have the opposite effect. Regulatory capital ratios could also be impacted by changes in exchange rates.

Inflation Risk

Inflation risk is the potential for financial loss arising from changes in inflation rates. This risk results from insurance contract liabilities that are linked to market measures of inflation such as the Consumer Price Index. The primary sources for this risk exposure are from certain group and retail annuity contracts and group long term disability contracts. In these contracts, the annuity and disability benefit payments may be linked to an indexing formula containing an inflation price index. Benefit payments linked to inflation indices may also include various caps, floors and averaging mechanisms that vary across product designs.

Exposure to inflation risk is managed within our asset-liability management program, primarily by investing in inflation linked assets to match liability exposures.

i. Market Risk Sensitivities

We utilize a variety of methods and measures to quantify our market risk exposures. These include duration management, key rate duration techniques, convexity measures, cash flow gap analysis, scenario testing, and sensitivity testing of earnings and regulatory capital ratios versus risk appetite limits.

The measurement of liabilities and assets are affected by the level of equity market performance, interest rates, credit and swap spreads and other market risk variables. The following sections set out the estimated immediate impact on, or sensitivity of, our net income(1), contractual service margin, OCI and SLF Inc.'s LICAT ratio to certain instantaneous changes in market variables as at June 30, 2025 and December 31, 2024.

The estimated sensitivities in the tables below reflect the impact of market movements on insurance contracts and investment contracts, assets backing insurance contracts, assets backing investment contracts, assets backing the surplus segment, and seed investments in our asset management subsidiaries.

Net income sensitivities to equity and real estate market movements are driven primarily by changes in the value of investments backing general account liabilities and surplus. Net income sensitivities to interest rates and spreads are driven by the net impact on liabilities and the assets backing them. Lower interest rates or a narrowing of spreads will result in increased liabilities for insurance contracts, offset by increased values of the assets backing general account liabilities. Higher interest rates or a widening of spreads will result in decreased liabilities for insurance contracts, offset by decreased values of the assets backing general account liabilities. Further detail on the impact of changes or volatility in market prices on assets and liabilities is provided under the headings "Equity Risk", "Interest Rate and Spread Risk", and "Real Estate Risk" above.

OCI sensitivities are impacted by changes in the market value of assets classified as FVOCI. The market value of FVOCI fixed income assets, which are held primarily backing surplus, investment contracts and CSM liabilities, increases with lower interest rates or a narrowing of spreads, and decreases with higher interest rates or widening of spreads.

(1)Net income in section I - Risk Management in this document refers to common shareholders' net income.

30 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

As these market risk sensitivities reflect an instantaneous impact on net income, CSM, OCI and SLF Inc.'s LICAT ratio, they do not include impacts over time such as the effect on fee income in our asset management businesses.

Refer to Additional Cautionary Language and Key Assumptions Related to Sensitivities in this section for important additional information regarding these estimates.

1. Private and Public Equity Market Sensitivities

The following table sets out the estimated immediate impact on, or sensitivity of, our net income, CSM, OCI and SLF Inc.'s LICAT ratio to certain instantaneous changes in public or private equity market prices as at June 30, 2025 and December 31, 2024. The sensitivities shown outline the impact of the same percentage increase or decrease applied to each of private equity and public equity. About 60% of our expected net income sensitivity to changes in equity markets is driven by investments in private equity.


($ millions, unless otherwise noted)						As at June 30, 2025
Change in Private and Public Equity Markets(1)(2)(3)	25% decrease		10% decrease		10% increase		25% increase
Potential impact on net income (after-tax)		(525)		(225)		225		550
Potential impact on CSM (pre-tax)		(825)		(325)		300		750
Potential impact on OCI(4)		—		—		—		—
Potential impact on LICAT ratio(5)	1.5% point decrease		0.5% point decrease		0.5% point increase		1.0% point increase

($ millions, unless otherwise noted)						As at December 31, 2024
Change in Private and Public Equity Markets(1)(2)(3)	25% decrease		10% decrease		10% increase		25% increase
Potential impact on net income (after-tax)		(550)		(225)		225		575
Potential impact on CSM (pre-tax)		(775)		(300)		275		650
Potential impact on OCI(4)		—		—		—		—
Potential impact on LICAT ratio(5)	2.0% point decrease		0.5% point decrease		0.5% point increase		1.0% point increase
(1)Represents the respective change across all equity exposures as at June 30, 2025 and December 31, 2024. Due to the impact of active management, basis risk, and other factors, realized sensitivities may differ significantly from expectations. Sensitivities include the impact of re-balancing equity hedges for hedging programs at 2% intervals (for 10% changes in equity markets) and at 5% intervals (for 25% changes in equity markets). (2)The market risk sensitivities include the estimated impact of our hedging programs in effect as at June 30, 2025 and December 31, 2024, and include new business added and product changes implemented prior to such dates. (3)Net income, CSM and OCI sensitivities have been rounded in increments of $25 million. The sensitivities exclude the market impacts on the income from our joint ventures in China and India.
(4) The market risk OCI sensitivities exclude the impact of changes in the defined benefit obligations and plan assets. (5)The LICAT sensitivities illustrate the impact on SLF Inc. as at June 30, 2025 and December 31, 2024. LICAT ratios are rounded in increments of 0.5%.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 31

2. Interest Rate Sensitivities

The following table sets out the estimated immediate impact on, or sensitivity of, our net income, CSM, OCI and SLF Inc.'s LICAT ratio to certain instantaneous changes in interest rates as at June 30, 2025 and December 31, 2024.

($ millions, unless otherwise noted)

As at June 30, 2025

As at December 31, 2024

Change in Interest Rates(1)(2)(3)

50 basis point decrease

50 basis point increase

50 basis point decrease

50 basis point increase

Potential impact on net income

(after-tax)

(25)

(50)

Potential impact on CSM (pre-tax)

175

(200)

150

(150)

Potential impact on OCI(4)

225

(200)

200

(200)

Potential impact on LICAT ratio(5)

3.0% point increase

2.5% point decrease

2.5% point increase

2.0% point decrease

(1)Interest rate sensitivities assume a parallel shift in assumed interest rates across the entire yield curve as at June 30, 2025 and December 31, 2024 with no change to the ultimate risk-free rate. Variations in realized yields based on factors such as different terms to maturity and geographies may result in realized sensitivities being significantly different from those illustrated above. Sensitivities include the impact of re-balancing interest rate hedges for hedging programs at 10 basis point intervals (for 50 basis point changes in interest rates).

(2)The market risk sensitivities include the estimated impact of our hedging programs in effect as at June 30, 2025 and December 31, 2024, and include new business added and product changes implemented prior to such dates.

(3)Net income, CSM and OCI sensitivities have been rounded in increments of $25 million. The sensitivities exclude the market impacts on the income from our joint ventures in China and India.

(4)The market risk OCI sensitivities exclude the impact of changes in the defined benefit obligations and plan assets.

(5)The LICAT sensitivities illustrate the impact on SLF Inc. as at June 30, 2025 and December 31, 2024. The sensitivities reflect the worst scenario as at June 30, 2025 and assume that a scenario switch does not occur in the quarter. LICAT ratios are rounded in increments of 0.5%.

The above sensitivities were determined using a 50 basis point change in interest rates and 10% and 25% changes in our equity markets because we believe that these market shocks were reasonably possible as at June 30, 2025. Significant changes in market variables may result in other than proportionate impacts on our sensitivities.

3. Credit Spread and Swap Sensitivities

The following tables set out the estimated immediate impact on, or sensitivity of, our net income, CSM, OCI and SLF Inc.'s LICAT ratio to certain instantaneous changes in credit spreads and our net income, CSM, and OCI to certain changes in swap spreads as at June 30, 2025 and December 31, 2024.


($ millions, unless otherwise noted)	As at June 30, 2025				As at December 31, 2024
Change in Credit Spreads(1)(2)	50 basis point decrease		50 basis point increase		50 basis point decrease		50 basis point increase
Potential impact on net income (after-tax)		100		(100)		75		(50)
Potential impact on CSM (pre-tax)		125		(150)		125		(125)
Potential impact on OCI(3)		200		(200)		200		(200)
Potential impact on LICAT ratio(4)	2.0% point increase		2.5% point decrease		2.0% point increase		2.0% point decrease
(1)The credit spread sensitivities assume a parallel shift in the indicated spreads across the entire term structure with no change to the ultimate liquidity premium. The sensitivities reflect a floor of zero on credit spreads where the spreads are not currently negative. Variations in realized spread changes based on different terms to maturity, geographies, asset classes and derivative types, underlying interest rate movements, and ratings may result in realized sensitivities being significantly different from those provided above. (2)Net income, CSM, and OCI sensitivities have been rounded in increments of $25 million. The sensitivities exclude the market impacts on the income from our joint ventures in China and India. (3)The market risk OCI sensitivities exclude the impact of changes in the defined benefit obligations and plan assets.
(4)The LICAT sensitivities illustrate the impact on SLF Inc. as at June 30, 2025 and December 31, 2024. The sensitivities reflect the worst scenario as of June 30, 2025 and assume that a scenario switch does not occur in the quarter. LICAT ratios are rounded in increments of 0.5%.


($ millions, unless otherwise noted)	As at June 30, 2025				As at December 31, 2024
Change in Swap Spreads(1)(2)	20 basis point decrease		20 basis point increase		20 basis point decrease		20 basis point increase
Potential impact on net income (after-tax)		(25)		25		(25)		25
Potential impact on CSM (pre-tax)		—		—		—		—
Potential impact on OCI		—		—		—		—
(1)The swap spread sensitivities assume a parallel shift in the indicated spreads across the entire term structure. Variations in realized spread changes based on different terms to maturity, geographies, asset classes and derivative types, underlying interest rate movements, and ratings may result in realized sensitivities being significantly different from those provided above. (2)Net income, CSM, and OCI sensitivities have been rounded in increments of $25 million. The sensitivities exclude the market impacts on the income from our joint ventures in China and India.

32 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

4. Real Estate Sensitivities

The following table sets out the estimated immediate impact on, or sensitivity of, our net income, OCI and CSM to certain instantaneous changes in the value of our real estate investments as at June 30, 2025 and December 31, 2024.


($ millions, unless otherwise noted)	As at June 30, 2025		As at December 31, 2024
Change in Real Estate Values (1)	10% decrease	10% increase	10% decrease	10% increase
Potential impact on net income (after-tax)	(475)	475	(450)	450
Potential impact on CSM (pre-tax)	(100)	100	(100)	100
Potential impact on OCI	—	—	—	—
(1)Net income, CSM, and OCI sensitivities have been rounded in increments of $25 million. The sensitivities exclude the market impacts on the income from our joint ventures in China and India.

LICAT Interest Rate Scenario Switch

The LICAT interest rate risk is assessed under four different interest rate scenarios, and the scenario leading to the highest capital requirement is chosen as the worst scenario for each geographic region as defined by the LICAT guideline. Changes and interaction between the level and term movements in interest rates and credit spreads can shift the interest rate scenario applied in the LICAT calculation causing a discontinuity where capital requirements change materially. In 2020, OSFI updated the LICAT guideline for interest rate risk requirements for participating businesses to be smoothed over six quarters. As a result, the actual impact to the LICAT ratio from participating businesses in any quarter will reflect the scenarios from current quarter as well as the prior five quarters and switching between the scenarios would have the effect of offsetting the previous impacts over time. It should be noted that switching of the scenario can also change the direction of our sensitivities.

For SLF Inc., assuming no further scenario switches, no additional LICAT ratio impact is expected over the next five quarters.

For Sun Life Assurance, assuming no further scenario switches, no additional LICAT ratio impact is expected over the next five quarters.

5. Additional Cautionary Language and Key Assumptions Related to Sensitivities

Our market risk sensitivities are measures of our estimated change in net income, OCI, CSM and LICAT ratio for changes in market risk variables described above, based on market risk variables and business in force as at the reporting date. These sensitivities are calculated independently for each risk factor, generally assuming that all other risk variables stay constant. The sensitivities do not take into account indirect effects such as potential impacts on goodwill impairment or valuation allowances on deferred tax assets.

We have provided measures of our net income sensitivity to instantaneous changes in equity markets, interest rates, credit spreads, swap spreads, real estate price levels, and capital sensitivities to changes in equity price levels, interest rates and credit spreads. The LICAT ratio and CSM sensitivities are non-IFRS financial measures, and for additional information, see section N - Non-IFRS Financial Measures in this document. The cautionary language which appears in this section is applicable to all net income, CSM, OCI and LICAT ratio sensitivities.

Actual results can differ materially from these estimates for a variety of reasons, including differences in the pattern or distribution of the market shocks, the interaction between these risk factors, model error, or changes in other assumptions such as business mix, effective tax rates, policyholder behaviour, currency exchange rates and other market variables relative to those underlying the calculation of these sensitivities. The extent to which actual results may differ from the indicative ranges will generally increase with larger movements in risk variables. Our sensitivities as at December 31, 2024 have been included for comparative purposes only.

Sensitivities to interest rates and credit spreads assume a parallel shift in assumed interest rates across the entire yield curve or a parallel shift in the indicated spreads across the entire term structure, with no change to the ultimate risk-free rate or ultimate liquidity premium. Realized sensitivities may be significantly different from those illustrated based on factors such as different terms to maturity, geographies, asset classes and derivative types, and ratings.

The sensitivities reflect the composition of our assets and liabilities as at June 30, 2025 and December 31, 2024, respectively. Changes in these positions due to new sales or maturities, asset purchases/sales, or other management actions could result in material changes to these reported sensitivities. In particular, these sensitivities reflect the expected impact of hedging activities based on the hedging programs in place as at the respective calculation dates. The actual impact of hedging activity can differ materially from that assumed in the estimated sensitivities due to ongoing hedge re-balancing activities, changes in the scale or scope of hedging activities, changes in the cost or general availability of hedging instruments, basis risk (i.e., the risk that hedges do not exactly replicate the underlying portfolio experience), model risk, and other operational risks in the ongoing management of the hedge programs or the potential failure of hedge counterparties to perform in accordance with expectations.

The sensitivities are based on methods and assumptions in effect as at June 30, 2025 and December 31, 2024, as applicable. Changes in the regulatory environment, assumptions or methods used to measure assets and liabilities after those dates could result in material changes to the estimated sensitivities. Changes in market risk variables in excess of the changes illustrated may result in other than proportionate impacts.

The sensitivities reflect the CSM as at June 30, 2025 and December 31, 2024. For insurance contracts measured using the VFA, where the change in the effect of the time value of money and financial risk not arising from the underlying items adjusts the CSM, changes in the CSM balance will affect the sensitivity of income to changes in market risk variables.

Our LICAT sensitivities may be non-linear and can change due to the interrelationship between market rates and spreads, actuarial assumptions and our LICAT calculations.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 33

For the reasons outlined above, our sensitivities should only be viewed as indicative estimates of the underlying sensitivities of each factor under these specialized assumptions, and should not be viewed as predictors of our future income, OCI, CSM or capital. Given the nature of these calculations, we cannot provide assurance that actual impacts will be consistent with the estimates provided.

Information related to market risk sensitivities should be read in conjunction with the information contained in section N - Accounting and Control Matters - 1 - Critical Accounting Policies and Estimates in the 2024 Annual MD&A. Additional information on market risk can be found in Note 6 of the 2024 Annual Consolidated Financial Statements and the Risk Factors section in the 2024 AIF.


J. Additional Financial Disclosure

1. Revenue


	Quarterly results			Year-to-date
($ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Insurance revenue
Annuities	633	619	597	1,252	1,178
Life insurance	1,447	1,420	1,418	2,867	2,778
Health insurance	3,877	3,979	3,552	7,856	7,151
Total insurance revenue	5,957	6,018	5,567	11,975	11,107
Net Investment income (loss)	1,107	3,093	1,272	4,200	595
Fee income	2,135	2,240	2,077	4,375	4,089
Total revenue	9,199	11,351	8,916	20,550	15,791

Total revenue increased $0.3 billion compared to the prior year, primarily driven by higher insurance revenue. Foreign exchange translation led to a $87 million increase in revenue. By business group, total revenue reflected higher insurance revenue primarily in the U.S. and Canada.

Total revenue increased $4.8 billion in the first six months of 2025 compared to the same period in 2024, primarily driven by net investment income from fair value changes of invested assets and higher insurance revenue. Foreign exchange translation led to a $499 million increase in revenue. By business group, revenue reflected net investment income from fair value changes of invested assets in Canada, Asia and the U.S., and higher insurance revenue primarily in the U.S. and Canada.

2. Changes in the Statements of Financial Position and in Shareholders' Equity

Total general fund assets were $220.7 billion as at June 30, 2025 (December 31, 2024 - $221.9 billion), primarily driven by unfavourable impacts from foreign exchange translation, partially offset by general operating activities and net fair value growth from changes in interest rates and credit spreads.

The net liabilities balance for insurance contracts issued(1) was $148.0 billion as at June 30, 2025 (December 31, 2024 - $146.9 billion), primarily driven by insurance finance income and expenses, and cash flows, partially offset by foreign currency translation.

Total shareholders' equity, including preferred shares and other equity instruments, is $24.5 billion as at June 30, 2025
(December 31, 2024 - $25.6 billion). The change in total shareholders' equity included:

(i)common share dividend payments of $976 million;

(ii)unfavourable impacts from foreign exchange translation of $967 million included in OCI; and

(iii)a decrease of $918 million from the repurchase and cancellation of common shares; partially offset by

(iv)total shareholders' net income of $1,683 million, before preferred share dividends of $39 million; and

(v)net unrealized gains on FVOCI assets of $150 million.

As at July 25, 2025, SLF Inc. had 562,314,542 common shares, 3,105,778 options to acquire SLF Inc. common shares, and 52,200,000 Class A Shares outstanding.

(1)For more information about the changes in the net insurance contract liabilities, refer to Note 6 of the Interim Consolidated Financial Statements for the period ended June 30, 2025.

34 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

3. Cash Flows


	Quarterly results			Year-to-date
($ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Net cash and cash equivalents, beginning of period	7,869	9,954	7,908	9,954	11,170
Cash flows provided by (used in):
Operating activities	800	(382)	1,167	418	(1,320)
Investing activities	(53)	(80)	(97)	(133)	(81)
Financing activities	(864)	(1,642)	(294)	(2,506)	(1,219)
Changes due to fluctuations in exchange rates	(250)	19	47	(231)	181
Increase (decrease) in cash and cash equivalents	(367)	(2,085)	823	(2,452)	(2,439)
Net cash and cash equivalents, end of period	7,502	7,869	8,731	7,502	8,731
Short-term securities, end of period	3,600	3,608	2,746	3,600	2,746
Net cash, cash equivalents and short-term securities, end of period	11,102	11,477	11,477	11,102	11,477

Our operating activities generate cash flows which include net premiums, net investment income, fee income, and the sale and maturity of investments. They are the principal source of funds to pay for policyholder claims and benefits, commissions, operating expenses, and the purchase of investments. Cash flows used in investing activities primarily include transactions related to associates, joint ventures and acquisitions. Cash flows provided by and used in financing activities largely reflect capital transactions including payments of dividends, the issuance and repurchase of shares, as well as the issuance and retirement of debt instruments and preferred shares.

Q2'25 cash flows used in financing activities were higher year-over-year as the prior year included the issuance of $750 million principal amount of Series 2024-1 Subordinated Unsecured 5.12% Fixed/Floating Debentures.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 35

4. Quarterly Financial Results

The following table provides a summary of our results for the eight most recently completed quarters. A more complete discussion of our historical quarterly results can be found in our Interim and Annual MD&A for the relevant periods.


	Quarterly results
($ millions, unless otherwise noted)	Q2'25	Q1'25	Q4'24	Q3'24	Q2'24	Q1'24	Q4'23	Q3'23
Total revenue	9,199	11,351	7,509	15,333	8,916	6,875	18,684	2,439
Common shareholders' net income (loss)
Underlying net income(1)	1,015	1,045	965	1,016	1,000	875	983	930
Add: Market-related impacts	(166)	(22)	(179)	29	(153)	(70)	(193)	23
ACMA	3	(4)	11	36	16	(7)	(1)	35
Other adjustments	(136)	(91)	(560)	267	(217)	20	(40)	(117)
Reported net income - Common shareholder	716	928	237	1,348	646	818	749	871
Diluted EPS ($)
Underlying(1)	1.79	1.82	1.68	1.76	1.72	1.50	1.68	1.59
Reported	1.26	1.62	0.41	2.33	1.11	1.40	1.28	1.48
Basic reported EPS ($)
Reported	1.27	1.62	0.41	2.33	1.11	1.40	1.28	1.49
Underlying net income (loss) by segment(1)
Asset Management	300	351	360	344	307	282	331	330
Canada	379	376	366	375	402	310	350	338
U.S.	195	218	161	219	204	189	253	185
Asia	206	197	175	170	179	177	143	166
Corporate	(65)	(97)	(97)	(92)	(92)	(83)	(94)	(89)
Total underlying net income (loss)(1)	1,015	1,045	965	1,016	1,000	875	983	930
Add: Market-related impacts (pre-tax)	(187)	(28)	(221)	(12)	(169)	(26)	(436)	107
ACMA (pre-tax)	4	(5)	13	63	18	(8)	6	41
Other adjustments (pre-tax)	(181)	(113)	(378)	246	(254)	41	(118)	(156)
Tax expense (benefit) on above items	65	29	(142)	35	51	(64)	314	(51)
Reported net income (loss) by segment - Common shareholders
Asset Management	254	326	326	644	274	284	297	268
Canada	330	351	253	382	292	290	348	365
U.S.	103	186	(7)	339	127	97	101	132
Asia	98	166	11	32	151	235	44	211
Corporate	(69)	(101)	(346)	(49)	(198)	(88)	(41)	(105)
Total reported net income (loss) - Common shareholders	716	928	237	1,348	646	818	749	871

(1)Represents a non-IFRS financial measure. For more details, see section N - Non-IFRS Financial Measures in this document.

First Quarter 2025

Underlying net income of $1,045 million increased $170 million or 19% from prior year, driven by:

•Group - Health & Protection up $50 million: Business growth and favourable protection experience in Canada primarily from morbidity and mortality experience, and higher U.S. Dental results, partially offset by moderately unfavourable morbidity experience in U.S. medical stop-loss.

•Individual - Protection up $55 million: Business growth and higher contributions from joint ventures in Asia, and improved protection experience in Canada largely from mortality experience.

•Corporate expenses & other $(14) million increase in net loss primarily reflecting lower investment income from surplus assets.

Reported net income of $928 million increased $110 million or 13% from prior year, driven by the increase in underlying net income, market-related impacts primarily reflecting improved real estate experience and favourable interest rate impacts partially offset by unfavourable equity market impacts, and fair value changes in MFS shares owned by management, partially offset by prior year gains on partial sale of ABSLAMC and the early termination of a distribution agreement in Asset Management.

36 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

Fourth Quarter 2024

Underlying net income of $965 million decreased $18 million or 2%, driven by:

•Asset management & wealth up $47 million: Higher fee income in Asset Management, Canada, and Asia, partially offset by lower net investment results in Canada.

•Group - Health & Protection down $99 million: Unfavourable morbidity experience in U.S. medical stop-loss and less favourable morbidity experience in Canada, partially offset by business growth in Canada.

•Individual - Protection up $55 million: Improved protection experience in Asia and Canada and higher contributions from joint ventures in Asia.

•Corporate expenses & other $(21) million increase in net loss primarily reflecting higher expenses largely from continued investments in our Asia businesses and incentive compensation in Asia.

Reported net income of $237 million decreased $512 million or 68%, driven by lower tax-exempt investment income of $234 million in Corporate, an impairment charge of $186 million on an intangible asset related to bancassurance in Vietnam reflecting updates resulting from changes in regulatory and macro-economic factors, and a non-recurring provision in U.S. Dental, partially offset by market-related impacts primarily reflecting improved real estate experience.

Third Quarter 2024

Underlying net income of $1,016 million increased $86 million or 9%, driven by:

•Asset management & wealth up $17 million: Higher fee income in Asset Management, Asia, and Canada, partially offset by unfavourable credit experience in Canada.

•Group - Health & Protection up $60 million: Strong business growth in U.S. Group Benefits and Canada, higher fee-based income in Canada, and improved group life mortality experience in the U.S., partially offset by lower U.S. Dental results.

•Individual - Protection up $9 million: Business growth in Asia and Canada partially offset by unfavourable mortality experience in Asia.

•Corporate expenses & other were in line with prior year.

Reported net income of $1,348 million increased $477 million or 55%, driven by a decrease in SLC Management's estimated acquisition-related liabilities and the increase in underlying net income. Favourable equity market impacts and improved real estate experience were offset by interest rate impacts.

Second Quarter 2024

Underlying net income of $1,000 million increased $80 million or 9%, driven by:

•Asset management & wealth up $36 million: Higher fee income in Asset Management, Canada, and Asia, partially offset by higher expenses in Asset Management.

•Group - Health & Protection down $55 million: Lower results in U.S. Dental primarily reflecting the impact of Medicaid redeterminations and related claims following the end of the Public Health Emergency, less favourable morbidity experience in Canada, and unfavourable morbidity experience in U.S. medical stop-loss, partially offset by strong business growth in U.S. Group Benefits and Canada.

•Individual - Protection up $82 million: Business growth in Asia and Canada, and favourable mortality experience in Canada and the U.S.

•Corporate expenses & other $17 million decrease in net loss driven by lower operating expenses and financing costs.

Reported net income of $646 million decreased $14 million or 2%. Financial discipline remains core to our Client Impact Strategy and business. In Q2'24, we recorded a restructuring charge of $138 million (post-tax $108 million) reflecting actions taken to improve productivity and drive earnings growth at the higher-end of our Medium-Term Financial Objectives. We expect these actions to result in annual savings of approximately $200 million (pre-tax) by 2026. The restructuring charge is offset by the increase in underlying net income; and market-related impacts primarily reflecting interest rates and real estate investments.

First Quarter 2024

Underlying net income of $875 million decreased $20 million from prior year, driven by:

•Asset management & wealth down $3 million: Higher fee income offset by higher expenses in Asset Management, as well as lower net seed investment income in SLC Management.

•Group - Health & Protection down $23 million: Less favourable morbidity experience in U.S. medical stop-loss and lower results in U.S. Dental primarily reflecting the impact of Medicaid redeterminations following the end of the Public Health Emergency, partially offset by strong revenue growth in U.S. Group Benefits, and business growth and improved disability experience in Canada.

•Individual - Protection down $13 million: Lower earnings due to the sale of Sun Life UK partially offset by business growth in Asia.

•Corporate expenses & other $19 million decrease in net loss driven by lower financing costs.

Reported net income of $818 million increased $12 million from prior year, driven by the gains on partial sale of ABSLAMC and the early termination of a distribution agreement in Asset Management, largely offset by the prior year gain on sale of the sponsored markets business in Canada, fair value changes in MFS shares owned by management, and the decrease in underlying net income. Unfavourable real estate experience was mostly offset by favourable interest rate impacts.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 37

Fourth Quarter 2023

Underlying net income of $983 million increased $91 million or 10% from prior year, driven by:

•Asset management & wealth up $27 million: Higher Asset Management fee-related earnings and higher investment income driven by volume growth and an increase in yields.

•Group - Health & Protection up $44 million: Business premium growth in the U.S. and Canada, improved disability experience in Canada, and higher investment contributions in the U.S., partially offset by lower results in U.S. Dental.

•Individual - Protection up $53 million: Business growth reflecting good sales momentum in Asia, and higher investment contributions in Canada, partially offset by lower earnings due to the sale of Sun Life UK.

•Corporate expenses & other $(33) million increase in net loss driven by higher operating expenses reflecting business growth and continued investments in the business, partially offset by a lower effective tax rate.

•Higher earnings on surplus primarily driven by higher net interest income and lower realized losses.

Reported net income of $749 million decreased $416 million or 36%, driven by unfavourable market-related impacts primarily reflecting interest rates and real estate experience, the prior year impact of the Canada Tax Rate Change, and fair value changes in MFS shares owned by management; partially offset by the increase in underlying net income, the impact of the Bermuda Corporate Income Tax Change; and lower DentaQuest integration costs.

Third Quarter 2023

Underlying net income of $930 million decreased $19 million or 2%, driven by:

•Asset management & wealth up $38 million: Higher investment income driven by volume growth and an increase in yields, and higher Asset Management fee-related earnings.

•Group - Health & Protection up $4 million: Strong revenue growth across all U.S. businesses and better disability experience in Canada, largely offset by health and protection experience in the U.S., and lower fee-related earnings in Canada.

•Individual - Protection down $8 million: Lower earnings due to the sale of Sun Life UK, and lower net investment results in the U.S., partially offset by business growth reflecting good sales momentum during the past year in Asia.

•Corporate expenses & other $(53) million increase in net loss includes higher debt financing costs.

•Higher expenses across business types were driven by volume growth, continued investments in the business, and higher incentive compensation.

Reported net income of $871 million increased $760 million, driven by favourable market-related impacts primarily reflecting interest rates partially offset by real estate experience, a $170 million charge related to the sale of Sun Life UK and a higher increase in SLC Management's acquisition-related liabilities in the prior year, and ACMA impacts; partially offset by fair value changes in MFS shares owned by management.


K. Legal and Regulatory Proceedings

Information concerning legal and regulatory matters is provided in our Annual Consolidated Financial Statements, our annual MD&A and the AIF, in each case for the year ended December 31, 2024, and in our Interim Consolidated Financial Statements for the period ended June 30, 2025.

L. Changes in Accounting Policies

We have not adopted any new or amended IFRS standards in Q2'25. For additional information on other changes in accounting policy, refer to Note 2 in our Interim Consolidated Financial Statements for the period ended June 30, 2025.

M. Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of the Company's financial reporting and the preparation of its financial statements in accordance with IFRS.

There were no changes to the Company's internal control over financial reporting during the period, which began on April 1, 2025 and ended on June 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

38 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS


N. Non-IFRS Financial Measures

1. Common Shareholders' View of Reported Net Income

The following table provides the reconciliation of the Drivers of Earnings ("DOE") analysis to the Statement of Operations total net income. The DOE analysis provides additional detail on the sources of earnings, primarily for protection and health businesses, and explains the actual results compared to the longer term expectations. The underlying DOE and reported DOE are both presented on a common shareholders' basis by removing the allocations to participating policyholders.


($ millions)	Q2'25
Statement of Operations	Underlying DOE(1)	Non-underlying adjustments(1)	Common Shareholders' Reported DOE(2)(3)	Adjustment for:		Reported (per IFRS)
				Par(2)	Net(3)
Net insurance service result	760	—	760	75	(10)	825
Net investment result	446	(163)	283	(1)	92	374
ACMA(3)		4	4	—	(4)
Fee income:
Asset Management	416	(71)	345		(345)
Other fee income	102	—	102	(5)	2,038	2,135
Fee income						2,135
Other expenses	(440)	(145)	(585)	—	(1,773)	(2,358)
Income before taxes	1,284	(375)	909	69	(2)	976
Income tax (expense) benefit	(237)	65	(172)	(26)	—	(198)
Total net income	1,047	(310)	737	43	(2)	778
Allocated to Participating and NCI(4)	(13)	11	(2)	(43)	2	(43)
Dividends and Distributions(5)	(19)	—	(19)	—	—	(19)
Underlying net income(1)	1,015
Reported net income - Common shareholders		(299)	716	—	—	716


($ millions)	Q1'25
Statement of Operations	Underlying DOE(1)	Non-underlying adjustments(1)	Common Shareholders' Reported DOE(2)(3)	Adjustment for:		Reported (per IFRS)
				Par(2)	Net(3)
Net insurance service result	837	—	837	72	1	910
Net investment result	422	(22)	400	9	75	484
ACMA(3)		(5)	(5)	—	5
Fee income:
Asset Management	483	(38)	445		(445)
Other fee income	80	—	80	(5)	2,165	2,240
Fee income						2,240
Other expenses	(494)	(88)	(582)	—	(1,803)	(2,385)
Income before taxes	1,328	(153)	1,175	76	(2)	1,249
Income tax (expense) benefit	(248)	29	(219)	(23)	—	(242)
Total net income	1,080	(124)	956	53	(2)	1,007
Allocated to Participating and NCI(4)	(15)	7	(8)	(53)	2	(59)
Dividends and Distributions(5)	(20)	—	(20)	—	—	(20)
Underlying net income(1)	1,045
Reported net income - Common shareholders		(117)	928	—	—	928

(1)For a breakdown of non-underlying adjustments made to arrive at underlying net income as well as the underlying DOE analysis, see the heading "Underlying Net Income and Underlying EPS" below.

(2)Removes the components attributable to the participating policyholders.

(3)Certain amounts within the Drivers of Earnings are presented on a net basis to reflect how the business is managed, compared to a gross basis in the Consolidated Financial Statements. For more details, refer to "Drivers of Earnings" in section 3 - Additional Non-IFRS Financial Measures below. Further, in this document, the reported net income impact of ACMA excludes amounts attributable to participating policyholders and includes non-liability impacts. In contrast, the Interim Consolidated Financial Statements for the period ended June 30, 2025 (Note 10.B.v of the 2024 Annual Consolidated Financial Statements) shows the pre-tax net income impacts of method and assumption changes, and CSM Impacts include amounts attributable to participating policyholders.

(4)Allocated to equity in the participating account and attributable to non-controlling interests ("NCI").

(5)Dividends on preferred shares and distributions on other equity instruments.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 39


($ millions)	Q2'24
Statement of Operations	Underlying DOE(1)	Non-underlying adjustments(1)	Common Shareholders' Reported DOE(2)(3)	Adjustment for:		Reported (per IFRS)
				Par(2)	Net(3)
Net insurance service result	747	—	747	59	—	806
Net investment result	449	(167)	282	21	67	370
ACMA(3)		18	18	—	(18)
Fee income:
Asset Management	417	(41)	376		(376)
Other fee income	84	—	84	(4)	1,997	2,077
Fee income						2,077
Other expenses	(451)	(221)	(672)	—	(1,671)	(2,343)
Income before taxes	1,246	(411)	835	76	(1)	910
Income tax (expense) benefit	(215)	51	(164)	(28)	—	(192)
Total net income	1,031	(360)	671	48	(1)	718
Allocated to Participating and NCI(4)	(11)	6	(5)	(48)	1	(52)
Dividends and Distributions(5)	(20)	—	(20)	—	—	(20)
Underlying net income(1)	1,000
Reported net income - Common shareholders		(354)	646	—	—	646

Refer to the footnotes on the previous page.


	Year-to-date
($ millions)	2025
Statement of Operations	Underlying DOE(1)	Non-underlying adjustments(1)	Common Shareholders' Reported DOE(2)(3)	Adjustment for:		Reported (per IFRS)
				Par(2)	Net(3)
Net insurance service result	1,597	—	1,597	147	(9)	1,735
Net investment result	868	(185)	683	8	167	858
ACMA(3)		(1)	(1)	—	1
Fee Income:
Asset Management	899	(109)	790		(790)
Other fee income	182	—	182	(10)	4,203	4,375
Fee income						4,375
Other expenses	(934)	(233)	(1,167)	—	(3,576)	(4,743)
Income before taxes	2,612	(528)	2,084	145	(4)	2,225
Income tax (expense) benefit	(485)	94	(391)	(49)	—	(440)
Total net income	2,127	(434)	1,693	96	(4)	1,785
Allocated to Participating and NCI(4)	(28)	18	(10)	(96)	4	(102)
Dividends and Distributions(5)	(39)	—	(39)	—	—	(39)
Underlying net income(1)	2,060
Reported net income - Common shareholders		(416)	1,644	—	—	1,644

Refer to the footnotes on the previous page.

40 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS


	Year-to-date
($ millions)	2024
Statement of Operations	Underlying DOE(1)	Non-underlying adjustments(1)	Common Shareholders' Reported DOE(2)(3)	Adjustment for:		Reported (per IFRS)
				Par(2)	Net(3)
Net insurance service result	1,459	—	1,459	110	(2)	1,567
Net investment result	868	(98)	770	51	158	979
ACMA(3)		10	10	—	(10)
Fee income:
Asset Management	800	19	819		(819)
Other fee income	132	—	132	(8)	3,965	4,089
Fee income						4,089
Other expenses	(930)	(303)	(1,233)	—	(3,295)	(4,528)
Income before taxes	2,329	(372)	1,957	153	(3)	2,107
Income tax (expense) benefit	(390)	(13)	(403)	(50)	—	(453)
Total net income	1,939	(385)	1,554	103	(3)	1,654
Allocated to Participating and NCI(4)	(24)	(26)	(50)	(103)	3	(150)
Dividends and Distributions(5)	(40)	—	(40)	—	—	(40)
Underlying net income(1)	1,875
Reported net income - Common shareholders		(411)	1,464	—	—	1,464

Refer to the footnotes on the previous page.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 41

2. Underlying Net Income and Underlying EPS

Underlying net income is a non-IFRS financial measure that assists in understanding Sun Life's business performance by making certain adjustments to IFRS income. Underlying net income, along with common shareholders’ net income (Reported net income), is used as a basis for management planning, and is also a key measure in our employee incentive compensation programs. This measure reflects management's view of the underlying business performance of the company and long-term earnings potential. For example, due to the longer term nature of our individual protection businesses, market movements related to interest rates, equity markets and investment properties can have a significant impact on reported net income in the reporting period. However, these impacts are not necessarily realized, and may never be realized, if markets move in the opposite direction in subsequent periods or in the case of interest rates, the fixed income investment is held to maturity.

Underlying net income removes the impact of the following items from reported net income:

•Market-related impacts reflecting the after-tax difference in actual versus expected market movements, including:

i)Net interest impact from risk-free rate, credit spread, swap spread movements, and other impacts, reflecting accounting mismatches between assets and liabilities:

a.Differences arising from fair value changes(1) of fixed income assets (including derivatives) measured at FVTPL supporting insurance contracts, compared to fair value changes of the liabilities(2);

b.Fair value changes of fixed income assets (including derivatives) measured at FVTPL supporting our investment contract liability and surplus portfolios(3); and

c.Tax-exempt investment(4) income above or below expected long-term tax savings relating to our Canadian multi-national insurance operations.

ii)Non-fixed income investments where the weighted average expected return is approximately 2% per quarter, including:

a.Equity investments (including derivatives) supporting insurance contracts and surplus portfolios; and

b.Investment properties supporting insurance contracts and surplus portfolios.

•ACMA – captures the impact of method and assumption changes, and management actions on insurance and reinsurance contracts.

•Other adjustments:

i)MFS shares owned by management – this adjustment removes the change in fair value and other activity related to MFS common shares owned by management.

ii)Acquisition, integration, and restructuring – expense and income related to acquisition or disposal of a business. Also includes expenses related to restructuring activities.

iii)Intangible asset amortization – removes the amortization expense associated with finite life intangible assets arising from acquisitions or business combinations excluding amortization of software and distribution agreements.

iv)Other – represents items that are unusual or exceptional in nature which management believes are not representative of the long-term performance of the Company.

Underlying EPS (diluted). This measure is used in comparing the profitability across multiple periods and is calculated by dividing underlying net income by weighted average common shares outstanding for diluted EPS, excluding the dilutive impact of convertible instruments. For additional information about the underlying net income, see above. For additional information about the composition of the EPS, please refer to Note 12 of our Interim Consolidated Financial Statements for the period ended June 30, 2025. For additional information about the SLEECS, please refer to Note 12 of our 2024 Annual Consolidated Financial Statements.

(1)For fixed income assets, Underlying Net Income includes credit experience from rating changes on assets measured at FVTPL, and the ECL impact for assets measured at FVOCI.

(2)Underlying net income is based on observable discount curves and exchange rates at the beginning of the period.

(3)Underlying net income for earnings on surplus includes realized gains (losses) on fixed income assets classified as FVOCI.

(4)Q4'24 balances are isolated in Other within Other adjustments.

42 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

The following table sets out the post-tax amounts that were excluded from our underlying net income (loss) and underlying EPS and provides a reconciliation to our reported net income and EPS based on IFRS.

Reconciliations of Select Net Income Measures


	Quarterly results			Year-to-date
($ millions, after-tax)	Q2'25	Q1'25	Q2'24	2025	2024
Underlying net income	1,015	1,045	1,000	2,060	1,875
Market-related impacts
Equity market impacts	—	(48)	(8)	(48)	4
Interest rate impacts(1)	(94)	57	(52)	(37)	(12)
Impacts of changes in the fair value of investment properties (real estate experience)	(72)	(31)	(93)	(103)	(215)
Add: Market-related impacts	(166)	(22)	(153)	(188)	(223)
Add: Assumption changes and management actions	3	(4)	16	(1)	9
Other adjustments
MFS shares owned by management	(1)	5	—	4	(12)
Acquisition, integration and restructuring(2)(3)(4)(5)	(38)	(54)	(164)	(92)	(142)
Intangible asset amortization(6)	(97)	(39)	(38)	(136)	(74)
Other(7)(8)	—	(3)	(15)	(3)	31
Add: Total of other adjustments	(136)	(91)	(217)	(227)	(197)
Reported net income - Common shareholders	716	928	646	1,644	1,464
Underlying EPS (diluted) ($)	1.79	1.82	1.72	3.62	3.22
Add: Market-related impacts ($)	(0.30)	(0.04)	(0.26)	(0.34)	(0.39)
Assumption changes and management actions ($)	0.01	(0.01)	0.03	—	0.02
MFS shares owned by management ($)	—	0.01	—	0.01	(0.02)
Acquisition, integration and restructuring ($)	(0.07)	(0.09)	(0.28)	(0.16)	(0.24)
Intangible asset amortization ($)	(0.17)	(0.07)	(0.07)	(0.24)	(0.13)
Other ($)	—	(0.01)	(0.03)	(0.01)	0.05
Impact of convertible securities on diluted EPS ($)	—	0.01	—	0.01	—
Reported EPS (diluted) ($)	1.26	1.62	1.11	2.89	2.51

(1)Our results are sensitive to long term interest rates given the nature of our business and to non-parallel yield curve movements (for example flattening, inversion, steepening, etc.).

(2)Amounts relate to acquisition costs for our SLC Management affiliates, BentallGreenOak, InfraRed Capital Partners, Crescent Capital Group LP and Advisors Asset Management, Inc, which include the unwinding of the discount for Other financial liabilities of $15 million in Q2'25 and $29 million for the first six months of 2025 (Q1'25 - $14 million, Q2'24 - $22 million; for the first six months of 2024 - $44 million).

(3)Includes acquisition, integration and restructuring costs associated with DentaQuest, acquired on June 1, 2022.

(4)Q2'24 includes a restructuring charge of $108 million in the Corporate business group.

(5)To meet regulatory obligations, in Q1'24, we sold 6.3% of our ownership interest in ABSLAMC, generating a gain of $84 million. As a result of the transaction, our ownership interest in ABSLAMC was reduced from 36.5% to 30.2% for gross proceeds of $136 million. Subsequently in Q2'24, we sold an additional 0.2% of our ownership interest.

(6)Includes an impairment charge of $61 million on a customer relationship intangible asset from the early termination of a U.S. group dental contract.

(7)Includes a Pillar Two global minimum tax adjustment in Q2'24. For additional information, refer to Note 8 of our Interim Consolidated Financial Statements for the period ended June 30, 2025 and section D - Profitability in the 2024 Annual MD&A.

(8)Includes the early termination of a distribution agreement in Asset Management in Q1'24.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 43

The following table shows the pre-tax amount of underlying net income adjustments:


	Quarterly results			Year-to-date
($ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Underlying net income (after-tax)	1,015	1,045	1,000	2,060	1,875
Underlying net income adjustments (pre-tax):
Add: Market-related impacts	(187)	(28)	(169)	(215)	(195)
Assumption changes and management actions(1)	4	(5)	18	(1)	10
Other adjustments	(181)	(113)	(254)	(294)	(213)
Total underlying net income adjustments (pre-tax)	(364)	(146)	(405)	(510)	(398)
Add: Taxes related to underlying net income adjustments	65	29	51	94	(13)
Reported net income - Common shareholders (after-tax)	716	928	646	1,644	1,464

(1)In this document, the reported net income impact of ACMA excludes amounts attributable to participating policyholders and includes non-liability impacts. In contrast, the Interim Consolidated Financial Statements for the period ended June 30, 2025 (Note 10.B.v of the 2024 Annual Consolidated Financial Statements) shows the pre-tax net income impacts of method and assumption changes, and CSM Impacts include amounts attributable to participating policyholders.

Taxes related to underlying net income adjustments may vary from the expected effective tax rate range reflecting the mix of business based on the Company's international operations and other tax-related adjustments.

3. Additional Non-IFRS Financial Measures

Management also uses the following non-IFRS financial measures:

After-tax profit margin for U.S. Group Benefits. This ratio expresses U.S. Group Benefits underlying net income as a percentage of net premiums. It assists in explaining our results from period to period and measures profitability. This ratio is calculated by dividing underlying net income (loss) by net premiums for the trailing four quarters. There is no directly comparable IFRS measure.

Assets under administration (in SLC Management). AUA represents Client assets for which Sun Life provides administrative services. In Asset Management, AUA includes assets distributed mostly by SLC Management's affiliate, Advisors Asset Management, Inc. There is no directly comparable IFRS measure.

Assets under management. AUM is a non-IFRS financial measure that indicates the size of our Company's assets across asset management, wealth, and insurance. There is no standardized financial measure under IFRS. In addition to the most directly comparable IFRS measures, which are the balance of General funds and Segregated funds on our Statements of Financial Position, AUM also includes Third-party AUM and Consolidation adjustments. "Consolidation adjustments" is presented separately as consolidation adjustments apply to all components of total AUM.

AUM not yet earning fees. This measure represents the committed uninvested capital portion of total AUM not currently earning management fees. The amount depends on the specific terms and conditions of each fund. There is no directly comparable IFRS measure.

Capital raising. This measure consists of increases in SLC Management's commitments from fund raising activities for all real estate, infrastructure and alternative credit Clients excluding leverage. Investment-grade fixed income capital raising consists of sales made to new Clients. There is no directly comparable IFRS measure.

Cash and other liquid assets. This measure is comprised of cash, cash equivalents, short-term investments, and publicly traded securities, net of loans related to acquisitions and short-term loans that are held at SLF Inc. (the ultimate parent company), and its wholly owned holding companies. This measure is a key consideration of available funds for capital re-deployment to support business growth.


($ millions)	As at June 30, 2025	As at December 31, 2024
Cash and other liquid assets (held at SLF Inc. and its wholly owned holding companies):
Cash, cash equivalents & short-term securities	530	479
Debt securities(1)	593	780
Equity securities(2)	—	112
Sub-total	1,123	1,371
Less: Loans related to acquisitions and short-term loans(3) (held at SLF Inc. and its wholly owned holding companies)	—	(17)
Cash and other liquid assets (held at SLF Inc. and its wholly owned holding companies)	1,123	1,354

(1)Includes publicly traded bonds.

(2)Includes exchange traded fund ("ETF") Investments.

(3)Includes drawdowns from credit facilities to manage timing of cash flows.

Constant currency. We remove the impacts of foreign exchange translation from certain IFRS and non-IFRS measures to assist in comparing our results from period to period. The impacts of foreign exchange translation is approximated by using the foreign exchange rates in effect during the comparative period, using the average or period end foreign exchange rates, as appropriate.

44 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

CSM Movement Analysis includes certain non-IFRS financial measures, detailed below, and also presents certain measures on a net basis to reflect how the business is managed, compared to a gross basis in the Consolidated Financial Statements. Examples include i) The impacts of insurance contracts issued is presented net of reinsurance; ii) Impact of new business is presented net of acquisition expense gain/loss; and iii) Certain methodology changes are presented as an impact of change in assumptions, whereas the Consolidated Financial Statement presentation is a contract modification.

•Organic CSM Movement is comprised of the Impact of new insurance business, Expected movements from asset returns & locked-in rates, Insurance experience gains/losses, and CSM recognized for services provided.

•Impact of new insurance business on CSM, also referred to as "new business CSM", represents growth from sales activity in the period, including individual protection sales (excluding joint ventures), and defined benefit solutions and segregated fund wealth sales in Canada. New business CSM is presented net of acquisition expense gain/loss.

•Expected movements from asset returns & locked-in rates applies to variable fee approach ("VFA") and general measurement approach ("GMA") contracts. For VFA contracts, this component of the CSM movement analysis is comprised of two factors: (i) the expected return on underlying assets and (ii) the measurement of financial guarantees. The difference between actual and expected results are reported as the impact of markets. For GMA contracts, this component of the CSM includes the accretion of the CSM balance at locked-in rates, which refer to the term structure associated with locked-in discount rates, set when the insurance contract was sold or on transition to IFRS 17. Average locked-in rates increase with the passage of time on in-force business and new business added at current rates.

•Impact of markets & other includes the difference between actual and expected movement for VFA contracts for: (i) the return on underlying assets and (ii) the measurement of financial guarantees. Also includes other amounts excluded from Organic CSM Movement.

•Insurance experience gains/losses represents the current period impacts of insurance experience, resulting in a change in future cash flows that adjust CSM.

•Impact of change in assumptions represents the future period impacts of changes in fulfilment cash flows that adjust CSM.

•CSM market sensitivities. CSM market sensitivities are non-IFRS financial measures for which there are no directly comparable measures under IFRS so it is not possible to provide a reconciliation of these amounts to the most directly comparable IFRS measures.

Deployment. This measure represents the amount of capital that has been invested in the period, including leverage where applicable. Deployment also includes capital committed in infrastructure deals to be invested in specific assets. There is no directly comparable IFRS measure.

Drivers of Earnings. The Drivers of Earnings ("DOE") analysis provides additional detail on the sources of earnings, primarily for protection and health businesses, and explains the actual results compared to the longer term expectations. The DOE is presented on a reported and underlying common shareholders' basis. Within the net insurance service result, the underlying DOE provides detail on expected insurance earnings, impact of new insurance business and experience gains (losses). Within the net investment result, the underlying DOE provides detail on expected investment earnings, credit experience, earnings on surplus, and joint ventures & other. For more information, refer to the headings "Underlying net income and Underlying EPS", "Earnings on surplus", "Notable items attributable to reported and underlying net income", in this document.

Certain amounts in the DOE are presented on a net basis to reflect how the business is managed, compared to a gross basis in the Consolidated Financial Statements. Examples include: i) Net investment result and Other expenses of the Asset Management operating segment are combined with Fee Income to report the net contribution to earnings; ii) Income for fee-based businesses is reported net of the associated expenses; iii) Carried interest in SLC Management within Fee Income excludes the carried interest that Sun Life does not participate in economically, and nets the non-controlling interest portion of the carried interest against fee income and expenses of consolidated funds; iv) Net investment results include assets returns net of the crediting rate for investment contract liabilities and the unwinding of and changes in the discount rate for insurance contract liabilities; v) Earnings on surplus reflects net spread earned from investment strategies; and vi) Earnings attributable to the participating account are excluded.

Earnings on Surplus. This component of the Drivers of Earnings represents the net income earned on a company’s surplus funds. Earnings on Surplus is comprised of realized gains on fair value through other comprehensive income assets, as well as net investment returns on surplus, such as investment income, gains (losses) on seed investments and investment properties mark-to-market, and also includes impacts from derivatives, currency and other items.

Experience-related items attributable to reported net income and underlying net income. These notable items attributable to reported net income and underlying net income are components of the Drivers of Earnings represents gains and losses that are due to differences between the actual results during the reporting period and management’s estimate of the expected longer-term returns on assets and liabilities (i.e. expected insurance earnings and expected investment earnings) at the start of the reporting period.

Fee earning AUM. FE AUM consists of assets managed by SLC Management, which are beneficially owned by Clients, on which we earn management fees for providing investment management, property management or advisory-related services. There is no directly comparable IFRS measure.

Fee-related earnings and Operating income. Fee-related earnings represent profitability of SLC Management's fee-related portfolios, and is calculated as Fee-related revenue less Fee-related expenses. Operating income represents profit realized from our business operations, and is calculated as the sum of Fee-related earnings, Investment income (loss) and performance fees, and Interest and other. Fee-related revenue represents all fee income, with the exception of performance fees, generated from third-party investors. Fee-related expenses represent all expenses directly related to generating fee revenue from third-party investors. Investment income (loss) and performance fees represent total income or loss from our seed investments, net of the related expenses. Interest and other represents performance fee compensation, our net interest income or expense and income from managing the General Account assets.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 45

Fee-related earnings and Operating income are non-IFRS financial measures within SLC Management's Supplemental Income Statement, which enhances the comparability of SLC Management's results with publicly traded alternative asset managers. For more details, see our Supplementary Financial Information package for the quarter.

The following table provides a reconciliation from Fee-related earnings and Operating income to SLC Management's Fee income and Total expenses based on IFRS.



SLC Management	Quarterly results			Year-to-date
($ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Fee income (per IFRS)	415	473	394	888	955
Less: Non-fee-related revenue adjustments(1)(2)	103	110	95	213	353
Fee-related revenue	312	363	299	675	602
Total expenses (per IFRS)	421	452	420	873	891
Less: Non-fee-related expense adjustments(2)(3)	198	188	186	386	423
Fee-related expenses	223	264	234	487	468
Fee-related earnings	89	99	65	188	134
Add: Investment income (loss) and performance fees(4)	15	52	25	67	30
Add: Interest and other(5)	(22)	(19)	(23)	(41)	(51)
Operating income	82	132	67	214	113

(1)Includes Interest and other - fee income, Investment income (loss) and performance fees - fee income, and Other - fee income.

(2)Excludes the income and related expenses for certain property management agreements to provide more accurate metrics on our fee-related business.

(3)Includes Interest and other, Placement fees - other, Amortization of intangibles, Acquisition, integration and restructuring, and Other - expenses.

(4)Investment income (loss) and performance fee in SLC Management's Supplemental Income Statement relates to the underlying results of our seed investments. As such, we have excluded non-underlying market-related impacts as well as the gains or losses of certain non-seed hedges that are reported under Net investment income (loss) under IFRS. The reconciliation is as follows (amounts have been adjusted for rounding):


	Quarterly results			Year-to-date
($ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Net investment income (loss) (per IFRS)	10	59	47	69	69
Less: Market-related impacts and Other - Investment income (loss)	(5)	7	22	2	40
Add: Investment income (loss) and performance fees - fee income	—	—	—	—	1
Investment income (loss) and performance fees	15	52	25	67	30

(5)Includes Interest and other reported under Fee income under IFRS, net of Interest and other reported under Total expenses under IFRS.

Financial leverage ratio. This ratio is an indicator of the Company's balance sheet strength measured by its proportion of capital qualifying debt in accordance with OSFI guidelines. This is calculated as the ratio of total debt plus preferred shares to total capital including the contractual service margin net of taxes, where debt consists of all capital-qualifying debt securities. Capital-qualifying debt securities consist of subordinated debt and innovative capital instruments. The CSM is included net of taxes because debts are repaid and serviced from available after-tax funds.

Impacts of foreign exchange translation. To assist in comparing our results from period-to-period, the favourable or unfavourable impacts of foreign exchange translation are approximated using the foreign exchange rates, in effect during the comparative period, for several IFRS and Non-IFRS financial measures using the average or period end foreign exchange rates, as appropriate. Items impacting a reporting period, such as Revenue, Expenses, and Reported net income (loss) in our Consolidated Statements of Operations, as well as underlying net income (loss), and sales, are translated into Canadian dollars using average exchange rates for the appropriate daily, monthly, or quarterly period. For Assets and Liabilities in our Consolidated Statements of Financial Position, as well as the AUM and certain components of the Drivers of Earnings disclosure, period-end rates are used for currency translation purposes.

LICAT market sensitivities. LICAT market sensitivities are non-IFRS financial measures for which there are no directly comparable measures under IFRS so it is not possible to provide a reconciliation of these amounts to the most directly comparable IFRS measures.

Organic capital generation. This supplementary financial measure provides a view of the Company’s ability to generate excess capital under the normal course of business, excluding non-recurring items; where excess capital is defined as LICAT Available Capital and Surplus Allowance above LICAT Base Solvency Buffer at target ratio, as defined and calculated under OSFI-mandated guideline. This amount is determined as follows: underlying net income and organic CSM movement net of shareholder dividends and change in base solvency buffer for new business and aging of in-force. This amount excludes non-recurring impacts to available capital or base solvency buffer from markets, assumption changes, management actions, and other non-underlying items.

Pre-tax fee related earnings margin. This ratio is a measure of SLC Management's profitability in relation to funds that earn recurring fee revenues, while excluding investment income and performance fees. The ratio is calculated by dividing fee-related earnings by fee-related revenues and is based on the last twelve months. There is no directly comparable IFRS measure.

Pre-tax net operating margin. This ratio is a measure of the profitability and there is no directly comparable IFRS measure. For MFS, this ratio is calculated by excluding MFS shares owned by management and certain commission expenses that are offsetting. These commission expenses are excluded in order to neutralize the impact these items have on the pre-tax net operating margin and have no impact on the profitability of MFS. For SLC Management, the ratio is calculated by dividing the total operating income by fee-related revenue plus investment Income (loss) and performance fees, and is based on the last twelve months.

46 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

The following table provides a reconciliation to calculate MFS' pre-tax net operating margin:



MFS	Quarterly results			Year-to-date
(US$ millions)	Q2'25	Q1'25	Q2'24	2025	2024
Revenue
Fee income (per IFRS)	820	818	835	1,638	1,661
Less: Commissions	93	95	99	188	198
Less: Other(1)	(14)	(15)	(14)	(29)	(27)
Adjusted revenue	741	738	750	1,479	1,490
Expenses
Expenses (per IFRS)	594	581	595	1,175	1,208
Net investment (income)/loss (per IFRS)	(19)	(16)	(20)	(35)	(50)
Less: MFS shares owned by management (net of NCI)(2)	10	4	10	14	28
Compensation-related equity plan adjustments	3	6	2	9	14
Commissions	93	95	99	188	198
Other(1)	(12)	(17)	(12)	(29)	(23)
Adjusted expenses	481	477	476	958	941
Pre-tax net operating margin	35.1%	35.4%	36.5%	35.2%	36.8%

(1)Other includes accounting basis differences, such as sub-advisory expenses and product allowances.

(2)Excluding non-controlling interest. For more information on MFS shares owned by management, see the heading Underlying Net Income and Underlying EPS.

Return on equity. IFRS does not prescribe the calculation of ROE and therefore a comparable measure under IFRS is not available. To determine reported ROE and underlying ROE, respectively, reported net income (loss) and underlying net income (loss) is divided by the total weighted average common shareholders’ equity for the period. The ROE provides an indication of the overall profitability of the Company. The quarterly ROE is annualized.

Sales and flows. Asset Management gross flows includes funds from retail and institutional Clients; SLC Management gross flows include capital raising, such as uncalled capital commitments and fund leverage. Asset Management net flows consist of gross flows less gross outflows; SLC Management's net flows do not include Client distributions from the sale of underlying assets in closed-end funds. In Canada and in Asia, net sales consist of asset management gross flows & wealth sales less redemptions. In Canada, asset management gross flows & wealth sales consist of sales in Group Retirement Services (excluding retained sales) and Individual Wealth; group - health & protection sales consist of workplace benefits sold by Sun Life Health; and individual - protection sales refer to individual insurance sales. In the U.S., group - health & protection sales consist of sales by Group Benefits and Dental. In Asia, asset management gross flows & wealth sales consist of Hong Kong asset management gross flows & wealth sales, Philippines mutual fund sales, asset management gross flows & wealth sales by our India and China joint ventures and associates, and Aditya Birla Sun Life AMC Limited's equity and fixed income mutual fund sales based on our proportionate equity interest, including sales as reported by our bank distribution partners; individual - protection sales consist of the individual insurance sales, by our subsidiaries and joint ventures and associates, based on our proportionate equity interest, in the Philippines, Indonesia, India, China, Malaysia, Vietnam, International, Hong Kong and Singapore. Asia also has group - health & protection sales in the Philippines, Hong Kong and our joint ventures. To provide greater comparability across reporting periods, we exclude the impacts of foreign exchange translation from sales and gross flows. There is no directly comparable IFRS measure.

Third-party AUM. Third-party AUM is composed of retail, institutional, and other third party assets, which includes general fund and segregated fund assets managed by our joint ventures. In Asset Management, third-party AUM includes Client assets for retail and institutional Clients, as well as capital raising, such as uncalled commitments and fund leverage in SLC Management. In Canada, third-party AUM includes Client assets in retail mutual fund products of Sun Life Global Investments. In Asia, third-party AUM includes Client assets in Hong Kong managed fund products, International asset management & wealth products, Philippines mutual and managed fund products, Aditya Birla Sun Life AMC Limited equity and fixed income mutual fund products, Sun Life Everbright Asset Management products and our joint ventures’ general fund and segregated fund assets based on our proportionate equity interest. There is no directly comparable IFRS financial measure.

Total weighted premium income ("TWPI"). This measure consists of 100% renewal premiums, 100% of first year premiums, and 10% of single premiums. In contrast to sales, which only includes premiums from new business, TWPI includes renewal premiums, reflecting the strength of the in-force block and providing a better understanding of both new and existing business. There is no directly comparable IFRS measure.

Underlying dividend payout ratio. This is the ratio of dividends paid per share to diluted underlying EPS for the period. The ratio is utilized during the medium-term capital budgeting process to inform our planned capital initiatives. We target an underlying dividend payout ratio of between 40% and 50% based on underlying EPS. For more information, see section J - Capital and Liquidity Management in the 2024 Annual MD&A.

Underlying effective tax rate. This measure is calculated using the pre-tax underlying net income and the income tax expense associated with it. Our statutory tax rate is normally reduced by various tax benefits, such as lower taxes on income subject to tax in foreign jurisdictions, a range of tax-exempt investment income, and other sustainable tax benefits. Our effective tax rate helps in the analysis of the income tax impacts in the period.

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 47

4. Reconciliations of Select Non-IFRS Financial Measures

Underlying Net Income to Reported Net Income Reconciliation - Pre-tax by Business Group


	Q2'25
($ millions)	Asset Management	Canada	U.S.	Asia	Corporate	Total
Underlying net income (loss)	300	379	195	206	(65)	1,015
Add: Market-related impacts (pre-tax)	(29)	(41)	3	(116)	(4)	(187)
ACMA (pre-tax)	—	2	—	2	—	4
Other adjustments (pre-tax)	(31)	(8)	(137)	(5)	—	(181)
Tax expense (benefit)	14	(2)	42	11	—	65
Reported net income (loss) - Common shareholders	254	330	103	98	(69)	716
	Q1'25
Underlying net income (loss)	351	376	218	197	(97)	1,045
Add: Market-related impacts (pre-tax)	(11)	(9)	15	(19)	(4)	(28)
ACMA (pre-tax)	—	(2)	—	(3)	—	(5)
Other adjustments (pre-tax)	(20)	(23)	(60)	(10)	—	(113)
Tax expense (benefit) on above items	6	9	13	1	—	29
Reported net income (loss) - Common shareholders	326	351	186	166	(101)	928
	Q2'24
Underlying net income (loss)	307	402	204	179	(92)	1,000
Add: Market-related impacts (pre-tax)	(2)	(127)	(35)	(3)	(2)	(169)
ACMA (pre-tax)	—	8	—	10	—	18
Other adjustments (pre-tax)	(33)	(9)	(70)	(4)	(138)	(254)
Tax expense (benefit)	2	18	28	(31)	34	51
Reported net income (loss) - Common shareholders	274	292	127	151	(198)	646


	Year-to-date
	2025
($ millions)	Asset Management	Canada	U.S.	Asia	Corporate	Total
Underlying net income (loss)	651	755	413	403	(162)	2,060
Add: Market-related impacts (pre-tax)	(40)	(50)	18	(135)	(8)	(215)
ACMA (pre-tax)	—	—	—	(1)	—	(1)
Other adjustments (pre-tax)	(51)	(31)	(197)	(15)	—	(294)
Tax expense (benefit)	20	7	55	12	—	94
Reported net income (loss) - Common shareholders	580	681	289	264	(170)	1,644
	2024
Underlying net income (loss)	589	712	393	356	(175)	1,875
Add: Market-related impacts (pre-tax)	—	(82)	(88)	(19)	(6)	(195)
ACMA (pre-tax)	—	1	2	7	—	10
Other adjustments (pre-tax)	(7)	(17)	(137)	86	(138)	(213)
Tax expense (benefit)	(24)	(32)	54	(44)	33	(13)
Reported net income (loss) - Common shareholders	558	582	224	386	(286)	1,464

48 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

Underlying Net Income to Reported Net Income Reconciliation - Pre-tax by Business Unit - Asset Management


	Q2'25		Q1'25		Q2'24
($ millions)	MFS	SLC Management	MFS	SLC Management	MFS	SLC Management
Underlying net income (loss)	255	45	266	85	265	42
Add: Market-related impacts (pre-tax)	—	(29)	—	(11)	—	(2)
Other adjustments (pre-tax)	2	(33)	9	(29)	5	(38)
Tax expense (benefit)	(3)	17	(4)	10	(5)	7
Reported net income (loss) - Common shareholders	254	—	271	55	265	9


	Year-to-date
	2025		2024
($ millions)	MFS	SLC Management	MFS	SLC Management
Underlying net income (loss)	521	130	519	70
Add: Market-related impacts (pre-tax)	—	(40)	—	—
Other adjustments (pre-tax)	11	(62)	(3)	(4)
Tax expense (benefit)	(7)	27	(9)	(15)
Reported net income (loss) - Common shareholders	525	55	507	51

Underlying Net Income to Reported Net Income Reconciliation - Pre-tax in U.S. dollars


	Q2'25		Q1'25		Q2'24
(US$ millions)	U.S.	MFS	U.S.	MFS	U.S.	MFS
Underlying net income (loss)	143	184	151	186	149	194
Add: Market-related impacts (pre-tax)	—	—	11	—	(28)	—
ACMA (pre-tax)	—	—	—	—	—	—
Other adjustments (pre-tax)	(97)	2	(42)	6	(50)	3
Tax expense (benefit)	28	(3)	9	(2)	20	(3)
Reported net income (loss) - Common shareholders	74	183	129	190	91	194


	Year-to-date
	2025		2024
(US$ millions)	U.S.	MFS	U.S.	MFS
Underlying net income (loss)	294	370	290	383
Add: Market-related impacts (pre-tax)	11	—	(69)	—
ACMA (pre-tax)	—	—	2	—
Other adjustments (pre-tax)	(139)	8	(101)	(3)
Tax expense (benefit)	37	(5)	40	(6)
Reported net income (loss) - Common shareholders	203	373	162	374

Underlying Net Income to Reported Net Income Reconciliation - U.S. Group Benefits - Pre-tax in U.S. dollars

The following table sets out the amounts that were excluded from our reported net income (loss) for U.S. Group Benefits, which is used to calculate the trailing four-quarter after-tax profit margin for U.S. Group Benefits.


(US$ millions)	Q2'25	Q1'25	Q4'24	Q3'24	Q2'24	Q1'24	Q4'23	Q3'23
Underlying net income (loss) for U.S. Group Benefits	121	105	62	118	124	118	138	96
Add: Market-related impacts (pre-tax)	(1)	8	(18)	17	(11)	(8)	14	(10)
ACMA (pre-tax)	—	—	—	8	—	—	(11)	47
Other adjustments (pre-tax)	(4)	(4)	(5)	(5)	(6)	(7)	(9)	(6)
Tax expense (benefit)	1	(1)	5	(4)	3	3	1	(6)
Reported net income (loss) - Common shareholders	117	108	44	134	110	106	133	121

MANAGEMENT'S DISCUSSION AND ANALYSIS Sun Life Financial Inc. Second Quarter 2025 49


O. Forward-looking Statements

From time to time, the Company makes written or oral forward-looking statements within the meaning of certain securities laws, including the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements contained in this document include statements (i) relating to our strategies, plans, targets, goals and priorities; (ii) relating to our growth initiatives and other business objectives; (iii) relating to expected annual savings resulting from the actions taken to improve financial discipline and productivity reflected in the restructuring charge recorded in Q2'24; (iv) set out in this document under the heading I - Risk Management - Market Risk Sensitivities - Interest Rate Sensitivities; (v) relating to expected changes in our LICAT ratio; (vi) that are predictive in nature or that depend upon or refer to future events or conditions; and (vii) that include words such as “achieve”, “aim”, “ambition”, “anticipate”, “aspiration”, “assumption”, “believe”, “could”, “estimate”, “expect”, “goal”, “initiatives”, “intend”, “may”, “objective”, “outlook”, “plan”, “project”, “seek”, “should”, “strategy”, “strive”, “target”, “will”, and similar expressions. Forward-looking statements include the information concerning our possible or assumed future results of operations. These statements represent our current expectations, estimates, and projections regarding future events and are not historical facts, and remain subject to change.

Forward-looking statements are not a guarantee of future performance and involve risks and uncertainties that are difficult to predict. Future results and shareholder value may differ materially from those expressed in these forward-looking statements due to, among other factors, the matters set out in this document under the headings C - Profitability - 5 - Income taxes, F - Financial Strength and I - Risk Management and in SLF Inc.’s 2024 AIF under the heading Risk Factors, and the factors detailed in SLF Inc.’s other filings with Canadian and U.S. securities regulators, which are available for review at www.sedarplus.ca and www.sec.gov, respectively.

Important risk factors that could cause our assumptions and estimates, and expectations and projections to be inaccurate and our actual results or events to differ materially from those expressed in or implied by the forward-looking statements contained in this document, are set out below. The realization of our forward-looking statements essentially depends on our business performance which, in turn, is subject to many risks. Factors that could cause actual results to differ materially from expectations include, but are not limited to: market risks - related to the performance of equity markets; changes or volatility in interest rates or credit spreads or swap spreads; real estate investments; fluctuations in foreign currency exchange rates; and inflation; insurance risks - related to mortality experience, morbidity experience and longevity; policyholder behaviour; product design and pricing; the impact of higher-than-expected future expenses; and the availability, cost and effectiveness of reinsurance; credit risks - related to issuers of securities held in our investment portfolio, debtors, structured securities, reinsurers, counterparties, other financial institutions and other entities; business and strategic risks - related to global economic and geopolitical conditions; the design and implementation of business strategies; changes in distribution channels or Client behaviour including risks relating to market conduct by intermediaries and agents; the impact of competition; the performance of our investments and investment portfolios managed for Clients such as segregated and mutual funds; shifts in investing trends and Client preference towards products that differ from our investment products and strategies; changes in the legal or regulatory environment, including capital requirements and tax laws; environmental and social issues and their related laws and regulations; operational risks - related to breaches or failure of information system security and privacy, including cyber-attacks; our ability to attract and retain employees; legal, regulatory compliance and market conduct, including the impact of regulatory inquiries and investigations; the execution and integration of mergers, acquisitions, strategic investments and divestitures; our information technology infrastructure; a failure of information systems and Internet-enabled technology; dependence on third-party relationships, including outsourcing arrangements; business continuity; model errors; information management; liquidity risks - the possibility that we will not be able to fund all cash outflow commitments as they fall due; and other risks - changes to accounting standards in the jurisdictions in which we operate; risks associated with our international operations, including our joint ventures; market conditions that affect our capital position or ability to raise capital; downgrades in financial strength or credit ratings; and tax matters, including estimates and judgements used in calculating taxes.

The Company does not undertake any obligation to update or revise its forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, except as required by law.

50 Sun Life Financial Inc. Second Quarter 2025 MANAGEMENT'S DISCUSSION AND ANALYSIS

CONSOLIDATED STATEMENTS OF OPERATIONS




	For the three months ended						For the six months ended
(unaudited, in millions of Canadian dollars, except for per share amounts)	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024

Insurance service result
Insurance revenue (Note 6)		$	5,957		$	5,567		$	11,975		$	11,107
Insurance service expenses		(5,130)			(4,737)			(10,225)			(9,577)
Reinsurance contract held net income (expenses)		(2)			(24)			(15)			37
Net insurance service result		825			806			1,735			1,567
Investment result
Investment result excluding result for account of segregated fund holders:
Net investment income (loss) (Note 4)		1,107			1,272			4,200			595
Insurance finance income (expenses) from insurance contracts issued		(658)			(786)			(3,237)			590
Insurance finance income (expenses) from reinsurance contracts held		10			(14)			66			(5)
Decrease (increase) in investment contract liabilities		(85)			(102)			(171)			(201)
Net investment result excluding result for account of segregated fund holders		374			370			858			979
Investment result for insurance contracts for account of segregated fund holders:
Investment income (loss) on investments for account of segregated fund holders		643			74			642			1,130
Insurance finance income (expenses) (Note 10)		(643)			(74)			(642)			(1,130)
Net investment result for insurance contracts for account of segregated fund holders		—			—			—			—
Net investment result		374			370			858			979
Fee income (Note 7)		2,135			2,077			4,375			4,089
Other expenses (income)
Other income		—			—			—			(161)
Operating expenses and commissions		2,229			2,205			4,481			4,392
Interest expenses		129			138			262			297
Total other expenses (income)		2,358			2,343			4,743			4,528
Income (loss) before income taxes		976			910			2,225			2,107
Less: Income tax expense (benefit) (Note 8)		198			192			440			453
Total net income (loss)		778			718			1,785			1,654
Less: Net income (loss) allocated to the participating account		43			48			96			103
Net income (loss) attributable to non-controlling interests		—			4			6			47
Shareholders' net income (loss)		735			666			1,683			1,504
Less: Dividends on preferred shares and distributions on other equity instruments		19			20			39			40
Common shareholders' net income (loss)		$	716		$	646		$	1,644		$	1,464

Average exchange rates during the reporting periods: U.S. dollars		1.38			1.37			1.41			1.36

Earnings (loss) per share (Note 12)
Basic		$	1.27		$	1.11		$	2.89		$	2.52
Diluted		$	1.26		$	1.11		$	2.89		$	2.51

Dividends per common share		$	0.880		$	0.810		$	1.720		$	1.590

The attached notes form part of these Interim Consolidated Financial Statements.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Sun Life Financial Inc.

Second Quarter 2025

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)




	For the three months ended						For the six months ended
(unaudited, in millions of Canadian dollars)	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024

Total net income (loss)		$	778		$	718		$	1,785		$	1,654
Other comprehensive income (loss), net of taxes:
Items that may be reclassified subsequently to income:
Change in unrealized foreign currency translation gains (losses):
Unrealized gains (losses)		(992)			84			(967)			376

Change in unrealized gains (losses) on investments at fair value through other comprehensive income:
Unrealized gains (losses)		50			23			151			(8)
Reclassifications to net income (loss) and provision for credit losses recognized into income		(20)			(20)			(1)			(37)
Change in unrealized gains (losses) on cash flow hedges:
Unrealized gains (losses)		(21)			5			(16)			32
Reclassifications to net income (loss)		20			(11)			17			(36)
Share of other comprehensive income (loss) in joint ventures and associates:
Unrealized gains (losses)		73			(1)			3			114
Reclassifications to net income (loss)		—			5			—			5
Total items that may be reclassified subsequently to income		(890)			85			(813)			446
Items that will not be reclassified subsequently to income:
Remeasurement of defined benefit plans		14			4			2			11
Share of other comprehensive income (loss) in joint ventures and associates		9			2			8			(7)

Total items that will not be reclassified subsequently to income		23			6			10			4
Total other comprehensive income (loss)		(867)			91			(803)			450
Total comprehensive income (loss)		(89)			809			982			2,104
Less: Comprehensive income (loss) allocated to the participating account		53			57			104			110
Non-controlling interests' comprehensive income (loss)		(2)			6			4			54
Shareholders’ comprehensive income (loss)		$	(140)		$	746		$	874		$	1,940

INCOME TAXES INCLUDED IN OTHER COMPREHENSIVE INCOME (LOSS)



	For the three months ended						For the six months ended
(unaudited, in millions of Canadian dollars)	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024
Income tax benefit (expense):
Items that may be reclassified subsequently to income:
Unrealized foreign currency translation gains (losses)		$	—		$	—		$	—		$	(2)
Unrealized gains (losses) on investments at fair value through other comprehensive income		(6)			(4)			(31)			8
Reclassifications to net income (loss) and provision for credit losses recognized into income on investments at fair value through other comprehensive income		2			3			5			6
Unrealized gains (losses) on cash flow hedges		(6)			1			(6)			(2)
Reclassifications to net income (loss) for cash flow hedges		3			—			4			3
Total items that may be reclassified subsequently to income		(7)			—			(28)			13
Items that will not be reclassified subsequently to income:
Remeasurement of defined benefit plans		(2)			(1)			3			(4)

Total items that will not be reclassified subsequently to income		(2)			(1)			3			(4)
Total income tax benefit (expense) included in other comprehensive income (loss)		$	(9)		$	(1)		$	(25)		$	9

The attached notes form part of these Interim Consolidated Financial Statements.

Sun Life Financial Inc.

Second Quarter 2025

INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION



	As at
(unaudited, in millions of Canadian dollars)	June 30, 2025			December 31, 2024

Assets
Cash, cash equivalents and short-term securities (Note 4)		$	11,202		$	13,873
Debt securities (Note 4)		83,142			81,955
Equity securities (Note 4)		10,603			9,974
Mortgages and loans (Note 4)		57,810			57,619
Derivative assets		2,049			1,971
Other financial invested assets (Note 4)		13,273			13,306
Financial invested assets		178,079			178,698
Investment properties (Note 4)		9,230			9,290
Other non-financial invested assets (Note 4)		1,882			1,829
Invested assets		189,191			189,817
Other assets		6,838			7,021
Reinsurance contract held assets (Note 6)		6,153			6,318
Insurance contract assets (Note 6)		285			355
Deferred tax assets		3,908			3,910
Intangible assets		5,155			5,058
Goodwill		9,141			9,456
Total general fund assets		220,671			221,935
Investments for account of segregated fund holders (Note 10)		155,616			148,786
Total assets		$	376,287		$	370,721
Liabilities and equity
Liabilities
Insurance contract liabilities excluding those for account of segregated fund holders (Note 6)		$	148,236		$	147,269
Reinsurance contract held liabilities (Note 6)		2,073			1,825
Investment contract liabilities (Note 4)		12,106			11,678
Derivative liabilities		1,857			2,077
Deferred tax liabilities		283			286
Other liabilities		24,552			26,292
Senior debentures		200			200
Subordinated debt		6,180			6,179
Total general fund liabilities		195,487			195,806
Insurance contract liabilities for account of segregated fund holders (Note 10)		19,756			20,097
Investment contract liabilities for account of segregated fund holders (Note 10)		135,860			128,689
Total liabilities		$	351,103		$	344,592
Equity
Issued share capital and contributed surplus		$	10,368		$	10,526
Shareholders’ retained earnings and accumulated other comprehensive income		14,155			15,031
Total shareholders’ equity		24,523			25,557
Equity in the participating account		600			496
Non-controlling interests’ equity		61			76
Total equity		$	25,184		$	26,129
Total liabilities and equity		$	376,287		$	370,721

Exchange rates at the end of the reporting periods: U.S. dollars		1.36			1.44

The attached notes form part of these Interim Consolidated Financial Statements.

Approved on behalf of the Board of Directors on August 7, 2025.



Kevin Strain			Helen Mallovy Hicks
Chief Executive Officer			Director

INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Sun Life Financial Inc.

Second Quarter 2025

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY



For the six months ended
(unaudited, in millions of Canadian dollars)	June 30, 2025			June 30, 2024
Shareholders:
Preferred shares and other equity instruments



Balance, beginning and end of period		$	2,239		$	2,239
Common shares (Note 9)
Balance, beginning of period		8,192			8,327
Stock options exercised		32			12
Common shares purchased for cancellation		(179)			(100)

Balance, end of period		8,045			8,239
Contributed surplus
Balance, beginning of period		95			94
Share-based payments		(3)			1
Stock options exercised		(8)			(1)
Balance, end of period		84			94
Retained earnings




Balance, beginning of period(1)		12,817			12,370
Net income (loss)		1,683			1,504
Dividends on common shares		(976)			(927)
Dividends on preferred shares and distributions on other equity instruments		(39)			(40)
Common shares purchased for cancellation (Note 9) and other		(735)			(425)



Balance, end of period		12,750			12,482
Accumulated other comprehensive income (loss), net of taxes (Note 13)



Balance, beginning of period(1)		2,214			552
Total other comprehensive income (loss) for the period		(809)			436

Balance, end of period		1,405			988
Total shareholders’ equity, end of period		$	24,523		$	24,042
Equity in the participating account:




Balance, beginning of period		$	496		$	457
Net income (loss)		96			103
Total other comprehensive income (loss) for the period (Note 13)		8			7

Total equity in the participating account, end of period		$	600		$	567
Non-controlling interests:
Balance, beginning of period		$	76		$	161
Net income (loss)		6			47


Total other comprehensive income (loss) for the period (Note 13)		(2)			7
Distribution to non-controlling interests		(19)			(123)
Total non-controlling interests’ equity, end of period		$	61		$	92
Total equity		$	25,184		$	24,701

(1) Balances have been restated. Refer to Note 2.

The attached notes form part of these Interim Consolidated Financial Statements.

Sun Life Financial Inc.

Second Quarter 2025

INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENTS OF CASH FLOWS



	For the three months ended						For the six months ended
(unaudited, in millions of Canadian dollars)	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024

Cash flows provided by (used in) operating activities
Income (loss) before income taxes		$	976		$	910		$	2,225		$	2,107
Adjustments:
Interest expense related to financing activities		88			102			176			201
(Decrease) increase in investment contract liabilities		85			102			171			201
Changes in insurance contract liabilities and assets		(169)			(44)			1,487			(2,120)
Changes in reinsurance contract held assets and liabilities		(8)			38			(51)			(32)
Realized and unrealized (gains) losses and foreign currency changes on invested assets		868			492			(366)			3,002
Sales, maturities and repayments of invested assets		15,192			16,034			30,738			27,930
Purchases of invested assets		(17,886)			(17,276)			(35,609)			(32,311)
Income taxes received (paid)		(327)			(421)			(502)			(678)
Mortgage securitization (Note 4)		(21)			(243)			(87)			(245)
Other operating activities		2,002			1,473			2,236			625
Net cash provided by (used in) operating activities		800			1,167			418			(1,320)
Cash flows provided by (used in) investing activities
Net (purchase) sale of property and equipment		(32)			(26)			(63)			(70)
Investment in and transactions with joint ventures and associates		3			1			5			4
Dividends and other proceeds related to joint ventures and associates		6			20			6			141


Other investing activities		(30)			(92)			(81)			(156)
Net cash provided by (used in) investing activities		(53)			(97)			(133)			(81)
Cash flows provided by (used in) financing activities
Increase in (repayment of) borrowed funds		12			9			21			18
Issuance of subordinated debt, net of issuance costs		—			746			—			746
Increase in (repayment of) borrowings from credit facility		211			(88)			(323)			(164)

Issuance of common shares on exercise of stock options		19			—			24			11
Transactions with non-controlling interests		(19)			(20)			(27)			(123)
Common shares purchased for cancellation (Note 9)		(398)			(286)			(918)			(460)
Dividends paid on common and preferred shares		(526)			(502)			(1,012)			(969)
Payment of lease liabilities		(46)			(46)			(91)			(88)
Interest expense paid		(117)			(107)			(180)			(190)

Net cash provided by (used in) financing activities		(864)			(294)			(2,506)			(1,219)
Changes due to fluctuations in exchange rates		(250)			47			(231)			181
Increase (decrease) in cash and cash equivalents		(367)			823			(2,452)			(2,439)
Net cash and cash equivalents, beginning of period		7,869			7,908			9,954			11,170
Net cash and cash equivalents, end of period		7,502			8,731			7,502			8,731
Short-term securities, end of period		3,600			2,746			3,600			2,746
Net cash, cash equivalents and short-term securities, end of period (Note 4)		$	11,102		$	11,477		$	11,102		$	11,477

The attached notes form part of these Interim Consolidated Financial Statements.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Sun Life Financial Inc.

Second Quarter 2025

Condensed Notes to the Interim Consolidated Financial Statements

(Unaudited, in millions of Canadian dollars, except for per share amounts and where otherwise stated. All amounts stated in U.S. dollars are in millions.)

1. General Information

Description of Business

Sun Life Financial Inc. ("SLF Inc.") is a publicly traded company domiciled in Canada and is the holding company of Sun Life Assurance Company of Canada ("Sun Life Assurance"). SLF Inc. and its subsidiaries are collectively referred to as "us", "our", "ours", "we", or "the Company".

Our Interim Consolidated Financial Statements have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting as issued by the International Accounting Standards Board ("IASB"). We have used accounting policies which are consistent with our accounting policies in our 2024 Annual Consolidated Financial Statements, except as updated in Note 2 below. Our Interim Consolidated Financial Statements should be read in conjunction with our 2024 Annual Consolidated Financial Statements, as interim financial statements do not include all the information incorporated in annual consolidated financial statements prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the IASB.

2. Changes in Accounting Policies

Our material accounting policies and future changes in accounting policies that are not yet effective for us are disclosed in Notes 1 and 2 of our 2024 Annual Consolidated Financial Statements.

Other Changes in Accounting Policy

We have changed our accounting policy for certain joint ventures to disaggregate insurance finance income or expenses between net income and other comprehensive income ("OCI"). For these joint ventures, insurance finance income or expenses were previously recorded through net income, while the corresponding invested assets have historically been recorded at fair value through OCI ("FVOCI"). These invested assets and insurance liabilities are managed together and presenting insurance finance income or expense changes for both items through OCI reduces accounting mismatch. We account for these joint ventures using the equity method of accounting, whereby we recognize our share of net income in investment income in our Consolidated Statements of Operations and our share of OCI in our Consolidated Statements of Comprehensive Income (Loss). The impact of this change is not material to our share of net income or OCI in any individual prior period. We have processed an adjustment to increase opening Retained earnings by $213 and decrease Accumulated other comprehensive income by $213 retroactively to January 1, 2024.

3. Segmented Information

We have five reportable business segments: Canada, United States ("U.S."), Asset Management, Asia, and Corporate. These business segments operate in the financial services industry and reflect our management structure and internal financial reporting. Asset Management includes the results of our MFS Investment Management and SLC Management business units. Corporate primarily includes our Corporate Support operations, such as investment income, expenses, capital, and other items not allocated to our other business groups.

Revenues from our business segments are derived primarily from life and health insurance, investment management and annuities, and mutual funds. Revenues not attributed to the strategic business units are derived primarily from Corporate investments and earnings on capital.

The expenses in each business segment may include costs or services directly incurred or provided on their behalf at the enterprise level. For other costs not directly attributable to one of our business segments, we use a management reporting framework that uses assumptions, judgments, and methodologies for allocating overhead costs and indirect expenses to our business segments.

Intersegment transactions consist primarily of internal financing agreements which are measured at fair values prevailing when the arrangements are negotiated. Intersegment investment income consists primarily of interest paid by U.S. to Corporate. Intersegment fee income is primarily asset management fees paid by our business segments to Asset Management. SLC Management collects fee income and incurs the operational expenses associated with the management of the general fund assets. Intersegment transactions are eliminated in the Consolidation adjustments column in the following tables.

Management considers its external Clients to be individuals and corporations. We are not reliant on any individual Client as none is individually significant to our operations.

Sun Life Financial Inc.

Second Quarter 2025

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


For the three months ended	Canada			U.S.			Asset Management			Asia			Corporate			Consolidation adjustments			Total
June 30, 2025
Insurance revenue:
Annuities		$	555		$	73		$	—		$	5		$	—		$	—		$	633
Life insurance		575			522			—			350			—			—			1,447
Health insurance		1,169			2,633			—			75			—			—			3,877
Total Insurance revenue		2,299			3,228			—			430			—			—			5,957
Net investment income (loss)		(324)			283			39			1,067			68			(26)			1,107
Fee income		472			126			1,551			76			56			(146)			2,135
Segment revenue(1)		2,447			3,637			1,590			1,573			124			(172)			9,199
Expenses:
Insurance service expenses		1,893			3,020			—			217			—			—			5,130
Reinsurance contract held net (income) expenses		43			(53)			—			12			—			—			2
Insurance finance (income) expenses from insurance contracts issued		(635)			220			—			1,073			—			—			658
Reinsurance finance (income) expenses		14			(23)			—			(1)			—			—			(10)
(Decrease) increase in investment contract liabilities		82			—			—			3			—			—			85

Interest expenses		46			31			34			23			24			(29)			129
Operating expenses and commissions		517			316			1,213			129			197			(143)			2,229
Total expenses(1)		1,960			3,511			1,247			1,456			221			(172)			8,223
Income (loss) before income taxes		487			126			343			117			(97)			—			976
Less: Income tax expense (benefit)		128			16			89			12			(47)			—			198
Total net income (loss)		359			110			254			105			(50)			—			778
Less:
Net income (loss) allocated to the participating account		29			7			—			7			—			—			43
Net income (loss) attributable to non-controlling interests		—			—			—			—			—			—			—
Shareholders' net income (loss)		$	330		$	103		$	254		$	98		$	(50)		$	—		$	735
June 30, 2024
Insurance revenue:
Annuities		$	514		$	77		$	—		$	6		$	—		$	—		$	597
Life insurance		586			504			—			324			4			—			1,418
Health insurance		1,090			2,400			—			62			—			—			3,552
Total Insurance revenue		2,190			2,981			—			392			4			—			5,567
Net investment income (loss)		939			20			76			243			16			(22)			1,272
Fee income		435			117			1,536			80			39			(130)			2,077
Segment revenue(1)		3,564			3,118			1,612			715			59			(152)			8,916
Expenses:
Insurance service expenses		1,766			2,733			—			236			2			—			4,737
Reinsurance contract held net (income) expenses		40			(26)			—			10			—			—			24
Insurance finance (income) expenses from insurance contracts issued		720			(40)			—			106			—			—			786
Reinsurance finance (income) expenses		1			11			—			2			—			—			14
(Decrease) increase in investment contract liabilities		101			—			—			1			—			—			102


Interest expenses		34			30			47			25			30			(28)			138
Operating expenses and commissions		486			248			1,190			115			290			(124)			2,205
Total expenses(1)		3,148			2,956			1,237			495			322			(152)			8,006
Income (loss) before income taxes		416			162			375			220			(263)			—			910
Less: Income tax expense (benefit)		104			27			97			49			(85)			—			192
Total net income (loss)		312			135			278			171			(178)			—			718
Less:
Net income (loss) allocated to the participating account		20			8			—			20			—			—			48
Net income (loss) attributable to non-controlling interests		—			—			4			—			—			—			4
Shareholders' net income (loss)		$	292		$	127		$	274		$	151		$	(178)		$	—		$	666

(1) Segment revenue and Total expenses exclude Investment result for insurance contracts for account of segregated fund holders.

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Sun Life Financial Inc.

Second Quarter 2025



For the six months ended	Canada			U.S.		Asset Management			Asia		Corporate			Consolidation adjustments			Total
June 30, 2025
Insurance revenue:
Annuities		$	1,090	$	151		$	—	$	11		$	—		$	—		$	1,252
Life insurance		1,137		1,035			—		695			—			—			2,867
Health insurance		2,319		5,388			—		149			—			—			7,856
Total Insurance revenue		4,546		6,574			—		855			—			—			11,975
Net investment income (loss)		1,492		888			124		1,655			92			(51)			4,200
Fee income		947		260			3,198		163			100			(293)			4,375
Segment revenue(1)		6,985		7,722			3,322		2,673			192			(344)			20,550
Expenses:
Insurance service expenses		3,717		6,074			—		434			—			—			10,225
Reinsurance contract held net (income) expenses		66		(74)			—		23			—			—			15
Insurance finance (income) expenses from insurance contracts issued		891		765			—		1,581			—			—			3,237
Reinsurance finance (income) expenses		4		(72)			—		2			—			—			(66)
(Decrease) increase in investment contract liabilities		168		—			—		3			—			—			171

Interest expenses		92		62			70		48			49			(59)			262
Operating expenses and commissions		1,065		606			2,466		261			368			(285)			4,481
Total expenses(1)		6,003		7,361			2,536		2,352			417			(344)			18,325
Income (loss) before income taxes		982		361			786		321			(225)			—			2,225
Less: Income tax expense (benefit)		243		58			200		33			(94)			—			440
Total net income (loss)		739		303			586		288			(131)			—			1,785
Less:
Net income (loss) allocated to the participating account		58		14			—		24			—			—			96
Net income (loss) attributable to non-controlling interests		—		—			6		—			—			—			6
Shareholders' net income (loss)		$	681	$	289		$	580	$	264		$	(131)		$	—		$	1,683
June 30, 2024
Insurance revenue:
Annuities		$	1,013	$	152		$	—	$	13		$	—		$	—		$	1,178
Life insurance		1,156		1,005			—		613			4			—			2,778
Health insurance		2,154		4,878			—		119			—			—			7,151
Total Insurance revenue		4,323		6,035			—		745			4			—			11,107
Net investment income (loss)		(67)		(82)			143		570			79			(48)			595
Fee income		842		233			3,049		151			78			(264)			4,089
Segment revenue(1)		5,098		6,186			3,192		1,466			161			(312)			15,791
Expenses:
Insurance service expenses		3,585		5,566			—		424			2			—			9,577
Reinsurance contract held net (income) expenses		41		(95)			—		17			—			—			(37)
Insurance finance (income) expenses from insurance contracts issued		(636)		(190)			—		236			—			—			(590)
Reinsurance finance (income) expenses		(27)		36			—		(4)			—			—			5
(Decrease) increase in investment contract liabilities		198		—			—		3			—			—			201
Other income(2)		—		—			(161)		—			—			—			(161)
Interest expenses		91		57			94		52			59			(56)			297
Operating expenses and commissions		970		523			2,443		231			481			(256)			4,392
Total expenses(1)		4,222		5,897			2,376		959			542			(312)			13,684
Income (loss) before income taxes		876		289			816		507			(381)			—			2,107
Less: Income tax expense (benefit)		248		52			211		77			(135)			—			453
Total net income (loss)		628		237			605		430			(246)			—			1,654
Less:
Net income (loss) allocated to the participating account		46		13			—		44			—			—			103
Net income (loss) attributable to non-controlling interests		—		—			47		—			—			—			47
Shareholders' net income (loss)		$	582	$	224		$	558	$	386		$	(246)		$	—		$	1,504

(1) Segment revenue and Total expenses exclude Investment result for insurance contracts for account of segregated fund holders.

(2) Relates to the early termination of a distribution agreement. We recognized income of $161 (pre-tax) and $46 (net of taxes, NCI impact and others).

Sun Life Financial Inc.

Second Quarter 2025

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

4. Total Invested Assets and Related Net Investment Income

4.A Fair Value of Financial Instruments

4.A.i Carrying Value and Fair Value of Financial Assets and Financial Liabilities

The carrying values and fair values of our financial assets and liabilities are shown in the following table:


As at	June 30, 2025					December 31, 2024
	Carrying value			Fair value		Carrying value			Fair value
Financial assets
Cash, cash equivalents and short-term securities – FVTPL		$	11,202	$	11,202		$	13,873	$	13,873
Debt securities – FVTPL(1)		69,019		69,019			68,106		68,106
Debt securities – FVOCI		14,123		14,123			13,849		13,849
Equity securities – FVTPL		10,533		10,533			9,900		9,900
Equity securities – FVOCI		70		70			74		74
Mortgages and loans – FVTPL(2)		53,459		53,459			53,233		53,233
Mortgages and loans – FVOCI		2,601		2,601			2,525		2,525
Mortgages and loans – Amortized cost(3)		1,750		1,718			1,861		1,814
Derivative assets – FVTPL		2,049		2,049			1,971		1,971
Other financial invested assets (excluding CLOs) – FVTPL(4)		7,870		7,870			7,950		7,950
Other financial invested assets (CLOs) – FVTPL(7)		5,403		5,403			5,356		5,356
Total(5)		$	178,079	$	178,047		$	178,698	$	178,651
Financial liabilities
Investment contract liabilities – Amortized cost		$	12,106	$	12,106		$	11,678	$	11,678
Obligations for securities borrowing – FVTPL		274		274			239		239
Derivative liabilities – FVTPL		1,857		1,857			2,077		2,077
Other financial liabilities – Amortized cost(6)		2,174		2,153			2,265		2,214
Other financial liabilities (CLOs) – FVTPL(7)		5,057		5,057			5,028		5,028
Total(8)		$	21,468	$	21,447		$	21,287	$	21,236

(1) Includes primarily debt securities that are designated at fair value through profit or loss ("FVTPL").

(2) Includes primarily mortgages and loans that are designated at FVTPL.

(3) Certain mortgages and loans are carried at amortized cost. The fair value of these mortgages and loans, for disclosure purposes, is determined based on the methodology and assumptions described in Note 4.A.iii. As at June 30, 2025, $1,699 and $19 are categorized in Level 2 and Level 3, respectively, of the fair value hierarchy described in this Note (December 31, 2024 — $1,787 and $27, respectively).

(4) Other financial invested assets include our investments in segregated funds, mutual funds, and limited partnerships.

(5) Invested assets on our Consolidated Statements of Financial Position of $189,191 (December 31, 2024 — $189,817) includes Total financial assets in this table, Investment properties of $9,230 (December 31, 2024 — $9,290), and Other non-financial invested assets of $1,882 (December 31, 2024 — $1,829). Other non-financial invested assets consist of investment in associates, subsidiaries and joint ventures which are not consolidated.

(6) Amount reflects the obligations to purchase outstanding shares of certain SLC Management subsidiaries.

(7) See below for details on Collateralized Loan Obligations ("CLOs").

(8) Total financial liabilities excluding Senior debentures and Subordinated debt.

Collateralized Loan Obligations Structure

Crescent, a subsidiary within our Asset Management business segment, issues and manages CLOs. Each CLO is a special purpose vehicle that owns a portfolio of investments, consisting primarily of senior secured loans, and issues various tranches of senior and subordinated notes to third parties for the purpose of financing the purchase of those investments. Assets of the special purpose vehicle, the senior secured loans, are included in Other financial invested assets and the associated liabilities, the senior and subordinated notes issued to third parties, are included in Other liabilities in our Consolidated Statements of Financial Position.

As at June 30, 2025, the carrying value of the assets related to CLOs are $5,403 (December 31, 2024 — $5,356), which consists of cash and accounts receivable of $510 (December 31, 2024 — $679) and loans of $4,893 (December 31, 2024 — $4,677). These underlying loans are mainly below investment grade.

As at June 30, 2025, the carrying value of the liabilities related to CLOs are $5,057 (December 31, 2024 — $5,028). Our maximum contractual exposure to loss related to the CLOs is limited to our investment of $282 (December 31, 2024 — $263) in the most subordinated tranche. The net unrealized loss incurred to date is $90.

4.A.ii Non-Financial Invested Assets

Non-financial invested assets consist of investment properties, investment in associates, subsidiaries and joint ventures which are not consolidated. As at June 30, 2025, the carrying value and fair value of investment properties was $9,230 (December 31, 2024 — $9,290) and $9,230 (December 31, 2024 — $9,290), respectively. The carrying value of other non-financial invested assets which were measured using the equity method of accounting was $1,882 as at June 30, 2025 (December 31, 2024 — $1,829).

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Sun Life Financial Inc.

Second Quarter 2025

4.A.iii Fair Value Hierarchy

The fair value methodologies and assumptions for assets and liabilities carried at fair value, as well as disclosures on unobservable inputs, sensitivities and valuation processes for Level 3 assets can be found in Note 5 of our 2024 Annual Consolidated Financial Statements.

Our assets and liabilities that are carried at fair value on a recurring basis by hierarchy level are as follows:


As at	June 30, 2025									December 31, 2024
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets
Cash, cash equivalents and short-term securities – FVTPL		$	10,753	$	449	$	—	$	11,202		$	13,243	$	630	$	—	$	13,873
Debt securities – FVTPL		712		67,459		848		69,019			463		67,126		517		68,106
Debt securities – FVOCI		430		13,532		161		14,123			505		13,193		151		13,849
Equity securities – FVTPL		7,015		3,507		11		10,533			6,331		3,358		211		9,900
Equity securities – FVOCI		—		—		70		70			—		—		74		74
Mortgages and loans – FVTPL		—		52,805		654		53,459			—		50,933		2,300		53,233
Mortgages and loans – FVOCI		—		2,594		7		2,601			—		2,512		13		2,525
Derivative assets – FVTPL		91		1,958		—		2,049			28		1,943		—		1,971
Other financial invested assets (excluding CLOs) – FVTPL(1)		802		217		6,851		7,870			859		211		6,880		7,950
Other financial invested assets (CLOs) – FVTPL(2)		—		5,403		—		5,403			—		5,356		—		5,356
Investment properties – FVTPL		—		—		9,230		9,230			—		—		9,290		9,290
Total invested assets measured at fair value		$	19,803	$	147,924	$	17,832	$	185,559		$	21,429	$	145,262	$	19,436	$	186,127
Investments for account of segregated fund holders – FVTPL		17,120		137,990		506		155,616			17,253		131,074		459		148,786
Total assets measured at fair value		$	36,923	$	285,914	$	18,338	$	341,175		$	38,682	$	276,336	$	19,895	$	334,913
Liabilities
Obligations for securities borrowing – FVTPL		$	7	$	267	$	—	$	274		$	4	$	235	$	—	$	239
Derivative liabilities – FVTPL		46		1,811		—		1,857			28		2,049		—		2,077
Other financial liabilities (CLOs) – FVTPL(2)		—		5,057		—		5,057			—		5,028		—		5,028
Investment contract liabilities for account of segregated fund holders – FVTPL		—		—		135,860		135,860			—		—		128,689		128,689
Total liabilities measured at fair value		$	53	$	7,135	$	135,860	$	143,048		$	32	$	7,312	$	128,689	$	136,033

(1) Other financial invested assets (excluding CLOs) – FVTPL include our investments in segregated funds, mutual funds, and limited partnerships.

(2) For details on CLOs, refer to Note 4.A.i.

Debt securities at FVTPL consist of the following:


As at	June 30, 2025								December 31, 2024
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Canadian federal government	$	—	$	6,852	$	12	$	6,864	$	—	$	6,790	$	13	$	6,803
Canadian provincial and municipal government	—		15,650		11		15,661		—		15,302		—		15,302
U.S. government and agency	712		150		—		862		463		163		—		626
Other foreign government	—		3,272		55		3,327		—		3,762		34		3,796
Corporate	—		32,811		662		33,473		—		32,929		465		33,394
Asset-backed securities:
Commercial mortgage-backed securities	—		2,047		—		2,047		—		2,163		—		2,163
Residential mortgage-backed securities	—		3,890		—		3,890		—		3,539		—		3,539
Collateralized debt obligations	—		653		104		757		—		352		1		353
Other	—		2,134		4		2,138		—		2,126		4		2,130
Total debt securities at FVTPL	$	712	$	67,459	$	848	$	69,019	$	463	$	67,126	$	517	$	68,106

Sun Life Financial Inc.

Second Quarter 2025

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Debt securities at FVOCI consist of the following:


As at	June 30, 2025								December 31, 2024
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Canadian federal government	$	—	$	819	$	—	$	819	$	—	$	734	$	—	$	734
Canadian provincial and municipal government	—		344		—		344		—		353		—		353
U.S. government and agency	423		7		—		430		501		8		—		509
Other foreign government	7		403		11		421		4		397		12		413
Corporate	—		7,125		88		7,213		—		7,529		90		7,619
Asset-backed securities:
Commercial mortgage-backed securities	—		1,261		—		1,261		—		1,084		—		1,084
Residential mortgage-backed securities	—		1,264		—		1,264		—		1,159		11		1,170
Collateralized debt obligations	—		1,047		62		1,109		—		673		38		711
Other	—		1,262		—		1,262		—		1,256		—		1,256
Total debt securities at FVOCI	$	430	$	13,532	$	161	$	14,123	$	505	$	13,193	$	151	$	13,849

Mortgages and loans at FVTPL consist of the following:


As at	June 30, 2025								December 31, 2024
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Mortgages:
Retail	$	—	$	2,272	$	5	$	2,277	$	—	$	2,472	$	12	$	2,484
Office	—		2,426		20		2,446		—		2,602		12		2,614
Multi-family residential	—		2,767		—		2,767		—		2,887		—		2,887
Industrial	—		3,520		—		3,520		—		3,447		—		3,447
Other	—		1,090		—		1,090		—		1,034		—		1,034
Corporate loans	—		40,730		629		41,359		—		38,491		2,276		40,767
Total mortgages and loans at FVTPL	$	—	$	52,805	$	654	$	53,459	$	—	$	50,933	$	2,300	$	53,233

Mortgages and loans at FVOCI consist of the following:


As at	June 30, 2025								December 31, 2024
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Mortgages:
Retail	$	—	$	83	$	—	$	83	$	—	$	83	$	—	$	83
Office	—		19		—		19		—		19		—		19
Multi-family residential	—		121		—		121		—		79		—		79
Industrial	—		238		—		238		—		236		—		236

Corporate loans	—		2,133		7		2,140		—		2,095		13		2,108
Total mortgages and loans at FVOCI	$	—	$	2,594	$	7	$	2,601	$	—	$	2,512	$	13	$	2,525

There were no significant transfers between Level 1 and Level 2 for the three and six months ended June 30, 2025 and June 30, 2024.

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Sun Life Financial Inc.

Second Quarter 2025

The following table provides a reconciliation of the beginning and ending balances for assets that are categorized in Level 3:


For the three months ended	Debt securities at FVTPL			Debt securities at FVOCI			Equity securities at FVTPL			Equity securities at FVOCI			Mortgages and loans at FVTPL			Mortgages and loans at FVOCI			Other financial invested assets at FVTPL			Investment properties at FVTPL			Total invested assets measured at fair value			Investments for account of segregated fund holders			Total assets measured at fair value
June 30, 2025
Beginning balance		$	591		$	223		$	12		$	74		$	2,314		$	6		$	7,075		$	9,335		$	19,630		$	507		$	20,137

Included in net income(1)(2)(3)		1			—			(1)			—			(26)			(3)			(214)			(60)			(303)			(4)			(307)
Included in OCI(2)		—			1			—			—			—			—			—			—			1			—			1
Purchases / Issuances		284			64			—			—			70			6			179			61			664			38			702
Sales / Payments		(1)			—			—			—			(47)			—			(96)			(26)			(170)			(15)			(185)
Settlements		(1)			—			—			—			—			(1)			—			—			(2)			—			(2)
Transfers into Level 3(4)		—			—			—			—			109			—			—			—			109			—			109
Transfers (out) of Level 3(4)		—			(121)			—			—			(1,763)			(1)			—			—			(1,885)			—			(1,885)
Foreign currency translation(5)		(26)			(6)			—			(4)			(3)			—			(93)			(80)			(212)			(20)			(232)
Ending balance		$	848		$	161		$	11		$	70		$	654		$	7		$	6,851		$	9,230		$	17,832		$	506		$	18,338
Unrealized gains (losses) included in earnings relating to instruments still held(1)		$	—		$	—		$	(1)		$	—		$	(24)		$	(1)		$	(214)		$	(54)		$	(294)		$	—		$	(294)
June 30, 2024
Beginning balance		$	482		$	176		$	116		$	70		$	2,092		$	1		$	6,312		$	9,555		$	18,804		$	365		$	19,169


Included in net income(1)(2)(3)		(3)			—			10			—			8			—			104			(121)			(2)			(2)			(4)

Purchases / Issuances		159			116			(2)			—			131			15			188			33			640			58			698
Sales / Payments		(20)			(46)			—			—			(37)			—			(105)			(11)			(219)			(48)			(267)
Settlements		(14)			(24)			—			—			(11)			—			—			—			(49)			(1)			(50)
Transfers into Level 3(4)		117			62			—			—			44			—			—			—			223			1			224
Transfers (out) of Level 3(4)		(93)			(43)			—			—			(42)			—			—			—			(178)			—			(178)
Foreign currency translation(5)		(9)			(2)			—			—			—			—			17			18			24			(8)			16
Ending balance		$	619		$	239		$	124		$	70		$	2,185		$	16		$	6,516		$	9,474		$	19,243		$	365		$	19,608
Unrealized gains (losses) included in earnings relating to instruments still held(1)		$	(1)		$	—		$	10		$	—		$	23		$	—		$	(19)		$	(118)		$	(105)		$	—		$	(105)

Sun Life Financial Inc.

Second Quarter 2025

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



For the six months ended	Debt securities at FVTPL			Debt securities at FVOCI			Equity securities at FVTPL			Equity securities at FVOCI			Mortgages and loans at FVTPL			Mortgages and loans at FVOCI			Other financial invested assets at FVTPL			Investment properties at FVTPL			Total invested assets measured at fair value			Investments for account of segregated fund holders			Total assets measured at fair value
June 30, 2025
Beginning balance		$	517		$	151		$	211		$	74		$	2,300		$	13		$	6,880		$	9,290		$	19,436		$	459		$	19,895

Included in net income(1)(2)(3)		8			—			(1)			—			28			(3)			(112)			(66)			(146)			—			(146)
Included in OCI(2)		—			3			—			—			—			—			—			—			3			—			3
Purchases / Issuances		354			183			—			—			115			6			394			111			1,163			85			1,248
Sales / Payments		(22)			—			(127)			—			(78)			(1)			(219)			(26)			(473)			(23)			(496)
Settlements		(1)			—			—			—			—			(1)			—			—			(2)			—			(2)
Transfers into Level 3(4)		15			—			—			—			236			—			—			—			251			—			251
Transfers (out) of Level 3(4)		(4)			(170)			(72)			—			(1,944)			(7)			—			—			(2,197)			—			(2,197)
Foreign currency translation(5)		(19)			(6)			—			(4)			(3)			—			(92)			(79)			(203)			(15)			(218)
Ending balance		$	848		$	161		$	11		$	70		$	654		$	7		$	6,851		$	9,230		$	17,832		$	506		$	18,338
Unrealized gains (losses) included in earnings relating to instruments still held(1)		$	7		$	—		$	(1)		$	—		$	43		$	(1)		$	(102)		$	(60)		$	(114)		$	—		$	(114)
June 30, 2024
Beginning balance		$	402		$	187		$	113		$	68		$	2,056		$	—		$	6,074		$	9,723		$	18,623		$	341		$	18,964

Included in net income(1)(2)(3)		(3)			—			11			—			(82)			—			185			(287)			(176)			1			(175)

Purchases / Issuances		284			155			—			—			188			15			377			60			1,079			76			1,155
Sales / Payments		(34)			(46)			—			—			(71)			—			(157)			(79)			(387)			(49)			(436)
Settlements		(18)			(32)			—			—			(13)			—			—			—			(63)			(1)			(64)
Transfers into Level 3(4)		117			62			—			—			148			1			—			—			328			1			329
Transfers (out) of Level 3(4)		(123)			(85)			—			—			(42)			—			(15)			—			(265)			—			(265)
Foreign currency translation(5)		(6)			(2)			—			2			1			—			52			57			104			(4)			100
Ending balance		$	619		$	239		$	124		$	70		$	2,185		$	16		$	6,516		$	9,474		$	19,243		$	365		$	19,608
Unrealized gains (losses) included in earnings relating to instruments still held(1)		$	(1)		$	—		$	11		$	—		$	(83)		$	—		$	38		$	(284)		$	(319)		$	—		$	(319)

(1) Included in Net investment income (loss) in our Consolidated Statements of Operations for Total invested assets measured at fair value.

(2) Total gains and losses in net income (loss) and OCI are calculated assuming transfers into or out of Level 3 occur at the beginning of the period. For an asset or liability that transfers into Level 3 during the reporting period, the entire change in fair value for the period is included in the table above. For transfers out of Level 3 during the reporting period, the change in fair value for the period is excluded from the table above.

(3) Investment properties included in net income is comprised of fair value changes on investment properties of $(52) and $(47) for the three and six months ended June 30, 2025, respectively (June 30, 2024 — $(111) and $(268), respectively), net of amortization of leasing commissions and tenant inducements of $8 and $19 for the three and six months ended June 30, 2025, respectively (June 30, 2024 — $10 and $19, respectively). As at June 30, 2025, we have used assumptions that reflect known changes in the property values including changes in expected future cash flows.

(4) Transfers into Level 3 occur when the inputs used to price the assets and liabilities lack observable market data, and as a result, no longer meet the Level 1 or 2 definitions at the reporting date. Transfers out of Level 3 occur when the pricing inputs become more transparent and satisfy the Level 1 or 2 criteria and are primarily the result of observable market data being available at the reporting date, thus removing the requirement to rely on inputs that lack observability.

(5) Foreign currency translation relates to the foreign exchange impact of translating Level 3 assets and liabilities of foreign subsidiaries from their functional currencies to Canadian dollars.

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Sun Life Financial Inc.

Second Quarter 2025

4.B Net Investment Income (Loss)


	For the three months ended						For the six months ended
	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024
Interest income (expense)		$	1,773		$	1,648		$	3,477		$	3,290
Dividend and other investment income		143			91			253			173
Net realized and unrealized gains (losses):
Cash, cash equivalents and short-term investments		(12)			1			(8)			4
Debt securities		(1,105)			(580)			(148)			(2,034)
Equity securities		792			167			703			540
Mortgages and loans		(286)			(17)			506			(431)
Derivative investments		176			4			(189)			(1,035)
Other financial assets		(348)			13			(280)			109
Other financial liabilities		12			(8)			26			(40)
Total net realized and unrealized gains (losses)		(771)			(420)			610			(2,887)
Provision for credit losses		(1)			(2)			(8)			3
Net investment income (loss) from financial instruments		$	1,144		$	1,317		$	4,332		$	579
Net investment income (loss) from non-financial instruments		$	72		$	(44)		$	50		$	71
Total Net investment income (loss)(1)		$	1,216		$	1,273		$	4,382		$	650

(1) Net investment income (loss) recognized in income is $1,107 and $4,200 for the three and six months ended June 30, 2025, respectively (June 30, 2024 — $1,272 and $595, respectively), and net investment income (loss) recognized in OCI is $109 and $182 for the three and six months ended June 30, 2025, respectively (June 30, 2024 — $1 and $55, respectively).

4.C Cash, Cash Equivalents and Short-Term Securities

Cash, cash equivalents and short-term securities presented in our Consolidated Statements of Financial Position and Net cash, cash equivalents and short-term securities presented in our Consolidated Statements of Cash Flows consist of the following:



As at	June 30, 2025			December 31, 2024			June 30, 2024
Cash		$	2,132		$	2,294		$	2,105
Cash equivalents		5,470			7,835			6,626
Short-term securities		3,600			3,744			2,746
Cash, cash equivalents and short-term securities		11,202			13,873			11,477
Less: Bank overdraft, recorded in Other liabilities		100			175			—
Net cash, cash equivalents and short-term securities		$	11,102		$	13,698		$	11,477

4.D Mortgage Securitization

We securitize certain insured fixed rate commercial mortgages as described in Note 5 of our 2024 Annual Consolidated Financial Statements.

The carrying value and fair value of the securitized mortgages as at June 30, 2025 are $1,475 and $1,441, respectively (December 31, 2024 — $1,555 and $1,505, respectively). The carrying value and fair value of the associated liabilities as at June 30, 2025 are $1,767 and $1,738, respectively (December 31, 2024 — $1,854 and $1,807, respectively). The carrying value of securities in the principal reinvestment account ("PRA") as at June 30, 2025 is $291 (December 31, 2024 — $302). There are $nil cash and cash equivalents in the PRA as at June 30, 2025 (December 31, 2024 — $nil).

The fair value of the secured borrowings from mortgage securitization is based on the methodologies and assumptions for asset-backed securities described in Note 5 of our 2024 Annual Consolidated Financial Statements. The fair value of these liabilities is categorized in Level 2 of the fair value hierarchy as at June 30, 2025 and December 31, 2024.

5. Financial Instrument Risk Management

The significant risks related to financial instruments are credit risk, market risk (including equity risk, real estate risk, interest rate and spread risk, foreign currency risk, and inflation risk) and liquidity risk. Further details on our financial instrument risk management, including methodologies and assumptions, are described in Notes 1 and 6 of our 2024 Annual Consolidated Financial Statements.

The allowance for expected credit losses was $89 as at June 30, 2025 (December 31, 2024 — $88) and the provision for credit losses was $1 and $8 for the three and six months ended June 30, 2025, respectively (June 30, 2024 — $2 and $(3), respectively). There were no significant transfers between Stage 1, Stage 2, and Stage 3 for the three and six months ended June 30, 2025 and June 30, 2024.

Sun Life Financial Inc.

Second Quarter 2025

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

6. Insurance Contracts

6.A Changes in Insurance Contracts

6.A.i Changes in Insurance Contracts Issued and Reinsurance Contracts Held Net Asset or Liability

Insurance Contracts Issued By Measurement Component

The following table shows the changes in net liabilities for insurance contracts issued by measurement component, including estimates of present value ("PV") of future cash flows, risk adjustment, and Contractual Service Margin ("CSM"). Changes in the liabilities for insurance contract liabilities for account of segregated fund holders are provided in Note 10. Further details of our measurement approach, including the premium allocation approach ("PAA"), can be found in Note 1 of our 2024 Annual Consolidated Financial Statements.


	For the six months ended and as at June 30, 2025									For the year ended and as at December 31, 2024
	Estimates of PV of future cash flows			Risk adjustment		CSM		Total		Estimates of PV of future cash flows			Risk adjustment		CSM		Total
Insurance contracts, beginning of period:
Insurance contract liabilities — non-PAA		$	108,232	$	7,948	$	12,733	$	128,913		$	99,420	$	7,388	$	11,597	$	118,405
Insurance contract liabilities — PAA		17,490		866		—		18,356			16,436		828		—		17,264
Insurance contract assets — non-PAA		(670)		149		295		(226)			(578)		146		248		(184)
Insurance contract assets — PAA		(129)		—		—		(129)			—		—		—		—
Net balances, beginning of period		$	124,923	$	8,963	$	13,028	$	146,914		$	115,278	$	8,362	$	11,845	$	135,485
CSM recognized for services provided		—		—		(600)		(600)			—		—		(1,117)		(1,117)
Risk adjustment recognized for non-financial risk expired		—		(298)		—		(298)			—		(596)		—		(596)
Changes in estimates that adjust CSM		(424)		(15)		439		—			(508)		34		474		—
Contracts initially recognized in the period		(1,024)		264		809		49			(1,859)		530		1,448		119
Other		1,892		(114)		(351)		1,427			11,087		595		378		12,060
Changes in PAA balance		437		22		—		459			925		38		—		963
Net balances, end of period		$	125,804	$	8,822	$	13,325	$	147,951		$	124,923	$	8,963	$	13,028	$	146,914
Insurance contracts, end of period:
Insurance contract liabilities — non-PAA(1)		$	108,669	$	7,788	$	13,026	$	129,483		$	108,232	$	7,948	$	12,733	$	128,913
Insurance contract liabilities — PAA		17,865		888		—		18,753			17,490		866		—		18,356
Insurance contract assets — non-PAA		(663)		146		299		(218)			(670)		149		295		(226)
Insurance contract assets — PAA		(67)		—		—		(67)			(129)		—		—		(129)
Net balances, end of period		$	125,804	$	8,822	$	13,325	$	147,951		$	124,923	$	8,963	$	13,028	$	146,914

(1) Includes liabilities of $(343) as at June 30, 2025 (December 31, 2024 — $(325)) for segregated fund insurance contracts that are not backed by the related Investments for account of segregated fund holders.

Reinsurance Contracts Held By Measurement Component

The following table shows the ending balances for reinsurance contracts held by measurement component:


As at	June 30, 2025									December 31, 2024
	Estimates of PV of future cash flows			Risk adjustment		CSM		Total		Estimates of PV of future cash flows			Risk adjustment		CSM		Total
Reinsurance contracts, end of period:
Reinsurance contract held assets — non-PAA		$	4,207	$	1,484	$	74	$	5,765		$	4,292	$	1,487	$	130	$	5,909
Reinsurance contract held assets — PAA		364		24		—		388			392		17		—		409
Reinsurance contract held liabilities — non-PAA		(2,484)		835		(424)		(2,073)			(2,212)		855		(468)		(1,825)

Net balances, end of period		$	2,087	$	2,343	$	(350)	$	4,080		$	2,472	$	2,359	$	(338)	$	4,493

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Sun Life Financial Inc.

Second Quarter 2025

6.A.ii Analysis of Insurance Revenue

Insurance revenue in the Consolidated Statements of Operations consists of the following:


	For the three months ended						For the six months ended
	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024

For contracts not measured using the PAA:
Amounts relating to changes in liabilities for remaining coverage:
Expected claims and other expenses(1)		$	1,273		$	1,213		$	2,495		$	2,378
Release of risk adjustment(1)		139			154			294			304
CSM recognized for services provided		303			274			600			543
Income taxes specifically chargeable to the policyholder		10			1			18			1

Amortization of insurance acquisition cash flows		78			98			153			185
Total insurance revenue for contracts not measured using the PAA		1,803			1,740			3,560			3,411
For contracts measured using the PAA:
Insurance revenue		4,154			3,827			8,415			7,696
Total insurance revenue		$	5,957		$	5,567		$	11,975		$	11,107

(1) Expected claims and other expenses excludes investment components and amounts allocated to the loss component. Release of risk adjustment excludes amounts allocated to the loss component and amounts related to changes in the time value of money, which are recognized in Insurance finance income (expenses).

7. Fee Income



	For the three months ended						For the six months ended
	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024
Fee income from service contracts:
Distribution fees		$	256		$	251		$	526		$	506
Fund management and other asset-based fees		1,492			1,466			3,072			2,893
Administrative service and other fees		387			360			777			690
Total fee income		$	2,135		$	2,077		$	4,375		$	4,089

Distribution fees and Fund management and other asset-based fees are primarily earned in the Asset Management segment. Administrative service and other fees are primarily earned in the Canada and U.S. segments. The fee income by business segment is presented in Note 3.

8. Income Taxes

The Company’s effective income tax rate is generally lower than our statutory income tax rate of 27.8% due to various tax benefits, such as lower taxes on income subject to tax in foreign jurisdictions and a range of tax-exempt or low-taxed investment income.

Our effective income tax rate for the three and six months ended June 30, 2025 was 20.3% and 19.8% compared to 21.1% and 21.5% for the three and six months ended June 30, 2024. The effective income tax rate for the three and six months ended June 30, 2025 was lower than the effective income tax rate for the three and six months ended June 30, 2024, primarily due to lower Global Minimum Tax expense and higher income in jurisdictions with lower tax rates in 2025.

In our Consolidated Statements of Operations, Income tax expense (benefit) has the following components:


	For the three months ended						For the six months ended
	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024

Current income tax expense (benefit)		$	220		$	206		$	490		$	513
Deferred income tax expense (benefit)		(22)			(14)			(50)			(60)
Total income tax expense (benefit)		$	198		$	192		$	440		$	453

The IASB issued amendments to IAS 12 Income Taxes in May 2023, which provided a mandatory temporary exception to the recognition and disclosure of information about deferred taxes relating to Global Minimum Tax ("GMT"), and we have applied this temporary exception. Our deferred taxes will not reflect impacts of GMT while the mandatory exception is applicable. The GMT rules applied to us effective January 1, 2024. The Canadian GMT legislation requires the ultimate parent entity of a group to pay top-up tax, on a jurisdiction-by-jurisdiction basis, on profits of its subsidiaries that are taxed below 15%. Some jurisdictions have enacted a Qualifying Domestic Minimum Top-Up Tax ("QDMTT") which requires the GMT top-up tax to be paid in the local jurisdiction rather than to the ultimate parent entity's jurisdiction. In response to the GMT rules, Bermuda enacted a Corporate Income Tax ("CIT") regime, including a corporate income tax rate of 15%, which applies to us effective January 1, 2025. The Bermuda CIT is not a QDMTT for the purposes of GMT. Our other subsidiaries that are

Sun Life Financial Inc.

Second Quarter 2025

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

currently subject to a statutory tax rate or to a tax regime that could result in taxing profits at a rate below 15% include those in Hong Kong and Ireland, which have both enacted a QDMTT. Current income tax expense (benefit) for the three and six months ended June 30, 2025 includes GMT income tax benefit of $(4) and $(7), due to prior year GMT adjustments (June 30, 2024 — $28 and $30).

9. Capital Management

9.A Capital

Our capital base is structured to exceed minimum regulatory and internal capital targets and maintain strong credit and financial strength ratings, while maintaining a capital efficient structure. We strive to achieve an optimal capital structure by balancing the use of debt and equity financing. Capital is managed both on a consolidated basis under the principles that consider all the risks associated with the business, as well as at the business group level under the principles appropriate to the jurisdiction in which each operates. We manage the capital for all of our international subsidiaries on a local statutory basis in a manner commensurate with their individual risk profiles. Further details on our capital, and how it is managed, are included in Note 20 of our 2024 Annual Consolidated Financial Statements.

SLF Inc. is a non-operating insurance company and is subject to the Life Insurance Capital Adequacy Test ("LICAT") guideline. As at June 30, 2025, SLF Inc.’s LICAT ratio exceeded the regulatory minimum target as set out by the Office of the Superintendent of Financial Institutions, Canada ("OSFI").

Sun Life Assurance, SLF Inc.’s principal operating life insurance subsidiary in Canada, is also subject to the LICAT guideline. As at June 30, 2025, Sun Life Assurance's LICAT ratio exceeded OSFI’s minimum regulatory target; as well as OSFI’s supervisory target applicable to operating life insurance companies.

In the U.S., Sun Life Assurance operates through a branch which is subject to U.S. regulatory supervision and it exceeded the levels under which regulatory action would be required as at June 30, 2025. In addition, other subsidiaries of SLF Inc. that must comply with local capital or solvency requirements in the jurisdiction in which they operate maintained capital levels above minimum local requirements as at June 30, 2025.

Our capital base consists mainly of common shareholders’ equity, preferred shareholders’ equity, equity in the participating account, non-controlling interest's equity, CSM, and certain other capital securities that qualify as regulatory capital.

9.B Significant Capital Transactions

9.B.i Common Shares

Changes in common shares issued and outstanding were as follows:


For the six months ended	June 30, 2025				June 30, 2024

Common shares (in millions of shares)	Number of shares		Amount		Number of shares		Amount
Balance, beginning of period		573.9	$	8,192		584.6	$	8,327
Stock options exercised		0.5	32			0.3	12
Common shares purchased for cancellation		(11.2)	(179)			(6.5)	(100)

Balance, end of period		563.2	$	8,045		578.4	$	8,239

On August 29, 2023, we launched a normal course issuer bid (the "NCIB") to purchase up to 17 million of our common shares, which expired on August 28, 2024. We renewed the NCIB to purchase up to 15 million of our common shares which commenced on August 29, 2024 and, was in effect until June 6, 2025 (the "2024 NCIB"). We repurchased approximately 14.4 million common shares under the 2024 NCIB. In June 2025, we renewed the NCIB to purchase up to 10.6 million common shares (the "2025 NCIB", and together with the 2024 NCIB, the "NCIBs"), representing an additional 10 million common shares approved by OSFI and the Toronto Stock Exchange (the "TSX"), and the remaining approximately 0.6 million common shares that the Company had not repurchased under the 2024 NCIB. The 2025 NCIB commenced on

June 9, 2025 and will continue until, at the latest, May 21, 2026.

We implemented an automatic repurchase plan with our designated broker in order to facilitate purchases of common shares under the NCIBs. Under the automatic repurchase plan, our designated broker is able to purchase common shares pursuant to the NCIBs at times when we ordinarily would not be active in the market due to applicable securities laws or self-imposed blackout periods. Any common shares purchased by us pursuant to the NCIBs will be cancelled or used in connection with certain equity settled incentive arrangements.

For the six months ended June 30, 2025, we purchased and cancelled an aggregate of approximately 11.2 million common shares (June 30, 2024 — 6.5 million common shares) at an average price per share of $81.71 (June 30, 2024 — $70.76) for a total amount of $918 (June 30, 2024 — $460) under the NCIBs and incurred tax on net repurchases of equity of $17 (June 30, 2024 — $9). The total amount paid to purchase the shares pursuant to the NCIBs and the tax incurred is recorded in our Consolidated Statements of Changes in Equity. The amount allocated to Common shares is based on the average cost per common share and amounts paid above the average cost are allocated to Retained earnings.

9.B.ii Preferred Shares and Other Equity Instruments

On June 30, 2025, 2.7 million of the 5.0 million Class A Non-Cumulative Floating Rate Preferred Shares Series 9QR (the "Series 9QR Shares") were converted into Class A Non-Cumulative Rate Reset Preferred Shares Series 8R (the "Series 8R Shares") on a one-for-one basis. As a result, as of June 30, 2025, SLF Inc. has approximately 8.9 million Series 8R Shares and 2.3 million Series 9QR Shares issued and outstanding.

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Sun Life Financial Inc.

Second Quarter 2025

10. Segregated Funds

10.A Segregated Funds Classified as Investment Contracts

10.A.i Investments for Account of Segregated Fund Holders — Investment Contracts

The carrying value of investments for account of segregated fund holders for contracts classified as investment contracts are as follows:



As at	June 30, 2025			December 31, 2024
Segregated and mutual fund units		$	134,188		$	126,867
Equity securities		1,014			1,049
Debt securities		559			773
Cash, cash equivalents and short-term securities		152			3





Other		(53)			(3)
Total investments for account of segregated fund holders		$	135,860		$	128,689

10.A.ii Changes in Account of Segregated Fund Holders — Investment Contracts


	For the six months ended and as at June 30, 2025			For the year ended and as at December 31, 2024

Balance, beginning of period		$	128,689		$	109,411
Additions to segregated funds:
Deposits		9,505			12,922

Net realized and unrealized gains (losses)		5,373			11,412
Other investment income		395			7,487
Total additions		15,273			31,821
Deductions from segregated funds:
Payments to policyholders and their beneficiaries		7,646			11,718
Management fees		420			784
Taxes and other expenses		30			49
Foreign exchange rate movements		6			(8)
Total deductions		8,102			12,543
Net additions (deductions)		7,171			19,278


Balance, end of period		$	135,860		$	128,689

10.B Segregated Funds Classified as Insurance Contracts

10.B.i Investments for Account of Segregated Fund Holders — Insurance Contracts

The carrying value of investments for account of segregated fund holders for contracts classified as insurance contracts, which are the underlying items for the insurance contracts, are as follows:



As at	June 30, 2025			December 31, 2024
Segregated and mutual fund units		$	14,761		$	15,084
Equity securities		2,988			3,113
Debt securities		1,694			1,607
Cash, cash equivalents and short-term securities		335			394

Mortgages		7			7
Other assets		68			52
Total assets		19,853			20,257
Less: Liabilities arising from investing activities		97			160
Total investments for account of segregated fund holders		$	19,756		$	20,097

Sun Life Financial Inc.

Second Quarter 2025

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

10.B.ii Changes in Account of Segregated Fund Holders — Insurance Contracts

Changes by Measurement Component

The following reconciliation illustrates the insurance contract liabilities for account of segregated fund holders by measurement component. For insurance contract liabilities for account of segregated fund holders, the entire amount is included in the estimates of PV of future cash flows. Reconciliations for the net liabilities of segregated fund insurance contracts that are not backed by investments for account of segregated fund holders are included as part of the insurance contract liabilities in Note 6.A.i.


	For the six months ended and as at June 30, 2025	For the year ended and as at December 31, 2024

Balance, beginning of period			$	20,097	$	19,041
Insurance finance (income) expenses			642		2,316
Foreign currency translation			(301)		388
Cash flows:
Premiums received			997		2,016
Amounts paid to policyholders and other insurance service expenses paid			(1,344)		(2,814)
Management fees, taxes and other expenses			(335)		(850)
Total cash flows			(682)		(1,648)


Balance, end of period			$	19,756	$	20,097

11. Commitments, Guarantees and Contingencies

Guarantees of Sun Life Assurance Preferred Shares and Subordinated Debentures

SLF Inc. has provided a guarantee on the $150 of 6.30% subordinated debentures due 2028 issued by Sun Life Assurance. Claims under this guarantee will rank equally with all other subordinated indebtedness of SLF Inc. SLF Inc. has also provided a subordinated guarantee of preferred shares issued from time to time by Sun Life Assurance, other than such preferred shares which are held by SLF Inc. and its affiliates. Sun Life Assurance has no outstanding preferred shares subject to the guarantee. As a result of these guarantees, Sun Life Assurance is entitled to rely on exemptive relief from most continuous disclosure and the certification requirements of Canadian securities laws.

The following tables set forth certain consolidating summary financial information for SLF Inc. and Sun Life Assurance (consolidated):


For the three months ended	SLF Inc.(unconsolidated)			Sun Life Assurance (consolidated)			Other subsidiaries of SLF Inc. (combined)			Consolidation adjustments			SLF Inc. (consolidated)
June 30, 2025
Insurance revenue		$	—		$	5,102		$	1,278		$	(423)		$	5,957
Net investment income (loss) excluding result for segregated fund holders		81			1,120			6			(100)			1,107
Fee income		1			536			1,743			(145)			2,135

Total revenue		$	82		$	6,758		$	3,027		$	(668)		$	9,199
Shareholders’ net income (loss)		$	735		$	580		$	132		$	(712)		$	735
June 30, 2024
Insurance revenue		$	—		$	4,836		$	1,096		$	(365)		$	5,567
Net investment income (loss) excluding result for segregated fund holders		78			1,269			14			(89)			1,272
Fee income		1			490			1,716			(130)			2,077

Total revenue		$	79		$	6,595		$	2,826		$	(584)		$	8,916
Shareholders’ net income (loss)		$	666		$	460		$	219		$	(679)		$	666

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Sun Life Financial Inc.

Second Quarter 2025



For the six months ended	SLF Inc.(unconsolidated)			Sun Life Assurance (consolidated)			Other subsidiaries of SLF Inc. (combined)			Consolidation adjustments			SLF Inc. (consolidated)
June 30, 2025
Insurance revenue		$	—		$	10,209		$	2,598		$	(832)		$	11,975
Net investment income (loss) excluding result for segregated fund holders		143			3,928			297			(168)			4,200
Fee income		1			1,075			3,586			(287)			4,375

Total revenue		$	144		$	15,212		$	6,481		$	(1,287)		$	20,550
Shareholders’ net income (loss)		$	1,683		$	1,144		$	507		$	(1,651)		$	1,683
June 30, 2024
Insurance revenue		$	—		$	9,526		$	2,319		$	(738)		$	11,107
Net investment income (loss) excluding result for segregated fund holders		157			584			61			(207)			595
Fee income		1			940			3,406			(258)			4,089
Other income		—			—			161			—			161
Total revenue		$	158		$	11,050		$	5,947		$	(1,203)		$	15,952
Shareholders’ net income (loss)		$	1,504		$	970		$	543		$	(1,513)		$	1,504


Assets and liabilities as at	SLF Inc.(unconsolidated)			Sun Life Assurance (consolidated)			Other subsidiaries of SLF Inc. (combined)			Consolidation adjustments			SLF Inc. (consolidated)
June 30, 2025
Invested assets		$	27,928		$	175,670		$	11,375		$	(25,782)		$	189,191
Reinsurance contract held assets		$	—		$	6,162		$	1		$	(10)		$	6,153
Insurance contract assets		$	—		$	218		$	1,281		$	(1,214)		$	285
Total other general fund assets		$	10,820		$	14,095		$	23,564		$	(23,437)		$	25,042
Investments for account of segregated fund holders		$	—		$	155,555		$	61		$	—		$	155,616
Insurance contract liabilities excluding those for account of segregated fund holders		$	—		$	148,157		$	89		$	(10)		$	148,236
Reinsurance contract held liabilities		$	—		$	3,287		$	—		$	(1,214)		$	2,073
Investment contract liabilities		$	—		$	12,106		$	—		$	—		$	12,106
Total other general fund liabilities		$	14,225		$	15,924		$	26,848		$	(23,925)		$	33,072
Insurance contract liabilities for account of segregated fund holders		$	—		$	19,695		$	61		$	—		$	19,756
Investment contract liabilities for account of segregated fund holders		$	—		$	135,860		$	—		$	—		$	135,860
December 31, 2024
Invested assets		$	28,494		$	175,508		$	12,449		$	(26,634)		$	189,817
Reinsurance contract held assets		$	—		$	6,353		$	—		$	(35)		$	6,318
Insurance contract assets		$	—		$	227		$	1,583		$	(1,455)		$	355
Total other general fund assets		$	4,639		$	13,979		$	10,299		$	(3,472)		$	25,445
Investments for account of segregated fund holders		$	—		$	148,720		$	66		$	—		$	148,786
Insurance contract liabilities excluding those for account of segregated fund holders		$	—		$	147,196		$	108		$	(35)		$	147,269
Reinsurance contract held liabilities		$	—		$	3,281		$	—		$	(1,456)		$	1,825
Investment contract liabilities		$	—		$	11,677		$	1		$	—		$	11,678
Total other general fund liabilities		$	7,576		$	16,191		$	15,589		$	(4,322)		$	35,034
Insurance contract liabilities for account of segregated fund holders		$	—		$	20,031		$	66		$	—		$	20,097
Investment contract liabilities for account of segregated fund holders		$	—		$	128,689		$	—		$	—		$	128,689

Sun Life Financial Inc.

Second Quarter 2025

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

12. Earnings (Loss) Per Share

Details of the calculation of the net income (loss) and the weighted average number of shares used in the earnings per share computations are as follows:



	For the three months ended						For the six months ended
	June 30, 2025			June 30, 2024			June 30, 2025			June 30, 2024
Common shareholders’ net income (loss) for basic earnings per share		$	716		$	646		$	1,644		$	1,464
Add: Increase in income due to convertible instruments(1)		2			2			5			5
Common shareholders’ net income (loss) on a diluted basis		$	718		$	648		$	1,649		$	1,469
Weighted average number of common shares outstanding for basic earnings per share (in millions)		565			581			568			582
Add: Dilutive impact of stock options(2) (in millions)		1			—			1			—
Dilutive impact of convertible instruments(1) (in millions)		3			3			2			3
Weighted average number of common shares outstanding on a diluted basis (in millions)		569			584			571			585
Basic earnings (loss) per share		$	1.27		$	1.11		$	2.89		$	2.52
Diluted earnings (loss) per share		$	1.26		$	1.11		$	2.89		$	2.51

(1) The convertible instruments are the Sun Life ExchangEable Capital Securities (“SLEECS“) — Series B issued by Sun Life Capital Trust.

(2) Excludes the impact of nil stock options for both the three and six months ended June 30, 2025 (June 30, 2024 — 1 million and 1 million, respectively) because these stock options were anti-dilutive for the period.

13. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss), net of taxes, are as follows:



For the three months ended	June 30, 2025							June 30, 2024
	Balance, beginning of period			Other comprehensive income (loss)			Balance, end of period		Balance, beginning of period		(1)		Other comprehensive income (loss)			Balance, end of period	(1)
Items that may be reclassified subsequently to income:
Unrealized foreign currency translation gains (losses), net of hedging activities		$	2,721		$	(992)			$	1,729	$	1,642		$	84		$	1,726
Unrealized gains (losses) on FVOCI assets		(130)			30				(100)		(402)			3			(399)
Unrealized gains (losses) on cash flow hedges		6			(1)				5		1			(6)			(5)
Share of other comprehensive income (loss) in joint ventures and associates		(233)			73				(160)		(249)			4			(245)
Items that will not be reclassified subsequently to income:
Remeasurement of defined benefit plans		(210)			14				(196)		(210)			4			(206)
Share of other comprehensive income (loss) in joint ventures and associates		(6)			9				3		(7)			2			(5)
Revaluation surplus on transfers to investment properties		144			—				144		143			—			143
Total		$	2,292		$	(867)			$	1,425	$	918		$	91		$	1,009
Total attributable to:
Participating account		$	1		$	10			$	11	$	4		$	9		$	13
Non-controlling interests		11			(2)				9		6			2			8
Shareholders		2,280			(875)				1,405		908			80			988
Total		$	2,292		$	(867)			$	1,425	$	918		$	91		$	1,009

(1) Balances have been restated. Refer to Note 2.

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Sun Life Financial Inc.

Second Quarter 2025



For the six months ended	June 30, 2025											June 30, 2024
	Balance, beginning of period			(1)	Other comprehensive income (loss)			Balance, end of period			Balance, beginning of period		(1)	Other comprehensive income (loss)			Balance, end of period		(1)
Items that may be reclassified subsequently to income:
Unrealized foreign currency translation gains (losses), net of hedging activities		$	2,696			$	(967)		$	1,729					$	1,350	$	376		$	1,726
Unrealized gains (losses) on FVOCI assets		(250)				150			(100)						(354)		(45)			(399)
Unrealized gains (losses) on cash flow hedges		4				1			5						(1)		(4)			(5)
Share of other comprehensive income (loss) in joint ventures and associates		(163)				3			(160)						(364)		119			(245)
Items that will not be reclassified subsequently to income:
Remeasurement of defined benefit plans		(198)				2			(196)						(217)		11			(206)
Share of other comprehensive income (loss) in joint ventures and associates		(5)				8			3						2		(7)			(5)
Revaluation surplus on transfers to investment properties		144				—			144						143		—			143
Total		$	2,228			$	(803)		$	1,425					$	559	$	450		$	1,009
Total attributable to:
Participating account		$	3			$	8		$	11					$	6	$	7		$	13
Non-controlling interests		11				(2)			9						1		7			8
Shareholders		2,214				(809)			1,405						552		436			988
Total		$	2,228			$	(803)		$	1,425					$	559	$	450		$	1,009

(1) Balances have been restated. Refer to Note 2.

14. Legal and Regulatory Proceedings

We are regularly involved in legal actions, both as a defendant and as a plaintiff. Legal actions naming us as a defendant ordinarily involve our activities as a provider of insurance protection and wealth management products, as an investor and investment advisor, and as an employer. In addition, government and regulatory bodies in Canada, the U.S., the UK, and Asia, including federal, provincial, and state securities and insurance regulators, tax authorities, and other government authorities, from time to time, make inquiries and require the production of information or conduct examinations or investigations concerning our compliance with tax, insurance, securities, and other laws.

Provisions for legal proceedings related to insurance contracts, such as for disability and life insurance claims and the cost of litigation, are included in Insurance contract liabilities in our Consolidated Statements of Financial Position. Other provisions are established outside of the Insurance contract liabilities if, in the opinion of management, it is both probable that a payment will be required and a reliable estimate can be made of the amount of the obligation. Management reviews the status of all proceedings on an ongoing basis and exercises judgment in resolving them in such manner as management believes to be in our best interest.

Our significant legal proceedings and regulatory matters are disclosed in Note 22.G of our 2024 Annual Consolidated Financial Statements. There have been no significant updates to such legal and regulatory proceedings.

15. Subsequent Event

On July 15, 2025, we invested $55 cash in Bowtie Life Insurance Company Limited which resulted in an increase in ownership, excluding dilution, of approximately 11%. Due to the recent closing of this transaction, the fair value determination and purchase price accounting have not been completed.

Sun Life Financial Inc.

Second Quarter 2025

CONDENSED NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Corporate and Shareholder Information

For information about Sun Life, corporate

United States

Direct deposit of dividends

news and financial results, please visit

Equiniti Trust Company, LLC

Common shareholders residing in Canada,

sunlife.com

PO Box 860

or the U.S. may have their dividend

Newark, NJ 07101

payments deposited directly into their

Corporate office

Tel: 1-877-224-1760

bank account.

Sun Life Financial Inc.

Email: sunlifeinquiries@tmx.com

1 York Street

The Request for Electronic Payment of

Toronto, Ontario

United Kingdom

Dividends Form is available for downloading

Canada M5J 0B6

MUFG Corporate Markets (UK) Limited

from the TSX Trust Company website,

Tel: 416-979-9966

Central Square

tsxtrust.com/sun-life/forms, or you can

Website: sunlife.com

29 Wellington Street

contact TSX Trust Company to have a form

Leeds LS1 4DL

sent to you.

Investor Relations

Tel: +44 (0) 345-602-1587

For financial analysts, portfolio managers

Email:

Canadian dividend reinvestment

and institutional investors requiring

shareholderenquiries@cm.mpms.mufg.com

and share purchase plan

information, please contact:

Canadian-resident common shareholders

Investor Relations

Philippines

can enroll in the Dividend Reinvestment

Email: Investor_Relations@sunlife.com

RCBC Trust Corporation

and Share Purchase Plan. For details, visit

Please note that financial information can

Stock Transfer Processing Section

our website at sunlife.com or contact the

also be obtained from sunlife.com.

Ground Floor, West Wing

Plan Agent, TSX Trust Company at

GPL (Grepalife) Building

sunlifeinquiries@tmx.com.

Transfer agent

221 Senator Gil Puyat Avenue

Sun Life Financial Inc. has appointed TSX

Makati City, 1200

Stock exchange listings

Trust Company as its share registrar and

Philippines

Sun Life Financial Inc. common shares are

transfer agent. TSX Trust Company has

From Metro Manila: 632-5318-8567

listed on the Toronto (TSX), New York

co-transfer agents in the U.S., U.K.,

From the Provinces: 1-800-1-888-2422

(NYSE) and Philippine (PSE) stock

Philippines and Hong Kong.

Email: rcbcstocktransfer@rcbc.com

exchanges. Ticker Symbol: SLF

For information about your shareholdings,

Hong Kong, SAR

Sun Life Financial Inc. Class A Preferred

dividends, change in share registration or

Computershare Hong Kong

Shares are listed on the Toronto Stock

address, estate transfers, lost certificates,

Investor Services Limited

Exchange (TSX).

or to advise of duplicate mailings, please

17M Floor, Hopewell Centre

Ticker Symbols:

contact the Transfer Agent in the country

183 Queen’s Road East

Series 3

SLF.PR.C

where you reside. If you do not live in any

Wanchai, Hong Kong

Series 4

SLF.PR.D

of the countries listed, please contact the

Tel: 852-2862-8555

Series 5

SLF.PR.E

Canadian Transfer Agent.

Shareholders can submit inquiries online at

Series 8R

SLF.PR.G

computershare.com/hk/contact

Series 9QR

SLF.PR.J

Canada

Series 10R

SLF.PR.H

TSX Trust Company

Shareholder services

Series 11QR

SLF.PR.K

301 — 100 Adelaide Street West

For shareholder account inquiries, please

Toronto, ON

contact the Transfer Agent in the country

M5H 4H1

where you reside, or Sun Life’s

Tel (within North America):

Shareholder Services team.

1-877-224-1760

English Email:

Tel (outside North America):

shareholderservices@sunlife.com

416-682-3865

French Email:

Fax: 1-888-249-6189

servicesauxactionnaires@sunlife.com

Email: sunlifeinquiries@tmx.com

Website: tsxtrust.com/sun-life

2025 dividend dates

Common Shares

Shareholders can view their account

details using TSX Trust Company's

Record dates

Payment dates

Internet service, Investor Central.

February 26, 2025

March 31, 2025

May 28, 2025

June 30, 2025

August 27, 2025

September 29, 2025

November 26, 2025*

December 31, 2025*

*Subject to approval by the Board of Directors

CORPORATE AND SHAREHOLDER INFORMATION

Sun Life Financial Inc.

Second Quarter 2025