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: Canada, United States ("U.S."), Asset Management, Asia, and Corporate. The information in this document is based on the unaudited interim financial results of SLF Inc. for the period ended September 30, 2023 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 September 30, 2023, 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. On January 1, 2023 we adopted
IFRS 17 Insurance Contracts ("IFRS 17"), which replaces IFRS 4 Insurance Contracts, and IFRS 9 Financial Instruments ("IFRS 9"), which replaces IAS 39 Financial Instruments: Recognition and Measurement (collectively, "the new standards"). The nature and effects of the key changes to our critical accounting policies and estimated impacts from the adoption of the new standards are summarized in section L - Changes in Accounting Policies in our MD&A for the period ended September 30, 2023 ("Q3'23 MD&A").

TORONTO, ON - (November 13, 2023) - Sun Life Financial Inc. (TSX: SLF) (NYSE: SLF) announced its results for the third quarter ended September 30, 2023.

•Underlying net income(1) of $930 million decreased $19 million or 2% from Q3'22(2); underlying ROE(1) was 17.7%.

◦Wealth & asset management underlying net income(1): $457 million, up $38 million or 9%.

◦Group - Health & Protection underlying net income(1): $285 million, up $4 million or 1%.

◦Individual - Protection underlying net income(1): $297 million, down $8 million or 3%.

◦Corporate expenses & other(1): $(109) million net loss, increase in net loss of $(53) million or 95%.

•Reported net income of $871 million increased $760 million from Q3'22(2); reported ROE(1) was 16.6%.

•Increase to common share dividend from $0.75 to $0.78 per share.

“Sun Life delivered good results and we continue to benefit from our diversified business mix with strong net income in Canada, growth in SLC Management fee-related earnings and good growth in Asia," said Kevin Strain, President and CEO of Sun Life.

“We completed our acquisition of Dialogue, Canada’s leading virtual health and wellness provider that gives access to quality, high-touch care. In Asia, we increased our investment in Bowtie, Hong Kong’s first virtual insurer. Since the beginning of our partnership five years ago, Bowtie has grown in digital distribution, sales and increased market share. In the U.S., we’ve extended our Teledentistry.com partnership to DentaQuest, which will provide approximately 3.5 million people across 20 states access to oral and dental care. SLC Management's strategic relationship with Scotiabank Global Wealth Management to provide private asset solutions in the Canadian market will help to meet the growing demand for alternative investments.”

						Quarterly results						Year-to-date
Profitability						Q3'23			Q3'22(2)			2023			2022(2)
			Underlying net income ($ millions)(1)			930			949			2,745			2,477
			Reported net income - Common shareholders ($ millions)			871			111			2,337			1,706
			Underlying EPS ($)(1)(3)			1.59			1.62			4.68			4.23
			Reported EPS ($)(3)			1.48			0.19			3.97			2.91
			Underlying return on equity ("ROE")(1)			17.7%			19.4%			17.6%			17.1%
			Reported ROE(1)			16.6%			2.3%			14.9%			11.8%
Growth						Q3'23			Q3'22(2)			2023			2022(2)
			Wealth sales & asset management gross flows ($ millions)(1)(4)			39,324			42,146			128,070			155,381
			Group - Health & Protection sales ($ millions)(1)			374			499			1,573			1,209
			Individual - Protection sales ($ millions)(1)			669			444			1,784			1,269
			Assets under management ("AUM") ($ billions)(1)			1,340			1,269			1,340			1,269
			New business Contractual Service Margin ("CSM") ($ millions)(1)			370			177			872			509
Financial Strength						Q3'23			As at January 1, 2023(5)
			LICAT ratios (at period end)(5)
			Sun Life Financial Inc.			147%			142%
			Sun Life Assurance(6)			138%			139%
			Financial leverage ratio (at period end)(2)(7)			21.8%			23.7%

(1)Represents a non-IFRS financial measure. For more details, see the Non-IFRS Financial Measures section in this document and in the Q3'23 MD&A.

(2)2022 restated results may not be fully representative of our future earnings profile, as we were not managing our asset and liability portfolios under the new standards, IFRS 17 and IFRS 9. For more details, see the heading "Note to Readers: 2022 Restated Results on Adoption of IFRS 17 and IFRS 9" in this document.

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

(4)Effective January 1, 2023, Canada wealth sales & asset management gross flows have been updated to exclude retained sales. Prior period amounts have been updated to reflect this change.

(5)OSFI's 2023 LICAT Guideline, effective January 1, 2023, specifies that available capital for LICAT purposes includes the Contractual Service Margin. Prior period restatement and resubmissions are not mandated. Pro-forma January 1, 2023 LICAT ratios are disclosed to illustrate transition impact. These pro-forma calculations will not be formally submitted to OSFI. Refer to section F - Financial Strength in the Q3'23 MD&A.

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

(7)Effective January 1, 2023, the calculation for the financial leverage ratio was updated to include the CSM balance (net of taxes) in the denominator. The CSM (net of taxes) was $9.3 billion as at September 30, 2023 (January 1, 2023 - $8.7 billion).

(1)Represents a non-IFRS financial measure. For more details, see the Non-IFRS Financial Measures section in this document and in the Q3'23 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 Q3'23 MD&A.

(3)Not meaningful.

(4)Effective January 1, 2023, Canada wealth sales & asset management gross flows have been updated to exclude retained sales. Prior period amounts have been updated to reflect this change.

Underlying net income(1) of $930 million decreased $19 million or 2% from prior year, driven by:

•Wealth & asset management(1) 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(1) 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(1) down $8 million: Lower earnings due to the sale of Sun Life UK(2), 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(1) $(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.

•Favourable foreign currency translation led to an increase of $16 million.

•Favourable market-related impacts primarily reflecting interest rates partially offset by real estate experience(3);

•A $170 million charge related to the sale of Sun Life UK(2) and a higher increase in SLC Management's acquisition-related liabilities(4) in the prior year; and

•ACMA(5) impacts; partially offset by

•Fair value changes in management's ownership of MFS(6) shares.

(1)Refer to section C - Profitability in the Q3'23 MD&A for more information on notable items attributable to reported & 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 Q3'23 MD&A.

(2)On April 3, 2023 we completed the sale of SLF of Canada UK Limited to Phoenix Group Holdings plc ("the sale of Sun Life UK"). In Q3'22, we recognized an impairment charge of $170 million pertaining to the attributed goodwill that was not expected to be recovered through the sale. For additional information, refer to Note 3 of our Interim Consolidated Financial Statements for the period ended September 30, 2023.

(3)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").

(4)Reflects the changes in estimated future payments for acquisition-related contingent considerations and options to purchase remaining ownership interests of SLC Management affiliates.

(5)Assumption changes and management actions ("ACMA").

(6)MFS Investment Management ("MFS").

•MFS up $4 million (down US$5 million): Higher average net assets ("ANA"), an increase in net investment income, favourable foreign exchange translation and higher variable compensation expenses. The MFS pre-tax net operating profit margin(1) was 41% for Q3'23, consistent with the prior year.

•SLC Management up $28 million: Fee-related earnings(1) increased 17% driven by higher AUM, reflecting strong capital raising and deployment across the platform and the AAM acquisition(2). Fee-related earnings margin(1) for Q3'23 of 24% was consistent with the prior year. The increase in underlying net income was driven by the higher fee-related earnings, a favourable tax rate(3), and higher retention expenses in the prior year that did not repeat.

Reported net income of $268 million increased $50 million or 23% from prior year, driven by a lower increase in SLC Management's acquisition-related liabilities(4) compared to the prior year and an increase in underlying net income, partially offset by fair value changes in management's ownership of MFS shares.

Asset Management ended Q3'23 with $974 billion of AUM, consisting of $755 billion (US$556 billion) in MFS and $219 billion in SLC Management. Total Asset Management net outflows of $9.1 billion in Q3'23 reflected MFS net outflows of $12.5 billion (US$9.3 billion) partially offset by SLC Management net inflows of $3.4 billion.

MFS maintained good momentum in growing the defined contribution business. On a year-to-date basis, defined contribution gross sales are up 14% compared to prior year due to strong placement on consultant, advisor and recordkeeping platforms’ select lists, driving approximately     US$3 billion in net inflows, despite challenging market conditions.

In October, SLC Management entered into a strategic partnership with Scotiabank to distribute alternative investment capabilities to the Canadian retail market through Scotia Global Wealth Management. This will allow SLC Management to extend alternative investment capabilities to new Clients and expands the roster of investment solutions Scotiabank can offer the Canadian wealth management market. This strategic partnership, coupled with the recent acquisition of Advisors Asset Management, Inc. (“AAM”), positions SLC Management to meet the growing demand for alternative assets among High-Net-Worth ("HNW") investors. AAM also announced it will distribute Crescent Private BDC, a non-traded closed-end fund launched by Crescent Capital Group LP. This is the second collaboration between AAM and other SLC Management affiliates since its acquisition in Q1, highlighting the strategic benefit of adding this distribution channel.

Canada underlying net income of $338 million increased $45 million or 15% from prior year, reflecting:

•Wealth & asset management up $14 million: Increase in investment income driven by higher volume and yields.

•Group - Health & Protection up $34 million: Improved disability experience reflecting higher margins and shorter claims durations, partially offset by lower fee-related earnings.

•Individual - Protection down $3 million: In line with prior year.

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

Reported net income of $365 million increased $309 million from prior year, driven by more favourable market-related impacts primarily from interest rates, ACMA impacts, and the increase in underlying net income, partially offset by real estate experience.

Canada's sales(5):

•Wealth sales & asset management gross flows of $3 billion were up 7%, driven by higher Individual Wealth sales, primarily from mutual funds, partially offset by lower defined contribution sales in Group Retirement Services ("GRS").

•Group - Health & Protection sales of $119 million were up 4%, reflecting higher health sales.

•Individual - Protection sales of $148 million were up 24%, reflecting higher participating whole life insurance sales.

We continue to execute on our strategy of helping Clients access the care they need to prevent and mitigate health risks and live healthier lives. In Q3, Sun Life was selected to move forward in the final stages of contract negotiations with the Government of Canada to be the administrator of the Canadian Dental Care Plan (“CDCP”), which will provide access to dental care for Canadians in need. Through the CDCP, up to nine million additional Canadians will have access to dental care.

(1)Represents a non-IFRS financial measure. For more details, see the Non-IFRS Financial Measures section in this document and in the Q3'23 MD&A.

(2)On February 1, 2023, we completed the acquisition of a majority stake interest in Advisors Asset Management, Inc. ("the AAM acquisition"), a leading independent U.S. retail distribution firm, with the option to acquire the remaining interest starting in 2028.

(3)Underlying net income includes favourable adjustments related to tax filings.

(4)Reflects the changes in estimated future payments for acquisition-related contingent considerations and options to purchase remaining ownership interests of SLC Management affiliates.

(5)Compared to the prior year.

In support of our focus on inclusive workplace benefits, we are making it easier for plan members to understand and access culturally relevant covered health expenses under the standard Personal Spending Accounts (“PSA”). For example, we created a new Indigenous Health category which outlines and creates awareness that Sun Life provides coverage for traditional medicines, fees and supplies for Indigenous ceremonies, and more under the PSA. We also expanded our partnership with Spirit North, a national charitable organization, committing $1 million in funding over three years, to deliver physical health programs and address health inequities in underserved Indigenous communities.

U.S. underlying net income of US$140 million decreased US$33 million or 19% ($185 million decreased $42 million or 19%) from prior year, driven by:

•Group - Health & Protection down US$24 million: Lower Dental results as strong revenue growth was more than offset by the impact of Medicaid redeterminations following the end of the Public Health Emergency and investments in the Advantage Dental+ business. In Group Benefits, strong revenue growth was largely offset by less favourable morbidity experience.

•Individual - Protection down US$9 million: The inclusion of the UK payout annuity business(1) was more than offset by lower net investment results.

Reported net income of US$105 million increased US$9 million or 9% ($132 million increased $7 million or 6%) from prior year, driven by market-related impacts largely from interest rates, offset by the decrease in underlying net income and ACMA impacts.

U.S. group sales(2) of US$179 million were down US$102 million or 36% ($239 million, down $127 million or 35%), reflecting lower large case Medicaid sales in Dental, partially offset by higher commercial dental sales.

As a leader in health and benefits, we are helping Clients get access to the right care at the right time to live healthier lives. In Q3, we established a new preferred partnership with OptiMed, a U.S. national health care organization, to make specialty drugs more accessible and affordable for our stop-loss members. The new program will improve how specialty drugs are administered for members who need them, often in their own home, while also managing rising health care costs. Also, in employee benefits, we launched an enhanced disability product suite specially designed for healthcare professionals, providing them with income replacement coverage that meets their specific needs.

We extended our partnership with Teledentistry.com to include DentaQuest members. The service offers members 24/7 virtual access to dental providers, making it easier to get dental care and advice digitally. It is expected to be available to Medicaid and commercial dental plan members in 20 states by the end of 2023, increasing access to oral health care for approximately 3.5 million members in those states.

Asia underlying net income of $166 million increased $13 million or 8% from prior year, driven by:

•Wealth & asset management down $8 million: Lower earnings in the Philippines.

•Individual - Protection up $39 million: Business growth reflecting good sales momentum during the past year. Experience in the quarter included favourable mortality from lower claims volumes, largely offset by higher expense experience.

•Regional office expenses & other $(18) million increased net loss primarily reflecting higher incentive compensation.

Asia's sales(2):

•Wealth sales & asset management gross flows of $2 billion were down 34%, primarily reflecting lower money market fund sales in the Philippines.

•Individual sales of $521 million were up 60%, driven by higher sales in Hong Kong reflecting increased demand as pandemic-related travel restrictions were lifted in early 2023, and in International reflecting large case sales, partially offset by lower sales in Vietnam reflecting market conditions.

New business CSM of $238 million in Q3'23, compared to $79 million in the prior year, was primarily driven by sales in Hong Kong and High-Net-Worth.

We continue to execute on our growth strategy through strategic partnerships and investments. We launched our 15-year exclusive bancassurance partnership with Dah Sing Bank in Hong Kong with strong sales. We also increased our strategic investment in Bowtie Life Insurance Company Limited, Hong Kong’s first virtual insurer with a leading market share of approximately 30%(3) in Hong Kong’s direct sales channel.

(1)On April 3, 2023, we completed the sale of SLF of Canada UK Limited to Phoenix Group Holdings plc ("the sale of Sun Life UK"). Under the agreement, we will retain our economic interest in the payout annuities business through a reinsurance treaty, which, effective Q2'23 is recorded in In-force Management within the U.S. business group. For additional information, refer to Note 3 of our Interim Consolidated Financial Statements for the period ended September 30, 2023.

(2)Compared to the prior year.

(3)According to Insurance Authority’s Provisional Statistics for Long Term Business 2021-2023, Bowtie ranked first in number of new individual paid policies through direct channel in Hong Kong.

Demonstrating our focus on adopting prudent financial practices that protect our Clients while strengthening our risk management capabilities, Sun Life Hong Kong received approval from the Hong Kong Insurance Authority for the early adoption of the Risk-Based Capital (“RBC”) regime, effective end of June 2023. Sun Life Hong Kong is among the few insurers in Hong Kong that has transitioned to the RBC regime earlier than scheduled, reflecting our risk management capabilities and financial strength.

Corporate underlying net loss was $89 million compared to underlying net loss of $22 million in the prior year, driven by the sale of Sun Life UK(1), higher operating expenses including incentive compensation, an increase in debt financing costs, partially offset by higher investment income from surplus assets.

(1)On April 3, 2023 we completed the sale of SLF of Canada UK Limited to Phoenix Group Holdings plc ("the sale of Sun Life UK"). Under the agreement, we will retain our economic interest in the payout annuities business through a reinsurance treaty, which, effective Q2'23, is recorded in In-force Management within the U.S. business group.

(2)In Q3'22, we recognized an impairment charge of $170 million pertaining to the attributed goodwill that was not expected to be recovered through the sale of Sun Life UK. For additional information, refer to Note 3 of our Interim Consolidated Financial Statements for the period ended September 30, 2023. Also, the prior year included market-related losses from Sun Life UK.

 

For the period ended September 30, 2023

Dated November 13, 2023

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 September 30, 2023, Sun Life had total assets under management ("AUM") of $1.34 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.

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: Canada, United States ("U.S."), Asset Management, 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.

On January 1, 2023 we adopted IFRS 17 Insurance Contracts ("IFRS 17"), which replaces IFRS 4 Insurance Contracts. IFRS 17 establishes the principles for the recognition, measurement, presentation, and disclosure of insurance contracts. On January 1, 2023, we also adopted IFRS 9 Financial Instruments ("IFRS 9"), which replaces IAS 39 Financial Instruments: Recognition and Measurement. The nature and effects of the key changes in our critical accounting policies and estimated impacts from the adoption of the new standards are summarized in section
L - Changes in Accounting Policies in this document. For more information including the measurement and classification of opening balances, refer to Note 2 of our Interim Consolidated Financial Statements for the period ended September 30, 2023.

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

2022 results have been restated for the adoption of IFRS 17 and the related IFRS 9 classification overlay (“the new standards”). The restated results may not be fully representative of our future earnings profile, as we were not managing our asset and liability portfolios under the new standards. The majority of the actions taken to re-balance asset portfolios and transition asset-liability management execution to an IFRS 17 basis occurred in Q1'23. Accordingly, analysis based on 2022 comparative results may not necessarily be indicative of future trends, and should be interpreted with this context. Using sensitivities to analyze the outlook for market risk and related impacts (e.g., interest rate sensitivities) will be more representative starting with the sensitivities disclosed for Q1’23 and onward in section I - Risk Management in each quarter's respective MD&A document. Certain 2022 restated results and 2023 interim results in the Drivers of Earnings and CSM Movement Analysis were refined to more accurately reflect how management views the business. As these results are not audited, or have not yet been audited, they may still be subject to change.

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

•Wealth & asset management: Sun Life’s wealth & asset management 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:

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.

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.

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, 2022. 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.

(1)2022 restated results may not be fully representative of our future earnings profile, as we were not managing our asset and liability portfolios under the new standards. See the heading "Note to Readers: 2022 Restated Results on Adoption of IFRS 17 and IFRS 9" in section A - How We Report Our Results in this document.

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

(3)Effective January 1, 2023, Canada wealth sales & asset management gross flows have been updated to exclude retained sales. Prior period amounts have been updated to reflect this change.

(4)OSFI's 2023 LICAT Guideline, effective January 1, 2023, specifies that available capital for LICAT purposes includes the Contractual Service Margin. Prior period restatement and resubmissions are not mandated. Pro-forma January 1, 2023 LICAT ratios are disclosed to illustrate transition impact. These pro-forma calculations will not be formally submitted to OSFI.

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

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

(7)Effective January 1, 2023, the calculation for the financial leverage ratio was updated to include the CSM balance (net of taxes) in the denominator. The CSM (net of taxes) was $9.3 billion as at September 30, 2023 (June 30, 2023 - $9.1 billion; January 1, 2023 - $8.7 billion).

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.

(1)2022 restated results may not be fully representative of our future earnings profile, as we were not managing our asset and liability portfolios under the new standards. See the heading "Note to Readers: 2022 Restated Results on Adoption of IFRS 17 and IFRS 9" in section A - How We Report Our Results in this document.

(2)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.

(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").

(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.

Underlying net income(1) of $930 million decreased $19 million or 2%, driven by:

•Wealth & asset management(1) 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(1) 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(1) down $8 million: Lower earnings due to the sale of Sun Life UK(2), 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(1) $(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.

•Favourable market-related impacts primarily reflecting interest rates partially offset by real estate experience(3);

•A $170 million charge related to the sale of Sun Life UK(2) and a higher increase in SLC Management's acquisition-related liabilities(4) in the prior year; and

•ACMA impacts; partially offset by

•Fair value changes in management's ownership of MFS(5) shares.

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

(2)On April 3, 2023 we completed the sale of SLF of Canada UK Limited to Phoenix Group Holdings plc ("the sale of Sun Life UK"). In Q3'22, we recognized an impairment charge of $170 million pertaining to the attributed goodwill that was not expected to be recovered through the sale. For additional information, refer to Note 3 of our Interim Consolidated Financial Statements for the period ended September 30, 2023.

(3)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").

(4)Reflects the changes in estimated future payments for acquisition-related contingent considerations and options to purchase remaining ownership interests of SLC Management affiliates.

(5)MFS Investment Management ("MFS").

1.Market-related impacts

Market-related impacts represent the difference between actual versus expected market movements. Market-related impacts resulted in an increase of $23 million to reported net income, driven by interest rate impacts partially offset by real estate experience. Interest rate impacts primarily reflected non-parallel curve changes during the quarter. Real estate experience was primarily in Canada and Asia.

2.Assumption changes and management actions

The net impact of assumption changes and management actions was an increase of $35 million to reported net income. These included favourable impacts from modelling enhancements in Asia, which were partially offset by unfavourable policyholder behaviour updates in Asia and mortality updates in the U.S. For additional details refer to "Assumption Changes and Management Actions by Type" in

Section E - Contractual Service Margin in this document.

3.Other adjustments

Other adjustments decreased reported net income by $117 million, reflecting DentaQuest integration costs and amortization of acquired intangible assets, and an increase in SLC Management's acquisition-related liabilities(1).

4.Experience-related items

In the third quarter of 2023, notable experience items included:

•Favourable mortality experience in Asia and Canada, partially offset by U.S. group life;

•Favourable morbidity experience largely in Canada and in U.S. group disability and medical stop-loss; and

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

5.Income taxes

The Q3'23 effective income tax rate(2) on underlying net income and reported net income was 15.9% and 20.7% respectively.

6.Impacts of foreign exchange translation

Underlying net income of $2,745 million increased $268 million or 11%, driven by:

•Wealth & asset management up $26 million: Higher investment income driven by volume growth and an increase in yields, partially offset by lower fee-related earnings in MFS, Canada, and Asia.

•Group - Health & Protection up $306 million: Strong premium growth across all U.S. businesses, better disability experience in Canada and the U.S., as well as DentaQuest contribution.

•Individual - Protection up $84 million: Business growth reflecting good sales momentum during the past year in Asia, and improved protection experience, partially offset by lower earnings due to the sale of Sun Life UK.

•Corporate expenses & other $(148) million increase in net loss includes higher debt financing costs.

•In addition, the earnings by business type above include higher earnings on surplus and higher expenses.

•Higher earnings on surplus reflects an increase in realized gains and net interest income from higher rates.

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

Reported net income of $2,337 million increased $631 million or 37%, driven by the increase in underlying net income and:

•ACMA impacts;

•A $170 million charge related to the sale of Sun Life UK and a higher increase in SLC Management's acquisition-related liabilities(1), partially offset by a gain on the sale-leaseback of the Wellesley office in the U.S., in the prior year; and

•Gain on the sale of the sponsored markets business in Canada(3); partially offset by

•Fair value changes in management's ownership of MFS shares; and

•Market-related impacts reflecting real estate experience, largely offset by interest rates and equity markets.

(1)Reflects the changes in estimated future payments for acquisition-related contingent considerations and options to purchase remaining ownership interests of SLC Management affiliates.

(2)Our effective income tax rate on reported net income is calculated using Total income (loss) before income taxes, as detailed in Note 9 in our Interim Consolidated Financial Statements for the period ended September 30, 2023. 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.

(3)On February 1, 2023, we completed the sale of the sponsored markets business from Sun Life Assurance, a wholly owned subsidiary of SLF Inc., to Canadian Premier Life Insurance Company ("sale of the sponsored markets business").

Foreign exchange translation led to an increase of $75 million and $70 million to underlying net income and reported net income, respectively.

Underlying ROE was 17.6% and reported ROE was 14.9% (2022 - 17.1% and 11.8%, respectively).

1.Market-related impacts

Market-related impacts represent the difference between actual versus expected market movements. Market-related impacts resulted in a decrease of $261 million to reported net income, primarily reflecting unfavourable real estate experience, partially offset by interest rate impacts. The unfavourable real estate experience was driven by Asia and Canada. Interest rate impacts primarily reflected non-parallel curve changes during the year.

2.Assumption changes and management actions

The net impact of assumption changes and management actions was an increase of $37 million to reported net income.

3.Other adjustments

Other adjustments decreased reported net income by $184 million, reflecting DentaQuest integration costs and amortization of acquired intangible assets, and SLC Management acquisition-related costs(1), partially offset by gains on the sale of the sponsored markets business in Canada and the sale of Sun Life UK.

Notable experience items in the current year included:

•Favourable morbidity experience largely in Canada and in U.S. medical stop-loss;

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

•Other experience was favourable reflecting various smaller items.

5.Income taxes

The effective income tax rate on underlying net income(2) and reported net income was 17.6% and 17.4%, respectively.

6.Impacts of foreign exchange translation

Foreign exchange translation led to an increase of $75 million and $70 million in underlying net income and reported net income, respectively.

(1)Includes an increase in SLC Management's acquisition-related liabilities in Q3'23, which reflects the changes in estimated future payments for acquisition-related contingent considerations and options to purchase remaining ownership interests of SLC Management affiliates.

(2)Our effective income tax rate on reported net income is calculated using Total income (loss) before income taxes, as detailed in Note 9 in our Interim Consolidated Financial Statements for the period ended September 30, 2023. 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.

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

(2)Effective January 1, 2023, Canada wealth sales & asset management gross flows have been updated to exclude retained sales. Prior period amounts have been updated to reflect this change.

(3)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 wealth sales & asset management gross flows decreased $2.8 billion or 7% year-over-year ($3.7 billion(1) or 9%(1), excluding foreign exchange translation).

•Asset Management gross flows decreased $3.1 billion(1) or 8%(1), reflecting lower gross flows in SLC Management and MFS.

•Canada wealth sales & asset management gross flows increased $0.2 billion or 7%, driven by higher Individual Wealth sales, primarily from mutual funds, partially offset by lower defined contribution sales in Group Retirement Services ("GRS").

•Asia wealth sales & asset management gross flows decreased $0.9 billion(1) or 35%(1), primarily reflecting lower money market fund sales in the Philippines.

Total group health & protection sales decreased $125 million or 25% from prior year ($130 million(1) or 26%(1), excluding foreign exchange translation).

•Canada group sales increased $5 million or 4%, reflecting higher health sales.

•U.S. group sales decreased $133 million(1) or 36%(1), reflecting lower large case Medicaid sales in Dental, partially offset by higher commercial dental sales.

Total individual protection sales increased $225 million or 51% from prior year ($213 million(1) or 48%(1), excluding foreign exchange translation).

•Canada individual sales increased $29 million or 24%, reflecting higher participating whole life insurance sales.

•Asia individual sales increased $184 million(1) or 57%(1), driven by higher sales in Hong Kong reflecting increased demand as pandemic-related travel restrictions were lifted in early 2023, and in International reflecting large case sales, partially offset by lower sales in Vietnam reflecting market conditions.

New business CSM represents growth derived from sales activity in the period. The impact of new insurance business drove a $370 million increase in CSM, compared to new business CSM of $177 million in the prior year, driven by strong individual protection sales in Asia in Hong Kong and High-Net-Worth ("HNW"), and 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.

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.

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

(2)Effective October 1, 2022, the classification of a MFS fund has changed from Institutional and managed funds to Retail. Other retail and trust accounts have also been reclassified from Institutional and managed funds to Retail. Prior periods have been restated.

AUM increased $21.6 billion or 2% from December 31, 2022, primarily driven by:

(i)favourable market movements on the value of segregated, retail, institutional and managed funds of $40.6 billion; and

(ii)an increase of $5.2 billion from AUM primarily driven by the AAM acquisition(1); partially offset by

(iii)net outflows from segregated funds and third-party AUM of $15.5 billion;

(iv)Client distributions of $4.7 billion; and

(v)a decrease in AUM of general fund assets of $4.5 billion primarily due to the decline in net fair value from rising interest rates.

Segregated fund and third-party AUM net outflows of $10.5 billion during the quarter were comprised of:

(1)The acquisition of a majority stake in Advisors Asset Management, Inc. ("AAM acquisition"). For additional information, refer to Note 3 in our Interim Consolidated Financial Statements for the period ended September 30, 2023.

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.

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

(2)Relates to the sale of Sun Life UK. For additional information, refer to Note 3 in our Interim Consolidated Financial Statements for the period ended
September 30, 2023.

Total CSM ended Q3'23 at $11.5 billion, an increase of $0.6 billion or 5% for the first nine months of 2023:

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

•Favourable insurance experience in Canada, partially offset by Asia which included unfavourable policyholder behaviour in Vietnam and High-Net-Worth.

•Unfavourable markets and other impacts driven by interest rates.

•Impact of change in assumptions include favourable net mortality and net favourable model refinements.

•A $262 million reduction to the CSM balance from the sale of Sun Life UK.

The impact on CSM of ACMA is attributable to insurance contracts under the general measurement approach ("GMA") and variable fee approach ("VFA"). For insurance contracts measured under the GMA, the impacts flow through the CSM at locked-in discount rates. For insurance contracts measured under the VFA, the impact flows through the CSM at current discount rates.

The following table sets out the impacts of ACMA on our reported net income and CSM in the third quarter of 2023.

(1)In this document, the reported net income impact of ACMA is shown in aggregate for Net insurance service result and Net investment result, and excludes amounts attributable to participating policyholders.

(2)CSM is shown on a pre-tax basis as it reflects the changes in our insurance contract liabilities, while reported net income is shown on a post-tax basis to reflect the impact on capital.

(3)The impact of change in assumptions in the CSM rollforward of $287 million is comprised of $46 million for the three months ended March 31, 2023 from various small enhancements, $284 million for the three months ended June 30, 2023 which included a contract modification resulting in a change in the fulfilment cash flows offset by CSM within insurance contract liabilities, and $(43) million for the three months ended September 30, 2023, as referenced in the table above.

(4)Total impact of change in assumptions represents a non-IFRS financial measure for amounts deferred in CSM. For more details, see section

N - Non-IFRS Financial Measures in this document.

(1)This measure has not been restated for periods in 2022 and earlier as IFRS 17 and IFRS 9 were not the accounting standards in effect, and therefore were not applicable to our capital management practices at the time.

(2)OSFI's 2023 LICAT Guideline, effective January 1, 2023, specifies that available capital for LICAT purposes includes the CSM, and as such total capital was also updated to include the CSM balance. Prior period restatement and resubmissions are not mandated. Pro-forma January 1, 2023 LICAT ratios are disclosed to illustrate transition impact. These pro-forma calculations will not be formally submitted to OSFI.

(3)Innovative capital instruments consist of Sun Life ExchangEable Capital Securities ("SLEECS"), see section I - Capital and Liquidity Management in the 2022 Annual MD&A.

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

(5)Effective January 1, 2023, the calculation for the financial leverage ratio was updated to include the CSM balance (net of taxes) in the denominator. The CSM (net of taxes) was $9.3 billion as at September 30, 2023 (June 30, 2023 - $9.1 billion; March 31, 2023 - $9.0 billion; January 1, 2023 - $8.7 billion).

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

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 142% and Sun Life Assurance's LICAT ratio of 139% as at January 1, 2023 increased 12 percentage points compared to December 31, 2022, from the transition to IFRS 17. The largest driver of change was the reduction in the LICAT base solvency buffer ("BSB") scalar from 1.05 to 1.0 which contributed seven percentage points.

SLF Inc.'s LICAT ratio of 147% as at September 30, 2023 increased five percentage points compared to January 1, 2023, driven by reported net income and capital optimization, partially offset by shareholder dividend payments, subordinated debt redemption, market movements, and share buybacks.

Sun Life Assurance's LICAT ratio of 138% as at September 30, 2023 decreased one percentage point compared to January 1, 2023, reflecting dividend payments to SLF Inc. and market movements, largely offset by the impact of reported net income and capital optimization.

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

On transition to the new standards, total capital of $40.6 billion as at January 1, 2023 increased $4.4 billion compared to December 31, 2022 driven by the establishment of the CSM, which includes transfers from Common shareholders' equity and equity in the participating account to the CSM.

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

September 30, 2023, our total capital was $41.6 billion, an increase of $1.0 billion compared to January 1, 2023. The increase to total capital included reported net income of $2,337 million, an increase of $587 million in CSM, and the issuance of $500 million principal amount of Series 2023-1 Subordinated Unsecured 5.50% Fixed/Floating Debentures, which is detailed below. This was partially offset by the payment of         $1,304 million of dividends on common shares of SLF Inc. ("common shares"), the redemption of $1 billion principal amount of Series 2016-2 Subordinated Unsecured 3.05% Fixed/Floating Debentures, which is detailed below, a decrease of $186 million from the repurchase and cancellation of common shares, and the impact related to the acquisition of AAM of $158 million(1).

Our capital and liquidity positions remain strong with a LICAT ratio of 147% at SLF Inc., a financial leverage ratio of 21.8%(2) and $1.4 billion in cash and other liquid assets(2) as at September 30, 2023 in SLF Inc.(3) (December 31, 2022 - $1.1 billion).

On July 4, 2023, SLF Inc. issued $500 million principal amount of Series 2023-1 Subordinated Unsecured 5.50% Fixed/Floating Debentures due 2035. Sun Life intends to use an amount equal to the net proceeds from the offering to finance or refinance, in whole or in part, eligible assets as defined in our Sustainability Bond Framework.

On September 19, 2023, SLF Inc. redeemed all of the outstanding $1 billion principal amount of Series 2016-2 Subordinated Unsecured 3.05% Fixed/Floating Debentures, in accordance with the redemption terms attached to such debentures. The redemptions were funded from existing cash and liquid assets in SLF Inc.

On October 3, 2023, we acquired Dialogue Health Technologies Inc. ("Dialogue"). As a result of this acquisition, our ownership interest increased from approximately 23% to approximately 95% for cash proceeds of approximately $272 million (for equity not previously owned by Sun Life or rolled by certain members of Dialogue's executive management). Dialogue is a Canadian based health and wellness virtual care platform. For additional information, refer to Note 3 and Note 16 of our Interim Consolidated Financial Statements for the period ended September 30, 2023.

On August 24, 2023, SLF inc. announced that OSFI and the Toronto Stock Exchange ("TSX") had approved its previously announced normal course issuer bid to purchase up to 17 million of its common shares (the "NCIB”). The NCIB commenced on August 29, 2023 and continues until

August 28, 2024, such earlier date as SLF Inc. may determine, or such date as SLF Inc. completes its purchases of common shares pursuant to the NCIB. Purchases under the NCIB may be made through the facilities of the TSX, other Canadian stock exchanges and/or alternative Canadian trading platforms, at prevailing market rates. Subject to regulatory approval, purchases under the NCIB may also be made by way of private agreements or share repurchase programs under issuer bid exemption orders issued by securities regulatory authorities. Any purchases made under an exemption order issued by a securities regulatory authority will generally be at a discount to the prevailing market price. The actual number of common shares purchased under the NCIB, and the timing of such purchases (if any), will be determined by SLF Inc. Any common shares purchased by SLF Inc. pursuant to the NCIB will be cancelled or used in connection with certain equity settled incentive arrangements. The NCIB will provide the Company with the flexibility to acquire common shares in order to return capital to shareholders as part of its overall capital management strategy.

During the third quarter, SLF Inc. purchased approximately 2.8 million common shares at a total cost of $186 million pursuant to the NCIB. All of the common shares purchased under SLF Inc.'s NCIB were subsequently cancelled.

(1)For additional information, refer to Note 3 in our interim Consolidated Financial Statements for the period ended September 30, 2023.

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

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

(1)2022 restated results may not be fully representative of our future earnings profile, as we were not managing our asset and liability portfolios under the new standards. See the heading "Note to Readers: 2022 Restated Results on Adoption of IFRS 17 and IFRS 9" in section A - How We Report Our Results in this document.

(2)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.

(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 $21 million in Q3'23 and $62 million for the first nine months of 2023 (Q2'23 - $21 million; Q3'22 -$15 million; the first nine months of 2022 - $47 million).

(3)Q3'23 reflects the changes in estimated future payments for acquisition-related contingent considerations and options to purchase remaining ownership interests of SLC Management affiliates of $42 million (Q3'22 - $80 million).

(4)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, 2022.

(5)Based on a trailing 12-month basis. IFRS 9 was adopted on January 1, 2023, as such the Q3'22 pre-tax net operating margin reflects earnings on an IAS 39 basis. For more details, see section N - Non-IFRS Financial Measures in this document.

•MFS up $4 million (down US$5 million): Higher average net assets ("ANA"), an increase in net investment income, favourable foreign exchange translation and higher variable compensation expenses. The MFS pre-tax net operating profit margin(1) was 41% for Q3'23, consistent with the prior year.

•SLC Management up $28 million: Fee-related earnings(1) increased 17% driven by higher AUM, reflecting strong capital raising and deployment across the platform and the AAM acquisition(2). Fee-related earnings margin(1) and pre-tax net operating profit margin(1) for Q3'23 were 24% and 20%, respectively (Q3'22 - 24% and 22%, respectively). The increase in underlying net income was driven by the higher fee-related earnings, a favourable tax rate(3), and higher retention expenses in the prior year that did not repeat.

Reported net income of $268 million increased $50 million or 23%, driven by a lower increase in SLC Management's acquisition-related liabilities(4) compared to the prior year and an increase in underlying net income, partially offset by fair value changes in management's ownership of MFS shares.

Asset Management underlying net income of $908 million decreased $6 million or 1% driven by:

•MFS down $21 million (US$48 million): Lower ANA partially offset by an increase in net investment income and favourable foreign exchange translation.

•SLC Management up $15 million: Fee-related earnings(1) increased 21% driven by higher AUM, reflecting strong capital raising and deployment across the platform and the AAM acquisition. The increase in underlying net income was driven by the higher fee-related earnings, a favourable tax rate(3), and higher retention expenses in the prior year that did not repeat. This was partially offset by higher financing costs on seed investments and higher compensation expenses.

Reported net income of $770 million decreased $57 million or 7%, reflecting fair value changes in management's ownership of MFS shares, a decline in value of real estate investments held in the SLC Management surplus account, partially offset by a lower increase in SLC Management's acquisition-related liabilities(4) compared to the prior year.

Foreign exchange translation led to an increase of $36 million and $34 million in underlying net income and reported net income, respectively.

Asset Management AUM of $974.2 billion increased $22.3 billion or 2% from December 31, 2022 driven by:

•Net asset value changes of $36.7 billion; and

•AUM driven by the AAM acquisition of $5.2 billion; partially offset by

•Net outflows of $14.9 billion; and

•Client distributions of $4.7 billion.

MFS' AUM increased US$8.0 billion or 1% from December 31, 2022, driven by:

•Increase in asset values from higher equity markets of US$25.6 billion, partially offset by net outflows of US$17.5 billion.

In Q3'23, 96%, 91%, and 24% 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 increased $9.8 billion or 5% from December 31, 2022 driven by:

•Net inflows of $8.6 billion, the AAM acquisition of $5.2 billion, and asset value changes of $0.7 billion, partially offset by Client distributions of $4.7 billion.

•Net inflows were comprised of capital raising and Client contributions, totaling $16.7 billion, partially offset by outflows of $8.0 billion.

SLC Management's FE AUM increased $8.2 billion or 5% from December 31, 2022, driven by:

•Net inflows of $8.6 billion and the AAM acquisition of $5.2 billion, partially offset by Client distributions of $5.0 billion and asset value changes of $0.7 billion.

•Net inflows were comprised of capital deployment and Client contributions, totaling $15.4 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.

(2)On February 1, 2023, we completed the acquisition of a majority stake interest in Advisors Asset Management, Inc. ("the AAM acquisition"), a leading independent U.S. retail distribution firm, with the option to acquire the remaining interest starting in 2028.

(3)Underlying net income includes favourable adjustments related to tax filings.

(4)Reflects the changes in estimated future payments for acquisition-related contingent considerations and options to purchase remaining ownership interests of SLC Management affiliates.

(1)2022 restated results may not be fully representative of our future earnings profile, as we were not managing our asset and liability portfolios under the new standards. See the heading "Note to Readers: 2022 Restated Results on Adoption of IFRS 17 and IFRS 9" in section A - How We Report Our Results in this document.

(2)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.

(3)Effective January 1, 2023, Canada wealth sales & asset management gross flows have been updated to exclude retained sales. Prior period amounts have been updated to reflect this change.

Underlying net income of $338 million increased $45 million or 15%, reflecting:

•Wealth & asset management up $14 million: Increase in investment income driven by higher volume and yields.

•Group - Health & Protection up $34 million: Improved disability experience reflecting higher margins and shorter claims durations, partially offset by lower fee-related earnings.

•Individual - Protection down $3 million: In line with prior year.

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

Reported net income of $365 million increased $309 million, driven by more favourable market-related impacts primarily from interest rates, ACMA impacts, and the increase in underlying net income, partially offset by real estate experience.

Underlying net income of $1,026 million increased $228 million or 29%, reflecting:

•Wealth & asset management up $48 million: Increase in investment income driven by higher volume and yields, partially offset by lower fee-related earnings.

•Group - Health & Protection up $118 million: Improved disability experience reflecting higher margins, lower claims volumes, and shorter claims durations.

•Individual - Protection up $62 million: Growth of in-force business, improved protection experience and higher investment contributions.

•In addition the earnings across all businesses above include higher earnings on surplus and higher expenses.

•Higher earnings on surplus reflects an increase in realized gains and net interest income from higher rates.

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

Reported net income of $904 million increased $116 million or 15%, driven by the increase in underlying net income, ACMA impacts, and a gain on the sale of the sponsored markets business, partially offset by market-related impacts. The market-related impacts were primarily from interest rates and real estate experience partially offset by equity markets.

•Wealth sales & asset management gross flows of $3.4 billion were up 7%, driven by higher Individual Wealth sales, primarily from mutual funds, partially offset by lower defined contribution sales in GRS.

•Group - Health & Protection sales of $119 million were up 4%, reflecting higher health sales.

•Individual - Protection sales of $148 million were up 24%, reflecting higher participating whole life insurance sales.

•Wealth sales & asset management gross flows of $9.6 billion were down 9%, reflecting lower defined contribution and defined benefit solution sales in GRS.

•Group - Health & Protection sales of $417 million were in line with prior year.

•Individual - Protection sales of $438 million were up 23%, reflecting higher participating whole life insurance sales.

(1)2022 restated results may not be fully representative of our future earnings profile, as we were not managing our asset and liability portfolios under the new standards. See the heading "Note to Readers: 2022 Restated Results on Adoption of IFRS 17 and IFRS 9" in section A - How We Report Our Results in this document.

(2)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.

(3)Effective Q2'23, the UK payout annuities run-off business was moved from the Corporate business segment to the U.S. business segment upon the sale of Sun Life UK. For additional information, refer to Note 3 of our Interim Consolidated Financial Statements for the period ended September 30, 2023. Also, effective Q3'23 the run-off reinsurance business was moved from the Corporate business segment to the U.S. business segment.

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

(5)Based on underlying net income, on a trailing four-quarter basis. IFRS 17 and IFRS 9 were adopted on January 1, 2023, as such the Q3'22 margin reflects underlying net income on an IFRS 4 and IAS 39 basis. For more details, see section N - Non-IFRS Financial Measures in this document.

Underlying net income of US$140 million decreased US$33 million or 19%, driven by:

•Group - Health & Protection down US$24 million: Lower Dental results as strong revenue growth was more than offset by the impact of Medicaid redeterminations following the end of the Public Health Emergency and investments in the Advantage Dental+ business. In Group Benefits, strong revenue growth was largely offset by less favourable morbidity experience.

•Individual - Protection down US$9 million: The inclusion of the UK payout annuity business(1) was more than offset by lower net investment results.

Reported net income of US$105 million increased US$9 million or 9%, driven by market-related impacts largely from interest rates, and a prior year charge reflecting the resolution of a matter related to our reinsurance pricing in the In-force Management business, partially offset by the decrease in underlying net income and ACMA impacts.

(1)On April 3, 2023, we completed the sale of SLF of Canada UK Limited to Phoenix Group Holdings plc ("the sale of Sun Life UK"). Under the agreement, we will retain our economic interest in the payout annuities business through a reinsurance treaty, which, effective Q2'23 is recorded in In-force Management within the U.S. business group. For additional information, refer to Note 3 of our Interim Consolidated Financial Statements for the period ended September 30, 2023.

Underlying net income of US$476 million increased US$118 million or 33%, driven by:

•Group - Health & Protection up US$125 million: Strong premium growth across all businesses, contribution from the DentaQuest acquisition, higher investment contributions, and more favourable experience. Experience in the year included higher medical stop-loss margins and favourable group disability. This was partially offset by unfavourable dental experience primarily reflecting the impact of Medicaid redeterminations following the end of the Public Health Emergency, and group mortality. During the year, mortality improved significantly when compared to pandemic-related experience in the prior year.

•Individual - Protection down US$7 million: The inclusion of the UK payout annuity business(1) was more than offset by lower net investment results. Mortality experience in the year improved compared to prior year.

•Higher earnings on surplus reflecting an increase in net interest income from higher rates.

Reported net income of US$363 million increased US$110 million or 43%, driven by the increase in underlying net income and market-related impacts, partially offset by amortization of DentaQuest acquired intangible assets. The prior year included a gain on the sale-leaseback of the Wellesley office which was partially offset by a charge reflecting the resolution of a matter related to reinsurance pricing for the In-force Management business.

Foreign exchange translation led to an increase of $31 million and $26 million in underlying net income and reported net income, respectively.

U.S. group sales of US$179 million were down US$102 million or 36%, reflecting lower large case Medicaid sales in Dental, partially offset by higher commercial dental sales.

U.S. group sales of US$814 million were up US$249 million or 44%, driven by higher Dental(2) sales in Medicaid, Medicare Advantage and commercial dental.

(1)On April 3, 2023, we completed the sale of SLF of Canada UK Limited to Phoenix Group Holdings plc ("the sale of Sun Life UK"). Under the agreement, we will retain our economic interest in the payout annuities business through a reinsurance treaty, which, effective Q2'23 is recorded in In-force Management within the U.S. business group. For additional information, refer to Note 3 of our Interim Consolidated Financial Statements for the period ended September 30, 2023.

(2)Dental sales include sales from DentaQuest, acquired on June 1, 2022.

(1)2022 restated results may not be fully representative of our future earnings profile, as we were not managing our asset and liability portfolios under the new standards. See the heading "Note to Readers: 2022 Restated Results on Adoption of IFRS 17 and IFRS 9" in section A - How We Report Our Results in this document.

(2)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.

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

Underlying net income of $166 million increased $13 million or 8%, driven by:

•Wealth & asset management down $8 million: Lower earnings in the Philippines.

•Individual - Protection up $39 million: Business growth reflecting good sales momentum during the past year. Experience in the quarter included favourable mortality from lower claims volumes, largely offset by higher expense experience.

•Regional office expenses & other $(18) million increased net loss primarily reflecting higher incentive compensation.

Underlying net income of $457 million increased $53 million or 13%, driven by:

•Wealth & asset management down $16 million: Lower earnings largely in the Philippines and Hong Kong.

•Individual - Protection up $88 million: Business growth reflecting good sales momentum during the past year, improved mortality, and contributions from joint ventures driven by favourable policyholder behaviour and expense experience, partially offset by lower investment contributions.

•Regional office expenses & other $(19) million increased net loss primarily reflecting higher incentive compensation.

Reported net income of $467 million increased $349 million, driven by lower market-related impacts, ACMA impacts, and the increase in underlying net income. The market-related impacts were primarily driven by the steepening of the interest rate curve, partially offset by real estate experience.

Foreign exchange translation led to an increase of $9 million and $15 million in underlying net income and reported net income, respectively.

•Wealth sales & asset management gross flows of $1.7 billion were down 35%(1), primarily reflecting lower money market fund sales in the Philippines.

•Individual sales of $521 million were up 57%(1), driven by higher sales in Hong Kong reflecting increased demand as pandemic-related travel restrictions were lifted in early 2023, and in International reflecting large case sales, partially offset by lower sales in Vietnam reflecting market conditions.

New business CSM of $238 million, compared to $79 million in the prior year, was primarily driven by sales in Hong Kong and High-Net-Worth.

•Wealth sales & asset management gross flows of $5.7 billion were down 40%(1), primarily reflecting lower money market fund sales in the Philippines.

•Individual sales of $1,346 million were up 45%(1), driven by higher sales in Hong Kong, International, India, and China, partially offset by lower sales in Vietnam.

New business CSM of $458 million, compared to $200 million in the prior year, was primarily driven by sales in Hong Kong and High-Net-Worth.

Effective July 1, 2023 we commenced our 15-year exclusive bancassurance partnership with Dah Sing Bank ("Dah Sing"). Under this

partnership, Sun Life will be the exclusive provider of life insurance solutions to Dah Sing's approximately 570,000 retail banking customers, helping to fulfill their savings and protection needs at different life stages. This is Sun Life's first exclusive bancassurance partnership in Hong Kong and will be a valuable complement to our existing network of over 2,500 expert insurance advisors.

(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.

(1)2022 restated results may not be fully representative of our future earnings profile, as we were not managing our asset and liability portfolios under the new standards. See the heading "Note to Readers: 2022 Restated Results on Adoption of IFRS 17 and IFRS 9" in section A - How We Report Our Results in this document.

(2)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.

(3)The UK annuities run-off businesses in Corporate has been included with Individual – Protection. Effective Q2'23, the UK annuities run-off business was moved from the Corporate business segment to the U.S. business segment upon the sale of Sun Life UK. For additional information, refer to Note 3 of our Interim Consolidated Financial Statements for the period ended September 30, 2023. Also, effective Q3'23 the run-off reinsurance business was moved from the Corporate business segment to the U.S. business segment.

Underlying net loss was $89 million compared to underlying net loss of $22 million in the prior year, driven by the sale of Sun Life UK(1), higher operating expenses including incentive compensation, an increase in debt financing costs, partially offset by higher investment income from surplus assets.

Underlying net loss was $283 million compared to underlying net loss of $107 million in the prior year, driven by the sale of Sun Life UK(1), higher operating expenses including incentive compensation, an increase in debt financing costs, partially offset by higher investment income from surplus assets.

Reported net loss was $279 million compared to reported net loss of $357 million in the prior year, driven by the impacts from the sale of Sun Life UK(2) , partially offset by the change in underlying net loss.

(1)On April 3, 2023 we completed the sale of SLF of Canada UK Limited to Phoenix Group Holdings plc ("the sale of Sun Life UK"). Under the agreement, we will retain our economic interest in the payout annuities business through a reinsurance treaty, which, effective Q2'23, is recorded in In-force Management within the U.S. business group.

(2)In Q3'22, we recognized an impairment charge of $170 million pertaining to the attributed goodwill that was not expected to be recovered through the sale of Sun Life UK. In Q2'23, we recognized a gain of $19 million for the sale of Sun Life UK. For additional information, refer to Note 3 of our Interim Consolidated Financial Statements for the period ended September 30, 2023. Also, the prior year included market-related losses from Sun Life UK.

Total general fund invested assets of $162.8 billion as at September 30, 2023, were down $6.0 billion from December 31, 2022. The decrease was primarily due to decline in net fair value from rising interest rates. 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)

(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.

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 September 30, 2023, with the exception of certain countries where we have business operations, including Canada, the United States and the Philippines, our exposure to debt securities from any single country did not exceed 1% of total invested assets.

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

Our gross unrealized losses as at September 30, 2023 for fair value through profit or loss ("FVTPL") and fair value through other comprehensive income ("FVOCI") debt securities were $11,211 million and $1,057 million, respectively (December 31, 2022 - $9,384 million and $1,521 million, respectively). The increase in gross unrealized losses was largely due to the impact from rising interest rates.

Debt securities with a credit rating of "A" or higher represented 71% of the total debt securities as at September 30, 2023 (December 31, 2022 - 72%). Debt securities with a credit rating of "BBB" or higher represented 99% of total debt securities as at September 30, 2023, (December 31, 2022 - 99%).

Changes to fair value estimates for loans was implemented on January 1, 2023. For additional details, refer to Note 2 in the Interim Consolidated Financial Statements for the period ended September 30, 2023.

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

(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.

As at September 30, 2023, we held $14.0 billion of mortgages (December 31, 2022 - $14.4 billion). Our mortgage portfolio consists entirely of commercial mortgages, as presented in the following table.

Our mortgage portfolio consists entirely of commercial mortgages, including retail, office, multi-family, and industrial properties. As at
September 30, 2023, 35% 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 52% as at
September 30, 2023 (December 31, 2022 - 53%). 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 1.74 times. Of the $3.8 billion of multi-family residential mortgages in the Canadian commercial mortgage portfolio, 93% were insured by the CMHC.

As at September 30, 2023, we held $37.9 billion of loans (December 31, 2022 - $36.8 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 September 30, 2023, our impaired mortgages and loans, net of allowances for losses, were $3 million (December 31, 2022 - $47 million).

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.

(1)Amounts presented are net of collateral received.

The net fair value of derivatives was a liability of $663 million as at September 30, 2023 (December 31, 2022 - liability of $256 million). The decrease in net fair value was driven by a decrease in interest rate contracts due to upward shifts in yield curves.

The total notional amount of our derivatives decreased to $69.0 billion as at September 30, 2023 (December 31, 2022 - $69.8 billion). The change in notional amount is mainly attributable to a decrease in interest rate contracts for duration matching.

As at September 30, 2023, we held $10.0 billion of investment properties (December 31, 2022 - $10.1 billion). The decrease in our investment property portfolio is predominantly driven by net sales.

The balance of the total loss allowance was $81 million as at September 30, 2023 (January 1, 2023(1) - $75 million) and the provision for credit losses was $6 million for the nine months ended September 30, 2023.

(1)For financial assets in which the impairment requirements of IFRS 9 applies, we have elected to continue presenting the loss allowance that was determined in accordance with IAS 39 for balances at December 31, 2022. For additional information, refer to Note 2 in our Interim Consolidated Financial Statements for the period ended September 30, 2023.

for the quarter ended September 30, 2023.

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. Risk appetite limits are established for equity, interest rate, credit spread, real estate and foreign currency 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 2022 Annual MD&A and AIF.

On adoption of IFRS 17 and IFRS 9, we have updated the descriptions of risk factors related to equity, interest rates, credit and swap spreads, and real estate. For more information about the adoption of IFRS 17 and IFRS 9, see Note 2 of the Interim Consolidated Financial Statements for the period ended September 30, 2023.

When referring to segregated funds in this section, it is inclusive of segregated fund guarantees, variable annuities and investment products.

We generate revenue in our asset management businesses and from certain insurance and annuity 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, and the CSM. 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 CSM, 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 CSM, and capital.

A sustained low interest rate environment may adversely impact our net income, CSM, capital, and our ability to implement our business strategy and plans in several ways, including:

•Lower sales of certain insurance and wealth products, which can in turn put pressure on our operating expense levels;

•Shifts in the expected pattern of redemptions (surrenders) on existing policies;

•Higher losses on new business;

•Reduced return on new fixed income asset purchases, and higher hedging costs;

•The impact of consequent changes in assumptions used to measure insurance contracts;

•Impairment of goodwill; and

•Valuation allowances against our deferred tax assets.

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.

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

(2)Effective January 1, 2023, we adopted IFRS 17 and IFRS 9, and certain financial assets were reclassified between measurement categories as permitted. December 31, 2022 amounts provided in the sensitivities in section I - Risk Management of this document have been adjusted to reflect these January 1, 2023 reclassifications. See Note 2 of the Interim Consolidated Financial Statements for the period ended September 30, 2023 for further details on the reclassifications.

1.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 equity market prices as at September 30, 2023 and December 31, 2022(1).

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 September 30, 2023 and December 31, 2022(1).

(1)Effective January 1, 2023, we adopted IFRS 17 and IFRS 9, and certain financial assets were reclassified between measurement categories as permitted. December 31, 2022 amounts provided in the sensitivities in section I - Risk Management of this document have been adjusted to reflect these January 1, 2023 reclassifications. See Note 2 of the Interim Consolidated Financial Statements for the period ended September 30, 2023 for further details on the reclassifications.

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 September 30, 2023 and December 31, 2022(1).

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.

This quarter, SLF Inc. experienced a scenario switch, resulting in an increase in the LICAT ratio of approximately one percentage point. For SLF Inc., assuming no further scenario switches, the remaining impact of one-half percentage point is expected to increase the LICAT ratio over the next five quarters.

This quarter, Sun Life Assurance experienced a scenario switch, resulting in no change to the LICAT ratio. For Sun Life Assurance, assuming no further scenario switches, the LICAT ratio is expected to increase one-half percentage point over the next five quarters.

(1)Effective January 1, 2023, we adopted IFRS 17 and IFRS 9, and certain financial assets were reclassified between measurement categories as permitted. December 31, 2022 amounts provided in the sensitivities in section I - Risk Management of this document have been adjusted to reflect these January 1, 2023 reclassifications. See Note 2 of the Interim Consolidated Financial Statements for the period ended September 30, 2023 for further details on the reclassifications.

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 September 30, 2023 and December 31, 2022(1).

(1)Effective January 1, 2023, we adopted IFRS 17 and IFRS 9, and certain financial assets were reclassified between measurement categories as permitted. December 31, 2022 amounts provided in the sensitivities in section I - Risk Management of this document have been adjusted to reflect these January 1, 2023 reclassifications. See Note 2 of the Interim Consolidated Financial Statements for the period ended September 30, 2023 for further details on the reclassifications.

(2)Net income, CSM, and OCI sensitivities have been rounded in increments of $25 million.

5.Segregated Funds Risk & Hedging

Certain segregated fund products provide benefit guarantees, which are linked to underlying fund performance and 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 activities, policyholder behaviour and mortality experience, each of which may result in negative impacts on net income, the CSM and capital.

Our hedging programs use derivative instruments and fixed income assets to mitigate the interest rate and equity market exposure of our segregated fund contracts. As at September 30, 2023, over 90% of our segregated fund contracts, as measured by fund values, were included in a hedging program. While a large percentage of contracts are included in the hedging program, not all of our market risk exposure related to these contracts is hedged. For those segregated fund contracts included in the hedging program, we generally hedge the value of expected future net claims costs and associated risk adjustments for non-financial risk.

Our hedging strategy is applied both at the line of business or product level and at the total company level using a combination of hedging techniques such as re-balancing of short-dated interest rate and equity derivative contracts and longer-dated put options. We actively monitor our overall market exposure and may implement tactical hedge overlay strategies in order to align sensitivities with risk management objectives.

The impact of segregated fund guarantees and associated hedging programs on net income, CSM and capital are included in

the disclosed market risk 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.

(1)Effective January 1, 2023, we adopted IFRS 17 and IFRS 9, and certain financial assets were reclassified between measurement categories as permitted. December 31, 2022 amounts provided in the sensitivities in section I - Risk Management of this document have been adjusted to reflect these January 1, 2023 reclassifications. See Note 2 of the Interim Consolidated Financial Statements for the period ended September 30, 2023 for further details on the reclassifications.

The sensitivities reflect the CSM as at September 30, 2023 and December 31, 2022(1). 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.

Information related to market risk sensitivities should be read in conjunction with the information contained in section M - Accounting and Control Matters - 1 - Critical Accounting Policies and Estimates in the 2022 Annual MD&A. Additional information on market risk can be found in Note 2 of the 2022 Annual Consolidated Financial Statements and the Risk Factors section in the 2022 AIF.

(1)Effective January 1, 2023, we adopted IFRS 17 and IFRS 9, and certain financial assets were reclassified between measurement categories as permitted. December 31, 2022 amounts provided in the sensitivities in section I - Risk Management of this document have been adjusted to reflect these January 1, 2023 reclassifications. See Note 2 of the Interim Consolidated Financial Statements for the period ended September 30, 2023 for further details on the reclassifications.

Foreign exchange translation led to a $0.1 billion increase in revenue. By business group, revenue reflected higher net investment losses in Canada partially offset by higher net investment income in Asia, Corporate and the U.S., and higher insurance revenue primarily in the U.S.

Revenue increased $24.8 billion in the first nine months of 2023 compared to the same period in 2022, driven by higher net investment income from fair value of assets. Foreign exchange translation led to a $0.7 billion increase in revenue. By business group, revenue reflected higher net investment income in Canada, Asia, the U.S., and Corporate, and higher insurance revenue primarily in the U.S.

Total general fund assets was $193.9 billion as at September 30, 2023 (December 31, 2022 - $198.3 billion), primarily reflecting a decline in the fair value of assets driven by rising interest rates.

The net liabilities balance for insurance contracts issued(1) was $124.7 billion as at September 30, 2023 (December 31, 2022 - $131.2 billion), mainly due to dispositions, the change in insurance service result and insurance finance income and expenses, partially offset by cash flows.

Total shareholders' equity, including preferred shares and other equity instruments, is $23.2 billion as at September 30, 2023 (December 31, 2022 - $22.5 billion). The change in total shareholders' equity included:

(i)total shareholders' net income of $2,396 million, before preferred share dividends of $59 million; partially offset by

(ii)common share dividend payments of $1,304 million;

(iii)a decrease of $186 million from the repurchase and cancellation of common shares; and

(iv)the impact related to the AAM acquisition of $158 million(2).

As at November 3, 2023, SLF Inc. had 584,295,400 common shares, 3,720,172 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 Notes 7.A and 7.B of the Interim Consolidated Financial Statements for the period ended September 30, 2023.

(2)For additional information, refer to Note 3 in our Interim Consolidated Financial Statements for the period ended September 30, 2023.

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.

Q3'23 cash flows provided by financing activities decreased year-over-year primarily due to the redemption of $1 billion principal amount of Series 2016-2 Subordinated Unsecured 3.05% Fixed/Floating Debentures.

A more complete discussion of our historical quarterly results can be found in our Interim and Annual MD&A for the relevant periods.