As Filed with the Securities and Exchange Commission on April 27, 2012

REGISTRATION NO. 333-168712

811-05846

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Post-Effective Amendment No. 4

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 123

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F

(Exact Name of Registrant)

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(Name of Depositor)

One Sun Life Executive Park

Wellesley Hills, Massachusetts 02481

(Address of Depositor's Principal Executive Offices)

Depositor's Telephone Number, including Area Code: (781) 237-6030

William T. Evers, Assistant Vice President and Senior Counsel

Sun Life Assurance Company of Canada (U.S.)

One Sun Life Executive Park, SC 2335

Wellesley Hills, Massachusetts 02481

(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box)

£ immediately upon filing pursuant to paragraph (b) of Rule 485

R on May 1, 2012 pursuant to paragraph (b) of Rule 485

£ 60 days after filing pursuant to paragraph (a)(1) of Rule 485

£ on (date) pursuant to paragraph (a)(1) of Rule 485.

If appropriate, check the following box:

£ this post-effective amendment designates a new effective date for a previously filed post-effective amendment.

Title of Securities Being Registered: Flexible Premium Deferred Variable Annuity Contracts.

No Filing fee is due because an indefinite amount of securities is deemed to have been registered in reliance on Section 24(f) of the Investment Company Act of 1940.

PART A

MAY 1, 2012

SUN LIFE FINANCIAL MASTERS® FLEX II PROSPECTUS

Sun Life Assurance Company of Canada (U.S.) and Sun Life of Canada (U.S.) Variable Account F offer the flexible payment deferred annuity contracts and certificates described in this Prospectus to groups and individuals. The contracts and certificates described in this Prospectus are no longer available for sale. You may choose among a number of fixed and variable investment options. The variable options are Sub-Accounts in the Variable Account, each of which invests in shares of one of the following funds (the “Funds”):

Large-Cap Equity Funds	Emerging Markets Equity Funds
Columbia Variable Portfolio - Marsico Growth Fund, Class 2	Lazard Retirement Emerging Markets Equity Portfolio, Service Class
Fidelity® Variable Insurance Products Fund II - Contrafund® Portfolio,	MFS® Emerging Markets Equity Portfolio, Service Class
Service Class 2	Specialty Sector Equity Fund
Huntington VA Dividend Capture Fund1	MFS® Utilities Portfolio, Service Class
Huntington VA Growth Fund1	Specialty Sector Commodity Funds
Huntington VA Income Equity Fund1	Huntington VA Real Strategies Fund1
Huntington VA Macro 100 Fund1	PIMCO CommodityRealReturn® Strategy Portfolio, Advisor Class
Invesco Van Kampen V.I. Comstock Fund, Series II	Real Estate Equity Fund
JPMorgan Insurance Trust U.S. Equity Portfolio, Class 2	Sun Capital Global Real Estate Fund, Service Class
Lord Abbett Series Fund, Inc. - Fundamental Equity Portfolio, Class VC	Asset Allocation Funds
MFS® Core Equity Portfolio, Service Class	AllianceBernstein Balanced Wealth Strategy Portfolio, Class B
MFS® Growth Portfolio, Service Class	AllianceBernstein Dynamic Asset Allocation Portfolio, Class B
MFS® Value Portfolio, Service Class	BlackRock Global Allocation V.I. Fund, Class III
Mutual Shares Securities Fund, Class 4	Fidelity® Variable Insurance Products III - Balanced Portfolio,
Putnam VT Equity Income Fund, Class IB	Service Class 2
SCSM BlackRock Large Cap Index Fund, Service Class	Franklin Income Securities Fund, Class 4
SCSM Davis Venture Value Fund, Service Class	Huntington VA Balanced Fund1
SCSM Lord Abbett Growth & Income Fund, Service Class	Invesco Van Kampen V.I. Equity and Income Fund, Series II
SCSM WMC Large Cap Growth Fund, Service Class	MFS® Global Tactical Allocation Portfolio, Service Class
Universal Institutional Funds, Inc. - Growth Portfolio, Class II	MFS® Total Return Portfolio, Service Class
Mid-Cap Equity Funds	PIMCO All Asset Portfolio, Advisor Class
Fidelity® Variable Insurance Products III - Mid Cap Portfolio,	PIMCO Global Multi-Asset Portfolio, Advisor Class
Service Class 2	Putnam VT Absolute Return 500 Fund, Class IB
Huntington VA Mid Corp America Fund1	SCSM Ibbotson Balanced Fund, Service Class
Invesco Van Kampen V.I. Mid Cap Value Fund, Series II2	SCSM Ibbotson Conservative Fund, Service Class
Lord Abbett Series Fund, Inc. - Growth Opportunities Portfolio, Class VC	SCSM Ibbotson Growth Fund, Service Class
SCSM Goldman Sachs Mid Cap Value Fund, Service Class	Money Market Fund
SCSM WMC Blue Chip Mid Cap Fund, Service Class	Sun Capital Money Market Fund®, Service Class
Universal Institutional Funds, Inc. - Mid Cap Growth Portfolio, Class II	Global Bond Fund
Small -Mid-Cap Equity Fund	Templeton Global Bond Securities Fund, Class 4
AllianceBernstein Small/Mid Cap Value Portfolio, Class B	Short-Term Bond Fund
Small-Cap Equity Funds	SCSM Goldman Sachs Short Duration Fund, Service Class
Franklin Small Cap Value Securities Fund, Class 4	Intermediate-Term Bond Funds
Huntington VA Situs Fund1	Huntington VA Mortgage Securities Fund1
SCSM BlackRock Small Cap Index Fund, Service Class	JPMorgan Insurance Trust Core Bond Portfolio, Class 2
SCSM Columbia Small Cap Value Fund, Service Class	MFS® Government Securities Portfolio, Service Class
SCSM Invesco Small Cap Growth Fund, Service Class	MFS® Research Bond Series, Service Class
International/Global Equity Funds	SCSM PIMCO Total Return Fund, Service Class
Huntington VA International Equity Fund1	Sun Capital Investment Grade Bond Fund®, Service Class
Huntington VA Rotating Markets Fund1	Wells Fargo Variable Trust - VT Total Return Bond Fund, Class 2
Invesco V.I. International Growth Fund, Series II	Inflation Protected Bond Fund
MFS® International Growth Portfolio, Service Class	SCSM BlackRock Inflation Protected Bond Fund, Service Class
MFS® International Value Portfolio, Service Class	Multi-Sector Bond Fund
MFS® Research International Portfolio, Service Class	Franklin Strategic Income Securities Fund, Class 4
Oppenheimer Global Securities/VA, Service Shares	High Yield Bond Fund
PIMCO EqS Pathfinder Portfolio, Advisor Class	SCSM PIMCO High Yield Fund, Service Class
SCSM AllianceBernstein International Value Fund, Service Class	Emerging Markets Bond Fund
SCSM BlackRock International Index Fund, Service Class	PIMCO Emerging Markets Bond Portfolio, Advisor Class
International/Global Small/Mid-Cap Equity Fund
First Eagle Overseas Variable Fund

1 Only available as an investment option if you purchase your Contract through a Huntington Bank representative.

2 On or about July 15, 2012, the Fund will change its name to Invesco Van Kampen V.I. American Value Fund, Series II.

We have filed a Statement of Additional Information dated May 1, 2012 (the “SAI”) with the Securities and Exchange Commission (the “SEC”), which is incorporated by reference in this Prospectus. The table of contents for the SAI is on page 56 of this Prospectus. You may obtain a copy without charge by writing to us at the address shown below or by telephoning (800) 752-7216. In addition, you can inspect and copy all of our filings at the SEC’s public reference facilities at: 100 F Street, N.E., Washington, D.C. 20549-0102, telephone (202) 551-8090. The SEC will provide copies by mail for a fee. The SEC also has a website (www.sec.gov) that contains the SAI, material incorporated by reference, and other information regarding companies that file with the SEC.

The Contracts are not deposits or obligations of, or guaranteed or endorsed by, any bank, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other agency. The SEC has not approved or disapproved these securities or passed upon the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. Please read this Prospectus and the Fund prospectuses carefully before investing and keep them for future reference. They contain important information about the Contracts and the Funds.

Any reference in this Prospectus to receipt by us means receipt at the following address: SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.), P.O. Box 9133, Wellesley Hills, Massachusetts 02481.

TABLE OF CONTENTS

SPECIAL TERMS [INSERT PAGE NUMBER]

PRODUCT HIGHLIGHTS [INSERT PAGE NUMBER]

FEES AND EXPENSES [INSERT PAGE NUMBER]

EXAMPLE [INSERT PAGE NUMBER]

CONDENSED FINANCIAL INFORMATION [INSERT PAGE NUMBER]

THE ANNUITY CONTRACT [INSERT PAGE NUMBER]

COMMUNICATING TO US ABOUT YOUR CONTRACT [INSERT PAGE NUMBER]

Electronic Account Information [INSERT PAGE NUMBER]

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.) [INSERT PAGE NUMBER]

THE VARIABLE ACCOUNT [INSERT PAGE NUMBER]

VARIABLE ACCOUNT OPTIONS: THE FUNDS [INSERT PAGE NUMBER]

THE FIXED ACCOUNT OPTIONS: THE DCA PERIODS [INSERT PAGE NUMBER]

THE ACCUMULATION PHASE [INSERT PAGE NUMBER]

Issuing Your Contract [INSERT PAGE NUMBER]

Amount and Frequency of Purchase Payments [INSERT PAGE NUMBER]

Allocation of Net Purchase Payments [INSERT PAGE NUMBER]

Your Account [INSERT PAGE NUMBER]

Your Account Value [INSERT PAGE NUMBER]

Variable Account Value [INSERT PAGE NUMBER]

Fixed Account Value [INSERT PAGE NUMBER]

Transfer Privilege [INSERT PAGE NUMBER]

Waivers; Reduced Charges; Credits; Special Guaranteed Interest Rates [INSERT PAGE NUMBER]

Other Programs [INSERT PAGE NUMBER]

WITHDRAWALS AND WITHDRAWAL CHARGES [INSERT PAGE NUMBER]

Cash Withdrawals [INSERT PAGE NUMBER]

Withdrawal Charge [INSERT PAGE NUMBER]

Types of Withdrawals not Subject to Withdrawal Charge [INSERT PAGE NUMBER]

CONTRACT CHARGES [INSERT PAGE NUMBER]

Account Fee [INSERT PAGE NUMBER]

Administrative Expense Charge and Distribution Fee [INSERT PAGE NUMBER]

Mortality and Expense Risk Charge [INSERT PAGE NUMBER]

Charges for Optional Benefits [INSERT PAGE NUMBER]

Premium Taxes [INSERT PAGE NUMBER]

Fund Expenses [INSERT PAGE NUMBER]

Modification in the Case of Group Contracts [INSERT PAGE NUMBER]

OPTIONAL LIVING BENEFITS [INSERT PAGE NUMBER]

Key Terms [INSERT PAGE NUMBER]

Description of the Living Benefits [INSERT PAGE NUMBER]

Important Considerations [INSERT PAGE NUMBER]

Withdrawal Benefit Base [INSERT PAGE NUMBER]

Lifetime Withdrawal Percentage [INSERT PAGE NUMBER]

Annual Withdrawal Amount [INSERT PAGE NUMBER]

Bonus and Bonus Base [INSERT PAGE NUMBER]

200% Benefit Enhancement (SIM and SIM Plus only) [INSERT PAGE NUMBER]

Step-Up [INSERT PAGE NUMBER]

Plus Factor (SIM Plus only) [INSERT PAGE NUMBER]

Impact of Withdrawals [INSERT PAGE NUMBER]

Costs of Living Benefits [INSERT PAGE NUMBER]

Cancellation of Living Benefits [INSERT PAGE NUMBER]

Death of Participant - Single-Life Coverage [INSERT PAGE NUMBER]

Death of Participant - Joint-Life Coverage [INSERT PAGE NUMBER]

Annuitization Under the Living Benefits [INSERT PAGE NUMBER]

Tax Issues Under the Living Benefits [INSERT PAGE NUMBER]

DESIGNATED FUNDS [INSERT PAGE NUMBER]

BUILD YOUR OWN PORTFOLIO [INSERT PAGE NUMBER]

DEATH BENEFIT [INSERT PAGE NUMBER]

Amount of Death Benefit [INSERT PAGE NUMBER]

The Basic Death Benefit [INSERT PAGE NUMBER]

Optional Death Benefit [INSERT PAGE NUMBER]

Spousal Continuance [INSERT PAGE NUMBER]

Calculating the Death Benefit [INSERT PAGE NUMBER]

Method of Paying Death Benefit [INSERT PAGE NUMBER]

Non-Qualified Contracts [INSERT PAGE NUMBER]

Selection and Change of Beneficiary [INSERT PAGE NUMBER]

Payment of Death Benefit [INSERT PAGE NUMBER]

THE INCOME PHASE - ANNUITY PROVISIONS [INSERT PAGE NUMBER]

Selection of Annuitant(s) [INSERT PAGE NUMBER]

Selection of the Annuity Commencement Date [INSERT PAGE NUMBER]

Annuity Options [INSERT PAGE NUMBER]

Selection of Annuity Option [INSERT PAGE NUMBER]

Amount of Annuity Payments [INSERT PAGE NUMBER]

Transfer of Variable Annuity Units [INSERT PAGE NUMBER]

Account Fee [INSERT PAGE NUMBER]

Annuity Payment Rates [INSERT PAGE NUMBER]

Annuity Options as Method of Payment for Death Benefit [INSERT PAGE NUMBER]

OTHER CONTRACT PROVISIONS [INSERT PAGE NUMBER]

Exercise of Contract Rights [INSERT PAGE NUMBER]

Change of Ownership [INSERT PAGE NUMBER]

Voting of Fund Shares [INSERT PAGE NUMBER]

Reports to Owners [INSERT PAGE NUMBER]

Substitution of Securities [INSERT PAGE NUMBER]

Change in Operation of Variable Account [INSERT PAGE NUMBER]

Splitting Units [INSERT PAGE NUMBER]

Modification [INSERT PAGE NUMBER]

Discontinuance of New Participants [INSERT PAGE NUMBER]

Reservation of Rights [INSERT PAGE NUMBER]

Right to Return [INSERT PAGE NUMBER]

TAX PROVISIONS [INSERT PAGE NUMBER]

U.S. Federal Income Tax Provisions [INSERT PAGE NUMBER]

Puerto Rico Tax Provisions [INSERT PAGE NUMBER]

ADMINISTRATION OF THE CONTRACT [INSERT PAGE NUMBER]

DISTRIBUTION OF THE CONTRACT [INSERT PAGE NUMBER]

AVAILABLE INFORMATION [INSERT PAGE NUMBER]

STATE REGULATION [INSERT PAGE NUMBER]

LEGAL PROCEEDINGS [INSERT PAGE NUMBER]

FINANCIAL STATEMENTS [INSERT PAGE NUMBER]

TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION [INSERT PAGE NUMBER]

APPENDIX A - GLOSSARY [INSERT PAGE NUMBER]

APPENDIX B - WITHDRAWAL CHARGE CALCULATIONS [INSERT PAGE NUMBER]

APPENDIX C - PREVIOUSLY AVAILABLE INVESTMENT OPTIONS [INSERT PAGE NUMBER]

APPENDIX D - OPTIONAL LIVING BENEFIT EXAMPLES [INSERT PAGE NUMBER]

APPENDIX E - BUILD YOUR OWN PORTFOLIO [INSERT PAGE NUMBER]

APPENDIX F - CONDENSED FINANCIAL INFORMATION [INSERT PAGE NUMBER]

SPECIAL TERMS

Your Contract is a legal document that uses a number of specially defined terms. We explain most of the capitalized terms that we use in this Prospectus in the context where they arise, and some are self-explanatory. In addition, for convenient reference, we have compiled a list of these capitalized terms in the Glossary included at the back of this Prospectus as Appendix A. If, while you are reading this Prospectus, you come across a capitalized term that you do not understand, please refer to the Glossary for an explanation.

PRODUCT HIGHLIGHTS

The headings in this section correspond to headings in the Prospectus under which we discuss these topics in more detail.

The Annuity Contract

The Sun Life Financial Masters® Flex II Contract provides a number of important benefits for your retirement planning. You are eligible to purchase a Contract if you are age 85 or younger on the Open Date. During the Accumulation Phase, you make Purchase Payments under the Contract and allocate them to one or more of the Variable Account options or the Fixed Account options available through our dollar-cost averaging program. During the Income Phase, we make annuity payments to you or someone else based on the amount you have accumulated. The Contract provides tax-deferral so that you do not pay taxes on your earnings until you withdraw them. When purchased in connection with a tax-qualified plan, the Contract provides no additional tax-deferral benefits because tax-qualified plans confer their own tax-deferral. The Contract also provides a basic death benefit if you die during the Accumulation Phase. You may enhance the basic death benefit by purchasing the optional death benefit, at an additional cost if you are younger than age 75 on the Open Date.

The Accumulation Phase

Under most circumstances, you can buy the Contract with an initial Purchase Payment of $10,000 or the maximum annual Individual Retirement Annuity contribution, unless we waive these limits. You can make additional Purchase Payments at any time during the Accumulation Phase. Currently there is no minimum amount required for additional Purchase Payments. However, we reserve the right to require that each additional Purchase Payment be at least $1,000. We will not accept, without our prior approval, a Purchase Payment if your Account Value is over $2 million or if the Purchase Payment would cause your Account Value to exceed $2 million. These general requirements for Purchase Payments apply even if you elect an optional living benefit. In addition, there are other restrictions on the amounts and frequency of Purchase Payments that apply depending upon which optional living benefit you select.

If you select the Sun Income Riser® III living benefit, you can only make additional Purchase Payments during your first Account Year. Under Sun Income Riser III, any Purchase Payments received after your first Account Anniversary will be deemed “not in good order” and returned to you.

If you select the Sun Income MaximizerSM or Sun Income MaximizerSM Plus living benefits, you can make additional Purchase Payments at any time. However, after your first Account Anniversary, Purchase Payments can not exceed $50,000 per Account Year, without our prior approval. We reserve the right not to allow additional Purchase Payments at anytime under Sun Income Maximizer or Sun Income Maximizer Plus. We will notify all Contract Owners in writing before we exercise this right.

Variable Account Options: The Funds

You can allocate your Purchase Payments among the Sub-Accounts investing in a number of Fund options. You may also transfer among the Funds. Each Fund is either a mutual fund registered under the Investment Company Act of 1940 or a separate securities portfolio of shares of such a mutual fund. The investment returns on the Funds are not guaranteed. You can make or lose money.

The Fixed Account Options: The DCA Periods

You can allocate your Purchase Payments to one of the Fixed Account options available through our dollar-cost averaging (“DCA”) program: 6-month DCA Period and 12-month DCA Period. Each DCA Period earns interest at a Guaranteed Interest Rate that we publish. We may change the Guaranteed Interest Rate from time to time, but no Guaranteed Interest Rate will ever be less than the minimum guaranteed rate required by law. Once we have accepted your allocation to a particular DCA Period, we promise that the Guaranteed Interest Rate applicable to that allocation will not change for the duration of the DCA Period. We reserve the right to stop offering the DCA program. (See “Other Programs.”)

Fees and Expenses

The Contract has insurance features and investment features, and there are costs related to each.

If your Account Value is less than $100,000 on your Account Anniversary, we deduct a $50 Annual Account Fee. We will waive the Account Fee if your Account Value is $100,000 or more on your Account Anniversary.

During the Accumulation Phase, we deduct a mortality and expense risk charge at an annual rate of 1.30% of the average daily value of the Contract invested in the Variable Account.

We also deduct an administrative charge at an annual rate of 0.15% of the average daily value and a distribution fee at an annual rate of 0.20% of the average daily value of the Contract invested in the Variable Account.

We may assess a withdrawal charge on certain amounts that you withdraw during the first four Account Years after your Issue Date.The withdrawal charge (also known as a “contingent deferred sales charge”) starts at 8% in the first Account Year and declines to 0% after four complete Account Years.

Currently, you can transfer your Account Value among the underlying Funds free of charge. However, we reserve the right to impose a charge of up to $15 per transfer. We limit the number of your Fund transfers to 12 per year. (See “Transfer Privilege.”)

If you elect the optional death benefit, we will deduct, during the Accumulation Phase, an additional charge from the assets of the Variable Account at an annual rate of 0.40% of the average daily value of your Contract.

If you elect an optional living benefit, we will assess a periodic charge at a rate that may differ among the optional living benefits that are available. The annual amount of the charge will not exceed 1.75% for single-life coverage, and 1.95% for joint-life coverage, of the highest Withdrawal Benefit Base during the Account Year.

In addition to the charges we impose under the Contract, there are also charges (which include management fees and operating expenses) imposed by the Funds. The charges vary depending upon which Fund(s) you have selected.

Optional Living Benefits

At issue, you may choose to participate in one of the following optional living benefits available under your Contract:

· Sun Income Riser® III (“SIR III”) offers a guaranteed withdrawal benefit with an opportunity for a bonus to be added to your benefit base if you defer taking withdrawals during a specified time period under your Contract.

· Sun Income MaximizerSM (“SIM”) offers the same guaranteed withdrawal benefit as SIR III, includes a higher bonus than SIR III, and offers a benefit base enhancement equal to 200% of your first-year Purchase Payments.

· Sun Income MaximizerSM Plus (“SIM Plus”) offers the same guaranteed withdrawal benefit, bonus, and benefit base enhancement as SIM and offers an additional opportunity to increase the amount of your annual withdrawal over time regardless of market performance.

If you are age 59 or older, each of the living benefits offer lifetime income even if your Account Value declines to zero, provided that you limit the amount you withdraw annually to a specified percentage of your benefit base and you limit your investments to the Designated Funds. (See “Description of Living Benefits” and “Annual Withdrawal Amount.”) The living benefits also allow you to “step-up,” or increase, your guaranteed amount on an annual basis, if eligible. You will pay a fee for the optional living benefit that you select.

These optional living benefits are available only if you are 85 or younger on the Open Date. For SIM or SIM Plus all Owners and Annuitants must be 21 or older on the Open Date. If you want to participate in an optional living benefit, you must elect it when you purchase your Contract.

Under SIR III, you may make Purchase Payments only during your first Account Year. Any Purchase Payments received after your first Account Anniversary will be deemed “not in good order” and returned to you.

Under SIM and SIM Plus, you may make additional Purchase Payments at any time. However, after your first Account Anniversary, you may only make Purchase Payments up to $50,000 per Account Year without our prior approval. In addition, under SIM and SIM Plus, we reserve the right not to accept any additional Purchase Payments. We will notify you in writing before we exercise this right.

Purchase Payments allocated to investment options other than the Designated Funds will only terminate the optional living benefit. Withdrawals taken in excess of allowable amounts, or withdrawals taken prior to certain dates, may severely decrease your Account Value or cause your Contract and your living benefit to terminate without value.

You may terminate an optional living benefit at any time. In addition, your optional living benefit will terminate if you annuitize or if you transfer any portion of your Account Value to an investment option other than one of the Designated Funds. In certain circumstances, a change of ownership may also terminate your living benefit. Upon termination, all benefits and fees associated with the optional living benefit will cease. Once terminated, a living benefit may not be reinstated.

The Income Phase: Annuity Provisions

If you want to receive regular income from your annuity after the Annuity Commencement Date, you can select one of several Annuity Options. You can choose to receive annuity payments on a fixed or variable basis. If you choose to receive any part of your annuity payments on a variable basis, the dollar amount of the payments may fluctuate with the performance of the underlying Funds. Subject to the Maximum Annuity Commencement Date, you decide when your Income Phase will begin but, once it begins, you cannot change your choice of annuity payment option.

During the Income Phase, we will deduct total insurance charges at an annual rate of 1.65% of your average daily Annuity Unit values. We will not deduct the mortality and expense risk charge; nor will we deduct the charges for any optional living benefit or optional death benefit. The 1.65% insurance charge, which includes an administrative expense charge and a distribution fee, compensates us for the risks and expenses associated with providing annuity payments during the Income Phase.

Death Benefit

If you die before the Contract reaches the Income Phase, the Beneficiary will receive a death benefit. The amount of the death benefit depends upon whether you choose the basic death benefit or, for a fee, the optional death benefit. The basic death benefit pays the greater of your Account Value or your total Purchase Payments (adjusted for withdrawals) calculated as of your Death Benefit Date. If you are younger than age 75 on the Open Date, you may purchase the Maximum Anniversary Account Value (“MAV”) optional death benefit which pays the greater of the basic death benefit and the highest Account Value on any Account Anniversary (adjusted for withdrawals) prior to age 81. You must make your election before your Issue Date. Your death benefit election may not be changed after your Issue Date.

Withdrawals and Withdrawal Charges

You can withdraw money from your Contract during the Accumulation Phase. You may withdraw a portion of your Account Value each year without the imposition of a withdrawal charge. During the first four Account Years, this “free withdrawal amount” is equal to 10% of the amount of all Purchase Payments made minus all withdrawals that were not subject to withdrawal charges taken during the current Account Year. All other Purchase Payments withdrawn will be subject to a withdrawal charge. After the end of the fourth Account Year, any amount you withdraw is free of withdrawal charges. (For details on how to calculate withdrawal charges, please see “Withdrawal Charge” and “APPENDIX B - WITHDRAWAL CHARGE CALCULATIONS.”) You may also have to pay income taxes and tax penalties on money you withdraw.

Right to Return

Your Contract contains a “free look” provision. If you cancel your Contract within 10 days after receiving it (or later, if allowed by your state), we will send you, depending upon the laws of your state, either the full amount of all of your Purchase Payments or your Account Value as of the day we receive your cancellation request, in good order. (This amount may be more or less than the original Purchase Payment.) In states requiring return of Purchase Payments, you will receive the greater of (1) your Surrender Value as of the day we receive your cancellation request or (2) your total Purchase Payments made as of that date. We will only deduct a withdrawal charge when the returned amount is based on Surrender Value.

Tax Provisions

Your earnings are not taxed until you take them out. If you withdraw money during the Accumulation Phase, earnings come out first and are taxed as ordinary income. If your Contract is a Non-Qualified Contract, it is possible that the election of an optional living benefit might increase the taxable portion of any withdrawal you make from the Contract. If you are younger than 59½ when you take money out, you may be charged a 10% federal tax penalty on taxable amounts.

NOTE ABOUT OTHER ANNUITY CONTRACTS THAT WE OFFER: In addition to the Contract, we currently offer many other forms of annuity contracts with a wide variety of features, benefits and charges. Depending on your circumstances and needs, some of these other contracts may be at a lower cost to you. Not all of the annuity contracts that we offer are available in all jurisdictions or through all of the selling agents who offer the contracts. You should consider with your selling agent what annuity contract or financial product is most consistent with your needs and preferences.

If you have any questions about your Contract or need more information, please contact us at:

Sun Life Assurance Company of Canada (U.S.)

P. O. Box 9133

Wellesley Hills, Massachusetts 02481

Toll Free (800) 752-7216

www.sunlife.com/us

FEES AND EXPENSES

The following tables describe the fees and expenses that you will pay when buying, owning, and surrendering the Contract.1

The table below describes the fees and expenses that you will pay at the time that you buy the Contract, surrender the Contract, or transfer cash value between investment options.

Contract Owner Transaction Expenses

Maximum Withdrawal Charge (as a percentage of Purchase Payments withdrawn): 8%2

Number of Account Years Since Issue Date	0-1	1-2	2-3	3-4	4 or more
Withdrawal Charge	8%	8%	7%	6%	0%

Maximum Fee Per Transfer (currently $0):	$15
Premium Taxes (as a percentage of Account Value or total Purchase Payments):	0% - 3.5%3

The tables below describe the fees and expenses that you will pay periodically during the time that you own the Contract, not including Fund fees and expenses.

Annual Account Fee $ 504

Variable Account Annual Expenses

(as a percentage of net Variable Account assets)5

	Mortality and Expense Risk Charge:	1.30%
	Administrative Expense Charge:	0.15%
	Distribution Fee:	0.20%
Total Variable Account Annual Expenses (without optional benefits):		1.65%

Charge for Optional Death Benefit

	Fee as a % of Variable Account Value
Maximum Anniversary Account Value Death benefit (“MAV”)6     (as a percentage of Variable Account Value):	0.40%

Charges for Optional Living Benefits

Living Benefits Available7	Maximum Annual Fee
Sun Income Riser III Living Benefit     (as a percentage of the highest Withdrawal Benefit Base8 during the Account Year):	1.95%
Sun Income Maximizer Living Benefit     (as a percentage of the highest Withdrawal Benefit Base8 during the Account Year):	1.95%
Sun Income Maximizer Plus Living Benefit     (as a percentage of the highest Withdrawal Benefit Base8 during the Account Year):	1.95%

Maximum Annual Charge for an Optional Living Benefit     (as a percentage of highest applicable Withdrawal Benefit Base8 during the Account Year): 1.95% 

Total Variable Account Annual Expenses (1.65%) plus Maximum Charges for the Optional     Death Benefit (0.40%) and an Optional Living Benefit (1.95%): 4.00%9

The table below shows the minimum and maximum total operating expenses charged by the Funds that you may pay periodically during the time that you own the Contract.

Total Annual Fund Operating Expenses		Minimum	Maximum
	(expenses as a percentage of average daily Fund net assets that are deducted from Fund assets, including management fees, distribution and/or service (12b-1) fees, and other expenses)	0.72%	2.48%

The expenses shown, which include any acquired fund fees and expenses, are those incurred for the year ended December 31, 2011, and were provided by the Funds. We have not independently verified the accuracy of the Fund expense information. Current or future expenses may be greater or less than those shown. For more information about Fund expenses, including a description of any applicable fee waiver or expense reimbursement arrangement, see the Fund prospectuses.

1	The fee tables apply to the Accumulation Phase of the Contract and reflect the maximum charges unless otherwise noted. (See “Contract Charges.”) During the Income Phase, the fees will be different than the Total Variable Account Annual Expenses described in the fee table. After you annuitize, we will deduct total insurance charges at an annual rate of 1.65% of your average daily Annuity Unit values; we will no longer deduct a mortality and expense risk charge or the charges for any optional living benefit or the optional death benefit. The 1.65% insurance charge, which includes the administrative expense charge and a distribution fee, compensates us for the risks and expenses associated with providing annuity payments during the Income Phase.
2	A portion of your Account may be withdrawn each year without imposition of any withdrawal charge and, after four complete Account Years, all withdrawals taken are free of any withdrawal charges. (See “Withdrawal Charge.”)
3	The premium tax rate and base vary by your state of residence and the type of Contract you own. We may deduct premium taxes from Account Value upon full surrender (including surrender for the death benefit) or annuitization. (See “Premium Taxes.”)
4	The Annual Account Fee is waived if your Account Value is $100,000 or more on your Account Anniversary.(See “Account Fee.”)
5	All of the Variable Account Annual Expenses, except for the charges for optional living benefits, are assessed as a percentage of average daily net Variable Account assets. The charge for each optional living benefit is assessed on a quarterly basis.
6	The MAV optional death benefit is described under “Death Benefit.” It is currently available only if you are younger than age 75 on the Open Date.
7	The optional living benefits, and the fees for each of them, are described under “Optional Living Benefits.” Only one optional living benefit can be in effect under your Contract at any time. The fee for the optional living benefit is assessed and deducted quarterly based upon your Withdrawal Benefit Base on the last day of the Account Quarter. Different fees may apply depending on whether you have elected single-life or joint-life coverage. On the Issue Date, your Withdrawal Benefit Base is equal to your initial Purchase Payment and is, thereafter, subject to certain adjustments. We reserve the right to increase or decrease the percentage rate used to calculate the fee for each living benefit at any time but, in no event, will the rate ever exceed  the maximum annual rate of 1.95%  for joint-life, or 1.75% for single-life, coverage.The current annual rates and maximum annual rates used to calculate the fee for each optional living benefit are shown in the chart under “Charges for Optional Benefits.”
8	The Withdrawal Benefit Base is equal to your initial Purchase Payment, and is, thereafter, subject to certain adjustments. (See “Withdrawal Benefit Base” under “Optional Living Benefits.”)
9	This amount assumes that MAV (0.40%) was selected and that an optional living benefit with joint-life coverage (1.95%) was also selected (in addition to the 1.30% Mortality and Expense Risk Charge, the 0.15% Administrative Expense Charge, and the 0.20% Distribution Fee). It also assumes that the living benefit’s initial Withdrawal Benefit Base is equal to the initial Purchase Payment. If the Withdrawal Benefit Base changes, the charge for your optional living benefit and your Total Variable Account Annual Expenses would be higher or lower.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include Contract Owner transaction expenses, contract fees, variable account annual expenses, and Fund fees and expenses.

The Example assumes that you invest $10,000 in the Contract for the time periods indicated and that your Contract combines the features producing the highest maximum charges, including the MAV optional death benefit and an optional living benefit with joint-life coverage. The Example also assumes that your investment has a 5% return each year and assumes the maximum fees and expenses of any of the Funds. For purposes of converting the Annual Account Fee to a percentage, the Example assumes an average Contract size of $50,000. In addition, this Example assumes no transfers were made and no premium taxes were deducted. If these arrangements were considered, the expenses shown would be higher.

Although your actual costs may be higher or lower, based on these assumptions, your costs would be:

(1) If you surrender your Contract at the end of the applicable time period:

1 year	3 years	5 years	10 years
$1,362	$2,579	$3,343	$6,808

(2) If you annuitize your Contract at the end of the applicable time period:

1 year	3 years	5 years	10 years
$654	$1,986	$3,343	$6,808

(3) If you do not surrender your Contract:

1 year	3 years	5 years	10 years
$654	$1,986	$3,343	$6,808

The fee table and Example should not be considered a representation of past or future expenses and charges of the Sub-Accounts. Your actual expenses may be greater or less than those shown. The Example does not include the deduction of state premium taxes, which may be assessed upon full surrender, death or annuitization, or any taxes and penalties you may be required to pay if you surrender the Contract.This Example also does not take into consideration any fee waiver or expense reimbursement arrangement of the Funds. If these arrangements were taken into consideration, the expenses shown would be lower. Similarly, the 5% annual rate of return assumed in the Example is not intended to be representative of past or future investment performance. For more information about Fund expenses, including a description of any applicable fee waiver or expense reimbursement arrangement, see the prospectuses for the Funds.

For information concerning compensation paid for the sale of the Contracts, see “DISTRIBUTION OF THE CONTRACT.”

CONDENSED FINANCIAL INFORMATION

Historical information about the value of the units we use to measure the variable portion of your Contract (“Variable Accumulation Units”) is included in the back of this Prospectus as “APPENDIX F - CONDENSED FINANCIAL INFORMATION.”

THE ANNUITY CONTRACT

Sun Life Assurance Company of Canada (U.S.) and Sun Life of Canada (U.S.) Variable Account F (the “Variable Account”) offer the Contract to groups and individuals for use in connection with their retirement plans. Annuities are long-term investment vehicles designed for retirement planning, and are not suitable for short-term investing or speculation. Persons wishing to employ such strategies should not purchase a Contract. The Contract is available on a group basis and, in certain states, may be available on an individual basis. We issue an Individual Contract directly to the individual Participant of the Contract. We issue a Group Contract to the Owner, covering all individuals participating under the Group Contract; each individual receives a Certificate that evidences his or her participation under the Group Contract.

In this Prospectus, unless we state otherwise, we refer to both the owners of Individual Contracts and participating individuals under Group Contracts as “Participants” and we address all Participants as “you”; we use the term “Contracts” to include Individual Contracts, Group Contracts, and Certificates issued under Group Contracts. For the purpose of determining benefits under both Individual Contracts and Group Contracts, we establish an Account for each Participant, which we will refer to as “your” Account or a “Participant Account.”

Your Contract provides certain features that may benefit you in retirement planning.

· It has an Accumulation Phase and an Income Phase. During the Accumulation Phase, you make Purchase Payments under the Contract and allocate them to one or more of the Variable Account options or the Fixed Account options available through our DCA program. During the Income Phase, we make annuity payments based on the amount you have accumulated. Annuity payments can be fixed or variable. When you choose variable options, you assume the investment risk. When you choose fixed options, we assume the investment risk.

· It also has tax deferral, so that you do not pay taxes on your earnings under your Contract until you withdraw them. However, if you purchase your Contract in connection with a tax-qualified plan, your purchase should be made for reasons other than tax-deferral. Tax-qualified plans provide tax-deferral without the need for purchasing an annuity contract.

· It provides a basic death benefit if you die during the Accumulation Phase. You may enhance the basic death benefit by electing the optional death benefit for an additional charge.

· If you so elect, during the Income Phase, it provides annuity payments to you or someone else for life or for another period that you choose.

The Contract is designed for use in connection with personal retirement and deferred compensation plans, some of which qualify for favorable federal income tax treatment under Sections 401, 403, 408 or 408A of the Internal Revenue Code. The Contract is also designed so that it may be used in connection with certain non-tax-qualified retirement plans, such as payroll savings plans and such other groups (trusteed or non-trusteed) as may be eligible under applicable law. We refer to Contracts used with plans that receive favorable tax treatment as “Qualified Contracts,” and all other Contracts as “Non-Qualified Contracts.” A qualified retirement plan generally provides tax-deferral regardless of whether the plan invests in an annuity contract. A decision to purchase an annuity contract should not be based on the assumption that the purchase of an annuity contract is necessary to obtain tax-deferral benefits under a qualified retirement plan.

You should work with your registered representative to decide whether an optional benefit is appropriate for you based on a thorough analysis of your particular insurance needs, financial objectives, investment goals, time horizons and risk tolerance.

COMMUNICATING TO US ABOUT YOUR CONTRACT

You may submit transaction requests or otherwise communicate with us in writing or by telephone. All materials mailed to us, including Purchase Payments, must be sent to our mailing address as set forth at the beginning of this Prospectus. For all telephone communications, you must call (800) 752-7216. In addition, the authorized registered representative of the broker-dealer of record may submit transfer requests on your behalf in writing, by telephone, or over the Internet on our broker website. To use the broker website, the registered representative must first consent to our online terms of use. (See “Requests for Transfers” under “Transfer Privilege.”)

Unless this Prospectus states differently, we will consider all materials sent to us and all telephone communications to be received on the date we actually receive them at our mailing address or at (800) 752-7216. However, we will consider all financial transactions, including Purchase Payments, withdrawal requests and transfer instructions, to be received on the next Business Day if we receive them (1) on a day that is not a Business Day or (2) after the close of regular trading on the New York Stock Exchange, which is normally 4:00 p.m., Eastern Time. In some cases, receipt of requests for financial transactions by the broker-dealer of record will be deemed to be constructive receipt by us. This would include only cases where we have a specific agreement with the broker-dealer that provides for this treatment and the broker-dealer electronically forwards to us the request promptly after the end of the Business Day on which it receives the request in good order. In such cases, financial transactions received by us in good order will be priced that Business Day, provided the broker-dealer received the request before the earlier of (a) 4:00 p.m. Eastern Time on a Business Day, or (b) the close of the New York Stock Exchange on days that the Stock Exchange closes before 4:00 p.m. For information about whether we have this type of arrangement with your broker-dealer, you may call us at the above number.

Certain methods of contacting us, such as by telephone or over the Internet, may be unavailable or delayed. Any computer or telephone system (including yours, ours, and your registered representative’s) can experience delays or outages that may delay or prevent us from processing your request. While we have taken reasonable precautions to allow our systems to accommodate heavy usage, we do not guarantee access or reliability under all circumstances. If you experience delays or an outage, you may submit your request to us in writing to our mailing address, as set forth at the beginning of this Prospectus.

When we specify that notice to us must be in writing, we reserve the right, at our sole discretion, to accept notice in another form.

Electronic Account Information

Contract Owners may elect to receive prospectuses, transaction confirmations, reports and other communications in electronic format, instead of receiving paper copies of these documents. To enroll in this optional electronic delivery service Contract Owners must register and log on to our Internet customer website at https://customerlink.sunlife-usa.com. First-time users of this website can enroll in this electronic delivery service by selecting “eDeliver Documents” when registering to use the website. If you are already a registered user of this website, you can enroll in the electronic delivery service by logging on to your account and selecting “eDeliver Documents” on the “Update Profile” page. The electronic delivery service is subject to various terms and conditions, including a requirement that you promptly notify us of any change in your e-mail address, in order to avoid any disruption of deliveries to you. You may obtain more information and assistance at the above-mentioned internet location or by writing us at our mailing address or by telephone at (800) 752-7216.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

We are a stock life insurance company incorporated under the laws of Delaware on January 12, 1970. We do business in 49 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, and we have an insurance company subsidiary that does business in New York. The address for our Executive Office is One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481.

We are ultimately controlled by Sun Life Financial Inc. (“Sun Life Financial”). Sun Life Financial, a corporation organized in Canada, is a reporting company under the Securities Exchange Act of 1934 with common shares listed on the Toronto, New York, and Philippine stock exchanges.

THE VARIABLE ACCOUNT

We established the Variable Account as a separate account on July 13, 1989, pursuant to a resolution of our Board of Directors. The Variable Account funds the Contract and various other variable annuity contracts that we offer. These other products may have features, benefits and charges that are different from those under the Contract.

Under Delaware insurance law and the Contract, the income, gains or losses of the Variable Account are credited to or charged against the assets of the Variable Account without regard to the other income, gains, or losses of the Company. These assets are held in relation to the Contract and other variable annuity contracts that provide benefits that vary in accordance with the investment performance of the Variable Account. The assets maintained in the Variable Account will not be charged with any liabilities arising out of any other business we conduct. All obligations arising under a Contract, including the promise to make annuity payments, and the optional living benefit and death benefit guarantees, are general corporate obligations of the Company and, as such, are subject to the claims of the Company’s creditors.

The assets of the Variable Account are divided into Sub-Accounts. Each Sub-Account invests exclusively in shares of a specific Fund. All amounts allocated by you to a Sub-Account will be used to purchase Fund shares at their net asset value. Any and all distributions made by the Funds with respect to the shares held by the Variable Account will be reinvested to purchase additional Fund shares at their net asset value. Deductions from the Variable Account for cash withdrawals, annuity payments, death benefits, Account Fees, Contract charges against the assets of the Variable Account for the assumption of mortality and expense risks, administrative expenses, optional benefits, and any applicable taxes will, in effect, be made by redeeming the number of Fund shares at their net asset value equal in total value to the amount to be deducted. The Variable Account will be fully invested in Fund shares at all times.

VARIABLE ACCOUNT OPTIONS: THE FUNDS

The Contract offers Sub-Accounts that invest in a number of Fund investment options. Each Fund is a mutual fund registered under the Investment Company Act of 1940, or a separate series of shares of such a mutual fund.

Large-Cap Equity Funds	Emerging Markets Equity Funds
Columbia Variable Portfolio- Marsico Growth Fund, Class 2	Lazard Retirement Emerging Markets Equity Portfolio, Service Class
Fidelity® Variable Insurance Products Fund II - Contrafund® Portfolio,	MFS® Emerging Markets Equity Portfolio, Service Class
Service Class 24	Specialty Sector Equity Fund
Huntington VA Dividend Capture Fund2	MFS® Utilities Portfolio, Service Class
Huntington VA Growth Fund2	Specialty Sector Commodity Funds
Huntington VA Income Equity Fund2	Huntington VA Real Strategies Fund2
Huntington VA Macro 100 Fund2	PIMCO CommodityRealReturn® Strategy Portfolio, Advisor Class
Invesco Van Kampen V.I. Comstock Fund, Series II	Real Estate Equity Fund
JPMorgan Insurance Trust U.S. Equity Portfolio, Class 2	Sun Capital Global Real Estate Fund, Service Class
Lord Abbett Series Fund - Fundamental Equity Portfolio, Class VC	Asset Allocation Funds
MFS® Core Equity Portfolio, Service Class	AllianceBernstein Balanced Wealth Strategy Portfolio, Class B
MFS® Growth Portfolio, Service Class	AllianceBernstein Dynamic Asset Allocation Portfolio, Class B
MFS® Value Portfolio, Service Class	BlackRock Global Allocation V.I. Fund, Class III
Mutual Shares Securities Fund, Class 4	Fidelity® Variable Insurance Products III - Balanced Portfolio,
Putnam VT Equity Income Fund, Class IB	Service Class 24
SCSM BlackRock Large Cap Index Fund, Service Class	Franklin Income Securities Fund, Class 4
SCSM Davis Venture Value Fund, Service Class	Huntington VA Balanced Fund1,2
SCSM Lord Abbett Growth & Income Fund, Service Class	Invesco Van Kampen V.I. Equity and Income Fund, Series II
SCSM WMC Large Cap Growth Fund, Service Class	MFS® Global Tactical Allocation Portfolio, Service Class
Universal Institutional Funds, Inc. - Growth Portfolio, Class II5	MFS® Total Return Portfolio, Service Class
Mid-Cap Equity Funds	PIMCO All Asset Portfolio, Advisor Class1
Fidelity® Variable Insurance Products III - Mid Cap Portfolio,	PIMCO Global Multi-Asset Portfolio, Advisor Class1
Service Class 24	Putnam VT Absolute Return 500 Fund, Class IB
Huntington VA Mid Corp America Fund2	SCSM Ibbotson Balanced Fund, Service Class1
Invesco Van Kampen V.I. Mid Cap Value Fund, Series II6	SCSM Ibbotson Conservative Fund, Service Class1
Lord Abbett Series Fund - Growth Opportunities Portfolio, Class VC	SCSM Ibbotson Growth Fund, Service Class1
SCSM Goldman Sachs Mid Cap Value Fund, Service Class	Money Market Fund
SCSM WMC Blue Chip Mid Cap Fund, Service Class	Sun Capital Money Market Fund®, Service Class
Universal Institutional Funds, Inc. - Mid Cap Growth Portfolio, Class II5	Global Bond Fund
Small -Mid-Cap Equity Fund	Templeton Global Bond Securities Fund, Class 4
AllianceBernstein Small/Mid Cap Value Portfolio, Class B	Short-Term Bond Fund
Small-Cap Equity Funds	SCSM Goldman Sachs Short Duration Fund, Service Class
Franklin Small Cap Value Securities Fund, Class 4	Intermediate-Term Bond Funds
Huntington VA Situs Fund2	Huntington VA Mortgage Securities Fund2
SCSM BlackRock Small Cap Index Fund, Service Class	JPMorgan Insurance Trust Core Bond Portfolio, Class 2
SCSM Columbia Small Cap Value Fund, Service Class	MFS® Government Securities Portfolio, Service Class
SCSM Invesco Small Cap Growth Fund, Service Class	MFS® Research Bond Series, Service Class
International/Global Equity Funds	SCSM PIMCO Total Return Fund, Service Class
Huntington VA International Equity Fund2	Sun Capital Investment Grade Bond Fund®, Service Class
Huntington VA Rotating Markets Fund2	Wells Fargo Variable Trust - VT Total Return Bond Fund, Class 27
Invesco V.I. International Growth Fund, Series II	Inflation Protected Bond Fund
MFS® International Growth Portfolio, Service Class	SCSM BlackRock Inflation Protected Bond Fund, Service Class
MFS® International Value Portfolio, Service Class	Multi-Sector Bond Fund
MFS® Research International Portfolio, Service Class	Franklin Strategic Income Securities Fund, Class 4
Oppenheimer Global Securities/VA, Service Shares	High Yield Bond Fund
PIMCO EqS Pathfinder Portfolio, Advisor Class	SCSM PIMCO High Yield Fund, Service Class
SCSM AllianceBernstein International Value Fund, Service Class	Emerging Markets Bond Fund
SCSM BlackRock International Index Fund, Service Class	PIMCO Emerging Markets Bond Portfolio, Advisor Class
International/Global Small/Mid-Cap Equity Fund
First Eagle Overseas Variable Fund3

1	These are Fund of Funds options and expenses of the Fund include the Fund level expenses of the underlying Funds as well. These Funds may be more expensive than Funds that do not invest in other Funds.
2	Only available as an investment option if you purchase your Contract through a Huntington Bank representative. These Funds do not have different share classes.
3	First Eagle Overseas Variable Fund does not have different share classes.
4	In marketing materials and other documents, the Fidelity® funds may be referred to as follows: Fidelity® VIP Contrafund® Portfolio, Fidelity® VIP Mid Cap Portfolio, and Fidelity® VIP Balanced Portfolio.
5	In marketing materials and other documents, the Universal Institutional Fund may be referred to as Morgan Stanley UIF Mid Cap Growth Portfolio and Morgan Stanley UIF Growth Portfolio.
6	On or about July 15, 2012, the Fund will change its name to Invesco Van Kampen V.I. American Value Fund, Series II.
7	In marketing materials and other documents, the Wells Fargo Variable Trust - VT Total Return Bond Fund may be referred to as Wells Fargo Advantage VT Total Return Bond Fund.

AllianceBernstein L.P. advises the AllianceBernstein Portfolios. BlackRock Advisors, LLC advises BlackRock Global Allocation V.I. Fund (sub-advised by BlackRock Investment Management, LLC and BlackRock International Limited). Columbia Management Investment Advisers, LLC, advises the Columbia Variable Portfolio (sub-advised by Marsico Capital Management, LLC). Fidelity® Management & Research Company advises the Fidelity® VIP Portfolios; Fidelity® VIP Contrafund® Portfolio and Fidelity® VIP Mid Cap Portfolio (sub-advised by FMR Co. Inc. and other affiliates of Fidelity® Management & Research Company); and Fidelity® VIP Balanced Portfolio (sub-advised by Fidelity Investments Money Management, Inc., FMR Co. Inc., and other affiliates of Fidelity® Management & Research Company). First Eagle Investment Management, LLC advises First Eagle Overseas Variable Fund. Franklin Advisers, Inc. advises Franklin Income Securities Fund, Franklin Strategic Income Securities Fund , Templeton Global Bond Securities Fund. Franklin® Advisory Services, LLC advises Franklin Small Cap Value Securities Fund. Franklin Mutual Advisers, LLC advises Mutual Shares Securities Fund. Huntington Asset Advisors, Inc., advises the Huntington VA Funds. Invesco Advisers, Inc. advises the Invesco Funds. J.P. Morgan Investment Management Inc. advises the JPMorgan Portfolios. Lazard Asset Management LLC advises Lazard Retirement Portfolio. Lord, Abbett & Co. LLC advises the Lord Abbett Portfolios. Massachusetts Financial Services Company, our affiliate,advises the MFS® Portfolios. Morgan Stanley Investment Management Inc. advises The Universal Institutional Funds, Inc. Portfolios. OppenheimerFunds, Inc. advises the Oppenheimer Fund. Pacific Investment Management Company LLC advises the PIMCO Portfolios; PIMCO All Asset Portfolio (sub-advised by Research Affiliates, LLC). Putnam Investment Management, LLC advises the Putnam Funds. Sun Capital Advisers LLC, our affiliate, advises the Sun Capital Advisers Trust Funds; SCSM AllianceBernstein International Value Fund (sub-advised by AllianceBernstein L.P.); SCSM BlackRock Inflation Protected Bond Fund (sub-advised by BlackRock Financial Management, Inc.); SCSM BlackRock International Index Fund, SCSM BlackRock Large Cap Index Fund, and SCSM BlackRock Small Cap Index Fund (sub-advised by BlackRock Investment Management, LLC); SCSM Columbia Small Cap Value Fund (sub-advised by Columbia Management Investment Advisers, LLC); SCSM Davis Venture Value Fund (sub-advised by Davis Selected Advisers, L.P.); SCSM Goldman Sachs Mid Cap Value Fund and SCSM Goldman Sachs Short Duration Fund (sub-advised by Goldman Sachs Asset Management, L.P.); SCSM Ibbotson Balanced Fund, SCSM Ibbotson Conservative Fund, and SCSM Ibbotson Growth Fund (sub-advised by Ibbotson Associates, Inc.); SCSM Invesco Small Cap Growth Fund (sub-advised by Invesco Advisers, Inc.); SCSM Lord Abbett Growth & Income Fund (sub-advised by Lord, Abbett & Co. LLC); SCSM PIMCO High Yield Fund and SCSM PIMCO Total Return Fund (sub-advised by Pacific Investment Management Company LLC); SCSM WMC Blue Chip Mid Cap Fund and SCSM WMC Large Cap Growth Fund (sub-advised by Wellington Management Company, LLP); and Sun Capital Global Real Estate Fund (sub-advised by Massachusetts Financial Services Company). Wells Fargo Funds Management, LLC advises the Wells Fargo Variable Trust Fund (sub-advised by Wells Capital Management Incorporated).

More comprehensive information about the Funds, including a discussion of their management, investment objectives, expenses, and potential risks, is found in the current prospectuses for the Funds (the “Fund Prospectuses”). The Fund Prospectuses should be read in conjunction with this Prospectus before you invest. A copy of each Fund Prospectus, as well as each Fund’s Statement of Additional Information, may be obtained without charge by calling us at (800) 752-7216 or by writing to Sun Life Assurance Company of Canada (U.S.), P.O. Box 9133, Wellesley Hills, Massachusetts 02481.

The Funds may also be available to registered separate accounts offering variable annuity and variable life products of other affiliated and unaffiliated insurance companies, as well as to the Variable Account and other separate accounts of the Company. Although we do not anticipate any disadvantages to this, there is a possibility that a material conflict may arise between the interests of the Variable Account and one or more of the other separate accounts participating in the Funds. A conflict may occur due to a change in law affecting the operations of variable life and variable annuity separate accounts, differences in the voting instructions of the Participants and Payees and those of other companies, or some other reason. In the event of conflict, we will take any steps necessary to protect Participants and Payees, including withdrawal of the Variable Account from participation in the underlying Funds which are involved in the conflict or substitution of shares of other Funds.

Certain of the investment advisers, transfer agents, or underwriters to the Funds may reimburse us for administrative costs in connection with administering the Funds as options under the Contracts. These amounts are not charged to the Funds or Participants, but are paid from assets of the advisers, transfer agents, or underwriters.

Certain publicly available mutual funds may have similar investment goals and principal investment policies and risks as one or more of the Funds, and may be managed by a Fund’s portfolio manager(s). While a Fund may have many similarities to these other funds, its investment performance will differ from their investment performance. This is due to a number of differences between a Fund and these similar products, including differences in sales charges, expense ratios, and cash flows.

THE FIXED ACCOUNT OPTIONS: THE DCA PERIODS

The Fixed Account is made up of all the general assets of the Company (referred to as the “general account”) other than those allocated to any separate account. Amounts you allocate to the DCA program under either the 6-month DCA Period or the 12-month DCA Period, become part of the Fixed Account. (See “Other Programs.”) These general account assets are available to support our insurance and annuity obligations other than those funded by the Variable Account. Any guarantees under the Contract that exceed your Variable Account Value, such as those with any optional living benefit and any death benefit, are paid from our general account (and not the Variable Account). Therefore, any amounts that we may be obligated to pay under the Contract in excess of Variable Account Value are subject to our financial strength and claims-paying ability and our long-term ability to make such payments. We issue other types of insurance policies and financial products as well, and we pay our obligations under those products from our assets in the general account. The general account is subject to claims of creditors made on the assets of the Company.

We will invest the assets of the Fixed Account in those assets we choose that are allowed by applicable state insurance laws. In general, these laws permit investments, within specified limits and subject to certain qualifications, in federal, state and municipal obligations, corporate bonds, preferred and common stocks, real estate mortgages, real estate and certain other investments. We intend to invest primarily in investment-grade fixed income securities (i.e., rated by a nationally recognized rating service within the four highest grades) or instruments we believe are of comparable quality.

We are not obligated to invest amounts allocated to the Fixed Account according to any particular strategy, except as may be required by applicable state insurance laws. You will not have a direct or indirect interest in the Fixed Account investments.

Money allocated to a DCA Period earns interest at a Guaranteed Interest Rate. We determine Guaranteed Interest Rates at our discretion. Our determination will be influenced by the interest rates we earn on our fixed income investments as well as other factors, including regulatory and tax requirements, sales commissions, administrative expenses, general economic trends, and competitive factors. You can find out about our current Guaranteed Interest Rates by calling us at (800) 752-7216.

THE ACCUMULATION PHASE

During the Accumulation Phase of your Contract, you make Purchase Payments into your Account, and your earnings accumulate on a tax-deferred basis. The Accumulation Phase begins with our acceptance of your first Purchase Payment and ends the Business Day before your Annuity Commencement Date. The Accumulation Phase will end sooner if you surrender your Contract or if the “Covered Person” dies before the Annuity Commencement Date.

Issuing Your Contract

We “open” the Contract on the Business Day when we receive your Application at our mailing address shown on the first page of this Prospectus. We refer to this date as the “Open Date.” We “issue” your Contract on the day we apply your initial Purchase Payment, when your Application is “in good order.” An Application is in good order when we have received all the information necessary to complete it. We refer to this date as the “Issue Date.”

We determine your eligibility for purchasing a Contract and your eligibility for electing the optional death benefit and an optional living benefit based upon the ages of all Owners and Annuitants on the Open Date.

We will credit your initial Purchase Payment to your Account within two Business Days of receiving your completed Application, in good order. If your Application is not in good order, we will notify you. If we do not have the necessary information to complete the Application within five Business Days, we will send your money back to you or ask your permission to retain your Purchase Payment until the Application is in good order. Once the Application is in good order, we will then apply the Purchase Payment within two Business Days.

Amount and Frequency of Purchase Payments

The amount of Purchase Payments may vary. However, we will not accept an initial Purchase Payment of less than $10,000 or the maximum annual Individual Retirement Annuity (“IRA”) contribution, unless we waive these limits. Although there is currently no minimum amount for additional Purchase Payments, we reserve the right to limit each additional Purchase Payment to at least $1,000. In addition, unless we have given our prior approval, we will not accept a Purchase Payment if your Account Value is over $2 million, or if the Purchase Payment would cause your Account Value to exceed $2 million. We reserve the right to refuse Purchase Payments received more than five years after your Issue Date or after your 70th birthday, whichever is later. We will notify you of any change in writing prior to its effectiveness. Within these limits, you may make Purchase Payments at any time during the Accumulation Phase. Additional restrictions may apply if you purchased an optional living benefit. If you are participating in an optional living benefit, you may be limited in the amount and timing of Purchase Payments you can make. (See “OPTIONAL LIVING BENEFITS.”)

Allocation of Net Purchase Payments

You may allocate your Purchase Payments among the different Sub-Accounts and DCA Periods currently available. However, we reserve the right to limit any allocation to a DCA Period to at least $1,000. We will notify you of any change in writing prior to its effectiveness.

In your Application, you may specify the percentage of each Purchase Payment to be allocated to each Sub-Account or DCA Period. These percentages are called your allocation factors. You may change the allocation factors for future Purchase Payments by sending us notice of the change as required. We will use your new allocation factors for Purchase Payments we receive with or after we have received notice of the change until we receive another change notice.

Although it is currently not our practice, we may deduct applicable premium taxes or similar taxes from your Purchase Payments. (See “Premium Taxes.”) In that case, we will credit your Net Purchase Payment, which is the Purchase Payment minus the amount of those taxes.

Your Account

When we accept your first Purchase Payment, we establish an Account for you, which we maintain throughout the Accumulation Phase of your Contract.

Your Account Value

Your Account Value is the sum of the value of the two components of your Contract: the Variable Account portion of your Contract (“Variable Account Value”) and the Fixed Account portion of your Contract (“Fixed Account Value”). These two components are calculated separately, as described under “Variable Account Value” and “Fixed Account Value.”

Variable Account Value

Variable Accumulation Units

In order to calculate your Variable Account Value, we use a measure called a Variable Accumulation Unit for each Sub-Account. Your Variable Account Value is the sum of your Account Value in each Sub-Account, which is the number of your Variable Accumulation Units for that Sub-Account times the value of each Unit.

Variable Accumulation Unit Value

The value of each Variable Accumulation Unit in a Sub-Account reflects the net investment performance of that Sub-Account. We determine that value once on each day that the New York Stock Exchange is open for trading, at the close of trading, which is generally 4:00 p.m., Eastern Time. (The close of trading is determined by the New York Stock Exchange.) Each day we make a valuation is called a “Business Day.” The period that begins at the time Variable Accumulation Units are valued on a Business Day and ends at that time on the next Business Day is called a “Valuation Period.” On days other than Business Days, the value of a Variable Accumulation Unit does not change.

To measure these values, we use a factor, which we call the Net Investment Factor, which represents the net return on the Sub-Account’s assets. At the end of any Valuation Period, the value of a Variable Accumulation Unit for a Sub-Account is equal to the value of that Sub-Account’s Variable Accumulation Units at the end of the previous Valuation Period, multiplied by the Net Investment Factor. We calculate the Net Investment Factor by dividing (1) the net asset value of a Fund share held in the Sub-Account at the end of that Valuation Period, plus the per share amount of any dividend or capital gains distribution made by that Fund during the Valuation Period, by (2) the net asset value per share of the Fund share at the end of the previous Valuation Period; then, for each day in the Valuation Period, we deduct a factor representing the asset-based insurance charges (the mortality and expense risk charge, the administrative expense charge, and the distribution fee) plus any applicable asset-based charge for an optional benefit.

For a hypothetical example of how we calculate the value of a Variable Accumulation Unit, see the Statement of Additional Information.

Crediting and Canceling Variable Accumulation Units

When we receive an allocation to a Sub-Account, either from a Net Purchase Payment or a transfer of Account Value, we credit that amount to your Account in Variable Accumulation Units. Similarly, we cancel Variable Accumulation Units when you transfer or withdraw amounts from a Sub-Account, or when we deduct certain charges under the Contract. We determine the number of Units credited or canceled by dividing the dollar amount by the Variable Accumulation Unit value for that Sub-Account at the end of the Valuation Period during which the transaction or charge is effective.

Fixed Account Value

Your Fixed Account Value is the sum of all amounts allocated to the Fixed Account options available under our DCA program, plus interest credited on those amounts, minus withdrawals, transfers out of DCA Periods, and any deductions for charges under the Contract taken from your Fixed Account Value.

We credit interest on amounts allocated to the Fixed Account at the applicable Guaranteed Interest Rate for the duration of the DCA Period you elect. While you are participating in the DCA program, we credit interest daily at a rate that yields the Guaranteed Interest Rate on an annual effective basis. You can find out about our current Guaranteed Interest Rates by calling us at (800) 752-7216.

Transfer Privilege

Permitted Transfers

During the Accumulation Phase, you may transfer all or part of your Account Value to one or more Sub-Accounts then available, subject to the following restrictions:

· you may not make more than 12 transfers in any Account Year;

· at least 6 days must elapse between transfers to and from the Sub-Accounts;

· transfers to or from Sub-Accounts are subject to terms and conditions that may be imposed by the Funds; and

· we impose additional restrictions on market timers, which are further described below. (See “Short-Term Trading.”)

These restrictions do not apply to transfers made under any optional program. (See “Other Programs.”) Additional restrictions apply to transfers made under any of the optional living benefits.

We reserve the right to waive these restrictions and exceptions at any time, as discussed under “Short-Term Trading,” or to change them. Any change will be applied uniformly. We will notify you of any change prior to its effectiveness.

There is usually no charge imposed on transfers; however, we reserve the right to impose a transfer charge of $15 for each transfer. We will notify you of any change in writing prior to its effectiveness. Under current law, there is no tax liability for transfers.

Requests for Transfers

You, your authorized registered representative of the broker-dealer of record, or another authorized third party may request transfers in writing or by telephone. Registered representatives of broker-dealer firms that have entered into selling agreements with us may, on behalf of their clients, submit transfer requests electronically over the Internet on our broker website. To use this electronic transfer service, a registered representative must agree to our online terms of use. You can contact us by telephone at (800) 752-7216 to identify broker-dealers with registered representatives that use this service.

If a written, telephone, or electronic transfer request is received before the earlier of (a) 4:00 p.m. Eastern Time on a Business Day, or (b) the close of the New York Stock Exchange on days that the Stock Exchange closes before 4:00 p.m., the transfer will be priced that day. The telephone transfer privilege is available automatically during regular business hours before 4:00 p.m. Eastern Time, and does not require your written election. We have established procedures reasonably designed to confirm that instructions communicated to us by telephone or electronically are genuine. These procedures may require any person requesting a transfer made by telephone or electronically to provide personal identifying information. We will not be liable for following instructions communicated by telephone that we reasonably believe are genuine.

We reserve the right to deny any and all transfer requests made by telephone or electronically and to require that certain transfer requests be submitted in writing. A transfer request may be denied if it is not in good order or if it does not comply with the terms of our short-term trading policy or the trading policy of a fund involved in the transfer. If an electronic or a telephone transfer request is denied, we will immediately notify you and your authorized registered representative.

We also reserve the right to suspend, modify, restrict, or terminate the telephone or electronic transfer privilege at any time. Your ability (or the ability of your authorized registered representative or another authorized third party) to request transfers by telephone and/or electronically may also be limited due to circumstances beyond our control, such as during system outages or periods of high volume.

A transfer request will be priced at the Variable Accumulation Unit value next determined at the close of the Business Day if we receive your transfer request, in good order, before the earlier of (a) 4:00 p.m. Eastern Time on a Business Day, or (b) the close of the New York Stock Exchange on days that the Stock Exchange closes before 4:00 p.m. Otherwise, your transfer request will be priced on the next Business Day.

Certain transfer requests may result in the modification or cancellation of one or more of the Contract’s optional programs or features that require, or are based on, specific allocations among the available Sub-Accounts or DCA Periods as described more particularly elsewhere in this Prospectus and in Appendix E.

No more than one transfer request of Account Values may be made on the same Business Day regardless of whether the request is made by you, your authorized registered representative, or another authorized third party, and regardless of whether the request is submitted in writing, by telephone, or electronically. The Company has established reasonable procedures for handling multiple transfer requests received on the same Business Day, including processing the first transfer request received in good order on a Business Day (unless otherwise cancelled in accordance with the cancellation procedures described in the next paragraph).

You, your authorized registered representative, or another authorized third party may cancel a transfer request by contacting us by telephone at (800) 752-7216 before the end of the Business Day during which the transfer request was submitted. We may also permit your authorized registered representative to request cancellation of a transfer request electronically over the Internet, provided we receive the electronic request before the end of the Business Day during which the transfer request was submitted.

Short-Term Trading

The Contracts are not designed for short-term trading. If you wish to employ such strategies, do not purchase a Contract. Transfer limits and other restrictions, described below, are subject to our ability to monitor transfer activity. Some Participants and their third party intermediaries engaging in short-term trading may employ a variety of strategies to avoid detection. Despite our efforts to prevent short-term trading, there is no assurance that we will be able to identify such Participants or intermediaries or curtail their trading. A failure to detect and curtail short-term trading could result in adverse consequences to the Participants. Short-term trading can increase costs for all Participants as a result of excessive portfolio transaction fees. In addition, short-term trading can adversely affect a Fund’s performance. If large amounts of money are suddenly transferred out of a Fund, the Fund’s investment adviser cannot effectively invest in accordance with the Fund’s investment objectives and policies.

The Company has policies and procedures to limit the number and frequency of transfers of Account Value. The Company also reserves the right to charge a fee for transfers to discourage frequent trading. In no event will the total charge assessed in connection with a transfer, that includes this fee as well as any charge that we may assess on a permitted transfer of Account Value among Sub-Accounts (see “Permitted Transfers,” above), exceed the maximum fee per transfer presented in the table of “Contract Owner Transaction Expenses” under “FEES AND EXPENSES” in this Prospectus.

Short-term trading activities whether by the Participant or a third party authorized to initiate transfer requests on behalf of Participant(s) may be subject to other restrictions as well. For example, we reserve the right to take actions against short-term trading which restrict your transfer privileges more narrowly than the policies described under “Permitted Transfers,” such as requiring transfer requests to be submitted in writing through regular first-class U.S. mail (e.g., no overnight, priority or courier delivery allowed) and refusing any and all transfer instructions.

If we determine that a third party acting on your behalf is engaging (alone or in combination with transfers effected by you directly) in a pattern of short-term trading, we may refuse to process certain transfers requested by such a third party. We impose additional administrative restrictions on third parties that engage in transfers of Account Values on behalf of multiple Participants at one time. Specifically, we limit the form of such large group transfers to fax or mail delivery only, require the third party to provide us with advance notice of any possible large group transfer so that we can have additional staff ready to process the request, and require that the amount transferred out of a Sub-Account for each Participant be equal to 100% of that Participant’s value in the Sub-Account. In the last situation, we will not transfer any of the Sub-Account value. Instead, we will deem the request not in good order and immediately notify you.

We will provide you written notification of any restrictions imposed.

We reserve the right to waive short-term trading restrictions, where permitted by law and not adverse to the interests of the relevant underlying Fund, in the following instances:

· when a new broker of record is designated for the Contract;

· when the Participant changes;

· when control of the Contract passes to the designated beneficiary upon the death of the Participant or Annuitant;

· when necessary in our view to avoid hardship to a Participant; or

· when underlying Funds are dissolved, merged, or substituted.

If short-term trading results as a consequence of waiving the restrictions against short-term trading, it could expose Participants to certain risks. The short-term trading could increase costs for all Participants as a result of excessive portfolio transaction fees. In addition, the short-term trading could adversely affect a Fund’s performance. If large amounts of money are suddenly transferred out of a Fund, the Fund’s investment adviser cannot effectively invest in accordance with the Fund’s investment objectives and policies. We uniformly apply the short-term trading policy and the permitted waivers of that policy to all Contracts. If we did not do so, some Participants could experience a different application of the policy and therefore may be treated unfairly. Too much discretion on our part in allowing the waivers of short-term trading policy could result in an unequal treatment of short-term traders by permitting some short-term traders to engage in short-term trading while prohibiting others from doing the same.

Funds’ Shareholder Trading Policies

In addition to the restrictions that we impose (as described under “Permitted Transfers” and “Short-Term Trading”), most of the Funds have adopted restrictions or other policies about transfers or other purchases and sales of the Fund’s shares. These policies (the “Funds’ Shareholder Trading Policies”) are intended to protect the Fund from short-term trading or other trading practices that are potentially harmful to the Fund. The Funds’ Shareholder Trading Policies may be more restrictive in some respects than the restrictions that we otherwise would impose, and the Funds may modify their Shareholder Trading Policies from time to time.

We are legally obligated to provide (at the Funds’ request) information about each amount you cause to be deposited into a Fund (including by way of Purchase Payments and transfers under your Contract) or removed from the Fund (including by way of withdrawals and transfers under your Contract). If a Fund identifies you as having violated the Fund’s Shareholder Trading Policies, we are obligated, if the Fund requests, to restrict or prohibit any further deposits or exchanges by you (or a third party acting on your behalf) in respect of that Fund. Any such restriction or prohibition may remain in place indefinitely.

Accordingly, if you do not comply with any Fund’s Shareholder Trading Policies, you (or a third party acting on your behalf) may be prohibited from directing any additional amounts into that Fund or directing any transfers or other exchanges involving that Fund. You should review and comply with each Fund’s Shareholder Trading Policies, which are disclosed in the Funds’ current prospectuses.

Funds may differ significantly as to such matters as: (a) the amount, format, and frequency of information that the Funds request from us about transactions that our customers make; and (b) the extent and nature of any limits or restrictions that the Funds request us to impose upon such transactions. As a result of these differences, the costs borne by us and (directly or indirectly) by our customers may be significantly increased. Any such additional costs may outweigh any additional protection that would be provided to our customers, particularly in view of the protections already afforded by the trading restrictions that we impose as described under “Permitted Transfers” and under “Short-Term Trading.” Also, if a Fund imposes more strict trading restrictions than are reasonably necessary under the circumstances, you could be deprived of potentially valuable flexibility to make transactions with respect to that Fund. For these and other reasons, we may disagree with the timing or substance of a Fund’s requests for information from us or with any transaction limits or restrictions that the Fund requests us to impose upon our customers. If any such disagreement with respect to a Fund cannot be satisfactorily resolved, the Fund might be restricted or, subject to obtaining any required regulatory approval, replaced as a variable investment option.

Waivers; Reduced Charges; Credits; Special Guaranteed Interest Rates

We may reduce or waive the withdrawal charge or the annual Account Fee, credit additional amounts, grant special Guaranteed Interest Rates in certain situations, or offer other options or benefits. These situations may include sales of Contracts (1) where selling and/or maintenance costs associated with the Contracts are reduced, such as the sale of several Contracts to the same Participant, certain sales of larger-sized Contracts (generally, Contracts that have our approval to exceed $2 million in Account Value), and certain group sales, and (2) to officers, directors and employees of the Company or its affiliates, registered representatives and employees of broker-dealers with a current selling agreement with the Company and affiliates of such representatives and broker-dealers, employees of affiliated asset management firms, and persons who have retired from such positions (“Eligible Employees”) and immediate family members of Eligible Employees. Eligible Employees and their immediate family members may also purchase a Contract without regard to minimum Purchase Payment requirements. For other situations in which withdrawal charges may be waived, see “WITHDRAWALS AND WITHDRAWAL CHARGES.”

Other Programs

You may participate in any of the following optional programs free of charge. Transfers made pursuant to the provisions of the following optional programs will not be charged a transfer fee, nor will such transfers count as one of the 12 transfers per year allowed under the section entitled “Transfer Privilege.” If you have elected to participate in an optional living benefit or any death benefit, certain restrictions may affect the operation or availability of these programs as discussed in more detail under each specific program below.

We reserve the right to terminate each of these programs. You may also terminate your participation in any of these programs at any time.

Dollar-Cost Averaging (“DCA”) Program

You may elect to participate in the DCA program, at no extra charge, when you make any Purchase Payment to your Account prior to your Maximum Annuity Commencement Date. If you have elected SIR III, your ability to make Purchase Payments into the DCA program will end after your first Account Anniversary. If you have elected SIM or SIM Plus, you can make additional Purchase Payments into the DCA program at anytime. However, under SIM and SIM Plus, we reserve the right not to accept any additional Purchase Payments into the DCA program, and any Purchase Payments after the first Account Anniversary may not exceed $50,000 per Account Year without our prior approval.

The DCA program allows you to invest gradually over time by allocating all or a portion of your Purchase Payment to a 6-month DCA Period or 12-month DCA Period. At regular time intervals, we will automatically transfer a portion of your Fixed Account Value to one or more Sub-Accounts that you choose. The program continues until your Fixed Account Value is depleted or you elect to stop the program. The final amount transferred from the Fixed Account will include all interest earned.

Amounts allocated to a DCA Period under the program will earn interest at a rate declared by the Company for the DCA Period you elect. Amounts invested in a Sub-Account may not be transferred to a DCA Period. If you elected to participate in the DCA program when you purchased your Contract, then all future Purchase Payments will be allocated to the DCA program, unless you specify otherwise. Any allocation of a new Purchase Payment to the DCA program will be treated as commencing a new DCA Period.

The main objective of the DCA program is to minimize the impact of short-term price fluctuations on Account Value. In general, since you transfer the same dollar amount to the variable investment options at set intervals, the DCA program allows you to purchase more Variable Accumulation Units (and, indirectly, more Fund shares) when prices are low and fewer Variable Accumulation Units (and, indirectly, fewer Fund shares) when prices are high. Therefore, you may achieve a lower average cost per Variable Accumulation Unit over the long term. The DCA program allows you to take advantage of market fluctuations. However, it is important to understand that the DCA program does not insure a profit or protect against loss in a declining market.

Asset Allocation

One or more asset allocation models may be available in connection with the Contract, at no extra charge. You may elect to participate in an asset allocation model at any time prior to your Maximum Annuity Commencement Date as long as we are still offering asset allocation models. Asset allocation is the process of investing in different asset classes, such as equity funds, fixed income funds, and money market funds, depending on your personal investment goals, tolerance for risk, and investment time horizon. By spreading your money among a variety of asset classes, you may be able to reduce the risk and volatility of investing, although there are no guarantees, and asset allocation does not insure a profit or protect against loss in a declining market.

We have no discretionary authority or control over your investment decisions. We do not recommend asset allocation models or otherwise provide advice as to what asset allocation model may be appropriate for you.

Our asset allocation program consists of one or more asset allocation models that we may make available from time to time. You may participate in only one model at a time. Each such asset allocation model represents a combination of Sub-Accounts with a different level of risk. Any asset allocation models, as well as the terms and conditions of this asset allocation program, are fully described in a separate brochure. You may request a copy of this brochure by calling us at (800) 752-7216. We may add or delete such models in the future.

Our asset allocation models are “static.” That is to say, if you elect an asset allocation model, we automatically rebalance your Account Value among the Sub-Accounts represented in the model you chose. While we will not alter the Sub-Account allocation percentages used in any asset allocation model, your asset allocation model and allocation weightings could be affected by mergers, liquidations, fund substitutions or closures.

You will not be provided with information regarding the periodic updates to models that we may offer to new Contract purchasers. Any new models will only be offered to Contracts opened on or after the date the new model goes into effect or to Owners who elect an asset allocation model on or after that date. Owners of any existing asset allocation model will remain in that existing model and we will continue to rebalance their percentage allocations among the Sub-Accounts in that existing model. However, such Owners may make an independent decision to change their asset allocations at any time. Investment alternatives, other than these asset allocation models, are available that may enable you to invest your Account Value with similar risk and return characteristics. You should consult your financial adviser periodically to consider whether any model you have selected is still appropriate for you.

Systematic Withdrawal Program

You may select our Systematic Withdrawal Program at any time prior to your Maximum Annuity Commencement Date. Under the Systematic Withdrawal Program, you determine the amount and frequency of regular withdrawals you would like to receive from your Fixed Account Value and/or Variable Account Value and we will process them automatically. They may also be included as income and subject to a 10% federal tax penalty as well as charges applicable on withdrawal. You should consult a qualified tax professional before choosing this option. We reserve the right to limit the election of this program to Contracts with a minimum Account Value of $10,000.

You are responsible for and may have to adjust the amount and timing of your systematic withdrawals to comply with amounts you are allowed to withdraw under an optional living benefit. For more detail regarding the amount that you may withdraw under your optional living benefit, please see “Annual Withdrawal Amount” and “Lifetime Withdrawal Percentage.”

Withdrawals may significantly reduce the death benefit amount under your Contract. (See “Calculating the Death Benefit.”)

You may change or stop this program at any time, by written notice to us or other means approved by us.

Portfolio Rebalancing Program

You may select our Portfolio Rebalancing Program at any time prior to your Maximum Annuity Commencement Date. Under this program, we transfer funds among all Sub-Accounts to maintain the percentage allocation you have selected among these Sub-Accounts. At your election, we will make these transfers on a quarterly, semi-annual or annual basis. If you are participating in an optional living benefit, then, on a quarterly basis, we will automatically transfer your Account Value among the Designated Funds you have selected to maintain the percentage allocations you have chosen. (See “DESIGNATED FUNDS” and “BUILD YOUR OWN PORTFOLIO.”)

WITHDRAWALS AND WITHDRAWAL CHARGES

Cash Withdrawals

Requesting a Withdrawal

At any time during the Accumulation Phase, you may withdraw in cash all or any portion of your Account Value. To make a withdrawal, other than a Systematic Withdrawal, you must send us a written request at our mailing address. Your request must specify whether you want to withdraw the entire amount of your Account or, if less, the amount you wish to receive.

All withdrawals may be subject to a withdrawal charge. (See “Withdrawal Charge.”) Upon request, we will notify you of the amount we would pay in the event of a full withdrawal. Withdrawals also may have adverse federal income tax consequences including a 10% penalty tax. (See “TAX PROVISIONS.”) You should carefully consider these tax consequences before requesting a cash withdrawal.

Full Withdrawals

If you request a full withdrawal, we calculate the amount we will pay you as follows:

· first we determine your Account Value based on any Fixed Account Value in the DCA program and on the price next determined for each Sub-Account at the end of the Valuation Period during which we receive your withdrawal request;

· we then deduct the Account Fee, if applicable; and finally,

· we calculate and deduct any applicable withdrawal charge.

A full withdrawal results in the surrender of your Contract, cancellation of all rights and privileges under your Contract, and your optional living benefit will end.

Partial Withdrawals

When you request a partial withdrawal, you can ask to have any applicable charges deducted either from:

· the amount of your partial withdrawal request (thereby reducing the amount you are to receive); or

· your Account Value (thereby reducing your Account Value by the amount of your partial withdrawal request plus any applicable withdrawal charges).

If you make no specification, we will process your withdrawal request using the first option above. Please note: Under either option any applicable taxes will be deducted from the amount you receive.

You may specify the amount you want withdrawn from each Sub-Account and/or Fixed Account option to which your Account is allocated. If you do not so specify, we will deduct the total amount you request pro-rata, based on your Account Value at the end of the Valuation Period during which we receive your request. If you have elected “Build Your Own Portfolio,” withdrawals out of your portfolio model will be taken pro-rata from each of your selected Funds.

Withdrawals may significantly reduce any death benefit and/or living benefit amount. In calculating the amount payable under the living benefit or death benefit, we may reduce the benefit by an amount that is greater than the amount of the withdrawal, depending on the circumstances. Accordingly, you should refer to the more detailed discussions of the optional living benefits and the death benefits that appear elsewhere in this Prospectus for information about the effects that withdrawals will have on those benefits.

If you request a partial withdrawal that would result in your Account Value being reduced to an amount less than the Account Fee for the Account Year in which you make the withdrawal, we reserve the right to treat it as a request for a full withdrawal (i.e., a surrender of your Contract).

Time of Payment

We will pay you the applicable amount of any full or partial withdrawal within seven days after we receive your withdrawal request, in good order, except in cases where we are permitted, and choose, to defer payment under the Investment Company Act of 1940 and applicable state insurance law. Currently, we may defer payment of amounts you withdraw from the Variable Account only for the following periods:

· when the New York Stock Exchange is closed (except weekends and holidays) or when the SEC determines trading on the New York Stock Exchange is restricted;

· when the SEC determines that an emergency exists and that it is not reasonably practical (i) to dispose of securities held in the Variable Account or (ii) to determine the value of the net assets of the Variable Account; or

· when an SEC order permits us to defer payment for the protection of Participants.

If, pursuant to SEC rules, the Money Market Fund suspends payment of redemption proceeds in connection with a liquidation of the Fund, we will delay payment of any transfer, partial withdrawal, surrender, loan, or death benefit from the Money Market Sub-Account until the Fund is liquidated. We also may defer payment of amounts you withdraw from the Fixed Account for up to six months from the date we receive your withdrawal request. We do not pay interest on the amount of any payments we defer.

Withdrawal Restrictions for Qualified Plans

If your Contract is a Qualified Contract, you should carefully check the terms of your retirement plan for limitations and restrictions on cash withdrawals.

Withdrawal Charge

We do not deduct any sales charge from your Purchase Payments when they are made. However, we may impose a withdrawal charge (known as a “contingent deferred sales charge”) on certain amounts you withdraw. We impose this charge primarily to defray some of our expenses related to the sale of the Contracts, such as commissions we pay to agents, the cost of sales literature, and other promotional costs and transaction expenses.

Free Withdrawal Amount

In each Account Year you may withdraw a portion of your Account Value, which we call the “free withdrawal amount,” before incurring the withdrawal charge.

The “free withdrawal amount” is equal to 10% of the amount of all Purchase Payments you have made minus all withdrawals that were not subject to withdrawal charges taken during the current Account Year. The amount of your withdrawal, if any, that exceeds the total of the free withdrawal amount is subject to the withdrawal charge. In no event will a withdrawal charge be based on an amount more than the total Purchase Payments not previously withdrawn. After the fourth Account Anniversary, any amount you withdraw is free of withdrawal charges.

The “free withdrawal amount” that you do not use in an Account Year is not cumulative. In other words, it will not be carried forward or available for use in future Account Years.

For an example of how we calculate the “free withdrawal amount,” see “APPENDIX B - WITHDRAWAL CHARGE CALCULATIONS.”

Order of Withdrawals

Each time you make a withdrawal, we consider the free withdrawal amount to be withdrawn first. If the amount you withdraw is in excess of your free withdrawal amount, then that excess may be subject to a withdrawal charge. We will withdraw the excess, in order, from your oldest remaining Purchase Payment to your most recent Purchase Payment. Each time you make a withdrawal, we will follow this procedure until all of your Purchase Payments have been withdrawn. Once all Purchase Payments are withdrawn, the balance withdrawn (which would include the 0.15% credit described under “Mortality and Expense Risk Charge”) is not subject to a withdrawal charge. After the fourth Account Anniversary, amounts withdrawn are not subject to withdrawal charges.

Calculation of Withdrawal Charge

We calculate the amount of the withdrawal charge by multiplying the amount you withdraw by a percentage. As set forth below, the percentage decreases according to the number of complete Account Years since your Issue Date. After your fourth Account Anniversary, any amount you withdraw is free of withdrawal charges. The withdrawal charge scale is as follows:

Number of Account Years Since Your Issue Date	Withdrawal Charge
0-1	8%
1-2	8%
2-3	7%
3-4	6%
4 or more	0%

The withdrawal charge will never be greater than 8% of an amount equal to your Account Value minus your “free withdrawal amount.” You may want to consider deferring a withdrawal because withdrawal charges decline the longer your Contract is in effect.

For a Group Contract, we may modify the withdrawal charges and limits, upon notice to the Owner of the Group Contract. However, any modification will apply only to Accounts established after the date of the modification.

For additional examples of how we calculate withdrawal charges, see “APPENDIX B - WITHDRAWAL CHARGE CALCULATIONS.”

Types of Withdrawals not Subject to Withdrawal Charge

Nursing Home Waiver

We will waive the withdrawal charge for a full withdrawal if:

· the nursing home waiver is approved in the state of issue;

· at least one year has passed since your Issue Date;

· you are confined to an eligible nursing home and have been confined there for at least the preceding 180 days, or any shorter period required by your state; and

· your confinement to an eligible nursing home began after your Issue Date.

An “eligible nursing home” means a licensed hospital or licensed skilled or intermediate care nursing facility at which medical treatment is available on a daily basis and daily medical records are kept for each patient. You must provide us with evidence of confinement in the form we determine. To find out where the nursing home waiver is approved, you can call us at (800) 752-7216.

Minimum Distributions

For each Qualified Contract, the free withdrawal amount in any Account Year will be the greater of the free withdrawal amount described above or any amounts required to be withdrawn to comply with the minimum distribution requirement of the Internal Revenue Code. This waiver of the withdrawal charge applies only to the portion of the required minimum distribution attributable to that Qualified Contract.

Other Withdrawals

We do not impose withdrawal charges:

· when you annuitize your Contract;

· on amounts we pay as a death benefit;

· on amounts you transfer among the Sub-Accounts; or

· on any amounts transferred as part of an optional program. (See “Other Programs.”)

CONTRACT CHARGES

Account Fee

During the Accumulation Phase of your Contract, we will deduct from your Account an annual Account Fee of $50 to help cover the administrative expenses we incur related to the issuance of Contracts and the maintenance of Accounts. We deduct the Account Fee on each Account Anniversary. We deduct the Account Fee pro-rata from each Sub-Account and each Fixed Account option, based on the allocation of your Account Value on your Account Anniversary.

We will not charge the Account Fee if your Account Value is $100,000 or more on your Account Anniversary.

If you make a full withdrawal of your Account, we will deduct the full amount of the Account Fee at the time of the withdrawal. In addition, on the Annuity Commencement Date we will deduct a pro-rata portion of the Account Fee to reflect the time elapsed between the last Account Anniversary and the day before the Annuity Commencement Date.

After the Annuity Commencement Date, we will deduct an annual Account Fee of $50 in the aggregate in equal amounts from each Variable Annuity payment we make during the year. We do not deduct any Account Fee from Fixed Annuity payments.

Administrative Expense Charge and Distribution Fee

We deduct an administrative expense charge from the assets of the Variable Account during both the Accumulation Phase and the Income Phase. During the Accumulation Phase, this charge is deducted at an annual effective rate equal to 0.15% of your average daily Variable Account Value. During the Income Phase, this charge is included as part of the total insurance charges deducted from Annuity Unit values. This charge is designed to reimburse us for expenses we incur in administering the Contracts, Participant Accounts and the Variable Account that are not covered by the annual Account Fee.

We also deduct a distribution fee from the assets of the Variable Account during both the Accumulation Phase and the Income Phase. During the Accumulation Phase, this fee is deducted at an annual effective rate equal to 0.20% of your average daily Variable Account Value. During the Income Phase, this fee is included as part of the total insurance charges deducted from Annuity Unit values. This charge is designed to reimburse us for the expenses associated with distributing and issuing the Contracts.

Depending on the amount of expenses that we incur, we expect that we may earn a profit from these charges. If so, we may use the profit for any proper corporate purpose, including paying any other expenses in connection with the Contracts or adding to our corporate surplus.

Mortality and Expense Risk Charge

During the Accumulation Phase, we deduct a mortality and expense risk charge from the assets of the Variable Account at an effective annual rate equal to 1.30% of your average daily Variable Account Value. If your Purchase Payments or Account Value exceeds $1 million on your Account Anniversary, an amount equal to 0.15% of your Account Value will be credited to your Account on that date and on every subsequent Account Anniversary during the Accumulation Phase. The 0.15% credit is not a Purchase Payment and therefore no withdrawal charges are directly associated with the credit. This credit will be allocated to the Sub-Accounts in proportion to your Account Value in those Sub-Accounts. It also immediately increases your Account Value and, as a result, other values may be affected. For example:

· An increase in your Account Value may also result in your Account Value becoming the greatest amount payable under the basic death benefit.

· If you are participating in an optional living benefit, the increase in your Account Value may cause a step-up of your Withdrawal Benefit Base.

This credit is paid out of our general account and is the result of cost savings that we expect on Contracts over $1 million.

We assume numerous mortality and expense risks under the Contracts. These risks include, but are not limited to: (1) the risk that arises from our contractual obligation to continue to make annuity payments to each Annuitant, regardless of how long the Annuitant lives and regardless of how long all Annuitants as a group live; (2) the risk that arises from our contractual obligation to pay a death benefit upon the death of the Participant prior to the Annuity Commencement Date, including in cases where the death benefit is greater than a Contract’s Account Value; (3) the risk that our cost of providing benefits according to the terms of the optional death benefit and any optional living benefits will exceed the amount of the charges we deduct for those optional benefits; and (4) the risk that the annual Account Fee, the administrative expense charge, and the distribution fee we assess under the Contract may be insufficient to cover the actual total administrative expenses we incur. If the amount of the charge is insufficient to cover our costs resulting from these and other mortality and expense risks, we will bear the loss. If, as we expect, the amount of the charge is more than sufficient to cover such costs, we will make a profit on the charge. We may use this profit for any proper corporate purpose, including the payment of marketing and distribution expenses for the Contract. In setting the rate of this charge, we not only consider our expected mortality and expense risks, but also our objective to earn a profit from the Contracts, after all of the costs, expenses, credits, and benefits we expect to pay in connection with the Contracts.

During the Income Phase, we will deduct total insurance charges at an annual rate of 1.65% of your average daily Annuity Unit values. We will not deduct the mortality and expense risk charge; nor will we deduct the charges for any optional living benefit or the optional death benefit. The 1.65% charge, which includes an administrative expense charge and a distribution fee, compensates us for the risks and expenses associated with providing annuity payments during the Income Phase.

Charges for Optional Benefits

You may only elect one of the optional living benefits. If you elect an optional living benefit, we will deduct a fee from your Account Value on the last valuation day of each Account Quarter during the Accumulation Phase. The fee will be a percentage of the Withdrawal Benefit Base during the Account Year. (The Withdrawal Benefit Base is initially equal to your initial Purchase Payment, and thereafter is subject to certain adjustments.) (See “Withdrawal Benefit Base.”)The percentage rates that we use to determine these fees may change over time, but will not exceed the maximum annual rates shown in the following chart. The chart also shows the current annual rates for each optional living benefit. (For more information about this fee, please see “FEES AND EXPENSES.”)

	Single-Life Coverage		Joint-Life Coverage
	Current Annual Rate	Maximum Annual Rate	Current Annual Rate	Maximum Annual Rate
Sun Income Riser III	1.10%	1.75%	1.30%	1.95%
Sun Income Maximizer	1.10%	1.75%	1.30%	1.95%
Sun Income Maximizer Plus	1.25%	1.75%	1.45%	1.95%

If you elect the MAV optional death benefit, during the Accumulation Phase, we will deduct a daily charge at an effective annual rate of 0.40% of your average daily Variable Account Value. For more information about this charge, please see “FEES AND EXPENSES.” For more information about the calculation of this charge, please see “Variable Accumulation Unit Value” under “Variable Account Value.”

Premium Taxes

Some states and local jurisdictions impose a premium tax on us that is equal to a specified percentage of the Purchase Payments you make. In many states there is no premium tax. We believe that the amounts of applicable premium taxes currently range from 0% to 3.5%. You should consult a qualified tax professional to find out if you could be subject to a premium tax and the amount of any tax.

In order to reimburse us for the premium tax we may pay on Purchase Payments, our policy is to deduct the amount of such taxes from the amount you apply to provide an annuity at the time of annuitization. However, we reserve the right to deduct the amount of any applicable tax from your Account at any time, including at the time you make a Purchase Payment or make a full or partial withdrawal. We do not make any profit on the deductions we make to reimburse premium taxes.

Fund Expenses

There are fees and expenses deducted from each Fund. These fees and expenses are described in the Fund prospectuses and related Statements of Additional Information.

Modification in the Case of Group Contracts

For Group Contracts, we may modify the annual Account Fee, the administrative expense charge and the mortality and expense risk charge upon notice to Participants. However, such modification will apply only with respect to Participant Accounts established after the effective date of the modification.

OPTIONAL LIVING BENEFITS

We offer a suite of optional living benefits that help protect your future income against market risk (that is, the risk that your investments may decline in value or underperform your expectations). Each living benefit provides lifetime income even if the Account Value declines to zero, provided that certain requirements are met. Note that, if your Account Value is reduced to zero prior to your Coverage Date (generally the Account Anniversary after you turn 59), then your Contract and your living benefit will end. This means that you could pay for a benefit that you never receive.

You may elect to participate in any one of the following optional living benefits (each, a “Living Benefit”):

· Sun Income Riser® III (“SIR III”)

· Sun Income MaximizerSM (“SIM”)

· Sun Income MaximizerSM Plus (“SIM Plus”)

You can only elect one Living Benefit and that election must be made no later than the Issue Date. You will pay a fee for the Living Benefit that you elect. You may terminate a Living Benefit at any time. However, once terminated, a Living Benefit cannot be reinstated.

These Living Benefits are available only if you are 85 or younger on the Open Date. For SIM or SIM Plus all Owners and Annuitants must be 21 or older on the Open Date. Important information about cost, restrictions and availability of each Living Benefit is described more fully below. You should consult with tax and financial professionals to determine which of the Living Benefits is appropriate for you.

Living Benefits are designed to give you income for the rest of your life, regardless of investment performance. To determine the amount of lifetime income for which you are eligible, we consider two factors: your Withdrawal Benefit Base and your Lifetime Withdrawal Percentage. First, we set your Withdrawal Benefit Base to equal your initial Purchase Payment. We then determine your Lifetime Withdrawal Percentage, based on your age when you start taking withdrawals after your Coverage Date. The amount you can withdraw each Account Year equals your Annual Withdrawal Amount, which is your Lifetime Withdrawal Percentage multiplied by your Withdrawal Benefit Base. A Living Benefit gives you the opportunity, through Bonuses, step-ups, the Plus Factor (SIM Plus only), and the 200% Benefit Enhancement (SIM and SIM Plus only), to increase your Withdrawal Benefit Base and, therefore, your Annual Withdrawal Amount. See “Key Terms” for a better understanding of the Living Benefits before reading about them in more detail later in this Prospectus.

Key Terms

It is important to understand several key terms that are fundamental to the Living Benefits. These key terms are described in greater detail elsewhere in this Prospectus.

Annual Withdrawal Amount: an annual dollar amount calculated as a percentage of the Withdrawal Benefit Base beginning on the Coverage Date.

Bonus: an amount equal to 7% (for SIR III), and 8% (for SIM and SIM Plus only), of the Bonus Base credited to the Withdrawal Benefit Base in Account Years during the Bonus Period when no withdrawals are taken.

Bonus Base: the amount on which bonuses are calculated. The Bonus Base is set equal to your initial Purchase Payment, increased by any subsequent Purchase Payments and any “step-ups” (described below), and reduced proportionately by any Early Withdrawals and any Excess Withdrawals, and the One-Time Access Withdrawal (for SIM and SIM Plus only).

Bonus Period: a ten-year period beginning on the Issue Date and ending on your tenth Account Anniversary. For SIR III, this Bonus Period will renew at step-up. For SIM and SIM Plus, the Bonus Period is not renewable, and will end early if any withdrawal (other than the One-Time Access Withdrawal) is taken.

Coverage Date: your Issue Date if you are at least age 59; otherwise, the first Account Anniversary after you attain age 59. On this date, you will be eligible to begin receiving your Annual Withdrawal Amount, provided your Account Value is greater than zero.

Early Withdrawal: a withdrawal taken before the Coverage Date.

Excess Withdrawal: a withdrawal taken after the Coverage Date which, alone or when combined with any other withdrawals taken in the same Account Year, exceeds the Annual Withdrawal Amount (or, if greater, any required minimum distribution amount as defined under the Internal Revenue Code).

Lifetime Withdrawal Percentage: a percentage of the Withdrawal Benefit Base used to calculate the amount you can withdraw each Account Year. The percentage is determined based on your attained age at the time of your first withdrawal after the Coverage Date, unless the withdrawal is the One-Time Access Withdrawal (for SIM and SIM Plus only). Under each Living Benefit, a different Lifetime Withdrawal Percentage applies to specified age ranges. In all cases, the oldest age range corresponds to the highest percentage.

One-Time Access Withdrawal (for SIM and SIM Plus only): a withdrawal that will reduce your Withdrawal Benefit Base, your Bonus Base, and the amount eligible for the 200% Benefit Enhancement, but will not activate or lock-in your Lifetime Withdrawal Percentage or end your Bonus Period.

Plus Factor (for SIM Plus only): an annual increase of 2.5% to the Withdrawal Benefit Base on each Account Anniversary after the Coverage Date  that is initiated if you have taken a withdrawal other than a One-Time Access Withdrawal.

200% Benefit Enhancement (for SIM and SIM Plus only): an amount equal to the sum of 200% of the total Purchase Payments made in the first Account Year and 100% of Purchase Payments made on or after the first Account Anniversary. This sum is reduced proportionately by the One-Time Access Withdrawal, if taken.

Withdrawal Benefit Base: the amount used to calculate (i) your Annual Withdrawal Amount and (ii) the cost of your Living Benefit described below.

When discussing the Living Benefits, the terms “you” and “your” refer to the oldest living Participant under single-life coverage or the younger spouse under joint-life coverage. In the case of a non-natural Participant, these terms refer to the oldest living Annuitant.

Description of the Living Benefits

Each Living Benefit provides you with (i) a guaranteed lifetime withdrawal benefit and (ii) an opportunity to increase the amount of that benefit each year, if you meet certain requirements. First, you must allocate 100% of your Account Value in designated investment choices that are designed to help manage our risk and to support the guarantees under the Living Benefit. Second, after your Coverage Date, you must limit your total withdrawals in each year that a Living Benefit is in effect to an amount no greater than the Annual Withdrawal Amount. Your Living Benefit is in effect beginning on the Issue Date and ending on the earlier of the Annuity Commencement Date or the termination of the Living Benefit. Of course, you can always withdraw an amount up to your Surrender Value pursuant to your rights under the Contract.

Each of the Living Benefits allows you to defer withdrawals during your early Account Years to increase your benefit in later years. SIM and SIM Plus also offer the ability to increase the Withdrawal Benefit Base (i) by making additional Purchase Payments after your first Account Anniversary and (ii) through the 200% Benefit Enhancement. In addition, SIM Plus offers the Plus Factor that provides an additional means to increase the Withdrawal Benefit Base. SIM and SIM Plus also permit a One-Time Access Withdrawal that can be taken before you begin taking your Annual Withdrawal Amount.

You may elect single-life coverage or, for a higher fee, joint-life coverage. Under the Living Benefits, once you make an election, you cannot switch between joint-life and single-life coverage regardless of any change in life events. Joint-life coverage:

(i) must be elected on the Issue Date and cannot be added later;

(ii) is available on an individually-owned Contract only if the spouse is the sole primary beneficiary under the Contract while the Living Benefit is in effect;

(iii) is available on a co-owned Contract only if the spouses are the only co-owners while the Living Benefit is in effect; and

(iv) is not available if you are unmarried on the Issue Date.

If you are in a same-sex marriage, see “Federal Defense of Marriage Act and Same-Sex Marriages” under “TAX PROVISIONS.”

With joint-life coverage, the age of the person who was the younger spouse on the Issue Date determines when you can begin to receive your Living Benefit. Your Coverage Date will be the Issue Date provided that person is age 59. If that person is younger than age 59, your Coverage Date will be the Account Anniversary after he or she attains (or would have attained) age 59. It does not matter whether the person who was the spouse is still alive or whether you are still married to that person. The Lifetime Withdrawal Percentage is based on the age the younger spouse is (or would have been) on the date of the first withdrawal under the Contract after the Coverage Date. The Lifetime Withdrawal Percentage may be reset to a higher percentage in the event of a step-up.

Please note: Whereas withdrawals of the Annual Withdrawal Amount under single-life coverage end when any Participant dies, withdrawals of the Annual Withdrawal Amount under joint-life coverage continue as long as either you or your spouse is alive. To take the Annual Withdrawal Amount after the death of a spouse under joint-life coverage, however, the surviving spouse must first elect to continue the Contract through spousal continuation. (See “Death of Participant - Joint-Life Coverage.”)

The following chart summarizes the important information about the terms and conditions of each Living Benefit that is presented in more detail below and in the related appendices.

Purchase Payments and Maximum Withdrawal Benefit Base
	SIR III	SIM	SIM Plus
Purchase Payments allowed after the first Account Anniversary	Not permitted	If permitted, are limited to $50,000 per Account Year without our approval	Same as SIM
Maximum Withdrawal Benefit Base	$5 million	$10 million	Same as SIM

Lifetime Income
	SIR III	SIM	SIM Plus
Lifetime Withdrawal Percentage	Age          Percentage 59 - 64             4%        65 - 79             5%         80+                6%	Same as SIR III	Age          Percentage 59 - 64             3%        65 - 79             4%         80+                5%
Plus Factor	N/A	N/A	The Withdrawal Benefit Base increases by 2.5% annually after you start taking your Annual Withdrawal Amount

Bonuses and Enhancements
	SIR III	SIM	SIM Plus
Bonus	7% of Bonus Base	8% of Bonus Base	Same as SIM
Bonus Period	10 years from Issue or last step-up	·10 years from Issue Date ·Does not renew at step-up ·Ends with any withdrawal (other than One-Time Access Withdrawal)	Same as SIM
200% Benefit Enhancement	N/A	Withdrawal Benefit Base increased to 200% of total 1st year Purchase Payments.	Same as SIM

Step-Up
	SIR III	SIM	SIM Plus
Annual Step-Up	·During the Bonus Period, the Withdrawal Benefit Base and Bonus Base will step-up to the Account Value, if the Account Value is greater than Withdrawal Benefit Base, increased by any Bonuses ·Future Bonuses based on stepped-up Bonus Base ·After the Bonus Period, the Withdrawal Benefit Base will step-up to the Account Value, if Account Value is greater than Withdrawal Benefit Base ·Step-through to a higher Lifetime Withdrawal Percentage occurs at step-up, if you have attained age for higher tier	Same as SIR III except: ·Bonus Period does not renew at step-up	Same as SIM, and also: ·After the Bonus Period when taking income, the Withdrawal Benefit Base will step-up to the Account Value, if Account Value is greater than Withdrawal Benefit Base increased by the Plus Factor

Impact of Withdrawals
	SIR III	SIM	SIM Plus
Annual Withdrawal Amounts	·Reduce Account Value dollar-for-dollar ·Do not reduce Withdrawal Benefit Base or Bonus Base	Same as SIR III except: ·Ends Bonus Period and 200% Benefit Enhancement	Same as SIM, and also: ·Plus Factor added on each Account Anniversary
Early Withdrawals	·Reduce Account Value dollar-for-dollar ·Reduce Bonus Base and Withdrawal Benefit Base each in the same proportion as the amount withdrawn reduces the Account Value ·Subject to withdrawal charge on amount of withdrawal in excess of free withdrawal amount ·May be subject to 10% federal tax penalty if taken before age 59½ ·Contract and Living Benefit cancelled if Account Value reduced to zero as a result of an Early Withdrawal	Same as SIR III, and also: ·Ends Bonus Period and 200% Benefit Enhancement	Same as SIM
Excess Withdrawals	·Reduce Account Value dollar-for-dollar ·Reduce Bonus Base and Withdrawal Benefit Base in the same proportion  as the Account Value is reduced by the amount of the withdrawal that exceeds the Annual Withdrawal Amount ·Subject to withdrawal charge on amount of withdrawal in excess of free withdrawal amount ·Contract and Living Benefit cancelled if Account Value reduced to zero as a result of an Excess Withdrawal	Same as SIR III, and also: ·Ends Bonus Period and 200% Benefit Enhancement	Same as SIM, and also: ·No Plus Factor permitted in any year during which an Excess Withdrawal is taken

One-Time Access Withdrawal   N/A ·Reduce Account Value dollar-for-dollar ·Reduces Withdrawal Benefit Base, Bonus Base, and the amount eligible for the 200% Benefit Enhancement each in the same proportion as the amount withdrawn reduces the Account Value ·If 1st withdrawal is an Early Withdrawal, then it will be treated as a One-Time Access Withdrawal ·If 1st withdrawal is taken after the Coverage Date, then you must decide whether to elect to use withdrawal as One-Time Access Withdrawal ·Will not lock in the Lifetime Withdrawal Percentage ·Not available if any systematic withdrawal program has been selected Same as SIM, and also: ·Does not trigger initiation of Plus Factor

Investment Options
	SIR III	SIM	SIM Plus
Designated Funds	100% must be allocated among specified Funds; or 100% to asset allocation models	100% must be allocated among specified Funds	Same as SIM
Portfolio Model (Build Your Own Portfolio)	Allocation Ranges: ·30%-50% Fixed Income Funds ·40%-60% Core Retirement Strategies Funds ·10%-30% Asset Allocation Funds ·0%-20% Core Equity Funds ·0%-20% Growth Equity Funds ·0%-10% Specialty Funds	Allocation Ranges: ·0%-60% Balanced Funds ·40%-100% Fixed Income Funds	Same as SIM

Important Considerations

Optional living benefits may not be appropriate for all investors. Before purchasing a Living Benefit, you should carefully consider the following:

1. The frequency and amount of withdrawals you anticipate.

· You should not purchase a Living Benefit if you plan to take Early or Excess Withdrawals, because such withdrawals may significantly reduce or eliminate the value of the guarantees provided by the Living Benefit.

· Because the guaranteed lifetime withdrawal benefit under each Living Benefit is accessed through regular withdrawals that do not exceed the Annual Withdrawal Amount, such an optional living benefit may not be appropriate for you if you do not foresee a need for frequent withdrawals and your primary objective is to take maximum advantage of the tax deferral aspect of the Contract.

· The timing and amount of your withdrawals may significantly decrease, and even terminate, your benefits under a Living Benefit. For example, if your Account Value is reduced to zero immediately following an Early Withdrawal, Excess Withdrawal, or the One-Time Access Withdrawal, then your Withdrawal Benefit Base will also be reduced to zero and your Contract will terminate without value and, thereafter, no Annual Withdrawal Amount will be paid.

· Early and Excess Withdrawals may decrease the Withdrawal Benefit Base, the Bonus Base, and the 200% Benefit Enhancement by more than the amount withdrawn.

· You should carefully consider when to begin making withdrawals, because you may not start at the most financially beneficial time for you. For example, by waiting to take withdrawals, you will have a greater opportunity to increase your Annual Withdrawal Amount, but you will have less time to take withdrawals.

· Withdrawals taken in connection with a Living Benefit also:

o reduce your Account Value;

o reduce your death benefit under the Contract, including any optional death benefit;

o may be subject to withdrawal charges; and

o may be subject to income taxes and federal tax penalties (e.g., if taken before age 59½).

2. Your investment objectives.

· Your entire Account Value must be allocated to a limited number of specified Funds.

· Any investment in or transfer to a Fund that is not a Designated Fund, or that falls outside the allocation ranges for the Build Your Own Portfolio model, will terminate your Living Benefit.

You should consult your financial advisor to assist you in determining which investment options may be best suited for your financial needs and risk tolerance.

3. The cost of the Living Benefit.

· You will begin paying the fee for the Living Benefit as of the Issue Date, even if you do not begin taking withdrawals for many years, or ever.

· The percentage rate used to calculate the fee may increase or decrease over time, but will not exceed the maximum annual rate shown in the fee table. (See “Costs of Living Benefits.”)

· We will not refund the fees that you have paid for the Living Benefit.

4. The impact of tax regulations.

· The tax rules for Qualified Contracts may limit the value of a Living Benefit. You should consult a qualified tax professional before electing a Living Benefit for a Qualified Policy.

· You may not elect a Living Benefit with an Inherited Non-Qualified or Beneficiary IRA Contract.

· You may only withdraw your annual required minimum distribution (“RMD”) allowed under the Internal Revenue Code once during any given Account Year.

· For SIM and SIM Plus, any withdrawals taken (including RMDs) will end the Bonus Period and the 200% Benefit Enhancement unless your withdrawal is your One-Time Access Withdrawal.

5. Whether joint-life coverage or single-life coverage is appropriate for you.

· With joint-life coverage, all benefits are based on the age of the younger spouse.

· If your spouse is significantly younger or older than you, you should carefully consider whether joint-life coverage is an appropriate choice in light of the possible long waiting period to begin annual withdrawals and to become eligible for the 200% Benefit Enhancement (for SIM or SIM Plus only), the longer period during which your Account Value could be reduced to zero prior to the Coverage Date, andthe higher fee for joint-life coverage.

· Single-life coverage may not be an appropriate choice on a co-owned Contract because the Living Benefit will end on the death of any Participant.

· Once you elect joint-life coverage, you or your spouse will always pay the higher joint-life fee.

· If your spouse (as of the Issue Date) is no longer your spouse or no longer the sole primary beneficiary under the Contract, then coverage will continue until the death of a Participant. If a Participant remarries, the new spouse is not covered under the joint-life feature.

· If you are in a same-sex marriage, see “Federal Defense of Marriage Act and Same-Sex Marriages” under “TAX PROVISIONS.”

6. The amount and frequency of Purchase Payments.

· After your Issue Date, we may limit the amount and timing of Purchase Payments that you can make.

· For SIR III you cannot make Purchase Payments after your first Account Anniversary. Consequently, SIR III may not be appropriate if you are actively invested in a contributory plan.

· For SIM and SIM Plus, you can make additional Purchase Payments at any time. However, any Purchase Payments after the first Account Anniversary will be limited to $50,000 during any Account Year, without our prior approval. We reserve the right not to accept any additional Purchase payements under SIM and SIM Plus.

· For SIM and SIM Plus, under the 200% Benefit Enhancement, any Purchase Payments made after the first Account Anniversary receive a lower benefit than Purchase Payments made during your first Account Year. (See “200% Benefit Enhancement.”)

· For SIM and SIM Plus, because the Bonus Period ends on your tenth Account Anniversary, any Purchase Payment made after the first Account Anniversary will only be eligible for a Bonus for any years remaining in the Bonus Period.

7. What happens if your Account Value is reduced to zero.

· If your Account Value is reduced to zero before your Coverage Date, the Account Anniversary following the 59th birthday of the older spouse under single-life coverage (the younger spouse under joint-life coverage), then no Annual Withdrawal Amount will be available, and your Contract, including your Living Benefit, will end. This is true, even if no withdrawals had been taken and the Account Value fell to zero as a result of poor investment performance, as well as the deduction of contract fees and charges.

· If your Account Value is reduced to zero after your Coverage Date, for any reason other than immediately following an Excess Withdrawal or the One-Time Access Withdrawal, then your Contract, including your Living Benefit, will end, except that, payments of the Annual Withdrawal Amount (calculated on the following Account Anniversary), increased by the Plus Factor if applicable, will continue to be paid to the Participant for the rest of his/her life. This is true even if your Account Value falls to zero through any combination of (i) poor investment performance, (ii) the deduction of Contract fees and charges, as well as (iii) taking your Annual Withdrawal Amount.

· If your Account Value is reduced to zero immediately following an Early Withdrawal, Excess Withdrawal, or the One-Time Access Withdrawal, then your Contract, including your Living Benefit, will end, and no future Annual Withdrawal Amounts will be available.

See “APPENDIX D - OPTIONAL LIVING BENEFIT EXAMPLES” for examples showing how the features of these Living Benefits work.

Withdrawal Benefit Base

We use the Withdrawal Benefit Base to calculate the Annual Withdrawal Amount. On the Issue Date, we set your Withdrawal Benefit Base equal to your initial Purchase Payment. Thereafter, your Withdrawal Benefit Base is:

· increased by any subsequent Purchase Payments;

· increased by any applicable Bonuses;

· increased by any step-ups;

· increased by the 200% Benefit Enhancement (SIM and SIM Plus only);

· increased by the Plus Factor (SIM Plus only);

· decreased by any Early and Excess Withdrawals; and

· decreased by the One-Time Access Withdrawal (SIM and SIM Plus only).

The maximum Withdrawal Benefit Base permitted upon any step-up is $5 million for SIR III. After including any step-ups, Bonuses, 200% Benefit Enhancement, and the Plus Factor, the maximum Withdrawal Benefit Base permitted is $10 million for SIM and SIM Plus. (For the purposes of determining these maximum limits, we reserve the right, in our sole discretion, to aggregate the benefit bases of all variable annuity contracts with living benefits that you own and that are issued by Sun Life Assurance Company of Canada (U.S.) or it affiliates.)

Please note:

· We use the Withdrawal Benefit Base to calculate the Annual Withdrawal Amount as well as the fee for your Living Benefit.

· Your Withdrawal Benefit Base is not a cash value, a Surrender Value, or a death benefit. It is not available for withdrawal, it is not a minimum return for any Sub-Account, and it is not a guarantee of Account Value.

Lifetime Withdrawal Percentage

We use the Lifetime Withdrawal Percentage to calculate the Annual Withdrawal Amount. The Lifetime Withdrawal Percentage is determined based on:

· your age at the time of the first withdrawal taken after the Coverage Date; or

· if joint-life coverage is selected, the age of the younger spouse at the time of the first withdrawal taken after the Coverage Date.

Age at time of first withdrawal	Lifetime Withdrawal Percentage - Single-Life and Joint-Life Coverage
	SIR III and SIM	SIM Plus
< 59	0%	0%
59-64	4%	3%
65-79	5%	4%
80+	6%	5%

Please note: Once established, the Lifetime Withdrawal Percentage will not increase even though your age increases, except in certain circumstances involving step-ups (described below).

Annual Withdrawal Amount

Beginning on the Coverage Date, you can withdraw up to the Annual Withdrawal Amount from your Contract in any Account Year without reducing your Withdrawal Benefit Base. The Annual Withdrawal Amount is determined by multiplying the Withdrawal Benefit Base by the Lifetime Withdrawal Percentage (shown in the chart above), based on your age at the time of first withdrawal (other than the One-Time Access Withdrawal) after the Coverage Date. Your Annual Withdrawal Amount is recalculated on your Account Anniversary based upon the increases or decreases to the Withdrawal Benefit Base that occurred during the previous Account Year.

A Purchase Payment will increase your Withdrawal Benefit Base and your Annual Withdrawal Amount will immediately be recalculated. All other increases to the Withdrawal Benefit Base will occur on your next Account Anniversary and result in a new Annual Withdrawal Amount at that time. If an Excess Withdrawal has been taken, your available Annual Withdrawal Amount will be zero for the remainder of that Account Year. On your next Account Anniversary, a new Annual Withdrawal Amount will be calculated, based on your then current Withdrawal Benefit Base. If your Account Value has been reduced to zero immediately following an Excess Withdrawal, your Contract, including your Living Benefit, will end.

Your Lifetime Withdrawal Percentage will increase if your age at the time of step-up coincides with a higher percentage (shown in the chart above).

For further information regarding the impacts of taking your Annual Withdrawal Amount please see “Tax Issues Under the Living Benefits” and “TAX PROVISIONS.”

Please note:

· If the Living Benefit is elected before your Coverage Date, then you will still be assessed a fee for the Living Benefit, even though the Annual Withdrawal Amount will be zero until the Coverage Date.

· Your Annual Withdrawal Amount is not cumulative. This means that if you do not take the entire Annual Withdrawal Amount during an Account Year, then you cannot take more than the Annual Withdrawal Amount in the next Account Year and maintain the Living Benefit’s guarantees.

Bonus and Bonus Base

If you make no withdrawals in an Account Year during the Bonus Period, then, on each Account Anniversary during the Bonus Period, we will increase your Withdrawal Benefit Base by an amount equal to 7% of the Bonus Base (under SIR III), and 8% of the Bonus Base (under SIM and SIM Plus). The Bonus Period is a ten-year period beginning on the Issue Date and ending on your tenth Account Anniversary. If you step-up SIR III during the Bonus Period, the Bonus Period is renewed for ten years from the date of the step-up. For SIM and SIM Plus, the Bonus Period is not renewable, and will end early if any withdrawal is taken (other than the One-Time Access Withdrawal).

We use the Bonus Base to calculate the Bonus. We set the initial Bonus Base to equal the initial Purchase Payment at issue. The Bonus Base will be increased by any subsequent Purchase Payments and any step-ups. The Bonus Base will be decreased by any Early Withdrawals, Excess Withdrawals, or the One-Time Access Withdrawal.

Please note:

· Under SIR III:

o A Bonus will not be applied during your Bonus Period in any Account Year in which you take a withdrawal.

o Early and Excess Withdrawals will reduce the Bonus Base. (See “Impact of Withdrawals.”)

· Under SIM and SIM Plus:

o Any withdrawal (other than the One-Time Access Withdrawal) will end your Bonus Period and eliminate your Bonus Base.

o A One-Time Access Withdrawal will reduce the Bonus Base. (See “Impact of Withdrawals.”)

200% Benefit Enhancement (SIM and SIM Plus only)

If no withdrawals, other than the One-Time Access Withdrawal, are taken from the Contract, then your Withdrawal Benefit Base will increase to an amount equal to the amount of the 200% Benefit Enhancement on the latest of:

· the 10th Account Anniversary,

· the Account Anniversary following your 70th birthday, or

· the Account Anniversary following the 70th birthday of the younger spouse, if joint-life is elected.

On this date, we will set your Withdrawal Benefit Base to equal the greater of:

· the current Withdrawal Benefit Base, or

· the 200% Benefit Enhancement.

The 200% Benefit Enhancement equals the sum of (1), (2), and (3), below:

(1)             200% of the initial Purchase Payment,

(2)             200% of any additional Purchase Payments made before and including the first Account Anniversary, and

(3)             100% of additional Purchase Payments made after the first Account Anniversary.

If the One-Time Access Withdrawal is taken, the amount of the 200% Benefit Enhancement will be reduced in the same proportion as the amount withdrawn reduces the Account Value. The One-Time Access Withdrawal will not eliminate the 200% Benefit Enhancement.

Please note:

· If any withdrawal, other than the One-Time Access Withdrawal, is taken from the Contract, then you will not be eligible for the 200% Benefit Enhancement or any future Bonuses.

· This benefit may increase your Withdrawal Benefit Base when investment performance is neutral or negative.

· If, as a result of positive investment performance, your Withdrawal Benefit Base is greater than your 200% Benefit Enhancement, then you would not need or receive the 200% Benefit Enhancement because your actual performance is greater than the guarantee provided by the 200% Benefit Enhancement.

· Purchase Payments made after the first Account Anniversary will not provide any additional benefit to the 200% Benefit Enhancement. This is because the additional amount added to the 200% Benefit Enhancement is equal to 100% of Purchase Payments made after the first Account Anniversary. When adding Purchase Payments after the first Account Year, the same increase is made to the Withdrawal Benefit Base and, consequently, the additional Purchase Payment will not provide any greater benefit under the 200% Benefit Enhancement.

· The maximum Withdrawal Benefit Base permitted for SIM and SIM Plus is $10 million.

· If you are participating in SIR III, the 200% Benefit Enhancement is not available to you.

Step-Up

The step-up feature available with the Living Benefit gives you an opportunity to grow your Withdrawal Benefit Base.

· On each Account Anniversary during the Bonus Period and before your Annuity Commensement Date;

o If your Account Value exceeds your current Withdrawal Benefit Base, adjusted for any applicable Bonus, we will automatically increase your Withdrawal Benefit Base and Bonus Base to an amount equal to your Account Value.

o If your Account Value is less than your current Withdrawal Benefit Base, adjusted for any applicable Bonus, you will receive the Bonus, instead of a step-up.

· On each Account Anniversary after the Bonus Period and before your Annuity Commencement Date, if your Account Value exceeds your current Withdrawal Benefit Base, increased by the Plus Factor, if any, we will automatically increase your Withdrawal Benefit Base to an amount equal to your Account Value.

Please note: The Lifetime Withdrawal Percentage will increase if you have crossed into another age tier at the time of the step-up (we refer to this as “step-through”). For example, if you are age 79 (in the 65-79 age tier) when you make your first withdrawal, and you are age 80 at the time of the automatic step-up of your Withdrawal Benefit Base, then your Lifetime Withdrawal Percentage will increase to the level for the 80+ age tier. (See the chart under “Lifetime Withdrawal Percentage.”)

Plus Factor (SIM Plus only)

After the Coverage Date and if you have taken a withdrawal (other than a One-Time Access Withdrawal), the Plus Factor will be initiated. On each Account Anniversary thereafter, we will automatically increase your Withdrawal Benefit Base by 2.5%, unless a step-up would result in a greater Withdrawal Benefit Base.

Please note:

· A 2.5% Plus Factor increase could prevent a step-up to a higher Lifetime Withdrwal Percentage (referred to as a step-through).

· If you take an Excess Withdrawal in any Account Year, you will forfeit the Plus Factor for that Account Year.

· If your Account Value is reduced to zero immediately following an Excess Withdrawal, then no Annual Withdrawal Amount will be available. The Contract, including your Living Benefit and the Plus Factor, will end.

· If your Account Value is reduced to zero for any reason, other than immediately following an Excess Withdrawal (or One-Time Access Withdrawal), then the Contract, including your Living Benefit, will end, except that payments of the Annual Withdrawal Amount, increased by the Plus Factor if applicable, will continue to be paid to the Participant for the rest of his/her life.

· If you are participating in SIR III or SIM, the Plus Factor is not available to you.

Impact of Withdrawals

Starting on your Coverage Date and continuing to your Annuity Commencement Date, you may take partial withdrawals up to your Annual Withdrawal Amount each Account Year without reducing your Withdrawal Benefit Base or Bonus Base. These withdrawals will, however, reduce your Account Value by the amount of the withdrawal (and, consequently, the amount of your death benefit proportionately). In addition, these withdrawals are subject to withdrawal charges to the extent that they exceed the greatest of: (i) the free withdrawal amount permitted under your Contract (see “Free Withdrawal Amount”); (ii) your “yearly RMD amount” (subject to conditions discussed in “Tax Issues Under Living Benefits,”); and (iii) your Annual Withdrawal Amount.

Early Withdrawals

Withdrawals taken before your Coverage Date, referred to as “Early Withdrawals,” will reduce your Withdrawal Benefit Base and any Bonus Base according to the following formulas.

Your New Withdrawal Benefit Base	=	WBB x	(	AV - WD	)
				AV

Your New Bonus Base	=	BB x	(	AV - WD	)
				AV

Where:
	WBB	=	your Withdrawal Benefit Base immediately before the Early Withdrawal.
	BB	=	your Bonus Base immediately before the Early Withdrawal.
	WD	=	the amount of the Early Withdrawal.
	AV	=	your Account Value immediately before the Early Withdrawal.

Under SIM and SIM Plus, your first withdrawal, if taken before the Coverage Date, will be deemed the One-Time Access Withdrawal. (See “One-Time Access Withdrawal.”) For Early Withdrawals, the Withdrawal Benefit Base and the Bonus Base are both reduced proportionally by the full amount of the withdrawal.

Excess Withdrawals

After the Coverage Date, any partial withdrawal that, when taken alone or in combination with all other withdrawals taken in the same Account Year, exceeds the Annual Withdrawal Amount is referred to as an “Excess Withdrawal.” An Excess Withdrawal will reduce your Withdrawal Benefit Base and any Bonus Base according to the following formulas.

Your New Withdrawal Benefit Base	=	WBB x	(	AV - WD	)
				AV - AWA

Your New Bonus Base	=	BB x	(	AV - WD	)
				AV - AWA

Where:
	WBB	=	your Withdrawal Benefit Base immediately before the Excess Withdrawal.
	BB	=	your Bonus Base immediately before the Excess Withdrawal.
	WD	=	the amount of the Excess Withdrawal.
	AV	=	your Account Value immediately before the Excess Withdrawal.
	AWA	=	your Annual Withdrawal Amount minus any prior partial withdrawals taken during the current Account Year.

If you take an Excess Withdrawal, the Withdrawal Benefit Base and the Bonus Base are both reduced proportionally by the amount of the withdrawal in excess of the Annual Withdrawal Amount.

One-Time Access Withdrawal (SIM and SIM Plus only)

You may take your first withdrawal as the One-Time Access Withdrawal. Before the Coverage Date, your first withdrawal will automatically be your One-Time Access Withdrawal. After your Coverage Date, when you make your first withdrawal, you have the option of electing to use the One-Time Access Withdrawal.

The One-Time Access Withdrawal differs from other withdrawals in that:

· It will not end the 200% Benefit Enhancement, but will reduce the eligible amount based on the following formula:.

Your new 200% Benefit Enhancement	=	BE x	(	AV - WD	)
				AV

Where:
	BE	=	the 200% Benefit Enhancement immediately before the One-Time Access Withdrawal.
	WD	=	the total amount of the One-Time Access Withdrawal.
	AV	=	the Account Value immediately before the One-Time Access Withdrawal.

· It will reduce the Withdrawal Benefit Base and Bonus Base in the same manner as an Early Withdrawal. (See “Early Withdrawals.”)

· If taken during the Bonus Period, then it will cause the Bonus for that Account Year to be forfeited, but will not end the Bonus Period.

· If taken after the Coverage Date, then it will not lock in the Lifetime Withdrawal Percentage used to calculate the Annual Withdrawal Amount or initiate the Plus Factor for SIM Plus.

If you take a withdrawal after the Coverage Date and do not elect to use the One-Time Access Withdrawal then:

· we will lock in the Lifetime Withdrawal Percentage;

· you may begin to take your Annual Withdrawal Amount;

· you will be eligible to receive any applicable Plus Factors under SIM Plus;

· you will forfeit the One-Time Access Withdrawal benefit;

· the Bonus Period ends; and

· you will forfeit the 200% Benefit Enhancement.

If you are participating in SIR III, then the One-Time Access Withdrawal is not available to you.

Please Note: In regards to Early and Excess Withdrawals and the One-Time Access Withdrawal:

· The above calculations show proportionate reductions. Generally speaking:

· If your Account Value is greater than your Withdrawal Benefit Base, the reduction to your Withdrawal Benefit Base will be less than the amount withdrawn.

· If your Account Value is less than your Withdrawal Benefit Base, the reduction to your Withdrawal Benefit Base will be more than the amount withdrawn.

· Subsequent withdrawals taken after the One-Time Access Withdrawal will be treated as described in “Annual Withdrawal Amount,” “Early Withdrawals,” and “Excess Withdrawals.”

· A withdrawal that does not exceed the Annual Withdrawal Amount may nevertheless affect the Bonus Period and step-ups. If you elect SIM or SIM Plus, then any withdrawal, except the One-Time Access Withdrawal, will result in the forfeiture of the 200% Benefit Enhancement and end the Bonus Period. Under SIM Plus, you will forfeit the Plus Factor for that Account Year if you take an Excess Withdrawal.

· In addition, these withdrawals are subject to withdrawal charges if they occur before the fourth Account Anniversary and to the extent they exceed the greatest of:

· the free withdrawal amount permitted under your Contract;

· your yearly RMD amount for your Contract; and

· your Annual Withdrawal Amount.

· Early Withdrawals, Excess Withdrawals, and the One-Time Access Withdrawal could severely reduce, and even terminate, your Living Benefit, and could reduce your Account Value to zero, thereby terminating your Contract without value.

· In addition to reducing your Living Benefit, any withdrawal taken before you reach age 59½ could have adverse state and federal tax liabilities. You should consult a qualified tax professional for more information.

· We do not monitor for Excess Withdrawals. Accordingly, if you take regular or scheduled withdrawals, you should carefully monitor your withdrawals to be certain they are not in excess of your Annual Withdrawal Amount.

· The One-Time Access Withdrawal is only available at the time of your first partial withdrawal request and cannot be used in connection with any systematic withdrawal program available under your Contract.

· The One-Time Access Withdrawal is not available for a withdrawal made as part of an exchange under Section 1035 of the Internal Revenue Code (“Code”) or as part of a transfer or rollover to an eligible retirement plan offered by another insurance company.

Costs of Living Benefits

If you select a Living Benefit, then we will deduct a fee from your Account Value on the last valuation day of each Account Quarter. The fee is a percentage of your Withdrawal Benefit Base and differs for single-life and joint-life coverage. The percentage rate may increase or decrease over time, but will not exceed the Maximum Annual Rates shown in the table below. If we change the rate, then you may elect to cancel your Living Benefit and no longer pay the fee.

	Single-Life				Joint-Life
	Current Quarterly Rate	Current Annual Rate	Maximum Quarterly Rate	Maximum Annual Rate	Current Quarterly Rate	Current Annual Rate	Maximum Quarterly Rate	Maximum Annual Rate
SIR III	0.2750%	1.10%	0.4375%	1.75%	0.3250%	1.30%	0.4875%	1.95%
SIM	0.2750%	1.10%	0.4375%	1.75%	0.3250%	1.30%	0.4875%	1.95%
SIM Plus	0.3125%	1.25%	0.4375%	1.75%	0.3625%	1.45%	0.4875%	1.95%

Please note: Because the fee for the benefit is a percentage of your Withdrawal Benefit Base:

· Your total annual fee is the sum of four quarterly fees and could be a much higher percentage of your Account Value than of your Withdrawal Benefit Base. The maximum annual fee is the maximum annual rate multiplied by the highest quarterly Withdrawal Benefit Base during that Account Year.

· Your fee will increase as your Withdrawal Benefit Base increases (although the rate used to calculate the fee may remain the same).

Cancellation of Living Benefits

Should you decide that the Living Benefit is no longer appropriate for you, you may cancel it at any time.

We will terminate a Living Benefit upon the earliest of the following:

· receipt, in good order, at our mailing address, of your written request to cancel the Living Benefit;

· change of ownership of a Contract, unless you have received our prior approval to change the ownership;

· death of a Participant (with single-life coverage);

· death of a Participant with joint-life coverage, if the spouses on the Issue Date are no longer spouses or no longer sole primary beneficiaries;

· annuitization;

· termination/full surrender of the Contract;

· the Withdrawal Benefit Base is reduced to zero as a result of Early or Excess Withdrawals, or the One-Time Access Withdrawal (for SIM and SIM Plus only);

· if the Account Value is reduced to zero, prior to the Coverage Date, for any reason;

· any investment in or transfer to a Fund that is not a Designated Fund; or

· any investment in or transfer that is outside the allocation ranges for the Build Your Own Portfolio model.

Upon termination, all benefits and fees associated with a Living Benefit will cease. Once terminated, your Living Benefit cannot be reinstated.

Death of Participant - Single-Life Coverage

If you selected single-life coverage, then the Living Benefit ends on the death of any Participant and the Beneficiary may elect to exercise any of the available options under the Death Benefit provisions of the Contract. If your surviving spouse is the sole primary Beneficiary, he or she may elect to continue the Contract, but the Living Benefit will terminate and no optional living benefit will be available to your surviving spouse.

Please note:

· Single-life coverage may be inappropriate on a co-owned Contract because the Living Benefit will end on the death of any Participant.

· Beneficiaries who are not spouses cannot continue the Contract (see “Spousal Continuance” under “DEATH BENEFIT”) or any Living Benefit under the Contract. Co-owners who are not spouses should, therefore, discuss with their financial advisor whether a Living Benefit is appropriate for them. Also, if you are in a same-sex marriage, see “Federal Defense of Marriage Act and Same-Sex Marriages” under “TAX PROVISIONS.”

Death of Participant - Joint-Life Coverage

If the surviving spouse on the Death Benefit Date was not the spouse of a Participant on the original Contract’s Issue Date, then this section does not apply, even if joint-life coverage was elected. In such case, if a Participant dies while participating in a Living Benefit, the provisions of the section titled “Death of Participant - Single-Life Coverage” will apply.

If you purchased joint-life coverage and one of the Participants dies, then the surviving spouse, as the sole primary beneficiary, can elect to continue the Contract and all currently-held benefits will continue to the surviving spouse. In such case, the Account Value will be equal to the Death Benefit. If you are in a same-sex marriage, see “Federal Defense of Marriage Act and Same-Sex Marriages” under “TAX PROVISIONS.”

Alternatively, the surviving spouse may elect any available option under the death benefit provisions of the Contract. In such case, the Contract, including any applicable Living Benefit, will end.

Annuitization Under the Living Benefits

If your Account Value is greater than zero on your Maximum Annuity Commencement Date, then you must elect to:

· surrender your Contract and receive your Surrender Value,

· annuitize your Account Value under one of the then currently available Annuity Options, or

· annuitize your remaining Account Value as a single-life annuity (or a joint-life annuity, if joint-life coverage was elected on the Issue Date and is still eligible) with an annualized annuity payment of not less than your then current Annual Withdrawal Amount increased by the Plus Factor, if applicable. If you make no election, we will default your choice to this option.

If you elect to annuitize prior to your Maximum Annuity Commencement Date, then your Contract and any Living Benefit will end.

Tax Issues Under the Living Benefits

Certain state and federal tax provisions may be important to you in connection with a living benefit. If your Contract is a Non-Qualified Contract, it is possible that the election of optional living benefits, such as the Living Benefits, might increase the taxable portion of any withdrawal you make from the Contract. It is not clear whether withdrawals after the Coverage Date while the Contract Value is greater than zero will be taxed as withdrawals or as annuity payments. This is significant for Non-Qualified Contracts because withdrawals are taxed less favorably than are annuity payments. In view of this uncertainty, we intend to adopt a conservative approach and treat such payments as withdrawals for tax purposes. We intend to treat payments pursuant to a Living Benefit after the Contract Value becomes zero as annuity payments for tax purposes.

You may not elect a Living Benefit with an inherited Non-Qualified Contract or beneficiary IRA Contract.

If your Contract is a Qualified Contract, then the retirement plan governing that Qualified Contract may be subject to certain required minimum distribution (RMD) provisions imposed by the Internal Revenue Code (the “Code”) and Internal Revenue Service (“IRS”) regulations (collectively, the “Federal Tax Laws”). These RMD provisions require that an amount be distributed from the retirement plan each year, beginning generally in the calendar year in which you attain age 70½. Your failure to withdraw your yearly RMD amount from your retirement plan could result in adverse tax treatment. Because for certain retirement plans we do not know what assets are held by the plan, we have assumed for all plans that the Qualified Contract (i.e., your Contract) is the only asset, and we determine a yearly RMD amount taking into account only your Contract (“Yearly RMD Amount”).

When you elect to participate in a Living Benefit, we will inform you that you may withdraw amounts up to your Yearly RMD Amount each year without reducing your Withdrawal Benefit Base. To assist you in complying with the RMD requirements, in January of each year, we will notify you of your calculated Yearly RMD Amount and inform you that you may withdraw amounts up to your Yearly RMD Amount each Account Year without reducing your Withdrawal Benefit Base. Please note: For SIM and SIM Plus, if you withdraw your yearly RMD amount, that withdrawal will end the Bonus Period and the 200% Benefit Enhancement.

To the extent that the Yearly RMD Amount attributable to your Contract exceeds the Annual Withdrawal Amount permitted each year under your Living Benefit, we currently are waiving withdrawal provisions as follows. If you withdraw all or a portion of your Qualified Contract’s Yearly RMD Amount from the Contract while participating in a Living Benefit, then we will reduce your Account Value dollar-for-dollar by the amount of the withdrawal. In addition, for that year only, your Annual Withdrawal Amount under the Living Benefit will be reduced, dollar-for-dollar, by the amount of the withdrawal. We will not, however, penalize you if the current Federal Tax Laws require you to withdraw from your Contract an amount greater than your Annual Withdrawal Amount. In other words, we will not reduce your Annual Withdrawal Amount for future years (or your Withdrawal Benefit Base or Bonus Base), if a Yearly RMD Amount exceeds your Annual Withdrawal Amount, provided that:

● you withdraw your (Qualified) Contract’s first Yearly RMD Amount in the calendar year you attain age 70½, rather than postponing the withdrawal of that amount until the first quarter of the next calendar year, and

● you do not make any withdrawal from your (Qualified) Contract that would result in your receiving, in any Account Year, more than one calendar year’s Yearly RMD Amount.

Currently, any withdrawal in excess of the Annual Withdrawal Amount that is taken to satisfy the Yearly RMD Amounts will not be treated as an Excess Withdrawal. However, if there is any material change to the current Code or IRS Rules governing the timing or determination of required minimum distribution amounts, then the Company reserves the right to treat any withdrawal greater than the Annual Withdrawal Amount as an Excess Withdrawal which may significantly reduce the Withdrawal Benefit Base.

For a further discussion of some of these provisions, please refer to “Impact of Optional Death Benefit and Optional Living Benefits” under “TAX PROVISIONS.”

DESIGNATED FUNDS

To participate in a Living Benefit, all of your Account Value must be invested only in Designated Funds at all times during the term of your optional living benefit.

For Contracts participating in SIM or SIM Plus, the only Funds, dollar-cost averaging programs, and asset allocation models that currently qualify as Designated Funds are as follows:

Asset Allocation Models	Funds
Build Your Own Portfolio	MFS® Global Tactical Allocation Portfolio, Service Class
	SCSM Ibbotson Conservative Fund, Service Class
Dollar-Cost Averaging Program Options
6-Month DCA Period
12-Month DCA Period

For Contracts participating in SIR III, the only Funds, dollar-cost averaging program options, and asset allocation models that currently qualify as Designated Funds are as follows:

Asset Allocation Models	Funds
Build Your Own Portfolio	AllianceBernstein Dynamic Asset Allocation Portfolio, Class B
Blended Model	MFS® Global Tactical Allocation Portfolio, Service Class
	PIMCO All Asset Portfolio, Advisor Class
	PIMCO Global Multi-Asset Portfolio, Advisor Class
Dollar-Cost Averaging Program Options	Putnam VT Absolute Return 500 Fund, Class IB
6-Month DCA Period	SCSM Ibbotson Balanced Fund, Service Class
12-Month DCA Period	SCSM Ibbotson Conservative Fund, Service Class

One of the asset allocation models that qualifies as a Designated Fund is the portfolio model that applies to our “build your own portfolio” program. That portfolio model and the “build your own portfolio” program are described in “BUILD YOUR OWN PORTFOLIO” and in “APPENDIX E - BUILD YOUR OWN PORTFOLIO.”

If you elected to participate in Sun Income Riser III (“SIR III”), Sun Income Maximizer (“SIM”), or Sun Income Maximizer Plus (“SIM Plus”) and are invested in more than one Designated Fund, we will automatically transfer assets among your Designated Funds to maintain the percentage allocation you selected. We will make these transfers on a quarterly basis.

We reserve the right to declare that a particular Fund no longer qualifies as a Designated Fund. Written notice will be provided to Contract Owners whenever a fund is no longer considered to be a Designated Fund. If you are invested in a Designated Fund at the time we declare the Fund to no longer be a Designated Fund, your Account Value can remain in that Fund without canceling your participation in a Living Benefit. However, any transfers or future Purchase Payments may only be allocated to a Fund that is declared by us to be a Designated Fund at the time of the transaction. If you are invested in a Fund that has been declared by us to no longer be a Designated Fund, you must first transfer your Account Value from that Fund into one or more of the current Designated Fund(s) if you want to make subsequent Purchase Payments or any additional transfers. (Note that this restriction does not apply to automatic portfolio rebalancing. Likewise, if you are participating in a DCA program and one of the funds receiving transfers under the DCA program is declared no longer to be a Designated Fund, then your Account Value can remain invested in that Fund until the end of your DCA Period. However, before you make any subsequent Purchase Payments, you must first transfer all your Account Value from that Fund into one or more of the current Designated Funds and provide us with new allocation instructions for your DCA program.) We also reserve the right to close Funds only to new Contracts. We will, however, revise the prospectus to give notice to prospective investors of the closing of any Fund. If a Designated Fund is closed only to new Contracts, any current Account Value may remain in that Fund and future transfers and Purchase Payments to that Fund are permissible, as long as the Fund is still declared by us to be a Designated Fund.

Note that, on SIR III, SIM, and SIM Plus, we have reserved the right to allow step-ups only if your Account Value is invested in a Fund that has been declared by us to be a Designated Fund. In such case, if you are invested in a Fund that has been declared by us to no longer be a Designated Fund, you will have to transfer into a current Designated Fund before a step-up can occur. If you decide not to transfer into a current Designated Fund and forgo step-up, then your Living Benefit will continue with all of the benefits except for step-up.

BUILD YOUR OWN PORTFOLIO

Among the choices of Designated Funds is a selection of funds (“portfolio model”) that you design yourself using certain broad guidelines that we provide. To “build your own portfolio,” you pick funds from the asset classes available at that time. Altogether you may not choose more than 18 funds for your portfolio model. The amount you may invest in each asset class is determined by a percentage range that we provide for each asset class. The sum of the percentages you invest in the asset classes altogether must total 100%. A chart showing the Funds available in each asset class and the percentage range assigned to each asset class is included in Appendix E.

You may transfer funds within the asset classes as long as your allocations remain within the percentage ranges we have established, and you adhere to the transfer provisions of your Contract. (See “Transfer Privilege,” “Short-Term Trading,” and “Funds’ Shareholder Trading Policies.”) Withdrawals out of your portfolio model will be taken pro-rata from each of your selected Funds. Any additional Purchase Payments will be allocated proportionally to your current Fund selection. At any time you can change your Fund selection by providing new allocation instructions. Your new instructions will change your existing allocations accordingly. Your portfolio will be rebalanced quarterly to maintain your percentage allocations in line with the performance of the Funds over the prior quarter.

Under the terms of the Living Benefits, however, there are certain limits on the times when you can make additional Purchase Payments. For SIR III, you cannot make Purchase Payments after your first Account Anniversary. For SIM and SIM Plus, you may make additional Purchase Payments at anytime. However, Purchase Payments made after the first Account Anniversary, will be limited to $50,000 during any Account Year, without our prior approval. We reserve the right not to accept additional Purchase Payments under SIM and SIM Plus.

If at any time, a fund is closed to new business, no new payments or transfers into the fund will be permitted. However, portfolio rebalancing of the fund will continue. To make a payment into your portfolio model after a fund within the model has been closed, you must redesign your portfolio model without the closed fund. Your entire Account Value will then be reallocated to your new portfolio model. Likewise, if you are participating in a DCA program and one of the Funds in this portfolio model receiving transfers under the DCA program is declared to no longer be part of the portfolio model, then the program will run through to completion. However, before you make any subsequent Purchase Payments, you must first either (a) reallocate your total Account Value among funds that comply with the current Build Your Own Portfolio categories or (b) transfer your total Account Value to Designated Funds other than the Build Your Own Portfolio model. You must also provide us with new allocation instructions for your DCA program.

DEATH BENEFIT

If the Covered Person dies during the Accumulation Phase, we may pay a death benefit to the designated Beneficiary(ies), using the payment method elected (a single cash payment or one of our Annuity Options). If the Beneficiary is not living on the date of death of the Covered Person, we will pay the death benefit to the surviving Participant, if any, or, if there is no Participant, in one sum to your estate. We do not pay a death benefit if the Covered Person dies during the Income Phase. However, the Beneficiary will receive any annuity payments provided under an Annuity Option that is in effect. If the Contract names more than one Covered Person, we will pay the death benefit upon the first death of such Covered Persons.

The death benefit proceeds will remain invested in the Sub-Accounts in accordance with the allocations made by the Owner until the Beneficiary has provided us with Due Proof of Death in good order. Once we have received Due Proof of Death, then investments in the Variable Account may be reallocated in accordance with the Beneficiary’s instructions.

Amount of Death Benefit

To calculate the amount of the death benefit, we use a “Death Benefit Date.” The Death Benefit Date is the date we receive Due Proof of Death of the Covered Person in an acceptable form, if you have elected a death benefit payment method before the death of the Covered Person and it remains in effect. Otherwise, the Death Benefit Date is the later of the date we receive Due Proof of Death or the date we receive the Beneficiary’s election of either payment method or, if the Beneficiary is your spouse, Contract continuation. If we do not receive the Beneficiary’s election within 60 days after we receive Due Proof of Death, we reserve the right to provide a lump sum to your Beneficiary.

The amount of the death benefit is determined as of the Death Benefit Date.

The Basic Death Benefit

The basic death benefit will be the greater of the following amounts:

(1) your Account Value on the Death Benefit Date; and

(2) your total Adjusted Purchase Payments. (See “Calculating the Death Benefit.”)

Adjusted Purchase Payments initially equal the initial Purchase Payment.

Each time there is an additional Purchase Payment then:

Your new Adjusted Purchase Payments  = APP + PP

Where:

APP	=	Your Adjusted Purchase Payments immediately prior to the additional Purchase Payment.
PP	=	The amount of the additional Purchase Payment.

Each time there is a withdrawal then:

Your new Adjusted Purchase Payments	=	APP x	(AV - WD)
			AV

Where:

APP	=	Your Adjusted Purchase Payments immediately prior to the withdrawal.
WD	=	The amount of the withdrawal.
AV	=	Your Account Value immediately prior to the withdrawal.

When the Account Value is less than the Adjusted Purchase Payments, a withdrawal may cause the basic death benefit to decrease by more than the amount of the withdrawal.

Optional Death Benefit

You may enhance the “basic death benefit” by electing the optional death benefit known as the Maximum Anniversary Account Value (“MAV”). You must make your election on or before the Issue Date. You will pay a charge for the optional death benefit. (For a description of the charge, see “Charges for Optional Benefits.”) The optional death benefit is available only if you are younger than age 75 on the Open Date. The optional death benefit election may not be changed after the Contract’s Issue Date. The optional death benefit will be adjusted for all partial withdrawals as described in this Prospectus under the heading “Calculating the Death Benefit.”

If your Contract is a Qualified Contract, required minimum distributions under the Internal Revenue Code may affect the value of this optional death benefit to you. Please refer to “Impact of Optional Death Benefit and Optional Living Benefits” under “TAX PROVISIONS” for more information regarding tax issues that you should consider before electing this optional benefit.

Under MAV, the death benefit will be the greater of:

· the amount payable under the basic death benefit above, or

· your highest Account Value on any Account Anniversary before the Covered Person’s 81st birthday, adjusted for any subsequent Purchase Payments and partial withdrawals made between that Account Anniversary and the Death Benefit Date.

In determining the highest Account Value, on the second and each subsequent Account Anniversary, the current Account Value is compared to the previous highest Account Value, adjusted for any Purchase Payments and partial withdrawals made during the Account Year ending on that Account Anniversary. If the current Account Value exceeds the adjusted highest Account Value, the current Account Value will become the new highest Anniversary Account Value.

Spousal Continuance

Under an individually-owned Contract, if you are the Covered Person and your spouse is the sole Beneficiary, upon your death, your spouse may elect to continue the Contract by becoming the new Participant and new Covered Person, rather than receive the death benefit amount. Under a co-owned Contract, if you and your spouse are the Covered Persons and sole Beneficiaries, then upon the death of either you or your spouse, the surviving spouse may continue the Contract as the sole Participant and sole Covered Person. In either case, we will not pay a death benefit, but the Contract’s Account Value will be set to equal the death benefit amount. (See “The Basic Death Benefit” or, if applicable, the “Optional Death Benefit.”) If you are participating in a Living Benefit and you have joint-life coverage, then your surviving spouse may continue the Contract and the Living Benefit. If you are participating in a Living Benefit and you have single-life coverage, then your surviving spouse can continue the Contract, but the Living Benefit will terminate and no optional living benefit will be available to your surviving spouse. (See “Death of Participant - Single-Life Coverage.”)

All Contract provisions, including, if elected, the optional death benefit (subject to the optional death benefit age restriction), will continue as if your surviving spouse had purchased the Contract on the Death Benefit Date with a deposit equal to the death benefit amount. For purposes of calculating death benefits and expenses from that date forward, your surviving spouse’s age on the original effective date of the Contract will be used. Upon surrender or annuitization, this increased amount will not be treated as premium, but will be treated as income. If you are in a same-sex marriage, see “Federal Defense of Marriage Act and Same-Sex Marriages” under “TAX PROVISIONS.”

Calculating the Death Benefit

In calculating the death benefit amount payable under option (2) of “The Basic Death Benefit” or the optional death benefit, each partial withdrawal will reduce the death benefit amount to an amount equal to the death benefit amount immediately before the withdrawal multiplied by the ratio of the Account Value immediately after the withdrawal to the Account Value immediately before the withdrawal. (See “The Basic Death Benefit.”) A withdrawal may cause the basic death benefit to decrease by more than the amount of the withdrawal.

Rather than receiving the death benefit, the Beneficiary may elect to annuitize, to defer annuitization, or to continue the Contract. In such case, if the death benefit amount payable under the Contract is greater than your Account Value, we will increase the Account Value to equal the death benefit amount. Any such increase will be allocated to the Sub-Accounts in proportion to your Account Value in those Sub-Accounts on the Death Benefit Date. Also, any portion of this new Account Value attributed to an existing DCA Period will be allocated to your selected Sub-Accounts.

Method of Paying Death Benefit

The death benefit may be paid in a single cash payment or as an annuity (either fixed, variable or a combination), under one or more of our Annuity Options. We describe the Annuity Options in this Prospectus under “The Income Phase - Annuity Provisions.”

During the Accumulation Phase, you may elect the method of payment for the death benefit. These elections are made by sending us, at our mailing address, a completed election form, which we will provide. If no such election is in effect on the date of your death, the Beneficiary may elect either a single cash payment or an annuity. If the Beneficiary is your surviving spouse, the Beneficiary may elect to continue the Contract. This election is made by sending us written notice in a form acceptable to us. If we do not receive the Beneficiary’s election within 60 days after we receive Due Proof of Death, the Beneficiary shall be deemed to have elected to defer receipt of payment under any death benefit option until a written election is submitted to the Company or a distribution is required by law. We can defer payment of the death benefit to the extent permitted under the Investment Company Act of 1940. (See “Payment of Death Benefit.”)

If we pay the death benefit in the form of an Annuity Option, the Beneficiary becomes the Annuitant/Payee under the terms of that Annuity Option.

Non-Qualified Contracts

If your Contract is a Non-Qualified Contract, special distribution rules apply to the payment of the death benefit. The amount of the death benefit must be distributed either (1) as a lump sum within 5 years after your death, or (2) if in the form of an annuity, over a period not greater than the life or expected life of the “designated beneficiary” within the meaning of Section 72(s) of the Internal Revenue Code, with payments beginning no later than one year after your death.

The person you have named as Beneficiary under your Contract, if any, will be the “designated beneficiary.” If the named Beneficiary is not living and no contingent beneficiary has been named, the surviving Participant, if any, or the estate of the deceased Participant automatically becomes the designated beneficiary.

If the designated beneficiary is your surviving spouse, your spouse may continue the Contract in his or her own name as Participant. To make this election, your spouse must give us written notification within 60 days after we receive Due Proof of Death. The special distribution rules will then apply on the death of your spouse. To understand what happens when your spouse continues the Contract, see “Spousal Continuance.” If you are in a same-sex marriage, see “Federal Defense of Marriage Act and Same-Sex Marriages” under “TAX PROVISIONS.”

During the Income Phase, if the Annuitant dies, the remaining value of the Annuity Option in place must be distributed at least as rapidly as the method of distribution under that option.

If the Participant is not a natural person, these distribution rules apply upon the death or removal of any Annuitant.

Payments made in contravention of these special rules would adversely affect the treatment of the Contracts as annuity contracts under the Internal Revenue Code. Neither you nor the Beneficiary may exercise rights that would have that effect.

Selection and Change of Beneficiary

You select your Beneficiary in your Application. You may change your Beneficiary at any time by sending us written notice on our required form, unless you previously made an irrevocable Beneficiary designation. A new Beneficiary designation is not effective until we record the change.

Payment of Death Benefit

Payment of the death benefit in cash will be made within seven days of the Death Benefit Date, except if we are permitted to defer payment in accordance with the Investment Company Act of 1940. If an Annuity Option is elected, the Annuity Commencement Date will be the first day of the second calendar month following the Death Benefit Date, and your Account will remain in effect until the Annuity Commencement Date.

THE INCOME PHASE - ANNUITY PROVISIONS

During the Income Phase, we make regular monthly annuity payments to the Annuitant.

The Income Phase of your Contract begins with the Annuity Commencement Date. On that date, we apply your Account Value, adjusted as described under the Annuity Option you have selected, and we make the first annuity payment.

Once the Income Phase begins, no lump sum settlement option or cash withdrawals are permitted, except pursuant to Annuity Option D, Monthly Payments for a Specified Period Certain, as described under “Annuity Options,” and you cannot change the Annuity Option selected. (Also, a Beneficiary receiving payments after the Annuitant’s death under Option B, Life Annuity with 60, 120, 180 or 240 Monthly Payments Certain, may elect to receive the discounted value of the remaining payments in a single sum, as discussed under “Annuity Options.”) You may request a full withdrawal before the Annuity Commencement Date, which will be subject to all charges applicable on withdrawals. (See “WITHDRAWALS AND WITHDRAWAL CHARGES.”)

Selection of Annuitant(s)

You select the Annuitant in your Application. The Annuitant is the person who receives annuity payments during the Income Phase and on whose life these payments are based. In your Contract, the Annuity Options refer to the Annuitant as the “Payee.” If you name someone other than yourself as Annuitant and the Annuitant dies before the Income Phase, you become the Annuitant.

When an Annuity Option has been selected as the method of paying the death benefit, the Beneficiary is the Payee of the annuity payments.

Selection of the Annuity Commencement Date

You select the Annuity Commencement Date in your Application. The following restrictions apply to the date you may select:

· The earliest possible Annuity Commencement Date is the first day of the second month following your Issue Date.

· The latest possible Annuity Commencement Date is the first day of the month following the Annuitant’s 95th birthday (“Maximum Annuity Commencement Date”). If there is a Co-Annuitant, the Annuity Commencement Date applies to the younger of the Annuitant and Co-Annuitant.

· The Annuity Commencement Date must always be the first day of a calendar month.

You may change the Annuity Commencement Date by sending us written notice, in a form acceptable to us, with the following additional limitations:

· We must receive your notice, in good order, at least 30 days before the current Annuity Commencement Date.

· The new Annuity Commencement Date must be at least 30 days after we receive the notice.

There may be other restrictions on your selection of the Annuity Commencement Date imposed by your retirement plan or applicable law. In most situations, current law requires that for a Qualified Contract, certain minimum distributions must commence no later than April 1 following the year the Annuitant reaches age 70½ (or, for Qualified Contracts other than IRAs, no later than April 1 following the year the Annuitant retires, if later than the year the Annuitant reaches age 70½).

Annuity Options

We offer the following Annuity Options for payments during the Income Phase. Each Annuity Option may be selected for a Variable Annuity, a Fixed Annuity, or a combination of both. We may also agree to other settlement options, at our discretion.

Annuity Option A - Life Annuity

We provide monthly payments during the lifetime of the Annuitant. Annuity payments stop when the Annuitant dies. There is no provision for continuation of any payments to a Beneficiary. Note that if the Annuitant dies prior to the end of the first month after the Annuity Commencement Date, only one annuity payment will be made.

Annuity Option B - Life Annuity with 60, 120, 180 or 240 Monthly Payments Certain

We make monthly payments during the lifetime of the Annuitant. In addition, we guarantee that the Beneficiary will receive monthly payments for the remainder of the period certain, if the Annuitant dies during that period. The election of a longer period results in smaller monthly payments. If no Beneficiary is designated, we pay the discounted value of the remaining payments in one sum to the Annuitant’s estate. The Beneficiary may also elect to receive the discounted value of the remaining payments in one sum. The discount rate for a Variable Annuity will be the assumed interest rate of 3%; the discount rate for a Fixed Annuity will be based on the interest rate we used to determine the amount of each payment.

Annuity Option C - Joint and Survivor Annuity

We make monthly payments during the lifetime of the Annuitant and another person you designate and during the lifetime of the survivor of the two. We stop making payments when the last survivor dies. There is no provision for continuance of any payments to a Beneficiary.

Annuity Option D - Monthly Payments for a Specified Period Certain

We make monthly payments for a specified period of time from 5 to 30 years, as you elect. The longer the period you elect, the smaller your monthly payments will be. If payments under this option are paid on a variable annuity basis, the Annuitant may elect to receive, in one sum, at any time, some or all of the discounted value of the remaining payments, less any applicable withdrawal charge; the discount rate for this purpose will be the assumed interest rate of 3%. If the Annuitant dies during the period selected, the remaining income payments are made as described above for the payments to a Beneficiary under Annuity Option B. The election of this Annuity Option may result in the imposition of a penalty tax. The 5, 6, 7, 8, and 9-year period certain options are not available during your first four Account Years unless (a) you or your Beneficiary are selecting this Annuity Option to be used as the method of payment for the death benefit and (b) your Beneficiary’s life expectancy on the date of the first payment exceeds the selected period.

Selection of Annuity Option

You select one or more of the Annuity Options, which you may change during the Accumulation Phase, as long as we receive your selection or change in writing at least 30 days before the Annuity Commencement Date. If we have not received your written selection on the 30th day before the Annuity Commencement Date, you will receive Annuity Option B, for a life annuity with 120 monthly payments certain, except as otherwise provided under your applicable Living Benefit.

You must specify the proportion of your Adjusted Account Value you wish to provide a Variable Annuity or a Fixed Annuity. Under a Variable Annuity, the dollar amount of payments will vary, while under a Fixed Annuity, the dollar amount of payments will remain the same. You may allocate your Adjusted Account Value applied to a Variable Annuity among the Sub-Accounts, or we will use your existing allocations. If, however, a portion of your Account Value was allocated to a DCA Period at the time of annuitization, that portion will be exchanged for Annuity Units and allocated among the Sub-Accounts you select at annuitization or, if you make no such selection, then in proportion to the Sub-Accounts you were invested in prior to annuitization.

There may be additional limitations on the options you may elect under your particular retirement plan or applicable law.

Remember that the Annuity Option may not be changed once annuity payments begin.

Amount of Annuity Payments

Adjusted Account Value

The Adjusted Account Value is the amount we apply to provide a Variable Annuity and/or a Fixed Annuity. We calculate Adjusted Account Value by taking your Account Value on the Business Day just before the Annuity Commencement Date and making the following adjustments:

· We deduct a proportional amount of the Account Fee, based on the fraction of the current Account Year that has elapsed.

· We deduct any applicable premium tax or similar tax if not previously deducted.

Variable Annuity Payments

On the Annuity Commencement Date, we will exchange your Account’s Variable Accumulation Units for Annuity Units upon which we will assess annual insurance charges of 1.65% of your average daily Annuity Unit values. Variable Annuity payments may vary each month. We determine the dollar amount of the first payment using the portion of your Adjusted Account Value applied to a Variable Annuity and the “annuity payment rates” in your Contract, which are based on an assumed interest rate of 3% per year, compounded annually. (See “Annuity Payment Rates.”)

To calculate the remaining payments, we convert the amount of the first payment into Annuity Units for each Sub-Account; we determine the number of those Annuity Units by dividing the portion of the first payment attributable to the Sub-Account by the Annuity Unit value of that Sub-Account for the Valuation Period ending just before the Annuity Commencement Date. This number of Annuity Units for each Sub-Account will remain constant (unless the Annuitant requests a transfer among Sub-Accounts). However, the dollar amount of the next Variable Annuity payment, which is the sum of the number of Annuity Units for each Sub-Account times its Annuity Unit value for the Valuation Period ending just before the date of the payment, will increase, decrease, or remain the same, depending on the net investment return of the Sub-Accounts.

If the net investment return of the Sub-Accounts selected is the same as the assumed interest rate of 3%, compounded annually, the payments will remain level. If the net investment return exceeds the assumed interest rate, payments will increase and, conversely, if it is less than the assumed interest rate, payments will decrease.

Please refer to the Statement of Additional Information for more information about calculating Variable Annuity Units and Variable Annuity payments, including examples of these calculations.

After you annuitize, we will deduct total insurance charges at an annual rate of 1.65% of your average daily Annuity Unit values. We will no longer deduct the mortality and expense risk charge or the charges for any optional living benefit or the optional death benefit. The 1.65% charge, which includes an administrative expense charge and a distribution fee, compensates us for the risks and expenses associated with providing annuity payments during the Income Phase.

Fixed Annuity Payments

Fixed Annuity payments are the same each month. We determine the dollar amount of each Fixed Annuity payment using the fixed portion of your Adjusted Account Value and the applicable “annuity payment rates.” These will be either (1) the rates in your Contract, or (2) new rates we have published and are using on the Annuity Commencement Date, if they are more favorable. (See “Annuity Payment Rates.”)

Minimum Payments

If your Adjusted Account Value is less than $2,000, or the first annuity payment for any Annuity Option is less than $20, we will pay the Adjusted Account Value to the Annuitant in one payment, except as otherwise provided under your Living Benefit.

Transfer of Variable Annuity Units

During the Income Phase, the Annuitant may transfer Annuity Units in one Sub-Account for Annuity Units in another Sub-Account, up to 12 times each Account Year. Any such transfers may be subject to any restrictions or other policies that the Funds have adopted to protect the Funds from short-term trading or other practices that are potentially harmful to the Fund (the “Funds’ Shareholder Trading Policies”). The applicability of the Funds’ Shareholder Trading Policies is the same during the Income Phase as during the Accumulation Phase, and this is discussed in this Prospectus under “Funds’ Shareholder Trading Policies.” For the reasons discussed there, you should review and comply with each Fund’s Shareholder Trading Policies, which are disclosed in the Funds’ current prospectuses.

To make a transfer, the Annuitant sends us, at our mailing address, a written request stating the number of Annuity Units in the Sub-Account he or she wishes to transfer and the new Sub-Account for which Annuity Units are requested. The number of new Annuity Units will be calculated so the dollar amount of an annuity payment on the date of the transfer would not be affected. To calculate this number, we use Annuity Unit values for the Valuation Period during which we receive the transfer request.

Before transferring Annuity Units in one Sub-Account for those in another, the Annuitant should carefully review the relevant Fund prospectuses for the investment objectives and risk disclosure of the Funds in which the Sub-Accounts invest.

During the Income Phase, we permit only transfers among Sub-Accounts. No transfers to or from a Fixed Annuity are permitted.

Account Fee

During the Income Phase, we deduct the annual Account fee of $50 in equal amounts from each Variable Annuity payment. We do not deduct the annual Account fee from Fixed Annuity payments.

Annuity Payment Rates

Annuity payment rates are the rates we use to determine the dollar amount of an annuity payment under each Annuity Option. The Contract contains annuity payment rate schedules for each Annuity Option described in this Prospectus. These schedules show, for each $1,000 applied, the dollar amount of: (a) the first monthly Variable Annuity payment based on the assumed interest rate specified in the applicable Contract (3% per year, compounded annually); and (b) the monthly Fixed Annuity payment, when this payment is based on the minimum guaranteed interest rate specified in the Contract. We may change these rates under Group Contracts for Accounts established after the effective date of such change. (See “Modification.”)

The annuity payment rates may vary according to the Annuity Option elected and the adjusted age of the Annuitant. The Contracts also describe the method of determining the adjusted age of the Annuitant. The mortality table used in determining the annuity payment rates for Annuity Options A, B and C is the Annuity 2000 Table.

Annuity Options as Method of Payment for Death Benefit

You or your Beneficiary may also select one or more Annuity Options to be used in the event of the Covered Person’s death before the Income Phase, as described under the “Death Benefit” section of this Prospectus. In that case, your Beneficiary will be the Annuitant. The Annuity Commencement Date will be the first day of the second month beginning after the Death Benefit Date.

OTHER CONTRACT PROVISIONS

Exercise of Contract Rights

An Individual Contract belongs to the individual to whom the Contract is issued. A Group Contract belongs to the Owner. In the case of a Group Contract, the Owner may expressly reserve all Contract rights and privileges; otherwise, each Participant will be entitled to exercise such rights and privileges. In any case, such rights and privileges can be exercised without the consent of the Beneficiary (other than an irrevocably designated Beneficiary) or any other person. Such rights and privileges may be exercised only before the Annuity Commencement Date, except as the Contract otherwise provides.

The Annuitant becomes the Payee on and after the Annuity Commencement Date. The Beneficiary becomes the Payee on the death of the Covered Person prior to the Annuity Commencement Date, or on the death of the Annuitant after the Annuity Commencement Date. Such Payee may thereafter exercise such rights and privileges, if any, of ownership which continue.

Change of Ownership

Ownership of a Qualified Contract may not be transferred except to: (1) the Annuitant; (2) a trustee or successor trustee of a pension or profit sharing trust which is qualified under Section 401 of the Internal Revenue Code; (3) the employer of the Annuitant, provided that the Qualified Contract after transfer is maintained under the terms of a retirement plan qualified under Section 403(a) of the Internal Revenue Code for the benefit of the Annuitant; (4) the trustee or custodian of an individual retirement account plan qualified under Section 408 of the Internal Revenue Code for the benefit of the Participants under a Group Contract; or (5) as otherwise permitted from time to time by laws and regulations governing the retirement or deferred compensation plans for which a Qualified Contract may be issued. Subject to the foregoing, a Qualified Contract may not be sold, assigned, transferred, discounted or pledged as collateral for a loan or as security for the performance of an obligation or for any other purpose to any person other than the Company.

The Owner of a Non-Qualified Contract may change the ownership of the Contract prior to the Annuity Commencement Date; and each Participant, in like manner, may change the ownership interest in a Contract. A change of ownership will not be binding on us until we receive written notification, in good order. When we receive such notification, the change will be effective as of the date on which the request for change was signed by the Owner or Participant, as appropriate, but the change will be without prejudice to us on account of any payment we make or any action we take before receiving the change. If you change the Owner of a Non-Qualified Contract, you will become immediately liable for the payment of taxes on any gain realized under the Contract prior to the change of ownership, including possible liability for a 10% federal excise tax.

Change of ownership will not change the Covered Person named when the Contract is issued. This means that all death benefits and surrender charge waivers will continue to be based on the Covered Person and not the Participant. The amount payable on the death of the new Participant will be the Surrender Value.

Voting of Fund Shares

To the extent required by law, we will vote all shares held in the Variable Account in accordance with instructions we receive from persons with voting interests in the Funds. During the Accumulation Phase, you will have the right to give voting instructions, except in the case of a Group Contract in which the Owner has reserved this right. During the Income Phase, the Payee (that is, the Annuitant or Beneficiary entitled to receive benefits) is the person having the right to give voting instructions.

Before a vote of the shareholders of a Fund occurs, each person with voting interests in the Fund will receive voting materials from us. We will ask those persons to instruct us on how to vote and to return their respective voting instructions to us in a timely manner. Each such person is permitted to cast votes based on the dollar value of the shares of each Fund that we hold for your Contract in the corresponding Sub-Account. We calculate this value based on the number of Variable Accumulation Units or Variable Annuity Units allocated to your Contract as of the date set by the Fund and the value of each Variable Accumulation Unit or Variable Annuity Unit on that date. We count fractional votes.

We will vote any shares attributable to us and Fund shares for which no timely voting instructions are received in the same proportion as the shares for which we receive instructions from person(s) with voting interests in the Fund. Because of this method of proportional voting, a small number of persons with voting interests in the Fund may determine the outcome of a shareholder vote. If, however, we determine that we are permitted to vote the Fund shares in our own right, then we may do so.

Note: Owners of Qualified Contracts issued on a group basis may be subject to other voting provisions of the particular retirement plan and under the Investment Company Act of 1940. Employees who contribute to retirement plans that are funded by the Contracts may be entitled to instruct the Owners as to how to instruct us to vote the Fund shares attributable to their contributions. Such retirement plans may also provide the additional extent, if any, to which an Owner shall follow voting instructions of persons with rights under those plans. If no voting instructions are received from any such person with respect to a particular Contract, the Owner may instruct us as to how to vote the number of Fund shares for which instructions may be given.

Reports to Owners

We will send you, by regular U.S. mail, confirmation of all Purchase Payments (including any interest credited), withdrawals, (including any withdrawal charges and federal taxes on withdrawals), minimum distributions, death benefit payments, transfers (excluding dollar-cost averaging transfers) and living benefit credits or refunds. Such confirmations will be sent within two business days after the transaction occurs.

In addition, within five business days after each calendar quarter, we will send you, by regular U.S. mail, a statement showing your current Account Value, death benefit value, and investment allocation by asset class. Each quarterly statement will detail transactions that occurred during the last calendar quarter including Purchase Payments, annuity payments, transfers (including dollar-cost averaging transfers), partial withdrawals, systematic withdrawals, minimum distributions, portfolio rebalancing, asset reallocations, interest credited on fixed accounts, step-ups credited on living benefits, and annual contract fees assessed.

We will also send you annual and semi-annual reports of the Funds in which you are invested, including a list of investments held by each portfolio as of the current date of the report.

If you have enrolled in the electronic delivery service and consented to receive documents electronically, we will send you an email at the address you provided notifying you when we have posted your confirmations, statements, and reports on our website.

It is your obligation to review each such statement carefully and to report to us, at the address or telephone number provided on the statement, any errors or discrepancies in the information presented therein within 60 days of the date of such statement. Unless we receive notice of any such error or discrepancy from you within such period, we may not be responsible for correcting the error or discrepancy.

Substitution of Securities

Shares of any or all Funds may not always be available for investment under the Contract. We may add or delete Funds or other investment companies as variable investment options under the Contract. We may also substitute for the shares held in any Sub-Account shares of another Fund or shares of another registered open-end investment company or unit investment trust, provided that the substitution has been approved, if required, by the SEC. You will receive notice of any such Fund changes that affect your Contract by a supplement to this Prospectus.

Change in Operation of Variable Account

At our election and subject to any necessary vote by persons having the right to give instructions with respect to the voting of Fund shares held by the Sub-Accounts, the Variable Account may be operated as a management company under the Investment Company Act of 1940 or it may be deregistered under the Investment Company Act of 1940 in the event registration is no longer required. Deregistration of the Variable Account requires an order by the SEC. In the event of any change in the operation of the Variable Account pursuant to this provision, we may supplement this Prospectus to reflect the change and take such other action as may be necessary and appropriate to effect the change.

Splitting Units

We reserve the right to split or combine the value of Variable Accumulation Units, Annuity Units or any of them. In effecting any such change of unit values, strict equity will be preserved and no change will have a material effect on the benefits or other provisions of the Contract. Any changes we make by splitting or combining Variable Accumulation Unit values must comply with federal securities laws and regulations.

Modification

Upon notice to the Participant, in the case of an Individual Contract, and the Owner and Participant(s), in the case of a Group Contract (or the Payee(s) during the Income Phase), we may modify the Contract if such modification is consistent with federal securities laws and regulations and: (1) is necessary to make the Contract or the Variable Account comply with any law or regulation issued by a governmental agency to which the Company or the Variable Account is subject; (2) is necessary to assure continued qualification of the Contract under the Internal Revenue Code or other federal or state laws relating to retirement annuities or annuity contracts; (3) is necessary to reflect a change in the operation of the Variable Account or the Sub-Account(s) (see “Change in Operation of Variable Account”); (4) provides additional Variable Account and/or fixed accumulation options; or (5) as may otherwise be in the best interests of Owners, Participants, or Payees, as applicable. In the event of any such modification, we may supplement this Prospectus to reflect such modification.

In addition, upon notice to the Owner, we may modify a Group Contract to change the withdrawal charges, Account Fee, mortality and expense risk charges, administrative expense charges, and the tables used in determining the amount of the first monthly variable annuity and fixed annuity payments, provided that such modification will not exceed the maximum fees as shown in the fee table. In order to exercise our modification rights in these particular instances, we must notify the Owner of such modification in writing. The notice shall specify the effective date of such modification which must be at least 60 days following the date we mail notice of modification. All of the charges and the annuity tables which are provided in the Group Contract prior to any such modification will remain in effect permanently, unless improved by the Company, with respect to Participant Accounts established prior to the effective date of such modification.

Discontinuance of New Participants

We may limit or discontinue the acceptance of new Applications and the issuance of new Certificates under a Group Contract by giving 30 days prior written notice to the Owner. This will not affect rights or benefits with respect to any Participant Accounts established under such Group Contract prior to the effective date of such limitation or discontinuance.

Reservation of Rights

We reserve the right, to the extent permitted by law, to: (1) combine any two or more variable accounts or Sub-Accounts; (2) add or delete Funds, sub-series thereof or other investment companies and corresponding Sub-Accounts; (3) add or remove DCA Periods available at any time for election by a Participant; and (4) restrict or eliminate any of the voting rights of Participants (or Owners) or other persons who have voting rights as to the Variable Account. Where required by law, we will obtain approval of changes from Participants or any appropriate regulatory authority. In the event of any change pursuant to this provision, we may supplement this Prospectus and make appropriate endorsement to the Contract as necessary to reflect the change.

Right to Return

If you are not satisfied with your Contract, you may return it by mailing or delivering it to us at our mailing address, as shown on the cover of this Prospectus, within 10 days or longer if allowed by your state after it was delivered to you. State law may also allow you to return the Contract to your sales representative. (Information about your right to return period can be found on the first page of your Contract or prominently displayed in an endorsement to your Contract. You can also obtain information about your right to return period by contacting your sales representative.) When we receive the returned Contract, it will be cancelled and we will refund to you your Account Value. If applicable state law requires return of Purchase Payments, we will return the greater of (1) your Surrender Value or (2) the full amount of any Purchase Payment(s) we received.

If you are establishing an Individual Retirement Annuity (“IRA”), the Internal Revenue Code requires that we give you a disclosure statement containing certain information about the Contract and applicable legal requirements. We must give you this statement on or before the date the IRA is established. If we give you the disclosure statement before the seventh day preceding the date the IRA is established, you will not have any right of revocation under the Code. If we give you the disclosure statement at a later date, then you may give us a notice of revocation at any time within seven days after your Issue Date. Upon such revocation, we will refund your Purchase Payment(s). This right of revocation with respect to an IRA is in addition to the return privilege set forth in the preceding paragraph. We allow a Participant establishing an IRA a “ten day free-look,” notwithstanding the provisions of the Internal Revenue Code.

TAX PROVISIONS

This section provides general information on the federal income tax consequences of ownership of a Contract and is not intended as tax advice. Actual federal tax consequences will vary depending on, among other things, the type of retirement plan under which your Contract is issued. Also, legislation altering the current tax treatment of annuity contracts could be enacted in the future and could apply retroactively to Contracts that were purchased before the date of enactment. We make no attempt to consider any applicable state or other tax laws, any state and local estate or inheritance tax, or other tax consequences of ownership or receipt of distributions under a Contract. We also make no guarantee regarding the federal, state, or local tax status of any Contract or any transaction involving any Contract. You should consult a qualified tax professional for advice before purchasing a Contract or executing any other transaction (such as a rollover, distribution, withdrawal or payment) involving a Contract.

When you invest in an annuity contract, you usually do not pay taxes on your investment gains until you withdraw the money – generally for retirement purposes. If you invest in a variable annuity as part of an individual retirement plan, pension plan or employer-sponsored retirement program, your Contract is called a “Qualified Contract.” If your annuity is independent of any formal retirement or pension plan, it is termed a “Non-Qualified Contract.” The tax rules applicable to Qualified Contracts vary according to the type of retirement plan and the terms and conditions of the plan.

U.S. Federal Income Tax Provisions

The following discussion applies only to those Contracts issued in the United States. For a discussion of tax provisions affecting Contracts issued in Puerto Rico, see “Puerto Rico Tax Provisions.”

Taxation of Non-Qualified Contracts

Deductibility of Purchase Payments. For federal income tax purposes, Purchase Payments made under Non-Qualified Contracts are not deductible. Under certain circumstances, Purchase Payments made under Qualified Contracts may be excludible or deductible from taxable income. Any such amounts will also be excluded from the “investment in the contract” for purposes of determining the taxable portion of any distributions from a Qualified Contract. As a general rule, regardless of whether you own a Qualified or a Non-Qualified Contract, the amount of your tax liability on earnings and distributions will depend upon the specific tax rules applicable to your Contract and your particular circumstances.

Pre-Distribution Taxation of Contracts. Generally, an increase in the value of a Contract will not give rise to a current income tax liability to the Owner of a Contract or to any payee under the Contract until a distribution is received from the Contract. However, certain assignments or pledges of a Contract or loans under a Contract will be treated as distributions to the Owner of the Contract and will accelerate the taxability of any increases in the value of a Contract.

Also, corporate (or other non-natural person) Owners of a Non-Qualified Contract will generally incur a current tax liability on Account Value increases. There are certain exceptions to this current taxation rule, including: (i) any Contract that is an “immediate annuity”, which the Internal Revenue Code (the “Code”) defines as a single premium contract with an annuity commencement date within one year of the date of purchase which provides for a series of substantially equal periodic payments (to be made not less frequently than annually) during the annuity period, and (ii) any Contract that the non-natural person holds as agent for a natural person (such as where a bank or other entity holds a Contract as trustee under a trust agreement).

You should note that a qualified retirement plan generally provides tax deferral regardless of whether the plan invests in an annuity contract. For that reason, no decision to purchase an annuity should be based on the assumption that the purchase of an annuity is necessary to obtain tax deferral under a qualified plan.

Distributions and Withdrawals from Non-Qualified Contracts. The Account Value of a Non-Qualified Contract will generally include both (i) an amount attributable to Purchase Payments, the return of which will not be taxable, and (ii) an amount attributable to investment earnings, the receipt of which will be taxable at ordinary income rates. The relative portions of any particular distribution that derive from nontaxable Purchase Payments and taxable investment earnings depend upon the nature and the timing of that distribution.

Any withdrawal of less than your entire Account Value under a Non-Qualified Contract before the Annuity Commencement Date must be treated as a receipt of investment earnings. You may not treat such withdrawals as a non-taxable return of Purchase Payments unless you have first withdrawn the entire amount of the Account Value that is attributable to investment earnings. For purposes of determining whether an Owner has withdrawn the entire amount of the investment earnings under a Non-Qualified Contract, the Code provides that all Non-Qualified deferred annuity contracts issued by the same company to the same Owner during any one calendar year must be treated as one annuity contract. If you withdraw your entire Account Value under a Non-Qualified Contract before the Annuity Commencement Date (a “full surrender”), the taxable portion will equal the amount you receive less the “investment in the contract” (i.e., the total Purchase Payments (excluding amounts that were deductible by, or excluded from the gross income of, the Owner of a Contract), less any Purchase Payments that were amounts previously received which were not includable in income).

Annuity Payments. A Payee who receives annuity payments under a Non-Qualified Contract after the Annuity Commencement Date, will generally be able to treat a portion of each payment as a nontaxable return of Purchase Payments and to treat only the remainder of each such payment as taxable investment earnings. Until the Purchase Payments have been fully recovered in this manner, the nontaxable portion of each payment will be determined by the ratio of (i) the total amount of the Purchase Payments made under the Contract, to (ii) the Payee’s expected return under the Contract. Once the Payee has received nontaxable payments in an amount equal to total Purchase Payments, no further exclusion is allowed and all future distributions will constitute fully taxable ordinary income. If payments are terminated upon the death of the Annuitant or other Payee before the Purchase Payments have been fully recovered, the unrecovered Purchase Payments may be deducted on the final return of the Annuitant or other Payee.

Penalty Tax on Certain Withdrawals. A penalty tax of 10% may also apply to taxable cash withdrawals, including lump-sum payments from Non-Qualified Contracts. This penalty will generally not apply to distributions made after age 59½, to distributions pursuant to the death or disability of the owner, to distributions that are a part of a series of substantially equal periodic payments made not less frequently than annually for life or life expectancy, or to distributions under an immediate annuity (as defined above). Other exceptions may be applicable under certain circumstances and special rules may be applicable in connection with the exceptions enumerated above. Also, additional exceptions apply to distributions from a Qualified Contract. You should consult a qualified tax professional with regard to exceptions from the penalty tax.

Taxation of Death Benefit Proceeds. Death benefits paid upon the death of a Participant are not life insurance benefits and will generally be includable in the income of the recipient to the extent they represent investment earnings under the contract. For this purpose, the amount of the investment in the contract is not affected by the Participant’s or Annuitant’s death, i.e., the investment in the contract must still be determined by reference to the Participant’s investment in the Contract. Special mandatory distribution rules also apply after the death of the Participant when the beneficiary is not the surviving spouse of the Participant.

If death benefits are distributed in a lump sum, the taxable amount of those benefits will be determined in the same manner as upon a full surrender of the contract. If death benefits are distributed under an annuity option, the taxable amount of those benefits will be determined in the same manner as annuity payments, as described above.

Transfers, Assignments or Exchanges of a Contract. A transfer or assignment of ownership of a Contract, the designation of an Annuitant other than the Owner, the selection of certain maturity dates, or the exchange of a Contract may result in certain tax consequences to you that are not discussed herein. An Owner contemplating any such transfer, assignment or exchange should consult a qualified tax professional as to the tax consequences.

Withholding. Annuity distributions are generally subject to withholding for the recipient’s federal income tax liability.  Recipients can generally elect, however, not to have tax withheld from distributions.

Multiple Contracts. All non-qualified deferred annuity contracts that are issued by us (or our affiliates) to the same owner during any calendar year are treated as one annuity contract for purposes of determining the amount includible in such owner’s income when a taxable distribution occurs.

Partial Annuitization. Under a new tax provision enacted in 2010, if part of an annuity contract’s value is applied to an annuity option that provides payments for one or more lives or for a period of at least ten years, those payments may be taxed as annuity payments instead of withdrawals. None of the payment options under the Contract is intended to qualify for this “partial annuitization” treatment.

Taxation of Qualified Contracts

“Qualified Contracts” are Contracts used with plans that receive tax-deferral treatment pursuant to specific provisions of the Code. Annuity contracts also receive tax-deferral treatment. It is not necessary that you purchase an annuity contract to receive the tax- deferral treatment available through a Qualified Contract. If you purchase this annuity Contract as a Qualified Contract, you do not receive additional tax-deferral. Therefore, if you purchase this annuity Contract as a Qualified Contract, you should do so for reasons other than obtaining tax deferral.

You may use Qualified Contracts with several types of qualified retirement plans. Because tax consequences will vary with the type of qualified retirement plan and the plan’s specific terms and conditions, we provide below only brief, general descriptions of the consequences that follow from using Qualified Contracts in connection with various types of qualified retirement plans. We stress that the rights of any person to any benefits under these plans may be subject to the terms and conditions of the plans themselves, regardless of the terms of the Qualified Contracts that you are using. These terms and conditions may include restrictions on, among other things, ownership, transferability, assignability, contributions and distributions. Adverse tax consequences may result if you do not ensure that contributions, distributions and other transactions with respect to the Contract comply with the law.

Pension and Profit-Sharing Plans. Sections 401(a), 401(k) and 403(a) of the Code permit business employers and certain associations to establish various types of retirement plans for employees. The Code requirements are similar for qualified retirement plans of corporations and those of self- employed individuals. Self-employed persons, as a general rule, may therefore use Qualified Contracts as a funding vehicle for their retirement plans.  Adverse tax consequences to the retirement plan, the participant or both may result if the Contract is transferred to any individual as a means to provide benefit payments, unless the plan complies with all the requirements applicable to such benefits prior to transferring the Contract.

Individual Retirement Accounts and Annuities. Individual Retirement Accounts and Annuities (“IRAs”), as defined in Section 408 of the Code, permit eligible individuals to make annual contributions of up to the lesser of a specified dollar amount for the year or the amount of compensation includible in the individual’s gross income for the year.  The contributions may be deductible in whole or in part, depending on the individual’s income. In addition, certain distributions from some other types of retirement plans may be “rolled over” into an IRA on a tax-deferred basis without regard to these limits. Amounts in the IRA (other than nondeductible contributions) are taxed when distributed from the IRA. A 10% penalty tax generally applies to distributions made before age 59½, unless an exception applies. The Internal Revenue Service imposes special information requirements with respect to IRAs and we will provide purchasers of the Contracts as Individual Retirement Annuities with any necessary information. You will have the right to revoke a Contract issued as an Individual Retirement Annuity under certain circumstances, as described in the section of this Prospectus entitled “Right to Return.” If your Contract is issued in connection with an Individual Retirement Account, we have no information about the Account and you should contact the Account’s trustee or custodian.

Roth Individual Retirement Arrangements. Section 408A of the Code permits certain eligible individuals to contribute to an individual retirement program called a Roth IRA. Unlike contributions to a traditional IRA under Section 408 of the Code, contributions to a Roth IRA are not tax-deductible. Provided certain conditions are satisfied, distributions are generally tax-free. Like traditional IRAs, Roth IRAs are subject to limitations on contribution amounts and the timing of distributions. If you roll over from or convert a traditional IRA Contract into a Roth IRA Contract or your Individual Retirement Account that holds a Contract is converted to a Roth Individual Retirement Account, the fair market value of the Contract is included in taxable income. Under IRS regulations and Revenue Procedure 2006-13, fair market value may exceed the Contract’s account balance. Thus, you should consult with a qualified tax professional prior to any conversion.  Distributions from a Roth IRA are generally not taxed, except that once aggregate distributions exceed contributions to the Roth IRA, income tax and a 10% penalty tax may apply to distributions made (1) before age 59½ (subject to certain exceptions) or (2) during the five taxable years starting with the year in which the first contribution is made to any Roth IRA.  A 10% penalty tax may apply to amounts attributable to a conversion from an IRA if they are distributed during the five taxable years beginning with the year in which the conversion was made.

The Internal Revenue Service imposes special information requirements with respect to Roth IRAs and we will provide the necessary information for Contracts issued as Roth Individual Retirement Annuities. If your Contract is issued in connection with a Roth Individual Retirement Account, we have no information about the Account and you should contact the Account’s trustee or custodian.

Distributions and Withdrawals from Qualified Contracts. In most cases, all of the distributions you receive from a Qualified Contract will constitute fully taxable ordinary income. Also, a 10% penalty tax will apply to distributions prior to age 59½, except in certain circumstances.

If you receive a distribution from a Qualified Contract used in connection with a qualified pension plan, from a tax-sheltered annuity, a governmental Code Section 457 plan or an IRA and roll over some or all of that distribution to another eligible plan, following the rules set out in the Code and IRS regulations, the portion of such distribution that is rolled over will not be includible in your income. An eligible rollover distribution from a qualified plan, tax-sheltered annuity or governmental Section 457 plan will be subject to 20% mandatory withholding as described below. Because the amount of the cash paid to you as an eligible rollover distribution will be reduced by this withholding, you will not be able to roll over the entire account balance under your Contract, unless you use other funds equal to the tax withholding to complete the rollover. Rollovers of IRA distributions are not subject to the 20% mandatory withholding requirement.

An eligible rollover distribution from a qualified plan, governmental Section 457 plan or tax-sheltered annuity is any distribution of all or any portion of the balance to the credit of an employee, except that the term does not include:

· a distribution which is one of a series of substantially equal periodic payments made annually under a lifetime annuity or for a specified period of ten years or more;

· any required minimum distribution; or

· any hardship distribution.

Only you or your surviving spouse Beneficiary may elect to roll over a distribution to an eligible retirement plan. However, a non-surviving-spouse Beneficiary may be able to directly transfer a distribution to a so-called inherited IRA that will be subject to the IRS distribution rules applicable to beneficiaries.

Withholding. In the case of an eligible rollover distribution (as defined above) from a Qualified Contract (other than from an IRA), we (or the plan administrator) must withhold and remit to the U.S. Government 20% of the distribution, unless the Participant or Payee elects to make a direct rollover of the distribution to another qualified retirement plan that is eligible to receive the rollover; however, a non-surviving-spouse Beneficiary may elect a direct rollover only to a so-called inherited IRA. In the case of a distribution from (i) a Non-Qualified Contract, (ii) an IRA, or (iii) a Qualified Contract where the distribution is not an eligible rollover distribution, we will withhold and remit to the U.S. Government a part of the taxable portion of each distribution unless, prior to the distribution, the Participant or Payee provides us his or her taxpayer identification number and instructs us (in the manner prescribed) not to withhold. The Participant or Payee may credit against his or her federal income tax liability for the year of distribution any amounts that we (or the plan administrator) withhold.

Investment Diversification and Control

The Treasury Department has issued regulations that prescribe investment diversification requirements for the mutual fund series underlying non-qualified variable contracts. All Non-Qualified Contracts must comply with these regulations to qualify as annuities for federal income tax purposes. The owner of a Non-Qualified Contract that does not meet these guidelines will be subject to current taxation on annual increases in value of the Contract. We believe that each Fund available as an investment option under the Contract complies with these regulations.

In certain circumstances, owners of variable annuity contracts have been considered for Federal income tax purposes to be the owners of the assets of the separate account supporting their contracts due to their ability to exercise investment control over those assets. When this is the case, the contract owners have been currently taxed on income and gains attributable to the variable account assets. There is limited guidance in this area, and some features of our Contracts, such as the flexibility of an owner to allocate premium payments and transfer amounts among the investment divisions of the separate account, have not been explicitly addressed in published rulings. While we believe that the Contracts do not give Owners investment control over separate account assets, we reserve the right to modify the Contracts as necessary to prevent an Owner from being treated as the Owner of the separate account assets supporting the Contract. Nevertheless, you should consult with a qualified tax professional on the potential impact of the investor control rules of the IRS as they relate to the investment decisions and activities you may undertake with respect to the Contract. In addition, the IRS and/or the Treasury Department may issue new rulings, interpretations or regulations on this subject in the future. Accordingly, we therefore reserve the right to modify the Contracts as necessary to attempt to prevent you from being considered the owner, for tax purposes, of the underlying assets. We also reserve the right to notify you if we determine that it is no longer practicable to maintain the Contract in a manner that was designed to prevent you from being considered the owner of the assets of the Separate Account. You bear the risk that you may be treated as the owner of Separate Account assets and taxed accordingly.

Tax Treatment of the Company and the Variable Account

As a life insurance company under the Code, we will record and report operations of the Variable Account separately from other operations. The Variable Account will not, however, constitute a regulated investment company or any other type of taxable entity distinct from our other operations. Under present law, we will not incur tax on the income of the Variable Account (consisting primarily of interest, dividends, and net capital gains) if we use this income to increase reserves under Contracts participating in the Variable Account.

Impact of Optional Death Benefit and Optional Living Benefits

For a further discussion, please refer to “Tax Issues Under the Living Benefits.”

Qualified Contracts. If your Contract is a Qualified Contract other than a Roth IRA, it is subject to certain required minimum distribution (RMD) requirements imposed by the Internal Revenue Code and IRS regulations. Under the RMD rules, distributions must begin no later than April 1 of the calendar year following the year in which you attain age 70½ or, for non-IRAs, the date of retirement instead of age 70½ if it is later. The RMD amount for a distribution calendar year is generally calculated by dividing the Contract’s value as of 12/31 of the prior calendar year by the applicable distribution factor set forth in a Uniform Lifetime Table in the IRS regulations.

The IRS’s RMD regulations provide that the annual RMD amount is to be calculated based on the Contract’s Account Value as of 12/31 plus “the actuarial present value of any additional benefits” that are provided under your Contract (such as optional death and living benefits) which is also calculated as of 12/31. When we notify you yearly of the RMD amount, we will inform you if the calculation included the actuarial present value of any additional benefits since such inclusion would have increased your RMD amount. Because of the above actuarial present value requirements, your election of a Contract’s optional benefit could cause your RMD amount to be higher than it would be without such an election. Additionally, if your RMD amount exceeds your guaranteed withdrawal amount under an optional benefit, you will have to withdraw more than the guaranteed withdrawal amount to avoid the imposition of a 50% excise tax, causing a reset of your guaranteed withdrawal amount. Prior to electing to participate in any optional benefit, you should consult with a qualified tax professional as to the possible effect of that benefit on your yearly RMD amounts.

You may take an RMD amount calculated for a particular Individual Retirement Annuity from that Annuity or from another IRA of yours. If your Qualified Contract is an asset of a qualified retirement plan, the qualified plan is subject to the RMD requirements and the Contract, as an asset of the qualified plan, may need to be used as a source of funds for the RMDs.

If your Contract is a traditional Individual Retirement Annuity or is held by your traditional Individual Retirement Account and you convert such a traditional Annuity or Account to a Roth IRA (see “Roth Individual Retirement Arrangements”), the IRS’s rules for determining the amount of your taxable income at the time of conversion include an amount based on the RMD actuarial present value requirements discussed above. Thus, your election of a Contract’s optional benefit could cause your taxable income upon conversion to be higher than it would be without such an election. Prior to electing to participate in any optional living benefit or death benefit, you should consult with a qualified tax professional as to the possible effect of that benefit on conversion taxable income.

For Qualified Contracts issued other than as Individual Retirement Annuities, (1) we do not calculate your annual RMD amount nor do we notify you of such amount and (2) you should contact the Account’s trustee or custodian about RMD requirements since we only provide the trustee or custodian with the Contract’s value (including any actuarial present value of additional benefits discussed below) so that it can be used by the trustee or custodian in the Account’s RMD calculations.

Non-Qualified Contracts. We are required to make a determination as to the taxability of any withdrawal you make in order to be able to annually report to the IRS and your information about your withdrawal. Under the Internal Revenue Code, any withdrawal from a Non-Qualified Contract is taxable to the extent the annuity’s cash value (determined without regard to surrender charges) exceeds the investment in the contract. There is no definition of “cash value” in the Code and, for tax reporting purposes, we are currently treating it as the Account Value of the Contract. However, there can be no assurance that the IRS will agree that this is the correct cash value. The IRS could, for example, determine that the cash value is the Account Value plus an additional amount representing the value of an optional benefit. If this were to occur, election of an optional benefit could cause any withdrawal, including a withdrawal under the withdrawal benefit of any optional living benefit, to have a higher proportion of the withdrawal derived from taxable investment earnings. Prior to electing to participate in an optional benefit (or, if applicable, prior to renewing your participation in any optional living benefit), you should consult with a qualified tax professional as to the meaning of “cash value.”

Federal Defense of Marriage Act and Same-Sex Marriages

The Contract provides that upon your death a surviving spouse may have certain continuation rights that he or she may elect to exercise for the Contract’s death benefit and any joint-life coverage under an optional living benefit. Because of the Federal Defense of Marriage Act, all such Contract continuation rights are available only to a person who is defined as a “spouse” under such Act and that definition does not include a same-sex spouse. Thus, under current Federal law, if you are in a same-sex marriage, your spouse would not be able to exercise any of the Contract’s spousal continuation rights. You should consult a qualified tax professional for advice before purchasing a Contract and/or joint-life coverage under an optional living benefit.

Federal Estate Taxes

While no attempt is being made to discuss the Federal estate tax implications of the Contract, a purchaser should keep in mind that the value of an annuity contract owned by a decedent and payable to a beneficiary by virtue of an annuity contract owned by a decedent and payable to a beneficiary by virtue of surviving the decedent is included in the decedent’s gross estate. Depending on the terms of the annuity contract, the value of the annuity included in the gross estate may be the value of the lump sum payment payable to the designated beneficiary or the actuarial value of the payments to be received by the beneficiary. Please consult an estate planning advisor for more information.

Generation-skipping Transfer Tax

Under certain circumstances, the Code may impose a “generation-skipping transfer tax” when all or part of an annuity contract is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Owner. Regulations issued under the Code may require us to deduct the tax from your Contract, or from any applicable payment, and pay it directly to the IRS. Please consult a qualified tax professional for more information.

Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the “2010 Act”) increases the federal estate tax exemption to $5,000,000 and reduces the federal estate tax rate to 35%; increases the Federal gift tax exemption to $5,000,000 and retains the federal gift tax rate at 35%; and increases the generation-skipping transfer (“GST”) tax exemption to $5,000,000 and reduces the GST tax rate to 35%. Commencing in 2012, these exemption amounts will be indexed for inflation.

The estate, gift, and GST provisions of the 2010 Act are only effective until December 31, 2012, after which the provisions will sunset, and the federal estate, gift and GST taxes will return to their pre-2001 levels, resulting in significantly lower exemptions and significantly higher tax rates. Between now and the end of 2012, Congress may make these provisions of the 2010 Act permanent, or they may do nothing and allow these 2010 Act provisions to sunset, or they may alter the exemptions and/or applicable tax rates.

The uncertainty as to how the current law might be modified in coming years underscores the importance of seeking guidance from a qualified professional to help ensure that your estate plan adequately addresses your needs and that of your beneficiaries under all possible scenarios.

Medicare Tax

Beginning in 2013, distributions from non-qualified annuity policies will be considered “investment income” for purposes of the newly enacted Medicare tax on investment income. Thus, in certain circumstances, a 3.8% tax may be applied to some or all of the taxable portion of distributions (e.g. earnings) to individuals whose income exceeds certain threshold amounts ($200,000 for filing single, $250,000 for married filing jointly and $125,000 for married filing separately.) Please consult a tax advisor for more information.

Annuity Purchases by Residents of Puerto Rico

The Internal Revenue Service has announced that income received by residents of Puerto Rico under life insurance or annuity contracts issued by a Puerto Rico branch of a United States life insurance company is U.S.-source income that is generally subject to United States federal income tax.

Annuity Purchases by Nonresident Aliens and Foreign Corporations

The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal withholding tax on taxable distributions from annuity contracts at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may be subject to state and/or municipal taxes and taxes that may be imposed by the purchaser’s country of citizenship or residence. Prospective purchasers are advised to consult with a qualified tax professional regarding U.S. state, and foreign taxation with respect to an annuity contract purchase.

Possible Tax Law Changes

Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of the Contract could change by legislation or otherwise. Consult a qualified tax professional with respect to legislative developments and their effect on the Contract.

We have the right to modify the Contract in response to legislative changes that could otherwise diminish the favorable tax treatment that annuity contract owners currently receive. We make no guarantee regarding the tax status of any contact and do not intend the above discussion as tax advice.

Puerto Rico Tax Provisions

The Contract offered by this Prospectus is considered a non-qualified annuity contract under Section 1022 of the Puerto Rico Internal Revenue Code of 1994, as amended and Section 1031.01 of the 2011 Internal Revenue Code for a New Puerto Rico, as amended (collectively the “Puerto Rico Code”). Under the current provisions of the Puerto Rico Code, no income tax is payable on increases in value of accumulation shares of annuity units credited to a variable annuity contract until payments are made to the annuitant or other payee under such contract.

When payments are made from your Contract in the form of an annuity, the annuitant or other payee will be required to include as gross income the lesser of the amount received during the taxable year or the portion of the amount received equal to 3% of the aggregate premiums or other consideration paid for the annuity. The amount, if any, in excess of the included amount is excluded from gross income as a return of premium. After an amount equal to the aggregate premiums or other consideration paid for the annuity has been excluded from gross income, all of the subsequent annuity payments are considered to be taxable income.

When a payment under a Contract is made in a lump sum, the amount of the payment would be included in the gross income of the Annuitant or other Payee to the extent it exceeds the Annuitant’s aggregate premiums or other consideration paid.

The provisions of the Puerto Rico Code with respect to qualified retirement plans described in this Prospectus vary significantly from those under the Internal Revenue Code. We currently offer the Contract in Puerto Rico in connection with Individual Retirement Arrangements that qualify under the U.S. Internal Revenue Code but do not qualify under the Puerto Rico Code. See the applicable text of this Prospectus under the heading “U.S. Federal Income Tax Provisions” dealing with such Arrangements and their RMD requirements. We may make Contracts available for use with other retirement plans that similarly qualify under the U.S. Internal Revenue Code but do not qualify under the Puerto Rico Code.

As a result of IRS Revenue Ruling 2004-75, as amplified by Revenue Ruling 2004-97, we will treat Contract distributions and withdrawals occurring on or after January 1, 2005 as U.S.-source income that is subject to U.S. income tax withholding and reporting. Under “TAX PROVISIONS,” see “Pre-Distribution Taxation of Contracts,” “Distributions and Withdrawals from Non-Qualified Contracts,” “Withholding” and “Non-Qualified Contracts.” You should consult a qualified tax professional for advice regarding the effect of Revenue Ruling 2004-75 on your U.S. and Puerto Rico income tax situation.

For information regarding the income tax consequences of owning a Contract, you should consult a qualified tax professional.

ADMINISTRATION OF THE CONTRACT

We perform certain administrative functions relating to the Contract, Participant Accounts, and the Variable Account. These functions include, but are not limited to, maintaining the books and records of the Variable Account and the Sub-Accounts; maintaining records of the name, address, taxpayer identification number, Contract number, Participant Account number and type, the status of each Participant Account and other pertinent information necessary to the administration and operation of the Contract; processing Applications, Purchase Payments, transfers and full and partial withdrawals; issuing Contracts and Certificates; administering annuity payments; furnishing accounting and valuation services; reconciling and depositing cash receipts; providing confirmations; providing toll-free customer service lines; and furnishing telephonic transfer services.

DISTRIBUTION OF THE CONTRACT

Contracts are sold by licensed insurance agents (“the Selling Agents”) in those states where the Contract may be lawfully sold. Such Selling Agents will be registered representatives of affiliated and unaffiliated broker-dealer firms (“the Selling Broker-Dealers”) registered under the Securities Exchange Act of 1934 who are members of the Financial Industry Regulatory Authority (“FINRA”) and who have entered into selling agreements with the Company and the general distributor, Clarendon Insurance Agency, Inc. (“Clarendon”), One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481. Clarendon is a wholly-owned subsidiary of the Company, is registered with the SEC under the Securities Exchange Act of 1934 as a broker-dealer and is a member of FINRA.

The Company (or its affiliate, for purposes of this section only, collectively, “the Company”), pays the Selling Broker-Dealers compensation for the promotion and sale of the Contract. The Selling Agents who solicit sales of the Contract typically receive a portion of the compensation paid by the Company to the Selling Broker-Dealers in the form of commissions or other compensation, depending on the agreement between the Selling Broker-Dealer and their Selling Agent. This compensation is not paid directly by the Participant or the separate account. The Company intends to recoup this compensation through fees and charges imposed under the Contract, and from profits on payments received by the Company for providing administrative, marketing, and other support and services to the Funds.

The amount and timing of commissions the Company may pay to Selling Broker-Dealers may vary depending on the selling agreement but is not expected to be more than 7.00% of Purchase Payments, and 1.25% annually of the Participant’s Account Value. The Company may pay or allow other promotional incentives or payments in the form of cash or other compensation to the extent permitted by FINRA rules and other applicable laws and regulations, and this compensation may be significant in amount.

The Company also pays compensation to wholesaling broker-dealers or other firms or intermediaries, including payments to affiliates of the Company, in return for wholesaling services such as providing marketing and sales support, product training and administrative services to the Selling Agents of the Selling Broker-Dealers. This compensation may be significant in amount and may be based on a percentage of Purchase Payments and/or a percentage of Contract Value and/or may be a fixed dollar amount.

In addition to the compensation described above, the Company may make additional cash payments, in certain circumstances referred to as “override” compensation, or reimbursements to Selling Broker-Dealers in recognition of their marketing and distribution, transaction processing and/or administrative services support. These payments are not offered to all Selling Broker-Dealers, and the terms of any particular agreement governing the payments may vary among Selling Broker-Dealers depending on, among other things, the level and type of marketing and distribution support provided. Marketing and distribution support services may include, among other services, placement of the Company’s products on the Selling Broker-Dealers’ preferred or recommended list, access to the Selling Broker-Dealers’ registered representatives for purposes of promoting sales of the Company’s products, assistance in training and education of the Selling Agents, and opportunities for the Company to participate in sales conferences and educational seminars. The payments or reimbursements may be calculated as a percentage of the particular Selling Broker-Dealer’s actual or expected aggregate sales of our variable contracts (including the Contract) or assets held within those contracts and/or may be a fixed dollar amount. Broker-dealers receiving these additional payments may pass on some or all of the payments to the Selling Agent. The prospect of receiving, or the receipt of additional compensation as described above may provide Selling Broker-Dealers with an incentive to favor sales of the Contracts over other variable annuity contracts (or other investments) with respect to which the Selling Broker-Dealer does not receive additional compensation, or lower levels of additional compensation. You should take such payment arrangements into account when considering and evaluating any recommendation relating to the Contracts.

In addition to selling our variable contracts (including the Contract), some Selling Broker-Dealers or their affiliates may have other business relationships with the Company. Those other business relationships may include, for example, reinsurance agreements pursuant to which an affiliate of the Selling Broker-Dealer provides reinsurance to the Company relative to some or all of the Contracts or other variable policies issued by the Company or its affiliates. The potential profits for a Selling Broker-Dealer or its affiliates (including its registered representatives) associated with such reinsurance arrangements could be significant in amount and could indirectly provide incentives to the Selling Broker-Dealer and its Selling Agents to recommend products for which they provide reinsurance over similar products which do not result in potential reinsurance profits to the Selling Broker-Dealer or its affiliate. The operation of an individual contract is not impacted by whether the policy is subject to a reinsurance arrangement between the Company and an affiliate of the Selling Broker-Dealer.

As discussed in the preceding paragraphs, the Selling Broker-Dealer may receive numerous forms of payments that, directly or indirectly, provide incentives to, and otherwise facilitate and encourage the offer and sale of the Contracts by Selling Broker-Dealers and their registered representatives. Such payments may be greater or less in connection with the Contracts than in connection with other products offered and sold by the Company or by others. Accordingly, the payments described above may create a potential conflict of interest, as they may influence your Selling Broker-Dealer or registered representative to present a Contract to you instead of (or more favorably than) another product or products that might be preferable to you.

You should ask your Selling Agent for further information about what commissions or other compensation he or she, or the Selling Broker-Dealer for which he or she works, may receive in connection with your purchase of a Contract.

Commissions may be waived or reduced in connection with certain transactions described in this Prospectus under the heading “Waivers; Reduced Charges; Credits; Special Guaranteed Interest Rates.” During 2010 and 2011, $284,111and $10,852,699, respectively, in commissions were paid to but not retained by Clarendon in connection with the distribution of the Contracts described in this Prospectus.

AVAILABLE INFORMATION

The Company and the Variable Account have filed with the SEC registration statements under the Securities Act of 1933 relating to the Contracts. For further information regarding the Variable Account, the Company and the Contracts, please refer to the registration statements and their exhibits. In addition, the Company is subject to the informational requirements of the Securities Exchange Act of 1934. We file reports and other information with the SEC to meet these requirements.

You can inspect and copy this information and our registration statements at the SEC’s public reference facilities at the following location: 100 F Street, N.E., Washington, D.C. 20549-0102, telephone (202) 551-8090. The SEC’s public reference room will also provide copies by mail for a fee. You may also find these materials on the SEC’s website (www.sec.gov).

STATE REGULATION

The Company is subject to the laws of the State of Delaware governing life insurance companies and to regulation by the Commissioner of Insurance of Delaware. An annual statement is filed with the Commissioner of Insurance on or before March lst in each year relating to the operations of the Company for the preceding year and its financial condition on December 31st of such year. Its books and records are subject to review or examination by the Commissioner or his agents at any time and a full examination of its operations is conducted at periodic intervals.

The Company is also subject to the insurance laws and regulations of the other states and jurisdictions in which it is licensed to operate. The laws of the various jurisdictions establish supervisory agencies with broad administrative powers with respect to licensing to transact business, overseeing trade practices, licensing agents, approving policy forms, establishing reserve requirements, fixing maximum interest rates on life insurance policy loans and minimum rates for accumulation of surrender values, prescribing the form and content of required financial statements and regulating the type and amounts of investments permitted. Each insurance company is required to file detailed annual reports with supervisory agencies in each of the jurisdictions in which it does business and its operations and accounts are subject to examination by such agencies at regular intervals.

In addition, many states regulate affiliated groups of insurers, such as the Company, Sun Life (Canada) and its affiliates, under insurance holding company legislation. Under such laws, inter-company transfers of assets and dividend payments from insurance subsidiaries may be subject to prior notice or approval, depending on the size of such transfers and payments in relation to the financial positions of the companies involved. Such insurance holding company legislation protects the Company’s ability to pay all guaranteed contract benefits, including any optional living benefits and death benefits. Under insurance guaranty fund laws in most states, insurers doing business therein can be assessed (up to prescribed limits) for policyholder losses incurred by insolvent companies. The amount of any future assessments of the Company under these laws cannot be reasonably estimated. However, most of these laws do provide that an assessment may be excused or deferred if it would threaten an insurer’s own financial strength and many permit the deduction of all or a portion of any such assessment from any future premium or similar taxes payable. A state’s assessment on insurers in connection with the state guaranty fund would not affect Sun Life’s obligation to pay guaranteed contract benefits, including any optional living benefits and death benefits. If an assessment were so large as to affect Sun Life’s own ability to meet its obligations, then the provisions to excuse, defer, or offset such assessment would allow Sun Life to pay guaranteed contract benefits.

Although the federal government generally does not directly regulate the business of insurance, federal initiatives often have an impact on the business in a variety of ways. Current and proposed federal measures which may significantly affect the insurance business include employee benefit regulation, removal of barriers preventing banks from engaging in the insurance business, tax law changes affecting the taxation of insurance companies, the tax treatment of insurance products and its impact on the relative desirability of various personal investment vehicles.

LEGAL PROCEEDINGS

Sun Life (U.S.), like other insurance companies, is involved in lawsuits, including class action lawsuits. Although the outcome of any litigation cannot be predicted with certainty, Sun Life (U.S.) believes that, at the present time, there are no pending or threatened lawsuits that are reasonably likely to have a material adverse impact on the Variable Account, on the ability of Clarendon Insurance Agency, Inc. to perform under its principal underwriting agreement, or on our ability to meet our obligations under the Contract.

FINANCIAL STATEMENTS

The financial statements of the Company which are included in the SAI should be considered only as bearing on the ability of the Company to meet its obligations with respect to amounts allocated to the Fixed Account options and with respect to the death benefit and the Company’s assumption of the mortality and expense risks. They should not be considered as bearing on the investment performance of the Fund shares held in the Sub-Accounts of the Variable Account.

The financial statements of the Variable Account for the year ended December 31, 2011 are also included in the SAI.

TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION

Sun Life Assurance Company of Canada (U.S.)	2
Advertising and Sales Literature	2
Tax-Deferred Accumulation	3
Calculations	4
Example of Net Investment Factor Calculation	4
Example of Variable Accumulation Unit Value Calculation	4
Annuity Provisions	4
Determination of Annuity Payments	4
Annuity Unit Value	5
Example of Variable Annuity Unit Calculation	5
Example of Variable Annuity Payment Calculation	5
Distribution of the Contracts	6
Custodian	6
Independent Registered Public Accounting Firm	6
Financial Statements	6

APPENDIX A -

GLOSSARY

The following terms as used in this Prospectus have the indicated meanings:

ACCOUNT or PARTICIPANT ACCOUNT: An account established for each Participant to which Net Purchase Payments are credited.

ACCOUNT QUARTER: A three-month period, with the first Account Quarter beginning on your Issue Date.

ACCOUNT VALUE: The Variable Account Value, if any, plus the Fixed Account Value, if any, of your Account for any Valuation Period.

ACCOUNT YEAR and ACCOUNT ANNIVERSARY: Your first Account Year is the period 365 days (366, if a leap year) from the date on which we issued your Contract. Your Account Anniversary is the last day of an Account Year. Each Account Year after the first is the 365-day period that begins on your Account Anniversary. For example, if the Issue Date is on March 12, the first Account Year is determined from the Issue Date and ends on March 12 of the following year. Your Account Anniversary is March 12 and all Account Years after the first are measured from March 12. (If the Anniversary Date falls on a non-Business Day, the previous Business Day will be used.)

ACCUMULATION PHASE: The period before the Annuity Commencement Date and during the lifetime of the Annuitant (and while the Covered Person and all Owners are still alive) during which you make Purchase Payments under the Contract. This is called the “Accumulation Period” in the Contract.

ADJUSTED PURCHASE PAYMENTS: Purchase Payments adjusted for partial withdrawals as described in “Calculating the Death Benefit.”

*ANNUITANT: The person or persons to whom the first annuity payment is made. If either Annuitant dies prior to the Annuity Commencement Date, the surviving Annuitant will become the sole Annuitant. The Annuitant becomes the Payee on the Annuity Commencement Date.

ANNUITY COMMENCEMENT DATE: The date on which the first annuity payment under each Contract is to be made.

ANNUITY OPTION: The method you choose for making annuity payments.

ANNUITY UNIT: A unit of measure used in the calculation of the amount of the second and each subsequent Variable Annuity payment from the Variable Account.

APPLICATION: The document signed by you or other evidence acceptable to us that serves as your application for participation under a Group Contract or purchase of an Individual Contract.

*BENEFICIARY: The person or entity having the right to receive the death benefit and, for a Certificate issued under a Non-Qualified Contract, who is the “designated beneficiary” for purposes of Section 72(s) of the Code in the event of the Participant’s death. Notwithstanding the foregoing, if there is more than one Participant of a Non-Qualified Contract, the surviving Participant will be deemed the beneficiary under the preceding sentence and any other designated beneficiary will be treated as a contingent beneficiary. The Beneficiary becomes the Payee on the death of the Covered Person prior to the Annuity Commencement Date, or on the death of the Annuitant on or after the Annuity Commencement Date.

BUSINESS DAY: Any day the New York Stock Exchange is open for trading. Also, any day on which we make a determination of the value of a Variable Accumulation Unit.

CERTIFICATE: The document for each Participant which evidences the coverage of the Participant under a Group Contract.

COMPANY (“WE,” “US,” “SUN LIFE (U.S.)”): Sun Life Assurance Company of Canada (U.S.).

CONTRACT: Any Individual Contract, Group Contract, or Certificate issued under a Group Contract.

COVERED PERSON: The person(s) identified as such in the Contract whose death will trigger the death benefit provisions of the Contract and whose medically necessary stay in a hospital or nursing facility may allow the Participant to be eligible for a waiver of the withdrawal charge. The Participant/Owner is the Covered Person unless there is a non-natural Owner, such as a trust, in which case the Annuitant is the Covered Person.

DCA PERIOD: The period for which a Guaranteed Interest Rate is credited.

DEATH BENEFIT DATE: If you have elected a death benefit payment option before the Covered Person’s death that remains in effect, the date on which we receive Due Proof of Death. If your Beneficiary elects the death benefit payment option, the later of (a) the date on which we receive the Beneficiary’s election and (b) the date on which we receive Due Proof of Death. If we do not receive the Beneficiary’s election within 60 days after we receive Due Proof of Death, the Beneficiary shall be deemed to have elected to defer receipt of payment under any death benefit option until such time as a written election is received by the Company or a distribution is required by law.

DESIGNATED FUNDS: The limited investment options you can choose if you are participating in a living benefit.

DUE PROOF OF DEATH: Receipt by the Company of (1) an original certified copy of an official death certificate or an original certified copy of a decree of a court of competent jurisdiction as to the finding of death, and (2) any other information or documentation required by the Company that is necessary to make payment (e.g. taxpayer identification numbers, beneficiary names and addresses, state inheritance tax waivers, etc.).

FIXED ACCOUNT: The general account of the Company, consisting of all assets of the Company other than those allocated to a separate account of the Company.

FIXED ACCOUNT VALUE: The value of that portion of your Account allocated to the Fixed Account.

FIXED ANNUITY: An annuity with payments which do not vary as to dollar amount.

FUND: A registered management investment company, or series thereof, in which assets of a Sub-Account may be invested.

GROUP CONTRACT: A Contract issued by the Company on a group basis.

GUARANTEED INTEREST RATE: The rate of interest we credit on an annual effective basis.

INCOME PHASE: The period on and after the Annuity Commencement Date and during the lifetime of the Annuitant during which we make annuity payments under the Contract.

INDIVIDUAL CONTRACT: A Contract issued by the Company on an individual basis.

ISSUE DATE: The date the Contract becomes effective which is the date we apply your initial Net Purchase Payment to your Account and issue your Contract. This is called the “Date of Coverage” in the Contract.

MAXIMUM ANNUITY COMMENCEMENT DATE: The first day of the month following the youngest Annuitant’s 95th birthday.

NET INVESTMENT FACTOR: An index applied to measure the investment performance of a Sub-Account from one Valuation Period to the next. The Net Investment Factor may be greater than, less than, or equal to one.

NET PURCHASE PAYMENT: The portion of a Purchase Payment which remains after the deduction of any applicable premium tax or similar tax.

NON-QUALIFIED CONTRACT: A Contract used in connection with a retirement plan that does not receive favorable federal income tax treatment under Sections 401, 403, 408, or 408A of the Internal Revenue Code. The Participant’s interest in the Contract must be owned by a natural person or agent for a natural person for the Contract to receive income tax treatment as an annuity.

OPEN DATE: The Business Day your Application is received by the Company at its mailing address. The ages of all Owners and Annuitants on the Open Date determines your eligibility for purchasing a Contract and for electing the optional death benefit and an optional living benefit.

*OWNER: The person, persons or entity entitled to the ownership rights stated in a Group Contract and in whose name or names the Group Contract is issued. The Owner may designate a trustee or custodian of a retirement plan which meets the requirements of Section 401, Section 408(c), Section 408(k), Section 408(p) or Section 408A of the Internal Revenue Code to serve as legal owner of assets of a retirement plan, but the term “Owner,” as used herein, shall refer to the organization entering into the Group Contract.

*PARTICIPANT: In the case of an Individual Contract, the owner of the Contract. In the case of a Group Contract, the person named in the Contract who is entitled to exercise all rights and privileges of ownership under the Contract, except as reserved by the Owner. If there are two Participants, the death benefit is paid upon the death of either Participant.

PAYEE: A recipient of payments under a Contract. The term includes (1) an Annuitant or (2) a Beneficiary who becomes entitled to benefits upon the death of the Participant or upon the death of the Annuitant on or after the Annuity Commencement Date.

PURCHASE PAYMENT (PAYMENT): An amount paid to the Company as consideration for the benefits provided by a Contract.

QUALIFIED CONTRACT: A Contract used in connection with a retirement plan which may receive favorable federal income tax treatment under Sections 401, 403, 408 or 408A of the Internal Revenue Code of 1986, as amended.

SUB-ACCOUNT: That portion of the Variable Account which invests in shares of a specific Fund.

SURRENDER VALUE: The amount payable on full withdrawal (or surrender) of your Contract. The amount equals: (i) your Account Value at the end of the Valuation Period during which we receive your surrender request; minus (ii) any Account Fee applicable for the Account Year in which the surrender is made and minus any applicable withdrawal charge.

VALUATION PERIOD: The period of time from one determination of Variable Accumulation Unit or Annuity Unit values to the next subsequent determination of these values. Value determinations are made as of the close of the New York Stock Exchange on each day that the Exchange is open for trading.

VARIABLE ACCOUNT: Variable Account F of the Company, which is a separate account of the Company consisting of assets set aside by the Company, the investment performance of which is kept separate from that of the general assets of the Company.

VARIABLE ACCUMULATION UNIT: A unit of measure used in the calculation of Variable Account Value.

VARIABLE ACCOUNT VALUE: The value of that portion of your Account allocated to the Variable Account.

VARIABLE ANNUITY: An annuity with payments which vary as to dollar amount in relation to the investment performance of the Variable Account.

YOU and YOUR: The terms “you” and “your” refer to “Owner,” “Participant,” and/or “Covered Person” as those terms are identified in the Contract.

*You specify these items on the Application, and may change them, as we describe in this Prospectus.

APPENDIX B -

WITHDRAWAL CHARGE CALCULATIONS

Full Withdrawal:

Assume a Purchase Payment of $40,000 is made on the Issue Date, no additional Purchase Payments are made and there are no partial withdrawals. The table below presents three examples of the withdrawal charge resulting from a full withdrawal of your Account, based on hypothetical Account Values.

		Hypothetical	Free	Purchase Payment	Withdrawal	Withdrawal
	Account	Account	Withdrawal	Amount Subject to	Charge	Charge
	Year	Value	Amount	Withdrawal Charge	Percentage	Amount
(a)	1	$41,000	$ 4,000	$37,000	8.00%	$2,960
	2	$44,200	$ 4,000	$40,000	8.00%	$3,200
(b)	3	$47,700	$ 4,000	$40,000	7.00%	$2,800
	4	$51,500	$ 4,000	$40,000	6.00%	$2,400
(c)	5	$55,600	$55,600	$          0	0.00%	$        0
	6	$60,000	$60,000	$          0	0.00%	$        0

(a)	The free withdrawal amount in any year is equal to 10% of all of the Purchase Payments you have made. In Account Year 1, the free withdrawal amount is $4,000, which equals 10% of the Purchase Payment of $40,000. On a full withdrawal of $41,000, the amount subject to a withdrawal charge is $37,000, which equals the Account Value of $41,000 minus the free withdrawal amount of $4,000.
(b)	In Account Year 3, the free withdrawal amount is $4,000, which equals 10% of the Purchase Payment of $40,000. The Account Value minus the free withdrawal amount is $47,700 minus $4,000, which equals $43,700; however, the amount subject to a withdrawal charge is capped at the amount of your remaining Purchase Payments. Therefore, the amount subject to a withdrawal charge is $40,000, which is the amount of your remaining Purchase Payments.
(c)	In Account Year 5, you have passed your fourth Account Anniversary, so no withdrawal charges apply to any withdrawals you make.

Partial Withdrawal:

Assume a single Purchase Payment of $40,000 is made on the Issue Date, no additional Purchase Payments are made, no partial withdrawals have been taken prior to the fourth Account Year, and there is a series of four partial withdrawals made during the fourth Account Year of $3,000, $8,000, $12,000, and $22,000.

	Hypothetical	Free		Amount of			Remaining
	Account	Withdrawal		Withdrawal			Free	Hypothetical
	Value	Amount		Subject to	Withdrawal	Withdrawal	Withdrawal	Account
Account	Before	Before	Amount of	Withdrawal	Charge	Charge	Amount After	Value after
Year	Withdrawal	Withdrawal	Withdrawal	Charge	Percentage	Amount	Withdrawal	Withdrawal
1	$41,000	$4,000	$          0	$          0	8.00%	$        0	$4,000	$41,000
2	$44,200	$4,000	$          0	$          0	8.00%	$        0	$4,000	$44,200
3	$47,700	$4,000	$          0	$          0	7.00%	$        0	$4,000	$47,700
(a)    4	$48,200	$4,000	$  3,000	$          0	6.00%	$        0	$1,000	$45,200
(b)    4	$46,000	$1,000	$  8,000	$  7,000	6.00%	$   420	$        0	$38,000
(c)    4	$38,250	$        0	$12,000	$12,000	6.00%	$   720	$        0	$26,250
(d)    4	$26,650	$        0	$22,000	$21,000	6.00%	$1,260	$        0	$ 4,650
Totals			$45,000	$40,000	6.00%	$2,400	$        0	$ 4,650

(a)	In Account Year 4, the free withdrawal amount is $4,000, which equals 10% of the Purchase Payment of $40,000. The partial withdrawal amount of $3,000 is less than the free withdrawal amount, so there is no withdrawal charge.
(b)	Since a partial withdrawal of $3,000 was taken, the remaining free withdrawal amount in Account Year 4 is $4,000 - $3,000 = $1,000. Therefore, $1,000 of the $8,000 withdrawal is not subject to a withdrawal charge, and $7,000 is subject to a withdrawal charge. Of the $11,000 withdrawn to date, $4,000 has been from the free withdrawal amount and $7,000 has been from Purchase Payments. Therefore, the amount of remaining Purchase Payments is $33,000.
(c)	Since $4,000 of the two prior Account Year 4 partial withdrawals was taken from the free withdrawal amount, the remaining free withdrawal amount in Account Year 4 is $4,000 - $4,000 = $0. Therefore, the entire $12,000 withdrawal is subject to a withdrawal charge. Of the $23,000 withdrawn to date, $4,000 has been from the free withdrawal amount and $19,000 has been from Purchase Payments. Therefore, the amount of remaining Purchase Payments is $21,000.
(d)	Since $4,000 of the three prior Account Year 4 partial withdrawals was taken from the free withdrawal amount, the remaining free withdrawal amount in Account Year 4 is $4,000 - $4,000 = $0. The amount of Purchase Payments remaining before this withdrawal is $21,000. Therefore, $21,000 of the $22,000 withdrawal is taken from Purchase Payments and is subject to a withdrawal charge, and $1,000 of the withdrawal is taken from earnings and is not subject to a withdrawal charge. Of the $45,000 withdrawn to date, $4,000 has been from the free withdrawal amount, $40,000 has been from Purchase Payments, and $1,000 has been from earnings. The amount of remaining Purchase Payments is now equal to $0. Note that if the $4,650 remaining balance was withdrawn, it would all be from earnings and not subject to a withdrawal charge. The total Account Year 4 withdrawal charges would then be $2,400, which is the same amount that was assessed for a full withdrawal in Account Year 4 in the example above.

APPENDIX C -

PREVIOUSLY AVAILABLE INVESTMENT OPTIONS

The current available variable investment options are those listed on page 1 of the prospectus.

If you purchased your Contract before October 31, 2011, you may make subsequent Purchase Payments and transfers into the following investment options that were available for investment prior to that date:

Large-Cap Equity Funds	Asset Allocation Funds
Columbia Variable Portfolio - Marsico 21st Century Fund, Class 2	Franklin Income Securities Fund, Class 2
Mutual Shares Securities Fund, Class 2	Target Date Funds
Oppenheimer Capital Appreciation Fund/VA, Service Shares	Fidelity® Variable Insurance Products Fund IV - Freedom 2015
Small-Cap Equity Funds	Portfolio, Service Class 2
Franklin Small Cap Value Securities Fund, Class 2	Fidelity® Variable Insurance Products Fund IV - Freedom 2020
International/Global Equity Funds	Portfolio, Service Class 2
AllianceBernstein International Growth Portfolio, Class B	Intermediate-Term Bond Funds
Columbia Variable Portfolio - Marsico International	MFS® Bond Portfolio, Service Class
Opportunities Fund, Class 2	Multi-Sector Bond Fund
Templeton Growth Securities Fund, Class 2	Franklin Strategic Income Securities Fund, Class 2
Specialty Sector Commodity Funds	Emerging Markets Bond Fund
PIMCO CommodityRealReturn® Strategy Portfolio,	PIMCO Emerging Markets Bond Portfolio, Administrative Class
Administrative Class

AllianceBernstein L.P. advises the AllianceBernstein Portfolio. Columbia Management Investment Advisers, LLC, advises the Columbia Variable Portfolios (sub-advised by Marsico Capital Management, LLC). Franklin Advisers, Inc. advises Franklin Income Securities Fund and Franklin Strategic Income Securities Fund. Franklin Advisory Services, LLC advises Franklin Small Cap Value Securities Fund. Franklin Mutual Advisers LLC advises Mutual Shares Securities Fund. Massachusetts Financial Services Company, our affiliate,advises the MFS® Portfolio. Pacific Investment Management Company LLC advises the PIMCO Portfolios. OppenheimerFunds, Inc. advises the Oppenheimer Fund. Strategic Advisers, Inc. advises the Fidelity® VIP Freedom Portfolios. Templeton Global Advisors Limited advises Templeton Growth Securities Fund.

APPENDIX D -

OPTIONAL LIVING BENEFIT EXAMPLES

Example: How the Living Benefits work

Assume for the examples below that you are age 63 when your Contract is issued with an initial Purchase Payment of $100,000 and that you elected to participate with single-life coverage. (If you selected joint-life coverage, then the numbers shown in the example could be different). Your Withdrawal Benefit Base and your Bonus Base are each set equal to your initial Purchase Payment on your Issue Date. Because you reached age 59 prior to your Issue Date, your Coverage Date is your Issue Date. At any time, you can begin to withdraw up to your Annual Withdrawal Amount each Account Year without reducing your Withdrawal Benefit Base. (For convenience, assume that the investment performance of your underlying investments equals or offsets all Contract expenses. Therefore, your Account Value remains constant throughout the life of your Contract, except for Account Years 2 and 5.)

A. How SIR III works.

Your Annual Withdrawal Amount is set equal to 4% of your Withdrawal Benefit Base, or $4,000. Your Withdrawal Benefit Base will increase by 7% of your Bonus Base each Account Year in which you do not take a withdrawal during the Bonus Period. By deferring withdrawals during the Bonus Period you will increase your Withdrawal Benefit Base, which in turn may maximize your Annual Withdrawal Amount.
Assume that, because of good investment performance of the Designated Funds during Account Year 2, your Account Value has grown to $125,000 on your second Account Anniversary. Therefore, your Contract is eligible for an automatic step-up of its Withdrawal Benefit Base and Bonus Base. At this time we will step up your Withdrawal Benefit Base and your Bonus Base to $125,000. Additionally, because you have crossed into another age tier (from age 63 to age 65), your new Annual Withdrawal Amount will be 5% of your new Withdrawal Benefit Base, or $6,250. Going forward, your new Bonus Base will be $125,000, unless increased by another step-up or reduced by an Excess Withdrawal, and your Bonus Period will now end on your 12th Account Anniversary (i.e., ten years after the step-up). All values shown are as of the beginning of the Account Year.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
1	$100,000	$100,000	$100,000	$4,000	$0
2	$100,000	$107,000	$100,000	$4,280	$0
3	$125,000	$125,000	$125,000	$6,250	$0
Assume you take your first withdrawal in Account Year 4.  We set your Lifetime Withdrawal Percentage at 5%. Your Annual Withdrawal Amount will be equal to 5% of your Withdrawal Benefit Base. You can withdraw up to $6,688 in Account Year 4 without reducing your Withdrawal Benefit Base.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
4	$125,000	$133,750	$125,000	$6,688	$6,688
5	$118,312	$133,750	$125,000	$6,688	$6,688
Assume that, because of good investment performance of the Designated Funds during Account Year 5, your Account Value has grown to $170,000 on your fifth Account Anniversary. Therefore, your Contract is eligible for an automatic step-up of its Withdrawal Benefit Base. We will step up your Withdrawal Benefit Base to $170,000. Your new Annual Withdrawal Amount will be 5% of your new Withdrawal Benefit Base, or $8,500. Going forward, your new Bonus Base will be $170,000, unless increased by another step-up or reduced by an Excess Withdrawal, and your Bonus Period will now end on your 15th Account Anniversary
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
6	$170,000	$170,000	$170,000	$8,500	$8,500
7	$161,500	$170,000	$170,000	$8,500	$8,500
8	$153,000	$170,000	$170,000	$8,500	$8,500
Assume in Account Year 9, you don’t take a withdrawal. Your Withdrawal Benefit Base will increase by $11,900, which is 7% of your Bonus Base ($170,000). Your new Annual Withdrawal Amount will be set equal to $9,095, which is 5% of your new Withdrawal Benefit Base ($181,900), as shown below:
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
9	$144,500	$170,000	$170,000	$8,500	$0
10	$144,500	$181,900	$170,000	$9,095	$9,095
11	$135,405	$181,900	$170,000	$9,095	$9,095
12	$126,310	$181,900	$170,000	$9,095	$9,095
13	$117,215	$181,900	$170,000	$9,095	$9,095
14	$108,120	$181,900	$170,000	$9,095	$9,095
15	$  99,025	$181,900	$170,000	$9,095	$9,095

B. How SIM works.

Your Annual Withdrawal Amount is set equal to 4% of your Withdrawal Benefit Base, or $4,000. Your Withdrawal Benefit Base will increase by 8% of your Bonus Base each Account Year in which you do not take a withdrawal during the Bonus Period. By deferring withdrawals during the Bonus Period, you will increase your Withdrawal Benefit Base, which in turn may maximize your Annual Withdrawal Amount.
Assume that, because of good investment performance of the Designated Funds during Account Year 2, your Account Value has grown to $125,000 on your second Account Anniversary. Therefore, your Contract is eligible for an automatic step-up of its Withdrawal Benefit Base and Bonus Base. At this time we will step-up your Withdrawal Benefit Base and your Bonus Base to $125,000. Additionally, because you have crossed into another age tier (from age 63 to age 65), your new Annual Withdrawal Amount will be 5% of your new Withdrawal Benefit Base, or $6,250. Going forward, your new Bonus Base will be $125,000, unless increased by another step-up or reduced by a One Time Access Withdrawal. Your Bonus Period will end on your 10th Account Anniversary (i.e., ten years after the Issue Date) or the first withdrawal that is not a One-Time Access Withdrawal. All values shown are as of the beginning of the Account Year.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
1	$100,000	$100,000	$100,000	$4,000	$0
2	$100,000	$108,000	$100,000	$4,320	$0
3	$125,000	$125,000	$125,000	$6,250	$0
Assume you take your first withdrawal in Account Year 4. We set your Lifetime Withdrawal Percentage at 5%. Your Annual Withdrawal Amount will be equal to 5% of your Withdrawal Benefit Base. In Account Year 4, your Withdrawal Benefit Base (including the Bonus) equals $135,000, and you can withdraw up to $6,750 (5% of $135,000) in Account Year 4 without reducing your Withdrawal Benefit Base. Because your first withdrawal was not a One-Time Access Withdrawal, your Bonus Period ends.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
4	$125,000	$135,000	N/A	$6,750	$6,750
5	$118,250	$135,000	N/A	$6,750	$6,750
Assume that, because of good investment performance of the Designated Funds during Account Year 5, your Account Value has grown to $170,000 on your fifth Account Anniversary.  Therefore, your Contract is eligible for an automatic step-up of its Withdrawal Benefit Base.  We will step up your Withdrawal Benefit Base to $170,000. Your new Annual Withdrawal Amount will be 5% of your new Withdrawal Benefit Base, or $8,500.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
6	$170,000	$170,000	N/A	$8,500	$8,500
7	$161,500	$170,000	N/A	$8,500	$8,500
8	$153,000	$170,000	N/A	$8,500	$8,500
Assume in Account Year 9, you don’t take a withdrawal. Your Withdrawal Benefit Base will not increase by a Bonus because the Bonus Period ended when the first withdrawal (other than the One-Time Access Withdrawal) was taken.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
9	$144,500	$170,000	N/A	$8,500	$0
10	$144,500	$170,000	N/A	$8,500	$8,500
11	$136,000	$170,000	N/A	$8,500	$8,500
12	$127,500	$170,000	N/A	$8,500	$8,500
13	$119,000	$170,000	N/A	$8,500	$8,500
14	$110,500	$170,000	N/A	$8,500	$8,500
15	$102,000	$170,000	N/A	$8,500	$8,500

C. How SIM Plus works.

Your Annual Withdrawal Amount is set equal to 3% of your Withdrawal Benefit Base, or $3,000. Your Withdrawal Benefit Base will increase by 8% of your Bonus Base each Account Year in which you do not take a withdrawal during the Bonus Period. By deferring your withdrawals during the Bonus Period you will increase your Withdrawal Benefit Base, which in turn may maximize your Annual Withdrawal Amount.
Assume that, because of good investment performance of the Designated Funds during Account Year 2, your Account Value has grown to $125,000 on your second Account Anniversary. Therefore, your Contract is eligible for an automatic step-up of its Withdrawal Benefit Base and Bonus Base. At this time we will step up your Withdrawal Benefit Base and your Bonus Base to $125,000. Additionally, because you have crossed into another age tier (from age 63 to age 65), your new Annual Withdrawal Amount will be 4% of your new Withdrawal Benefit Base, or $5,000. Going forward, your new Bonus Base will be $125,000, unless increased by another step-up or reduced by a One Time Access Withdrawal. Your Bonus Period will end on your 10th Account Anniversary (i.e., ten years after the Issue Date) or the first withdrawal that is not a One-Time Access Withdrawal. All values shown are as of the beginning of the Account Year.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
1	$100,000	$100,000	$100,000	$3,000	$0
2	$100,000	$108,000	$100,000	$3,240	$0
3	$125,000	$125,000	$125,000	$5,000	$0
Assume you take your first withdrawal in Account Year 4. We set your Lifetime Withdrawal Percentage at 4%. Your Annual Withdrawal Amount will be equal to 4% of your Withdrawal Benefit Base. In Account Year 4, your Withdrawal Benefit Base (including the Bonus) equals $135,000, and you can withdraw up to $5,400 (4% of $135,000) in Account Year 4 without reducing your Withdrawal Benefit Base. The Withdrawal Benefit Base will increase each year following the initial withdrawal by the 2.5% Plus Factor, as long as no Excess Withdrawals are taken during the Account Year. Because your first withdrawal was not a One-Time Access Withdrawal, your Bonus Period ends.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
4	$125,000	$135,000	N/A	$5,400	$5,400
5	$119,600	$138,375	N/A	$5,535	$5,535
Assume that, because of good investment performance of the Designated Funds during Account Year 5, your Account Value has grown to $170,000 on your fifth Account Anniversary.  Therefore your Contract is eligible for an automatic step-up of its Withdrawal Benefit Base. We will step up your Withdrawal Benefit Base to $170,000. Your new Annual Withdrawal Amount will be 4% of your new Withdrawal Benefit Base, or $6,800.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
6	$170,000	$170,000	N/A	$6,800	$6,800
7	$163,200	$174,250	N/A	$6,970	$6,970
8	$156,230	$178,606	N/A	$7,144	$7,144
Assume in Account Year 9, you don’t take a withdrawal. Your Withdrawal Benefit Base will not increase by a Bonus because the Bonus Period ended when the first withdrawal (other than the One-Time Access Withdrawal) was taken.  However, the Withdrawal Benefit Base will increase by 2.5% as a result of the Plus Factor.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
9	$149,086	$183,071	N/A	$7,323	$0
10	$149,086	$187,648	N/A	$7,506	$7,506
11	$141,580	$192,339	N/A	$7,694	$7,694
12	$133,886	$197,148	N/A	$7,886	$7,886
13	$126,000	$202,077	N/A	$8,083	$8,083
14	$117,917	$207,129	N/A	$8,285	$8,285
15	$109,623	$212,307	N/A	$8,492	$8,492

Example: 200% Benefit Enhancement (SIM & SIM Plus only)

Assume a client, age 62, purchased a contract on January 1, 2010 with an initial Purchase Payment of $100,000. On January 1, 2020 (the later of the 10th Account Anniversary or the Account Anniversary following age 70), if no withdrawals have been taken and the then current Withdrawal Benefit Base equals $180,000, the Withdrawal Benefit Base will be increased to $200,000 (200% of the initial Purchase Payment). If on January 1, 2020, your current Withdrawal Benefit Base is greater than $200,000 due to a prior step-up, then the 200% Benefit Enhancement would not be applied.

Assume a client, age 55, purchased a contract on January 1, 2010 with an initial Purchase Payment of $100,000. On January 1, 2025 (the later of the 10th Account Anniversary or the Account Anniversary following age 70), if no withdrawals have been taken and the then current Withdrawal Benefit Base equals $180,000, the Withdrawal Benefit Base will be increased to $200,000.

Assume a client, age 62, purchased a contract on January 1, 2010 with an initial Purchase Payment of $100,000. A subsequent purchase payment of $50,000 is made on June 1, 2018. On January 1, 2020 (the later of the 10th Account Anniversary or the Account Anniversary following age 70), if no withdrawals have been taken and the then current Withdrawal Benefit Base equals $238,000, the Withdrawal Benefit Base will be increased to $250,000 (200% of the initial Purchase Payment, plus 100% of additional Purchase Payments made after the first Account Anniversary.

Example: One-Time Access Withdrawal (SIM and SIM Plus only)

You may take the One-Time Access Withdrawal before you begin receiving your Annual Withdrawal Amount. The One-Time Access Withdrawal will not end the 200% Benefit Enhancement or the Bonus Period. However, the One-Time Access Withdrawal will cause the Bonus for that Account Year to be forfeited. As a result of the One-Time Access Withdrawal, your Withdrawal Benefit Base, Bonus Base and your 200% Benefit Enhancement will be reduced using the following formulas:

Your new Bonus Base	=	BB x	(	AV - WD	)
				AV

Your new Withdrawal Benefit Base	=	WBB x	(	AV - WD	)
				AV

Your new 200% Benefit Enhancement	=	BE x	(	AV - WD	)
				AV

Where:
	BB  =	Your Bonus Base immediately prior to the One-Time Access Withdrawal.
	WBB  =	Your Withdrawal Benefit Base immediately prior to the One-Time Access Withdrawal.
	BE  =	Your 200% Benefit Enhancement immediately prior to the One-Time Access Withdrawal.
	WD  =	The amount of the One-Time Access Withdrawal.
	AV  =	Your Account Value immediately prior to the One-Time Access Withdrawal.

Assume your Contract is issued with an initial Purchase Payment of $100,000, and that you elected to participate with single-life coverage. Your Withdrawal Benefit Base and your Bonus Base are each set equal to your initial Purchase Payment on your Issue Date. Your Withdrawal Benefit Base will increase by 8% of your Bonus Base each year in which you do not take a withdrawal during the Bonus Period.  Assume your Coverage Date will start in your 5th Account Anniversary (the first Account Anniversary after you reach age 59). If you notify us, the first withdrawal you take after the Coverage Date may be considered the One-Time Access Withdrawal.
Assume that because of good investment performance of the Designated Funds during Account Year 2 your Account Value has grown to $125,000 on your second Account Anniversary. Therefore your Contract is eligible for an automatic step-up of its Withdrawal Benefit Base and Bonus Base. We will step-up your Withdrawal Benefit Base and your Bonus Base to $125,000.
Assume that, in your Account Year 7, you need to take $10,000 and you notify us of your intention to make this withdrawal your One-Time Access Withdrawal.
Account Year		Account Value	Withdrawal Benefit Base			Bonus Base			Withdrawals
1		$100,000	$100,000			$100,000			$0
2		$100,000	$108,000			$100,000			$0
3		$125,000	$125,000			$125,000			$0
4		$125,000	$135,000			$125,000			$0
5		$125,000	$145,000			$125,000			$0
6		$125,000	$155,000			$125,000			$0
7		$125,000	$165,000			$125,000			$10,000
At this point, your Bonus Base, your Withdrawal Benefit Base and your 200% Benefit Enhancement will be recalculated as follows:
	Your new Bonus Base			=	$125,000		x	$125,000 – $10,000
								$125,000
				=	$115,000
	Your new Withdrawal Benefit Base			=	$165,000		x	$125,000 – $10,000
								$125,000
				=	$151,800
	Your new 200% Benefit Enhancement			=	$200,000		x	$125,000 – $10,000
								$125,000
				=	$184,000

Example: Early Withdrawals

Any withdrawal (other than the One-Time Access Withdrawal applicable to SIM and SIM Plus) taken before your Coverage Date will be considered an Early Withdrawal. Your Bonus Base (applicable to SIR III only) and Withdrawal Benefit Base will be reduced using the following formulas:

Your new Bonus Base	=	BB x	(	AV - WD	)
				AV

Your new Withdrawal Benefit Base	=	WBB x	(	AV - WD	)
				AV

Where:
	BB  =	Your Bonus Base immediately prior to the Early Withdrawal.
	WBB  =	Your Withdrawal Benefit Base immediately prior to the Early Withdrawal.
	WD  =	The amount of the Early Withdrawal.
	AV  =	Your Account Value immediately prior to the Early Withdrawal.

Assume that you are age 50 when your Contract is issued with an initial Purchase Payment of $100,000, and that you elected to participate with single-life coverage. Your Withdrawal Benefit Base and your Bonus Base are each set to equal your initial Purchase Payment on your Issue Date. Your Withdrawal Benefit Base will increase by a percentage of your Bonus Base each year in which you do not take a withdrawal. Your Coverage Date will be the first Account Anniversary after you attain the age of 59. (Please note that with SIM and SIM Plus, the first Early Withdrawal taken will be considered the One-Time Access Withdrawal. Also note that the Bonus Period will end on SIM and SIM Plus if a second Early Withdrawal is taken.)
Assume that, because of good investment performance of the Designated Funds during Account Year 2 your Account Value has grown to $125,000 on your second Account Anniversary. Therefore, your Contract is eligible for an automatic step-up of the Withdrawal Benefit Base and Bonus Base. We will step up your Withdrawal Benefit Base and Bonus Base to $125,000. Assume that, in your Account Year 3, you withdraw $10,000. Because you are age 53 (and younger than age 59), this is an Early Withdrawal.
At this point, your Bonus Base and your Withdrawal Benefit Base will be recalculated as follows:
	Your new  Bonus Base	=	$125,000	x	$125,000 – $10,000
	(SIR III only)				$125,000
		=	115,000
	Your new Withdrawal Benefit Base	=	$125,000	x	$125,000 – $10,000
					$125,000
		=	115,000
Your Annual Withdrawal Amount will still be $0 because you have not reached your Coverage Date. For SIM and SIM Plus, any withdrawal other than the One-Time Access Withdrawal will end the Bonus Period and forfeit the 200% Benefit Enhancement have ended.

Example: Excess Withdrawals

If you take an Excess Withdrawal that is not your One-Time Access Withdrawal,(applicable to SIM and SIM Plus only) your Withdrawal Benefit Base and Bonus Base (applicable to SIR III only) will be reduced according to the following formulas:

Your new  Bonus Base	=	BB x	(	AV - WD	)
				AV-AWA

Your new Withdrawal Benefit Base	=	WBB x	(	AV - WD	)
				AV - AWA

Where:
	BB =	Your Bonus Base immediately prior to the Excess Withdrawal.
	WBB =	Your Withdrawal Benefit Base immediately prior to the Excess Withdrawal.
	WD =	The amount of the Excess Withdrawal.
	AV =	Your Account Value immediately prior to the Excess Withdrawal.
	AWA =	Your Annual Withdrawal Amount minus any prior partial withdrawals taken during the current Account Year.

Assume that you invested $65,000 and, due to recent positive market performance, your Account Value in Account Year 5 is $100,000. Your Withdrawal Benefit Base and Bonus Base have stepped up to 100,000, your Lifetime Withdrawal Percentage is 5%, and thus your Annual Withdrawal Amount is $5,000. During this Account Year you make two withdrawals: a $4,000 withdrawal followed by a $6,000 withdrawal. Your first withdrawal reduces your Account Value to $96,000 but does not affect your Withdrawal Benefit Base because it is not in excess of your Annual Withdrawal Amount. Your second withdrawal (when combined with the first) is in excess of your $5,000 Annual Withdrawal Amount. After your second withdrawal, your Withdrawal Benefit Base will be reduced as follows:
	Your new Bonus Base	=	$100,000	x	$96,000 – $6,000
					$96,000 – ($5,000 – $4,000)
		=	$94,737
	Your new Withdrawal Benefit Base	=	$100,000	x	$96,000 – $6,000
					$96,000 – ($5,000 – $4,000)
		=	$94,737
Beginning on your Account Anniversary and going forward, your new Annual Withdrawal Amount will be $4,737 (5% of $94,737). For SIM and SIM Plus , any withdrawal other than the One-Time Access Withdrawal will end the Bonus Period and forfeit the 200% Benefit Enhancement have ended.

You should be aware that, if your Account Value minus your Annual Withdrawal Amount is less than the Withdrawal Benefit Base at the time an Excess Withdrawal is taken (as in the above example), then your Withdrawal Benefit Base will be reduced by an amount equal to or more than the excess amount withdrawn. Thus, Excess Withdrawals taken in a down market could severely reduce your benefit.

Example: Account Value goes to zero before the Coverage Date

Assume for the next two examples (A and B) below that you are age 45 when your Contract is issued with an initial Purchase Payment of $100,000 and that you elected to participate in the SIR III living benefit with single-life coverage. (If you selected joint-life coverage or a different optional living benefit, the numbers shown in the example could be different; however, the concept is the same).

Your Withdrawal Benefit Base and your Bonus Base are each set equal to your initial Purchase Payment on your Issue Date. Because you have not reached age 59 prior to your Issue Date, your Coverage Date is the anniversary following your 59th birthday. You may begin to withdraw up to your Annual Withdrawal Amount each Account Year without reducing your Withdrawal Benefit Base starting on the Coverage Date.

A. Early Withdrawal causes Account Value to go to zero before the Coverage Date.

Assume that because of the investment performance of the Designated Funds your Account Value remains constant. During Account Year 4 you decide to take an Early Withdrawal equal to the full Account Value.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
1	$100,000	$100,000	$100,000	$0	$0
2	$100,000	$107,000	$100,000	$0	$0
3	$100,000	$114,000	$100,000	$0	$0
4	$100,000	$121,000	$100,000	$0	$100,000
5	$0	$0	$0	$0	$0

Since your withdrawal was for the full Account Value, your Contract, including the Living Benefit, will end and you will not be eligible to receive your Annual Withdrawal Amount.

B. Poor performance, Contract fees and charges cause Account Value to go to zero before the Coverage Date.

Assume that, over the course of the first 10 years of the Contract, the investment performance of the Designated Funds is such that the Account Value goes to zero due to the combination of poor investment performance, contract fees and charges. You did not take any withdrawals to cause the Account Value to go to zero.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
1	$100,000	$100,000	$100,000	$0	$0
2	$85,000	$107,000	$100,000	$0	$0
3	$65,000	$114,000	$100,000	$0	$0
4	$55,000	$121,000	$100,000	$0	$0
5	$45,000	$128,000	$100,000	$0	$0
6	$35,000	$135,000	$100,000	$0	$0
7	$25,000	$142,000	$100,000	$0	$0
8	$15,000	$149,000	$100,000	$0	$0
9	$8,000	$156,000	$100,000	$0	$0
10	$400	$163,000	$100,000	$0	$0
11	$0	$0	$0	$0	$0

Since your Account Value went to zero before the Coverage Date, your Contract, including the Living Benefit, will end and you will not be eligible to receive your Annual Withdrawal Amount.

Examples: Account Value goes to zero after the Coverage Date

Assume for the next two examples (A and B) below that you are age 65 when your Contract is issued with an initial Purchase Payment of $100,000 and that you elected to participate in the SIR III living benefit with single-life coverage. (If you selected joint-life coverage or a different optional living benefit, the numbers shown in the example could be different; however, the concept is the same).

A. Excess Withdrawal combined with poor performance, Contract fees and charges cause Account Value to go

 to zero after the Coverage Date.

Assume that, over the course of the first 9 years of the Contract, the investment performance of the Designated Funds is such that the Account Value increases by $1,000 per year. During Account Year 9, you decide to take an Excess Withdrawal for less than the full Account Value. Your Withdrawal Benefit Base and Bonus Base will both reduce proportionately; your Annual Withdrawal Amount will be 5% of the new Withdrawal Benefit Base. Suppose, due to poor investment performance after the Excess Withdrawal, the Account Value goes to zero during Account Year 12. Then your Annual Withdrawal Amount available in Account Year 13 will continue to be paid for the rest of your life.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
1	$100,000	$100,000	$100,000	$5,000	$0
2	$101,000	$107,000	$100,000	$5,350	$0
3	$102,000	$114,000	$100,000	$5,700	$0
4	$103,000	$121,000	$100,000	$6,050	$0
5	$104,000	$128,000	$100,000	$6,400	$0
6	$105,000	$135,000	$100,000	$6,750	$0
7	$106,000	$142,000	$100,000	$7,100	$0
8	$107,000	$149,000	$100,000	$7,450	$0
9	$108,000	$156,000	$100,000	$7,800	$50,000
10	$58,000	$90,299	$57,884	$4,515	$4,515
11	$25,000	$90,299	N/A	$4,515	$4,515
12	$5,000	$90,299	N/A	$4,515	$4,515
For Life	$0	$90,299	N/A	$4,515	$4,515

B. Poor performance, Contract fees and charges cause Account Value to go to zero after the Coverage Date.

Assume that, over the course of the first 10 years of the Contract, the investment performance of the Designated Funds is such that the Account Value goes to zero due to the combination of poor investment performance, contract fees and charges. You did not take any withdrawals to cause the Account Value to go to zero.
Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
1	$100,000	$100,000	$100,000	$5,000	$0
2	$85,000	$107,000	$100,000	$5,350	$0
3	$65,000	$114,000	$100,000	$5,700	$0
4	$55,000	$121,000	$100,000	$6,050	$0
5	$45,000	$128,000	$100,000	$6,400	$0
6	$35,000	$135,000	$100,000	$6,400	$0
7	$25,000	$142,000	$100,000	$7,100	$0
8	$15,000	$149,000	$100,000	$7,450	$0
9	$8,000	$156,000	$100,000	$7,800	$0
10	$400	$163,000	$100,000	$8,150	$0
11	$0	$170,000	N/A	$8,500	$8,500
For Life	$0	$170,000	N/A	$8,500	$8,500

Because yourAccount Value was reduced to zero during Account Year 11, we will pay the Annual Withdrawal Amount for the rest of your life. All other Contract features, benefits, and guarantees will terminate.

C. Excess Withdrawal causes Account Value to go to zero after the Coverage Date.

Account Year	Account Value	Withdrawal Benefit Base	Bonus Base	Annual Withdrawal Amount	Withdrawals
1	$100,000	$100,000	$100,000	$5,000	$0
2	$80,000	$107,000	$100,000	$5,350	$0
3	$60,000	$114,000	$100,000	$5,700	$60,000
4	$0	$0	$0	$0	$0

Your Contract and all benefits end because you took an Excess Withdrawal that causes your Account Value to go to zero.

APPENDIX E -

BUILD YOUR OWN PORTFOLIO

This Appendix sets forth the Funds and percentage limits that constitute the “build your own portfolio” program. This program is more fully described under “BUILD YOUR OWN PORTFOLIO” in the Prospectus. Briefly, if you comply with this program, the portfolio you build will satisfy the Designated Funds requirement under certain optional living benefits. If you do not comply with the allocation percentage limits in effect under your Contract, your selection of the Build Your Own Portfolio model will not qualify as a Designated Fund and your participation in the Living Benefit will be cancelled.

For Contracts purchased with Sun Income Maximizer or Sun Income Maximizer Plus, the Funds available in each asset class and the percentage range assigned to each asset class under the Build Your Own Portfolio investment option are as follows:

Balanced Funds	Fixed Income Funds
0% to 60%	40% to 100%
AllianceBernstein Balanced Wealth Strategy Portfolio	Huntington VA Mortgage Securities Fund1
AllianceBernstein Dynamic Asset Allocation Portfolio	JPMorgan Insurance Trust Core Bond Portfolio
BlackRock Global Allocation V.I. Fund	MFS® Government Securities Portfolio
Fidelity® Variable Insurance Products III - Balanced Portfolio	MFS® Research Bond Series
Huntington VA Balanced Fund1	SCSM BlackRock Inflation Protected Bond Fund
Invesco Van Kampen V.I. Equity and Income Fund	SCSM Goldman Sachs Short Duration Fund
MFS® Global Tactical Allocation Portfolio	SCSM PIMCO Total Return Fund
MFS® Total Return Portfolio	Sun Capital Investment Grade Bond Fund®
PIMCO All Asset Portfolio	Sun Capital Money Market Fund®
PIMCO Global Multi-Asset Portfolio	Wells Fargo Variable Trust - VT Total Return Bond Fund
Putnam VT Absolute Return 500 Fund
SCSM Ibbotson Balanced Fund
SCSM Ibbotson Conservative Fund

1Only available if you purchased your Contract through a Huntington Bank representative.

For Contracts purchased on or after October 31, 2011, with Sun Income Riser III, the following is the Build Your Own Portfolio model that applies to your Contract. If you do not comply with the allocation percentage limits in effect under your Contract, then your selection of the Build Your Own Portfolio model will not qualify as a Designated Fund and your participation in the Living Benefit will be cancelled.

Fixed Income Funds	Core Retirement Strategies Funds	Asset Allocation Funds	Core Equity Funds	Growth Equity Funds	Specialty Funds
30% to 50%	40% to 60%	10% to 30%	0% to 20%	0% to 20%	0% to 10%
Sun Capital Investment Grade Bond Fund®	AllianceBernstein Dynamic Asset Allocation Portfolio	AllianceBernstein Balanced Wealth Strategy Portfolio	Lord Abbett Series Fund - Fundamental Equity Portfolio	Franklin Small Cap Value Securities Fund	Franklin Strategic Income Securities Fund
MFS® Government Securities Portfolio	PIMCO Global Multi-Asset Portfolio	Fidelity® Variable Insurance Products III - Balanced Portfolio	MFS® Value Portfolio	SCSM BlackRock Small Cap Index Fund	PIMCO Emerging Markets Bond Portfolio
Huntington VA Mortgage Securities Fund1	MFS® Global Tactical Allocation Portfolio	Franklin Income Securities Fund	Invesco Van Kampen V.I. Comstock Fund	Lord Abbett Series Fund - Growth Opportunities Portfolio	Sun Capital Global Real Estate Fund
Sun Capital Money Market Fund®	SCSM Ibbotson Balanced Fund	MFS® Total Return Portfolio	Mutual Shares Securities Fund	MFS® International Value Portfolio	PIMCO CommodityRealReturn® Strategy Portfolio
SCSM Goldman Sachs Short Duration Fund	SCSM Ibbotson Conservative Fund	Invesco Van Kampen V.I. Equity and Income Fund	MFS® Utilities Portfolio	MFS® Research International Portfolio	MFS® Emerging Markets Equity Portfolio
SCSM PIMCO Total Return Fund	PIMCO All Asset Portfolio	SCSM Ibbotson Growth Fund	MFS® Core Equity Portfolio	First Eagle Overseas Variable Fund	SCSM PIMCO High Yield Fund
SCSM BlackRock Inflation Protected Bond Fund	Putnam VT Absolute Return 500 Fund	BlackRock Global Allocation V.I. Fund	SCSM Davis Venture Value Fund	Oppenheimer Global Securities/VA	Lazard Retirement Emerging Markets Equity Portfolio
Wells Fargo Variable Trust - VT Total Return Bond Fund		Huntington VA Balanced Fund1	Huntington VA Dividend Capture Fund1	Fidelity® Variable Insurance Products III - Mid Cap Portfolio	Huntington VA Rotating Markets Fund1
JPMorgan Insurance Trust Core Bond Portfolio			Huntington VA Income Equity Fund1	MFS® International Growth Portfolio	Huntington VA Real Strategies Fund1
MFS® Research Bond Series			SCSM Lord Abbett Growth & Income Fund	SCSM WMC Large Cap Growth Fund	Templeton Global Bond Securities Fund
			SCSM Goldman Sachs Mid Cap Value Fund	Columbia Variable Portfolio - Marsico Growth Fund
			SCSM BlackRock Large Cap Index Fund	Huntington VA Growth Fund1
			JPMorgan Insurance Trust U.S. Equity Portfolio	Huntington VA Macro 100 Fund1
			Putnam VT Equity Income Fund	Huntington VA Mid Corp America Fund1
				Huntington VA International Equity Fund1
				Huntington VA Situs Fund1
				SCSM WMC Blue Chip Mid Cap Fund
				Universal Institutional Funds Inc. - Mid Cap Growth Portfolio
				Invesco Van Kampen V.I. Mid Cap Value Fund
				Fidelity® Variable Insurance Products Fund II - Contrafund® Portfolio
				SCSM AllianceBernstein International Value Fund
				SCSM Columbia Small Cap Value Fund

Fixed Income Funds	Core Retirement Strategies Funds	Asset Allocation Funds	Core Equity Funds	Growth Equity Funds	Specialty Funds
30% to 50%	40% to 60%	10% to 30%	0% to 20%	0% to 20%	0% to 10%
				SCSM Invesco Small Cap Growth Fund
				SCSM BlackRock International Index Fund
				AllianceBernstein Small/Mid Cap Value Portfolio
				Invesco V.I. International Growth Fund
				PIMCO EqS Pathfinder Portfolio
				MFS® Growth Portfolio
				Universal Institutional Funds Inc. - Growth Portfolio

1Only available if you purchased your Contract through a Huntington Bank representative.

For Contracts purchased prior to October 31, 2011, with Sun Income Riser III, the following is the Build Your Own Portfolio model that applies to your Contract. If you do not comply with the allocation percentage limits in effect under your Contract, then your selection of the Build Your Own Portfolio model will not qualify as a Designated Fund and your participation in the Living Benefit will be cancelled.

Fixed Income Funds	Core Retirement Strategies Funds	Asset Allocation Funds	Core Equity Funds	Growth Equity Funds	Specialty Funds
30% to 50%	40% to 60%	10% to 30%	0% to 20%	0% to 20%	0% to 10%
Sun Capital Investment Grade Bond Fund®	AllianceBernstein Dynamic Asset Allocation Portfolio	AllianceBernstein Balanced Wealth Strategy Portfolio	Lord Abbett Series Fund - Fundamental Equity Portfolio	Franklin Small Cap Value Securities Fund	Franklin Strategic Income Securities Fund
MFS® Government Securities Portfolio	PIMCO Global Multi-Asset Portfolio	Fidelity® Variable Insurance Products III - Balanced Portfolio	MFS® Value Portfolio	SCSM BlackRock Small Cap Index Fund	PIMCO Emerging Markets Bond Portfolio
MFS® Bond Portfolio	MFS® Global Tactical Allocation Portfolio	Franklin Income Securities Fund	Invesco Van Kampen V.I. Comstock Fund	Oppenheimer Capital Appreciation Fund/VA	Sun Capital Global Real Estate Fund
Huntington VA Mortgage Securities Fund1	SCSM Ibbotson Balanced Fund	MFS® Total Return Portfolio	Mutual Shares Securities Fund	Lord Abbett Series Fund - Growth Opportunities Portfolio	PIMCO CommodityRealReturn® Strategy Portfolio
Sun Capital Money Market Fund®	SCSM Ibbotson Conservative Fund	Invesco Van Kampen V.I. Equity and Income Fund	MFS® Utilities Portfolio	MFS® International Value Portfolio	MFS® Emerging Markets Equity Portfolio
SCSM Goldman Sachs Short Duration Fund	PIMCO All Asset Portfolio	Fidelity® Variable Insurance Products Fund IV - Freedom 2015 Portfolio	MFS® Core Equity Portfolio	MFS® Research International Portfolio	SCSM PIMCO High Yield Fund
SCSM PIMCO Total Return Fund	Putnam VT Absolute Return 500 Fund	Fidelity® Variable Insurance Products Fund IV - Freedom 2020 Portfolio	SCSM Davis Venture Value Fund	Templeton Growth Securities Fund	Lazard Retirement Emerging Markets Equity Portfolio
SCSM BlackRock Inflation Protected Bond Fund		SCSM Ibbotson Growth Fund	Huntington VA Dividend Capture Fund1	First Eagle Overseas Variable Fund	Huntington VA Rotating Markets Fund1
Wells Fargo Variable Trust - VT Total Return Bond Fund		BlackRock Global Allocation V.I. Fund	Huntington VA Income Equity Fund1	Oppenheimer Global Securities/VA	Huntington VA Real Strategies Fund1
JPMorgan Insurance Trust Core Bond Portfolio		Huntington VA Balanced Fund1	SCSM Lord Abbett Growth & Income Fund	Columbia Variable Portfolio - Marsico International Opportunities Fund	Templeton Global Bond Securities Fund
MFS® Research Bond Series			SCSM Goldman Sachs Mid Cap Value Fund	Fidelity® Variable Insurance Products III - Mid Cap Portfolio
			SCSM BlackRock Large Cap Index Fund	MFS® International Growth Portfolio
			JPMorgan Insurance Trust U.S. Equity Portfolio	SCSM WMC Large Cap Growth Fund
			Putnam VT Equity Income Fund	Columbia Variable Portfolio - Marsico Growth Fund
				Columbia Variable Portfolio - Marsico 21st Century Fund
				Huntington VA Growth Fund1
				Huntington VA Marco 100 Fund1
				Huntington VA Mid Corp America Fund1
				Huntington VA International Equity Fund1
				Huntington VA Situs Fund1
				SCSM WMC Blue Chip Mid Cap Fund
				Universal Institutional Funds Inc. - Mid Cap Growth Portfolio
				Invesco Van Kampen V.I. Mid Cap Value Fund

Fixed Income Funds	Core Retirement Strategies Funds	Asset Allocation Funds	Core Equity Funds	Growth Equity Funds	Specialty Funds
30% to 50%	40% to 60%	10% to 30%	0% to 20%	0% to 20%	0% to 10%
				AllianceBernstein International Growth Portfolio
				Fidelity® Variable Insurance Products Fund II - Contrafund® Portfolio
				SCSM AllianceBernstein International Value Fund
				SCSM Columbia Small Cap Value Fund
				SCSM Invesco Small Cap Growth Fund
				SCSM BlackRock International Index Fund
				AllianceBernstein Small/Mid Cap Value Portfolio
				Invesco V.I. International Growth Fund
				PIMCO EqS Pathfinder Portfolio
				MFS® Growth Portfolio
				Universal Institutional Funds Inc. - Growth Portfolio

1Only available if you purchased your Contract through a Huntington Bank representative.

APPENDIX F -

CONDENSED FINANCIAL INFORMATION

The following information for SUN LIFE FINANCIAL MASTERS FLEX II should be read in conjunction with the Variable Account’s financial statements appearing in the Statement of Additional Information. The beginning value for each Accumulation Unit is November 19, 2010, which is the date the Sub-Accounts first became available.

Fund	Price Level	Year	Accumulation Unit Value Beginning of Year	Accumulation Unit Value End of Year	Number of Accumulation Units End of Year
AllianceBernstein Dynamic Asset Allocation Portfolio, Class B	01	2011	10.0000	9.3981	1,600,542
	02	2011	10.0000	9.3727	210,454
AllianceBernstein International Growth Portfolio, Class B	01	2011	8.6073	7.1071	31,239
	01	2010	10.0000	8.6073	232
	02	2011	8.5091	6.9975	17,922
	02	2010	10.0000	8.5091	0
AllianceBernstein Small/Mid Cap Value Portfolio, Class B	01	2011	10.0000	10.4853	39
	02	2011	10.0000	10.4734	0
AllianceBernstein Balanced Wealth Strategy Portfolio, Class B	01	2011	10.1178	9.6471	339,492
	01	2010	10.0000	10.1178	7,567
	02	2011	10.0025	9.4984	73,661
	02	2010	10.0000	10.0025	6,185
BlackRock Global Allocation V.I. Fund, Class III	01	2011	12.9302	12.2544	5,555,583
	01	2010	10.0000	12.9302	107,540
	02	2011	12.8149	12.0958	727,602
	02	2010	10.0000	12.8149	27,336
Columbia Variable Portfolio - Marsico Growth Fund, Class 2	01	2011	10.3762	9.9163	72,843
	01	2010	10.0000	10.3762	9,759
	02	2011	10.2155	9.7231	19,430
	02	2010	10.0000	10.2155	1,217
ColumbiaVariable Portfolio - Marsico 21st Century Fund, Class 2	01	2011	9.6511	8.3422	17,988
	01	2010	10.0000	9.6511	88
	02	2011	9.5015	8.1796	16,272
	02	2010	10.0000	9.5015	0
Columbia Variable Portfolio - Marsico International Oppoortunities Fund, Class 2	01	2011	13.0960	10.7955	14,655
	01	2010	10.0000	13.0960	0
	02	2011	12.7908	10.5010	9,808
	02	2010	10.0000	12.7908	493
Fidelity VIP Balanced Portfolio, Service Class 2	01	2011	10.9517	10.3593	661,880
	01	2010	10.0000	10.9517	15,101
	02	2011	10.7821	10.1574	130,381
	02	2010	10.0000	10.7821	0
Fidelity VIP Contrafund Portfolio, Service Class 2	01	2011	10.2031	9.7557	478,110
	01	2010	10.0000	10.2031	4,228
	02	2011	10.0868	9.6053	93,840
	02	2010	10.0000	10.0868	4,760
Fidelity VIP Freedom 2015 Portfolio, Service Class 2	01	2011	11.8467	11.5915	8,396
	01	2010	10.0000	11.8467	0
	02	2011	11.5995	11.3036	587
	02	2010	10.0000	11.5995	0
Fidelity VIP Freedom 2020 Portfolio, Service Class 2	01	2011	11.6416	11.3077	15,193
	01	2010	10.0000	11.6416	0
	02	2011	11.3987	11.0269	3,579
	02	2010	10.0000	11.3987	0
Fidelity VIP Mid Cap Portfolio, Service Class 2	01	2011	12.0596	10.5737	429,403
	01	2010	10.0000	12.0596	7,597
	02	2011	11.8728	10.3676	82,785
	02	2010	10.0000	11.8728	6,537
First Eagle Overseas Variable Fund	01	2011	11.7890	10.8650	2,043,297
	01	2010	10.0000	11.7890	68,125
	02	2011	11.6065	10.6533	313,060
	02	2010	10.0000	11.6065	21,125
Franklin Income Securities Fund, Class 2	01	2011	10.4089	10.4816	348,942
	01	2010	10.0000	10.4089	15,460
	02	2011	10.2478	10.2775	70,337
	02	2010	10.0000	10.2478	982
Franklin Small Cap Value Securities Fund, Class 2	01	2011	20.6154	19.5135	52,914
	01	2010	10.0000	20.6154	842
	02	2011	19.9204	18.7791	9,377
	02	2010	10.0000	19.9204	207
Franklin Strategic Income Securities Fund, Class 2	01	2011	12.1773	12.2852	62,275
	01	2010	10.0000	12.1773	1,271
	02	2011	11.9888	12.0459	32,436
	02	2010	10.0000	11.9888	0
Franklin Income Securities Fund, Class 4	01	2011	10.0000	10.3449	52,984
	02	2011	10.0000	10.3331	12,880
Franklin Small Cap Value Securities Fund, Class 4	01	2011	10.0000	11.0043	11,607
	02	2011	10.0000	10.9917	3,056
Franklin Strategic Income Securities Fund, Class 4	01	2011	10.0000	10.0587	4,121
	02	2011	10.0000	10.0472	971
Mutual Shares Securities Fund, Class 4	01	2011	10.0000	10.5403	4,099
	02	2011	10.0000	10.5283	625
Templeton Global Bond Securities Fund, Class 4	01	2011	10.0000	9.7890	14,826
	02	2011	10.0000	9.7778	857
Huntington VA Balanced Fund	01	2011	12.3558	12.3565	41,722
	01	2010	10.0000	12.3558	1,717
	02	2011	12.2725	12.2234	0
	02	2010	10.0000	12.2725	0
Huntington VA Dividend Capture Fund	01	2011	9.8466	10.3694	949
	01	2010	10.0000	9.8466	0
	02	2011	9.7252	10.1999	0
	02	2010	10.0000	9.7252	0
Huntington VA Growth Fund	01	2011	7.7120	7.3537	2,449
	01	2010	10.0000	7.7120	0
	02	2011	7.6170	7.2336	0
	02	2010	10.0000	7.6170	0
Huntington VA Income Equity Fund	01	2011	8.1487	8.5807	0
	01	2010	10.0000	8.1487	0
	02	2011	8.0482	8.4405	0
	02	2010	10.0000	8.0482	0
Huntington VA International Equity Fund	01	2011	8.4765	7.3738	3,500
	01	2010	10.0000	8.4765	0
	02	2011	8.3720	7.2533	0
	02	2010	10.0000	8.3720	0
Huntington VA Macro 100 Fund	01	2011	8.8960	8.6333	0
	01	2010	10.0000	8.8960	0
	02	2011	8.7863	8.4922	0
	02	2010	10.0000	8.7863	0
Huntington VA Mid Corp America Fund	01	2011	9.8116	9.3827	0
	01	2010	10.0000	9.8116	0
	02	2011	9.6906	9.2294	0
	02	2010	10.0000	9.6906	0
Huntington VA Mortgage Securities Fund	01	2011	10.8374	11.2238	20,038
	01	2010	10.0000	10.8374	0
	02	2011	10.7039	11.0405	0
	02	2010	10.0000	10.7039	0
Huntington VA New Economy Fund	01	2011	7.2478	6.2211	0
	01	2010	10.0000	7.2478	0
	02	2011	7.1583	6.1194	0
	02	2010	10.0000	7.1583	0
Huntington VA Real Strategies Fund	01	2011	7.6830	6.8286	2,808
	01	2010	10.0000	7.6830	1,423
	02	2011	7.6001	6.7275	0
	02	2010	10.0000	7.6001	0
Huntington VA Rotating Markets Fund	01	2011	8.0892	8.5002	359
	01	2010	10.0000	8.0892	0
	02	2011	7.9894	8.3613	0
	02	2010	10.0000	7.9894	0
Huntington VA Situs Fund	01	2011	9.8664	9.6155	3,407
	01	2010	10.0000	9.8664	590
	02	2011	9.7447	9.4584	0
	02	2010	10.0000	9.7447	0
Invesco V.I. International Growth Fund, Series II	01	2011	10.0000	10.2240	0
	02	2011	10.0000	10.2124	0
Invesco Van Kampen V.I. Comstock Fund, Series II	01	2011	8.9599	8.6266	39,997
	01	2010	10.0000	8.9599	0
	02	2011	8.8211	8.4585	7,948
	02	2010	10.0000	8.8211	0
Invesco Van Kampen V.I. Equity and Income Fund, Series II	01	2011	11.0718	10.7479	835,940
	01	2010	10.0000	11.0718	5,925
	02	2011	10.9456	10.5823	102,534
	02	2010	10.0000	10.9456	926
Invesco Van Kampen V.I. Mid Cap Value Fund, Series II	01	2011	10.7530	10.6634	13,760
	01	2010	10.0000	10.7530	2,003
	02	2011	10.6304	10.4990	5,979
	02	2010	10.0000	10.6304	0
JPMorgan Insurance Trust Core Bond Portfolio, Class 2	01	2011	10.0000	10.0222	51,712
	02	2011	10.0000	10.0108	5,104
JPMorgan Insurance Trust U.S. Equity Portfolio, Class 2	01	2011	10.0000	10.3278	4,692
	02	2011	10.0000	10.3160	0
Lazard Retirement Emerging Markets Equity Portfolio, Service Class	01	2011	11.0933	8.9466	404,222
	01	2010	10.0000	11.0933	24,383
	02	2011	10.9668	8.8087	91,755
	02	2010	10.0000	10.9668	3,925
Lord Abbett Series Fund, Inc. - Fundamental Equity Portfolio, Class VC	01	2011	14.9744	14.0666	81,464
	01	2010	10.0000	14.9744	1,009
	02	2011	14.5490	13.6115	33,297
	02	2010	10.0000	14.5490	2,100
Lord Abbett Series Fund, Inc. - Growth Opportunities Portfolio, Class VC	01	2011	15.2913	13.5283	36,031
	01	2010	10.0000	15.2913	381
	02	2011	14.8569	13.0905	8,238
	02	2010	10.0000	14.8569	1,014
MFS Bond Portfolio, Service Class	01	2011	14.8866	15.5647	579,978
	01	2010	10.0000	14.8866	20,230
	02	2011	14.3849	14.9791	142,797
	02	2010	10.0000	14.3849	7,853
MFS Core Equity Portfolio, Service Class	01	2011	9.8034	9.5211	40,173
	01	2010	10.0000	9.8034	2,235
	02	2011	9.6515	9.3355	57,698
	02	2010	10.0000	9.6515	0
MFS Emerging Markets Equity Portfolio, Service Class	01	2011	16.9221	13.5269	172,837
	01	2010	10.0000	16.9221	1,850
	02	2011	16.5691	13.1909	28,600
	02	2010	10.0000	16.5691	0
MFS Global Tactical Allocation Portfolio, Service Class	01	2011	10.3446	10.3056	19,653,338
	01	2010	10.0000	10.3446	517,213
	02	2011	10.3014	10.2209	3,227,421
	02	2010	10.0000	10.3014	103,714
MFS Government Securities Portfolio, Service Class	01	2011	12.5801	13.2529	714,966
	01	2010	10.0000	12.5801	7,049
	02	2011	12.1560	12.7543	83,139
	02	2010	10.0000	12.1560	1,854
MFS Growth Portfolio, Service Class	01	2011	10.0000	9.9812	9,261
	02	2011	10.0000	9.9698	10,642
MFS International Growth Portfolio, Service Class	01	2011	10.6579	9.3174	72,962
	01	2010	10.0000	10.6579	579
	02	2011	10.4928	9.1358	7,816
	02	2010	10.0000	10.4928	0
MFS International Value Portfolio, Service Class	01	2011	9.6480	9.3205	70,865
	01	2010	10.0000	9.6480	1,962
	02	2011	9.4986	9.1388	1,381
	02	2010	10.0000	9.4986	0
MFS Research International Portfolio, Service Class	01	2011	19.6916	17.2251	50,508
	01	2010	10.0000	19.6916	137
	02	2011	19.0278	16.5767	3,404
	02	2010	10.0000	19.0278	0
MFS Total Return Portfolio, Service Class	01	2011	14.4747	14.4721	713,688
	01	2010	10.0000	14.4747	20,514
	02	2011	13.9868	13.9275	124,510
	02	2010	10.0000	13.9868	0
MFS Utilities Portfolio, Service Class	01	2011	32.1976	33.8329	39,461
	01	2010	10.0000	32.1976	1,294
	02	2011	31.1127	32.5602	6,747
	02	2010	10.0000	31.1127	134
MFS Value Portfolio, Service Class	01	2011	16.3776	16.0616	153,764
	01	2010	10.0000	16.3776	958
	02	2011	15.8255	15.4571	14,319
	02	2010	10.0000	15.8255	0
MFS® Research Bond Series, Service Class	01	2011	10.0000	10.0474	92,261
	02	2011	10.0000	10.0360	12,374
Universal Institutional Fund, Inc. - Mid Cap Growth Portfolio, Class II	01	2011	12.6283	11.5292	38,534
	01	2010	10.0000	12.6283	2,521
	02	2011	12.4843	11.3514	12,770
	02	2010	10.0000	12.4843	397
Mutual Shares Securities Fund, Class 2	01	2011	14.9278	14.5290	48,407
	01	2010	10.0000	14.9278	2,723
	02	2011	14.4246	13.9822	3,811
	02	2010	10.0000	14.4246	258
Oppenheimer Capital Appreciation Fund/VA, Service Shares	01	2011	14.5127	14.0776	18,758
	01	2010	10.0000	14.5127	421
	02	2011	14.0234	13.5478	11,465
	02	2010	10.0000	14.0234	0
Oppenheimer Global Securities/VA, Service Shares	01	2011	15.1623	13.6409	15,757
	01	2010	10.0000	15.1623	0
	02	2011	14.7315	13.1995	10,328
	02	2010	10.0000	14.7315	0
PIMCO All Asset Portfolio, Advisor Class	01	2011	10.0000	9.9867	380,017
	02	2011	10.0000	9.9753	43,953
PIMCO CommodityRealReturn Strategy Portfolio, Advisor Class	01	2011	10.0000	9.1003	28,284
	02	2011	10.0000	9.0899	2,351
PIMCO Emerging Markets Bond Portfolio, Administrative Class	01	2011	24.0717	25.1746	79,375
	01	2010	10.0000	24.0717	414
	02	2011	23.2750	24.2426	10,442
	02	2010	10.0000	23.2750	736
PIMCO Emerging Markets Bond Portfolio, Advisor Class	01	2011	10.0000	10.0738	13,109
	02	2011	10.0000	10.0623	1,522
PIMCO EqS Pathfinder Portfolio, Advisor Class	01	2011	10.0000	10.1116	0
	02	2011	10.0000	10.1000	0
PIMCO Global Multi-Asset Portfolio, Advisor Class	01	2011	11.6886	11.2893	16,703,196
	01	2010	10.0000	11.6886	474,411
	02	2011	11.6234	11.1808	2,518,312
	02	2010	10.0000	11.6234	116,540
PIMCO CommodityRealReturn Strategy Portfolio, Administrative Class	01	2011	11.2077	10.1900	287,325
	01	2010	10.0000	11.2077	7,407
	02	2011	10.9739	9.9370	46,206
	02	2010	10.0000	10.9739	0
Putnam VT Absolute Return 500 Fund, Class IB	01	2011	10.0000	10.0371	87,312
	02	2011	10.0000	10.0257	38,502
Putnam VT Equity Income Fund, Class IB	01	2011	10.0000	10.7174	0
	02	2011	10.0000	10.7052	3,824
SC AllianceBernstein International Value Fund, Service Class	01	2011	12.0403	9.8927	2,267
	01	2010	10.0000	12.0403	0
	02	2011	11.9329	9.7646	2,348
	02	2010	10.0000	11.9329	0
SC BlackRock Inflation Protected Bond Fund, Service Class	01	2011	11.2702	12.3837	3,110,467
	01	2010	10.0000	11.2702	76,973
	02	2011	11.1697	12.2235	441,964
	02	2010	10.0000	11.1697	8,429
SC BlackRock International Index Fund, Service Class	01	2011	10.0304	8.6125	61,218
	01	2010	10.0000	10.0304	107
	02	2011	10.0284	8.5757	17,532
	02	2010	10.0000	10.0284	0
SC BlackRock Large Cap Index Fund, Service Class	01	2011	9.9345	9.8857	164,994
	01	2010	10.0000	9.9345	855
	02	2011	9.6583	9.5718	37,293
	02	2010	10.0000	9.6583	0
SC BlackRock Small Cap Index Fund, Service Class	01	2011	9.7786	9.1276	57,367
	01	2010	10.0000	9.7786	1,890
	02	2011	9.6271	8.9497	19,329
	02	2010	10.0000	9.6271	0
SC Columbia Small Cap Value Fund, Service Class	01	2011	14.2679	13.1201	16,330
	01	2010	10.0000	14.2679	488
	02	2011	14.1406	12.9503	8,353
	02	2010	10.0000	14.1406	208
SC Davis Venture Value Fund, Service Class	01	2011	9.0745	8.5662	142,190
	01	2010	10.0000	9.0745	2,324
	02	2011	8.9339	8.3992	18,836
	02	2010	10.0000	8.9339	2,465
SC Goldman Sachs Mid Cap Value Fund, Service Class	01	2011	10.3738	10.4414	75,359
	01	2010	10.0000	10.3738	2,479
	02	2011	10.2556	10.2805	25,617
	02	2010	10.0000	10.2556	487
SC Goldman Sachs Short Duration Fund, Service Class	01	2011	10.3846	10.2315	1,314,078
	01	2010	10.0000	10.3846	33,622
	02	2011	10.2663	10.0739	269,074
	02	2010	10.0000	10.2663	4,777
SC Ibbotson Balanced Fund, Service Class	01	2011	13.4940	13.0319	15,774,256
	01	2010	10.0000	13.4940	537,464
	02	2011	13.3737	12.8633	2,751,572
	02	2010	10.0000	13.3737	61,700
SC Ibbotson Conservative Fund, Service Class	01	2011	12.5068	12.3783	7,927,286
	01	2010	10.0000	12.5068	142,264
	02	2011	12.3952	12.2181	1,018,406
	02	2010	10.0000	12.3952	18,265
SC Ibbotson Growth Fund, Service Class	01	2011	14.2208	13.4409	296,793
	01	2010	10.0000	14.2208	6,630
	02	2011	14.0940	13.2670	105,505
	02	2010	10.0000	14.0940	2,160
SC Invesco Small Cap Growth Fund, Service Class	01	2011	14.4236	14.0158	21,575
	01	2010	10.0000	14.4236	437
	02	2011	14.2949	13.8343	7,482
	02	2010	10.0000	14.2949	205
SC Lord Abbett Growth & Income Fund, Service Class	01	2011	9.6131	8.8495	30,525
	01	2010	10.0000	9.6131	1,142
	02	2011	9.5035	8.7130	5,367
	02	2010	10.0000	9.5035	0
SC PIMCO High Yield Fund, Service Class	01	2011	12.0764	12.3553	90,832
	01	2010	10.0000	12.0764	454
	02	2011	11.9389	12.1650	23,691
	02	2010	10.0000	11.9389	0
SC PIMCO Total Return Fund, Service Class	01	2011	11.9205	12.1169	7,299,233
	01	2010	10.0000	11.9205	162,970
	02	2011	11.8142	11.9601	1,043,558
	02	2010	10.0000	11.8142	44,889
SC WMC Blue Chip Mid Cap Fund, Service Class	01	2011	11.5310	10.4304	13,342
	01	2010	10.0000	11.5310	0
	02	2011	11.3996	10.2696	6,393
	02	2010	10.0000	11.3996	0
SC WMC Large Cap Growth Fund, Service Class	01	2011	8.9733	8.4021	25,621
	01	2010	10.0000	8.9733	503
	02	2011	8.8039	8.2101	3,590
	02	2010	10.0000	8.8039	0
Sun Capital Global Real Estate Fund, Serivce Class	01	2011	12.1482	11.0232	135,197
	01	2010	10.0000	12.1482	1,195
	02	2011	11.8104	10.6730	21,597
	02	2010	10.0000	11.8104	0
Sun Capital Investment Grade Bond Fund, Serivce Class	01	2011	11.7315	12.3209	1,682,301
	01	2010	10.0000	11.7315	67,077
	02	2011	11.4054	11.9298	206,894
	02	2010	10.0000	11.4054	350
Sun Capital Money Market Fund, Service Class	01	2011	10.3091	10.1396	577,684
	01	2010	10.0000	10.3091	7,438
	02	2011	10.0689	9.8631	71,536
	02	2010	10.0000	10.0689	0
Templeton Growth Securities Fund, Class 2	01	2011	15.6565	14.3245	25,863
	01	2010	10.0000	15.6565	258
	02	2011	15.1382	13.7940	4,034
	02	2010	10.0000	15.1382	0
Universal Institutional Funds Inc., - Growth Portfolio, Class II	01	2011	10.0000	9.2040	874
	02	2011	10.0000	9.1935	0
Wells Fargo Variable Trust - VT Total Return Bond Fund, Class 2	01	2011	10.0000	10.4720	325,838
	02	2011	10.0000	10.4438	55,152

This Prospectus sets forth information about the Contract and the Variable Account that a prospective purchaser should know before investing. Additional information about the Contract and the Variable Account has been filed with the Securities and Exchange Commission in a Statement of Additional Information dated May 1, 2012 which is incorporated herein by reference. The Statement of Additional Information is available upon request and without charge from Sun Life Assurance Company of Canada (U.S.). To receive a copy, return this request form to the address shown below or telephone (800) 752-7216.

To:	Sun Life Assurance Company of Canada (U.S.)
	P.O. Box 9133
	Wellesley Hills, Massachusetts 02481
	Please send me a Statement of Additional Information for
	Sun Life Financial Masters Flex II
	Sun Life of Canada (U.S.) Variable Account F.

Name:
Address:
City:	State:	Zip Code:
Telephone:

PART B

MAY 1, 2012

SUN LIFE FINANCIAL MASTERS® FLEX II

VARIABLE AND FIXED ANNUITY

STATEMENT OF ADDITIONAL INFORMATION

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F

TABLE OF CONTENTS

Sun Life Assurance Company of Canada (U.S.)	2
Advertising and Sales Literature	2
Tax Deferred Accumulation	3
Calculations	4
Example of Net Investment Factor Calculation	4
Example of Variable Accumulation Unit Value Calculation	4
Annuity Provisions	4
Determination of Annuity Payments	4
Annuity Unit Value	5
Example of Variable Annuity Unit Calculation	5
Example of Variable Annuity Payment Calculation	5
Distribution of the Contract	6
Custodian	6
Independent Registered Public Accounting Firm	6
Financial Statements	6

The Statement of Additional Information sets forth information which may be of interest to prospective purchasers of the Sun Life Financial Masters® Flex II (the “Contract”) issued by Sun Life Assurance Company of Canada (U.S.) (the “Company” or “Sun Life (U.S.)”) in connection with Sun Life of Canada (U.S.) Variable Account F (the “Variable Account”) which is not included in the corresponding Prospectus dated May 1, 2012.  This Statement of Additional Information should be read in conjunction with the Prospectus, a copy of which may be obtained without charge from the Company by writing to Sun Life Assurance Company of Canada (U.S.), P.O. Box 9133, Wellesley Hills, Massachusetts 02481, or by telephoning (800) 752-7216.

The terms used in this Statement of Additional Information have the same meanings as in the Prospectus.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE PURCHASERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

Sun Life Financial Inc. (“Sun Life Financial”), a reporting company under the Securities Exchange Act of 1934 with common shares listed on the Toronto, New York and Philippine stock exchanges, is the ultimate corporate parent of Sun Life (U.S.). Sun Life Financial ultimately controls Sun Life (U.S.) through the following intervening companies: Sun Life of Canada (U.S.) Holdings, Inc., Sun Life Financial (U.S.) Investments LLC, Sun Life Financial (U.S.) Holdings, Inc., Sun Life Assurance Company of Canada - U.S. Operations Holdings, Inc., and Sun Life Global Investments Inc.

ADVERTISING AND SALES LITERATURE

As set forth in the Prospectus, the Company may refer to the following organizations (and others) in its marketing materials:

A.M. Best’s Rating System is designed to evaluate the various factors affecting the overall performance of an insurance company in order to provide an opinion as to an insurance company’s relative financial strength and ability to meet its contractual obligations. The procedure includes both a quantitative and qualitative review of each company.

Lipper Variable Insurance Products Performance Analysis Service is a publisher of statistical data covering the investment company industry in the United States and overseas. Lipper is recognized as the leading source of data on open-end and closed-end funds. Lipper currently tracks the performance of over 5,000 investment companies and publishes numerous specialized reports, including reports on performance and portfolio analysis, fee and expense analysis.

Standard & Poor’s insurance claims-paying ability rating is an opinion of an operating insurance company’s financial capacity to meet obligations of its insurance policies in accordance with their terms.

VARDS (Variable Annuity Research Data Service) provides a comprehensive guide to variable annuity contract features and historical fund performance. The service also provides a readily understandable analysis of the comparative characteristics and market performance of funds inclusive in variable contracts.

Moody’s Investors Services, Inc.’s insurance claims-paying rating is a system of rating an insurance company’s financial strength, market leadership, and ability to meet financial obligations. The purpose of Moody’s ratings is to provide investors with a simple system of gradation by which the relative quality of insurance companies may be noted.

Standard & Poor’s Index - broad-based measurement of changes in stock-market conditions based on the average performance of 500 widely held common stocks; commonly known as the Standard & Poor’s 500 (S&P 500). The selection of stocks, their relative weightings to reflect differences in the number of outstanding shares, and publication of the index itself are services of Standard & Poor’s Corporation, a financial advisory, securities rating, and publishing firm. The index tracks 400 industrial company stocks, 20 transportation stocks, 40 financial company stocks, and 40 public utilities.

NASDAQ-OTC Price Index - this index is based on the National Association of Securities Dealers Automated Quotations (NASDAQ) and represents all domestic over-the-counter stocks except those traded on exchanges and those having only one market maker, a total of some 3,500 stocks. It is market value-weighted and was introduced with a base of 100.00 on February 5, 1971.

Dow Jones Industrial Average (DJIA) - price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but including American Express Company and American Telephone and Telegraph Company. Prepared and Published by Dow Jones & Company, it is the oldest and most widely quoted of all the market indicators. The average is quoted in points, not dollars.

Morningstar, Inc. is an independent financial publisher offering comprehensive statistical and analytical coverage of open-end and closed-end funds and variable annuities. This coverage for mutual funds includes, among other information, performance analysis rankings, risk rankings (e.g. aggressive, moderate or conservative), and “style box” matrices. Style box matrices display, for equity funds, the investment philosophy and size of the companies in which the fund invests and, for fixed-income funds, interest rate sensitivity and credit quality of the investment instruments.

Ibbotson Associates, Inc. is a consulting firm that provides a variety of historical data, including total return, capital appreciation and income, on the stock market as well as other investment asset classes, and inflation. This information will be used primarily for comparative purposes and to illustrate general financial planning principles.

In its advertisements and other sales literature for the Variable Account and the Funds, the Company intends to illustrate the advantages of the Contracts in a number of ways:

Dollar-Cost Averaging Illustrations. These illustrations will generally discuss the price-leveling effect of making regular investments in the same Sub-Accounts over a period of time, to take advantage of the trends in market prices of the portfolio securities purchased by those Sub-Accounts.

Systematic Withdrawal Program. A service provided by the Company, through which a Participant may take any distribution allowed by Internal Revenue Code Section 401 (a) (9) in the case of Qualified Contracts, or permitted under Internal Revenue Code Section 72 in the case of Non-Qualified Contracts, by way of a series of partial withdrawals. Withdrawals under this program may be fully or partially includible in income and may be subject to a 10% penalty tax. Consult your tax advisor.

The Company’s and the Funds’ Customers. Sales literature for the Variable Account and the Funds may refer to the number of clients which they serve.

The Company’s Assets, Size. The Company may discuss its general financial condition (see, for example, the references to Standard & Poor’s and A.M. Best Company above); it may refer to its assets; and it may discuss its relative size and/or ranking among companies in the industry or among any sub-classification of those companies, based upon recognized evaluation criteria.

Compound Interest Illustrations. These will emphasize several advantages of the variable annuity contract. For example, but not by way of limitation, the literature may emphasize the potential savings through tax deferral; the potential advantage of the Variable Account over the Fixed Account; and the compounding effect when a participant makes regular deposits to his or her account.

The Company may use hypothetical illustrations of the benefits of tax deferral, including but not limited to the following chart. The chart below assumes an initial investment of $10,000 which remains fully invested for the entire time period, an 8% annual return, and a 33% combined federal and state income tax rate. It compares how 3 different investments might fare over 10, 20, and 30 years. The first example illustrates an investment in a non-tax-deferred account and assumes that taxes are paid annually out of that account. The second example illustrates how the same investment would grow in a tax-deferred investment, such as an annuity. The third example illustrates the net value of the tax-deferred investment after paying taxes on the full account value.

	10 YEARS	20 YEARS	30 YEARS
Non-Tax-Deferred Account	$16,856	$28,413	$ 47,893
Tax-Deferred Account	$21,589	$46,610	$100,627
Tax-Deferred Account After Paying Taxes	$17,765	$34,528	$ 70,720

This illustration is hypothetical and does not represent the projected performance of the contract or any of its investment options. The illustration does not reflect the deduction of any charges or fees related to portfolio management, mortality and expense, or account administration. Taxes on earnings within an annuity are due upon withdrawal. Withdrawals may also be subject to surrender charges and, if made prior to age 59½, a 10% federal penalty tax.

TAX-DEFERRED ACCUMULATION

In general, individuals who own annuity contracts are not taxed on increases in the value of their annuity contracts until some form of distribution is made under the contract. As a result, the annuity contract would benefit from tax deferral during the contract’s accumulation phase; this would have the effect of permitting an investment in an annuity contract to grow more rapidly that a comparable investment under which increases in value are taxed on a current basis.

In reports or other communications to you or in advertising or sales materials, we may also describe the effects of tax-deferred compounding on the Variable Account’s investment returns. We may illustrate these effects in charts or graphs and from time to time may include comparisons of returns under the Contract or in general on a tax-deferred basis, with the returns on a taxable basis. Different tax rates may be assumed. Any such illustrative chart or graph would show accumulations on an initial investment or Purchase Payment, assuming a given amount (including the applicable interest credit), hypothetical gross annual returns compounded annually, and a stated rate of return. The values shown for the taxable investment would not include any deduction for management fees or other expenses, but would assume the annual deduction of federal and state taxes from investment returns. The values shown for the Contract in a chart would reflect the deduction of Contract expenses, such as the mortality and expense risk charge, the 0.15% administrative charge, and the $50 annual Account Fee. In addition, the values shown would assume that the Participant has not surrendered his or her Contract or made any partial surrenders until the end of the period shown. The chart would assume a full surrender at the end of the period shown and the payment of federal and state taxes, at a rate of not more than 33%, on the amount in excess of the Purchase Payments.

In developing illustrative tax deferral charts, we will observe these general principles:

· The assumed rate of earnings will be realistic.

· The illustrative chart will accurately depict the effect of all fees and charges or provide a narrative that prominently discloses all fees and charges under the Contract.

· Charts comparing accumulation values for tax-deferred and non-tax-deferred investments will depict the implications of any surrender.

· A narrative accompanying the chart will prominently disclose that there may be a 10% tax penalty on a surrender by a Participant who has not reached age 59½ at the time of surrender.

The rates of return illustrated in any chart would be hypothetical and are not an estimate or guaranty of performance. Actual tax returns may vary among Participants.

CALCULATIONS

Example of Net Investment Factor Calculation

We determine the net investment factor using the following formula:

Investment Factor = ( a + b c ) - d

where:

(a) is the net asset value of a Fund share held in the Sub-Account at the end of that Valuation Period;

(b) is the per share amount of any dividend or capital gains distribution made by that Fund during the Valuation Period;

(c) is the net asset value per share of the Fund share at the end of the previous Valuation Period;

(d) is a factor representing the asset-based insurance charges (the mortality and expense risk charge, the administrative expense charge, and the distribution fee) plus any applicable asset-based charge for an optional benefit for the Valuation Period.

Assume the following facts about a particular Variable Account at the end of the current Valuation Period.

(a) the net asset value of a fund equals $ 18.38

(b) the per share amount of any dividend or capital gains distributions equal $0

(c) the net asset value per share of the Fund share at the end of the previous Valuation Period equals $18.32

(d) the factor representing the asset-based insurance charges (the mortality and expense risk charge, the administrative expense charge, and the distribution fee) plus any applicable asset-based charge for an optional benefit for the Valuation Period equals 0.00004837.

The net investment factor is, therefore, determined as follows:

(18.38 + 0.00) – (.00004837)	=	1.00322674
18.32

Example of Variable Accumulation Unit Value Calculation

We calculate the Variable Accumulation Unit Value for any Valuation Period as follows: we multiply the Variable Accumulation Unit Value for the immediately preceding Valuation Period by the appropriate Net Investment Factor for the subsequent Valuation Period.

Assume the Variable Accumulation Unit value for the immediately preceding Valuation Period had been 14.5645672.  Assume that the Net Investment Factor for the subsequent Valuation Period is 1.00321276 as shown in the calculation above.  The value for the current Valuation Period would be, therefore, determined as follows:

(14.5645672 x 1.00321836) = 14.6114413

ANNUITY PROVISIONS

Determination of Annuity Payments

On the Annuity Commencement Date the Contract’s Accumulation Account will be canceled and its adjusted value will be applied to provide a Variable Annuity or a Fixed Annuity or a combination of both. The adjusted value will be equal to the value of the Accumulation Account for the Valuation Period which ends immediately preceding the Annuity Commencement Date, reduced by any applicable premium or similar taxes and a proportionate amount of the contract maintenance charge to reflect the time elapsed between the last Contract Anniversary and the day before the Annuity Commencement Date.

The dollar amount of the first variable annuity payment will be determined in accordance with the annuity payment rates found in the Contract which are based on an assumed interest rate of 3% per year. All variable annuity payments other than the first are determined by means of Annuity Units credited to the Contract. The number of Annuity Units to be credited in respect of a particular Variable Account is determined by dividing that portion of the first variable annuity payment attributable to that Variable Account by the Annuity Unit value of that Variable Account for the Valuation Period which ends immediately preceding the Annuity Commencement Date. The number of Annuity Units of each particular Variable Account credited to the Contract then remains fixed unless an exchange of Annuity Units is made as described below. The dollar amount of each variable annuity payment after the first may increase, decrease or remain constant, and is equal to the sum of the amounts determined by multiplying the number of Annuity Units of a particular Variable Account credited to the Contract by the Annuity Unit value for the particular Variable Account for the Valuation Period which ends immediately preceding the due date of each subsequent payment.

Annuity Unit Value

The Annuity Unit value for each Variable Account was established at $10.00 for the first Valuation Period of the particular Variable Account. The Annuity Unit value for any subsequent Valuation Period is determined using the following formula:

Annuity Unit Value = (A x B) x C

where:

A equals the Annuity Unit value for the immediately preceding Valuation Period

B equals the Net Investment Factor for the current Valuation Period

C equals a factor to neutralize the assumed interest rate of 3% per year used to establish the annuity payment rates found in the Contract. (This factor is 0.99991902 for a one day Valuation Period.)

Example of Variable Annuity Unit Calculation

Assume the value of an Annuity Unit for the immediately preceding Valuation Period had been 12.3456789. Assume that the Net Investment Factor for the subsequent Valuation Period is 1.00322953 as shown in the calculation above. If the first variable annuity payment is determined by using an annuity payment based on an assumed interest rate of 3% per year, the value of the Annuity Unit for the current Valuation Period would be determined as follows:

(12.3456789 x 1.00322953) x 0.99991902 = 12.3845466

Example of Variable Annuity Payment Calculation

The first Variable Annuity payment is determined by multiplying the Variable Accumulation Unit value for the Valuation Period (as described under “Example of Variable Accumulation Unit Calculation”) by the annuity payment rate for the age and annuity option elected.

Assume the following facts:

· the Account value being annuitized is made up of a particular Variable Account with 8,765.4321 Variable Accumulation Units;

· at the end of the Valuation Period immediately preceding the Annuity Commencement Date, the Variable Accumulation Unit value and the Annuity Unit value for that Variable Account are 14.5645672 and 12.3456789, respectively;

· the annuity payment rate for the age and option elected is $6.78 per $1,000; and

· on the day prior to the second variable annuity payment date, the Annuity Unit value is 12.3724831.

The first Variable Annuity payment would be determined as follows:

(8,765.4321 x 14.5645672) x 6.78	=	$865.57
1,000

This first Variable Annuity payment of $865.57 represents 70.1112 Variable Annuity Units, which are calculated by dividing the first Variable Annuity Payment by the Variable Annuity Unit value at the end of the Valuation Period immediately preceding the Annuity Commencement Date. In this case, $865.57 divided by 12.3456789.

Subsequent Variable Annuity payments are determined by multiplying the number of Variable Annuity Units (calculated for the first Variable Annuity payment) by the Variable Annuity Unit value at the end of the Valuation Period immediately preceding the annuity payment date. Thus, the second Variable Annuity payment would be determined as follows:

70.1112 x 12.3845467 = $868.29

DISTRIBUTION OF THE CONTRACT

We offer the Contract on a continuous basis through the general distributor and principal underwriter of the Contracts, Clarendon Insurance Agency, Inc. (“Clarendon”).  Clarendon also acts as the general distributor of certain other annuity contracts issued by the Company and its subsidiary, Sun Life Insurance and Annuity Company of New York, and variable life insurance contracts issued by the Company.

In addition to commissions, the Company may, from time to time, pay or allow additional promotional incentives, in the form of cash or other compensation. The Company reserves the right to offer these additional incentives only to certain broker-dealers that sell or are expected to sell during specified time periods certain minimum amounts of Contracts or Certificates or other contracts offered by the Company.  Promotional incentives may change at any time.

Commissions will not be paid to selling agents with respect to Participant Accounts established for the personal account of employees of the Company or any of its affiliates, or of persons engaged in the distribution of the Contract, or of immediate family members of such employees or persons. In addition, commissions may be waived or reduced in connection with certain transactions described in the Prospectus under the heading “Waivers; Reduced Charges; Credits; Special Guaranteed Interest Rates.” Total commissions paid by the Variable Account to, but not retained by, Clarendon during 2009, 2010, and 2011, were approximately $23,131,617, $31,742,826, and $29,279,164, respectively.

CUSTODIAN

We are the Custodian of the assets of the Variable Account.  We will purchase Fund shares at net asset value in connection with amounts allocated to the Sub-Accounts in accordance with your instructions, and we will redeem Fund shares at net asset value for the purpose of meeting the contractual obligations of the Variable Account, paying charges relative to the Variable Account or making adjustments for annuity reserves held in the Variable Account.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The consolidated financial statements of Sun Life Assurance Company of Canada (U.S.) included in this Statement of Additional Information have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein (which report, dated March 29, 2012, accompanying such financial statements expresses an unqualified opinion and includes an explanatory paragraph, referring to the Company changing its method of accounting and reporting for other-than-temporary impairments in 2009), and has been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.  Their office is located at 200 Berkeley Street, Boston, Massachusetts.

The financial statements of Sun Life of Canada (U.S.) Variable Account F that are included in this Statement of Additional Information have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein (which report, dated April 23, 2012, accompanying the financial statements expresses an unqualified opinion) and has been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

FINANCIAL STATEMENTS

The financial statements of the Variable Account and Sun Life Assurance Company of Canada (U.S.) are included herein. The consolidated financial statements of Sun Life Assurance Company of Canada (U.S.) are provided as relevant to its ability to meet its financial obligations under the Certificates and should not be considered as bearing on the investment performance of the assets held in the Variable Account.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

Sun Life Assurance Company of Canada (U.S.)

Wellesley Hills, Massachusetts

We have audited the accompanying consolidated balance sheets of Sun Life Financial Assurance Company of Canada (U.S.) and subsidiaries (the "Company") as of December 31, 2011 and 2010, and the related consolidated statements of operations, comprehensive income, stockholder’s equity, and cash flows for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Sun Life Assurance Company of Canada (U.S.) and subsidiaries as of December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting and reporting for other-than-temporary impairments as required by accounting guidance adopted in 2009.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

March 29, 2012

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

For the  Years Ended December 31,

	2011		2010		2009
Revenues:
Premiums and annuity considerations (Note 8)	$	137,420	$	136,175	$	134,246
Net investment income (1)  (Note 7)		727,628		1,390,210		2,582,307
Net derivative loss (Note 4)		(988,070)		(149,290)		(39,902)
Net realized investment gains (losses), excluding impairment losses on available-for-sale securities (Note 6)		39,578		26,951		(36,675)
Other-than-temporary impairment losses (2)  (Note 4)		(71)		(885)		(4,834)
Fee and other income (Note 8)		608,411		511,027		385,836
Total revenues		524,896		1,914,188		3,020,978
Benefits and expenses:
Interest credited (Note 8)		424,208		401,848		385,768
Interest expense		47,170		51,789		39,780
Policyowner benefits (Note 8)		134,412		239,794		110,439
Amortization of deferred policy acquisition costs and value of business and customer renewals acquired		(247,401)		697,102		1,024,661
Other operating expenses (Note 8)		350,325		318,170		248,156
Total benefits and expenses		708,714		1,708,703		1,808,804
(Loss) income from continuing operations before income tax (benefit) expense		(183,818)		205,485		1,212,174
Income tax (benefit) expense (Note 10)		(80,701)		71,211		335,649
Net (loss) income from continuing operations		(103,117)		134,274		876,525
Income from discontinued operations, net of tax
(Note 2)		-		-		104,971
Net (loss) income	$	(103,117)	$	134,274	$	981,496

(1) Net investment income includes an increase in market value of trading investments of $186.6 million, $674.2 million and $2,086.7 million for the years ended December 31, 2011, 2010 and 2009, respectively.

(2) The $0.1 million, $0.9 million and $4.8 million other-than-temporary impairment (“OTTI”) losses for years ended December 31, 2011, 2010 and 2009, respectively, represent solely credit losses.  The Company incurred no non-credit OTTI losses during the years ended December 31, 2011, 2010 and 2009 as such, no non-credit OTTI losses were recognized in other comprehensive income for these periods.

The accompanying notes are an integral part of the consolidated financial statements

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED BALANCE SHEETS

(in thousands except per share data)

ASSETS		December 31, 2011		December 31, 2010
Investments
Available-for-sale fixed maturity securities, at fair value (amortized cost of $1,339,960 and $1,422,951 in 2011 and 2010, respectively) (Note 4)	$	1,402,525	$	1,495,923
Trading fixed maturity securities, at fair value (amortized cost of $10,336,058 and $11,710,416 in 2011 and 2010, respectively) (Note 4)		10,280,536		11,467,118
Mortgage loans (Note 4)		1,457,356		1,737,528
Derivative instruments – receivable (Note 4)		422,404		198,064
Limited partnerships		34,088		41,622
Real estate (Note 4)		223,814		214,665
Policy loans		603,371		717,408
Other invested assets		37,075		27,456
Short-term investments		105,895		832,739
Cash and cash equivalents		872,064		736,323
Total investments and cash		15,439,128		17,468,846
Accrued investment income		169,761		188,786
Deferred policy acquisition costs and sales inducement asset (Note 13)		2,206,886		1,682,559
Value of business and customer renewals acquired (Note 14)		106,087		134,985
Net deferred tax asset (Note 10)		448,376		394,297
Goodwill (Note 1)		7,299		7,299
Receivable for investments sold		5,092		5,328
Reinsurance receivable		2,237,806		2,347,086
Other assets (Note 1)		119,325		125,529
Separate account assets (Note 1)		27,483,790		26,880,421
Total assets	$	48,223,550	$	49,235,136
LIABILITIES
Contractholder deposit funds and other policy liabilities	$	13,626,525	$	14,593,228
Future contract and policy benefits		910,032		849,514
Payable for investments purchased		730		44,827
Accrued expenses and taxes		49,867		52,628
Debt payable to affiliates (Note 3)		683,000		783,000
Reinsurance payable		2,100,124		2,231,835
Derivative instruments – payable (Note 4)		287,074		362,023
Other liabilities		339,641		285,056
Separate account liabilities		27,483,790		26,880,421
Total liabilities		45,480,783		46,082,532
Commitments and contingencies (Note 20)
STOCKHOLDER’S EQUITY
Common stock, $1,000 par value – 10,000 shares authorized; 6,437 shares issued and outstanding in 2011 and 2010		6,437		6,437
Additional paid-in capital		3,629,228		3,928,246
Accumulated other comprehensive income (Note 19)		38,851		46,553
Accumulated deficit		(931,749)		(828,632)
Total stockholder’s equity		2,742,767		3,152,604
Total liabilities and stockholder’s equity	$	48,223,550	$	49,235,136

The accompanying notes are an integral part of the consolidated financial statements.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

For the Years Ended December 31,

		2011		2010		2009
Net (loss) income	$	(103,117)	$	134,274	$	981,496
Other comprehensive (loss) income:
Change in unrealized holding gains on available- for- sale securities, net of tax (1)		33,493		34,459		113,278
Reclassification adjustment for OTTI losses, net of tax (2)		1,111		938		202
Change in pension and other postretirement plan adjustments, net of tax (3)		-		-		10,231
Reclassification adjustments of net realized investment losses into net income (gains) losses (4)		(42,306)		(24,088)		3,117
Other comprehensive (loss) income		(7,702)		11,309		126,828
Comprehensive (loss) income	$	(110,819)	$	145,583	$	1,108,324

(1) Net of tax (expense) of $(18.0) million, $(18.6) million and $(60.1) million for the years ended December 31, 2011, 2010 and 2009, respectively.

(2) Represents an adjustment to OTTI losses due to the sale of other-than-temporarily impaired available-for-sale fixed maturity securities.

(3) Net of tax (expense) of $(5.5) million for the year ended December 31, 2009.

(4) Net of tax benefits (expense) of $22.8 million, $13.0 million and $(1.7) million for the years ended December 31, 2011, 2010 and 2009, respectively.

The accompanying notes are an integral part of the consolidated financial statements

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY

(in thousands)

For the Years Ended December 31,

	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income (1)		Accumulated Deficit		Total Stockholder’s Equity
Balance at December 31, 2008	$	6,437	$	2,872,242	$	(129,884)	$	(1,953,540)	$	795,255
Cumulative effect of accounting changes related to the adoption of FASB ASC Topic 320, net of tax (2)		-		-		(9,138)		9,138		-
Net income		-		-		-		981,496		981,496
Tax benefit from stock options		-		185		-		-		185
Capital contribution from Parent		-		748,652		-		-		748,652
Net liabilities transferred to affiliate (Note 3)		-		1,467		47,438		-		48,905
Dividend to Parent (Notes 1 and 2)		-		(94,869)		-		-		(94,869)
Other comprehensive income		-		-		126,828		-		126,828
Balance at December 31, 2009		6,437		3,527,677		35,244		(962,906)		2,606,452
Net income		-		-		-		134,274		134,274
Tax benefit from stock options		-		569		-		-		569
Capital contribution from Parent		-		400,000		-		-		400,000
Other comprehensive income		-		-		11,309		-		11,309
Balance at December 31, 2010		6,437		3,928,246		46,553		(828,632)		3,152,604
Net loss		-		-		-		(103,117)		(103,117)
Tax benefit from stock options		-		982		-		-		982
Return of capital to Parent (Note 3)		-		(300,000)		-		-		(300,000)
Other comprehensive loss		-		-		(7,702)		-		(7,702)
Balance at December 31, 2011	$	6,437	$	3,629,228	$	38,851	$	(931,749)	$	2,742,767

(1) As of December 31, 2011, the total amount of after tax non-credit OTTI losses recorded in the Company’s accumulated other comprehensive income was $6.9 million.

(2) Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”) Topic 320, “Investments-Debt and Equity Securities.”

The accompanying notes are an integral part of the consolidated financial statements

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

For the Years Ended December 31,

		2011		2010		2009
Cash Flows From Operating Activities:
Net (loss) income from operations	$	(103,117)	$	134,274	$	981,496
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Net amortization (accretion) of premiums on investments		47,608		30,562		(689)
Amortization of deferred policy acquisition costs, and value of business and customer renewals acquired		(247,401)		697,102		1,024,661
Depreciation and amortization		10,012		5,683		5,535
Net loss (gain) on derivatives		960,978		41,483		(96,041)
Net realized (gains) losses and OTTI credit losses on available-for- sale investments		(39,507)		(26,066)		41,509
Net increase in fair value of trading investments		(186,566)		(674,223)		(2,086,740)
Net realized losses on trading investments		94,640		67,277		367,337
Undistributed (income) loss on private equity limited partnerships		(2,883)		2,339		9,207
Interest credited to contractholder deposits		424,208		401,848		385,768
Goodwill impairment		-		-		-
Deferred federal income taxes		(49,932)		149,377		295,608
Changes in assets and liabilities:
Additions to deferred policy acquisition costs, sales inducement asset and value of business and customer renewals acquired		(225,114)		(184,995)		(346,900)
Accrued investment income		19,025		41,805		36,736
Net change in reinsurance receivable/payable		69,511		129,907		209,637
Future contract and policy benefits		60,518		33,876		(125,992)
Other, net		(32,132)		17,031		(243,369)
Adjustments related to discontinued operations		-		-		(288,018)
Net cash provided by operating activities		799,848		867,280		169,745
Cash Flows From Investing Activities:
Sales, maturities and repayments of:
Available-for-sale fixed maturity securities		708,951		498,087		113,478
Trading fixed maturity securities		3,136,456		4,170,750		2,097,054
Mortgage loans		253,599		249,283		143,493
Real estate		812		-		-
Other invested assets (1)		115,650		(315,643)		(207,548)
Purchases of:
Available-for-sale fixed maturity securities		(561,142)		(771,747)		(347,139)
Trading fixed maturity securities		(1,948,459)		(3,946,548)		(867,310)
Mortgage loans		(15,045)		(101,668)		(17,518)
Real estate		(4,739)		(4,874)		(4,702)
Other invested assets (2)		(71,270)		(64,998)		(106,277)
Net change in other investments		-		-		(183,512)
Net change in policy loans		6,879		5,182		6,817
Net change in short-term investments		726,844		434,572		(722,821)
Net cash provided by (used in) investing activities	$	2,348,536	$	152,396	$	(95,985)

Continued on next page

(1) Includes $95.1 million, $(371.9) million and $(345.2) million related to settlements of derivative instruments during the years ended December 31, 2011, 2010 and 2009, respectively.

(2) Includes $(62.0) million, $(62.0) million and $(92.1) million related to acquisitions of derivative instruments during the years ended December 31, 2011, 2010 and 2009, respectively.

The accompanying notes are an integral part of the consolidated financial statements

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

For the Years Ended December 31,

		2011		2010		2009
Cash Flows From Financing Activities:
Additions to contractholder deposit funds	$	1,029,870	$	1,217,014	$	2,795,939
Withdrawals from contractholder deposit funds		(3,631,161)		(3,606,335)		(3,011,499)
Repayment of debt		(100,000)		(100,000)		-
Debt proceeds		-		-		200,000
Capital contribution from Parent		-		400,000		748,652
Return of capital to Parent		(300,000)		-		-
Other, net		(11,352)		1,760		(27,312)
Net cash (used in) provided by financing activities		(3,012,643)		(2,087,561)		705,780
Net change in cash and cash equivalents		135,741		(1,067,885)		779,540
Cash and cash equivalents, beginning of year		736,323		1,804,208		1,024,668
Cash and cash equivalents, end of year	$	872,064	$	736,323	$	1,804,208
Supplemental Cash Flow Information:
Interest paid	$	44,272	$	45,389	$	47,151
Income taxes (refunded) paid	$	(21,041)	$	(107,063)	$	21,144

Supplemental schedule of non-cash investing and financing activities

The Company exchanged $111.8 million of fixed maturity securities and converted $16.0 million of fixed maturity securities to equity securities during the year ended December 31, 2011.  Equity securities are reported in the Company’s balance sheets as part of other invested assets.  Mortgage foreclosures resulted in a reclassification of $9.0 million from mortgage loans to real estate during the year-ended December 31, 2011.  Refer to Note 8 for details of a $107.2 million non-cash adjustment to policy loans during the year ended December 31, 2011.

On December 31, 2009, the Company paid a dividend of all of the issued and outstanding common stock of the Company’s wholly-owned subsidiary, Sun Life Financial (U.S.) Reinsurance Company (“Sun Life Vermont”), to the Company’s sole shareholder, Sun Life of Canada (U.S.) Holdings, Inc. (the “Parent”).  This dividend is discussed more fully in Note 2.  As a result of the dividend, the Company’s total assets decreased by $2,658.1 million and total liabilities decreased by $2,563.2 million in a non-cash transaction.

The accompanying notes are an integral part of the consolidated financial statements

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GENERAL

Sun Life Assurance Company of Canada (U.S.) (the “Company”) is a stock life insurance company incorporated under the laws of Delaware.  The Company is a direct wholly-owned subsidiary of the Parent, which in turn is wholly-owned by Sun Life Financial Inc. (“SLF”), a reporting company under the Securities Exchange Act of 1934.  Accordingly, the Company is an indirect wholly-owned subsidiary of SLF.  SLF and its subsidiaries are collectively referred to herein as “Sun Life Financial.”

The Company and its subsidiaries offer a variety of wealth accumulation products, protection products and institutional investment contracts.  These products include individual and group fixed and variable annuities, individual and group variable life insurance, individual universal life insurance, group life, group disability, group dental and group stop loss insurance and funding agreements.  The Company is authorized to transact business in 49 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.  In addition, the Company’s wholly-owned subsidiary, Sun Life Insurance and Annuity Company of New York (“SLNY”), is authorized to transact business in the State of New York.

On December 12, 2011, SLF announced the completion of a major strategic review of its businesses.  As a result of this strategic review, SLF announced that it would close its domestic U.S. variable annuity and individual life products to new sales effective December 30, 2011.  The decision to discontinue sales in these lines of business is based on unfavorable product economics which, due to ongoing shifts in capital markets and regulatory requirements, no longer enhance shareholder value.  This decision reflects SLF’s intensified focus on reducing volatility and improving the return on shareholders’ equity by shifting capital to businesses with superior growth, risk and return characteristics.

Existing legal, business and contractual requirements call for the Company to, among other things, continue accepting limited applications for (1) certain private placement variable annuities until mid-2012, and (2) new employees of corporate-owned life insurance (“COLI”) customers.  Subject to these and other existing obligations, the Company has ceased writing all other COLI new business effective January 31, 2012 and all other individual life and annuities new business effective December 30, 2011.

The decision to stop selling variable annuity and individual life products in the U.S. will not impact existing customers and their policies.  The Company will continue to provide quality service to its policyholders, while focusing on the profitability, capital efficiency and risk management of its in-force business.  The Company will continue to earn revenue and to provide policyholder benefits on its in-force business.

Of the one-time restructuring costs on a pre-tax basis associated with the discontinuation of these products lines in the U.S., $12.7 million was allocated to the Company.  The restructuring costs related primarily to employee severance and other employee benefits, which are expected to be paid in the form of future cash expenditures, as well as other costs.

BASIS OF PRESENTATION

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for stock life insurance companies.

The consolidated financial statements include the accounts of the Company and its subsidiaries.  As of December 31, 2011, the Company directly or indirectly owned all of the outstanding shares of SLNY, which issues individual fixed and variable annuity contracts, group life, group disability, group dental and stop loss insurance, and individual life insurance in New York; Independence Life and Annuity Company (“ILAC”), a Rhode Island life insurance company that sold variable and whole life insurance products; Clarendon Insurance Agency, Inc., a registered broker-dealer; SLF Private Placement Investment Company I, LLC; 7101 France Avenue Manager, LLC; Sun MetroNorth, LLC; SLNY Private Placement Investment Company I, LLC; and SL Investment DELRE Holdings 2009-1, LLC.

The Company’s consolidated financial statements also include a variable interest entity (“VIE”) that the Company is required to consolidate.  Refer to Note 4 for further information about VIEs.

All inter-company transactions and balances between the Company and its subsidiaries have been eliminated in consolidation.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

BASIS OF PRESENTATION (CONTINUED)

On December 30, 2009, Sun Life Vermont, which was a subsidiary of the Company at the time, paid a $100.0 million cash dividend to the Company.  On December 31, 2009, the Company paid a dividend of all of the issued and outstanding common stock of Sun Life Vermont to the Parent.  As a result of this transaction, Sun Life Vermont is no longer the Company’s wholly-owned subsidiary.  At December 31, 2009, Sun Life Vermont’s total assets and liabilities were $2,658.1 million and $2,563.2 million, respectively.  Sun Life Vermont’s net income for the year ended December 31, 2009 was $105.0 million.  As a result of this dividend transaction, the net income and changes in cash flows from the operating activities of Sun Life Vermont for the year ended December 31, 2009 are presented as discontinued operations in these consolidated financial statements.

USE OF ESTIMATES

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  The most significant estimates are those used in determining the fair value of financial instruments, goodwill, deferred policy acquisition costs (“DAC”) including sales inducement asset (“SIA”), value of business acquired (“VOBA”), value of customer renewals acquired (“VOCRA”), liabilities for future contract and policyholder benefits, unearned revenue reserves, accruals, other-than-temporary impairments of investments, allowance for loan loss, valuation allowance on deferred tax assets and provision for income taxes.  Actual results could differ from those estimates.

OUT-OF-PERIOD ADJUSTMENTS

During the year ended December 31, 2011, upon settlement of certain note obligations, the Company recognized $35.4 million of adjustments to contract liabilities that were not previously recorded.  These adjustments should have been recorded during prior years.  Prior periods have not been adjusted as the previously unrecognized amounts were not deemed to be material under Staff Accounting Bulletin (“SAB”) No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in the Current Year Financial Statements.”

FINANCIAL INSTRUMENTS

In the normal course of business, the Company enters into transactions involving various types of financial instruments, including cash equivalents, short-term investments, fixed maturity securities, mortgage loans, equity securities, derivative financial instruments, debt, loan commitments and financial guarantees.  These instruments involve credit risk and also may be subject to risk of loss due to interest rate fluctuation.  The Company evaluates and monitors each financial instrument individually and, when appropriate, obtains collateral or other security to minimize losses.

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Cash, cash equivalents and short-term investments are highly liquid securities.  The Company’s cash equivalents primarily include cash, commercial paper and money market investments which have an original term to maturity of less than three months.  Short-term investments include debt instruments with a term to maturity exceeding three months, but less than one year on the date of acquisition.  Cash equivalents and short-term investments are held at amortized cost, which approximates fair value.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVESTMENTS

Fixed Maturity Securities

The Company accounts for its investments in accordance with FASB ASC Topic 320.  At the time of purchase, fixed maturity securities are classified as either trading or available-for-sale.  Securities, for which the Company has elected to measure at fair value under FASB ASC Topic 825, “Financial Instruments,” are classified as trading securities.  Although classified as trading securities, the Company’s intent is to not sell these securities in the near term.  Trading securities are carried at aggregate fair value with changes in market value reported as a component of net investment income.  Securities that do not meet the trading criterion are classified as available-for-sale.  Included with fixed maturity securities are forward purchase commitments on mortgage backed securities, better known as To Be Announced (“TBA”) securities.  The Company records TBA purchases on the trade date and the corresponding payable is recorded as an outstanding liability in payable for investments purchased until the settlement date of the transaction.  Available-for-sale securities that are not considered other-than-temporarily impaired are carried at fair value with the unrealized gains or losses reported in other comprehensive income.

The Company determines the fair value of its publicly-traded fixed maturity securities using three primary pricing methods: third-party pricing services, non-binding broker quotes and pricing models.  Prices are first sought from third party pricing services; the remaining unpriced securities are priced using one of the remaining two methods.  Third-party pricing services derive the security prices through recently reported trades for identical or similar securities with adjustments for trading volumes and market observable information through the reporting date.  In the event that there are no recent market trades, pricing services and brokers may use pricing models to develop a security price based on future expected cash flows discounted at an estimated market rate using collateral performance and vintages.  The Company generally does not adjust quotes or prices obtained from brokers or pricing services.

Structured securities, such as asset-backed securities (“ABS”) including collateralized debt obligations, residential mortgage-backed securities (“RMBS”) and commercial mortgage-backed securities (“CMBS”) are priced using a fair value model or independent broker quotations.  CMBS securities are priced using the last sale price of the day or a broker quote, if no sales were transacted that day.  Typical inputs used by these three pricing methods include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids and/or estimated cash flows and prepayment speeds.  In addition, estimates of expected future prepayments are factors in determining the price of ABS, RMBS and CMBS.  These estimates are based on the underlying collateral and structure of the security, as well as prepayment speeds previously experienced in the market at interest rate levels projected for the underlying collateral.  Actual prepayment experience may vary from these estimates.

For privately-placed fixed maturity securities, fair values are determined using a discounted cash flow model which includes estimates that take into account credit spreads for publicly-traded securities of similar credit risk, maturity, prepayment and liquidity characteristics.  A portion of privately-placed fixed maturity securities also are priced using market prices or broker quotes.  The fair values of mortgages are estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

The Company’s ability to liquidate positions in privately-placed fixed securities and mortgages could be impacted to a significant degree by the lack of an actively traded market.  Although the Company believes that its estimates reasonably reflect the fair value of those instruments, its key assumptions about risk-free interest rates, risk premiums, performance of underlying collateral (if any) and other factors may not reflect those of an active market.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVESTMENTS (continued)

Fixed Maturity Securities (continued)

The fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between knowledgeable, unrelated willing parties using inputs, including estimates and assumptions, a market participant would utilize.  The Company performs a monthly analysis on the prices received from third parties to assess if the prices represent a reasonable estimate of the fair value.  In addition, on the quarterly basis, the Company performs quantitative and qualitative analysis that includes back testing of recent trades, review of key assumptions such as spreads, duration, and credit rating, and on-going review of third-party pricing services’ methodologies.  The Company performs further testing on those securities whose prices do not fall within a pre-established tolerance range.  This testing includes looking at specific market events that may affect pricing or obtaining additional information or new prices from the third-party pricing service.  Additionally, the Company makes a selection of securities from its portfolio and compares the price received from its third-party pricing services to an independent source, creates option adjusted spreads or obtains additional broker quotes to corroborate the current market price.  Historically, the Company has found no material variances between the prices received from third-party pricing sources and the results of its own testing.

Please refer to Note 5 of the Company’s consolidated financial statements for further discussion of the Company’s fair value measurements.

As required by FASB ASC Topic 320, the Company recognizes an OTTI loss and records a charge to earnings for the full amount of the impairment based on the difference between the amortized cost and fair value of the security, if the Company intends to sell, or if it is more likely than not that it will be required to sell, the impaired security prior to recovery of its cost basis.  Otherwise, losses on securities which are other-than-temporarily impaired are separated into two categories:  credit loss and non-credit loss.  The credit loss portion is charged to the consolidated statements of operations, while the non-credit loss is charged to other comprehensive income.  When an unrealized loss on a fixed maturity is considered temporary, the Company continues to record the unrealized loss in other comprehensive income and not in earnings.

Structured securities, typically those rated single A or below, are subject to certain provisions in FASB ASC Topic 325, “Investments–Other.”  These provisions require the Company to periodically update its best estimate of cash flows over the life of the security.  In the event that fair value is less than the carrying amount and there has been an adverse change in the expected cash flows, then an impairment charge, based on the difference between amortized cost and the present value of the expected cash flows discounted at the current effective rate, is recorded to income.

Please refer to Note 4 of the Company’s consolidated financial statements for further discussion of the Company’s recognition and disclosure of OTTI loss.

The Company discontinues the accrual of income on its holdings for issuers that are in default.  The Company’s net investment income would have increased by $2.1 million and $4.6 million for the year ended December 31, 2011 and 2010, respectively, if these holdings were performing.  As of December 31, 2011 and 2010, the fair market value of holdings for issuers in default was $19.6 million and $53.9 million, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVESTMENTS (CONTINUED)

Mortgage Loans and Real Estate

Mortgage loans are stated at unpaid principal balances, net of provisions for estimated losses.  Mortgage loans acquired at a premium or discount are carried at amortized cost using the effective interest rate method, net of provisions for estimated losses.  Purchases and sales of mortgage loans are recognized or derecognized in the Company’s balance sheet on the loans’ trade dates, which are the dates that the Company commits to purchase or sell the loan.  Transaction costs on mortgage loans are capitalized on initial recognition and are recognized in the Company’s statement of operations using the effective interest method.  Mortgage loans, which primarily include commercial first mortgages, are diversified by property type and geographic area throughout the United States.  Mortgage loans are collateralized by the related properties and generally are no more than 75% of the property’s value at the time that the original loan is made.  The Company regularly assesses the value of the collateral.

A mortgage loan is considered impaired when it is probable that the principal or interest is not collectible in accordance with the contractual terms of the loan. When a mortgage loan is classified as impaired, allowances for credit losses are established to adjust the carrying value of the loan to its net recoverable amount. The allowance for credit losses are estimated using the present value of expected cash flows discounted at the loan’s effective interest rate or the fair value of the collateral, if the loan is collateral dependent.  A specific allowance for loan loss is established for an impaired loan if the present value of expected cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral less cost to sell, is less than the recorded amount of the loan.  The full extent of impairment in the mortgage portfolio cannot be assessed solely by reviewing these loans individually.  A general allowance for loan loss is established based on an assessment of past loss experience on groups of loans with similar characteristics and current economic conditions.  While management believes that it uses the best information available to establish the loan loss allowances, future adjustments may become necessary if economic conditions differ from the assumptions used in calculating them.

Interest income is recognized on impaired mortgage loans when the collection of contractually specified future cash flows is probable, in which case cash receipts are recorded in accordance with the effective interest rate method.  Interest income is not recognized on impaired mortgage loans and these mortgage loans are placed on non-accrual status when the collection of contractually specified future cash flows is not probable, in which case cash receipts are applied, firstly against the carrying value of the loan, then against the provision, and then to income.  The accrual of interest resumes when the collection of contractually specified future cash flows becomes probable based on certain facts and circumstances.

Changes in allowances for losses and write-off of specific mortgages are recorded as net realized gain or loss in the Company’s statements of operations.  Once the conditions causing impairment improve and future payments are reasonably assured, allowances are reduced and the mortgages are no longer classified as impaired.  However, the mortgage loan continues to be classified as impaired if the original terms of the contract have been restructured, resulting in the Company providing an economic concession to the borrower.

If the conditions causing impairment do not improve and future payments remain unassured, the Company typically derecognizes the asset through disposition or foreclosure.  Uncollectible collateral-dependent loans are written off through allowances for losses at the time of disposition or foreclosure.

Real estate investments are held for the production of income or are held for sale.  Real estate investments held for the production of income are carried at depreciated cost.  Depreciation of buildings and improvements is calculated using the straight-line method over the estimated useful life of the asset.  Real estate investments held for sale are primarily acquired through foreclosure of mortgage loans for which the carrying amount is established as the fair value less cost to sell at the foreclosure date.  Real estate investments held- for-sale are measured at the lower of their carrying amount or fair value less costs to sell.  Real estate investments are diversified by property type and geographic area throughout the United States.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INVESTMENTS (CONTINUED)

Derivative instruments

The Company uses derivative financial instruments including swaps, swaptions, options and futures as a means of hedging exposure to interest rate, currency and equity price risk.  Derivatives are carried at fair value and changes in fair value are recorded as a component of derivative income or loss.

Policy loans and other

Policy loans are carried at the amount of outstanding principal balance.  Policy loans are collateralized by the related insurance policy and do not exceed the net cash surrender value of such policy.

Investments in private equity limited partnerships are accounted for by the equity method of accounting.

Realized gains and losses

Realized gains and losses on the sales of investments are recognized in operations at the date of sale and are determined using the average cost method.  Changes in the provision for estimated losses on mortgage loans and real estate are included in net realized investment gains and losses.

Investment income

Interest income is recorded on the accrual basis.  Investments are placed in a non-accrual status when management believes that the borrower's financial position, after giving consideration to economic and business conditions and collection efforts, is such that collection of principal and interest is doubtful.  When an investment is placed in non-accrual status, all interest accrued is reversed against current period interest income.  Interest accruals are resumed on such investments only when the investments have performed on a sustained basis for a reasonable period of time and when, in the judgment of management, the investments are estimated to be fully collectible as to both principal and interest.

The Company manages assets related to certain funds-withheld reinsurance agreements.  These assets are primarily comprised of fixed maturity securities, mortgage loans, policy loans, equity securities, derivative instruments, related accrued income and cash and cash equivalents and are accounted for consistent with the policies described above.  Investment income on assets within funds-withheld reinsurance portfolios is included as a component of net investment income in the Company’s consolidated statements of operations.

Please refer to Note 7 of the Company’s consolidated financial statements for further discussion of the Company’s net investment income.

DEFERRED POLICY ACQUISITION COSTS AND SALES INDUCMENT ASSET

Acquisition costs consist of commissions, underwriting and other costs that vary with and are primarily related to the production of new business.  Acquisition costs related to deposit-type contracts, primarily deferred annuity, universal life (“UL”) and guaranteed investment contracts (“GICs”) are deferred and amortized with interest based on the proportion of actual gross profits to the present value of all estimated gross profits to be realized over the estimated lives of the contracts.  Estimated gross profits are composed of net investment income, net realized and unrealized investment gains and losses, life and variable annuity fees, surrender charges, interest credited, policyholder benefits and direct variable administrative expenses.

SIA represents amounts that are credited to policyholder account balances related to the enhanced or bonus crediting rates that the Company offers on certain of its annuity products.  The costs associated with offering the enhanced or bonus crediting rates are capitalized and amortized over the expected life of the related contracts in proportion to the estimated gross profits.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

DEFERRED POLICY ACQUISITION COSTS AND SALES INDUCMENT ASSET (CONTINUED)

Estimating future gross profit is a complex process requiring considerable judgment and the forecasting of events into the future based on historical information and actuarial assumptions.  These assumptions are subject to an annual review process and are updated on a more frequent basis if required.  Changes in any of the assumptions that serve to increase or decrease the estimated future gross profits will cause the amortization of DAC to decrease or increase, respectively, in the current period.  Assumptions affecting the computation of estimated future gross profits include, but are not limited to, recent investment and policyholder experience, expectations of future performance and policyholder behavior, changes in interest rates, capital market growth rates, and account maintenance expense.

DAC amortization is reviewed regularly and adjusted retrospectively through the current period operations when the Company calculates the actual profits or losses and revises its estimate of future gross profits to be realized from deposit-type contracts, including realized and unrealized gains and losses from investments.  The Company also tests its DAC asset and SIA for loss recognition on a quarterly basis.  The test is performed by comparing the GAAP liability, net of DAC and SIA, to the present value of future expected gross profits or gross premium reserves.  The Company’s DAC asset and SIA at December 31, 2011 and 2010 failed the loss recognition test for certain annuity products and the Company, therefore, wrote down DAC asset and the SIA by $21.0 million and $126.0 million during the years ended December 31, 2011 and 2010, respectively.  Please refer to Note 13 of the Company’s consolidated financial statements for the Company’s DAC asset and SIA roll-forward.

The DAC asset under GAAP cannot exceed accumulated deferrals, plus interest.  At December 31, 2009, the Company reached the cap for its DAC asset and SIA related to certain fixed and fixed index annuity products and reported the DAC asset for these products at historical accumulated deferrals with interest.  At December 31, 2010, the Company’s SIA related to certain fixed and fixed index annuity remained at historical accumulated deferral with interest.  However, the Company’s DAC related to certain fixed annuities was below the cap and regular amortization was recorded during the year.  At December 31, 2011, the Company’s DAC asset and SIA were below the cap and regular amortization was recorded during the year.

Although recovery of DAC and the SIA is not assured, the Company believes it is more likely than not that all of these costs will be recovered from future profits.  The amount of DAC and SIA considered recoverable could be reduced in the near term, however, if the future estimates of gross profits are reduced.

VALUE OF BUSINESS AND CUSTOMER RENEWALS ACQUIRED

VOBA represents the actuarially determined present value of projected future gross profits from the Keyport Life Insurance Company (“Keyport”) in-force policies on November 1, 2001, the date of the Company’s acquisition of Keyport.  Prior to December 31, 2009, the Company’s VOBA also included the present value of projected future gross profits from the in-force policies that were transferred to SLNY, based on a series of agreements between SLNY and Sun Life and Health Insurance Company (U.S.) (“SLHIC”), an affiliate, (the “SLHIC to SLNY asset transfer”).  VOBA related to Keyport is amortized in proportion to the projected emergence of profits over the estimated life of the purchased block of business; VOBA related to the SLHIC to SLNY asset transfer was amortized in proportion to the projected premium income over the period to the first renewal of the transferred business.  As of December 31, 2009, VOBA related to the SLHIC to SLNY asset transfer was fully amortized.

VOCRA represents a portion of the assets that were transferred to SLNY under the SLHIC to SLNY asset transfer.  VOCRA is the actuarially determined present value of projected future profits arising from the existing in-force business at May 31, 2007 to the next policy renewal date.  This amount is amortized in proportion to the projected premium income over the period from the first renewal date to the end of the projected life of the policies.  The Company tests its VOCRA asset for impairment on an annual basis.  During the year ended December 31, 2009, the Company determined that its VOCRA asset was impaired and recorded an impairment charge of $2.6 million.  Please refer to Note 14 of the Company’s consolidated financial statements for the Company’s combined VOBA and VOCRA roll-forward.

Although recovery of VOBA is not assured, the Company believes it is more likely than not that all of these costs will be recovered from future profits.  The amount of VOBA and VOCRA considered recoverable could be reduced in the near term, however, if the future estimates of gross profits are reduced.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

OTHER ASSETS

The Company’s other assets are comprised primarily of receivables from affiliates, outstanding premiums and intangible assets.  Intangible assets consist of state insurance licenses that are not subject to amortization and the value of distribution.  The value of distribution represents the present value of projected future profits arising from sales of new business by brokers with whom SLHIC had an existing distribution relationship contract.  This amount is amortized on a straight-line basis over 25 years, representing the period over which the Company expects to earn premiums from new sales stemming from the added distribution capacity.

Prior to December 31, 2009, the Company’s other asset also included property, equipment, leasehold improvements and capitalized software costs.  As described in Note 3, effective December 31, 2009, the Company transferred certain property, equipment, leasehold improvements and capitalized software costs to Sun Life Financial (U.S.) Services Company, Inc. (“Sun Life Services”), an affiliate.  Depreciation and amortization expenses related to these assets were $1.3 million for year ended December 31, 2009.

POLICY LIABILITIES AND ACCRUALS

Future contract and policy benefit liabilities include amounts reserved for future policy benefits payable upon contingent events, as well as liabilities for unpaid claims due as of the statement date.  Such liabilities are established in amounts adequate to meet the estimated future obligations of in-force policies.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

POLICY LIABILITIES AND ACCRUALS (continued)

Policy reserves for annuity contracts include liabilities held for group pension and payout annuity payments and liabilities held for product guarantees on variable annuity products, such as guaranteed minimum death benefits (“GMDB”).  Reserves for pension and payout annuity contracts are calculated using the best-estimate interest and decrement assumptions.  The Company periodically reviews its policies for loss recognition based upon management’s best estimates.  During the year ended December 31, 2011 and 2010, the Company recorded $49.3 million and $29.2 million, respectively, of adjustments to reserves related to loss recognition.

Reserves for GMDB and guaranteed minimum income benefits (“GMIB”) are calculated according to the methodology prescribed by the American Institute of Certified Public Accountants (“AICPA”) which is included in FASB ASC Topic 944 “Financial Services- Insurance,” whereby the expected benefits provided by the guarantees are spread over the duration of the contract in proportion to the benefit assessments.

Policy reserves for UL contracts are held for benefit coverages that are not fully provided for in the policy account value.  These include rider coverages, conversions from group policies, and benefits provided under market conduct settlements.

Policy reserves for group life and health contracts are calculated using standard actuarial methods recognized by the American Academy of Actuaries. For the tabular reserves, discount rates are based on the Company’s earned investment yield and the morbidity and mortality tables used are standard industry tables modified to reflect the Company’s actual experience when appropriate.  In particular, for the Company’s group reported claim reserves and the mortality and morbidity tables for the early durations of claims are based exclusively on the Company’s experience, incorporating factors such as age at disability, sex and elimination period.  These reserves are computed at amounts that, with interest compounded annually at assumed rates, are expected to meet the Company’s future obligations.

Liabilities for unpaid claims consist of the estimated amount payable for claims reported but not yet settled and an estimate of claims incurred but not reported.  The amount reported is based upon historical experience, adjusted for trends and current circumstances.  Management believes that the recorded liability is sufficient to provide for the associated claims adjustment expenses.  Revisions of these estimates are included in operations in the year such refinements are made.

Contractholder deposit funds consist of policy values that accrue to the holders of UL-type contracts and investment-related products such as deferred annuities, single premium whole life (“SPWL”) policies, GICs and funding agreements.  The liabilities consist of deposits received plus interest credited, less accumulated policyholder charges, assessments, partial withdrawals and surrenders.  The liabilities are not reduced by surrender charges.

INCOME TAXES

The Company accounts for current and deferred income taxes and recognizes reserves for income tax contingencies in accordance with FASB ASC Topic 740, “Income Taxes.”

Under the applicable asset and liability method for recording deferred income taxes, deferred taxes are recognized when assets and liabilities have different values for financial statement and tax reporting purposes, using enacted tax rates in effect for the year in which the differences are expected to reverse.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.  Valuation allowances on deferred tax assets are estimated based upon the Company’s assessment of the realizability of such amounts.  Please refer to Note 10 of the Company’s consolidated financial statements for further discussion of the Company’s income taxes.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

REVENUE AND EXPENSES

Premiums for traditional individual life products are considered earned revenue when due.  Premiums related to group life, group stop loss, group dental and group disability insurance are recognized as earned revenue pro-rata over the contract period.  The unexpired portion of these premiums is recorded as unearned premiums.  Revenue from UL-type products and investment-related products includes charges for the cost of insurance (mortality), initiation and administration of the policy, and surrender charges. Revenue is recognized when the charges are assessed except that any portion of an assessment that relates to services to be provided in future years is deferred and recognized over the period during which the services are provided.

Benefits and expenses related to traditional life, annuity and disability contracts, including group policies, are recognized when incurred in a manner designed to match them with related premium revenue and to spread income recognition over the expected life of the policy.  For UL-type and investment-type contracts, expenses include interest credited to policyholders’ accounts and death benefits in excess of account values, which are recognized as incurred.

Fees from investment advisory services are recognized as revenues when the services are provided.

SEPARATE ACCOUNTS

The Company has established separate accounts applicable to various classes of contracts providing variable benefits.  Contracts for which funds are invested in separate accounts include variable life insurance and individual and group qualified and non-qualified variable annuity contracts.  Investment income and changes in mutual fund asset values are allocated to policyholders and therefore do not affect the operating results of the Company.  Assets held in the separate accounts are carried at fair value and the investment risk of such securities is retained by the contractholder.  The Company earns separate account fees for providing administrative services and bearing the mortality risks related to these contracts.  The activity of the separate accounts is not reflected in the consolidated financial statements except for the following:

Ø The fees that the Company receives, which are assessed periodically and recognized as revenue when assessed; and

Ø The activity related to the GMDB, GMIB, guaranteed minimum accumulation benefit (“GMAB”) and guaranteed minimum withdrawal benefit (“GMWB”), which is reflected in the Company’s consolidated financial statements.

Ø The dividends-received-deduction (“DRD”) which is included in the Company’s income tax (benefit) expense, is calculated based upon the separate account assets held in connection with variable annuity contracts.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTING PRONOUNCEMENTS

New and Adopted Accounting Pronouncements

In April 2011, the FASB issued Accounting Standard Update (“ASU”) 2011-02, “Receivables (Topic 310): A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring,” which clarifies when a loan modification or restructuring is considered a troubled debt restructuring (“TDR”).  In evaluating whether a restructuring constitutes a TDR a creditor must use judgment to determine whether the following exist:

1. The borrower is experiencing financial difficulties, and

2. The lender has granted a concession to the borrower.

ASU 2011-02 amends FASB ASC Topic 310 “Receivables,” to include financial difficulty indicators (such as debtor default, debtor bankruptcy or concerns about the future as a going concern) that the lender should consider in determining whether a borrower is experiencing financial difficulties.  The amendments also clarify that a borrower could be experiencing financial difficulties even though the borrower is not currently in payment default but default is probable in the foreseeable future.

ASU 2011-02 provides guidance on whether the lender has granted a concession to the borrower and notes that:

· A borrower’s inability to access funds at a market rate for a new loan with similar risk characteristics as the modified loan indicates that the modification was executed at a below-market rate and therefore may indicate that a concession was granted.

· A temporary or permanent increase in the contractual interest rate as a result of restructuring does not preclude the restructuring from being considered a concession because the rate may still be below market.

· A restructuring that results in an insignificant delay in contractual cash flow is not considered to be a concession.

The amendments in ASU 2011-02 are effective for the first interim or annual period beginning on or after June 15, 2011.  These amendments are to be applied retrospectively to modifications occurring on or after the beginning of the annual period of adoption.  The Company adopted ASU 2011-2 on July 1, 2011 and the TDR disclosure requirements are included in Note 4 of these consolidated financial statements.

In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805):  Disclosure of Supplementary Pro Forma Information for Business Combinations (a consensus of the FASB Emerging Issues Task Force).”  The amendments of ASU 2010-29 provide guidance to clarify the acquisition date that should be used for reporting the pro forma financial information disclosures when comparative financial statements are presented.  ASU 2010-29 requires a public entity that presents comparative financial statements to disclose revenue and earnings of the combined entity as if the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period.  The amendments also require the supplemental proforma disclosure to include a description of the nature and amount of material, nonrecurring pro forma adjustments that are directly related to the business combination. The Company adopted ASU 2010-29 on January 1, 2011 and will apply this guidance to future business combinations.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTING PRONOUNCEMENTS (CONTINUED)

New and Adopted Accounting Pronouncements (Continued)

In December 2010, the FASB issued ASU 2010-28 “Intangibles–Goodwill and Other (Topic 350):  When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (a consensus of the FASB Emerging Issues Task Force).”  The amendments of ASU 2010-28 require reporting units with zero or negative carrying amounts to perform Step 2 of goodwill impairment test if it is more likely than not that a goodwill impairment exists and to consider adverse qualitative factors when performing the impairment test.  The Company adopted ASU 2010-28 on January 1, 2011, and the adoption did not have a significant impact on the Company’s consolidated financial statements.

In July 2010, the FASB issued ASU 2010-20, “Receivables (Topic 310): Disclosure about the Credit Quality of Financing Receivables and the Allowance for Credit Losses,” which amends FASB ASC Topic 310 to enhance disclosures and to provide financial statement users with greater transparency about an entity’s allowance for credit losses and the credit quality of its financing receivables.  The amendments require an entity to provide a greater level of disaggregated information about the credit quality of the entity’s financing receivables and allowance for credit losses.  ASU 2010-20 also requires an entity to disclose credit quality indicators, the aging of past due information and the modification of its financing receivables.  The amendments in ASU 2010-20 that relate to disclosures as of the end of a reporting period are effective for interim and annual reporting periods ending on or after December 15, 2010.  However, the disclosure about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010. Comparative disclosures are required for reporting periods ending after initial adoption.  The Company adopted ASU 2010-20 on December 31, 2010.  The enhanced disclosures required by ASU 2010-20 are included in Note 4 of the Company’s consolidated financial statements.

In April 2010, the FASB issued ASU 2010-18, “Receivables (Topic 310):  Effect of a Loan Modification When the Loan Is Part of a Pool That Is Accounted for as a Single Asset–a consensus of the FASB Emerging Issues Task Force,” which amends FASB ASC Topic 310.  The amendments were made to eliminate diversity in practice in accounting for loans that undergo troubled debt restructuring for those loans that have been included in a pool of loans.  Under ASU 2010-18, debt modifications that were made for distressed loans included in a pool of loans do not trigger the criteria needed to allow for such loans to be accounted for separately outside of the pool.  Upon initial adoption, an entity may make a one-time election to terminate accounting for loans as a pool.  The election may be made on a pool-by-pool basis and does not prevent the entity from using pool accounting for loans that will be acquired in the future.  The amendments in ASU 2010-18 are effective for the first fiscal quarter ending on or after July 15, 2010.  Early adoption is permitted.  The Company adopted ASU 2010-18 on September 30, 2010 and such adoption did not have a material impact on the Company’s consolidated financial statements.

In April 2010, the FASB issued ASU 2010-15, “Financial Services–Insurance (Topic 944):  How Investments Held through Separate Accounts Affect an Insurer’s Consolidation Analysis of Those Investments–a consensus of the FASB Emerging Issues Task Force,” to provide guidance regarding accounting for investment funds determined to be VIEs.  Under this guidance, an insurance entity would not be required to consolidate a voting-interest investment fund when it holds the majority of the voting interests of the fund through its separate accounts.  In addition, an insurance entity would not consider the interests held through separate accounts for the benefit of policyholders in the insurer’s evaluation of its controlling interest in a VIE, unless the separate account contract holder is a related party.  The guidance is effective, on a retrospective basis, for fiscal years and interim periods within those fiscal years, beginning after December 15, 2010.  The Company adopted ASU 2010-15 on January 1, 2011 and the adoption did not have a significant impact on the Company’s consolidated financial statements.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTING PRONOUNCEMENTS (CONTINUED)

New and Adopted Accounting Pronouncements (Continued)

In March 2010, the FASB issued ASU 2010-11, “Derivatives and Hedging (Topic 815):  Scope Exception Related to Embedded Credit Derivatives,” which provides amendments to FASB ASC Topic 815, “Derivatives and Hedging,” to clarify the embedded credit derivative scope exception included therein.  The amendments address how to determine which embedded credit derivative features are considered to be embedded derivatives that should not be analyzed for potential bifurcation and separate accounting under ASC Topic 815.  Under ASU 2010-11, only the embedded credit derivative feature created by subordination between financial instruments is not subject to the bifurcation requirements of ASC Topic 815.  However, other embedded credit derivative features would be subject to analysis for potential bifurcation even if their effects are allocated to interests in tranches of securitized financial instruments in accordance with those subordination provisions.  The following circumstances would not qualify for the scope exception and are subject to the application of ASC Topic 815 requiring the embedded derivatives to be analyzed for potential bifurcation:

Ø An embedded derivative feature relating to another type of risk (including another type of credit risk) is present in the securitized financial instrument.

Ø The holder of an interest in a tranche of securitized financial instruments is exposed to the possibility of being required to make potential future payments because the possibility of those future payments is not created by subordination.

Ø The holder owns an interest in a single-tranche securitization vehicle; therefore, the subordination of one tranche to another is not relevant.

The amendments in ASU 2010-11 are effective for the first fiscal quarter beginning after June 15, 2010.  Early adoption is permitted.  The Company adopted ASU 2010-11 on July 1, 2010 and such adoption did not have a material impact on the Company’s consolidated financial statements.

In February 2010, the FASB issued ASU 2010-09, “Subsequent Events (Topic 855):  Amendments to Certain Recognition and Disclosure Requirements” which removes the requirement for U.S. Securities and Exchange Commission (“SEC”) filers to disclose the date through which subsequent events have been evaluated.  ASU No. 2010-09 is effective upon issuance.  Events that have occurred subsequent to December 31, 2011 have been evaluated by the Company’s management in accordance with ASU 2010-09.

In January 2010, the FASB issued ASU 2010-06, “Fair Value Measurement and Disclosures (Topic 820):  Improving Disclosures about Fair Value Measurements,” which provides amendments to FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” to provide more robust disclosures about the following:

Ø The different classes of assets and liabilities measured at fair value;

Ø The valuation techniques and inputs used;

Ø The transfers between Levels 1, 2, and 3; and

Ø The activity in Level 3 fair value measurements.

Certain new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 31, 2009.  Disclosures about purchases, sales, issuances and settlements in the roll-forward of activities in Level 3 are effective for fiscal years beginning after December 15, 2010.  The Company adopted ASU 2010-06 on January 1, 2010.  The enhanced disclosures required by ASU 2010-06 for the periods beginning after December 31, 2009 are included in Note 5 of the Company’s consolidated financial statements.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTING PRONOUNCEMENTS (CONTINUED)

New and Adopted Accounting Pronouncements (continued)

On January 1, 2010, the Company adopted the provisions of FASB ASC Topic 860, “Transfers and Servicing,” which were issued in June 2009.  These provisions amend and expand disclosures about the relevance, representational faithfulness and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets.  FASB ASC Topic 860 amends previously issued derecognition accounting and disclosure guidance and eliminates the exemption from consolidation for qualifying special purpose entities (“QSPEs”); it also requires a transferor to evaluate all existing QSPEs to determine whether they must be consolidated in accordance with the provisions of FASB ASC Topic 860.  This guidance is effective for financial asset transfers occurring in fiscal years and interim periods beginning after November 15, 2009.  The adoption did not have a material impact on the Company’s consolidated financial statements.

On January 1, 2010, the Company adopted the provisions of FASB ASC Topic 810, “Consolidation,” which were issued in June 2009.  This guidance amends previously issued consolidation guidance which affects all entities currently within the scope of FASB ASC Topic 810, including QSPEs, as the concept of these entities was eliminated by FASB ASC Topic 860.  This guidance is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2009.  The adoption did not have a material impact on the Company’s consolidated financial statements.

The Company adopted the provisions of FASB ASC Topic 320, which were issued in April 2009.  This guidance amends the guidance for OTTI of debt securities and changes the presentation of OTTI in the financial statements.   If the Company intends to sell, or if it is more likely than not that it will be required to sell, an impaired security prior to recovery of its cost basis, the security is to be considered other-than-temporarily impaired and the full amount of impairment must be charged to earnings.  Otherwise, losses on securities which are other-than-temporarily impaired are separated into two categories, the portion of loss which is considered credit loss (“credit loss”) and the portion of loss which is due to other factors (“non-credit loss”).  The credit loss portion is charged to earnings, while the non-credit loss is charged to other comprehensive income.  When an unrealized loss on a fixed maturity is considered temporary, the Company continues to record the unrealized loss in other comprehensive income and not in earnings.  This guidance also expands and increases the frequency of existing disclosures about OTTI of debt and equity securities.  The Company adopted the above-noted aspects of FASB ASC Topic 320 on April 1, 2009.  Upon adoption, a cumulative effect adjustment, net of taxes, of $9.1 million was recorded to decrease accumulated other comprehensive income with a corresponding increase to retained earnings (accumulated deficit) for the non-credit component of previously impaired securities that the Company neither intends to sell, nor is it more likely than not that the Company will be required to sell, before recovery of amortized cost.  The enhanced disclosures required by FASB ASC Topic 320 are included in Note 4 of the Company’s consolidated financial statements.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTING PRONOUNCEMENTS (CONTINUED)

Accounting Standards Not Yet Adopted

In December 2011, the FASB issued ASU 2011-12, “Comprehensive Income (Topic 220):  Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05,” which allows for the deferral of certain presentation requirements about reclassifications of items out of accumulated other income originally included in ASU 2011-05, “Comprehensive Income (Topic 220):  Presentation of Comprehensive Income.”  The amendments are being made to allow FASB time to reconsider it requirements of entities to present on the face of their financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented.  The amendments are effective at the same time as the amendments in ASU 2011-05 so that entities will not be required to comply with the presentation requirements in ASU 2011-05 that ASU 2011-12 is deferring.  All other requirements in ASU 2011-05 are not affected by ASU 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements.  The amendments in ASU 2011-12 are effective for public entities for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company will adopt ASU 2011-12 on March 31, 2012 and does not expect its requirements to significantly impact the Company’s consolidated financial statements.

In December 2011, the FASB issued ASU 2011-11, “Balance Sheet (Topic 210):  Disclosures about Offsetting Assets and Liabilities,” which requires an entity to disclose information about offsetting assets and liabilities and related arrangements included in its financial statements.  Offsetting (netting) assets and liabilities is an important aspect of presentation in financial statements.  The differences in the offsetting requirements in GAAP and International Financial Reporting Standards (“IFRS”) account for a significant difference in the amounts presented in statements of financial position prepared in accordance with GAAP and in the amounts presented in those statements prepared in accordance with IFRS for certain institutions.  This difference reduces the comparability of statements of financial position.  As a result, users of financial statements requested that the differences should be addressed expeditiously.  In response to those requests, the FASB and the International Accounting Standards Board are issuing joint requirements that will enhance current disclosures.  Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement.  This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements.  The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of GAAP and those entities that prepare their financial statements on the basis of IFRS.  The amendments in ASU 2011-11 are effective, on a retrospective basis, for fiscal years and interim periods within those fiscal years beginning after December 31, 2012.  The Company will adopt ASU 2011-11 on March 31, 2013 and is accessing the impact of this adoption.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220):  Presentation of Comprehensive Income,” which revises the manner in which entities present comprehensive income in their financial statements. The amendments in ASU 2011-05 require entities to present components of comprehensive income in either a single continuous statement of comprehensive income or in two separate but consecutive statements.  Under the two-statement approach, the first statement (i.e., the statement of net income) must present total net income and its components followed consecutively by the statement of comprehensive income which should include total other comprehensive income and its components.  Under either method, entities must display adjustments for items that are classified from other comprehensive income to net income in both statements of net income and comprehensive income.  ASU 2011-05 does not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income.  The amendments in ASU 2011-05 are effective, on a retrospective basis, for fiscal years and interim periods within those fiscal years beginning after December 15, 2011.  The Company will adopt ASU 2011-05 on March 31, 2012 and does not expect its requirements to significantly impact the Company’s consolidated financial statements.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

ACCOUNTING PRONOUNCEMENTS (CONTINUED)

Accounting Standards Not Yet Adopted (continued)

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820):  Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in GAAP and IFRSs,” which changes the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements.  Some of the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements, while other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.  Many of the requirements in this update are not meant to result in a change in application of the requirements of FASB ASC Topic 820, “Fair Value Measurement,” but to improve upon an entity’s consistency in application across jurisdictions to ensure that GAAP and IFRS fair value measurement and disclosure requirements are described in the same way.  The amendments in ASU 2011-04 are effective, on a retrospective basis, for fiscal years and interim periods within those fiscal years beginning after December 15, 2011.  The Company will adopt ASU 2011-04 on January 1, 2012 and does not expect its requirements to significantly impact the Company’s consolidated financial statements.

In October 2010, the FASB issued ASU 2010-26, “Financial Services–Insurance (Topic 944):  Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts (a consensus of the FASB Emerging Issues Task Force),” which amends FASB ASC Topic 944, “Financial Services–Insurance,” to modify the definition of the types of costs incurred by insurance entities that can be capitalized in the acquisition of new and renewal contracts.  The amendments specify that only incremental costs of successful contract acquisition that result directly from and are essential to the contract transactions can be capitalized as deferred acquisition costs.  The incremental direct costs are those costs that would not have been incurred by the insurance entity if the contract transactions did not occur.  The amendments in ASU 2010-26 are effective for interim periods and fiscal years beginning after December 15, 2011.  The Company will adopt ASU 2010-20 on January 1, 2012 and does not expect the adoption of ASU 2010-20 to have a significant impact on its consolidated financial statements.

2. MERGERS, ACQUISITIONS AND DISPOSITIONS

On December 31, 2009, the Company paid a dividend of all of Sun Life Vermont’s issued and outstanding common stock, and net assets totaling $94.9 million to the Parent.  As a result of this transaction, Sun Life Vermont is no longer the Company’s wholly-owned subsidiary.  The following table represents a summary of the results of operations for Sun Life Vermont which are included in discontinued operations:

	Year ended December 31, 2009
Total revenue	$	191,965
Total benefits and expenses		46,304
Income before income tax expense		145,661
Income tax expense		40,690
Net income	$	104,971

The Company transferred all of Sun Life Vermont’s assets and liabilities at their carrying value to the Parent and therefore no gain or loss resulted from this dividend.  Sun Life Vermont was previously reported as component of the Individual Protection segment.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES

The Company has significant transactions with affiliates.  Management believes inter-company revenues and expenses are calculated on a reasonable basis.  However, these amounts may not necessarily be indicative of the costs that would be incurred if the Company operated on a stand-alone basis and these transactions were with unrelated parties.  Below is a summary of transactions with           non-consolidated affiliates.

Reinsurance Related Transactions

As more fully described in Note 8 to the Company’s consolidated financial statements, the Company and its subsidiary, SLNY, are party to several reinsurance transactions with Sun Life Assurance Company of Canada (“SLOC”) and other affiliates.  Reinsurance premiums with related parties are based on market rates.

On February 11, 2009, the Company received regulatory approval and entered into a reinsurance agreement with Sun Life Reinsurance (Barbados) No. 3 Corp (“BarbCo 3”) an affiliate, to cede all of the risks associated with certain in-force corporate and bank-owned variable universal life, and private placement variable universal life policies on a combination coinsurance, coinsurance with funds-withheld, and a modified coinsurance basis.  The reinsurance agreement covered in-force policies on the effective date and new sales through December 31, 2009.  Effective January 1, 2010, the Company and BarbCo 3 amended the reinsurance agreement.  Refer to Note 8 for additional information regarding the amendment and the impact of this agreement on the Company’s consolidated financial statements.

Capital Transactions

The Company did not receive any capital contribution from the Parent during the year ended December 31, 2011.  During the year ended December 31, 2010, the Company received capital contributions totaling $400.0 million from the Parent.  The cash contributions were recorded as additional paid-in capital and were made to ensure that the Company continues to exceed certain regulatory capital requirements established by the National Association of Insurance Commissioners (“NAIC”).  The NAIC has established standards for minimum capitalization requirements based on risk-based capital formulas for life insurance companies.  The risk-based capital formulas for life insurance companies establish capital requirements relating to insurance, business, asset and interest rate risks, including equity, interest rate and expense recovery risks associated with variable annuities that contain death benefits or certain living benefits.

Effective December 31, 2009, the Company distributed all of Sun Life Vermont’s issued and outstanding common stock and net assets totaling $94.9 million in the form of a dividend to the Parent.  The Company paid a return of capital of $300.0 million to the Parent during the year ended December 31, 2011.  The Company did not declare or pay any cash dividends or return of capital to the Parent during the year ended December 31, 2010 or 2009.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES (CONTINUED)

Debt Transactions

On November 8, 2007, a long-term financing arrangement was established with a financial institution (the “Lender”) that enables Sun Life Vermont, a subsidiary of the Company prior to December 31, 2009, to fund a portion of its obligations under its reinsurance agreement with SLOC.  Under this arrangement, at inception of the agreement, Sun Life Vermont issued an initial floating rate surplus note of $1 billion (the “Surplus Note”) to a special-purpose entity, Structured Asset Repackage Company, 2007- SUNAXXX LLC (“SUNAXXX”), affiliated with the Lender.  Pursuant to this arrangement, Sun Life Vermont exercised its option to issue additional Surplus Notes of $200.0 million and $115.0 million in 2009 and 2008, respectively, to SUNAXXX.  At December 31, 2009, the value of the Surplus Note was $1.3 billion.  Pursuant to an agreement between the Lender and the Company’s indirect parent, Sun Life Assurance Company of Canada – U.S. Operations Holdings, Inc. (“SLC - U.S. Ops Holdings”), U.S. Ops Holdings bears the ultimate obligation to repay the Lender and, as such, consolidates SUNAXXX in accordance with FASB ASC Topic 810.  Sun Life Vermont agreed to reimburse U.S. Ops Holdings for certain costs incurred in connection with the issuance of the Surplus Note.  Sun Life Vermont incurred interest expense of $21.7 million for the year ended December 31, 2009, which is included in the Company’s consolidated statements of operations as a component of income from discontinued operations, net of tax.

At December 31, 2011 and 2010, the Company had an $18.0 million promissory note that was initially issued to Sun Life (Hungary) Group Financing Limited Company (“Sun Life (Hungary) LLC”), an affiliate, for which the Company pays interest semi-annually.  On June 2, 2011, Sun Life (Hungary) LLC sold the $18.0 of promissory note to SLOC.  With the exception of the change in lenders, this transaction did not have any impact on the terms of the promissory note.  Effective June 2, 2011, the Company began paying the related interest to SLOC.  Related to this note, the Company incurred interest expense of $1.0 million for each of the years ended December 31, 2011, 2010 and 2009.

At December 31, 2011 and 2010, the Company had $565.0 million of surplus notes payable to Sun Life Financial (U.S.) Finance, Inc., an affiliate.  The Company expensed $42.6 million for interest on these surplus notes for each of the years ended December 31, 2011, 2010 and 2009.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES (CONTINUED)

Institutional Investments Contracts

On September 12, 2006, the Company issued two floating rate funding agreements totaling $900.0 million to Sun Life Financial Global Funding III, L.L.C. (“LLC III”), an affiliate, which will mature on October 6, 2013.  On April 7, 2008, the Company issued an additional floating rate funding agreement totaling $5.8 million to LLC III.  On December 1, 2011, the Company paid $5.8 million to LLC III due to the maturity of the funding agreement issued to LLC III.  Total interest credited for these funding agreements was $5.9 million, $6.2 million, and $11.2 million for the years ended December 31, 2011, 2010 and 2009, respectively.  The Company also issued a $100.0 million floating rate demand note payable to LLC III on September 19, 2006.  The Company expensed $0.7 million, $0.7 million, and $1.3 million for the years ended December 31, 2011, 2010 and 2009, respectively, for interest on this demand note.

The Company has an interest rate swap agreement with LLC III with an aggregate notional amount of $900.0 million that effectively converts the floating rate payment obligations under the funding agreements to fixed rate obligations.

On May 17, 2006, the Company issued a floating rate funding agreement of $900.0 million to Sun Life Financial Global Funding II, L.L.C. (“LLC II”), an affiliate.  On April 7, 2008, the Company issued an additional floating rate funding agreement totaling $7.5 million to LLC II.  On July 1 and July 19, 2011, the Company paid $901.3 million and $7.5 million, respectively, to LLC II due to the maturity of the funding agreements that the Company issued to LLC II.  The payments included $1.3 million in accrued interest.   Total interest credited for these funding agreements was $2.6 million, $5.4 million, and $10.5 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Company also issued a $100.0 million floating rate demand note payable to LLC II on May 24, 2006.  On July 19, 2011, the Company paid off the $100.0 million demand note that was due to LLC II.  The Company expensed $0.3 million, $0.6 million, and $1.2 million for the years ended December 31, 2011, 2010 and 2009, respectively, for interest on this demand note.

The Company also had an interest rate swap agreement with LLC II with an aggregate notional amount of $900.0 million that effectively converted the floating rate payment obligations under the funding agreements to fixed rate obligations.  This interest swap agreement expired on July 6, 2011 due to the maturity of the underlying floating rate funding agreement with LLC II.

On June 3, 2005 and June 29, 2005, the Company issued two floating rate funding agreements totaling $900 million to Sun Life Financial Global Funding, L.L.C. (“LLC”), an affiliate.  On April 7, 2008, the Company issued an additional floating rate funding agreement totaling $10 million to LLC.  On July 1 and July 8, 2010, the Company paid $900.0 million and $10.0 million, respectively, to the LLC due to the maturity of these funding agreements.  Total interest credited for these funding agreements was $2.9 million and $11.3 million for the years ended December 31, 2010 and 2009, respectively.  On August 6, 2010, the Company paid $100.1 million to LLC, including $0.1 million in interest due to settle a $100.0 million floating rate demand note payable.  The Company expensed $0.5 million and $1.3 million for the years ended December 31, 2010 and 2009, respectively, for interest on this demand note.

The Company had an interest rate swap agreement with LLC with an aggregate notional amount of $900.0 million that effectively converts the floating rate payment obligations under the funding agreements to fixed rate obligations.  The related $900.0 million interest rate swap agreement expired on July 6, 2010 due to the maturity of the underlying floating rate funding agreements with LLC.

The account values related to these funding agreements issued to LLC III and LLC II are reported in the Company’s consolidated balance sheets as a component of contractholder deposits funds and other policy liabilities.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES (CONTINUED)

The following table lists the details of notes due to affiliates at December 31, 2011:

Payees	Type	Rate	Maturity		Principal		Interest Expense
Sun Life Financial (U.S.) Finance, Inc.	Surplus	8.625%	11/06/2027	$	250,000	$	21,563
Sun Life Financial (U.S.) Finance, Inc.	Surplus	6.150%	12/15/2027		150,000		9,225
Sun Life Financial (U.S.) Finance, Inc.	Surplus	7.250%	12/15/2015		150,000		10,875
Sun Life Financial (U.S.) Finance, Inc.	Surplus	6.125%	12/15/2015		7,500		459
Sun Life Financial (U.S.) Finance, Inc.	Surplus	6.150%	12/15/2027		7,500		461
Sun Life Assurance Company of Canada	Promissory	5.710%	06/30/2012		18,000		1,028
Sun Life Financial Global Funding III, L.L.C.	Demand	LIBOR + 0.35%	10/06/2013		100,000		664
				$	683,000	$	44,275

The following table lists the details of notes due to affiliates at December 31, 2010:

Payees	Type	Rate	Maturity		Principal		Interest Expense
Sun Life Financial (U.S.) Finance, Inc.	Surplus	8.625%	11/06/2027	$	250,000	$	21,563
Sun Life Financial (U.S.) Finance, Inc.	Surplus	6.150%	12/15/2027		150,000		9,225
Sun Life Financial (U.S.) Finance, Inc.	Surplus	7.250%	12/15/2015		150,000		10,875
Sun Life Financial (U.S.) Finance, Inc.	Surplus	6.125%	12/15/2015		7,500		459
Sun Life Financial (U.S.) Finance, Inc.	Surplus	6.150%	12/15/2027		7,500		461
Sun Life (Hungary) Group Financing Limited Company	Promissory	5.710%	06/30/2012		18,000		1,028
Sun Life Financial Global Funding II, L.L.C.	Demand	LIBOR + 0.26%	07/06/2011		100,000		611
Sun Life Financial Global Funding III, L.L.C.	Demand	LIBOR + 0.35%	10/06/2013		100,000		703
				$	783,000	$	44,925

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES (CONTINUED)

Administrative Service Agreements, Rent and Other

Effective December 31, 2009, the Company transferred all of its employees to Sun Life Services with the exception of 28 employees who were transferred to Sun Life Financial Distributors, Inc. (“SLFD”), another affiliate.  The tax benefit associated with SLF stock options that had been granted to employees of the Company prior to the employee transfer, is recognized by the Company in stockholder’s equity when these options vest.   Neither Sun Life Services nor SLFD are included in the accompanying consolidated financial statements.  Concurrent with this transaction, Sun Life Services assumed the sponsorship of the Company’s retirement plans, as discussed in Note 9 to the Company’s consolidated financial statements.  As a result of this transaction, the Company transferred to Sun Life Services the plan assets and liabilities, the associated deferred tax asset, and certain property, equipment and software, as summarized in the following table:

Assets:
Cash	$	32,298
Property and equipment		9,545
Software and other		58,877
Deferred tax asset		25,543
Total assets	$	126,263
Liabilities:
Pension liabilities	$	109,512
Long term incentives		16,923
Other liabilities		48,733
Total liabilities	$	175,168

In accordance with FASB ASC Topic 845, “Nonmonetary Transactions,” all assets and liabilities were transferred at book value and no gain or loss was recognized in the Company’s consolidated statement of operations.  The difference between the book value of the transferred assets and liabilities of $48.9 million, net of tax, was recorded by the Company as other comprehensive income and paid-in-capital.  Prior to the transfer, this difference between the book value of the transferred assets and liabilities was recorded in the Company’s consolidated balance sheet as a component of accumulated other comprehensive income.

Pursuant to an administrative services agreement between the Company and Sun Life Services which was effective December 31, 2009, Sun Life Services provides human resources services (e.g., recruiting and maintaining appropriately trained and qualified personnel and equipment necessary for the performance of actuarial, financial, legal, administrative and other operational support functions) to the Company.  The Company reimburses Sun Life Services for the cost of such services, plus, with respect to certain of those services, pays an arms-length based profit margin to be agreed upon by the parties.  Total payments under this agreement were $110.0 million and $117.6 million for the years ended December 31, 2011 and 2010, respectively.

As discussed in Note 1, SLF made the decision to close its domestic U.S. variable annuity and individual life products to new sales after completing a major strategic review of its businesses.  As a result of this decision and the related severance of certain Sun Life Services’ employees, Sun Life Services allocated $12.2 million in expenses to the Company, which is a portion of the related restructuring costs on a pre-tax basis.  The costs allocated to the Company represent primarily employee severance and other employee benefits of $10.2 million, as well as other costs of $2.0 million.

As described in Note 9, the Company participates in a pension plan and other retirement plans sponsored by Sun Life Services.

The transfer of fixed assets from the Company to Sun Life Services discussed above, along with the administrative services agreement, resulted in a sale-leaseback transaction.  The Company recorded a deposit liability for $17.1 million which represents the cost of certain of the assets transferred.  The Company will amortize the liability over the remaining useful life of the transferred assets, which was estimated to be seven years.  As of December 31, 2011, the remaining deposit liability was $11.4 million.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES (CONTINUED)

Administrative Service Agreements, Rent and Other (continued)

Effective December 31, 2009, Sun Life Services and SLOC entered into an administrative services agreement under which Sun Life Services provides to SLOC, as requested, personnel and certain services.  Prior to December 31, 2009, the Company had an administrative services agreement with SLOC under which the Company provided personnel and certain services to SLOC, as requested.  Pursuant to the agreement with SLOC, the Company recorded reimbursements of $336.0 million for the year ended December 31, 2009, as a reduction to other operating expenses.  Effective December 31, 2009, the Company no longer provides personnel services to SLOC and SLOC no longer reimburses the Company for such services.

The Company continues to provide certain services to SLOC under an administrative services agreement.  Pursuant to this agreement, the Company recorded reimbursements of $99.3 million and $99.1 million for the years ended December 31, 2011 and 2010, respectively.

The Company has administrative services agreements with SLOC under which SLOC provides, as requested, certain services on a cost-reimbursement basis.  Pursuant to the agreements with SLOC, the Company recorded expenses of $14.5 million, $13.0 million and $8.9 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Company has an administrative services agreement with Sun Life Information Services Canada, Inc. (“SLISC”), under which SLISC provides administrative and support services to the Company in connection with the Company’s insurance and annuity businesses.  Expenses under this agreement amounted to approximately $19.3 million, $18.0 million and $15.5 million for the years ended December 31, 2011, 2010 and 2009, respectively.  In addition, SLISC allocated $0.1 million of severance costs to the Company.  These severance costs relate to the decision to discontinue the Company’s variable annuity and individual life products.

The Company has a service agreement with Sun Life Information Services Ireland Limited (“SLISIL”), under which SLISIL provides various insurance related and information systems services to the Company.  Expenses under this agreement amounted to approximately $22.6 million, $23.5 million and $24.2 million for the years ended December 31, 2011, 2010 and 2009, respectively.  In addition, SLISIL allocated $0.4 million of severance costs to the Company.  These severance costs relate to the decision to discontinue the Company’s variable annuity and individual life products.

The Company has an administrative services agreement with SLC – U.S. Ops Holdings, under which the Company provides administrative and investor services with respect to certain open-end management investment companies for which an affiliate, Massachusetts Financial Services Company (“MFS”), serves as the investment adviser, and which are offered to certain of the Company’s separate accounts established in connection with the variable annuity contracts issued by the Company.  Amounts received under this agreement were approximately $12.7 million, $13.0 million and $8.9 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Company has an administrative services agreement with Sun Capital Advisers LLC (“SCA”), an affiliate and a registered investment adviser, under which the Company provides administrative services with respect to certain open-end management investment companies for which SCA serves as the investment adviser, and which are offered to certain of the Company’s separate accounts established in connection with the variable contracts issued by the Company.  Amounts received under this agreement amounted to approximately $16.6 million, $13.0 million and $4.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.  The Company paid $20.6 million, $21.4 million and $18.2 million for the years ended December 31, 2011, 2010 and 2009, respectively, in investment management services fees to SCA.

The Company paid distribution fees to SLFD of $38.7 million, $41.4 million and $45.4 million, during the years ended December 31, 2011, 2010 and 2009, respectively.

The Company leases office space to SLOC under lease agreements with terms expiring on December 31, 2014 and options to extend the terms for each of twelve successive five-year terms at fair market rental value, not to exceed 125% of the fixed rent for the term which is then ending.  Rent received by the Company under the leases amounted to approximately $12.1 million, $12.1 million and $10.1 million for the years ended December 31, 2011, 2010 and 2009, respectively.  Rental income is reported as a component of net investment income on the Company’s consolidated statements of operations.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

3. SIGNIFICANT TRANSACTIONS WITH AFFILIATES (CONTINUED)

Administrative service agreements, rent and other (continued)

During the year ended December 31, 2009, the Company sold certain limited partnership investments to SLOC with a book value of $16.9 million and a fair market value of $22.4 million.  The Company recorded a pre-tax gain on the sales of $5.5 million for the year ended December 31, 2009.

During the year ended December 31, 2009, the Company purchased $395.7 million of available-for-sale fixed-rate bonds from Sun Life Investments LLC at fair value.  The Company paid cash for the bonds.

During the year ended December 31, 2010, the Company sold mortgage loans to SLOC with a book value of $85.6 million and a fair market value of $93.4 million and recognized a pre-tax gain of $7.8 million as a result.  During the year ended December 31, 2010, the Company also purchased $52.2 million of mortgage loans from SLOC at fair value.  The Company did not purchase or sell any mortgage loans from SLOC during the years ended December 31, 2011 and 2009.

SLNY has a series of agreements with SLHIC, through which substantially all of the New York issued business of SLHIC was transferred to SLNY.  As part of these agreements, SLNY received certain intangible assets totaling $31.3 million.  These assets included the value of distribution acquired, VOBA, and VOCRA.  The value of distribution acquired of $7.5 million is being amortized on a straight-line basis over its projected economic life of 25 years.  The amortization expense for the value of distribution acquired was $0.3 million for each of the years ended December 31, 2011, 2010 and 2009.

VOBA of $7.6 million is subject to amortization based upon expected premium income over the period from acquisition to the first customer renewal, which is generally not more than two years.  VOBA was fully amortized as of December 31, 2009.  VOCRA of $16.2 million is subject to amortization based upon expected premium income over the projected life of the in-force business acquired, which is 20 years.  The Company recorded amortization for VOBA and VOCRA for the years ended December 31 as follows:

	2011		2010		2009
VOBA	$	-	$	-	$	913
VOCRA	$	1,022	$	1,327	$	4,063

At December 31, 2009, the Company determined that the VOCRA asset was impaired and recorded an impairment charge of $2.6 million which is included in VOCRA amortization expense.  The impairment charge was allocated to the Group Protection segment.

The Company settles with its affiliates payments related to the administrative service agreements, rent and other on a monthly basis.  At December 31, 2011 and 2010, the Company’s net receivable due from affiliated companies was $21.4 million and $32.5 million, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS

FIXED MATURITY SECURITIES

The amortized cost and fair value of fixed maturity securities held at December 31, 2011 were as follows:

Available-for-sale fixed maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Temporary Losses		OTTI Losses (1)		Fair Value
Non-corporate securities:
Asset-backed securities	$	55	$	-	$	-	$	-	$	55
Residential mortgage-backed securities		24,340		2,203		-		-		26,543
Commercial mortgage-backed securities		9,643		286		(1,017)		-		8,912
U.S. states and political subdivision securities		214		7		-		-		221
U.S. treasury and agency securities		375,751		6,818		-		-		382,569
Total non-corporate securities		410,003		9,314		(1,017)		-		418,300
Corporate securities		929,957		79,479		(14,616)		(10,595)		984,225
Total available-for-sale fixed maturity securities	$	1,339,960	$	88,793	$	(15,633)	$	(10,595)	$	1,402,525

Trading fixed maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Non-corporate securities:
Asset-backed securities	$	423,464	$	7,951	$	(139,163)	$	292,252
Residential mortgage-backed securities		868,588		13,857		(169,250)		713,195
Commercial mortgage-backed securities		785,912		32,750		(135,644)		683,018
Foreign government & agency securities		97,404		19,194		-		116,598
U.S. states and political subdivision securities		486		41		-		527
U.S. treasury and agency securities		323,298		13,705		(49)		336,954
Total non-corporate securities		2,499,152		87,498		(444,106)		2,142,544
Corporate securities		7,836,906		436,622		(135,536)		8,137,992
Total trading fixed maturity securities	$	10,336,058	$	524,120	$	(579,642)	$	10,280,536

(1) Represents the pre-tax non-credit OTTI loss recorded as a component of accumulated other comprehensive income (“AOCI”) for assets still held at the reporting date.  Recoveries of $9.3 million are shown within gross unrealized gains and the remainder as gross unrealized temporary losses.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

FIXED MATURITY SECURITIES (CONTINUED)

The amortized cost and fair value of fixed maturity securities held at December 31, 2010 were as follows:

Available-for-sale fixed maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Temporary Losses		OTTI Losses (1)		Fair Value
Non-corporate securities:
Asset-backed securities	$	694	$	27	$	(6)	$	-	$	715
Residential mortgage-backed securities		32,263		2,351		-		-		34,614
Commercial mortgage-backed securities		15,952		522		(1,424)		-		15,050
Foreign government & agency securities		506		57		-		-		563
U.S. states and political subdivision securities		217		-		(3)		-		214
U.S. treasury and agency securities		371,704		4,500		(971)		-		375,233
Total non-corporate securities		421,336		7,457		(2,404)		-		426,389
Corporate securities		1,001,615		82,490		(2,267)		(12,304)		1,069,534
Total available-for-sale fixed maturity securities	$	1,422,951	$	89,947	$	(4,671)	$	(12,304)	$	1,495,923
Trading fixed maturity securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Non-corporate securities:
Asset-backed securities	$	544,106	$	10,104	$	(142,230)	$	411,980
Residential mortgage-backed securities		1,184,184		17,259		(278,650)		922,793
Commercial mortgage-backed securities		917,650		42,368		(140,823)		819,195
Foreign government & agency securities		122,537		8,239		-		130,776
U.S. states and political subdivision securities		605		8		-		613
U.S. treasury and agency securities		745,460		3,037		(878)		747,619
Total non-corporate securities		3,514,542		81,015		(562,581)		3,032,976
Corporate securities		8,195,874		368,893		(130,625)		8,434,142
Total trading fixed maturity securities	$	11,710,416	$	449,908	$	(693,206)	$	11,467,118

(1)Represents the pre-tax non-credit OTTI loss recorded as a component of AOCI for assets still held at the reporting date.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

FIXED MATURITY SECURITIES (CONTINUED)

The amortized cost and estimated fair value by maturity periods for fixed maturity securities held at December 31, 2011 are shown below.  Actual maturities may differ from contractual maturities on structured securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

		Amortized Cost		Fair Value
Maturities of available-for-sale fixed securities:
	Due in one year or less	$	211,945	$	212,744
	Due after one year through five years		438,320		455,056
	Due after five years through ten years		137,332		141,194
	Due after ten years		518,325		558,021
	Subtotal – Maturities of available-for-sale fixed securities		1,305,922		1,367,015
ABS, RMBS and CMBS securities (1)			34,038		35,510
	Total available-for-sale fixed securities	$	1,339,960	$	1,402,525
Maturities of trading fixed securities:
	Due in one year or less	$	652,353	$	662,374
	Due after one year through five years		4,163,381		4,328,570
	Due after five years through ten years		1,858,860		1,982,358
	Due after ten years		1,583,500		1,618,769
	Subtotal – Maturities of trading fixed securities		8,258,094		8,592,071
ABS, RMBS and CMBS securities (1)			2,077,964		1,688,465
	Total trading fixed securities	$	10,336,058	$	10,280,536

 (1) ABS, RMBS and CMBS are shown separately in the table as these securities are not due at a single maturity.

Gross gains of $119.3 million, $172.6 million and $50.0 million and gross losses of $51.3 million, $40.9 million and $57.5 million were realized on fixed maturity securities for the years ended December 31, 2011, 2010 and 2009, respectively.

Fixed maturity securities with an amortized cost of approximately $11.8 million and $12.3 million at December 31, 2011 and 2010, respectively, were on deposit with federal and state governmental authorities, as required by law.

As of December 31, 2011 and 2010, 92.3% and 92.4%, respectively, of the Company's fixed maturity securities were investment grade.  Investment grade securities are those that are rated "BBB" or better by a nationally recognized statistical rating organization.  Securities that are not rated by a nationally recognized statistical rating organization are assigned ratings based on the Company's internally prepared credit evaluations.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

FIXED MATURITY SECURITIES (CONTINUED)

Unrealized Losses

The following table shows the fair value and gross unrealized losses, which includes temporary unrealized losses and the portion of non-credit OTTI losses recognized in AOCI, of the Company’s available-for-sale fixed maturity investments, aggregated by investment category and length of time that the individual securities had been in an unrealized loss position at December 31, 2011.

	Less Than Twelve Months				Twelve Months Or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Non-corporate securities:
Asset-backed securities	$	-	$	-	$	-	$	-	$	-	$	-
Residential mortgage-backed securities		12		-		21		-		33		-
Commercial mortgage-backed securities		447		(50)		2,131		(967)		2,578		(1,017)
U.S. states and political subdivision securities		-		-		-		-		-		-
U.S. treasury and agency securities		-		-		-		-		-		-
Total non-corporate securities		459		(50)		2,152		(967)		2,611		(1,017)
Corporate securities		120,623		(8,049)		38,498		(7,831)		159,121		(15,880)
Total	$	121,082	$	(8,099)	$	40,650	$	(8,798)	$	161,732	$	(16,897)

The following table shows the fair value and gross unrealized losses, which includes temporary unrealized losses and the portion of non-credit OTTI losses recognized in AOCI, of the Company’s available-for-sale fixed maturity investments, aggregated by investment category and length of time that the individual securities had been in an unrealized loss position at December 31, 2010.

	Less Than Twelve Months				Twelve Months Or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Non-corporate securities:
Asset-backed securities	$	-	$	-	$	11	$	(6)	$	11	$	(6)
Residential mortgage-backed securities		26		-		-		-		26		-
Commercial mortgage-backed securities		-		-		2,534		(1,424)		2,534		(1,424)
Foreign government & agency securities		-		-		-		-		-		-
U.S. states and political subdivision securities		214		(3)		-		-		214		(3)
U.S. treasury and agency securities		23,636		(971)		-		-		23,636		(971)
Total non-corporate securities		23,876		(974)		2,545		(1,430)		26,421		(2,404)
Corporate securities		187,916		(5,211)		91,154		(9,360)		279,070		(14,571)
Total	$	211,792	$	(6,185)	$	93,699	$	(10,790)	$	305,491	$	(16,975)

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

UNREALIZED LOSSES (CONTINUED)

The following table provides the number of securities of the Company’s available-for-sale fixed maturity securities with gross unrealized losses and a portion of non-credit OTTI losses recognized in AOCI aggregated by investment category, at December 31, 2011 (not in thousands):

	Number of Securities Less Than Twelve Months	Number of Securities Twelve Months or More	Total Number of Securities
Non-corporate securities:
Asset-backed securities	-	-	-
Residential mortgage-backed securities	3	1	4
Commercial mortgage-backed securities	1	4	5
Foreign government & agency securities	-	-	-
U.S. states and political subdivisions securities	-	-	-
U.S. treasury and agency securities	-	-	-
Total non-corporate securities	4	5	9
Corporate securities	33	15	48
Total	37	20	57

The following table provides the number of securities of the Company’s available-for-sale fixed maturity securities with gross unrealized losses and a portion of non-credit OTTI losses recognized in AOCI aggregated by investment category, at December 31, 2010 (not in thousands):

	Number of Securities Less Than Twelve Months	Number of Securities Twelve Months or More	Total Number of Securities
Non-corporate securities:
Asset-backed securities	-	1	1
Residential mortgage-backed securities	1	-	1
Commercial mortgage-backed securities	-	5	5
Foreign government & agency securities	-	-	-
U.S. states and political subdivisions securities	1	-	1
U.S. treasury and agency securities	2	-	2
Total non-corporate securities	4	6	10
Corporate securities	72	35	107
Total	76	41	117

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

OTHER-THAN-TEMPORARY IMPAIRMENT

Beginning on April 1, 2009, the Company presents and discloses OTTI in accordance with FASB ASC Topic 320.  Securities whose fair value is less than their carrying amount are considered to be impaired and are evaluated for potential OTTI.  If the Company intends to sell, or if it is more likely than not that it will be required to sell an impaired security prior to recovery of its cost basis, the security is considered other-than-temporarily impaired and the Company records a charge to earnings for the full amount of impairment based on the difference between the amortized cost and fair value of the security.  Otherwise, losses on securities which are other-than-temporarily impaired are separated into two categories:  credit loss and non-credit loss.  The credit loss portion is charged to net realized investment gains (losses) in the consolidated statements of operations, while the non-credit loss is charged to other comprehensive income.  When an unrealized loss on an available-for-sale fixed maturity is considered temporary, the Company continues to record the unrealized loss in other comprehensive income and not in earnings.

To compute the credit loss component of OTTI for corporate bonds on the date of transition (i.e., April 1, 2009), both historical default (by rating) data, used as a proxy for the probability of default, and loss given default (by issuer) projections were applied to the par amount of the bond.  For corporate bonds post-transition, the present value of future cash flows using the book yield is used to determine the credit component of OTTI.  If the present value of the cash flow is less than the security’s amortized cost, the difference is recorded as a credit loss.  The difference between the estimates of the credit related loss and the overall OTTI is the non-credit-related component.

As a result of the adoption of FASB ASC Topic 320, a cumulative effect adjustment, net of tax, of $9.1 million was recorded to decrease accumulated other comprehensive income with a corresponding increase to retained earnings (accumulated deficit) for the non-credit loss component of previously impaired securities that the Company neither intends to sell, nor is it more likely than not that the Company will be required to sell, before recovery of amortized cost.

For those securities where the Company does not have the intent to sell and it is not more likely than not that the Company will be required to sell, the Company employs a portfolio monitoring process to identify securities that are other-than-temporarily impaired.  The Company utilizes a Credit Committee, comprised of investment and finance professionals, which meets at least quarterly to review individual issues or issuers that are of concern.  In determining whether a security is other-than-temporarily-impaired, the Credit Committee considers the factors described below.  The process involves a quarterly screening of all impaired securities.

Discrete credit events, such as a ratings downgrade, also are used to identify securities that may be other-than-temporarily impaired.  The securities identified are then evaluated based on issuer-specific facts and circumstances, such as the issuer’s ability to meet current and future interest and principal payments, an evaluation of the issuer’s financial position and its near-term recovery prospects, difficulties being experienced by an issuer’s parent or affiliate, and management’s assessment of the outlook for the issuer’s sector.  In making these evaluations, the Credit Committee exercises considerable judgment.  Based on this evaluation, issues or issuers are considered for inclusion on one of the Company’s following credit lists:

“Monitor List”- Management has concluded that the Company’s amortized cost will be recovered through timely collection of all contractually specified cash flows, but that changes in issuer-specific facts and circumstances require monitoring on a quarterly basis.  No OTTI charge is recorded in the Company’s consolidated statements of operations for unrealized loss on securities related to these issuers.

“Watch List”- Management has concluded that the Company’s amortized cost will be recovered through timely collection of all contractually specified cash flows, but that changes in issuer-specific facts and circumstances require continued monitoring during the quarter.  A security is moved from the Monitor List to the Watch List when changes in issuer-specific facts and circumstances increase the possibility that a security may become impaired within the next 24 months.  No OTTI charge is recorded in the Company’s consolidated statements of operations for unrealized losses on securities related to these issuers.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

OTHER-THAN-TEMPORARY IMPAIRMENT (CONTINUED)

“Impaired List”- This list includes securities that the Company has the intent to sell or more likely than not will be required to sell.  In addition, it includes those securities that management has concluded that the Company’s amortized cost will not be recovered due to expected delays or shortfalls in contractually specified cash flows.  For these investments, an OTTI charge is recorded or the security is sold and a realized loss is recorded as a charge to income.  Credit OTTI losses are recorded in the Company’s consolidated statement of operations and non-credit OTTI losses are recorded in other comprehensive income.

Structured securities, those rated single A or below in particular, are subject to certain provisions in FASB ASC Topic 325, “Investments–Other.”  These provisions require the Company to periodically update its best estimate of cash flows over the life of the security.  In the event that the fair value is less than the carrying amount and there has been an adverse change in the expected cash flows (as measured by comparing the original expected cash flows to the current expectation of cash flows, both discounted at the current effective rate), then an impairment charge is recorded to income.  Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third parties, along with assumptions and judgments about the future performance of the underlying collateral.  Losses incurred on the respective portfolios are based on expected loss models, not incurred loss models.  Expected cash flows include assumptions about key systematic risks and loan-specific information.

There are inherent risks and uncertainties in management’s evaluation of securities for OTTI.  These risks and uncertainties include factors both external and internal to the Company, such as general economic conditions, an issuer’s financial condition or near-term recovery prospects, market interest rates, unforeseen events which affect one or more issuers or industry sectors, and portfolio management parameters, including asset mix, interest rate risk, portfolio diversification, duration matching and greater than expected liquidity needs.  All of these factors could impact management’s evaluation of securities for OTTI.

For securities that are assessed to have incurred a credit loss, the amount of credit loss is calculated based upon the cash flows that the Company expects to collect given an assessment of the relevant facts and circumstances for the issuer and specific bond issue.  Such factors include the financial condition, credit quality, and the near-term prospects of the issuer, as well as the issuer's relative liquidity, among other factors.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

OTHER-THAN-TEMPORARY IMPAIRMENT (CONTINUED)

The Company recorded credit OTTI losses in its consolidated statement of operations totaling $0.1 million and $0.9 million for the years ended December 31, 2011 and 2010, respectively on its available-for-sale fixed maturity securities.  The $0.1 million OTTI credit loss recorded during the year ended December 31, 2011 was concentrated in structured securities issued by sponsored securitization vehicles.  This impairment was driven primarily by the adverse financial condition of the issuer.  The $0.9 million OTTI credit loss recorded during the year ended December 31, 2010 was concentrated in corporate debt of a foreign issuer.  This impairment was driven primarily by the adverse financial conditions of the issuer.

The following tables roll forward the amount of credit losses recognized in earnings on debt securities, for which a portion of the OTTI also was recognized in other comprehensive income:

		Year ended December 31, 2011
Beginning balance, at January 1, 2011	$	5,847
Add: Credit losses on OTTI not previously recognized		71
Less: Credit losses on securities sold		(5,756)
Other		3,341
Ending balance, at December 31, 2011	$	3,503
		Year ended December 31, 2010
Beginning balance, at January 1, 2010	$	9,148
Add: Credit losses on OTTI not previously recognized		885
Less: Credit losses on securities sold		(2,528)
Less: Increases in cash flows expected on previously
impaired securities		(1,658)
Ending balance, at December 31, 2010	$	5,847

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

Variable Interest Entities

The Company is involved with various special purpose entities and other entities that are deemed to be VIEs primarily as a collateral manager and as an investor through normal investment activities or as a means of accessing capital.  A VIE is an entity that either has investors that lack certain essential characteristics of a controlling financial interest or lacks sufficient funds to finance its own activities without financial support provided by other entities.

The Company performs ongoing qualitative assessments of its VIEs under FASB ASC Topic 810, to determine whether it has a controlling financial interest in the VIE and, therefore, is the primary beneficiary. The Company is deemed to have a controlling financial interest when it has both the ability to direct the activities that most significantly impact the economic performance of the VIE and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.  The Company consolidates the VIE in its consolidated financial statements if it determines that it is the VIEs primary beneficiary.

Consolidated VIEs

At December 31, 2011, the Company had an interest in one significant VIE, Credit and Repackaged Securities Limited Series 2006-10 Trust (the“CARS Trust”), for which consolidation is required under FASB ASC Topic 810.

The Company has an agreement with the CARS Trust.  Pursuant to this agreement, the Company purchased a funded note from the CARS Trust which, through a credit default swap entered into by the CARS Trust, is exposed to the credit performance of a portfolio of corporate reference entities.  The Company entered into this agreement for yield enhancement related to the fee earned on the credit default swap which adds to the return earned on the funded note.

The CARS Trust is a structured investment vehicle for which the Company provides investment management services and holds securities issued by the trust.  Creditors have no recourse against the Company in the event of default by the CARS Trust, nor does the Company have any implied or unfunded commitments to the CARS Trust.  The Company's financial or other support provided to the CARS Trust is limited to its investment management services and original investment.  The following table presents the carrying value of assets and liabilities and the maximum exposure to loss relating to the CARS Trust.

		December 31, 2011		December 31, 2010
Assets	$	20,077	$	36,324
Liabilities		17,723		27,341
Maximum exposure to loss		20,928		37,400

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

Consolidated VIEs (continued)

As the sole beneficiary of the CARS Trust, while having a controlling financial interest in the investment vehicle, the Company is required to consolidate the entity under FASB ASC Topic 810.  As a result of the consolidation, the Company has recorded in its consolidated balance sheets, investment grade corporate debt securities and a credit default swap held by the CARS Trust.  At issue, the swap had a seven-year term, maturing in 2013.  Under the terms of the swap, the CARS Trust will be required to make payments to the swap counterparty upon the occurrence of a credit event, with respect to any reference entity, that is in excess of the threshold amount specified in the swap agreement.  In the event that the CARS Trust is required to make any payments under the swap, the underlying assets held by the trust would be liquidated to fund the payment.  If the disposition of these assets is insufficient to fund the payment calculated, then under the terms of the agreement, the cash settlement amount would be capped at the amount of the proceeds from the sale of the underlying assets.  Under the credit default swap, the CARS Trust made a payment of $16.5 million during the twelve-month period ended December 31, 2011; no payment was made during the year ended December 31, 2010.  As of December 31, 2011, the cumulative payments that the CARS Trust has made under the credit default swap is $34.1 million, leaving $20.9 million as the maximum future payments that it could be required to make.  The carrying amount of the assets in this VIE is included in trading fixed maturity securities and the carrying amount of the liabilities in this VIE is included in the derivative instruments-payable in the Company’s consolidated balance sheets.

Non-Consolidated VIEs

At December 31, 2011, other than the CARS Trust, the Company had no interest in VIEs for which consolidation is required under FASB ASC Topic 810.

In addition, through normal investment activities, the Company makes passive investments in various issues by VIEs.  These investments are included in trading and available-for-sale fixed maturity securities, limited partnerships and other invested assets in the Company's consolidated financial statements.  The Company has not provided financial or other support with respect to these investments other than its original investments.  For these investments, the Company has determined it is not the primary beneficiary due to the size of its investment relative to other issues, the level of credit subordination which reduces its obligation to absorb losses or its right to receive benefits, and/or its inability to direct the activities that most significantly impact the economic performance of the VIEs.  The Company's maximum exposure to loss on these investments is limited to the amount of its investment.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

MORTGAGE LOANS AND REAL ESTATE

The Company invests in commercial first mortgage loans and real estate throughout the United States.  Investments are diversified by property type and geographic area.  Mortgage loans are collateralized by the related properties and generally are no more than 75% of the property’s value at the time that the original loan is made.

The carrying value of the Company’s mortgage loans and real estate investments, net of applicable allowances and accumulated depreciation, was as follows:

			December 31,
			2011		2010
Total mortgage loans		$	1,457,356	$	1,737,528
Real estate:
	Held for production of income		223,814		214,665
Total real estate		$	223,814	$	214,665
Total mortgage loans and real estate		$	1,681,170	$	1,952,193

Accumulated depreciation on real estate was $50.9 million and $45.6 million at December 31, 2011 and 2010, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

MORTGAGE LOANS AND REAL ESTATE (CONTINUED)

A loan is considered impaired when it is probable that the principal or interest is not collectible in accordance with the contractual terms of the loan.  The allowance for credit losses is estimated using the present value of expected cash flows discounted at the loan’s effective interest rate or the fair value of the collateral, if the loan is collateral dependent.  A specific allowance for loan loss is established for an impaired loan if the present value of expected cash flows discounted at the loan’s effective interest rate, or the fair value of the loan collateral, less cost to sell, is less than the recorded amount of the loan.  A general allowance for loan loss is established based on an assessment of past loss experience on groups of loans with similar characteristics and current economic conditions.  While management believes that it uses the best information available to establish the allowances, future adjustments may become necessary if economic conditions differ from the assumptions used in calculating them.

Delinquency status is determined based upon the occurrence of a missed contract payment.  The following table set forth an age analysis of past due loans in the Company’s mortgage loan portfolio at December 31.

			Gross Carrying Value
		2011		2010
Past due:
	Between 30 and 59 days	$	4,075	$	16,607
	Between 60 and 89 days		5,043		12,333
	90 days or more		14,403		19,310
Total past due			23,521		48,250
Current (1)			1,490,236		1,743,060
Balance, at December 31		$	1,513,757	$	1,791,310
Past due 90 days or more and still accruing interest		$	-	$	-

The Company’s allowance for mortgage loan losses at December 31 was as follow:

	Allowance for Loan Loss
		2011		2010
General allowance	$	17,767	$	23,662
Specific allowance		38,634		30,120
Total	$	56,401	$	53,782

(1) Included in the $1,490.2 million and $1,743.1 million of the Company’s mortgage loans in current status at December 31, 2011 and 2010, were $153.1 million and $165.6 million, respectively, of mortgage loans that are impaired, but not past due.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

MORTGAGE LOANS AND REAL ESTATE (CONTINUED)

The Company individually evaluates all its mortgage loans for impairment and records a specific provision for those deemed impaired.  The Company also collectively evaluates most of its mortgage loans (excluding those for which a specific allowance was recorded) for impairment.  At December 31, 2011, the Company individually and collectively evaluated loans with a gross carrying value of $1,513.8 million and $1,396.1 million, respectively.  At December 31, 2010, the Company individually and collectively evaluated loans with a gross carrying value of $1,791.3 million and $1,706.0 million, respectively.

The credit quality indicator for the Company’s mortgage loans is an internal risk rated measure based on the borrowers’ ability to pay and the value of the underlying collateral.  The internal risk rating is related to an increasing likelihood of loss, with a low quality rating representing the category in which a loss is first expected.  The following table shows the gross carrying value of the Company’s mortgage loans disaggregated by credit quality indicator at December 31:

	2011		2010
Insured	$	-	$	-
High		263,398		394,288
Standard		416,847		544,243
Satisfactory		354,359		333,086
Low quality		479,153		519,693
Total	$	1,513,757	$	1,791,310

The following tables show the gross carrying value of impaired mortgage loans and related allowances at:

	December 31, 2011
		With no allowance recorded		With an allowance recorded		Total
Gross carrying value	$	53,922	$	117,701	$	171,623
Unpaid principal balance		55,380		122,806		178,186
Related allowance		-		38,634		38,634
Average recorded investment		95,694		95,408		191,102
Interest income recognized	$	4,563	$	-	$	4,563
	December 31, 2010
		With no allowance recorded		With an allowance recorded		Total
Gross carrying value	$	119,323	$	85,281	$	204,604
Unpaid principal balance		120,417		88,625		209,042
Related allowance		-		30,120		30,120
Average recorded investment		113,701		86,575		200,276
Interest income recognized	$	5,899	$	-	$	5,899

Included in the $171.6 million and $204.6 million of impaired mortgage loans at December 31, 2011 and 2010, were $53.9 million and $119.3 million, respectively, of impaired loans that did not have an allowance for loan loss because the fair value of the collateral or the expected future cash flows exceeded the carrying value of the loans.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

MORTGAGE LOANS AND REAL ESTATE (CONTINUED)

The average investment in impaired mortgage loans before an allowance for loan loss and the related interest income and cash receipts for interest on impaired mortgage loans for the years ended December 31 were as follows:

	2011		2010		2009
Average investment	$	191,102	$	200,276	$	121,500
Interest income	$	4,563	$	5,899	$	897
Cash receipts on interest	$	4,069	$	5,899	$	897

The gross carrying value of the Company’s mortgage loans on nonaccrual status was $138.9 million and $114.7 million at December 31, 2011 and 2010, respectively.

The activity in the allowance for loan loss was as follows:

		2011		2010		2009
Balance at January 1	$	53,782	$	42,782	$	3,000
Provision for allowance		34,641		26,742		40,050
Charge-offs		(19,790)		(6,892)		-
Recoveries		(12,232)		(8,850)		(268)
Balance at December 31	$	56,401	$	53,782	$	42,782

Troubled Debt Restructurings

The Company may modify the terms of a loan by adjusting the interest rate, extending the maturity date or both.  The Company evaluates each restructuring of debt and considers it a TDR if, for economic or legal reasons related to the debtor's financial difficulties, it grants a concession to the borrower that it would not otherwise consider.  Specifically, the Company's evaluation of each restructuring includes an assessment of the indicators of impairment to determine if the debtor is exhibiting financial difficulties and an assessment of market lending activity to determine if the debtor can obtain funds from other sources at market interest rates at or near those for nontroubled debts.  Those restructurings where financial difficulties are present and alternative sources of funding are not available or prohibitively expensive to the borrower are considered TDR.

Upon adoption of the amendments in ASU 2011-02, the Company reassessed all restructured loans that occurred on or after January 1, 2011, the beginning of its fiscal year, for identification as TDRs.  Adoption of the ASU 2011-02 had no impact on the number of restructured loans that are considered TDRs.

All TDRs identified by the Company are commercial mortgage loans modified by granting concessions to borrowers where, as a result of the restructuring, the Company does not expect to collect all amounts due, including interest accrued at the original contract rate.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

MORTGAGE LOANS AND REAL ESTATE (CONTINUED)

Troubled Debt Restructuring (continued)

Modifications are factored into the determination of the allowance for credit losses by including adjustments to the outstanding recorded investment.  The financial effect of a TDR is not recognized when the Company expects to collect cash flows at, or above, the original contract rate.  For the year ended December 31, 2011, no financial effect from TDRs was recognized.  The following table provides information about the Company’s loans that were modified and how they were modified as a TDR during the year ended:

	December 31, 2011
	No. (1)	Pre-modification recorded investment		Post- modification recorded investment
Adjusted interest rate	1	$	2,834	$	2,834
Extended maturity date	1		8,970		8,970
Combined rate and maturity	5		15,368		15,368
Total	7	$	27,172	$	27,172

(1) Represents the number of contracts that were modified and considered as TDR. The number of contracts is not in thousands.

Defaults are factored into the determination of the allowance for credit losses by indicating that, as a result of the default, the Company does not expect to collect all amounts due per the modified terms.  The following table shows the number and value of TDRs within the previous twelve months for which there was a payment default during the year ended (the number of contracts is not in thousands):

	December 31, 2011
Number of contracts		1
Recorded investment amount	$	2,053

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

MORTGAGE LOANS AND REAL ESTATE (CONTINUED)

Mortgage loans and real estate investments comprise the following property types and geographic regions at December 31:

	2011		2010
Property Type:
Office building	$	499,405	$	599,930
Retail		684,051		748,345
Industrial/warehouse		207,820		242,413
Apartment		46,226		54,364
Other		300,069		360,923
Allowance for loan losses		(56,401)		(53,782)
Total	$	1,681,170	$	1,952,193

	2011		2010
Geographic region:
California	$	77,879	$	85,853
Florida		193,068		200,056
Georgia		62,802		69,173
Massachusetts		103,983		112,128
Missouri		48,325		52,218
New York		201,835		247,154
Ohio		104,074		125,454
Pennsylvania		80,641		98,251
Texas		265,705		303,336
Washington		52,718		65,708
Other (1)		546,541		646,644
Allowance for loan losses		(56,401)		(53,782)
Total	$	1,681,170	$	1,952,193

(1)Includes the states in which the value of the Company’s mortgage loans and real estate investments was below $50.0 million at December 31, 2011 and 2010, respectively.

At December 31, 2011, scheduled mortgage loan maturities were as follows:

2012	$	60,993
2013		106,420
2014		145,960
2015		173,654
2016		223,720
Thereafter		764,376
General allowance		(17,767)
Total	$	1,457,356

Actual maturities could differ from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties and loans may be refinanced.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

LEVERAGED LEASES AND LIMITED PARTNERSHIPS

The Company was an owner participant in a trust that is a lessor in a leveraged lease agreement entered into on October 21, 1994, under which equipment having an estimated economic life of 25-40 years was originally leased through a VIE for a term of 9.78 years.  The master lessee had the option to purchase the equipment at the expiration of the lease term.  The Company's equity investment in this VIE represented 8.33% of the partnership that provided 22.9% of the purchase price of the equipment.  The Company did not have the ability to direct the activities that most significantly impact the economic performance of the VIE, nor did it have the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.  Therefore, the Company did not consolidate this trust in its consolidated financial statements.  The balance of the purchase price was furnished by third-party long-term debt financing, collateralized by the equipment, and was non-recourse to the Company.  The leveraged lease investment was included as a part of other invested assets in the Company’s consolidated balance sheet at December 31, 2009.

On June 1, 2010, the master lessee elected to exercise a fixed price purchase option to purchase the equipment and the Company received $22.6 million in cash for its investment in the VIE and realized a $3.4 million gain in its consolidated statement of operations.

The Company had no leveraged lease investments at December 31, 2011 and 2010.

The Company had outstanding commitments to fund limited partnerships of approximately $11.8 million and $12.6 million at December 31, 2011 and 2010, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company uses derivative financial instruments for risk management purposes to hedge against specific risks related to interest rates, foreign currency exchange rates, and equity market conditions, as well as to alter exposure arising from mismatches between assets and liabilities.  Derivative instruments are recorded in the consolidated balance sheets at fair value and are presented as assets or liabilities.

The Company does not employ hedge accounting.  The Company believes that its derivatives provide economic hedges and the cost of formally documenting hedge effectiveness in accordance with the provisions of FASB ASC Topic 815 is not justified.  As a result, all changes in the fair value of derivatives are recorded in the current period operations as a component of net derivative income or loss.

Credit enhancement, such as collateral, is used to improve the credit risk of longer-term derivative contracts.

It is common, and the Company’s preferred practice, for the parties to execute a Credit Support Annex (“CSA”) in conjunction with the International Swaps and Derivatives Association Master Agreement. Under a CSA, collateral is exchanged between the parties to mitigate the market contingent counterparty risk inherent in outstanding positions.

The primary types of derivatives held by the Company include interest rate and foreign currency swap agreements, swaptions, futures, listed and over-the counter (“OTC”) equity options, foreign currency forwards and embedded derivatives, as described below.

Interest Rate and Foreign Currency Swap Agreements

As a component of its investment strategy, the Company utilizes swap agreements.  Swap agreements are agreements to exchange with a counterparty a series of cash flow payments at pre-determined intervals, based upon or calculated by reference to changes in specified interest rates (fixed or floating) or foreign currency exchange rates.  Typically, no cash is exchanged at the outset of the contract and no principal payments are made by either party, except on certain foreign currency exchange swaps.  A single net payment is usually made by one counterparty at pre-determined dates.  The net payment is recorded as a component of net derivative loss in the Company’s consolidated statement of operations.

Interest rate swaps are generally used to manage the sensitivity of the duration gap between assets and liabilities to interest rate changes or to manage the exposure to product guarantees sensitive to movements in equity market and interest rate levels related to life insurance contracts, fixed index annuities and variable annuities.

Foreign currency swaps are utilized as an economic hedge against changes in foreign currencies associated with certain non-U.S. dollar denominated cash flows.

The Company has an agreement with the CARS Trust whereby the Company is the sole beneficiary of the CARS Trust.  Please refer to Note 4 of the Company’s consolidated financial statements for additional information regarding the CARS Trust.

Swaptions

The Company utilizes payer swaptions to hedge exposure to interest rate risk, typically on product guarantees.  Swaptions give the buyer the option to enter into an interest rate swap per the terms of the original swaption agreement.  A premium is paid on settlement date and no further cash transactions occur until the positions settle or expire.  At expiration, the swaption either cash settles for value, settles into an interest rate swap, or expires worthless per the terms of the original swaption agreement.  At December 31, 2011, the Company did not have any position in swaptions.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (CONTINUED)

Futures

Equity, interest rate and foreign exchange futures contracts, both long and short, are entered into for purposes of hedging liabilities on fixed index and variable annuity products containing guaranteed minimum death benefit and guaranteed minimum living benefit features, with cash flows based on changes in equity indices, interest rates or foreign exchange rates.  On the trade date, an initial cash margin is deposited as required by the relevant stock exchange.  Cash is subsequently exchanged daily to settle the variation margin or daily fluctuations in the underlying index.

Listed and OTC Equity Options

In addition to short futures, the Company also utilizes listed put options on major indices to hedge against stock market exposure inherent in the guaranteed minimum death benefit and living benefit features of the Company's variable annuities.  Listed options are traded on the stock exchange similar to futures.  Unlike futures, however, an up-front premium is paid to or received from the counterparty, instead of depositing an initial cash margin with the Exchange.  The Company also purchases listed and OTC call options on major indices to economically hedge its obligations under certain fixed annuity contracts, as well as enhance income on the underlying assets.  On the trade date, an initial cash margin is exchanged for listed options.  Daily cash is exchanged to settle the daily variation margin.

Foreign Currency Forwards

A foreign currency forward is an agreement between two parties to buy and sell currencies at the current market rate, for settlement at a specified future date.  Foreign currency forwards are utilized as an economic hedge against changes in foreign currencies associated with certain non-U.S. dollar denominated cash flows.

The following is a summary of the Company’s derivative positions (excluding embedded derivatives) at:

	December 31, 2011			December 31, 2010
	Number of Contracts (2)		Principal Notional	Number of Contracts (2)		Principal Notional
Interest rate contracts	78	$	5,496,000	71	$	5,793,500
Foreign currency contracts	16		69,507	43		393,609
Equity contracts	11,216		1,949,878	13,704		2,373,741
Credit contracts	1		20,928	1		37,400
Futures contracts (1)	(34,187)		4,747,764	(25,699)		2,918,839
Total		$	12,284,077		$	11,517,089

(1) Futures contracts include interest rate, equity price and foreign currency exchange risks. The negative amount represents the Company’s net short position including (45,084) contracts and (33,683) contracts in short position and 10,897 contracts and 7,984 contracts in long position at December 31, 2011 and 2010, respectively.

(2) Not in thousands.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (CONTINUED)

With the exception of embedded derivatives, all derivatives are carried at fair value in derivative instruments – receivable or derivative instruments – payable in the Company’s consolidated balance sheets.  Embedded derivatives related to reinsurance agreements and annuity contracts are carried at fair value in contractholder deposit funds and other policy liabilities in the Company’s consolidated balance sheets.  The following is a summary of the Company’s derivative asset and liability positions by primary risk exposure.

	At December 31, 2011				At December 31, 2010
	Asset Derivatives Fair Value (a)		Liability Derivatives Fair Value (a)		Asset Derivatives Fair Value (a)		Liability Derivatives Fair Value (a)
Interest rate contracts	$	362,753	$	257,719	$	97,060	$	329,214
Foreign currency contracts		577		3,422		32,504		3,878
Equity contracts		46,944		-		59,397		-
Credit contracts		-		17,723		-		27,341
Futures contracts		12,130		8,210		9,103		1,590
Total derivative instruments		422,404		287,074		198,064		362,023
Embedded derivatives (b)		-		1,516,277		2,896		178,069
Total	$	422,404	$	1,803,351	$	200,960	$	540,092

(a) Amounts are presented without consideration of cross-transaction netting and collateral.

(b) Embedded derivatives expose the Company to a combination of credit, interest rate and equity price risks.

All realized and unrealized derivative gains and losses are recorded in net derivative loss in the Company’s consolidated statements of operations.  The following is a summary of the Company’s realized and unrealized gains (losses) by derivative type for the years ended December 31:

		2011		2010		2009
Interest rate contracts	$	270,885	$	(122,712)	$	143,402
Foreign currency contracts		(50,493)		(16,206)		(12,116)
Equity contracts		(58,110)		(26,734)		(71,865)
Credit contracts		9,619		7,008		(9,855)
Futures contracts		122,649		(217,428)		(328,595)
Embedded derivatives		(1,282,620)		226,782		239,127
Net derivative loss from continuing operations	$	(988,070)	$	(149,290)	$	(39,902)
Net derivative income from discontinued operations	$	-	$	-	$	216,956

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

4. INVESTMENTS (CONTINUED)

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (CONTINUED)

Concentration of Credit Risk

Credit risk relates to the uncertainty of an obligor’s continued ability to make timely payments in accordance with the contractual terms of the instrument or contract.  With derivative instruments, the Company is primarily exposed to credit risk through its counterparty relationships.  The Company primarily manages credit risk through policies which address the quality of counterparties, contractual requirements for transacting with counterparties and collateral support agreements, and limitations on counterparty concentrations.  Exposures by counterparty and counterparty credit ratings are monitored closely.  All of the contracts are held with counterparties rated A- or higher.  As of December 31, 2011, the Company’s liability positions were linked to a total of 5 affiliated and unaffiliated counterparties, of which the largest single unaffiliated counterparty payable, net of collateral, had credit exposure of $17.7 million to the Company.  As of December 31, 2011, the Company’s asset positions were linked to a total of 11 affiliated and unaffiliated counterparties, of which the largest single unaffiliated counterparty receivable, net of collateral, had credit exposure of $3.9 million.

Credit-related Contingent Features

All derivative transactions are covered under standardized contractual agreements with counterparties, all of which include credit-related contingent features. These standardized agreements include language related to the failure to pay or deliver on an obligation, bankruptcy and additional termination events, such as a credit rating falling below a stipulated level . These triggers generally result in early terminations after a grace period.

Certain counterparty relationships also may include supplementary agreements with additional triggers related to credit downgrades of the Company or its counterparty.  If the Company’s credit rating were to fall below the stipulated level, this could result in a reduction of minimum thresholds in collateral agreements or full overnight collateralization.  These impacts can frequently be mitigated, however, through re-negotiation of contractual terms.

The aggregate value of all derivative instruments with credit risk-related contingent features that were in a liability position at December 31, 2011 and 2010 was $287.1 million and $362.0 million, respectively.  At December 31, 2011, the Company was fully collateralized, substantially mitigating credit risk.

In the event of an early termination, the Company might be required to accelerate payments to counterparties, up to the current value of its net liability positions, after considering the impacts of netting at default.  If payments cannot be exchanged simultaneously at early termination, funds also will be held in escrow to facilitate settlement.  If an early termination was triggered on December 31, 2011, the Company would be expected to settle a net obligation of $79.1 million.

If counterparties are unable to meet accelerated payment obligations, the Company may also be exposed to uncollectible net asset positions, after considering the impact of netting at default.

At December 31, 2011, the Company pledged $289.6 million in U.S. Treasury securities as collateral to counterparties.  At December 31, 2011, counterparties pledged to the Company $245.1 million in collateral comprised of cash and U.S. Treasury securities.

Embedded Derivatives

The Company performs a quarterly analysis of its new contracts, agreements and financial instruments for embedded derivatives.  No embedded derivatives required bifurcation from financial assets.  However, the Company issues certain annuity contracts and enters into reinsurance agreements that contain derivatives embedded in the contract.  Upon issuing the contract, the embedded derivative is separated from the host contract (annuity contract or reinsurance agreement) and is carried at fair value.  Please refer to Note 8 of the Company’s consolidated financial statements for further information regarding derivatives embedded in reinsurance contracts; refer to Note 12 for further information regarding derivatives embedded in annuity contracts.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  In determining fair value, the Company uses various methods including market, income and cost approaches.  The Company utilizes valuation techniques that maximize the use of observable inputs and minimizes the use of unobservable inputs.

The Company has categorized its financial instruments that are carried at fair value into a three-level hierarchy based on the priority of the inputs to the valuation technique.  The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).  If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

On April 1, 2009, the FASB issued additional guidance on estimating fair value when the volume and level of activity for the asset or liability have significantly decreased, as well as guidance on identifying circumstances indicating that a transaction is not orderly.  The Company reviewed its pricing sources and methodologies and has concluded that its various pricing sources and methodologies are in compliance with this guidance.  During the year ended December 31, 2011, there were no changes to these valuation techniques and the related inputs.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

Financial assets and liabilities recorded at fair value in the Company’s consolidated balance sheets are categorized as follows:

Level 1

· Unadjusted quoted prices for identical assets or liabilities in an active market.

The types of assets and liabilities utilizing Level 1 valuations include U.S. Treasury and agency securities, investments in publicly-traded mutual funds with quoted market prices and listed derivatives.

Level 2

· Quoted prices in markets that are not active or significant inputs that are observable either directly or indirectly.

Level 2 inputs include the following:

a) Quoted prices for similar assets or liabilities in active markets,

b) Quoted prices for identical or similar assets or liabilities in non-active markets,

c) Inputs other than quoted market prices that are observable, and

d) Inputs that are derived principally from or corroborated by observable market data through correlation or other means.

The types of assets and liabilities utilizing Level 2 valuations generally include U.S. Government securities not backed by the full faith and credit of the Government, municipal bonds, structured notes and certain ABS including collateralized debt obligations, RMBS, CMBS, certain corporate debt, certain private equity investments and certain derivatives, including derivatives embedded in reinsurance contracts.

Level 3

· Prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. They reflect management's assumptions about what a market participant would use in pricing the asset or liability.

Generally, the types of assets and liabilities utilizing Level 3 valuations are certain ABS, RMBS and CMBS, certain corporate debt, certain private equity investments, certain mutual fund holdings and certain derivatives, including certain derivatives embedded in reinsurance and annuity contracts and certain funding agreements.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

Fair Value Hierarchy

The following table presents the Company’s categories for its assets measured at fair value on a recurring basis as of December 31, 2011:

		Level 1		Level 2		Level 3		Total
Assets
Available-for-sale fixed maturity securities:
	Asset-backed securities	$	-	$	55	$	-	$	55
	Residential mortgage-backed securities		-		26,543		-		26,543
	Commercial mortgage-backed securities		-		6,781		2,131		8,912
	Foreign government & agency securities		-		-		-		-
	U.S. states and political subdivision securities		-		221		-		221
	U.S. treasury and agency securities		382,569		-		-		382,569
	Corporate securities		-		977,356		6,869		984,225
Total available-for-sale fixed maturity securities			382,569		1,010,956		9,000		1,402,525
Trading fixed maturity securities:
	Asset-backed securities		-		215,343		76,909		292,252
	Residential mortgage-backed securities		-		593,066		120,129		713,195
	Commercial mortgage-backed securities		-		619,180		63,838		683,018
	Foreign government & agency securities		-		96,205		20,393		116,598
	U.S. states and political subdivision securities		-		527		-		527
	U.S. treasury and agency securities		327,827		7,199		1,928		336,954
	Corporate securities		-		8,062,279		75,713		8,137,992
Total trading fixed maturity securities			327,827		9,593,799		358,910		10,280,536
Derivative instruments - receivable:
	Interest rate contracts		-		362,753		-		362,753
	Foreign currency contracts		-		577		-		577
	Equity contracts		24,499		17,252		5,193		46,944
	Futures contracts		12,130		-		-		12,130
Total derivative instruments - receivable			36,629		380,582		5,193		422,404
Other invested assets (1)			1,896		21,621		9,252		32,769
Short-term investments			105,895		-		-		105,895
Cash and cash equivalents			872,064		-		-		872,064
Total investments and cash			1,726,880		11,006,958		382,355		13,116,193
Separate account assets:
	Mutual fund investments		21,668,110		-		-		21,668,110
	Equity investments		-		-		-		-
	Fixed income investments		785,438		5,236,487		16,012		6,037,937
	Alternative investments		4,122		62,989		360,463		427,574
	Other investments		(1,328)		-		-		(1,328)
Total separate account assets (2) (3)			22,456,342		5,299,476		376,475		28,132,293
Total assets measured at fair value on a recurring basis		$	24,183,222	$	16,306,434	$	758,830	$	41,248,486

(1)   Excludes $4.3 million of other invested assets that are not subject to FASB ASC Topic 820.

(2)  Pursuant to the conditions set forth in FASB ASC Topic 944, the value of separate account liabilities is set to equal the fair value of the separate account assets.

(3)  Excludes $648.5 million, primarily related to investment purchases payable, net of investment sales receivable, that are not subject to FASB ASC Topic 820.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

Fair Value Hierarchy (continued)

The following table presents the Company’s categories for its liabilities measured at fair value on a recurring basis as of December 31, 2011:

		Level 1		Level 2		Level 3		Total
Liabilities
Other policy liabilities:
	Guaranteed minimum withdrawal benefit liability	$	-	$	-	$	1,071,126	$	1,071,126
	Guaranteed minimum accumulation benefit liability		-		-		215,598		215,598
	Derivatives embedded in reinsurance contracts		-		107,965		5,193		113,158
	Derivatives embedded in fixed index annuities		-		-		116,395		116,395
Total other policy liabilities (1)			-		107,965		1,408,312		1,516,277
Derivative instruments – payable:
	Interest rate contracts		-		257,719		-		257,719
	Foreign currency contracts		-		3,422		-		3,422
	Credit contracts		-		-		17,723		17,723
	Futures contracts		8,210		-		-		8,210
Total derivative instruments – payable			8,210		261,141		17,723		287,074
Other liabilities:
	Bank overdrafts (2)		48,893		-		-		48,893
Total liabilities measured at fair value on a recurring basis		$	57,103	$	369,106	$	1,426,035	$	1,852,244

(1) The balances are included within the contractholder deposits funds and other policy liabilities in the Company’s consolidated balance sheets.

(2) Bank overdrafts are included within other liabilities in the Company’s consolidated balance sheet.

Assets Measured at Fair Value on a Nonrecurring Basis

The following table presents the Company’s categories for its assets measured at fair value on a nonrecurring basis at December 31, 2011:

		Level 1		Level 2		Level 3		Total		Total Loss
Asset
Mortgage loans	$	-	$	-	$	79,067	$	79,067	$	(38,634)

At December 31, 2011, the Company determined that certain mortgage loans were impaired and as a practical expedient, measured the impairment using the fair value of the related collateral.  The fair value of the collateral was based on real estate valuations.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

Fair Value Hierarchy (continued)

The following table presents the Company’s categories for its assets measured at fair value on a recurring basis as of December 31, 2010:

		Level 1		Level 2		Level 3		Total
Assets
Available-for-sale fixed maturity securities:
	Asset-backed securities	$	-	$	704	$	11	$	715
	Residential mortgage-backed securities		-		34,614		-		34,614
	Commercial mortgage-backed securities		-		13,003		2,047		15,050
	Foreign government & agency securities		-		563		-		563
	U.S. states and political subdivision securities		-		214		-		214
	U.S. treasury and agency securities		375,233		-		-		375,233
	Corporate securities		-		1,068,399		1,135		1,069,534
Total available-for-sale fixed maturity securities			375,233		1,117,497		3,193		1,495,923
Trading fixed maturity securities:
	Asset-backed securities		-		321,129		90,851		411,980
	Residential mortgage-backed securities		-		834,074		88,719		922,793
	Commercial mortgage-backed securities		-		737,024		82,171		819,195
	Foreign government & agency securities		-		116,986		13,790		130,776
	U.S. states and political subdivision securities		-		613		-		613
	U.S. treasury and agency securities		737,936		8,582		1,101		747,619
	Corporate securities		-		8,301,586		132,556		8,434,142
Total trading fixed maturity securities			737,936		10,319,994		409,188		11,467,118
Derivative instruments - receivable:
	Interest rate contracts		-		97,060		-		97,060
	Foreign currency contracts		-		32,504		-		32,504
	Equity contracts		14,873		30,739		13,785		59,397
	Futures contracts		9,103		-		-		9,103
Total derivative instruments - receivable			23,976		160,303		13,785		198,064
Other invested assets (1)			2,890		11,120		8,343		22,353
Short-term investments			832,739		-		-		832,739
Cash and cash equivalents			736,323		-		-		736,323
Total investments and cash			2,709,097		11,608,914		434,509		14,752,520
Separate account assets:
	Mutual fund investments		21,892,209		30,517		-		21,922,726
	Equity investments		188,216		277		-		188,493
	Fixed income investments		317,713		5,812,900		56,323		6,186,936
	Alternative investments		24,094		78,164		293,254		395,512
	Other investments		900		-		-		900
Total separate account assets (2) (3)			22,423,132		5,921,858		349,577		28,694,567
Total assets measured at fair value on a recurring basis		$	25,132,229	$	17,530,772	$	784,086	$	43,447,087

(1) Excludes $5.1 million of other invested assets that are not subject to FASB ASC Topic 820.

(2) Pursuant to the conditions set forth in FASB ASC Topic 944, the value of separate account liabilities is set to equal the fair value of the separate account assets.

(3) Excludes $1,814.1 million, primarily related to investment purchases payable, net of investment sales receivable, that are not subject to FASB ASC Topic 820.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

Fair Value Hierarchy (continued)

The following table presents the Company’s categories for its liabilities measured at fair value on a recurring basis as of December 31, 2010:

		Level 1		Level 2		Level 3		Total
Liabilities
Other policy liabilities:
	Guaranteed minimum withdrawal benefit liability	$	-	$	-	$	2,245	$	2,245
	Guaranteed minimum accumulation benefit liability		-		-		49		49
	Derivatives embedded in reinsurance contracts		-		41,272		-		41,272
	Derivatives embedded in fixed index annuities		-		-		131,608		131,608
Total other policy liabilities (1)			-		41,272		133,902		175,174
Derivative instruments – payable:
	Interest rate contracts		-		329,214		-		329,214
	Foreign currency contracts		-		3,878		-		3,878
	Credit contracts		-		-		27,341		27,341
	Futures contracts		1,590		-		-		1,590
Total derivative instruments – payable			1,590		333,092		27,341		362,023
Other liabilities:
	Bank overdrafts (2)		61,227		-		-		61,227
Total liabilities measured at fair value on a recurring basis		$	62,817	$	374,364	$	161,243	$	598,424

(1) The balances are included within the contractholder deposits funds and other policy liabilities in the Company’s consolidated balance sheets.

(2) Bank overdrafts are included within other liabilities in the Company’s consolidated balance sheet.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

Fair Value Hierarchy (continued)

The methods and assumptions that the Company uses in determining the estimated fair value of its financial instruments that are measured at fair value on a recurring basis are summarized below:

Fixed maturity securities:  The Company determines the fair value of its publicly-traded fixed maturity securities using three primary pricing methods: third-party pricing services, non-binding broker quotes and pricing models.  Prices are first sought from third-party pricing services; the remaining unpriced securities are priced using one of the remaining two methods.  Third-party pricing services derive the security prices through recently reported trades for identical or similar securities with adjustments for trading volumes and market observable information through the reporting date.  In the event that there are no recent market trades, pricing services and brokers may use pricing models to develop a security price based on future expected cash flows discounted at an estimated market rate using collateral performance and vintages.  The Company generally does not adjust quotes or prices obtained from brokers or pricing services.

Structured securities, such as ABS, RMBS and CMBS, are priced using third-party pricing services, a fair value model or independent broker quotations.  CMBS securities are priced using the last sale price of the day or a broker quote, if no sales were transacted that day.  Typical inputs used by these three pricing methods include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids and/or estimated cash flows and prepayment speeds.  In addition, estimates of expected future prepayments are factors in determining the price of ABS, RMBS and CMBS.  These estimates are based on the underlying collateral and structure of the security, as well as prepayment speeds previously experienced in the market at interest rate levels projected for the underlying collateral.  Actual prepayment experience may vary from these estimates.

For privately-placed fixed maturity securities, fair values are estimated using models which take into account credit spreads for publicly-traded securities of similar credit risk, maturity, prepayment and liquidity characteristics.  A portion of privately-placed fixed maturity securities also are priced using market prices or broker quotes.

The Company’s ability to liquidate positions in privately-placed fixed securities and mortgages could be impacted to a significant degree by the lack of an actively traded market.  Although the Company believes that its estimates reasonably reflect the fair value of those instruments, its key assumptions about risk-free interest rates, risk premiums, performance of underlying collateral (if any) and other factors may not reflect those of an active market.

Derivative instruments - receivables and payables:  The fair values of swaps are based on current settlement values, dealer quotes and market prices.  Fair values for options and futures are also based on dealer quotes and market prices.  The Company uses credit valuation adjustments (“CVAs”) to properly reflect the component of fair value of certain derivative instruments that arise from default risk.  CVAs are based on a methodology that primarily uses published credit default swap spreads as a key input in determining an implied level of expected loss over the total life of the derivative contract.  When this information is not available, the Company also may utilize credit spreads implied from published bond yields or published cumulative default experience data adjusted for current trends.  CVAs may be calculated based on the credit risk of counterparties for asset positions or the Company's own credit risk for liability positions.  The CVAs also take into account contractual factors designed to reduce the Company’s credit exposure to each counterparty, such as collateral and legal rights of offset.

Other invested assets:  This financial instrument primarily consists of equity securities.  The fair value of the Company’s equity securities is first based on quoted market prices.  Similar to fixed maturity securities, the Company uses pricing services and broker quotes to price the equity securities for which the quoted market price is not available.

Cash, cash equivalents and short-term investments:  The carrying value for cash, cash equivalents and short-term investments approximates fair value due to the short-term nature and liquidity of the balances.

Separate accounts, assets and liabilities:  The estimated fair value of assets held in separate accounts is based on quoted market prices.  The fair value of liabilities related to separate accounts is the amount payable on demand, which excludes surrender charges.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

Fair Value Hierarchy (continued)

Other policy liabilities:  The fair values of S&P 500 Index and other equity-linked embedded derivatives are produced using standard derivative valuation techniques.  GMAB and GMWB are considered to be derivatives under FASB ASC Topic 815 and are included in contractholder deposit funds and other policy liabilities in the Company’s consolidated balance sheets.  Consistent with the provisions of FASB ASC Topic 820, the Company incorporates risk margins and the Company’s own credit standing, as well as changes in assumptions regarding policyholder behavior, in the calculation of the fair value of embedded derivatives.

Other liabilities:  This financial instrument consists of bank overdraft balances which are due to issued checks and transmitted wires that were not cashed and processed in the Company’s bank accounts at the end of the reporting period.  Similar to cash, the carrying value for other liabilities approximates fair value due to the liquidity of the balance.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

The following table shows a reconciliation of the beginning and ending balances for assets which are categorized as Level 3 for the

 year ended December 31, 2011:

			Total realized and unrealized gains (losses)
Assets		Beginning balance	Included in earnings	Included in OCI	Purchases	Sales	Issuances	Settlements	Transfers into  level 3	Transfers out of level 3	Ending balance	Change in unrealized gains (losses) (2)
Available-for-sale fixed maturity securities:
	Asset-backed securities	$ 11	$ (16)	$ 5	$ -	$ -	$ -	$ -	$ -	$ -	$ -	$ -
	Residential mortgage-backed securities	-	-	-	-	-	-	-	-	-	-	-
	Commercial mortgage-backed securities	2,047	(362)	446	-	-	-	-	-	-	2,131	-
	Foreign government & agency securities	-	-	-	-	-	-	-	-	-	-	-
	U.S. states and political subdivision securities	-	-	-	-	-	-	-	-	-	-	-
	U.S. treasury and agency securities	-	-	-	-	-	-	-	-	-	-	-
	Corporate securities	1,135	1,636	(1,653)	-	-	-	-	6,360	(609)	6,869	-
Total available-for-sale fixed maturity securities		3,193	1,258	(1,202)	-	-	-	-	6,360	(609)	9,000	-
Trading fixed maturity securities:
	Asset-backed securities	90,851	(4,497)	-	-	-	-	(5,534)	14,639	(18,550)	76,909	(2,925)
	Residential mortgage-backed securities	88,719	3,586	-	-	-	-	(44,230)	99,785	(27,731)	120,129	16,101
	Commercial mortgage-backed securities	82,171	(1,391)	-	-	-	-	(21,896)	4,954	-	63,838	168
	Foreign government & agency securities	13,790	6,603	-	-	-	-	-	-	-	20,393	8,292
	U.S. states and political subdivision securities	-	-	-	-	-	-	-	-	-	-	-
	U.S. treasury and agency securities	1,101	47	-	-	-	-	(431)	2,312	(1,101)	1,928	42
	Corporate securities	132,556	3,602	-	-	(7,984)	-	(9,419)	32,343	(75,385)	75,713	588
Total trading fixed maturity securities		409,188	7,950	-	-	(7,984)	-	(81,510)	154,033	(122,767)	358,910	22,266
Derivative instruments – receivable:
	Interest rate contracts	-	-	-	-	-	-	-	-	-	-	-
	Foreign currency contracts	-	-	-	-	-	-	-	-	-	-	-
	Equity contracts	13,785	(4,102)	-	9,295	-	-	(13,785)	-	-	5,193	(4,102)
	Futures contracts	-	-	-	-	-	-	-	-	-	-	-
Total derivative instruments– receivable		13,785	(4,102)	-	9,295	-	-	(13,785)	-	-	5,193	(4,102)
Other invested assets		8,343	(4)	-	8,859	(296)	-	-	-	(7,650)	9,252	196
Short-term investments		-	-	-	-	-	-	-	-	-	-	-
Cash and cash equivalents		-	-	-	-	-	-	-	-	-	-	-
Total investments and cash		434,509	5,102	(1,202)	18,154	(8,280)	-	(95,295)	160,393	(131,026)	382,355	18,360
Separate account assets:
	Mutual fund investments	-	-	-	-	-	-	-	-	-	-	-
	Equity investments	-	-	-	-	(49)	-	-	49	-	-	-
	Fixed income investments	56,323	(432)	-	523,188	(530,132)	-	(7,327)	8,096	(33,704)	16,012	(515)
	Alternative investments	293,254	411	-	207,717	(124,666)	-	(19,453)	3,200	-	360,463	(5,874)
	Other investments	-	-	-	-	-	-	-	-	-	-	-
Total separate account assets (1)		349,577	(21)	-	730,905	(654,847)	-	(26,780)	11,345	(33,704)	376,475	(6,389)
Total assets measured at fair value on
a recurring basis		$ 784,086	$ 5,081	$ (1,202)	$ 749,059	$ (663,127)	$ -	$ (122,075)	$ 171,738	$ (164,730)	$ 758,830	$ 11,971

(1) The realized/unrealized gains and losses included in net income for separate account assets are offset by an equal amount for separate account liabilities which results in a net zero impact on net income for the Company.

(2) Included in earnings relating to instruments still held at the reporting date.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

The following table shows a reconciliation of the beginning and ending balances for liabilities which are categorized as Level 3 for the

 year ended December 31, 2011:

			Total realized and unrealized (gains) losses
Liabilities		Beginning balance	Included in earnings	Included in OCI	Purchases	Sales	Issuances	Settlements	Transfers into  level 3	Transfers out of level 3	Ending balance	Change in unrealized (gains) losses (2)
Other policy liabilities:
	Guaranteed minimum withdrawal benefit liability	$ 2,245	$ 1,068,881	$ -	$ -	$ -	$ -	$ -	$ -	$ -	$1,071,126	$ 930,740
	Guaranteed minimum accumulation benefit liability	49	215,549	-	-	-	-	-	-	-	215,598	182,268
	Derivatives embedded in reinsurance contracts	-	(5,923)	-	29,753	-	-	(18,637)	-	-	5,193	(5,923)
	Derivatives embedded in fixed index annuities	131,608	(15,213)	-	-	-	-	-	-	-	116,395	69,921
Total other policy liabilities (1)		133,902	1,263,294	-	29,753	-	-	(18,637)	-	-	1,408,312	1,177,006
Derivative instruments – payable:
	Interest rate contracts	-	-	-	-	-	-	-	-	-	-	-
	Foreign currency contracts	-	-	-	-	-	-	-	-	-	-	-
	Credit contracts	27,341	(9,618)	-	-	-	-	-	-	-	17,723	(9,619)
	Futures contracts	-	-	-	-	-	-	-	-	-	-	-
Total derivative instruments – payable		27,341	(9,618)	-	-	-	-	-	-	-	17,723	(9,619)
Other liabilities:
	Bank overdrafts	-	-	-	-	-	-	-	-	-	-	-
Total liabilities measured at fair value on a recurring basis		$ 161,243	$ 1,253,676	$ -	$ 29,753	$ -	$ -	$ (18,637)	$ -	$ -	$1,426,035	$ 1,167,387

(1) The balances are included within the contractholder deposits funds and other policy liabilities in the Company’s consolidated balance sheets.

(2) Included in earnings relating to instruments still held at the reporting date.

Gains and losses related to Level 3 assets and liabilities, included in the Company’s consolidated statements of operations for the

 year ended December 31, 2011, are reported as follows:

	Total gains (losses) included in earnings		Change in unrealized gains (losses) related to assets and liabilities still held  at the reporting date
Net investment income	$	7,946	$	22,462
Net derivative loss		(1,257,778)		(1,171,489)
Net realized investment gains, excluding impairment losses on available-for-sale securities		1,258		-
Net losses	$	(1,248,574)	$	(1,149,027)

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

The following table shows a reconciliation of the beginning and ending balances for assets which are categorized as Level 3 for the year ended December 31, 2010:

			Total realized and unrealized gains (losses)
Assets		Beginning balance	Included in earnings	Included in other comprehensive income	Purchases, issuances, and settlements (net)	Transfers in and/or (out) of level 3 (2)	Ending balance	Change in unrealized gains (losses) included in earnings relating to instruments still held at the reporting date
Available-for-sale fixed maturity  securities:
	Asset-backed securities	$ 37	$ (40)	$ 14	$ -	$ -	$ 11	$ -
	Residential mortgage-backed securities	-	-	-	-	-	-	-
	Commercial mortgage-backed
	securities	1,930	(472)	589	-	-	2,047	-
	Foreign government & agency
	securities	-	-	-	-	-	-	-
	U.S. states and political subdivision	-	-	-	-	-	-	-
	securities	-	-	-	-	-	-	-
	U.S. treasury and agency securities				-
	Corporate securities	7,936	(23)	53	(6,831)	-	1,135	-
Total available-for-sale fixed maturity securities		9,903	(535)	656	(6,831)	-	3,193	-
Trading fixed maturity securities:
	Asset-backed securities	111,650	26,351	-	(38,060)	(9,090)	90,851	28,061
	Residential mortgage-backed securities	154,551	11,159	-	(34,087)	(42,904)	88,719	24,255
	Commercial mortgage-backed
	securities	14,084	1,833	-	66,950	(696)	82,171	3,334
	Foreign government & agency
	securities	15,323	(1,533)	-	-	-	13,790	65
	U.S. states and political subdivision
	securities	-	-	-	-	-	-	-
	U.S. treasury and agency securities	-	(13)	-	(232)	1,346	1,101	21
	Corporate securities	107,886	4,805	-	(11,997)	31,862	132,556	5,111
Total trading fixed maturity securities		403,494	42,602	-	(17,426)	(19,482)	409,188	60,847
Derivative instruments – receivable:
	Interest rate contracts	-	-	-	-	-	-	-
	Foreign currency contracts	-	-	-	-	-	-	-
	Equity contracts	8,821	-	-	4,964	-	13,785	-
	Futures contracts	-	-	-	-	-	-	-
Total derivative instruments– receivable		8,821	-	-	4,964	-	13,785	-
Other invested assets		-	(50)	900	7,493	-	8,343	(50)
Short-term investments		-	-	-	-	-	-	-
Cash and cash equivalents		-	-	-	-	-	-	-
Total investments and cash		422,218	42,017	1,556	(11,800)	(19,482)	434,509	60,797
Separate account assets:
	Mutual fund investments	-	-	-	-	-	-	-
	Equity investments	7	-	-	(7)	-	-	-
	Fixed income investments	276,530	(11,998)	-	(91,989)	(116,220)	56,323	(4,607)
	Alternative investments	267,196	12,671	-	30,021	(16,634)	293,254	12,341
	Other investments	4,108	-	-	-	(4,108)	-	-
	Total separate account assets (1)	547,841	673	-	(61,975)	(136,962)	349,577	7,734
Total assets measured at fair value on
a recurring basis		$ 970,059	$ 42,690	$ 1,556	$ (73,775)	$ (156,444)	$ 784,086	$ 68,531

(1) The realized/unrealized gains (losses) included in net income for separate account assets are offset by an equal amount for separate account liabilities which results in a net zero impact on net income for the Company.

(2) Transfers in and/or (out) of Level 3 during the year ended December 31, 2010 are primarily attributable to changes in the observability of inputs used to price the securities.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

The following table shows a reconciliation of the beginning and ending balances for liabilities which are categorized as Level 3 for the year ended December 31, 2010:

			Total realized and unrealized  (gains) losses
Liabilities		Beginning balance	Included in earnings		Included in other comprehensive income		Purchases, issuances, and settlements (net)	Transfers in and/or (out) of level 3	Ending balance	Change in unrealized (gains) losses included in earnings relating to instruments still held at the reporting date
Other policy liabilities:
	Guaranteed minimum withdrawal benefit liability	$ 168,786		$ (319,563)		$ -	$ 153,022	$ -	$ 2,245	$ (314,652)
	Guaranteed minimum accumulation benefit liability	81,669		(104,831)		-	23,211	-	49	(103,091)
	Derivatives embedded in reinsurance contracts	-		-		-	-	-	-	-
	Derivatives embedded in fixed index annuities	140,966		(13,153)		-	3,795	-	131,608	20,397
Total other policy liabilities (1)		391,421		(437,547)		-	180,028	-	133,902	(397,346)
Derivative instruments – payable:
	Interest rate contracts	-		-		-	-	-	-	-
	Foreign currency contracts	-		-		-	-	-	-	-
	Credit contracts	34,349		(7,008)		-	-	-	27,341	(7,008)
	Futures contracts	-		-		-	-	-	-	-
Total derivative instruments – payable		34,349		(7,008)		-	-	-	27,341	(7,008)
Other liabilities:
	Bank overdrafts	-		-		-	-	-	-	-
Total liabilities measured at fair value on a recurring basis		$ 425,770		$ (444,555)		$ -	$ 180,028	$ -	$ 161,243	$ (404,354)

(1) The balances are included within the contractholder deposit funds and other policy liabilities in the Company consolidated balance sheets.

Gains and losses related to Level 3 assets and liabilities, included in the Company’s consolidated statements of operations for the year ended December 31, 2010, are reported as follows:

		Total gains (losses) included in earnings		Change in unrealized gains related to assets and liabilities still held  at the reporting date
Net investment income	$	42,552	$	60,797
Net derivative gains		444,555		404,354
Net realized investment losses, excluding impairment
losses on available-for-sale securities		(535)		-
Net gains	$	486,572	$	465,151

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

The Company determines transfers between levels based on the fair value of each security as of the beginning of the reporting period.

During the year ended December 31, 2011, the Company transferred the following assets into (out of) Levels 1, 2 and 3:

		Level 1 Transfers				Level 2 Transfers				Level 3 Transfers
		Into		(Out of)		Into		(Out of)		Into		(Out of)
Assets
Available-for-sale fixed maturity securities:
	Asset-backed securities	$	-	$	-	$	-	$	-	$	-	$	-
	Residential mortgage-backed securities		-		-		-		-		-		-
	Commercial mortgage-backed securities		-		-		-		-		-		-
	Foreign government & agency securities		-		-		-		-		-		-
	U.S. states and political subdivision securities		-		-		-		-		-		-
	U.S. treasury and agency securities		-		-		-		-		-		-
	Corporate securities		-		-		609		(6,360)		6,360		(609)
Total available-for-sale fixed maturity securities			-		-		609		(6,360)		6,360		(609)
Trading fixed maturity securities:
	Asset-backed securities		-		-		18,550		(14,639)		14,639		(18,550)
	Residential mortgage-backed securities		-		-		27,731		(99,785)		99,785		(27,731)
	Commercial mortgage-backed securities		-		-		-		(4,954)		4,954		-
	Foreign government & agency securities		-		-		-		-		-		-
	U.S. states and political subdivision securities		-		-		-		-		-		-
	U.S. treasury and agency securities		-		(2,312)		1,101		-		2,312		(1,101)
	Corporate securities		-		-		75,385		(32,343)		32,343		(75,385)
Total trading fixed maturity securities			-		(2,312)		122,767		(151,721)		154,033		(122,767)
Derivative instruments- receivable:
	Interest rate contracts		-		-		-		-		-		-
	Foreign currency contracts		-		-		-		-		-		-
	Equity contracts		-		-		-		-		-		-
	Credit contracts		-		-		-		-		-		-
	Futures		-		-		-		-		-		-
Total derivative instruments-receivable			-		-		-		-		-		-
Other invested assets			-		-		7,650		-		-		(7,650)
Short-term investments			-		-		-		-		-		-
Cash and cash equivalents			-		-		-		-		-		-
Total investments and cash			-		(2,312)		131,026		(158,081)		160,393		(131,026)
Separate account assets:
	Mutual fund investments		-		-		-		-		-		-
	Equity investments		-		-		-		(49)		49		-
	Fixed income investments		-		-		33,704		(8,096)		8,096		(33,704)
	Alternative investments		-		-		-		(3,200)		3,200		-
	Other investments		-		-		-		-		-		-
Total separate account assets			-		-		33,704		(11,345)		11,345		(33,704)
Total assets measured at fair value on a
recurring basis		$	-	$	(2,312)	$	164,730	$	(169,426)	$	171,738	$	(164,730)

The Company did not change the categorization of its financial instruments during the year ended December 31, 2011.  The transfers into (out of) Level 2 and Level 3 were primarily due to changes in the level of observability of inputs used to price these securities.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

The Company determines transfers between levels based on the fair value of each security as of the beginning of the reporting period.

During the year ended December 31, 2010, the Company transferred the following assets into (out of) Levels 1, 2 and 3:

			Level 1 Transfers				Level 2 Transfers				Level 3 Transfers
			Into		(Out of)		Into		(Out of)		Into		(Out of)
Assets
Available-for-sale fixed maturity securities:
	Asset-backed securities	$	-	$	-	$	-	$	-	$	-	$	-
	Residential mortgage-backed securities		-		-		-		-		-		-
	Commercial mortgage-backed securities		-		-		-		-		-		-
	Foreign government & agency securities		-		-		-		-		-		-
	U.S. states and political subdivision securities		-		-		-		-		-		-
	U.S. treasury and agency securities		-		-		-		-		-		-
	Corporate securities		-		-		-		-		-		-
Total available-for-sale fixed maturity securities			-		-		-		-		-		-
Trading fixed maturity securities:
	Asset-backed securities		-		-		44,458		(35,368)		35,368		(44,458)
	Residential mortgage-backed securities		-		-		79,192		(36,288)		36,288		(79,192)
	Commercial mortgage-backed securities		-		-		696		-		-		(696)
	Foreign government & agency securities		-		-		-		-		-		-
	U.S. states and political subdivision securities		-		-		-		-		-		-
	U.S. treasury and agency securities		-		(1,346)		-		-		1,346		-
	Corporate securities		-		-		32,579		(64,441)		64,441		(32,579)
Total trading fixed maturity securities			-		(1,346)		156,925		(136,097)		137,443		(156,925)
Derivative instruments- receivable:
	Interest rate contracts		-		-		-		-		-		-
	Foreign currency contracts		-		-		-		-		-		-
	Equity contracts		-		-		-		-		-		-
	Credit contracts		-		-		-		-		-		-
	Futures contracts		-		-		-		-		-		-
Total derivative instruments-receivable			-		-		-		-		-		-
Separate account assets:
	Mutual fund investments		-		-		-		-		-		-
	Equity investments		-		-		-		-		-		-
	Fixed income investments		-		-		116,220		-		-		(116,220)
	Alternative investments		14,221		-		2,968		(555)		555		(17,189)
	Other investments		4,108		-		-		-		-		(4,108)
Total separate account assets			18,329		-		119,188		(555)		555		(137,517)
Total assets measured at fair value on a
recurring basis		$	18,329	$	(1,346)	$	276,113	$	(136,652)	$	137,998	$	(294,442)

The Company did not change the categorization of its financial instruments during the year ended December 31, 2010.  The transfers into (out of) Level 2 and Level 3 were primarily due to changes in the level of observability of inputs used to price these securities.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

5. FAIR VALUE MEASUREMENT (CONTINUED)

Financial Instruments Not Considered at Fair Value

FASB ASC Topic 825 requires disclosure of the fair value of certain financial instruments including those that are not carried at fair value. FASB ASC Topic 825 also excludes certain insurance liabilities and other non-financial instruments from its disclosure requirements.  The fair value amounts presented herein do not include the expected interest margin (interest earnings over interest credited) to be earned in the future on investment-type products or other intangible items.  Accordingly, the aggregate fair value amounts presented herein do not necessarily represent the underlying value to the Company.  Likewise, care should be exercised in deriving conclusions about the Company's business or financial condition based on the fair value information presented herein.

The following table presents the carrying value and estimated fair value of the Company’s financial instruments that are not carried at fair value at:

			December 31, 2011			December 31, 2010
		Carrying		Estimated		Carrying		Estimated
		Amount		Fair Value		Amount		Fair Value
Financial assets:
	Mortgage loans	$	1,457,356	$	1,588,473	$	1,737,528	$	1,811,567
	Policy loans	$	603,371	$	651,876	$	717,408	$	859,668
Financial liabilities:
	Contractholder deposit funds and other policy liabilities	$	9,503,446	$	9,183,946	$	11,944,058	$	11,490,525
	Debt payable to affiliates	$	683,000	$	683,503	$	783,000	$	783,000

The following methods and assumptions were used by the Company in determining the estimated fair value of the above financial instruments:

Interest receivable on the above financial instruments is stated at carrying value which approximates fair value.

Mortgage loans:  The fair values of mortgage loans are estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Policy loans:  The fair value of policy loans is determined by estimating future policy loan cash flows and discounting the cash flows at a current market interest rate.

Contractholder deposit funds and other policy liabilities:  The fair values of the Company’s general account insurance reserves and contractholder deposits under investment-type contracts (e.g., insurance, annuity and pension contracts that do not involve mortality or morbidity risks) are estimated using discounted cash flow analyses or surrender values based on interest rates currently being offered for similar contracts with maturities consistent with those remaining for all contracts being valued.  Those contracts that are deemed to have short-term guarantees have a carrying amount equal to the estimated market value.  The fair values of other deposits with future maturity dates are estimated using discounted cash flows.

Debt payable to affiliates:  The fair value of notes payable and other borrowings is based on future cash flows discounted at the stated interest rate, considering all appropriate terms of the related agreements.  Due to certain provisions included in such agreements, whereby the issuer of most of the notes has the ability to call the notes at par with appropriate approvals, the fair value is equal to par value.  The note, whose issuer does not have the ability to call at par, is reported at fair value.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

6. NET REALIZED INVESTMENT GAINS (LOSSES)

The Company’s net realized investment gains (losses) on available-for-sale fixed maturity securities and other investments, excluding OTTI losses, consisted of the following for the years ended December 31:

	2011		2010		2009
Fixed maturity securities	$	62,361	$	34,409	$	2,912
Mortgage loans		(25,573)		(10,327)		(43,148)
Real estate		(24)		2		-
Other invested assets		(136)		(170)		1,289
Sales of previously impaired assets		2,950		3,037		2,272
Net realized investment gains (losses) from   continuing operations	$	39,578	$	26,951	$	(36,675)
Net realized investment gains from discontinued     operations	$	-	$	-	$	-

7. NET INVESTMENT INCOME

The Company’s net investment income consisted of the following for the years ended December 31:

		2011		2010		2009
Trading fixed maturity securities:
	Interest and other income	$	613,479	$	713,960	$	822,599
	Change in fair value and net realized gains		91,919		606,946		1,736,975
Mortgage loans			91,920		108,555		121,531
Real estate			8,455		8,645		7,735
Policy loans			(88,548)		45,054		44,862
Income ceded under funds withheld reinsurance			25,213		(75,643)		(139,168)
Other			5,916		4,150		3,948
Gross investment income			748,354		1,411,667		2,598,482
Less: Investment expenses			20,726		21,457		16,175
Net investment income from continuing operations		$	727,628	$	1,390,210	$	2,582,307
Net investment loss from discontinued operations		$	-	$	-	$	(24,956)

Ceded investment income on funds-withheld reinsurance portfolios is included as a component of net investment income and is accounted for consistent with the policies discussed in Note 1 of the Company’s consolidated financial statements.  Net investment income ceded and interest earned on policy loans during the year ended December 31, 2011 were decreased by a $113.3 million prior-year adjustment related to the interest rate on policy loans.  Refer to the Wealth Management section in Note 8 to the Company’s consolidated financial statements for further discussion of this adjustment.  The ceded investment income relates to the funds-withheld reinsurance agreements between the Company and certain affiliates, which is further discussed in Note 8 to the Company’s consolidated financial statements.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

8. REINSURANCE

Reinsurance ceded contracts do not relieve the Company from its obligations to its policyholders.  The Company remains liable to its policyholders for the portion reinsured to the extent that any reinsurer does not meet the obligations assumed under the reinsurance agreement.  To minimize its exposure to significant losses from reinsurer insolvencies, the Company regularly evaluates the financial condition of its reinsurers and monitors concentrations of credit risk.  Management believes that any liability from this contingency is unlikely.

The effects of the Company’s reinsurance agreements in the consolidated statements of operations were as follows:

		For the Years Ended December 31,
		2011		2010		2009
Revenues:
Premiums and annuity considerations:
	Direct	$	109,569	$	94,869	$	86,671
	Assumed		36,169		47,616		52,856
	Ceded		(8,318)		(6,310)		(5,281)
Net premiums and annuity considerations from continuing operations		$	137,420	$	136,175	$	134,246
Net premiums and annuity considerations related to discontinued operations		$	-	$	-	$	-
Net investment income:
	Direct	$	702,415	$	1,465,853	$	2,721,475
	Assumed		-		-		-
	Ceded (1)		25,213		(75,643)		(139,168)
Net investment income from continuing operations		$	727,628	$	1,390,210	$	2,582,307
Net investment loss related to discontinued operations		$	-	$	-	$	(24,956)
Fee and other income:
	Direct	$	743,866	$	676,670	$	581,868
	Assumed		10		-		-
	Ceded		(135,465)		(165,643)		(196,032)
Net fee and other income from continuing operations		$	608,411	$	511,027	$	385,836
Net fee and other income related to discontinued operations		$	-	$	-	$	(49,947)

(1)  Investment income earned (direct) and ceded during the year ended December 31, 2011 includes a decrease of $113.3 million due to an interest rate adjustment.  This adjustment did not have any impact on net investment income.  Refer to the Wealth Management section of this Note 8 for further details.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

8. REINSURANCE (CONTINUED)

		For the Years Ended December 31,
		2011		2010		2009
Benefits and expenses:
Interest credited:
	Direct	$	386,809	$	491,090	$	472,275
	Assumed		6,260		6,879		7,801
	Ceded (2)		31,139		(96,121)		(94,308)
Net interest credited from continuing operations		$	424,208	$	401,848	$	385,768
Net interest credited related to discontinued operations		$	-	$	-	$	34,216
Policyowner benefits:
	Direct	$	236,232	$	409,907	$	265,021
	Assumed		22,915		26,189		38,313
	Ceded		(124,735)		(196,302)		(192,895)
Net policyowner benefits from continuing operations		$	134,412	$	239,794	$	110,439
Net policyowner benefits related to discontinued operations		$	-	$	-	$	13,267
Other operating expenses:
	Direct	$	355,928	$	333,850	$	282,502
	Assumed		3,314		5,079		6,129
	Ceded		(8,917)		(20,759)		(40,475)
Net other operating expenses from continuing operations		$	350,325	$	318,170	$	248,156
Net other operating expenses related to discontinued operations		$	-	$	-	$	10,436

(2) Interest credited ceded during the year ended December 31, 2011 includes a $113.3 million interest rate adjustment decreasing ceded interest credited.  Refer to the Wealth Management section of this Note 8 for further details.

A brief discussion of the Company’s significant reinsurance agreements by business segment follows.  Refer to Note 16 for additional information regarding the Company’s business segments.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

8. REINSURANCE (CONTINUED)

Wealth Management Segment

The Wealth Management segment manages a closed block of SPWLinsurance policies, a retirement-oriented tax-advantaged life insurance product.  The Company discontinued sales of the SPWL product in response to certain tax law changes in the 1980s.  The Company had SPWL policyholder balances of $1.3 billion and $1.5 billion at December 31, 2011 and 2010, respectively.  This entire block of business is reinsured on a funds-withheld coinsurance basis with SLOC, an affiliate.  Pursuant to this agreement, the Company held the following assets and liabilities at December 31:

	2011		2010
Assets
Reinsurance receivables	$	1,312,989	$	1,466,247
Liabilities
Contractholder deposit funds and other policy liabilities		1,342,628		1,478,459
Future contract and policy benefits		2,160		1,823
Reinsurance payable	$	1,410,748	$	1,555,336

The funds-withheld assets of $1.4 billion and $1.6 billion at December 31, 2011 and  2010, respectively, are comprised of fixed maturity securities, mortgage loans, policy loans, derivative instruments, and cash and cash equivalents that are managed by the Company.  The fair value of the embedded derivative increased contractholder deposit funds and other policy liabilities by $31.8 million and $14.0 million at December 31, 2011 and 2010, respectively.  The change in the fair value of this embedded derivative decreased derivative income by $17.8 million, $24.6 million, and $120.0 million for the years ended December 31, 2011, 2010 and 2009, respectively.

By reinsuring the SPWL product, the Company increased (decreased) net investment income by $48.5 million, $(49.9) million and $(126.6) million for the years ended December 31, 2011, 2010 and 2009, respectively.  The Company also increased (decreased) interest credited by $55.4 million, $(71.5) million and $(73.9) million for the years ended December 31, 2011, 2010 and 2009, respectively.

The net investment income ceded for the year ended December 31, 2011 was decreased by $113.3 million due to an interest rate adjustment processed during the year.  The interest credited ceded for year ended December 31, 2011 was decreased by $113.3 million due to policy reinstatements and interest rate adjustments processed during the year.  The adjustment was recorded to correct the Company’s prior year policy loan balances that were overstated by $113.3 million due to inaccurate interest rates applied to certain SPWL policies’ loan balances.  The adjustment did not have any impact on the interest credited and net investment income, net of reinsurances, reported in the Company’s consolidated statement of operations due to the 100% funds-withheld reinsurance agreement with SLOC noted above.  The adjustment also resulted in a $113.3 million decrease in policy loans, contractholder deposit funds and other policy liabilities, reinsurance receivable, and reinsurance payable in the Company’s consolidated balance sheet at December 31, 2011.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

8. REINSURANCE (CONTINUED)

Individual Protection Segment

The following are the Company’s significant reinsurance agreements that impact the Individual Protection segment.

On February 11, 2009, the Company received regulatory approval and entered into a reinsurance agreement with BarbCo 3, an affiliate, to cede all of the risks associated with certain in-force corporate and bank-owned variable universal life and private placement variable universal life policies on a combination coinsurance, coinsurance with funds-withheld and a modified coinsurance basis.

Effective January 1, 2010, the Company and BarbCo 3 amended the agreement to include coverage of certain corporate and bank-owned variable universal life and private placement variable universal life insurance cases sold between December 31, 2009 and March 31, 2010, inclusive.  Reinsurance coverage continued for all cases sold prior to April 1, 2010.  However, cases sold on or after April 1, 2010 have not been reinsured.  This amendment also enabled the Company to discontinue reinsuring a portion of the covered business that was previously reinsured on a modified coinsurance basis, effective April 1, 2010.  The discontinuance of the business reinsured on a modified coinsurance basis did not have a material impact on the Company’s consolidated financial statements.

At the inception of the transaction, BarbCo 3 paid an initial ceding commission to the Company of $41.5 million and the Company recorded a reinsurance payable and related reinsurance receivable of $370.7 million and $329.2 million, respectively.  The reinsurance payable included a funds-withheld liability of $247.9 million and a deferred gain of $122.8 million.  Pursuant to this agreement, the Company held the following assets and liabilities at:

	December 31,		December 31,
	2011		2010
Assets
Reinsurance receivable	$	451,397	$	419,684
Liabilities
Contractholder deposit funds and other policy liabilities		507,606		465,035
Reinsurance payable	$	429,914	$	432,160

Reinsurance payable includes a funds-withheld liability of $324.3 million and $326.9 million at December 31, 2011 and 2010, respectively, and a deferred gain of $105.6 million and $105.3 million at December 31, 2011 and 2010, respectively.  The funds-withheld assets are managed by the Company and comprised of fixed maturity securities, policy loans, equity securities, cash and cash equivalents and related accrued income, totaling $332.5 million and $357.2 million at December 31, 2011 and 2010, respectively.  The funds-withheld coinsurance agreement gives rise to an embedded derivative which is required to be separated from the host reinsurance contract.  At December 31, 2011 and 2010, the fair value of the embedded derivative increased contractholder deposit funds and other policy liabilities by $34.1 million and $24.1 million, respectively.

The change in fair value of the embedded derivative (decreased) increased derivative income by $(10.0) million and $2.2 million for the years ended December 31, 2011 and 2010, respectively.  In addition, during the years ended December 31, 2011 and 2010, the reinsurance agreement reduced revenues by $53.2 million and $24.3 million, respectively, and decreased expenses by $31.3 million and $56.2 million, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

8. REINSURANCE (CONTINUED)

Individual Protection Segment (continued)

The Company’s subsidiary, SLNY, has a funds-withheld reinsurance agreement with SLOC under which SLOC funds a portion of the statutory reserves (“AXXX reserves”) required by New York Regulation 147, which is substantially similar to Actuarial Guideline 38, as adopted by the NAIC, attributable to certain UL policies sold by SLNY.  Under this agreement SLNY ceded, and SLOC assumed, on a funds-withheld 90% coinsurance basis certain in-force policies at December 31, 2007.  Pursuant to this agreement, SLNY held the following assets and liabilities at December 31:

	2011		2010
Assets
Reinsurance receivable	$	159,649	$	133,088
Liabilities
Contractholder deposit funds and other policy liabilities		142,146		104,795
Future contract and policy benefits		33,138		21,662
Reinsurance payable	$	238,180	$	225,387

Reinsurance payable includes a funds-withheld liability of $194.3 million and $172.8 million at December 31, 2011 and 2010, respectively, and a deferred gain of $43.7 million and $52.6 million at December 31, 2011 and 2010, respectively.  The funds-withheld assets are managed by the Company and are comprised of trading fixed maturity securities, policy loans, equity securities, mortgage loans and related accrued income, totaling $191.2 million and $176.7 million at December 31, 2011 and 2010, respectively.  The coinsurance agreement with funds-withheld gives rise to an embedded derivative which is required to be separated from the host reinsurance contract.  The fair value of the embedded derivative increased contractholder deposit funds and other policy liabilities by $31.2 million and $3.2 million at December 31, 2011 and 2010, respectively.

The change in the fair value of this embedded derivative decreased derivative income by $28.1 million, $3.9 million and $11.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.  In addition, the activities related to the reinsurance agreement have decreased revenues by $48.8 million, $31.0 million and $29.0 million, and decreased expenses by $26.8 million, $28.0 million and $20.9 million for the years ended December 31, 2011, 2010 and 2009, respectively.

The Company has other reinsurance agreements with SLOC and several unrelated companies, which provide reinsurance for portions of the net-amount-at-risk under certain individual variable universal life, individual private placement variable universal life, bank owned life insurance (“BOLI”) and corporate owned life insurance (“COLI”) policies.  These amounts are reinsured on a monthly renewable term, a yearly renewable term or a modified coinsurance basis.  These other agreements decreased revenues by approximately $91.7 million, $134.7 million and $173.9 million and reduced expenses by approximately $79.9 million, $140.1 million and $168.5 million for the years ended December 31, 2011, 2010 and 2009, respectively.

Group Protection Segment

SLNY has several agreements with unrelated companies whereby the unrelated companies reinsure the mortality and morbidity risks of certain of SLNY’s group contracts.

SLNY also has a reinsurance agreement, effective May 31, 2007, to assume the net risks of SLHIC’s New York issued contracts.  At December 31, 2011 and 2010, SLNY held policyholder liabilities of $25.7 million and $28.6 million, respectively, related to this agreement.  In addition, the reinsurance agreement increased revenues by $36.2 million, $47.6 million and $52.9 million for the years ended December 31, 2011, 2010 and 2009, respectively, and increased expenses by $26.2 million, $31.2 million and $44.3 million for the years ended December 31, 2011, 2010 and 2009, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

9.  RETIREMENT PLANS

Effective December 31, 2009, the Company transferred all of its employees to an affiliate, Sun Life Services, with the exception of 28 employees who were transferred to SLFD, another affiliate.  As a result of this transaction, the Company transferred pension and other employee benefit liabilities, accumulated other comprehensive income related to pension and other postretirement plans, and cash to Sun Life Services.  Concurrent with this transaction, Sun Life Services became the sponsor of the retirement plans described below.  The employee transfer did not materially change the provisions of the related retirement plans.  The annual cost of these benefits to the Company is allocated and charged to the Company in a manner consistent with the allocation of employee compensation expenses.

Prior to the December 31, 2009 employee transfer, the Company sponsored two non-contributory defined benefit pension plans for its employees and certain affiliated employees.  These plans were the staff qualified pension plan (“staff pension plan”) and the staff nonqualified pension plan (“UBF plan”) (collectively, the “Pension Plans”).  Expenses were allocated to participating companies based in a manner consistent with the allocation of employee compensation expenses.  The Company's funding policies for the staff pension plan was to contribute amounts which at least satisfy the minimum amount required by the Employee Retirement Income Security Act of 1974 (“ERISA”).  Most pension plan assets consist of separate accounts of SLOC or other insurance company contracts.

Prior to the December 31, 2009 employee transfer, the Company sponsored a postretirement benefit plan for its employees and certain affiliated employees providing certain health, dental and life insurance benefits for retired employees and dependents (the “Other Post-Retirement Benefit Plan”).  Expenses were allocated to participating companies based on the number of participants.  Substantially all employees of the participating companies may become eligible for these benefits if they reach normal retirement age while working for the Company, or retire early upon satisfying an alternate age plus service condition.  Life insurance benefits are generally set at a fixed amount.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

9. RETIREMENT PLANS (CONTINUED)

The following tables set forth the change in the Pension Plans’ and the Other Post-Retirement Benefit Plan’s projected benefit obligations and assets, as well as information on the plans’ funded status at December 31, 2009:

		Pension Plans		Other Post Retirement Benefit Plan
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	270,902	$	49,112
Effect of eliminating early measurement date		-		-
Service cost		2,597		1,754
Interest cost		17,434		3,218
Actuarial loss		17,861		2,344
Benefits paid		(11,066)		(2,095)
Plan amendments		-		(803)
Federal subsidy		-		121
Transfer to Sun Life Services		(297,728)		(53,651)
Projected benefit obligation at end of year	$	-	$	-

		Pension Plans		Other Post Retirement Benefit Plan
Change in fair value of plan assets:
Fair value of plan assets at beginning of year	$	195,511	$	-
Effect of eliminating early measurement date		-		-
Employer contributions		6,500		2,095
Other		1,547		-
Actual return on plan assets		49,375		-
Benefits paid		(11,066)		(2,095)
Transfer to Sun Life Services		(241,867)		-
Fair value of plan assets at end of year	$	-	$	-

		Pension Plans		Other Post Retirement Benefit Plan
Information on the funded status of the plan:
Funded status	$	-	$	-
Accrued benefit cost	$	-	$	-

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

9. RETIREMENT PLANS (CONTINUED)

The following table sets forth the components of the net periodic benefit cost and the Company’s share of net periodic benefit costs related to the Pension Plans and the Other Post-Retirement Benefit Plan for the year ended December 31:

	Pension Plans		Other Post Retirement Benefit Plan
	2009		2009
Components of net periodic cost (benefit):
Service cost	$	2,597	$	1,754
Interest cost		17,434		3,218
Expected return on plan assets		(15,111)		-
Amortization of transition obligation asset		(2,093)		-
Amortization of prior service cost (benefit)		337		(529)
Recognized net actuarial loss		2,782		382
Net periodic cost	$	5,946	$	4,825
Company's share of net periodic cost	$	5,946	$	3,926

For the year ended December 31, 2011, Sun Life Services allocated costs to the Company of $1.2 million and $4.4 million for the Pension Plans and Other Post-Retirement Benefit Plan, respectively.  For the year ended December 31, 2010, Sun Life Services allocated costs to the Company of $3.1 million and $4.4 million for the Pension Plans and Other Post-Retirement Benefit Plan, respectively.

The following table shows changes in the Company’s AOCI related to the Pension Plans and the Other Post-Retirement Benefit Plan for the following years:

	Pension Plans		Other Post Retirement Benefit Plan
	2009		2009
Net actuarial (gain) loss arising during the year	$	(16,402)	$	2,344
Net actuarial (loss) gain recognized during the year		(2,782)		(382)
Prior service cost arising during the year		-		(803)
Prior service cost recognized during the year		(337)		529
Transition asset recognized during the year		2,093		-
Transition asset arising during the year		-		-
Total recognized in AOCI		(17,428)		1,688
Tax effect		6,100		(591)
Total recognized in AOCI, net of tax	$	(11,328)	$	1,097
Total recognized in net periodic (benefit) cost and      other comprehensive (loss) income, net of tax	$	(7,463)	$	3,648

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

9. RETIREMENT PLANS (CONTINUED)

Effective December 31, 2009, the Company transferred to Sun Life Services the following AOCI related to the Pension Plans and the Other Post-Retirement Benefit Plan:

	Pension Plans		Other Post  Retirement Benefit Plan		Total
Transfer of actuarial loss to affiliate	$	(67,343)	$	(7,525)	$	(74,868)
Transfer of prior service (cost)/credit to affiliate		(3,772)		4,164		392
Transfer of transition asset to affiliate		1,495		-		1,495
Total AOCI transferred to affiliate		(69,620)		(3,361)		(72,981)
Tax effect		24,367		1,176		25,543
Total AOCI, net of tax, transferred to affiliate	$	(45,253)	$	(2,185)	$	(47,438)

Assumptions

Weighted average assumptions used to determine benefit obligations for the Pension Plans and the Other Post-Retirement Benefit Plan were as follows:

	Pension Plans	Other Post Retirement Benefit Plan
	2009	2009
Discount rate	6.10%	6.10%
Rate of compensation increase	3.75%	n/a

Weighted average assumptions used to determine net (benefit) cost for the Pension Plans and the Other Post-Retirement Benefit Plan were as follows:

	Pension Plans	Other Post Retirement Benefit Plan
	2009	2009
Discount rate	6.50%	6.50%
Expected long term return on plan assets	7.75%	n/a
Rate of compensation increase	3.75%	n/a

The expected long-term rate of return on plan assets is calculated by taking the weighted average return expectations based on the long-term return expectations and investment strategy, adjusted for the impact of rebalancing.  The difference between actual and expected returns is recognized as a component of unrecognized gains/losses, which is recognized over the average remaining lifetime of inactive participants or the average remaining service lifetime of active participants in the plan, as provided by accounting standards.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

9. RETIREMENT PLANS (CONTINUED)

Cash Flow

The Company contributed $6.5 million and $1.5 million to the staff pension plan and the UBF plan in 2009, respectively.

Savings and Investment Plan

Effective December 31, 2009, Sun Life Services sponsors a savings plan that qualifies under Section 401(k) of the Internal Revenue Code (the“401(k) Plan”) and in which substantially all employees of at least age 21 at date of hire are eligible to participate.  Prior to December 31, 2009, the Company sponsored the 401(k) Plan.  Employee contributions, up to specified amounts, are matched by Sun Life Services under the 401(k) Plan.

The 401(k) Plan also includes a retirement investment account that qualifies under Section 401(a) of the Internal Revenue Code (the “RIA”).  Sun Life Services contributes a percentage of the participant’s eligible compensation determined under the following chart based on the sum of the participant’s age and service on January 1 of the applicable plan year.

Age Plus Service	Company Contribution
Less than 40	3%
At least 40 but less than 55	5%
At least 55	7%

For RIA participants who were at least age 40 on January 1, 2006 and whose age plus service on January 1, 2006 equaled or exceeded 45, the Company contributed to the RIA from January 1, 2006 through December 31, 2009, and Sun Life Services contributes to the RIA from January 1, 2010 through December 31, 2015, a percentage of the participant’s eligible compensation determined under the following chart based on the participant’s age and service on January 1, 2006.

	Service
Age	Less than 5 years	5 or more years
At least 40 but less than 43	3.0%	5.0%
At least 43 but less than 45	3.5%	5.5%
At least 45	4.5%	6.5%

The amount of the 2009 employer contributions under the 401(k) Plan for the Company and its affiliates was $25.2 million.  Amounts are allocated to affiliates based upon their respective employees’ contributions.  The Company’s portion of the expense was $14.2 million for the year ended December 31, 2009.  For the years ended December 31, 2011 and 2010, Sun Life Services allocated $16.3 million and $17.4 million to the Company, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

10. FEDERAL INCOME TAXES

The Company accounts for current and deferred income taxes in the manner prescribed by FASB ASC Topic 740.  A summary of the components of income tax (benefit) expense in the consolidated statements of operations for the years ended December 31 is as follows:

	2011		2010		2009
Income tax (benefit) expense:
Current	$	(30,769)	$	(78,166)	$	40,092
Deferred		(49,932)		149,377		295,557
Total income tax (benefit) expense related to
continuing operations	$	(80,701)	$	71,211	$	335,649
Total income tax expense related to
discontinued operations	$	-	$	-	$	40,690

Federal income taxes attributable to the Company’s consolidated operations are different from the amounts determined by multiplying income before federal income taxes by the expected federal income tax rate of 35%.  The following is a summary of the differences between the expected income tax (benefit) expense at the prescribed U.S. federal statutory income tax rate and the total amount of income tax (benefit) expense that the Company has recorded.

		2011		2010		2009
Expected federal income tax expense	$	(64,336)	$	71,920	$	424,261
Low income housing tax credits		(1,885)		(2,028)		(3,880)
Separate account dividends received deduction		(14,702)		(14,702)		(16,232)
Prior year adjustments/settlements		(968)		5,243		1,320
Valuation allowance-capital losses		-		-		(69,670)
Goodwill impairment		2,450		11,559		-
Adjustments to tax contingency reserves		-		305		1,605
Other items		(1,265)		(1,358)		(1,949)
Federal income tax (benefit) expense		(80,706)		70,939		335,455
State income tax expense		5		272		194
Total income tax (benefit) expense related to
continuing operations	$	(80,701)	$	71,211	$	335,649
Total income tax expense related to
discontinued operations	$	-	$	-	$	40,690

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

10. FEDERAL INCOME TAXES (CONTINUED)

The net deferred tax asset represents the tax effects of temporary differences between the carrying amounts of assets and liabilities used for financial reporting purposes and the amounts used for income tax purposes.  The components of the Company’s net deferred tax asset as of December 31 were as follows:

		2011		2010
Deferred tax assets:
Actuarial liabilities	$	689,286	$	155,285
Tax loss carryforwards		251,591		347,172
Investments, net		79,417		188,110
Goodwill and other impairments		34,573		47,303
Other		15,897		74,218
Gross deferred tax assets		1,070,764		812,088
Valuation allowance		-		-
Total deferred tax assets		1,070,764		812,088
Deferred tax liabilities:
Deferred policy acquisition costs		(622,388)		(417,791)
Total deferred tax liabilities		(622,388)		(417,791)
Net deferred tax asset	$	448,376	$	394,297

Under the applicable asset and liability method for recording deferred income taxes, deferred taxes are recognized when assets and liabilities have different values for financial statement and tax reporting purposes, using enacted tax rates in effect for the year in which the differences are expected to reverse.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company’s net deferred tax asset at December 31, 2011 and 2010 was comprised of gross deferred tax assets and gross deferred tax liabilities.  The gross deferred tax asset was primarily related to unrealized investment security losses, actuarial liabilities and net operating loss (“NOL”) carryforwards, as well as a capital loss carryforward generated in 2009.  At December 31, 2011, the Company had $698.9 million of NOL carryforwards and $20.0 million of capital loss carryforward.  At December 31, 2010, the Company had $958.2 million of NOL carryforwards and $33.7 million of capital loss carryforward.  If not utilized, the NOL carryforwards will begin to expire in 2023 and the capital loss carryforward will expire in 2014.  The Company’s net deferred tax asset was $448.4 million and $394.3 million at December 31, 2011 and 2010, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

10. FEDERAL INCOME TAXES (CONTINUED)

The Company performs the required recoverability (realizability) test in terms of its ability to realize its recorded net deferred tax asset.  In making this determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations.  In projecting future taxable income and sources of capital gains, the Company utilizes historical and current operating results and incorporates assumptions including the amount of future federal and state pre-tax operating income, the reversal of temporary differences, and the implementation of prudent and feasible tax planning strategies.

During the year ended December 31, 2011, no valuation allowance was recorded against the deferred tax asset for investment losses.  The Company believes that it is more likely than not that the deferred tax asset related to impairment losses will be realized due to tax planning strategies related to certain mortgage-backed securities, the Company’s intent and ability to hold the related investment securities to maturity, and other tax planning strategies.  For the remaining unrealized losses, the Company believes that it is more likely than not that the related deferred tax asset will be realized due to the Company’s intent and ability to hold the related investment securities to recovery of amortized cost.

FASB ASC Topic 740 establishes a comprehensive reporting model which addresses how a business entity should recognize, measure, present and disclose uncertain tax positions that the entity has taken or plans to take on a tax return.

The liability for unrecognized tax benefits (“UTBs”) related to permanent and temporary tax adjustments, exclusive of interest, was $32.9 million, $31.2 million and $42.0 million at December 31, 2011, 2010 and 2009, respectively.  Of the $32.9 million, $1.6 million represents the amount of UTBs that, if recognized, would favorably affect the Company’s effective income tax rate in future periods, exclusive of any related interest.

The net increase (decreases) in the tax liability for UTBs of $1.7 million, $(10.8) million and $(8.7) million in the years ended December 31, 2011, 2010 and 2009, respectively, resulted from the following:

	2011		2010		2009
Balance at January 1	$	31,217	$	41,989	$	50,679
Gross increases related to tax positions in prior years		13,855		23,214		7,950
Gross decreases related to tax positions in prior years		(4,472)		(16,170)		(16,640)
Settlements		(7,659)		(20,187)		-
Close of tax examinations/statutes of limitations		-		2,371		-
Balance at December 31	$	32,941	$	31,217	$	41,989

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

10. FEDERAL INCOME TAXES (CONTINUED)

The Company has elected to recognize interest and penalties accrued related to UTBs in interest expense (income).  During the years ended December 31, 2011, 2010 and 2009, the Company recognized $2.6 million, $6.4 million and $(9.0) million, respectively, in gross interest expense (income) related to UTBs.  The Company had approximately $9.2 million and $6.6 million of interest accrued at December 31, 2011 and 2010, respectively.  During 2010, the Company settled interest assessments of $4.6 million with the Internal Revenue Service (the “IRS”) for the 2001 and 2002 tax years.  The Company did not accrue any penalties.

While the Company expects the amount of unrecognized tax liabilities to change in the next twelve months, it does not expect the change to have a significant impact on its results of operations or financial position.

The Company files federal income tax returns and income tax returns in various state and local jurisdictions.  With few exceptions, the Company is no longer subject to examinations by the tax authorities in these jurisdictions for tax years before 2003.  In August 2006, the IRS issued a Revenue Agent’s Report for the Company’s 2001 and 2002 tax years.  The Company disagreed with some of the proposed adjustments, filed a protest, and the case was assigned to the Appeals division of the IRS (“Appeals”).  A settlement was reached and formally approved by the Company on January 11, 2010.   The effects of the settlement are in line with previous expectations and had no material impact on the Company’s consolidated financial statements.

On August 4, 2011, the IRS held an Opening Conference with the Company for the audit of the tax years 2007-2009.  The Company is in the process of responding to the IRS requests for information. The Company also provided a disclosure letter to the IRS on September 21, 2011, informing the IRS of potential issues in the tax years under audit.

On January 6, 2011, the IRS issued a Revenue Agent’s Report for the Company for tax years 2005 and 2006.  The Company disagrees with some of the issues and is in the process of filing a protest.  While the final outcome of the appeal and ongoing tax examinations is not determinable, the Company has adequate liabilities accrued and does not believe that any adjustments would be material to its financial position.

In October 2008, the IRS issued a Revenue Agent’s Report for the Company’s tax years 2003 and 2004.  The Company disagreed with some of the adjustments and filed a protest, which was assigned to Appeals in 2009.  On May 27, 2010, the IRS held an opening conference for the 2003 and 2004 Appeals.  The Company is involved in discussions with the IRS to reach a resolution.

The Company will file a consolidated federal income tax return with SLC – U.S. Ops Holdings for the  year ended December 31, 2011, as the Company did for the years ended December 31, 2010 and 2009.

Effective December 31, 2009, the Company paid a dividend of all of the issued and outstanding common stock of Sun Life Vermont to the Parent.  Sun Life Vermont continues to be included in the consolidated federal income tax return of the Parent after 2009.

The Company makes or receives payments under certain tax sharing agreements with SLC – U.S. Ops Holdings.  Under these agreements, such payments are determined based upon the Company’s stand-alone taxable income (as if it were filing as a separate company) and based upon the SLC – U.S. Ops Holdings consolidated group’s overall taxable position.  Under the terms of the tax sharing agreements, deferred tax assets for tax attributes are realized by the Company when the tax attributes are utilized by the consolidated group.  The Company received income tax refunds of $21.0 million and $107.1 million in 2011 and 2010, respectively, and made income tax payments of $21.1 million in 2009.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

11. LIABILITY FOR UNPAID CLAIMS AND CLAIMS ADJUSTMENT EXPENSES

Activity in the liability for unpaid claims and claims adjustment expenses, which is related to the Company’s and its subsidiaries’ group life, group disability insurance, group dental and group stop loss products is summarized below:

			2011		2010		2009
Balance at January 1		$	76,181	$	72,953	$	71,316
Less: reinsurance recoverable			(7,316)		(5,710)		(5,347)
Net balance at January 1			68,865		67,243		65,969
Incurred related to:
	Current year		73,573		83,384		86,905
	Prior years		468		(1,823)		(5,817)
Total incurred			74,041		81,561		81,088
Paid losses related to:
	Current year		(46,861)		(54,312)		(58,598)
	Prior years		(22,618)		(25,627)		(21,216)
Total paid			(69,479)		(79,939)		(79,814)
Balance at December 31			80,594		76,181		72,953
Less: reinsurance recoverable			(7,167)		(7,316)		(5,710)
Net balance at December 31		$	73,427	$	68,865	$	67,243

The Company regularly updates its estimates of liabilities for unpaid claims and claims adjustment expenses as new information becomes available and events occur which may impact the resolution of unsettled claims.  Changes in prior estimates are recorded in results of operations in the year such changes are made.  As a result of changes in estimates of insured events in prior years, the liability for unpaid claims and claims adjustment expenses increased (decreased) by $0.5 million, $(1.8) million and $(5.8) million, during the years ended December 31, 2011, 2010 and 2009, respectively.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

12. LIABILITIES FOR CONTRACT GUARANTEES

The Company offers various guarantees to certain policyholders, including a return of no less than (a) total deposits made on the contract, adjusted for any customer withdrawals, (b) total deposits made on the contract, adjusted for any customer withdrawals, plus a minimum return, or (c) the highest contract value on a specified anniversary date, minus any customer withdrawals following the contract anniversary.  These guarantees include benefits that are payable in the event of death, upon annuitization, or at specified dates during the accumulation period of an annuity.

The table below represents information regarding the Company’s variable annuity contracts with guarantees at December 31, 2011:

Benefit Type	Account Balance		Net Amount at Risk (1)		Average Attained Age
Minimum death	$	20,437,429	$	2,074,633	66.1
Minimum income	$	134,076	$	64,600	63.0
Minimum accumulation or withdrawal	$	13,633,969	$	841,197	63.7

The table below represents information regarding the Company’s variable annuity contracts with guarantees at December 31, 2010:

Benefit Type	Account Balance		Net Amount at Risk (1)		Average Attained Age
Minimum death	$	20,061,043	$	1,742,139	66.0
Minimum income	$	179,878	$	59,322	62.2
Minimum accumulation or withdrawal	$	12,233,731	$	152,571	63.2

(1)Net amount at risk represents the excess of the guaranteed benefits over account balance for contracts that have an account value less than the guarantee.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

12. LIABILITIES FOR CONTRACT GUARANTEES (CONTINUED)

The following roll-forward summarizes the change in reserve for the Company’s GMDBs and GMIBs for the year ended December 31, 2011:

		Guaranteed Minimum Death Benefit		Guaranteed Minimum Income Benefit		Total
Balance at January 1, 2011		$	123,605	$	14,630	$	138,235
Benefit Ratio Change /
	Assumption Changes		23,491		4,443		27,934
Incurred guaranteed benefits			27,116		1,257		28,373
Paid guaranteed benefits			(39,513)		(1,155)		(40,668)
Interest			9,072		916		9,988
Balance at December 31, 2011		$	143,771	$	20,091	$	163,862

The following roll-forward summarizes the change in reserve for the Company’s GMDBs and GMIBs for the year ended December 31, 2010:

		Guaranteed Minimum Death Benefit		Guaranteed Minimum Income Benefit		Total
Balance at January 1, 2010		$	96,267	$	10,058	$	106,325
Benefit Ratio Change /
	Assumption Changes		28,724		6,519		35,243
Incurred guaranteed benefits			28,481		1,434		29,915
Paid guaranteed benefits			(37,767)		(4,207)		(41,974)
Interest			7,900		826		8,726
Balance at December 31, 2010		$	123,605	$	14,630	$	138,235

The liability for death and income benefit guarantees is established equal to a benefit ratio, multiplied by the cumulative contract charges earned, plus accrued interest less contract benefit payments.  The benefit ratio is calculated as the estimated present value of all expected contract benefits divided by the present value of all expected contract charges.  The benefit ratio may be in excess of 100%.  For guarantees in the event of death, benefits represent the current guaranteed minimum death payments in excess of the current account balance.  For guarantees at annuitization, benefits represent the present value of the minimum guaranteed annuity benefits in excess of the current account balance.

Projected benefits and assessments used in determining the liability for contract guarantees are developed using a projection model and stochastic scenarios.  Underlying assumptions for the liability related to income benefits include assumed future annuitization elections based upon factors such as eligibility conditions and the annuitant’s attained age.

The liability for guarantees is re-calculated and adjusted regularly.  Changes to the liability balance are recorded as a charge or credit to policyowner benefits.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

12. LIABILITIES FOR CONTRACT GUARANTEES (CONTINUED)

GMABs and GMWBs are considered to be derivatives under FASB ASC Topic 815 and are recorded at fair value through earnings.  The Company records GMAB and GMWB assets or liabilities in its consolidated balance sheets as part of contractholder deposit funds and other policy liabilities.  The net balance of GMABs and GMWBs constituted a liability in the amount of $1,286.8 million and $2.3 million at December 31, 2011 and 2010, respectively.  The Company includes the following unobservable inputs in its calculation of the embedded derivative:

Actively-Managed Volatility Adjustments – This component incorporates the basis differential between the observable implied volatilities for each index and the actively-managed funds underlying the variable annuity product.  The adjustment is based upon historical actively-managed fund volatilities and historical weighted-average index volatilities.

Credit Standing Adjustment – This component makes an adjustment that market participants would make to reflect the non-performance risk associated with the embedded derivatives.  The adjustment is based upon the published credit spread for A-rated corporate bonds, which have ratings that are equivalent to the rating of the Company.

Behavior Risk Margin – This component adds a margin that market participants would require for the risk that the Company’s best estimate policyholder behavior assumptions could differ from actual experience.  This risk margin is determined by taking the difference between the fair value based on adverse policyholder behavior assumptions and the fair value based on best estimate policyholder behavior assumptions, using assumptions the Company believes market participants would use in developing risk margins.

13. DEFERRED POLICY ACQUISITION COSTS AND SALES INDUCEMENT ASSET

The following roll-forward summarizes the change in DAC asset and SIA for the years ended December 31:

		2011		2010
Balance at January 1	$	1,682,559	$	2,173,642
Acquisition costs deferred		244,659		241,182
Amortized to expense during the year  (1)		279,668		(732,265)
Balance at December 31	$	2,206,886	$	1,682,559

(1) Includes interest, unlocking and loss recognition.

Refer to Note 1 of the Company’s consolidated financial statements for information regarding the deferral and amortization methodologies related to DAC asset and SIA.  The Company tested its DAC asset and SIA for future recoverability and determined that the assets were not impaired at December 31, 2011.

During the year ended December 31, 2011, the Company recorded a negative amortization increasing its DAC asset and SIA by $770.2 million.  The negative amortization related to a decrease in actual gross profit which was due to a $1.3 billion increase in the fair value of GMAB and GMWB liabilities related to certain variable annuity products.  The increase in DAC asset and SIA was offset by an unlocking adjustment decreasing DAC asset and SIA by $575.2 million.  The unlocking adjustment recorded in 2011 was due to the total present value of the gross profit for the largest cohort of the Company’s fixed annuities, which was negative at December 31, 2011 resulting in decrease in DAC asset and SIA.

The Company wrote down DAC asset and SIA by $21.0 million and $126.0 million as a result of loss recognition related to certain annuity products for the years ended December 31, 2011 and 2010, respectively.  Of the $21.0 million charge for loss recognition in 2011, $18.3 million related to DAC and was reported as amortization of DAC.  The remaining $2.7 million related to SIA and was reported as a component of interest credited in the Company’s consolidated statement of operations.  Of the $126.0 million charge for loss recognition in 2010, $117.7 million related to DAC and was reported as amortization of DAC.  The remaining $8.3 million related to SIA and was reported as a component of interest credited in the Company’s consolidated statement of operations.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

14. VALUE OF BUSINESS AND CUSTOMER RENEWALS ACQUIRED

The following roll-forward summarizes the change in VOBA and VOCRA for the years ended December 31:

	2011		2010
Balance at January 1	$	134,985	$	168,845
Amortized to expense during the year		(28,898)		(33,860)
Balance at December 31	$	106,087	$	134,985

Refer to Note 1 of the Company’s consolidated financial statements for information regarding the amortization methodologies related to VOBA and VOCRA.  The Company tested its VOBA and VOCRA assets for future recoverability and determined that the assets were not impaired at December 31, 2011.

The Company tested the VOCRA asset for impairment in the fourth quarter of 2009 and determined that the fair value was lower than its carrying value.  Accordingly, the Company decreased the carrying value of VOCRA and recorded an impairment charge of $2.6 million for the year ended December 31, 2009.  The impairment charge is included in amortization expense in the consolidated statements of operations and is allocated in the Group Protection segment.

15. CONSOLIDATING FINANCIAL INFORMATION

The following consolidating financial statements are provided in compliance with Regulation S-X of the SEC and in accordance with SEC Rule 12h-5.

The products of the Company’s wholly-owned subsidiary, SLNY, include, among other products, combination fixed and variable annuity contracts (the “Contracts”) in the State of New York.  These Contracts contain a fixed investment option, where interest is paid at a guaranteed rate for a specified period of time, and withdrawals made before the end of the specified period may be subject to a market value adjustment that can increase or decrease the amount of the withdrawal proceeds (the “fixed investment option period”).  Effective September 27, 2007, the Company provided a full and unconditional guarantee (the “guarantee”) of SLNY’s obligation related to the fixed investment option period related to Contracts currently in-force or sold on or after that date.  The guarantee relieved SLNY of its obligation to file annual, quarterly, and current reports with the SEC on Form 10-K, Form 10-Q and Form 8-K.

In the following presentation of consolidating financial statements, the term "SLUS as Parent" is used to denote the Company as a standalone entity, isolated from its subsidiaries and the term “Other Subs” is used to denote the Company's other subsidiaries, with the exception of SLNY.  All consolidating financial statements are presented in thousands.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

Consolidating Statements of Operations

For the Year Ended December 31, 2011

		SLUS as Parent	SLNY		Other Subs		Eliminations & Reclassification		Consolidated Company
Revenues
Premiums and annuity considerations	$	20,524	$	116,896	$	-	$	-	$	137,420
Net investment income (1)		608,647		115,412		3,569		-		727,628
Net derivative loss		(873,518)		(114,552)		-		-		(988,070)
Net realized investment gains (losses), excluding impairment losses on available-for- sale securities		35,284		5,328		(1,034)		-		39,578
Other-than-temporary impairment losses (2)		(71)		-		-		-		(71)
Fee and other income		565,075		42,276		13,889		(12,829)		608,411
Total revenues		355,941		165,360		16,424		(12,829)		524,896
Benefits and Expenses
Interest credited		370,024		53,074		1,110		-		424,208
Interest expense		47,170		-		-		-		47,170
Policyowner benefits		66,426		67,733		253		-		134,412
Amortization of DAC, VOBA and VOCRA		(214,767)		(32,634)		-		-		(247,401)
Other operating expenses		298,518		51,234		13,402		(12,829)		350,325
Total benefits and expenses		567,371		139,407		14,765		(12,829)		708,714
(Loss) income before income tax (benefit) expense		(211,430)		25,953		1,659		-		(183,818)
Income tax (benefit) expense		(89,089)		7,947		441		-		(80,701)
Equity in the net income of subsidiaries		19,224		-		-		(19,224)		-
Net (loss) income	$	(103,117)	$	18,006	$	1,218	$	(19,224)	$	(103,117)

(1) SLUS as Parent’s and SLNY’s net investment income includes an increase in market value of trading investments of $152.4 million and $34.2 million, respectively, for the year ended December 31, 2011.  Other Subs’ net investment income does not include trading investments.

(2) SLUS as Parent’s and SLNY’s OTTI losses for the year ended December 31, 2011 represent impairments related to credit loss.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

Consolidating Statements of Operations

For the Year Ended December 31, 2010

	SLUS as Parent		SLNY		Other Subs		Eliminations & Reclassification		Consolidated Company
Revenues
Premiums and annuity considerations	$	16,680	$	119,495	$	-	$	-	$	136,175
Net investment income (1)		1,269,106		118,138		2,966		-		1,390,210
Net derivative (loss) income		(161,975)		12,685		-		-		(149,290)
Net realized investment gains (losses), excluding impairment losses on available-for-sale securites		26,848		827		(724)		-		26,951
Other-than-temporary impairment losses (2)		(735)		(150)		-		-		(885)
Fee and other income		481,606		19,433		9,988		-		511,027
Total revenues		1,631,530		270,428		12,230		-		1,914,188
Benefits and Expenses
Interest credited		342,977		57,924		947		-		401,848
Interest expense		51,334		455		-		-		51,789
Policyowner benefits		161,979		77,590		225		-		239,794
Amortization of DAC, VOBA and VOCRA		606,896		90,206		-		-		697,102
Other operating expenses		268,798		39,938		9,434		-		318,170
Total benefits and expenses		1,431,984		266,113		10,606		-		1,708,703
Income before income tax expense		199,546		4,315		1,624		-		205,485
Income tax expense		69,993		643		575		-		71,211
Equity in the net income of subsidiaries		4,721		-		-		(4,721)		-
Net income	$	134,274	$	3,672	$	1,049	$	(4,721)	$	134,274

(1) SLUS as Parent’s and SLNY’s net investment income includes an increase in market value of trading investments of $640.2 million, and $34.0 million, respectively, for the year ended December 31, 2010.  Other Subs’ net investment income does not include trading investments.

(2) SLUS as Parent’s and SLNY’s OTTI losses for the year ended December 31, 2010 represent impairments related to credit loss.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

Consolidating Statements of Operations

For the Year Ended December 31, 2009

	SLUS as Parent		SLNY		Other Subs		Eliminations & Reclassification		Consolidated Company
Revenues
Premiums and annuity considerations	$	14,374	$	119,872	$	-	$	-	$	134,246
Net investment income (1)		2,345,022		233,216		4,069		-		2,582,307
Net derivative (loss) income		(62,600)		22,698		-		-		(39,902)
Net realized investment losses, excluding impairment losses on available-for-sale securites		(30,129)		(2,815)		(3,731)		-		(36,675)
Other-than-temporary impairment losses (2)		(4,450)		(181)		(203)		-		(4,834)
Fee and other income		375,570		5,103		5,163		-		385,836
Total revenues		2,637,787		377,893		5,298		-		3,020,978
Benefits and Expenses
Interest credited		336,754		47,855		1,159		-		385,768
Interest expense		39,035		745		-		-		39,780
Policyowner benefits		36,409		78,231		(4,201)		-		110,439
Amortization of DAC, VOBA and VOCRA		917,129		107,532		-		-		1,024,661
Other operating expenses		201,205		42,368		4,583		-		248,156
Total benefits and expenses		1,530,532		276,731		1,541		-		1,808,804
Income before income tax expense		1,107,255		101,162		3,757		-		1,212,174
Income tax expense		305,150		29,650		849		-		335,649
Equity in the net income of subsidiaries		179,391		-		-		(179,391)		-
Net income from continuing operations		981,496		71,512		2,908		(179,391)		876,525
Income from discontinued operations, net of tax		-		-		104,971		-		104,971
Net income	$	981,496	$	71,512	$	107,879	$	(179,391)	$	981,496

(1) SLUS as Parent’s, SLNY’s and Other Subs’ net investment income includes an increase in market value of trading investments of $1,913.3 million, $173.4 million and $0.0 million, respectively, for the year ended December 31, 2009.

(2) SLUS as Parent’s, SLNY’s and Other Subs’ OTTI losses for the year ended December 31, 2009 represent impairments related to credit loss.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

Consolidating Balance Sheets at December 31, 2011

	SLUS as  Parent		SLNY		Other Subs		Eliminations & Reclassifications		Consolidated Company
ASSETS
Investments
Available-for-sale fixed maturity securities, at fair value	$	1,092,686	$	239,776	$	70,063	$	-	$	1,402,525
Trading fixed maturity securities, at fair value		8,633,690		1,646,846		-		-		10,280,536
Mortgage loans		1,269,140		153,987		34,229		-		1,457,356
Derivative instruments – receivable		422,404		-		-		-		422,404
Limited partnerships		34,088		-		-		-		34,088
Real estate		192,166		-		31,648		-		223,814
Policy loans		582,080		1,116		20,175		-		603,371
Other invested assets		32,735		4,340		-		-		37,075
Short-term investments		104,895		1,000		-		-		105,895
Cash and cash equivalents		793,146		63,168		15,750		-		872,064
Investment in subsidiaries		592,180		-		-		(592,180)		-
Total investments and cash		13,749,210		2,110,233		171,865		(592,180)		15,439,128
Accrued investment income		146,021		21,994		1,746		-		169,761
Deferred policy acquisition costs and sales inducement asset		2,038,342		168,544		-		-		2,206,886
Value of business and customer renewals acquired		102,670		3,417		-		-		106,087
Net deferred tax asset		437,558		7,391		3,427		-		448,376
Goodwill		-		7,299		-		-		7,299
Receivable for investments sold		4,589		503		-		-		5,092
Reinsurance receivable		2,061,777		175,928		101		-		2,237,806
Other assets		90,384		28,103		1,194		(356)		119,325
Separate account assets		26,082,352		1,365,026		36,412		-		27,483,790
Total assets	$	44,712,903	$	3,888,438	$	214,745	$	(592,536)	$	48,223,550
LIABILITIES
Contractholder deposit funds and other policy liabilities	$	11,981,712	$	1,620,152	$	24,661	$	-	$	13,626,525
Future contract and policy benefits		775,812		133,924		296		-		910,032
Payable for investments purchased		690		40		-		-		730
Accrued expenses and taxes		41,202		8,594		427		(356)		49,867
Debt payable to affiliates		683,000		-		-		-		683,000
Reinsurance payable		1,848,776		251,311		37		-		2,100,124
Derivative instruments – payable		287,074		-		-		-		287,074
Other liabilities		269,518		55,279		14,844		-		339,641
Separate account liabilities		26,082,352		1,365,026		36,412		-		27,483,790
Total liabilities		41,970,136		3,434,326		76,677		(356)		45,480,783
STOCKHOLDER’S EQUITY
Common stock	$	6,437	$	2,100	$	2,542	$	(4,642)	$	6,437
Additional paid-in capital		3,629,228		389,963		113,397		(503,360)		3,629,228
Accumulated other comprehensive income		38,851		9,655		3,446		(13,101)		38,851
(Accumulated deficit) retained earnings		(931,749)		52,394		18,683		(71,077)		(931,749)
Total stockholder’s equity		2,742,767		454,112		138,068		(592,180)		2,742,767
Total liabilities and stockholder’s equity	$	44,712,903	$	3,888,438	$	214,745	$	(592,536)	$	48,223,550

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

Consolidating Balance Sheets at December 31, 2010

	SLUS as Parent		SLNY		Other Subs		Eliminations & Reclassification		Consolidated Company
ASSETS
Investments
Available-for-sale fixed maturity securities, at fair value	$	1,193,875	$	246,944	$	55,104	$	-	$	1,495,923
Trading fixed maturity securities, at fair value		9,911,284		1,555,834		-		-		11,467,118
Mortgage loans		1,531,545		176,518		29,465		-		1,737,528
Derivative instruments – receivable		198,064		-		-		-		198,064
Limited partnerships		41,622		-		-		-		41,622
Real estate		161,800		-		52,865		-		214,665
Policy loans		695,607		1,217		20,584		-		717,408
Other invested assets		19,588		7,868		-		-		27,456
Short-term investments		813,745		18,994		-		-		832,739
Cash and cash equivalents		647,579		72,978		15,766		-		736,323
Investment in subsidiaries		559,344		-		-		(559,344)		-
Total investments and cash		15,774,053		2,080,353		173,784		(559,344)		17,468,846
Accrued investment income		165,841		21,130		1,815		-		188,786
Deferred policy acquisition costs and sales inducement asset		1,571,768		110,791		-		-		1,682,559
Value of business and customer renewals acquired		130,546		4,439		-		-		134,985
Net deferred tax asset		378,078		12,057		4,162		-		394,297
Goodwill		-		7,299		-		-		7,299
Receivable for investments sold		5,166		162		-		-		5,328
Reinsurance receivable		2,184,487		162,522		77		-		2,347,086
Other assets		93,755		31,729		2,918		(2,873)		125,529
Separate account assets		25,573,382		1,265,464		41,575		-		26,880,421
Total assets	$	45,877,076	$	3,695,946	$	224,331	$	(562,217)	$	49,235,136
LIABILITIES
Contractholder deposit funds and other policy liabilities	$	12,991,306	$	1,577,556	$	24,366	$	-	$	14,593,228
Future contract and policy benefits		732,368		116,946		200		-		849,514
Payable for investments purchased		44,723		104		-		-		44,827
Accrued expenses and taxes		49,224		4,612		1,665		(2,873)		52,628
Debt payable to affiliates		783,000		-		-		-		783,000
Reinsurance payable		1,995,083		236,718		34		-		2,231,835
Derivative instruments – payable		362,023		-		-		-		362,023
Other liabilities		193,363		66,118		25,575		-		285,056
Separate account liabilities		25,573,382		1,265,464		41,575		-		26,880,421
Total liabilities		42,724,472		3,267,518		93,415		(2,873)		46,082,532
STOCKHOLDER’S EQUITY
Common stock		6,437		2,100		2,542		(4,642)		6,437
Additional paid-in capital		3,928,246		389,963		108,450		(498,413)		3,928,246
Accumulated other comprehensive income		46,553		1,977		1,707		(3,684)		46,553
(Accumulated deficit) retained earnings		(828,632)		34,388		18,217		(52,605)		(828,632)
Total stockholder’s equity		3,152,604		428,428		130,916		(559,344)		3,152,604
Total liabilities and stockholder’s equity	$	45,877,076	$	3,695,946	$	224,331	$	(562,217)	$	49,235,136

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

Consolidating Statements of Cash Flows

For the Year Ended December 31, 2011

		SLUS as Parent		SLNY		Other  Subs	Eliminations & Reclassification			Consolidated Company
Cash Flows From Operating Activities:
Net (loss) income	$	(103,117)	$	18,006	$	1,218	$	(19,224)	$	(103,117)
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Net amortization of premiums on investments		39,398		7,170		1,040		-		47,608
Amortization of DAC, VOBA and VOCRA		(214,767)		(32,634)		-		-		(247,401)
Depreciation and amortization		8,860		311		841		-		10,012
Net losses on derivatives		846,426		114,552		-		-		960,978
Net realized (gains) losses and OTTI credit losses on available-for-sale investments		(35,213)		(5,328)		1,034		-		(39,507)
Net increase in fair value of trading investments		(152,403)		(34,163)		-		-		(186,566)
Net realized losses (gains) on trading investments		100,143		(5,503)		-		-		94,640
Undistributed income on private equity limited partnerships		(2,883)		-		-		-		(2,883)
Interest credited to contractholder deposits		370,024		53,074		1,110		-		424,208
Deferred federal income taxes		(50,262)		532		(202)		-		(49,932)
Equity in net income of subsidiaries		(19,224)		-		-		19,224		-
Changes in assets and liabilities:
Additions to DAC, SIA, VOBA and VOCRA		(206,151)		(18,963)		-		-		(225,114)
Accrued investment income		19,820		(864)		69		-		19,025
Net change in reinsurance receivable/payable		63,424		6,108		(21)		-		69,511
Future contract and policy benefits		43,444		16,978		96		-		60,518
Other, net		(20,765)		338		(11,705)		-		(32,132)
Net cash provided by (used in) operating activities		686,754		119,614		(6,520)		-		799,848
Cash Flows From Investing Activities:
Sales, maturities and repayments of:
Available-for-sale fixed maturity securities		575,842		107,561		25,548		-		708,951
Trading fixed maturity securities		2,803,484		332,972		-		-		3,136,456
Mortgage loans		222,227		23,303		8,069		-		253,599
Real estate		745		2,313		67		(2,313)		812
Other invested assets		112,679		2,971		-		-		115,650
Purchases of:
Available-for-sale fixed maturity securities		(443,343)		(82,300)		(35,499)		-		(561,142)
Trading fixed maturity securities		(1,558,387)		(390,072)		-		-		(1,948,459)
Mortgage loans		(10,363)		(3,750)		(932)		-		(15,045)
Real estate		(5,415)		-		(1,637)		2,313		(4,739)
Other invested assets		(70,295)		(975)		-		-		(71,270)
Net change in policy loans		6,369		101		409		-		6,879
Net change in short-term investments		708,850		17,994		-		-		726,844
Net cash provided by investing activities	$	2,342,393	$	10,118	$	(3,975)	$	-	$	2,348,536

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

Consolidating Statements of Cash Flows (continued)

For the Year Ended December 31, 2011

	SLUS as Parent		SLNY		Other  Subs		Eliminations & Reclassification		Consolidated Company
Cash Flows From Financing Activities:
Additions to contractholder deposit funds	$	915,078	$	114,792	$	-	$	-	$	1,029,870
Withdrawals from contractholder deposit funds		(3,385,603)		(244,743)		(815)		-		(3,631,161)
Repayment of debt		(100,000)		-		-		-		(100,000)
Capital contribution to subsidiaries		(11,114)		-		-		11,114		-
Return of capital from subsidiaries		-		-		-		-		-
Capital contribution from SLUS as Parent		-		-		11,114		(11,114)		-
Return of capital to Parent		(300,000)		-		-		-		(300,000)
Return of capital to SLUS as Parent		-		-		-		-		-
Other, net		(1,941)		(9,591)		180		-		(11,352)
Net cash (used in) provided by financing activities		(2,883,580)		(139,542)		10,479		-		(3,012,643)
Net change in cash and cash equivalents		145,567		(9,810)		(16)		-		135,741
Cash and cash equivalents, beginning of period		647,579		72,978		15,766		-		736,323
Cash and cash equivalents, end of period	$	793,146	$	63,168	$	15,750	$	-	$	872,064

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

Consolidating Statements of Cash Flows

For the Year Ended December 31, 2010

		SLUS as Parent	SLNY		Other  Subs		Eliminations & Reclassification		Consolidated Company
Cash Flows From Operating Activities:
Net income	$	134,274	$	3,672	$	1,049	$	(4,721)	$	134,274
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization of premiums on investments		24,690		4,787		1,085		-		30,562
Amortization of DAC, VOBA and VOCRA		606,896		90,206		-		-		697,102
Depreciation and amortization		4,418		312		953		-		5,683
Net loss (gain) on derivatives		54,168		(12,685)		-		-		41,483
Net realized (gains) losses and OTTI credit losses on available-for-sale investments		(26,113)		(677)		724		-		(26,066)
Net increase in fair value of trading investments		(640,222)		(34,001)		-		-		(674,223)
Net realized losses (gains) on trading investments		80,910		(13,633)		-		-		67,277
Undistributed loss on private equity limited partnerships		2,339		-		-		-		2,339
Interest credited to contractholder deposits		342,977		57,924		947		-		401,848
Deferred federal income taxes		158,398		(8,928)		(93)		-		149,377
Equity in net income of subsidiaries		(4,721)		-		-		4,721		-
Changes in assets and liabilities:
Additions to DAC, SIA, VOBA and VOCRA		(167,199)		(17,796)		-		-		(184,995)
Accrued investment income		45,884		(4,079)		-		-		41,805
Net change in reinsurance receivable/payable		124,563		5,328		16		-		129,907
Future contract and policy benefits		16,192		17,691		(7)		-		33,876
Other, net		(24,455)		42,324		(838)		-		17,031
Net cash provided by operating activities		732,999		130,445		3,836		-		867,280
Cash Flows From Investing Activities:
Sales, maturities and repayments of:
Available-for-sale fixed maturity securities		402,623		79,623		15,841		-		498,087
Trading fixed maturity securities		3,395,725		775,025		-		-		4,170,750
Mortgage loans		263,612		13,107		3,050		(30,486)		249,283
Real estate		-		1,000		2,010		(3,010)		-
Other invested assets		(317,388)		1,244		501		-		(315,643)
Purchases of:
Available-for-sale fixed maturity securities		(602,891)		(152,468)		(16,388)		-		(771,747)
Trading fixed maturity securities		(3,060,145)		(886,403)		-		-		(3,946,548)
Mortgage loans		(66,252)		(34,190)		(31,712)		30,486		(101,668)
Real estate		(6,818)		-		(1,066)		3,010		(4,874)
Other invested assets		(63,798)		(1,200)		-		-		(64,998)
Net change in policy loans		5,367		(947)		762		-		5,182
Net change in short-term investments		394,575		39,997		-		-		434,572
Net cash provided by (used in) investing activities	$	344,610	$	(165,212)	$	(27,002)	$	-	$	152,396

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

Consolidating Statements of Cash Flows (continued)

For the Year Ended December 31, 2010

	SLUS as Parent		SLNY		Other  Subs		Eliminations & Reclassification		Consolidated Company
Cash Flows From Financing Activities:
Additions to contractholder deposit funds	$	1,043,300	$	173,714	$	-	$	-	$	1,217,014
Withdrawals from contractholder deposit funds		(3,354,527)		(248,878)		(2,930)		-		(3,606,335)
Repayment of debt		(100,000)		-		-		-		(100,000)
Capital contribution to subsidiaries		(30,041)		-		-		30,041		-
Capital contribution from Parent		400,000		-		30,041		(30,041)		400,000
Other, net		(5,753)		7,587		(74)		-		1,760
Net cash (used in) provided by financing activities		(2,047,021)		(67,577)		27,037		-		(2,087,561)
Net change in cash and cash equivalents		(969,412)		(102,344)		3,871		-		(1,067,885)
Cash and cash equivalents, beginning of period		1,616,991		175,322		11,895		-		1,804,208
Cash and cash equivalents, end of period	$	647,579	$	72,978	$	15,766	$	-	$	736,323

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

Consolidating Statements of Cash Flows

For the Year Ended December 31, 2009

	SLUS as Parent		SLNY		Other  Subs		Eliminations & Reclassification		Consolidated Company
Cash Flows From Operating Activities:
Net income from operations	$	981,496	$	71,512	$	107,879	$	(179,391)	$	981,496
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Net (accretion) amortization of premiums on investments		(203)		(605)		119		-		(689)
Amortization of DAC, VOBA and VOCRA		917,129		107,532		-		-		1,024,661
Depreciation and amortization		4,355		337		843		-		5,535
Net gain on derivatives		(73,343)		(22,698)		-		-		(96,041)
Net realized losses and OTTI credit losses on available-for-sale investments		34,579		2,996		3,934		-		41,509
Net increase in fair value of trading investments		(1,913,351)		(173,389)		-		-		(2,086,740)
Net realized losses on trading investments		357,470		9,867		-		-		367,337
Undistributed loss on private equity limited partnerships		9,207		-		-		-		9,207
Interest credited to contractholder deposits		336,754		47,855		1,159		-		385,768
Equity in net income of subsidiaries		(179,391)		-		-		179,391		-
Deferred federal income taxes		290,478		6,256		(1,126)		-		295,608
Changes in assets and liabilities:
Additions to DAC, SIA, VOBA and VOCRA		(301,255)		(45,645)		-		-		(346,900)
Accrued investment income		38,445		(1,825)		116		-		36,736
Net change in reinsurance receivable/payable		195,092		19,060		(4,515)		-		209,637
Future contract and policy benefits		(131,052)		5,280		(220)		-		(125,992)
Dividends received from subsidiaries		100,000		-		-		(100,000)		-
Other, net		(90,229)		(153,878)		738		-		(243,369)
Adjustment related to discontinued operations		-		-		(288,018)		-		(288,018)
Net cash provided by (used in) operating activities		576,181		(127,345)		(179,091)		(100,000)		169,745
Cash Flows From Investing Activities:
Sales, maturities and repayments of:
Available-for-sale fixed maturity securities		86,619		21,303		5,556		-		113,478
Trading fixed maturity securities		1,673,886		333,236		98,233		(8,301)		2,097,054
Mortgage loans		149,414		12,456		15		(18,392)		143,493
Real estate		-		-		-		-		-
Other invested assets		(209,135)		1,587		-		-		(207,548)
Purchases of:
Available-for-sale fixed maturity securities		(342,313)		(4,515)		(311)		-		(347,139)
Trading fixed maturity securities		(226,389)		(587,134)		(62,088)		8,301		(867,310)
Mortgage loans		(12,602)		(4,875)		(18,433)		18,392		(17,518)
Real estate		(3,819)		-		(883)		-		(4,702)
Other invested assets		(106,277)		-		-		-		(106,277)
Net change in other investments		(178,590)		(4,922)		-		-		(183,512)
Net change in policy loans		3,574		(114)		3,357		-		6,817
Net change in short-term investments		(739,502)		56,978		(40,297)		-		(722,821)
Net cash provided by (used in) investing activities	$	94,866	$	(176,000)	$	(14,851)	$	-	$	(95,985)

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

15. CONSOLIDATING FINANCIAL INFORMATION (CONTINUED)

Consolidating Statements of Cash Flows (continued)

For the Year Ended December 31, 2009

	SLUS as Parent		SLNY		Other  Subs		Eliminations & Reclassification		Consolidated Company
Cash Flows From Financing Activities:
Additions to contractholder deposit funds	$	2,298,455	$	473,137	$	24,347	$	-	$	2,795,939
Withdrawals from contractholder deposit funds		(2,752,493)		(252,351)		(6,655)		-		(3,011,499)
Capital contribution to subsidiaries		(58,910)		-		-		58,910		-
Debt proceeds		-		-		200,000		-		200,000
Capital contribution from parent		748,652		-		58,910		(58,910)		748,652
Dividends paid to SLUS as Parent		-		-		(100,000)		100,000		-
Other, net		(23,278)		(4,108)		74		-		(27,312)
Net cash provided by financing activities		212,426		216,678		176,676		100,000		705,780
Net change in cash and cash equivalents		883,473		(86,667)		(17,266)		-		779,540
Cash and cash equivalents, beginning of period		733,518		261,989		29,161		-		1,024,668
Cash and cash equivalents, end of period	$	1,616,991	$	175,322	$	11,895	$	-	$	1,804,208

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

16. SEGMENT INFORMATION

As described below, the Company conducts business primarily in three operating segments and maintains a Corporate segment to provide for the capital needs of the three operating segments and to engage in other financing related activities.  Each segment is defined consistently with the way results are evaluated by the chief operating decision-maker.

Net investment income is allocated based on segmented assets, including allocated capital, by line of business.  Allocations of operating expenses among segments are made using both standard rates and actual expenses incurred.  Management evaluates the results of the operating segments on an after-tax basis.  The Company does not depend on one or a few customers, brokers or agents for a significant portion of its operations.

Wealth Management

The Wealth Management segment includes funding agreements, individual and group variable annuity products, individual and group fixed annuity products and other retirement benefit products.  These contracts may contain any of a number of features including variable or fixed interest rates and equity index options and may be denominated in foreign currencies.  The Company uses derivative instruments to manage the risks inherent in the contract options.  In addition, the Company consolidates certain VIEs as a component of the Wealth Management segment.  Refer to Note 4 for further discussion of the VIE that is consolidated in the Company’s consolidated financial statements.  Effective January 1, 2010, the Company discontinued the sales of certain of its fixed and fixed index annuity products.  Effective December 30, 2011, the Company discontinued new sales of its variable annuity products.  Refer to Note 1 for further details.

Individual Protection

The Individual Protection segment includes a variety of life insurance products sold to individuals and corporate owners of life insurance.  The products include whole life, UL and variable life products.  The Company discontinued the sales of its individual life products and its corporate-owned life insurance effective December 30, 2011 and January 31, 2012, respectively.  Refer to Note 1 for further details.

Group Protection

The Group Protection segment includes group life, group long-term disability, group short-term disability, group dental and group stop loss insurance products to small and mid-size employers in the State of New York through the Company’s subsidiary, SLNY.

Corporate

The Corporate segment includes the unallocated capital of the Company, its debt financing and items not otherwise attributable to the other segments.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

16. SEGMENT INFORMATION (CONTINUED)

The following amounts pertain to the Company’s four segments:

Year ended December 31, 2011
	Wealth		Individual		Group
	Management		Protection		Protection		Corporate		Totals
Total revenues	$	312,953	$	78,961	$	124,677	$	8,305	$	524,896
Total benefits and expenses		491,572		89,404		106,912		20,826		708,714
(Loss) income before income
tax (benefit) expense		(178,619)		(10,443)		17,765		(12,521)		(183,818)
Net (loss) income	$	(98,818)	$	(6,558)	$	11,579	$	(9,320)	$	(103,117)
Separate account assets	$	20,221,425	$	7,262,365	$	-	$	-	$	27,483,790
General account assets		17,688,786		2,278,730		182,603		589,641		20,739,760
Total assets	$	37,910,211	$	9,541,095	$	182,603	$	589,641	$	48,223,550

Year ended December 31, 2010
	Wealth		Individual		Group
	Management		Protection		Protection		Corporate		Totals
Total revenues	$	1,760,979	$	66,425	$	127,104	$	(40,320)	$	1,914,188
Total benefits and expenses		1,514,754		68,585		106,346		19,018		1,708,703
Income (loss) before income
tax expense (benefit)		246,225		(2,160)		20,758		(59,338)		205,485
Net income (loss)	$	162,975	$	(1,204)	$	13,508	$	(41,005)	$	134,274
Separate account assets	$	19,685,774	$	7,194,647	$	-	$	-	$	26,880,421
General account assets		19,453,702		2,067,064		181,482		652,467		22,354,715
Total assets	$	39,139,476	$	9,261,711	$	181,482	$	652,467	$	49,235,136

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

16. SEGMENT INFORMATION (CONTINUED)

Year ended December 31, 2009
	Wealth		Individual		Group
	Management		Protection		Protection		Corporate		Totals
Total revenues	$	2,823,029	$	71,718	$	135,242	$	(9,011)	$	3,020,978
Total benefits and expenses		1,623,582		40,477		119,134		25,611		1,808,804
Income (loss) from continuing
operations before income tax
expense (benefit)		1,199,447		31,241		16,108		(34,622)		1,212,174
Net income from continuing
operations		798,360		10,155		10,470		57,540		876,525
Income from discontinued
operations, net of tax		-		104,971		-		-		104,971
Net income	$	798,360	$	115,126	$	10,470	$	57,540	$	981,496
Separate account assets	$	16,396,394	$	6,929,928	$	-	$	-	$	23,326,323
General account assets		21,323,702		1,997,532		172,648		755,730		24,249,612
Total assets	$	37,720,096	$	8,927,460	$	172,648	$	755,730	$	47,575,935

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

17.  REGULATORY FINANCIAL INFORMATION

The Company and its insurance subsidiaries are required to file annual statements with state regulatory authorities prepared on a statutory accounting basis prescribed or permitted by such authorities.  As of December 31, 2009, the Company received permission from the Commissioner of Insurance of the State of Delaware to admit the equity value of its subsidiary, ILAC, without requiring audited financial statements because ILAC is not required to prepare audited financial statements under Rhode Island’s Annual Financial Reporting regulation.

Statutory surplus differs from stockholder's equity reported in accordance with GAAP primarily because policy acquisition costs are expensed when incurred, policy liabilities are based on different assumptions, investments are valued differently and deferred income taxes are calculated differently.  The Company’s statutory financials are not prepared on a consolidated basis.

At December 31, the Company and its insurance subsidiaries’ combined statutory capital and surplus and net loss were as follows:

	Unaudited for the Years Ended December 31,
	2011		2010		2009
Statutory capital and surplus	$	1,315,270	$	2,234,153	$	2,037,661
Statutory net loss	$	(507,715)	$	(77,503)	$	(23,879)

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

18. DIVIDEND RESTRICTIONS

The Company’s and its insurance company subsidiaries’ ability to pay dividends is subject to certain statutory restrictions.  The states in which the Company and its insurance company subsidiaries are domiciled have enacted laws governing the payment of dividends to stockholders by domestic insurers.

Pursuant to Delaware's statute, the maximum amount of dividends and other distributions that a domestic insurer may pay in any twelve-month period without prior approval of the Delaware Commissioner of Insurance is limited to the greater of (i) ten percent of its statutory surplus as of the preceding December 31, or (ii) the individual company's statutory net gain from operations for the preceding calendar year.  Any dividends to be paid by an insurer from a source other than statutory surplus, whether or not in excess of the aforementioned threshold, would also require the prior approval of the Delaware Commissioner of Insurance.  The Company is not permitted to pay dividends in 2012 without prior approval from the Delaware Commissioner of Insurance.

In 2011, after receiving prior approval from the Delaware Commissioner of Insurance, the Company paid a $300.0 million return of capital to the Parent.  In 2010 and 2009, the Company did not pay any cash dividends to the Parent.  However in 2009, with regulatory approval, the Company distributed Sun Life Vermont’s net assets and issued and outstanding common stock, totaling $94.9 million in the form of a dividend to the Parent, with regulatory approval.

New York law permits a domestic stock life insurance company to distribute a dividend to its shareholders without prior notice to the New York Superintendent of Financial Services, where the aggregate amount of such dividends in any calendar year does not exceed the lesser of:  (i) ten percent of its surplus to policyholders as of the immediately preceding calendar year; or (ii) its net gain from operations for the immediately preceding calendar year, not including realized capital gains.  SLNY is permitted to pay dividends up to a maximum of $1.9 million in 2012 without prior approval from the superintendent.  No dividends were paid by SLNY during 2011, 2010 or 2009.

Rhode Island law requires prior regulatory approval for any dividend where the amount of such dividend paid during the preceding twelve-month period would exceed the lesser of (i) ten percent of the insurance company’s surplus as of the December 31 next preceding, or (ii) its net gain from operations, not including realized capital gains, for the immediately preceding calendar year, excluding pro rata distributions of any class of the insurance company’s own securities.  ILAC is permitted to pay dividends up to a maximum of $2.1 million in 2012 without prior approval from the Rhode Island Superintendent of Insurance.  No dividends were paid by ILAC during 2011, 2010 or 2009.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

19. COMPONENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME

The components of accumulated other comprehensive income as of December 31, were as follows:

	2011		2010		2009
Net unrealized gains on available-for-sale securities (1)	$	70,367	$	83,926	$	67,970
Non-credit OTTI losses on available-for-sale fixed maturity securities		(10,595)		(12,304)		(13,748)
Deferred income tax expense		(20,921)		(25,069)		(18,978)
Accumulated other comprehensive income	$	38,851	$	46,553	$	35,244

(1)  Net of unrealized losses that were temporarily impaired.

20. COMMITMENTS AND CONTINGENCIES

Guaranty Funds

Under insurance guaranty fund laws in each state, the District of Columbia and Puerto Rico, insurers licensed to do business can be assessed by state insurance guaranty associations for certain obligations of insolvent insurance companies to policyholders and claimants. Most of these laws provide, however, that an assessment may be excused or deferred if it would threaten an insurer's solvency and further provide annual limits on such assessments.  In addition, part of the assessments paid by the Company pursuant to these laws may be used as credits for a portion of the associated premium taxes.  During the twelve month-period ended December 31, 2011, the Company recorded a $9.3 million accrual for guaranteed fund assessments.

Income Taxes

In Revenue Ruling 2007-61, issued on September 25, 2007, the IRS announced its intention to issue regulations with respect to certain computational aspects of the dividends-received-deduction (the “DRD”) on separate account assets held in connection with variable annuity contracts.  Revenue Ruling 2007-61 suspended Revenue Ruling 2007-54, issued on August 16, 2007, that purported to change accepted industry and IRS interpretations of the statutes governing computational questions impacting the DRD.  On May 30, 2010, the IRS issued an Industry Director Directive which makes clear that IRS interpretations prior to Revenue Ruling 2007-54 should be followed until new regulations are issued.  New DRD regulations that the IRS proposes for issuance on this matter will be subject to public comment, at which time the insurance industry and other interested parties will have the opportunity to raise comments and questions about the content, scope and application of new regulations.  The timing, substance and effective date of the new regulations are unknown, but they could result in the elimination of some or all of the separate account DRD tax benefit that the Company ultimately receives.  For the years ended December 31, 2011 and 2010, the Company recorded benefits of $14.8 million and $11.5 million, respectively, related to the separate account DRD.  The amounts recorded for the year ended December 31, 2010 included an adjustment of $3.2 million to reflect a reduced run rate of separate account DRD benefits following the filing of the 2009 tax return.

Litigation

The Company and its subsidiaries are parties to threatened or pending legal proceedings, including ordinary routine litigation incidental to their business, both as a defendant and as a plaintiff.  While it is not possible to predict the resolution of these proceedings, management believes, based upon currently available information, that the ultimate resolution of these matters will not be materially adverse to the Company's financial position, results of operations or cash flows.

SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)

(A Wholly-Owned Subsidiary of Sun Life of Canada (U.S.) Holdings, Inc.)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands)

For the Years Ended December 31, 2011, 2010 and 2009

20. COMMITMENTS AND CONTINGENCIES (CONTINUED)

Indemnities

In the normal course of its business, the Company has entered into agreements that include indemnities in favor of third parties, such as contracts with advisors and consultants, outsourcing agreements, underwriting and agency agreements, information technology agreements, distribution agreements and service agreements.  The Company has also agreed to indemnify its directors, officers and employees in accordance with the Company’s by-laws.  The Company believes any potential liability under these agreements is neither probable nor estimatable. Therefore, the Company has not recorded any associated liability.

Lease Commitments

The Company leases certain facilities under operating leases with terms of up to five years.  As of December 31, 2011, minimum future lease payments under such leases were as follow:

2012	$	506
2013		516
2014		516
2015		516
2016		551
Thereafter		2,327
Total	$	4,932

The Company was party to a guarantee agreement under which the Company guaranteed the lease payment obligations of SLFD.  The lease agreement was terminated and the Company was not required to pay or accrue any of the lease termination costs.

Total rental expense for the years ended December 31, 2011, 2010 and 2009 was $7.0 million, $7.2 million and $6.9 million, respectively.

21. SUBSEQUENT EVENTS

During the first quarter of 2012, the Company and its wholly-owned subsidiary, SLNY, received all necessary insurance regulatory approvals to amend the fixed investment option period in their combination fixed and variable annuity contracts and other contracts to remove any negative market value adjustment (“MVA”) that can decrease the amount of the withdrawal proceeds.  (Refer to Note 15 for additional information concerning the MVA and the fixed investment option period).  The Company and SLNY filed amendments to the necessary registration statements to include the contract amendments and to remove from registration any fixed investment options that remained unsold.  The SEC declared the associated amended registration statements effective on March 22, 2012.  As a result of the foregoing, the fixed investment option period in the contracts is no longer considered a “security” under the Securities Act of 1933, and the Company subsequently filed Forms 15 on March 23, 2012 to provide notice of suspension of its duty to file reports under Section 15(d) of the Securities Exchange Act of 1934.  No other changes were made to the contracts, and all other terms and conditions of the contracts remain unchanged.  The MVA amendment described above did not have a material impact on the Company’s financial position.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Participants of Regatta, Regatta Gold, Regatta Classic, Regatta Platinum, Regatta Extra, Regatta Access, Regatta Choice, Regatta Flex Four, Regatta Flex II, Regatta Choice II, Sun Life Financial Master Extra, Sun Life Financial Masters Extra II, Sun Life Financial Masters Choice, Sun Life Financial Masters Choice II, Sun Life Financial Masters Access, Sun Life Financial Masters Flex, Sun Life Financial Masters Flex II, Sun Life Financial Masters IV, Sun Life Financial Masters VII, Sun Life Financial Masters B Share, and Sun Life Financial Masters I Share Contracts of Sun Life of Canada (U.S.) Variable Account F and the Board of Directors of Sun Life Assurance Company of Canada (U.S.) (the “Sponsor”):

We have audited the accompanying statements of assets and liabilities of AllianceBernstein VPS Balanced Wealth Strategy Portfolio (Class B) Sub-Account, AllianceBernstein VPS Dynamic Asset Allocation Portfolio Class B Sub-Account, AllianceBernstein VPS International Growth Portfolio (Class B) Sub- Account, AllianceBernstein VPS International Value Portfolio (Class B) Sub- Account, AllianceBernstein VPS Small/Mid Cap Value Fund (Class B) Sub- Account, BlackRock Global Allocation V.I. Fund (Class III) Sub-Account, Columbia Variable Portfolio - Marsico 21st Century Fund Class 1 Sub- Account, Columbia Variable Portfolio - Marsico 21st Century Fund Class 2 Sub- Account, Columbia Variable Portfolio - Marsico Growth Fund Class 1 Sub- Account, Columbia Variable Portfolio - Marsico Growth Fund Class 2 Sub- Account, Columbia Variable Portfolio - Marsico International Opportunities Fund Class 2 Sub-Account, Columbia Variable Portfolio - Small Cap Value Fund Class 2 Sub- Account, Fidelity VIP Balanced Portfolio (Service Class 2) Sub-Account, Fidelity VIP Contrafund Portfolio (Service Class 2) Sub-Account, Fidelity VIP Freedom 2010 Portfolio (Service Class 2) Sub-Account, Fidelity VIP Freedom 2015 Portfolio (Service Class 2) Sub-Account, Fidelity VIP Freedom 2020 Portfolio (Service Class 2) Sub-Account, Fidelity VIP Mid Cap Portfolio (Service Class 2) Sub-Account, First Eagle Overseas Variable Fund Sub-Account, Franklin Templeton VIP Founding Funds Allocation Fund (Class 2) Sub-Account, Franklin Templeton VIP Franklin Income Securities Fund (Class 2) Sub-Account, Franklin Templeton VIP Franklin Income Securities Fund Class 4 Sub- Account, Franklin Templeton VIP Franklin Mutual Shares Securities Fund Class 4 Sub-Account, Franklin Templeton VIP Franklin Small Cap Value Securities Fund (Class 2) Sub-Account, Franklin Templeton VIP Franklin Small Cap Value Securities Fund Class 4 Sub-Account, Franklin Templeton VIP Franklin Strategic Income Securities Fund (Class 2) Sub-Account, Franklin Templeton VIP Franklin Strategic Income Securities Fund Class 4 Sub-Account, Franklin Templeton VIP Mutual Shares Securities Fund (Class 2) Sub-Account, Franklin Templeton VIP Templeton Developing Markets Securities Fund (Class 2) Sub-Account, Franklin Templeton VIP Templeton Foreign Securities Fund (Class 2) Sub-Account, Franklin Templeton VIP Templeton Global Bond Securities Class 4 Sub-Account, Franklin Templeton VIP Templeton Growth Securities Fund (Class 2) Sub-Account, Huntington VA Balanced Fund Sub-Account, Huntington VA Dividend Capture Sub-Account, Huntington VA Growth Sub-Account, Huntington VA Income Equity Sub-Account, Huntington VA International Equity Sub-Account, Huntington VA Macro 100 Sub-Account, Huntington VA Mid Corp America Sub-Account, Huntington VA Mortgage Securities Sub-Account, Huntington VA New Economy Sub-Account, Huntington VA Real Strategies Fund Sub-Account, Huntington VA Rotating Markets Sub-Account, Huntington VA Situs Fund Sub-Account, Invesco V.I. International Growth Fund II Sub-Account, Invesco Van Kampen V.I. Mid Cap Value Fund  II Sub-Account, Invesco Van Kampen V.I. Comstock Fund Series II Sub-Account, Invesco Van Kampen V.I. Equity and Income Fund II Sub-Account, JPMorgan Insurance Trust Core Bond Portfolio (Class 2) Sub-Account, JPMorgan Insurance Trust U.S. Equity Portfolio (Class 2) Sub-Account, Lazard Retirement Emerging Markets Equity Portfolio Service Class Sub-Account, Lord Abbett Series Fund - Growth Opportunities Portfolio VC Sub-Account, Lord Abbett Series Fund - Fundamental Equity Portfolio VC Sub- Account, MFS VIT II Blended Research Core Equity Portfolio I Class Sub- Account, MFS VIT II Blended Research Core Equity Portfolio S Class Sub-Account, MFS VIT II Bond Portfolio I Class Sub-Account, MFS VIT II Bond Portfolio S Class Sub-Account, MFS VIT II Core Equity Portfolio I Class Sub-Account, MFS VIT II Core Equity Portfolio S Class Sub-Account, MFS VIT II Emerging Growth Portfolio S Class Sub-Account, MFS VIT II Emerging Markets Equity Portfolio I Class Sub-Account, MFS VIT II Emerging Markets Equity Portfolio S Class Sub-Account, MFS VIT II Global Governments Portfolio I Class Sub-Account, MFS VIT II Global Governments Portfolio S Class Sub-Account, MFS VIT II Global Growth Portfolio I Class Sub-Account, MFS VIT II Global Growth Portfolio S Class Sub-Account, MFS VIT II Global Research Portfolio I Class Sub-Account, MFS VIT II Global Research Portfolio S Class Sub-Account, MFS VIT II Global Tactical Allocation Portfolio I Class Sub-Account, MFS VIT II Global Tactical Allocation Portfolio S Class Sub-Account, MFS VIT II Government Securities Portfolio I Class Sub-Account, MFS VIT II Government Securities Portfolio S Class Sub-Account, MFS VIT II Growth Portfolio Sub-Account, MFS VIT II High Yield Portfolio I Class Sub-Account, MFS VIT II High Yield Portfolio S Class Sub-Account, MFS VIT II International Growth Portfolio I Class Sub-Account, MFS VIT II International Growth Portfolio S Class Sub-Account, MFS VIT II International Value Portfolio I Class Sub-Account, MFS VIT II International Value Portfolio S Class Sub-Account, MFS VIT II Massachusetts Investors Growth Stock Portfolio I Class Sub-Account, MFS VIT II Massachusetts Investors Growth Stock Portfolio S Class Sub-Account, MFS VIT II Mid Cap Growth Portfolio I Class Sub-Account, MFS VIT II Mid Cap Growth Portfolio S Class Sub-Account, MFS VIT II Money Market Portfolio I Class Sub-Account, MFS VIT II Money Market Portfolio S Class Sub-Account, MFS VIT II New Discovery Portfolio I Class Sub-Account, MFS VIT II New Discovery Portfolio S Class Sub-Account, MFS VIT II Research International Portfolio I Class Sub-Account, MFS VIT II Research International Portfolio S Class Sub-Account, MFS VIT II Strategic Income Portfolio I Class Sub-Account, MFS VIT II Strategic Income Portfolio S Class Sub-Account, MFS VIT II Technology Portfolio I Class Sub-Account, MFS VIT II Technology Portfolio S Class Sub-Account, MFS VIT II Total Return Portfolio I Class Sub-Account, MFS VIT II Total Return Portfolio S Class Sub-Account, MFS VIT II Utilities Portfolio I Class Sub-Account, MFS VIT II Utilities Portfolio S Class Sub-Account, MFS VIT II Value Portfolio I Class Sub-Account, MFS VIT II Value Portfolio S Class Sub-Account, MFS VIT Research Bond Series (Service Class) Sub-Account, Morgan Stanley UIF Growth Portfolio Class II Sub-Account, Morgan Stanley UIF Mid Cap Growth Portfolio Class II Sub-Account, Oppenheimer Balanced Fund/VA (Service Shares) Sub-Account, Oppenheimer Capital Appreciation Fund/VA (Service Shares) Sub- Account, Oppenheimer Global Securities Fund/VA (Service Shares) Sub- Account, Oppenheimer Main Street Fund/VA (Service Shares) Sub-Account, Oppenheimer Main Street Small- & Mid-Cap Fund/VA (Service Shares) Sub-Account, PIMCO Equity Series Pathfinder Portfolio Advisor Class Sub-Account, PIMCO VIT All Asset Portfolio Admin Class Sub-Account, PIMCO VIT All Asset Portfolio Advisor Class Sub-Account, PIMCO VIT CommodityRealReturn Strategy Portfolio Advisor Class Sub-Account, PIMCO VIT CommodityRealReturnTM Strategy Portfolio Admin Class Sub-Account, PIMCO VIT Emerging Markets Bond Portfolio Admin Class Sub- Account, PIMCO VIT Emerging Markets Bond Portfolio Advisor Class Sub- Account, PIMCO VIT Global Multi-Asset Portfolio Advisor Class Sub-Account, PIMCO VIT Real Return Portfolio Admin Class Sub-Account, PIMCO VIT Total Return Portfolio Admin Class Sub-Account, Putnam VT Absolute Return 500 Fund Class IB Sub-Account, Putnam VT Equity Income Fund Class IB Sub-Account, SC AllianceBernstein International Value (Service Class) Sub-Account, SC BlackRock Inflation Protected Bond (Service Class) Sub-Account, SC BlackRock International Index Fund (Service Class) Sub-Account, SC BlackRock Large Cap Index Fund (Service Class) Sub-Account, SC BlackRock Small Cap Index Fund (Service Class) Sub-Account, SC Columbia Small Cap Value Service Sub-Account, SC Davis Venture Value Fund (Service Class) Sub-Account, SC Goldman Sachs Mid Cap Value Fund (Initial Class) Sub-Account, SC Goldman Sachs Mid Cap Value Fund (Service Class) Sub-Account, SC Goldman Sachs Short Duration Fund (Initial Class) Sub-Account, SC Goldman Sachs Short Duration Fund (Service Class) Sub-Account, SC Ibbotson Balanced Fund (Service Class) Sub-Account, SC Ibbotson Conservative Fund (Service Class) Sub-Account, SC Ibbotson Growth Fund (Service Class) Sub-Account, SC Invesco Small Cap Growth Service Sub-Account, SC Lord Abbett Growth & Income Fund (Initial Class) Sub-Account, SC Lord Abbett Growth & Income Fund (Service Class) Sub-Account, SC PIMCO High Yield Fund (Service Class) Sub-Account, SC PIMCO Total Return (Service Class) Sub-Account, SC WMC Blue Chip Mid Cap Fund (Service Class) Sub-Account, SC WMC Large Cap Growth Fund (Service Class) Sub-Account, Sun Capital Global Real Estate Fund (Initial Class) Sub-Account, Sun Capital Global Real Estate Fund (Service Class) Sub-Account, Sun Capital Investment Grade Bond Fund (Service Class) Sub-Account, Sun Capital Money Market Fund (Service Class) Sub-Account, Wanger Select Fund Sub-Account, Wanger USA Sub-Account, and Wells Fargo Advantage VT Total Return Bond Fund Class 2 Sub-Account of Sun Life of Canada (U.S.) Variable Account F (collectively the "Sub-Accounts"), as of December 31, 2011, and the related statements of operations and the statements of changes in net assets for each of the periods presented.  These financial statements are the responsibility of the Sponsor’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Sub-Accounts are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting.  Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Sub-Accounts’ internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  Our procedures included confirmation of securities owned as of December 31, 2011, by correspondence with the mutual fund companies.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the Sub-Accounts as of December 31, 2011, and the results of their operations and the changes in their net assets for each of the periods presented in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Boston, Massachusetts

April 23, 2012

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 2011

Assets:	Shares	Cost	Value
Investments at fair value:
AllianceBernstein VPS Balanced Wealth Strategy Portfolio (Class B)      Sub-Account (AVB)	5,320,232	$     54,091,263	$  57,458,501
AllianceBernstein VPS Dynamic Asset Allocation Portfolio Class B      Sub-Account (AAA)	3,959,796	38,567,749	38,568,416
AllianceBernstein VPS International Growth Portfolio (Class B)      Sub-Account (AN4)	595,626	9,566,749	8,892,693
AllianceBernstein VPS International Value Portfolio (Class B)      Sub-Account (IVB)	5,667,383	62,578,616	64,608,169
AllianceBernstein VPS Small/Mid Cap Value Fund (Class B)      Sub-Account (AAU)	4,170	61,972	64,141
BlackRock Global Allocation V.I. Fund (Class III) Sub-Account (9XX)	57,012,587	762,623,016	757,127,151
Columbia Variable Portfolio - Marsico 21st Century Fund Class 1      Sub-Account (NMT)	3,593	42,238	38,189
Columbia Variable Portfolio - Marsico 21st Century Fund Class 2      Sub-Account (MCC)	10,510,338	100,961,092	110,568,757
Columbia Variable Portfolio - Marsico Growth Fund Class 1      Sub-Account (NNG)	1,215	21,793	24,200
Columbia Variable Portfolio - Marsico Growth Fund Class 2      Sub-Account (CMG)	1,464,386	24,332,443	29,170,579
Columbia Variable Portfolio - Marsico International Opportunities      Fund Class 2 Sub-Account (NMI)	802,993	10,786,368	10,671,777
Columbia Variable Portfolio - Small Cap Value Fund Class 2      Sub-Account (CSC)	958	15,172	13,935
Fidelity VIP Balanced Portfolio (Service Class 2) Sub-Account (FVB)	5,314,118	71,591,872	76,682,725
Fidelity VIP Contrafund Portfolio (Service Class 2) Sub-Account (FL1)	9,762,847	177,348,027	221,030,866
Fidelity VIP Freedom 2010 Portfolio (Service Class 2)      Sub-Account (F10)	526,601	4,971,587	5,402,924
Fidelity VIP Freedom 2015 Portfolio (Service Class 2)      Sub-Account (F15)	2,730,423	26,788,435	28,232,570
Fidelity VIP Freedom 2020 Portfolio (Service Class 2)      Sub-Account (F20)	3,646,468	36,243,061	37,084,576
Fidelity VIP Mid Cap Portfolio (Service Class 2) Sub-Account (FVM)	5,521,138	144,905,139	157,794,136
First Eagle Overseas Variable Fund Sub-Account (SGI)	17,601,435	433,219,584	461,685,633
Franklin Templeton VIP Founding Funds Allocation Fund (Class 2)      Sub-Account (S17)	6,406,567	38,440,725	48,625,842
Franklin Templeton VIP Franklin Income Securities Fund (Class 2)      Sub-Account (ISC)	8,093,129	109,281,804	115,893,601
Franklin Templeton VIP Franklin Income Securities Fund Class 4      Sub-Account (AAZ)	92,045	1,314,287	1,338,333
Franklin Templeton VIP Franklin Mutual Shares Securities Fund Class 4      Sub-Account (BBC)	6,818	103,741	105,338
Franklin Templeton VIP Franklin Small Cap Value Securities Fund (Class2)      Sub-Account (FVS)	2,509,479	34,546,973	38,972,207
Franklin Templeton VIP Franklin Small Cap Value Securities Fund Class 4      Sub-Account (BBA)	32,720	510,094	514,029
Franklin Templeton VIP Franklin Strategic Income Securities Fund (Class 2)      Sub-Account (SIC)	2,801,009	34,134,199	34,368,378

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2011

Assets (continued):	Shares	Cost	Value
Investments at fair value (continued):
Franklin Templeton VIP Franklin Strategic Income Securities Fund Class 4      Sub- Account (BBB)	15,202	$           188,592	$       189,112
Franklin Templeton VIP Mutual Shares Securities Fund (Class 2)      Sub-Account (FMS)	15,844,464	216,174,737	243,687,852
Franklin Templeton VIP Templeton Developing Markets Securities Fund (Class 2)      Sub-Account (TDM)	4,934,966	42,029,676	46,487,383
Franklin Templeton VIP Templeton Foreign Securities Fund (Class 2)      Sub-Account (FTI)	16,504,655	220,761,145	207,298,469
Franklin Templeton VIP Templeton Global Bond Securities Class 4      Sub-Account (AAX)	16,844	309,960	310,599
Franklin Templeton VIP Templeton Growth Securities Fund (Class 2)      Sub-Account (FTG)	3,046,940	31,878,866	30,804,560
Huntington VA Balanced Fund Sub-Account (HBF)	1,205,567	15,441,872	16,106,376
Huntington VA Dividend Capture Sub-Account (HVD)	434,508	3,718,767	4,371,146
Huntington VA Growth Sub-Account (HVG)	106,874	744,526	807,966
Huntington VA Income Equity Sub-Account (HVI)	123,585	864,272	1,114,733
Huntington VA International Equity Sub-Account (HVE)	394,051	4,929,365	4,976,865
Huntington VA Macro 100 Sub-Account (HVM)	8,772	67,928	77,544
Huntington VA Mid Corp America Sub-Account (HVC)	74,239	975,648	1,267,264
Huntington VA Mortgage Securities Sub-Account (HVS)	710,382	8,251,668	8,425,130
Huntington VA New Economy Sub-Account (HVN)	36,373	376,077	401,560
Huntington VA Real Strategies Fund Sub-Account (HRS)	297,454	2,423,643	2,498,612
Huntington VA Rotating Markets Sub-Account (HVR)	116,025	1,213,341	1,371,418
Huntington VA Situs Fund Sub-Account (HSS)	337,773	4,180,566	5,015,924
Invesco V.I. International Growth Fund II Sub-Account (AI8)	479	12,752	12,500
Invesco Van Kampen V.I.  Mid Cap Value  Fund  II      Sub-Account (VKC)	509,944	6,330,027	6,491,582
Invesco Van Kampen V.I. Comstock Fund Series II      Sub-Account (VLC)	2,022,590	20,413,936	22,814,813
Invesco Van Kampen V.I. Equity and Income Fund II      Sub-Account (VKU)	3,789,550	50,031,970	51,651,570
JPMorgan Insurance Trust Core Bond Portfolio (Class 2)      Sub-Account (AAY)	146,590	1,706,626	1,712,175
JPMorgan Insurance Trust U.S. Equity Portfolio (Class 2)      Sub-Account (AAM)	3,527	52,971	53,540
Lazard Retirement Emerging Markets Equity Portfolio Service Class      Sub-Account (LRE)	3,060,630	61,021,629	57,264,390
Lord Abbett Series Fund - Growth Opportunities Portfolio VC      Sub-Account (LA9)	3,395,408	46,200,532	41,525,839
Lord Abbett Series Fund- Fundamental Equity Portfolio VC      Sub-Account (LAV)	2,827,303	43,271,017	45,971,939
MFS VIT II Blended Research Core Equity Portfolio I Class      Sub-Account (MIT)	9,080,839	251,243,952	289,315,519
MFS VIT II Blended Research Core Equity Portfolio S Class      Sub-Account (MFL)	4,246,670	121,335,858	134,407,094

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2011

Assets (continued):	Shares	Cost	Value
Investments at fair value (continued):
MFS VIT II Bond Portfolio I Class Sub-Account (BDS)	7,660,025	$       80,578,734	$         89,392,489
MFS VIT II Bond Portfolio S Class Sub-Account (MF7)	13,283,579	146,637,417	153,558,169
MFS VIT II Core Equity Portfolio I Class Sub-Account (RGS)	6,771,676	105,314,882	94,464,876
MFS VIT II Core Equity Portfolio S Class Sub-Account (RG1)	2,569,546	32,081,886	35,562,513
MFS VIT II Emerging Growth Portfolio S Class Sub-Account (MFF)	453,438	7,972,440	9,830,538
MFS VIT II Emerging Markets Equity Portfolio I Class      Sub-Account (EME)	2,659,693	42,570,264	36,810,149
MFS VIT II Emerging Markets Equity Portfolio S Class      Sub-Account (EM1)	2,379,711	36,195,302	32,459,265
MFS VIT II Global Governments Portfolio  I Class      Sub-Account (GGS)	2,309,957	24,860,457	26,079,409
MFS VIT II Global Governments Portfolio S Class Sub-Account      (GG1)	233,182	2,451,945	2,595,319
MFS VIT II Global Growth Portfolio  I Class Sub-Account (GGR)	3,564,153	44,466,645	53,854,348
MFS VIT II Global Growth Portfolio S Class Sub-Account (GG2)	200,409	2,878,466	3,014,152
MFS VIT II Global Research Portfolio I Class Sub-Account (RES)	6,365,792	102,221,745	112,738,179
MFS VIT II Global Research Portfolio S Class Sub-Account (RE1)	699,598	10,621,789	12,312,934
MFS VIT II Global Tactical Allocation Portfolio I Class      Sub-Account (GTR)	5,214,095	79,188,999	74,144,437
MFS VIT II Global Tactical Allocation Portfolio S Class      Sub-Account (GT2)	61,765,368	866,854,543	868,421,080
MFS VIT II Government Securities Portfolio  I Class      Sub-Account (GSS)	11,886,690	153,093,689	163,085,391
MFS VIT II Government Securities Portfolio S Class      Sub-Account (MFK)	27,856,357	363,865,212	379,403,581
MFS VIT II Growth Portfolio Sub-Account (EGS)	5,672,806	92,914,936	125,312,279
MFS VIT II High Yield Portfolio  I Class Sub-Account (HYS)	15,527,013	82,878,049	87,572,356
MFS VIT II High Yield Portfolio S Class Sub-Account (MFC)	13,060,266	64,259,035	73,006,888
MFS VIT II International Growth Portfolio I Class      Sub-Account (IGS)	4,613,568	62,882,273	51,118,336
MFS VIT II International Growth Portfolio S Class      Sub-Account (IG1)	2,195,489	26,481,897	24,150,384
MFS VIT II International Value Portfolio I Class Sub-Account (MII)	3,054,208	52,308,022	46,301,793
MFS VIT II International Value Portfolio S Class Sub-Account (MI1)	10,550,943	158,831,260	158,158,631
MFS VIT II Massachusetts Investors Growth Stock Portfolio I Class      Sub-Account (MIS)	28,055,743	277,906,965	321,238,256
MFS VIT II Massachusetts Investors Growth Stock Portfolio S Class      Sub-Account (M1B)	4,259,146	41,752,023	48,426,495
MFS VIT II Mid Cap Growth Portfolio I Class Sub-Account (MCS)	3,465,038	18,590,168	19,577,466
MFS VIT II Mid Cap Growth Portfolio S Class Sub-Account (MC1)	1,943,728	8,615,241	10,729,378
MFS VIT II Money Market Portfolio  I Class Sub-Account (MMS)	96,588,498	96,588,498	96,588,498
MFS VIT II Money Market Portfolio S Class Sub-Account (MM1)	123,631,881	123,631,881	123,631,881
MFS VIT II New Discovery Portfolio  I Class Sub-Account (NWD)	3,600,873	49,930,331	54,733,267
MFS VIT II New Discovery Portfolio S Class Sub-Account (M1A)	4,097,665	47,377,245	60,317,624

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2011

Assets (continued):	Shares	Cost	Value
Investments at fair value (continued):
MFS VIT II Research International Portfolio I Class      Sub-Account (RIS)	2,722,268	$       44,799,264	$          32,503,881
MFS VIT II Research International Portfolio S Class      Sub-Account (RI1)	7,647,358	100,339,855	90,238,822
MFS VIT II Strategic Income Portfolio I Class Sub-Account (SIS)	3,791,222	35,169,742	36,926,506
MFS VIT II Strategic Income Portfolio S Class Sub-Account (SI1)	1,036,421	9,609,754	10,022,193
MFS VIT II Technology Portfolio I Class Sub-Account (TEC)	2,108,149	12,250,355	14,588,392
MFS VIT II Technology Portfolio S Class Sub-Account (TE1)	216,390	1,237,712	1,456,301
MFS VIT II Total Return Portfolio  I Class Sub-Account (TRS)	27,032,760	471,555,000	449,284,475
MFS VIT II Total Return Portfolio S Class Sub-Account (MFJ)	39,071,232	650,704,270	643,112,485
MFS VIT II Utilities Portfolio  I Class Sub-Account (UTS)	6,902,630	143,128,829	154,204,748
MFS VIT II Utilities Portfolio S Class Sub-Account (MFE)	5,278,450	101,776,373	116,653,740
MFS VIT II Value Portfolio I Class Sub-Account (MVS)	8,353,675	127,954,860	105,590,450
MFS VIT II Value Portfolio S Class Sub-Account (MV1)	15,160,235	178,335,339	189,806,138
MFS VIT Research Bond Series (Service Class) Sub-Account (AAN)	178,612	2,280,220	2,295,169
Morgan Stanley UIF Growth Portfolio Class II Sub-Account (AAW)	1,191	24,217	23,549
Morgan Stanley UIF Mid Cap Growth Portfolio Class II      Sub-Account (VKM)	1,315,079	15,287,861	14,623,674
Oppenheimer Balanced Fund/VA (Service Shares)      Sub-Account (OBV)	1,116,984	10,502,702	12,476,713
Oppenheimer Capital Appreciation Fund/VA (Service Shares)      Sub-Account (OCA)	593,542	20,438,714	23,385,558
Oppenheimer Global Securities Fund/VA (Service Shares)      Sub-Account (OGG)	1,050,367	26,744,442	28,580,499
Oppenheimer Main Street Fund/VA (Service Shares)      Sub-Account  (OMG)	18,367,914	348,170,650	377,093,266
Oppenheimer Main Street Small- & Mid-Cap Fund/VA (Service Shares)      Sub-Account (OMS)	488,833	7,249,027	8,319,941
PIMCO Equity Series Pathfinder Portfolio Advisor Class      Sub-Account (AAQ)	7,272	71,426	71,413
PIMCO VIT All Asset Portfolio Admin Class Sub-Account (PRA)	526,491	5,727,789	5,491,304
PIMCO VIT All Asset Portfolio Advisor Class Sub-Account (AAP)	727,390	7,757,163	7,630,325
PIMCO VIT CommodityRealReturn Strategy Portfolio Advisor Class      Sub-Account (BBD)	78,268	592,073	569,007
PIMCO VIT CommodityRealReturnTM Strategy Portfolio Admin Class      Sub-Account (PCR)	10,273,536	85,494,867	73,969,457
PIMCO VIT Emerging Markets Bond Portfolio Admin Class      Sub-Account (PMB)	1,833,383	24,376,259	25,025,685
PIMCO VIT Emerging Markets Bond Portfolio Advisor Class      Sub -Account (BBE)	30,613	417,863	417,873
PIMCO VIT Global Multi-Asset Portfolio Advisor Class      Sub-Account (6TT)	85,904,239	1,068,731,064	1,044,595,551
PIMCO VIT Real Return Portfolio Admin Class Sub-Account (PRR)	7,417,235	92,093,378	103,470,424
PIMCO VIT Total Return Portfolio Admin Class Sub-Account (PTR)	33,231,147	357,555,000	366,207,244

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2011

Assets (continued):	Shares	Cost	Value
Investments at fair value (continued):
Putnam VT Absolute Return 500 Fund Class IB Sub-Account (AAR)	232,720	$         2,223,017	$          2,236,443
Putnam VT Equity Income Fund Class IB Sub-Account (AAS)	19,146	256,235	257,899
SC AllianceBernstein International Value (Service Class)      Sub-Account (3XX)	459,477	4,332,363	3,542,567
SC BlackRock Inflation Protected Bond (Service Class)      Sub-Account (5XX)	23,186,257	251,265,337	262,236,569
SC BlackRock International Index Fund (Service Class)      Sub-Account (SBI)	469,664	4,507,183	4,250,461
SC BlackRock Large Cap Index Fund (Service Class)      Sub-Account (SSA)	3,092,464	26,662,825	26,193,175
SC BlackRock Small Cap Index Fund (Service Class)      Sub-Account (VSC)	8,947,054	76,404,458	109,690,881
SC Columbia Small Cap Value Service Sub-Account (2XX)	1,322,376	12,808,426	10,975,717
SC Davis Venture Value Fund (Service Class) Sub-Account (SVV)	20,072,747	182,644,375	219,796,575
SC Goldman Sachs Mid Cap Value Fund (Initial Class)      Sub-Account (SGC)	6,071,824	42,023,588	52,581,997
SC Goldman Sachs Mid Cap Value Fund (Service Class)      Sub-Account (S13)	3,228,685	28,548,310	27,863,552
SC Goldman Sachs Short Duration Fund (Initial Class)      Sub-Account (SDC)	50,701,758	517,537,725	516,143,901
SC Goldman Sachs Short Duration Fund (Service Class)      Sub-Account (S15)	17,597,942	180,764,448	178,971,071
SC Ibbotson Balanced Fund (Service Class) Sub-Account (7XX)	148,651,726	1,697,908,386	1,721,386,983
SC Ibbotson Conservative Fund (Service Class) Sub-Account (6XX)	77,508,855	861,167,509	888,251,475
SC Ibbotson Growth Fund (Service Class) Sub-Account (8XX)	47,367,140	504,706,729	506,828,400
SC Invesco Small Cap Growth Service Sub-Account (1XX)	1,149,252	12,335,205	12,044,157
SC Lord Abbett Growth & Income Fund (Initial Class)      Sub-Account (SLC)	44,415,917	271,529,271	286,926,824
SC Lord Abbett Growth & Income Fund (Service Class)      Sub-Account (S12)	2,065,340	15,443,377	13,280,139
SC PIMCO High Yield Fund (Service Class) Sub-Account (S14)	3,093,016	29,445,172	28,641,325
SC PIMCO Total Return (Service Class) Sub-Account (4XX)	57,277,968	654,809,825	651,823,271
SC WMC Blue Chip Mid Cap Fund (Service Class)      Sub-Account (S16)	2,440,088	26,625,573	33,258,401
SC WMC Large Cap Growth Fund (Service Class)      Sub-Account (LGF)	606,721	5,342,389	5,569,702
Sun Capital Global Real Estate Fund (Initial Class)      Sub-Account (SC3)	404,895	3,473,450	3,947,722
Sun Capital Global Real Estate Fund (Service Class)      Sub-Account (SRE)	10,055,075	91,489,809	108,997,013
Sun Capital Investment Grade Bond Fund (Service Class)      Sub-Account (IGB)	17,301,696	162,913,343	166,269,297
Sun Capital Money Market Fund (Service Class)      Sub-Account(CMM)	150,089,582	150,089,582	150,089,582

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2011

Assets (continued):	Shares	Cost	Value
Investments at fair value (continued):
Wanger Select Fund Sub-Account (WTF)	28,959	$             473,339	$              676,190
Wanger USA Sub-Account (USC)	1,907	60,359	56,842
Wells Fargo Advantage VT Total Return Bond Fund Class 2      Sub-Account (AAL)	1,383,755	14,492,855	14,584,779
Total  investments		$ 16,422,662,688	$  16,925,969,194
Total assets		$ 16,422,662,688	$  16,925,969,194
Liabilities:
Payable to Sponsor			$           6,773,685
Total liabilities			6,773,685
Net Assets			$  16,919,195,509

The accompanying notes are an integral part of these financial statements.

 SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2011

		Applicable to Owners of Deferred Variable Annuity Contracts	Reserve for	Total
	Units	Value	Variable Annuities	Value
Net Assets:
AVB	5,947,187	$                57,458,501	$                        -	$       57,458,501
AAA	4,101,476	38,568,416	-	38,568,416
AN4	1,252,450	8,892,693	-	8,892,693
IVB	11,207,531	64,608,169	-	64,608,169
AAU	6,115	64,141	-	64,141
9XX	61,777,993	757,127,151	-	757,127,151
NMT	3,533	38,189	-	38,189
MCC	13,269,893	110,553,433	13,269	110,566,702
NNG	2,170	24,200	-	24,200
CMG	2,948,066	29,170,579	-	29,170,579
NMI	1,007,217	10,671,777	-	10,671,777
CSC	1,172	13,935	-	13,935
FVB	7,396,640	76,682,725	-	76,682,725
FL1	22,654,962	221,030,866	-	221,030,866
F10	472,101	5,402,924	-	5,402,924
F15	2,439,910	28,232,570	-	28,232,570
F20	3,280,196	37,084,576	-	37,084,576
FVM	14,937,626	157,785,121	7,276	157,792,397
SGI	42,483,720	461,677,945	6,389	461,684,334
S17	5,135,868	48,625,842	-	48,625,842
ISC	11,052,281	115,849,081	44,225	115,893,306
AAZ	129,363	1,338,333	-	1,338,333
BBC	9,990	105,338	-	105,338
FVS	2,017,094	38,966,850	3,533	38,970,383
BBA	46,701	514,029	-	514,029
SIC	2,800,517	34,368,378	-	34,368,378
BBB	18,795	189,112	-	189,112
FMS	16,848,114	243,682,821	3,164	243,685,985
TDM	3,451,536	46,483,997	2,797	46,486,794
FTI	13,164,270	207,215,388	74,961	207,290,349
AAX	31,720	310,599	-	310,599
FTG	2,191,897	30,804,560	-	30,804,560
HBF	1,299,312	16,106,376	-	16,106,376
HVD	419,954	4,371,146	-	4,371,146
HVG	109,345	807,966	-	807,966
HVI	129,405	1,114,733	-	1,114,733
HVE	673,679	4,976,865	-	4,976,865
HVM	8,964	77,544	-	77,544
HVC	135,012	1,267,264	-	1,267,264
HVS	745,930	8,425,130	-	8,425,130
HVN	64,413	401,560	-	401,560
HRS	365,057	2,498,612	-	2,498,612

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2011

		Applicable to Owners of Deferred Variable Annuity Contracts	Reserve for	Total
	Units	Value	Variable Annuities	Value
Net Assets (continued):
HVR	160,878	$              1,371,418	$                        -	$              1,371,418
HSS	519,574	5,015,924	-	5,015,924
AI8	1,222	12,500	-	12,500
VKC	608,083	6,491,582	-	6,491,582
VLC	2,647,256	22,814,813	-	22,814,813
VKU	4,795,893	51,651,570	-	51,651,570
AAY	170,792	1,712,175	-	1,712,175
AAM	5,184	53,540	-	53,540
LRE	6,403,042	57,264,390	-	57,264,390
LA9	3,079,831	41,509,363	15,398	41,524,761
LAV	3,280,677	45,971,939	-	45,971,939
MIT	18,480,552	287,220,641	1,241,661	288,462,302
MFL	9,632,098	134,346,841	54,413	134,401,254
BDS	4,609,175	88,763,790	417,841	89,181,631
MF7	9,806,250	153,556,663	-	153,556,663
RGS	7,453,731	94,104,427	225,445	94,329,872
RG1	3,585,793	35,556,823	882	35,557,705
MFF	776,655	9,830,029	-	9,830,029
EME	1,418,256	36,395,186	275,424	36,670,610
EM1	2,229,533	32,459,265	-	32,459,265
GGS	1,256,337	25,923,094	84,917	26,008,011
GG1	155,653	2,593,778	-	2,593,778
GGR	2,773,868	53,412,794	282,789	53,695,583
GG2	205,718	3,009,507	3,063	3,012,570
RES	7,166,923	111,686,937	683,620	112,370,557
RE1	969,870	12,311,079	558	12,311,637
GTR	3,221,964	73,239,210	513,559	73,752,769
GT2	83,798,499	868,416,102	3,419	868,419,521
GSS	8,225,599	162,298,916	628,083	162,926,999
MFK	28,525,248	379,069,888	296,584	379,366,472
EGS	9,986,814	124,500,490	571,933	125,072,423
HYS	4,271,067	86,592,305	507,501	87,099,806
MFC	4,304,415	72,932,180	63,608	72,995,788
IGS	3,253,080	50,857,762	176,556	51,034,318
IG1	2,183,236	24,149,594	-	24,149,594
MII	2,220,602	45,871,676	306,080	46,177,756
MI1	16,726,064	158,147,542	9,374	158,156,916
MIS	31,914,695	318,857,634	2,153,664	321,011,298
M1B	4,131,256	48,419,174	5,802	48,424,976
MCS	3,961,768	19,512,810	55,077	19,567,887
MC1	1,221,431	10,727,058	971	10,728,029
MMS	7,697,443	94,758,910	1,264,552	96,023,462

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2011

		Applicable to Owners of Deferred Variable Annuity Contracts	Reserve for	Total
	Units	Value	Variable Annuities	Value
Net Assets (continued):
MM1	12,602,049	$            123,548,184	$               74,611	$          123,622,795
NWD	3,937,734	54,572,228	113,546	54,685,774
M1A	3,562,208	60,281,721	28,669	60,310,390
RIS	2,377,975	32,425,103	81,004	32,506,107
RI1	5,379,665	90,212,068	24,977	90,237,045
SIS	2,148,862	36,765,919	150,485	36,916,404
SI1	636,505	10,015,557	4,003	10,019,560
TEC	2,826,156	14,530,755	51,330	14,582,085
TE1	130,600	1,456,301	-	1,456,301
TRS	19,776,275	443,967,417	3,610,433	447,577,850
MFJ	45,326,523	642,778,584	284,246	643,062,830
UTS	5,272,233	152,925,586	813,768	153,739,354
MFE	3,652,256	116,647,777	1,374	116,649,151
MVS	6,332,031	104,937,045	561,358	105,498,403
MV1	12,369,770	189,797,106	3,502	189,800,608
AAN	228,381	2,295,169	-	2,295,169
AAW	2,558	23,549	-	23,549
VKM	1,270,344	14,623,674	-	14,623,674
OBV	1,674,843	12,476,713	-	12,476,713
OCA	1,706,163	23,379,128	4,920	23,384,048
OGG	2,105,725	28,580,499	-	28,580,499
OMG	27,952,286	376,987,976	94,823	377,082,799
OMS	448,379	8,319,941	-	8,319,941
AAQ	7,060	71,413	-	71,413
PRA	447,883	5,491,304	-	5,491,304
AAP	763,861	7,630,325	-	7,630,325
BBD	62,501	569,007	-	569,007
PCR	7,266,721	73,969,457	-	73,969,457
PMB	1,020,777	25,025,685	-	25,025,685
BBE	41,476	417,873	-	417,873
6TT	92,518,029	1,044,595,551	-	1,044,595,551
PRR	6,421,218	103,470,424	-	103,470,424
PTR	24,120,523	366,100,415	94,001	366,194,416
AAR	222,829	2,236,443	-	2,236,443
AAS	24,071	257,899	-	257,899
3XX	358,397	3,542,567	-	3,542,567
5XX	21,180,067	262,236,569	-	262,236,569
SBI	492,505	4,250,461	-	4,250,461
SSA	2,632,636	26,193,175	-	26,193,175
VSC	12,024,401	109,676,957	12,085	109,689,042
2XX	837,562	10,975,717	-	10,975,717
SVV	25,668,113	219,780,477	14,269	219,794,746

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF ASSETS AND LIABILITIES (CONTINUED)

DECEMBER 31, 2011

		Applicable to Owners of Deferred Variable Annuity Contracts	Reserve for	Total
	Units	Value	Variable Annuities	Value
Net Assets (continued):
SGC	4,999,791	$              52,562,307	$                16,333	$               52,578,640
S13	2,669,109	27,863,552	-	27,863,552
SDC	50,037,729	516,049,055	88,011	516,137,066
S15	17,502,438	178,971,071	-	178,971,071
7XX	132,031,901	1,721,386,983	-	1,721,386,983
6XX	71,730,436	888,251,353	-	888,251,353
8XX	37,705,543	506,828,400	-	506,828,400
1XX	860,442	12,037,223	7,066	12,044,289
SLC	32,153,502	286,810,014	101,629	286,911,643
S12	1,500,444	13,280,139	-	13,280,139
S14	2,326,972	28,641,325	-	28,641,325
4XX	53,824,196	651,823,271	-	651,823,271
S16	3,190,123	33,258,401	-	33,258,401
LGF	663,785	5,569,702	-	5,569,702
SC3	253,031	3,944,169	2,677	3,946,846
SRE	9,929,655	108,974,506	20,796	108,995,302
IGB	13,453,290	166,269,297	-	166,269,297
CMM	14,892,335	149,951,761	126,392	150,078,153
WTF	56,247	676,190	-	676,190
USC	4,964	56,842	-	56,842
AAL	1,392,144	14,584,779	-	14,584,779
Total net assets		$        16,902,810,813	$          16,384,696	$   16,919,195,509

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2011

	AVB	AAA	AN4
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        1,242,992	$                      -	$           249,737
Expenses:
Mortality and expense risk charges	(824,873)	(152,758)	(136,783)
Distribution and administrative expense charges	(98,985)	(18,331)	(16,414)
Net investment income (loss)	319,134	(171,089)	96,540
Net realized and change in unrealized losses:
Net realized gains (losses) on sale of investments	1,869,277	(6,157)	276,732
Realized gain distributions	-	-	-
Net realized gains (losses)	1,869,277	(6,157)	276,732
Net change in unrealized appreciation/ depreciation	(4,999,607)	667	(2,055,549)
Net realized and change in unrealized losses	(3,130,330)	(5,490)	(1,778,817)
Decrease in net assets from operations	$     (2,811,196)	$        (176,579)	$     (1,682,277)
	IVB	AAU	9XX
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        2,923,382	$                      -	$      17,942,667
Expenses:
Mortality and expense risk charges	(1,113,242)	(48)	(10,411,129)
Distribution and administrative expense charges	(133,589)	(6)	(1,249,336)
Net investment income (loss)	1,676,551	(54)	6,282,202
Net realized and change in unrealized (losses) gains:
Net realized gains on sale of investments	129,126	33	11,729,321
Realized gain distributions	-	-	19,063,805
Net realized gains	129,126	33	30,793,126
Net change in unrealized appreciation/ depreciation	(17,353,908)	2,169	(77,867,381)
Net realized and change in unrealized (losses) gains	(17,224,782)	2,202	(47,074,255)
(Decrease) increase in net assets from operations	$   (15,548,231)	$               2,148	$   (40,792,053)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	NMT	MCC	NNG
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$                      -	$                      -	$                    83
Expenses:
Mortality and expense risk charges	(590)	(1,920,158)	(1,582)
Distribution and administrative expense charges	(71)	(230,419)	(190)
Net investment loss	(661)	(2,150,577)	(1,689)
Net realized and change in unrealized losses:
Net realized (losses) gains on sale of investments	(409)	(2,781,978)	11,905
Realized gain distributions	-	-	-
Net realized (losses) gains	(409)	(2,781,978)	11,905
Net change in unrealized appreciation/ depreciation	(4,433)	(12,374,508)	(16,572)
Net realized and change in unrealized losses	(4,842)	(15,156,486)	(4,667)
Decrease in net assets from operations	$            (5,503)	$   (17,307,063)	$            (6,356)
	CMG	NMI	CSC
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$             27,732	$           103,564	$                  131
Expenses:
Mortality and expense risk charges	(442,169)	(191,926)	(220)
Distribution and administrative expense charges	(53,060)	(23,031)	(26)
Net investment loss	(467,497)	(111,393)	(115)
Net realized and change in unrealized losses:
Net realized gains (losses) on sale of investments	799,290	523,432	(243)
Realized gain distributions	-	-	1,599
Net realized gains	799,290	523,432	1,356
Net change in unrealized appreciation/ depreciation	(1,705,400)	(2,826,003)	(2,461)
Net realized and change in unrealized losses	(906,110)	(2,302,571)	(1,105)
Decrease in net assets from operations	$     (1,373,607)	$     (2,413,964)	$            (1,220)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	FVB	FL1	F10
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        1,148,643	$        1,836,303	$           102,827
Expenses:
Mortality and expense risk charges	(1,023,128)	(3,395,176)	(93,685)
Distribution and administrative expense charges	(122,775)	(407,421)	(11,242)
Net investment income (loss)	2,740	(1,966,294)	(2,100)
Net realized and change in unrealized losses:
Net realized gains on sale of investments	2,270,791	11,701,252	254,946
Realized gain distributions	213,579	-	28,761
Net realized gains	2,484,370	11,701,252	283,707
Net change in unrealized appreciation/ depreciation	(6,962,155)	(19,823,020)	(387,734)
Net realized and change in unrealized losses	(4,477,785)	(8,121,768)	(104,027)
Decrease in net assets from operations	$     (4,475,045)	$   (10,088,062)	$        (106,127)
	F15	F20	FVM
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           533,067	$           744,563	$             37,995
Expenses:
Mortality and expense risk charges	(455,411)	(604,407)	(2,599,043)
Distribution and administrative expense charges	(54,649)	(72,529)	(311,885)
Net investment income (loss)	23,007	67,627	(2,872,933)
Net realized and change in unrealized losses:
Net realized losses on sale of investments	(549,960)	(860,922)	(2,764,751)
Realized gain distributions	146,593	142,500	298,540
Net realized losses	(403,367)	(718,422)	(2,466,211)
Net change in unrealized appreciation/ depreciation	(193,367)	(492,015)	(16,962,976)
Net realized and change in unrealized losses	(596,734)	(1,210,437)	(19,429,187)
Decrease in net assets from operations	$        (573,727)	$     (1,142,810)	$   (22,302,120)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	SGI	S17	ISC
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        5,872,831	$               8,195	$        6,563,565
Expenses:
Mortality and expense risk charges	(7,047,525)	(790,415)	(1,712,751)
Distribution and administrative expense charges	(845,703)	(94,850)	(205,530)
Net investment (loss) income	(2,020,397)	(877,070)	4,645,284
Net realized and change in unrealized losses:
Net realized gains (losses) on sale of investments	1,338,443	258,562	(2,738,894)
Realized gain distributions	8,148,343	-	-
Net realized gains (losses)	9,486,786	258,562	(2,738,894)
Net change in unrealized appreciation/ depreciation	(45,605,215)	(959,210)	(1,545,606)
Net realized and change in unrealized losses	(36,118,429)	(700,648)	(4,284,500)
(Decrease) increase in net assets from operations	$   (38,138,826)	$     (1,577,718)	$           360,784
	AAZ	BBC	FVS
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$                      -	$                      -	$           292,831
Expenses:
Mortality and expense risk charges	(1,251)	(79)	(645,460)
Distribution and administrative expense charges	(150)	(10)	(77,455)
Net investment loss	(1,401)	(89)	(430,084)
Net realized and change in unrealized gains (losses):
Net realized (losses) gains on sale of investments	(41)	1	3,422,962
Realized gain distributions	-	-	-
Net realized (losses) gains	(41)	1	3,422,962
Net change in unrealized appreciation/ depreciation	24,046	1,597	(5,359,748)
Net realized and change in unrealized gains (losses)	24,005	1,598	(1,936,786)
Increase (decrease) in net assets from operations	$             22,604	$               1,509	$     (2,366,870)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	BBA	SIC	BBB
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$                      -	$        1,988,960	$                      -
Expenses:
Mortality and expense risk charges	(519)	(499,870)	(209)
Distribution and administrative expense charges	(62)	(59,984)	(25)
Net investment (loss) income	(581)	1,429,106	(234)
Net realized and change in unrealized gains (losses):
Net realized (losses) gains on sale of investments	(9)	1,046,155	(4)
Realized gain distributions	-	-	-
Net realized (losses) gains	(9)	1,046,155	(4)
Net change in unrealized appreciation/ depreciation	3,935	(2,245,020)	520
Net realized and change in unrealized gains (losses)	3,926	(1,198,865)	516
Increase in net assets from operations	$               3,345	$           230,241	$                  282
	FMS	TDM	FTI
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        5,997,744	$           517,476	$        4,091,409
Expenses:
Mortality and expense risk charges	(3,878,500)	(820,105)	(3,811,088)
Distribution and administrative expense charges	(465,420)	(98,413)	(457,331)
Net investment income (loss)	1,653,824	(401,042)	(177,010)
Net realized and change in unrealized losses:
Net realized losses on sale of investments	(10,633,380)	(1,989,043)	(20,735,923)
Realized gain distributions	-	-	-
Net realized losses	(10,633,380)	(1,989,043)	(20,735,923)
Net change in unrealized appreciation/ depreciation	2,656,053	(7,349,434)	(5,535,384)
Net realized and change in unrealized losses	(7,977,327)	(9,338,477)	(26,271,307)
Decrease in net assets from operations	$     (6,323,503)	$     (9,739,519)	$   (26,448,317)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	AAX	FTG	HBF
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$                      -	$           460,170	$           145,866
Expenses:
Mortality and expense risk charges	(365)	(515,427)	(183,545)
Distribution and administrative expense charges	(44)	(61,851)	(22,025)
Net investment loss	(409)	(117,108)	(59,704)
Net realized and change in unrealized gains (losses):
Net realized (losses) gains on sale of investments	(2)	(3,107,548)	110,322
Realized gain distributions	-	-	669
Net realized (losses) gains	(2)	(3,107,548)	110,991
Net change in unrealized appreciation/ depreciation	639	489,250	(108,058)
Net realized and change in unrealized gains (losses)	637	(2,618,298)	2,933
Increase (decrease) in net assets from operations	$                  228	$     (2,735,406)	$          (56,771)
	HVD	HVG	HVI
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           159,351	$               1,263	$             31,595
Expenses:
Mortality and expense risk charges	(57,825)	(11,147)	(15,538)
Distribution and administrative expense charges	(6,939)	(1,338)	(1,865)
Net investment income (loss)	94,587	(11,222)	14,192
Net realized and change in unrealized gains (losses):
Net realized gains on sale of investments	155,657	10,797	16,461
Realized gain distributions	-	-	-
Net realized gains	155,657	10,797	16,461
Net change in unrealized appreciation/ depreciation	(29,881)	(37,962)	29,960
Net realized and change in unrealized gains (losses)	125,776	(27,165)	46,421
Increase (decrease) in net assets from operations	$           220,363	$          (38,387)	$             60,613

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	HVE	HVM	HVC
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$             61,785	$                  440	$               6,047
Expenses:
Mortality and expense risk charges	(72,227)	(928)	(19,165)
Distribution and administrative expense charges	(8,667)	(111)	(2,300)
Net investment loss	(19,109)	(599)	(15,418)
Net realized and change in unrealized losses:
Net realized gains on sale of investments	91,806	55	30,659
Realized gain distributions	-	-	-
Net realized gains	91,806	55	30,659
Net change in unrealized appreciation/ depreciation	(740,178)	(956)	(69,829)
Net realized and change in unrealized losses	(648,372)	(901)	(39,170)
Decrease in net assets from operations	$        (667,481)	$            (1,500)	$          (54,588)
	HVS	HVN	HRS
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           165,941	$                      -	$               3,951
Expenses:
Mortality and expense risk charges	(95,469)	(5,762)	(34,429)
Distribution and administrative expense charges	(11,456)	(691)	(4,131)
Net investment income (loss)	59,016	(6,453)	(34,609)
Net realized and change in unrealized gains (losses):
Net realized gains on sale of investments	52,714	517	76,326
Realized gain distributions	-	-	-
Net realized gains	52,714	517	76,326
Net change in unrealized appreciation/ depreciation	149,991	(55,256)	(325,556)
Net realized and change in unrealized gains (losses)	202,705	(54,739)	(249,230)
Increase (decrease) in net assets from operations	$           261,721	$          (61,192)	$        (283,839)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	HVR	HSS	AI8
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$               4,555	$               1,175	$                      -
Expenses:
Mortality and expense risk charges	(19,010)	(69,214)	(16)
Distribution and administrative expense charges	(2,281)	(8,306)	(2)
Net investment loss	(16,736)	(76,345)	(18)
Net realized and change in unrealized gains (losses):
Net realized gains (losses) on sale of investments	45,190	215,969	(1)
Realized gain distributions	-	-	-
Net realized gains (losses)	45,190	215,969	(1)
Net change in unrealized appreciation/ depreciation	36,303	(272,980)	(252)
Net realized and change in unrealized gains (losses)	81,493	(57,011)	(253)
Increase (decrease) in net assets from operations	$             64,757	$        (133,356)	$               (271)
	VKC	VLC	VKU
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$             38,295	$           335,236	$           661,113
Expenses:
Mortality and expense risk charges	(98,221)	(367,313)	(596,619)
Distribution and administrative expense charges	(11,787)	(44,078)	(71,594)
Net investment loss	(71,713)	(76,155)	(7,100)
Net realized and change in unrealized losses:
Net realized gains on sale of investments	643,544	1,412,990	848,883
Realized gain distributions	-	-	-
Net realized gains	643,544	1,412,990	848,883
Net change in unrealized appreciation/ depreciation	(687,441)	(2,322,504)	(2,444,214)
Net realized and change in unrealized losses	(43,897)	(909,514)	(1,595,331)
Decrease in net assets from operations	$        (115,610)	$        (985,669)	$     (1,602,431)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	AAY	AAM	LRE
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$                      -	$                      -	$        1,248,199
Expenses:
Mortality and expense risk charges	(1,223)	(51)	(903,624)
Distribution and administrative expense charges	(147)	(6)	(108,435)
Net investment (loss) income	(1,370)	(57)	236,140
Net realized and change in unrealized gains (losses):
Net realized gains on sale of investments	10	-	5,487,658
Realized gain distributions	-	-	-
Net realized gains	10	-	5,487,658
Net change in unrealized appreciation/ depreciation	5,549	569	(18,465,347)
Net realized and change in unrealized gains (losses)	5,559	569	(12,977,689)
Increase (decrease) in net assets from operations	$               4,189	$                  512	$   (12,741,549)
	LA9	LAV	MIT
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$                      -	$             94,940	$        5,854,999
Expenses:
Mortality and expense risk charges	(759,947)	(746,640)	(3,952,520)
Distribution and administrative expense charges	(91,193)	(89,597)	(474,302)
Net investment (loss) income	(851,140)	(741,297)	1,428,177
Net realized and change in unrealized (losses) gains:
Net realized gains on sale of investments	940,779	2,892,252	6,865,434
Realized gain distributions	10,042,616	1,542,710	-
Net realized gains	10,983,395	4,434,962	6,865,434
Net change in unrealized appreciation/ depreciation	(15,665,930)	(7,113,301)	(5,859,002)
Net realized and change in unrealized (losses) gains	(4,682,535)	(2,678,339)	1,006,432
(Decrease) increase in net assets from operations	$     (5,533,675)	$     (3,419,636)	$        2,434,609

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	MFL	BDS	MF7
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        2,427,630	$        4,371,790	$        7,222,431
Expenses:
Mortality and expense risk charges	(2,363,199)	(1,156,811)	(2,178,359)
Distribution and administrative expense charges	(283,584)	(138,817)	(261,403)
Net investment (loss) income	(219,153)	3,076,162	4,782,669
Net realized and change in unrealized gains:
Net realized gains on sale of investments	1,981,548	1,630,942	6,613,391
Realized gain distributions	-	-	-
Net realized gains	1,981,548	1,630,942	6,613,391
Net change in unrealized appreciation/ depreciation	(945,329)	(192,225)	(4,733,564)
Net realized and change in unrealized gains	1,036,219	1,438,717	1,879,827
Increase in net assets from operations	$           817,066	$        4,514,879	$        6,662,496
	RGS	RG1	MFF
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           987,904	$           267,955	$                      -
Expenses:
Mortality and expense risk charges	(1,323,313)	(529,864)	(159,671)
Distribution and administrative expense charges	(158,798)	(63,584)	(19,160)
Net investment loss	(494,207)	(325,493)	(178,831)
Net realized and change in unrealized losses:
Net realized (losses) gains on sale of investments	(2,781,867)	1,462,217	779,030
Realized gain distributions	-	-	-
Net realized (losses) gains	(2,781,867)	1,462,217	779,030
Net change in unrealized appreciation/ depreciation	1,088,996	(2,203,494)	(781,522)
Net realized and change in unrealized losses	(1,692,871)	(741,277)	(2,492)
Decrease in net assets from operations	$     (2,187,078)	$     (1,066,770)	$        (181,323)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	EME	EM1	GGS
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           241,810	$           120,226	$           597,362
Expenses:
Mortality and expense risk charges	(573,729)	(498,097)	(334,408)
Distribution and administrative expense charges	(68,847)	(59,772)	(40,129)
Net investment (loss) income	(400,766)	(437,643)	222,825
Net realized and change in unrealized (losses) gains:
Net realized (losses) gains on sale of investments	(3,963,242)	1,578,227	4,727
Realized gain distributions	1,850,846	1,416,111	273,418
Net realized (losses) gains	(2,112,396)	2,994,338	278,145
Net change in unrealized appreciation/ depreciation	(6,970,297)	(9,923,358)	669,954
Net realized and change in unrealized (losses) gains	(9,082,693)	(6,929,020)	948,099
(Decrease) increase in net assets from operations	$     (9,483,459)	$     (7,366,663)	$        1,170,924
	GG1	GGR	GG2
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$             54,821	$           421,773	$             13,021
Expenses:
Mortality and expense risk charges	(38,964)	(768,542)	(50,501)
Distribution and administrative expense charges	(4,676)	(92,225)	(6,060)
Net investment income (loss)	11,181	(438,994)	(43,540)
Net realized and change in unrealized gains (losses):
Net realized gains on sale of investments	46,229	3,659,137	165,559
Realized gain distributions	28,719	-	-
Net realized gains	74,948	3,659,137	165,559
Net change in unrealized appreciation/ depreciation	24,962	(7,824,199)	(405,842)
Net realized and change in unrealized gains (losses)	99,910	(4,165,062)	(240,283)
Increase (decrease) in net assets from operations	$           111,091	$     (4,604,056)	$        (283,823)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	RES	RE1	GTR
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        1,537,422	$           127,365	$           760,544
Expenses:
Mortality and expense risk charges	(1,610,598)	(205,189)	(995,213)
Distribution and administrative expense charges	(193,272)	(24,623)	(119,426)
Net investment loss	(266,448)	(102,447)	(354,095)
Net realized and change in unrealized (losses) gains:
Net realized gains (losses) on sale of investments	2,791,004	331,006	(2,146,203)
Realized gain distributions	-	-	318,420
Net realized gains (losses)	2,791,004	331,006	(1,827,783)
Net change in unrealized appreciation/ depreciation	(12,350,744)	(1,310,807)	2,430,147
Net realized and change in unrealized (losses) gains	(9,559,740)	(979,801)	602,364
(Decrease) increase in net assets from operations	$     (9,826,188)	$     (1,082,248)	$           248,269
	GT2	GSS	MFK
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        6,475,635	$        6,288,632	$      13,792,364
Expenses:
Mortality and expense risk charges	(9,104,632)	(2,145,431)	(5,776,863)
Distribution and administrative expense charges	(1,092,556)	(257,452)	(693,224)
Net investment (loss) income	(3,721,553)	3,885,749	7,322,277
Net realized and change in unrealized (losses) gains:
Net realized gains on sale of investments	1,606,563	2,835,223	7,188,810
Realized gain distributions	2,876,005	59,185	138,888
Net realized gains	4,482,568	2,894,408	7,327,698
Net change in unrealized appreciation/ depreciation	(10,072,819)	2,851,977	5,718,871
Net realized and change in unrealized (losses) gains	(5,590,251)	5,746,385	13,046,569
(Decrease) increase in net assets from operations	$     (9,311,804)	$        9,632,134	$      20,368,846

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	EGS	HYS	MFC
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           228,231	$        8,018,553	$        6,679,292
Expenses:
Mortality and expense risk charges	(1,722,370)	(1,182,471)	(1,229,418)
Distribution and administrative expense charges	(206,684)	(141,897)	(147,530)
Net investment (loss) income	(1,700,823)	6,694,185	5,302,344
Net realized and change in unrealized losses:
Net realized gains (losses) on sale of investments	5,195,511	(1,663,443)	(885,227)
Realized gain distributions	-	-	-
Net realized gains (losses)	5,195,511	(1,663,443)	(885,227)
Net change in unrealized appreciation/ depreciation	(5,766,397)	(2,362,572)	(2,491,984)
Net realized and change in unrealized losses	(570,886)	(4,026,015)	(3,377,211)
(Decrease) increase in net assets from operations	$     (2,271,709)	$        2,668,170	$        1,925,133
	IGS	IG1	MII
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           654,670	$           238,205	$           621,407
Expenses:
Mortality and expense risk charges	(762,244)	(378,947)	(648,007)
Distribution and administrative expense charges	(91,469)	(45,474)	(77,761)
Net investment loss	(199,043)	(186,216)	(104,361)
Net realized and change in unrealized losses:
Net realized (losses) gains on sale of investments	(3,619,294)	935	(2,126,151)
Realized gain distributions	5,000,619	2,265,374	-
Net realized gains (losses)	1,381,325	2,266,309	(2,126,151)
Net change in unrealized appreciation/ depreciation	(8,348,282)	(5,431,548)	951,034
Net realized and change in unrealized losses	(6,966,957)	(3,165,239)	(1,175,117)
Decrease in net assets from operations	$     (7,166,000)	$     (3,351,455)	$     (1,279,478)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	MI1	MIS	M1B
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        1,857,283	$        2,027,140	$           156,187
Expenses:
Mortality and expense risk charges	(2,700,695)	(4,431,586)	(823,017)
Distribution and administrative expense charges	(324,083)	(531,790)	(98,762)
Net investment loss	(1,167,495)	(2,936,236)	(765,592)
Net realized and change in unrealized (losses) gains:
Net realized (losses) gains on sale of investments	(7,214,597)	10,265,533	1,365,568
Realized gain distributions	-	-	-
Net realized (losses) gains	(7,214,597)	10,265,533	1,365,568
Net change in unrealized appreciation/ depreciation	3,308,356	(8,477,280)	(845,710)
Net realized and change in unrealized (losses) gains	(3,906,241)	1,788,253	519,858
Decrease in net assets from operations	$     (5,073,736)	$     (1,147,983)	$        (245,734)
	MCS	MC1	MMS
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$                      -	$                      -	$                    22
Expenses:
Mortality and expense risk charges	(306,468)	(188,904)	(1,314,687)
Distribution and administrative expense charges	(36,776)	(22,669)	(157,762)
Net investment loss	(343,244)	(211,573)	(1,472,427)
Net realized and change in unrealized losses:
Net realized (losses) gains on sale of investments	(162,810)	434,600	-
Realized gain distributions	-	-	-
Net realized (losses) gains	(162,810)	434,600	-
Net change in unrealized appreciation/ depreciation	(1,293,631)	(1,156,994)	-
Net realized and change in unrealized losses	(1,456,441)	(722,394)	-
Decrease in net assets from operations	$     (1,799,685)	$        (933,967)	$     (1,472,427)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	MM1	NWD	M1A
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$                    29	$                      -	$                      -
Expenses:
Mortality and expense risk charges	(2,139,456)	(854,214)	(1,116,484)
Distribution and administrative expense charges	(256,735)	(102,506)	(133,978)
Net investment loss	(2,396,162)	(956,720)	(1,250,462)
Net realized and change in unrealized losses:
Net realized gains on sale of investments	-	3,078,938	4,004,002
Realized gain distributions	-	5,313,267	5,906,342
Net realized gains	-	8,392,205	9,910,344
Net change in unrealized appreciation/ depreciation	-	(14,624,715)	(16,413,135)
Net realized and change in unrealized losses	-	(6,232,510)	(6,502,791)
Decrease in net assets from operations	$     (2,396,162)	$     (7,189,230)	$     (7,753,253)
	RIS	RI1	SIS
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           777,285	$        1,787,520	$        2,154,058
Expenses:
Mortality and expense risk charges	(503,893)	(1,572,144)	(481,735)
Distribution and administrative expense charges	(60,467)	(188,657)	(57,808)
Net investment income	212,925	26,719	1,614,515
Net realized and change in unrealized losses:
Net realized losses on sale of investments	(2,839,308)	(9,675,153)	(272,861)
Realized gain distributions	-	-	-
Net realized losses	(2,839,308)	(9,675,153)	(272,861)
Net change in unrealized appreciation/ depreciation	(1,910,466)	(2,640,814)	(141,430)
Net realized and change in unrealized losses	(4,749,774)	(12,315,967)	(414,291)
(Decrease) increase in net assets from operations	$     (4,536,849)	$   (12,289,248)	$        1,200,224

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	SI1	TEC	TE1
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           568,812	$                      -	$                      -
Expenses:
Mortality and expense risk charges	(146,380)	(198,022)	(23,025)
Distribution and administrative expense charges	(17,566)	(23,763)	(2,763)
Net investment income (loss)	404,866	(221,785)	(25,788)
Net realized and change in unrealized (losses) gains:
Net realized gains on sale of investments	64,492	1,312,661	183,554
Realized gain distributions	-	-	-
Net realized gains	64,492	1,312,661	183,554
Net change in unrealized appreciation/ depreciation	(195,560)	(1,093,071)	(166,157)
Net realized and change in unrealized (losses) gains	(131,068)	219,590	17,397
Increase (decrease) in net assets from operations	$           273,798	$            (2,195)	$            (8,391)
	TRS	MFJ	UTS
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$      12,769,855	$      16,450,601	$        5,581,866
Expenses:
Mortality and expense risk charges	(5,958,361)	(10,251,695)	(2,056,077)
Distribution and administrative expense charges	(715,003)	(1,230,203)	(246,729)
Net investment income	6,096,491	4,968,703	3,279,060
Net realized and change in unrealized (losses) gains:
Net realized (losses) gains on sale of investments	(2,769,230)	(19,163,907)	10,818,373
Realized gain distributions	-	-	-
Net realized (losses) gains	(2,769,230)	(19,163,907)	10,818,373
Net change in unrealized appreciation/ depreciation	(513,636)	14,724,697	(4,977,596)
Net realized and change in unrealized (losses) gains	(3,282,866)	(4,439,210)	5,840,777
Increase in net assets from operations	$        2,813,625	$           529,493	$        9,119,837

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	MFE	MVS	MV1
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        3,750,727	$        1,871,159	$        2,854,525
Expenses:
Mortality and expense risk charges	(1,709,538)	(1,479,326)	(3,065,550)
Distribution and administrative expense charges	(205,144)	(177,519)	(367,866)
Net investment income (loss)	1,836,045	214,314	(578,891)
Net realized and change in unrealized gains (losses):
Net realized losses on sale of investments	(1,250,241)	(3,020,299)	(6,251,505)
Realized gain distributions	-	7,804,721	14,102,544
Net realized (losses) gains	(1,250,241)	4,784,422	7,851,039
Net change in unrealized appreciation/ depreciation	4,756,412	(6,433,295)	(10,684,885)
Net realized and change in unrealized gains (losses)	3,506,171	(1,648,873)	(2,833,846)
Increase (decrease) in net assets from operations	$        5,342,216	$     (1,434,559)	$     (3,412,737)
	AAN	AAW	VKM
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$                      -	$                      -	$             39,623
Expenses:
Mortality and expense risk charges	(2,259)	(34)	(264,019)
Distribution and administrative expense charges	(271)	(4)	(31,682)
Net investment loss	(2,530)	(38)	(256,078)
Net realized and change in unrealized gains (losses):
Net realized (losses) gains on sale of investments	(103)	(1)	2,260,976
Realized gain distributions	-	-	6,676
Net realized (losses) gains	(103)	(1)	2,267,652
Net change in unrealized appreciation/ depreciation	14,949	(668)	(3,638,876)
Net realized and change in unrealized gains (losses)	14,846	(669)	(1,371,224)
Increase (decrease) in net assets from operations	$             12,316	$               (707)	$     (1,627,302)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	OBV	OCA	OGG
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           277,854	$             27,592	$           335,575
Expenses:
Mortality and expense risk charges	(198,975)	(391,190)	(479,882)
Distribution and administrative expense charges	(23,877)	(46,943)	(57,586)
Net investment income (loss)	55,002	(410,541)	(201,893)
Net realized and change in unrealized losses:
Net realized gains (losses) on sale of investments	373,844	(278,018)	(1,392,825)
Realized gain distributions	-	-	-
Net realized gains (losses)	373,844	(278,018)	(1,392,825)
Net change in unrealized appreciation/ depreciation	(608,198)	(93,688)	(1,658,822)
Net realized and change in unrealized losses	(234,354)	(371,706)	(3,051,647)
Decrease in net assets from operations	$        (179,352)	$        (782,247)	$     (3,253,540)
	OMG	OMS	AAQ
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        2,610,266	$             42,172	$                      -
Expenses:
Mortality and expense risk charges	(6,634,560)	(159,293)	(3)
Distribution and administrative expense charges	(796,147)	(19,115)	-
Net investment loss	(4,820,441)	(136,236)	(3)
Net realized and change in unrealized losses:
Net realized (losses) gains on sale of investments	(23,494,767)	260,424	-
Realized gain distributions	-	-	-
Net realized (losses) gains	(23,494,767)	260,424	-
Net change in unrealized appreciation/ depreciation	19,150,868	(501,351)	(13)
Net realized and change in unrealized losses	(4,343,899)	(240,927)	(13)
Decrease in net assets from operations	$     (9,164,340)	$        (377,163)	$                 (16)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	PRA	AAP	BBD
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           379,541	$           172,009	$             14,615
Expenses:
Mortality and expense risk charges	(88,054)	(6,103)	(580)
Distribution and administrative expense charges	(10,567)	(732)	(70)
Net investment income	280,920	165,174	13,965
Net realized and change in unrealized losses:
Net realized gains (losses) on sale of investments	85,345	(7)	(28)
Realized gain distributions	-	-	-
Net realized gains (losses)	85,345	(7)	(28)
Net change in unrealized appreciation/ depreciation	(354,512)	(126,838)	(23,066)
Net realized and change in unrealized losses	(269,167)	(126,845)	(23,094)
Increase (decrease) in net assets from operations	$             11,753	$             38,329	$            (9,129)
	PCR	PMB	BBE
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$      11,182,105	$        1,321,344	$               1,246
Expenses:
Mortality and expense risk charges	(1,160,947)	(378,854)	(302)
Distribution and administrative expense charges	(139,314)	(45,463)	(36)
Net investment income	9,881,844	897,027	908
Net realized and change in unrealized (losses) gains:
Net realized gains (losses) on sale of investments	3,854,601	974,243	(11)
Realized gain distributions	-	-	-
Net realized gains (losses)	3,854,601	974,243	(11)
Net change in unrealized appreciation/ depreciation	(20,646,109)	(781,543)	10
Net realized and change in unrealized (losses) gains	(16,791,508)	192,700	(1)
(Decrease) increase in net assets from operations	$     (6,909,664)	$        1,089,727	$                  907

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	6TT	PRR	PTR
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$      15,752,182	$        2,397,428	$      10,293,711
Expenses:
Mortality and expense risk charges	(12,611,962)	(1,720,715)	(6,008,274)
Distribution and administrative expense charges	(1,513,435)	(206,486)	(720,993)
Net investment income	1,626,785	470,227	3,564,444
Net realized and change in unrealized (losses) gains:
Net realized gains on sale of investments	3,424,904	2,684,637	5,275,873
Realized gain distributions	8,844,601	3,026,591	5,236,166
Net realized gains	12,269,505	5,711,228	10,512,039
Net change in unrealized appreciation/ depreciation	(55,464,424)	4,424,935	(6,477,484)
Net realized and change in unrealized (losses) gains	(43,194,919)	10,136,163	4,034,555
(Decrease) increase in net assets from operations	$   (41,568,134)	$      10,606,390	$        7,598,999
	AAR	AAS	3XX
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$                      -	$                      -	$             88,231
Expenses:
Mortality and expense risk charges	(2,363)	(124)	(56,576)
Distribution and administrative expense charges	(284)	(15)	(6,789)
Net investment (loss) income	(2,647)	(139)	24,866
Net realized and change in unrealized gains (losses):
Net realized losses on sale of investments	(2)	-	(512)
Realized gain distributions	-	-	189,033
Net realized (losses) gains	(2)	-	188,521
Net change in unrealized appreciation/ depreciation	13,426	1,664	(975,850)
Net realized and change in unrealized gains (losses)	13,424	1,664	(787,329)
Increase (decrease) in net assets from operations	$             10,777	$               1,525	$        (762,463)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	5XX	SBI	SSA
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        4,253,450	$                  314	$           144,176
Expenses:
Mortality and expense risk charges	(3,135,788)	(21,022)	(287,759)
Distribution and administrative expense charges	(376,295)	(2,523)	(34,531)
Net investment income (loss)	741,367	(23,231)	(178,114)
Net realized and change in unrealized gains (losses):
Net realized gains (losses) on sale of investments	4,040,628	(41,589)	775,001
Realized gain distributions	6,290,291	518	2,455,754
Net realized gains (losses)	10,330,919	(41,071)	3,230,755
Net change in unrealized appreciation/ depreciation	8,524,790	(256,722)	(3,142,346)
Net realized and change in unrealized gains (losses)	18,855,709	(297,793)	88,409
Increase (decrease) in net assets from operations	$      19,597,076	$        (321,024)	$          (89,705)
	VSC	2XX	SVV
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           279,767	$             51,074	$        1,543,547
Expenses:
Mortality and expense risk charges	(1,834,520)	(172,772)	(3,520,808)
Distribution and administrative expense charges	(220,142)	(20,733)	(422,497)
Net investment loss	(1,774,895)	(142,431)	(2,399,758)
Net realized and change in unrealized losses:
Net realized gains on sale of investments	1,847,760	315,439	2,690,023
Realized gain distributions	-	2,011,064	10,079,912
Net realized gains	1,847,760	2,326,503	12,769,935
Net change in unrealized appreciation/ depreciation	(7,627,055)	(3,160,600)	(23,716,810)
Net realized and change in unrealized losses	(5,779,295)	(834,097)	(10,946,875)
Decrease in net assets from operations	$     (7,554,190)	$        (976,528)	$   (13,346,633)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	SGC	S13	SDC
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$           616,057	$           259,481	$        6,832,858
Expenses:
Mortality and expense risk charges	(923,758)	(456,278)	(8,949,391)
Distribution and administrative expense charges	(110,851)	(54,753)	(1,073,927)
Net investment loss	(418,552)	(251,550)	(3,190,460)
Net realized and change in unrealized gains (losses):
Net realized gains on sale of investments	6,525,031	1,487,536	2,819,929
Realized gain distributions	4,986,073	2,665,782	3,266,288
Net realized gains	11,511,104	4,153,318	6,086,217
Net change in unrealized appreciation/ depreciation	(10,552,639)	(4,318,009)	(9,383,407)
Net realized and change in unrealized gains (losses)	958,465	(164,691)	(3,297,190)
Increase (decrease) in net assets from operations	$           539,913	$        (416,241)	$     (6,487,650)
	S15	7XX	6XX
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        1,516,719	$      19,048,368	$      10,112,461
Expenses:
Mortality and expense risk charges	(2,424,354)	(23,495,538)	(11,699,207)
Distribution and administrative expense charges	(290,923)	(2,819,465)	(1,403,905)
Net investment loss	(1,198,558)	(7,266,635)	(2,990,651)
Net realized and change in unrealized losses:
Net realized gains on sale of investments	977,911	34,358,382	23,687,999
Realized gain distributions	1,068,812	53,767,236	18,164,792
Net realized gains	2,046,723	88,125,618	41,852,791
Net change in unrealized appreciation/ depreciation	(3,414,688)	(145,665,536)	(47,984,269)
Net realized and change in unrealized losses	(1,367,965)	(57,539,918)	(6,131,478)
Decrease in net assets from operations	$     (2,566,523)	$   (64,806,553)	$     (9,122,129)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	8XX	1XX	SLC
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        8,566,488	$                      -	$        2,092,924
Expenses:
Mortality and expense risk charges	(8,032,477)	(189,752)	(5,100,341)
Distribution and administrative expense charges	(963,897)	(22,770)	(612,041)
Net investment loss	(429,886)	(212,522)	(3,619,458)
Net realized and change in unrealized losses:
Net realized gains on sale of investments	20,043,309	513,612	22,664,566
Realized gain distributions	45,359,255	411,881	53,270,158
Net realized gains	65,402,564	925,493	75,934,724
Net change in unrealized appreciation/ depreciation	(95,398,898)	(1,639,215)	(96,829,319)
Net realized and change in unrealized losses	(29,996,334)	(713,722)	(20,894,595)
Decrease in net assets from operations	$   (30,426,220)	$        (926,244)	$   (24,514,053)
	S12	S14	4XX
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$             55,371	$        2,147,264	$      13,546,341
Expenses:
Mortality and expense risk charges	(197,080)	(462,403)	(8,028,931)
Distribution and administrative expense charges	(23,650)	(55,488)	(963,472)
Net investment (loss) income	(165,359)	1,629,373	4,553,938
Net realized and change in unrealized (losses) gains:
Net realized gains on sale of investments	248,394	1,381,704	5,863,960
Realized gain distributions	2,183,587	773,410	15,378,792
Net realized gains	2,431,981	2,155,114	21,242,752
Net change in unrealized appreciation/ depreciation	(3,359,745)	(3,197,435)	(16,993,229)
Net realized and change in unrealized (losses) gains	(927,764)	(1,042,321)	4,249,523
(Decrease) increase in net assets from operations	$     (1,093,123)	$           587,052	$        8,803,461

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	S16	LGF	SC3
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$                      -	$               4,113	$           320,008
Expenses:
Mortality and expense risk charges	(551,081)	(86,063)	(77,440)
Distribution and administrative expense charges	(66,130)	(10,328)	(9,293)
Net investment (loss) income	(617,211)	(92,278)	233,275
Net realized and change in unrealized losses:
Net realized (losses) gains on sale of investments	(150,432)	442,780	426,243
Realized gain distributions	-	-	-
Net realized (losses) gains	(150,432)	442,780	426,243
Net change in unrealized appreciation/ depreciation	(2,596,509)	(741,808)	(1,044,310)
Net realized and change in unrealized losses	(2,746,941)	(299,028)	(618,067)
Decrease in net assets from operations	$     (3,364,152)	$        (391,306)	$        (384,792)
	SRE	IGB	CMM
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$        7,363,678	$        4,889,832	$                    29
Expenses:
Mortality and expense risk charges	(1,838,539)	(2,106,169)	(1,900,320)
Distribution and administrative expense charges	(220,625)	(252,740)	(228,038)
Net investment income (loss)	5,304,514	2,530,923	(2,128,329)
Net realized and change in unrealized (losses) gains:
Net realized (losses) gains on sale of investments	(1,570,819)	2,620,657	-
Realized gain distributions	-	2,503,877	867
Net realized (losses) gains	(1,570,819)	5,124,534	867
Net change in unrealized appreciation/ depreciation	(14,420,225)	(780,744)	-
Net realized and change in unrealized (losses) gains	(15,991,044)	4,343,790	867
(Decrease) increase in net assets from operations	$   (10,686,530)	$        6,874,713	$     (2,127,462)

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF OPERATIONS (CONTINUED)

FOR THE YEAR ENDED DECEMBER 31, 2011

	WTF	USC	AAL
	Sub-Account	Sub-Account	Sub-Account
Income:
Dividend income	$             17,075	$                      -	$           102,655
Expenses:
Mortality and expense risk charges	(11,976)	(1,015)	(62,575)
Distribution and administrative expense charges	(1,437)	(122)	(7,509)
Net investment income (loss)	3,662	(1,137)	32,571
Net realized and change in unrealized (losses) gains:
Net realized gains (losses) on sale of investments	89,769	(95)	(638)
Realized gain distributions	-	5,481	124,892
Net realized gains	89,769	5,386	124,254
Net change in unrealized appreciation/ depreciation	(250,177)	(7,604)	91,924
Net realized and change in unrealized (losses) gains	(160,408)	(2,218)	216,178
(Decrease) increase in net assets from operations	$        (156,746)	$            (3,355)	$           248,749

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	AVB Sub-Account		AAA Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$        319,134	$      357,112	$    (171,089)	$                   -
Net realized gains (losses)	1,869,277	774,286	(6,157)	-
Net change in unrealized appreciation/depreciation	(4,999,607)	3,058,601	667	-
Net (decrease) increase from operations	(2,811,196)	4,189,999	(176,579)	-
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	9,656,409	6,451,640	29,881,377	-
Transfers between Sub-Accounts
(including the Fixed Account), net	(229,416)	3,886,153	9,037,639	-
Withdrawals, surrenders, annuitizations
and contract charges	(2,721,602)	(3,007,755)	(174,021)	-
Net accumulation activity	6,705,391	7,330,038	38,744,995	-
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	6,705,391	7,330,038	38,744,995	-
Total increase in net assets	3,894,195	11,520,037	38,568,416	-
Net assets at beginning of year	53,564,306	42,044,269	-	-
Net assets at end of year	$     57,458,501	$    53,564,306	$     38,568,416	$                      -

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	AN4 Sub-Account		IVB Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income	$           96,540	$            8,169	$      1,676,551	$         763,349
Net realized gains (losses)	276,732	448,924	129,126	(4,456,313)
Net change in unrealized appreciation/depreciation	(2,055,549)	404,851	(17,353,908)	6,366,183
Net (decrease) increase from operations	(1,682,277)	861,944	(15,548,231)	2,673,219
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	894,234	1,807,080	386,976	321,489
Transfers between Sub-Accounts
(including the Fixed Account), net	769,899	(902,828)	4,787,525	1,007,017
Withdrawals, surrenders, annuitizations
and contract charges	(481,330)	(228,238)	(6,434,322)	(5,406,780)
Net accumulation activity	1,182,803	676,014	(1,259,821)	(4,078,274)
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase (decrease) from contract owner    transactions	1,182,803	676,014	(1,259,821)	(4,078,274)
Total (decrease) increase in net assets	(499,474)	1,537,958	(16,808,052)	(1,405,055)
Net assets at beginning of year	9,392,167	7,854,209	81,416,221	82,821,276
Net assets at end of year	$       8,892,693	$      9,392,167	$     64,608,169	$     81,416,221

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	AAU Sub-Account		9XX Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$               (54)	$                    -	$      6,282,202	$    (2,115,719)
Net realized gains	33	-	30,793,126	9,019,080
Net change in unrealized appreciation/depreciation	2,169	-	(77,867,381)	37,649,178
Net increase (decrease) from operations	2,148	-	(40,792,053)	44,552,539
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	10,000	-	145,802,452	121,054,412
Transfers between Sub-Accounts
(including the Fixed Account), net	52,060	-	64,013,878	55,627,571
Withdrawals, surrenders, annuitizations
and contract charges	(67)	-	(31,267,742)	(19,854,071)
Net accumulation activity	61,993	-	178,548,588	156,827,912
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	61,993	-	178,548,588	156,827,912
Total increase in net assets	64,141	-	137,756,535	201,380,451
Net assets at beginning of year	-	-	619,370,616	417,990,165
Net assets at end of year	$            64,141	$                     -	$   757,127,151	$   619,370,616

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	NMT Sub-Account		MCC Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$             (661)	$            (741)	$    (2,150,577)	$    (2,228,749)
Net realized losses	(409)	(3,476)	(2,781,978)	(8,064,348)
Net change in unrealized appreciation/depreciation	(4,433)	9,421	(12,374,508)	29,598,662
Net (decrease) increase from operations	(5,503)	5,204	(17,307,063)	19,305,565
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	-	-	1,786,315	1,897,319
Transfers between Sub-Accounts
(including the Fixed Account), net	3,389	(9,529)	393,071	(9,972,522)
Withdrawals, surrenders, annuitizations
and contract charges	(1,360)	(1,375)	(12,568,331)	(8,510,116)
Net accumulation activity	2,029	(10,904)	(10,388,945)	(16,585,319)
Annuitization Activity:
Annuitizations	-	-	-	4,530
Annuity payments and contract charges	-	-	(3,025)	(6,747)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	260	(1,107)
Net annuitization activity	-	-	(2,765)	(3,324)
Net increase (decrease) from contract owner   transactions	2,029	(10,904)	(10,391,710)	(16,588,643)
Total (decrease) increase in net assets	(3,474)	(5,700)	(27,698,773)	2,716,922
Net assets at beginning of year	41,663	47,363	138,265,475	135,548,553
Net assets at end of year	$            38,189	$           41,663	$   110,566,702	$   138,265,475

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	NNG Sub-Account		CMG Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$          (1,689)	$         (2,042)	$       (467,497)	$       (412,952)
Net realized gains (losses)	11,905	1,135	799,290	(598,093)
Net change in unrealized appreciation/depreciation	(16,572)	23,272	(1,705,400)	5,671,398
Net (decrease) increase from operations	(6,356)	22,365	(1,373,607)	4,660,353
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	-	1	2,056,016	2,894,057
Transfers between Sub-Accounts
(including the Fixed Account), net	2,204	(5,520)	2,570,861	(907,131)
Withdrawals, surrenders, annuitizations
and contract charges	(101,666)	(494)	(2,170,115)	(1,401,239)
Net accumulation activity	(99,462)	(6,013)	2,456,762	585,687
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net (decrease) increase from contract owner    transactions	(99,462)	(6,013)	2,456,762	585,687
Total (decrease) increase in net assets	(105,818)	16,352	1,083,155	5,246,041
Net assets at beginning of year	130,018	113,666	28,087,424	22,841,383
Net assets at end of year	$            24,200	$         130,018	$     29,170,579	$     28,087,424

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	NMI Sub-Account		CSC Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (111,393)	$     (135,440)	$              (115)	$                (64)
Net realized gains (losses)	523,432	(741,559)	1,356	(528)
Net change in unrealized appreciation/depreciation	(2,826,003)	2,191,586	(2,461)	2,943
Net (decrease) increase from operations	(2,413,964)	1,314,587	(1,220)	2,351
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	414,364	930,583	-	-
Transfers between Sub-Accounts
(including the Fixed Account), net	(177,513)	(1,091,138)	2,042	947
Withdrawals, surrenders, annuitizations
and contract charges	(960,267)	(766,573)	(62)	(56)
Net accumulation activity	(723,416)	(927,128)	1,980	891
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net (decrease) increase from contract owner    transactions	(723,416)	(927,128)	1,980	891
Total (decrease) increase in net assets	(3,137,380)	387,459	760	3,242
Net assets at beginning of year	13,809,157	13,421,698	13,175	9,933
Net assets at end of year	$     10,671,777	$    13,809,157	$            13,935	$            13,175

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	FVB Sub-Account		FL1 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$             2,740	$       (47,812)	$    (1,966,294)	$    (1,300,897)
Net realized gains	2,484,370	594,031	11,701,252	2,104,970
Net change in unrealized appreciation/depreciation	(6,962,155)	7,459,506	(19,823,020)	29,857,302
Net (decrease) increase from operations	(4,475,045)	8,005,725	(10,088,062)	30,661,375
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	16,737,584	6,851,617	13,567,224	17,776,509
Transfers between Sub-Accounts
(including the Fixed Account), net	10,039,898	3,094,491	2,512,738	(2,949,307)
Withdrawals, surrenders, annuitizations
and contract charges	(3,952,295)	(3,290,830)	(11,610,120)	(8,411,741)
Net accumulation activity	22,825,187	6,655,278	4,469,842	6,415,461
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	22,825,187	6,655,278	4,469,842	6,415,461
Total increase (decrease) in net assets	18,350,142	14,661,003	(5,618,220)	37,076,836
Net assets at beginning of year	58,332,583	43,671,580	226,649,086	189,572,250
Net assets at end of year	$     76,682,725	$    58,332,583	$   221,030,866	$   226,649,086

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	F10 Sub-Account		F15 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$          (2,100)	$         (1,497)	$           23,007	$           87,066
Net realized gains (losses)	283,707	164,354	(403,367)	(206,526)
Net change in unrealized appreciation/depreciation	(387,734)	576,267	(193,367)	3,235,744
Net (decrease) increase from operations	(106,127)	739,124	(573,727)	3,116,284
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	-	2	855,052	1,607,883
Transfers between Sub-Accounts
(including the Fixed Account), net	(123,450)	(1,509,986)	563,858	2,464,527
Withdrawals, surrenders, annuitizations
and contract charges	(1,236,730)	(727,940)	(4,403,079)	(2,629,076)
Net accumulation activity	(1,360,180)	(2,237,924)	(2,984,169)	1,443,334
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net (decrease) increase from contract owner    transactions	(1,360,180)	(2,237,924)	(2,984,169)	1,443,334
Total (decrease) increase in net assets	(1,466,307)	(1,498,800)	(3,557,896)	4,559,618
Net assets at beginning of year	6,869,231	8,368,031	31,790,466	27,230,848
Net assets at end of year	$       5,402,924	$      6,869,231	$     28,232,570	$     31,790,466

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	F20 Sub-Account		FVM Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$           67,627	$        122,699	$    (2,872,933)	$    (2,552,064)
Net realized losses	(718,422)	(775,565)	(2,466,211)	(7,556,272)
Net change in unrealized appreciation/depreciation	(492,015)	5,261,382	(16,962,976)	49,071,969
Net (decrease) increase from operations	(1,142,810)	4,608,516	(22,302,120)	38,963,633
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	2,110,643	2,216,681	10,891,768	14,240,611
Transfers between Sub-Accounts
(including the Fixed Account), net	231,747	(3,558,494)	7,423,954	(11,721,044)
Withdrawals, surrenders, annuitizations
and contract charges	(5,889,596)	(2,938,670)	(16,812,241)	(10,547,703)
Net accumulation activity	(3,547,206)	(4,280,483)	1,503,481	(8,028,136)
Annuitization Activity:
Annuitizations	-	-	-	7,930
Annuity payments and contract charges	-	-	(2,288)	(5,496)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	444	(1,479)
Net annuitization activity	-	-	(1,844)	955
Net (decrease) increase from contract owner    transactions	(3,547,206)	(4,280,483)	1,501,637	(8,027,181)
Total (decrease) increase in net assets	(4,690,016)	328,033	(20,800,483)	30,936,452
Net assets at beginning of year	41,774,592	41,446,559	178,592,880	147,656,428
Net assets at end of year	$     37,084,576	$    41,774,592	$   157,792,397	$   178,592,880

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	SGI Sub-Account		S17 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$   (2,020,397)	$     1,114,438	$       (877,070)	$      216,894
Net realized gains (losses)	9,486,786	(3,607,177)	258,562	(1,482,144)
Net change in unrealized appreciation/depreciation	(45,605,215)	67,514,207	(959,210)	5,832,637
Net (decrease) increase from operations	(38,138,826)	65,021,468	(1,577,718)	4,567,387
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	46,950,784	71,136,745	842,256	267,718
Transfers between Sub-Accounts
(including the Fixed Account), net	18,054,844	8,576,772	(2,102,432)	(4,531,015)
Withdrawals, surrenders, annuitizations
and contract charges	(27,584,198)	(16,709,427)	(4,969,441)	(4,275,371)
Net accumulation activity	37,421,430	63,004,090	(6,229,617)	(8,538,668)
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	(1,184)	(8,356)	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	3	(440)	-	-
Net annuitization activity	(1,181)	(8,796)	-	-
Net increase (decrease) from contract owner    transactions	37,420,249	62,995,294	(6,229,617)	(8,538,668)
Total (decrease) increase in net assets	(718,577)	128,016,762	(7,807,335)	(3,971,281)
Net assets at beginning of year	462,402,911	334,386,149	56,433,177	60,404,458
Net assets at end of year	$   461,684,334	$  462,402,911	$     48,625,842	$     56,433,177

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	ISC Sub-Account		AAZ Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$      4,645,284	$     4,577,998	$           (1,401)	$                     -
Net realized losses	(2,738,894)	(2,369,295)	(41)	-
Net change in unrealized appreciation/depreciation	(1,545,606)	7,885,079	24,046	-
Net increase from operations	360,784	10,093,782	22,604	-
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	8,596,226	14,486,059	1,186,477	-
Transfers between Sub-Accounts
(including the Fixed Account), net	8,806,377	9,481,301	129,652	-
Withdrawals, surrenders, annuitizations
and contract charges	(10,689,772)	(7,369,974)	(400)	-
Net accumulation activity	6,712,831	16,597,386	1,315,729	-
Annuitization Activity:
Annuitizations	49,794	-	-	-
Annuity payments and contract charges	(5,249)	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(295)	-	-	-
Net annuitization activity	44,250	-	-	-
Net increase from contract owner transactions	6,757,081	16,597,386	1,315,729	-
Total increase in net assets	7,117,865	26,691,168	1,338,333	-
Net assets at beginning of year	108,775,441	82,084,273	-	-
Net assets at end of year	$   115,893,306	$  108,775,441	$       1,338,333	$                      -

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	BBC Sub-Account		FVS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$              (89)	$                    -	$       (430,084)	$       (376,657)
Net realized gains (losses)	1	-	3,422,962	(2,841,191)
Net change in unrealized appreciation/depreciation	1,597	-	(5,359,748)	12,739,521
Net increase (decrease) from operations	1,509	-	(2,366,870)	9,521,673
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	101,917	-	2,506,905	4,607,290
Transfers between Sub-Accounts
(including the Fixed Account), net	1,912	-	(943,939)	(889,884)
Withdrawals, surrenders, annuitizations
and contract charges	-	-	(4,806,598)	(3,840,198)
Net accumulation activity	103,829	-	(3,243,632)	(122,792)
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	(2,158)	(1,927)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	(4)	(490)
Net annuitization activity	-	-	(2,162)	(2,417)
Net increase (decrease) from contract owner    transactions	103,829	-	(3,245,794)	(125,209)
Total increase (decrease) in net assets	105,338	-	(5,612,664)	9,396,464
Net assets at beginning of year	-	-	44,583,047	35,186,583
Net assets at end of year	$          105,338	$                     -	$     38,970,383	$     44,583,047

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	BBA Sub-Account		SIC Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$             (581)	$                    -	$      1,429,106	$         736,503
Net realized (losses) gains	(9)	-	1,046,155	333,818
Net change in unrealized appreciation/depreciation	3,935	-	(2,245,020)	1,188,070
Net increase from operations	3,345	-	230,241	2,258,391
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	509,584	-	2,839,756	5,155,122
Transfers between Sub-Accounts
(including the Fixed Account), net	1,100	-	2,466,691	5,972,079
Withdrawals, surrenders, annuitizations
and contract charges	-	-	(2,752,794)	(2,889,846)
Net accumulation activity	510,684	-	2,553,653	8,237,355
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	510,684	-	2,553,653	8,237,355
Total increase in net assets	514,029	-	2,783,894	10,495,746
Net assets at beginning of year	-	-	31,584,484	21,088,738
Net assets at end of year	$          514,029	$                     -	$     34,368,378	$     31,584,484

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	BBB Sub-Account		FMS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$             (234)	$                    -	$      1,653,824	$       (221,534)
Net realized losses	(4)	-	(10,633,380)	(9,145,559)
Net change in unrealized appreciation/depreciation	520	-	2,656,053	32,507,348
Net increase (decrease) from operations	282	-	(6,323,503)	23,140,255
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	167,103	-	3,017,826	12,092,176
Transfers between Sub-Accounts
(including the Fixed Account), net	21,727	-	(4,615,125)	(596,720)
Withdrawals, surrenders, annuitizations
and contract charges	-	-	(18,059,063)	(13,886,888)
Net accumulation activity	188,830	-	(19,656,362)	(2,391,432)
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	(1,775)	(5,247)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	(44)	(391)
Net annuitization activity	-	-	(1,819)	(5,638)
Net increase (decrease) from contract owner    transactions	188,830	-	(19,658,181)	(2,397,070)
Total increase (decrease) in net assets	189,112	-	(25,981,684)	20,743,186
Net assets at beginning of year	-	-	269,667,669	248,924,483
Net assets at end of year	$          189,112	$                     -	$   243,685,985	$   269,667,669

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	TDM Sub-Account		FTI Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$      (401,042)	$       (37,473)	$       (177,010)	$         583,074
Net realized losses	(1,989,043)	(6,463,039)	(20,735,923)	(20,231,941)
Net change in unrealized appreciation/depreciation	(7,349,434)	15,101,002	(5,535,384)	36,729,845
Net (decrease) increase from operations	(9,739,519)	8,600,490	(26,448,317)	17,080,978
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	269,481	269,896	1,750,211	1,476,923
Transfers between Sub-Accounts
(including the Fixed Account), net	1,474,660	(3,596,057)	366,260	(1,483,025)
Withdrawals, surrenders, annuitizations
and contract charges	(6,242,630)	(4,331,064)	(42,018,055)	(38,998,258)
Net accumulation activity	(4,498,489)	(7,657,225)	(39,901,584)	(39,004,360)
Annuitization Activity:
Annuitizations	-	3,248	-	2,954
Annuity payments and contract charges	(939)	(883)	(13,143)	(12,846)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	215	(559)	900	(1,045)
Net annuitization activity	(724)	1,806	(12,243)	(10,937)
Net decrease from contract owner transactions	(4,499,213)	(7,655,419)	(39,913,827)	(39,015,297)
Total (decrease) increase in net assets	(14,238,732)	945,071	(66,362,144)	(21,934,319)
Net assets at beginning of year	60,725,526	59,780,455	273,652,493	295,586,812
Net assets at end of year	$     46,486,794	$    60,725,526	$   207,290,349	$   273,652,493

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	AAX Sub-Account		FTG Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$             (409)	$                    -	$       (117,108)	$       (126,191)
Net realized losses	(2)	-	(3,107,548)	(3,734,745)
Net change in unrealized appreciation/depreciation	639	-	489,250	5,750,714
Net increase (decrease) from operations	228	-	(2,735,406)	1,889,778
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	225,085	-	1,587,559	2,957,446
Transfers between Sub-Accounts
(including the Fixed Account), net	85,489	-	443,541	534,227
Withdrawals, surrenders, annuitizations
and contract charges	(203)	-	(4,091,808)	(3,656,120)
Net accumulation activity	310,371	-	(2,060,708)	(164,447)
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase (decrease) from contract owner    transactions	310,371	-	(2,060,708)	(164,447)
Total increase (decrease) in net assets	310,599	-	(4,796,114)	1,725,331
Net assets at beginning of year	-	-	35,600,674	33,875,343
Net assets at end of year	$          310,599	$                     -	$     30,804,560	$     35,600,674

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	HBF Sub-Account		HVD Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$        (59,704)	$       (90,765)	$           94,587	$           91,087
Net realized gains	110,991	45,070	155,657	27,079
Net change in unrealized appreciation/depreciation	(108,058)	677,008	(29,881)	285,516
Net (decrease) increase from operations	(56,771)	631,313	220,363	403,682
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	5,876,612	3,127,053	457,169	802,328
Transfers between Sub-Accounts
(including the Fixed Account), net	1,136,657	3,028,939	120,337	67,729
Withdrawals, surrenders, annuitizations
and contract charges	(422,240)	(172,570)	(188,053)	(125,678)
Net accumulation activity	6,591,029	5,983,422	389,453	744,379
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	6,591,029	5,983,422	389,453	744,379
Total increase in net assets	6,534,258	6,614,735	609,816	1,148,061
Net assets at beginning of year	9,572,118	2,957,383	3,761,330	2,613,269
Net assets at end of year	$     16,106,376	$      9,572,118	$       4,371,146	$       3,761,330

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	HVG Sub-Account		HVI Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$        (11,222)	$         (8,350)	$           14,192	$           12,829
Net realized gains (losses)	10,797	(20,664)	16,461	(11,333)
Net change in unrealized appreciation/depreciation	(37,962)	102,343	29,960	99,542
Net (decrease) increase from operations	(38,387)	73,329	60,613	101,038
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	47,169	273,107	-	65,083
Transfers between Sub-Accounts
(including the Fixed Account), net	12,278	41,048	(14,685)	93,207
Withdrawals, surrenders, annuitizations
and contract charges	(28,914)	(34,629)	(34,460)	(64,170)
Net accumulation activity	30,533	279,526	(49,145)	94,120
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase (decrease) from contract owner    transactions	30,533	279,526	(49,145)	94,120
Total (decrease) increase in net assets	(7,854)	352,855	11,468	195,158
Net assets at beginning of year	815,820	462,965	1,103,265	908,107
Net assets at end of year	$          807,966	$         815,820	$       1,114,733	$       1,103,265

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	HVE Sub-Account		HVM Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$        (19,109)	$         (9,589)	$              (599)	$              (352)
Net realized gains (losses)	91,806	230	55	(306)
Net change in unrealized appreciation/depreciation	(740,178)	400,651	(956)	6,148
Net (decrease) increase from operations	(667,481)	391,292	(1,500)	5,490
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	284,776	1,266,358	8,977	-
Transfers between Sub-Accounts
(including the Fixed Account), net	625,955	483,150	21,785	6,286
Withdrawals, surrenders, annuitizations
and contract charges	(180,534)	(179,111)	(955)	(200)
Net accumulation activity	730,197	1,570,397	29,807	6,086
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	730,197	1,570,397	29,807	6,086
Total increase in net assets	62,716	1,961,689	28,307	11,576
Net assets at beginning of year	4,914,149	2,952,460	49,237	37,661
Net assets at end of year	$       4,976,865	$      4,914,149	$            77,544	$            49,237

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	HVC Sub-Account		HVS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$        (15,418)	$       (11,597)	$           59,016	$           29,685
Net realized gains	30,659	11,669	52,714	6,696
Net change in unrealized appreciation/depreciation	(69,829)	233,987	149,991	12,648
Net (decrease) increase from operations	(54,588)	234,059	261,721	49,029
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	39,831	147,014	3,019,516	2,156,518
Transfers between Sub-Accounts
(including the Fixed Account), net	38,299	(109,475)	430,155	1,947,219
Withdrawals, surrenders, annuitizations
and contract charges	(45,512)	(52,673)	(314,873)	(68,008)
Net accumulation activity	32,618	(15,134)	3,134,798	4,035,729
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase (decrease) from contract owner    transactions	32,618	(15,134)	3,134,798	4,035,729
Total (decrease) increase in net assets	(21,970)	218,925	3,396,519	4,084,758
Net assets at beginning of year	1,289,234	1,070,309	5,028,611	943,853
Net assets at end of year	$       1,267,264	$      1,289,234	$       8,425,130	$       5,028,611

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	HVN Sub-Account		HRS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$          (6,453)	$         (5,554)	$         (34,609)	$         (20,668)
Net realized gains (losses)	517	(6,370)	76,326	31,869
Net change in unrealized appreciation/depreciation	(55,256)	61,907	(325,556)	325,885
Net (decrease) increase from operations	(61,192)	49,983	(283,839)	337,086
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	(1)	49,704	356,002	771,053
Transfers between Sub-Accounts
(including the Fixed Account), net	87,841	(4,024)	298,782	291,873
Withdrawals, surrenders, annuitizations
and contract charges	(14,326)	(38,567)	(87,654)	(46,510)
Net accumulation activity	73,514	7,113	567,130	1,016,416
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	73,514	7,113	567,130	1,016,416
Total increase in net assets	12,322	57,096	283,291	1,353,502
Net assets at beginning of year	389,238	332,142	2,215,321	861,819
Net assets at end of year	$          401,560	$         389,238	$       2,498,612	$       2,215,321

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	HVR Sub-Account		HSS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$        (16,736)	$         (2,845)	$         (76,345)	$         (40,358)
Net realized gains	45,190	15,243	215,969	294,505
Net change in unrealized appreciation/depreciation	36,303	55,052	(272,980)	748,154
Net increase (decrease) from operations	64,757	67,450	(133,356)	1,002,301
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	148,122	412,579	500,962	1,081,906
Transfers between Sub-Accounts
(including the Fixed Account), net	(12,064)	181,126	260,464	134,952
Withdrawals, surrenders, annuitizations
and contract charges	(49,397)	(19,919)	(199,972)	(112,590)
Net accumulation activity	86,661	573,786	561,454	1,104,268
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	86,661	573,786	561,454	1,104,268
Total increase in net assets	151,418	641,236	428,098	2,106,569
Net assets at beginning of year	1,220,000	578,764	4,587,826	2,481,257
Net assets at end of year	$       1,371,418	$      1,220,000	$       5,015,924	$       4,587,826

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	AI8 Sub-Account		VKC Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$               (18)	$                    -	$         (71,713)	$         (38,335)
Net realized (losses) gains	(1)	-	643,544	507,015
Net change in unrealized appreciation/depreciation	(252)	-	(687,441)	447,776
Net (decrease) increase from operations	(271)	-	(115,610)	916,456
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	7,817	-	1,086,698	1,304,959
Transfers between Sub-Accounts
(including the Fixed Account), net	4,954	-	94,656	1,313,156
Withdrawals, surrenders, annuitizations
and contract charges	-	-	(388,016)	(280,141)
Net accumulation activity	12,771	-	793,338	2,337,974
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	12,771	-	793,338	2,337,974
Total increase in net assets	12,500	-	677,728	3,254,430
Net assets at beginning of year	-	-	5,813,854	2,559,424
Net assets at end of year	$            12,500	$                     -	$       6,491,582	$       5,813,854

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	VLC Sub-Account		VKU Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$        (76,155)	$     (333,132)	$           (7,100)	$           72,209
Net realized gains (losses)	1,412,990	(971,517)	848,883	560,020
Net change in unrealized appreciation/depreciation	(2,322,504)	4,196,691	(2,444,214)	1,969,610
Net (decrease) increase from operations	(985,669)	2,892,042	(1,602,431)	2,601,839
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	1,376,247	1,959,183	19,407,060	7,390,463
Transfers between Sub-Accounts
(including the Fixed Account), net	(148,073)	2,425,774	6,285,673	439,198
Withdrawals, surrenders, annuitizations
and contract charges	(2,073,465)	(1,702,495)	(1,669,668)	(1,425,271)
Net accumulation activity	(845,291)	2,682,462	24,023,065	6,404,390
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net (decrease) increase from contract owner transactions	(845,291)	2,682,462	24,023,065	6,404,390
Total (decrease) increase in net assets	(1,830,960)	5,574,504	22,420,634	9,006,229
Net assets at beginning of year	24,645,773	19,071,269	29,230,936	20,224,707
Net assets at end of year	$     22,814,813	$    24,645,773	$     51,651,570	$     29,230,936

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	AAY Sub-Account		AAM Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$          (1,370)	$                    -	$                (57)	$                     -
Net realized gains	10	-	-	-
Net change in unrealized appreciation/depreciation	5,549	-	569	-
Net increase from operations	4,189	-	512	-
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	1,002,054	-	52,501	-
Transfers between Sub-Accounts
(including the Fixed Account), net	706,334	-	527	-
Withdrawals, surrenders, annuitizations
and contract charges	(402)	-	-	-
Net accumulation activity	1,707,986	-	53,028	-
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	1,707,986	-	53,028	-
Total increase in net assets	1,712,175	-	53,540	-
Net assets at beginning of year	-	-	-	-
Net assets at end of year	$       1,712,175	$                     -	$            53,540	$                      -

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	LRE Sub-Account		LA9 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$         236,140	$     (148,310)	$       (851,140)	$       (869,133)
Net realized gains	5,487,658	2,403,644	10,983,395	1,560,426
Net change in unrealized appreciation/depreciation	(18,465,347)	7,193,278	(15,665,930)	9,152,488
Net (decrease) increase from operations	(12,741,549)	9,448,612	(5,533,675)	9,843,781
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	7,997,091	12,045,043	1,384,103	1,515,618
Transfers between Sub-Accounts
(including the Fixed Account), net	5,055,758	4,139,897	1,472,009	(6,381,219)
Withdrawals, surrenders, annuitizations
and contract charges	(4,540,903)	(3,199,616)	(6,746,689)	(6,124,052)
Net accumulation activity	8,511,946	12,985,324	(3,890,577)	(10,989,653)
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	(1,544)	(1,644)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	105	(271)
Net annuitization activity	-	-	(1,439)	(1,915)
Net increase (decrease) from contract owner    transactions	8,511,946	12,985,324	(3,892,016)	(10,991,568)
Total (decrease) increase in net assets	(4,229,603)	22,433,936	(9,425,691)	(1,147,787)
Net assets at beginning of year	61,493,993	39,060,057	50,950,452	52,098,239
Net assets at end of year	$     57,264,390	$    61,493,993	$     41,524,761	$     50,950,452

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	LAV Sub-Account		MIT Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$      (741,297)	$     (611,904)	$      1,428,177	$      1,200,161
Net realized gains (losses)	4,434,962	170,620	6,865,434	(1,890,102)
Net change in unrealized appreciation/depreciation	(7,113,301)	7,575,694	(5,859,002)	45,141,510
Net (decrease) increase from operations	(3,419,636)	7,134,410	2,434,609	44,451,569
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	3,727,176	3,979,072	4,064,483	3,452,756
Transfers between Sub-Accounts
(including the Fixed Account), net	3,073,501	(1,846,927)	(5,284,779)	(7,781,622)
Withdrawals, surrenders, annuitizations
and contract charges	(5,697,894)	(4,064,548)	(41,604,784)	(41,122,514)
Net accumulation activity	1,102,783	(1,962,403)	(42,825,080)	(45,451,380)
Annuitization Activity:
Annuitizations	-	-	49,116	46,847
Annuity payments and contract charges	-	-	(297,328)	(236,745)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	(26,914)	(137,216)
Net annuitization activity	-	-	(275,126)	(327,114)
Net increase (decrease) from contract owner    transactions	1,102,783	(1,962,403)	(43,100,206)	(45,778,494)
Total (decrease) increase in net assets	(2,316,853)	5,172,007	(40,665,597)	(1,326,925)
Net assets at beginning of year	48,288,792	43,116,785	329,127,899	330,454,824
Net assets at end of year	$     45,971,939	$    48,288,792	$   288,462,302	$   329,127,899

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	MFL Sub-Account		BDS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$      (219,153)	$     (314,547)	$      3,076,162	$      2,736,440
Net realized gains (losses)	1,981,548	(868,876)	1,630,942	185,705
Net change in unrealized appreciation/depreciation	(945,329)	23,909,406	(192,225)	5,482,332
Net increase from operations	817,066	22,725,983	4,514,879	8,404,477
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	1,141,500	1,249,389	1,102,950	1,258,154
Transfers between Sub-Accounts
(including the Fixed Account), net	(10,266,812)	(12,492,684)	2,915,066	8,183,604
Withdrawals, surrenders, annuitizations
and contract charges	(25,478,133)	(25,658,842)	(13,070,839)	(14,382,386)
Net accumulation activity	(34,603,445)	(36,902,137)	(9,052,823)	(4,940,628)
Annuitization Activity:
Annuitizations	-	-	2,395	-
Annuity payments and contract charges	(7,208)	(7,104)	(36,319)	(37,492)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	(898)	(41,875)	(79,301)
Net annuitization activity	(7,208)	(8,002)	(75,799)	(116,793)
Net decrease from contract owner transactions	(34,610,653)	(36,910,139)	(9,128,622)	(5,057,421)
Total (decrease) increase in net assets	(33,793,587)	(14,184,156)	(4,613,743)	3,347,056
Net assets at beginning of year	168,194,841	182,378,997	93,795,374	90,448,318
Net assets at end of year	$   134,401,254	$  168,194,841	$     89,181,631	$     93,795,374

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	MF7 Sub-Account		RGS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$      4,782,669	$     2,721,864	$       (494,207)	$       (315,298)
Net realized gains (losses)	6,613,391	1,417,488	(2,781,867)	(5,305,584)
Net change in unrealized appreciation/depreciation	(4,733,564)	5,402,593	1,088,996	20,867,477
Net increase (decrease) from operations	6,662,496	9,541,945	(2,187,078)	15,246,595
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	21,015,972	26,819,041	1,123,432	1,447,246
Transfers between Sub-Accounts
(including the Fixed Account), net	6,027,404	23,955,339	(1,846,519)	(1,074,537)
Withdrawals, surrenders, annuitizations
and contract charges	(18,936,178)	(13,429,433)	(12,557,014)	(12,853,985)
Net accumulation activity	8,107,198	37,344,947	(13,280,101)	(12,481,276)
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	(1,950)	(1,864)	(76,519)	(45,273)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(102)	(172)	(1,957)	(20,528)
Net annuitization activity	(2,052)	(2,036)	(78,476)	(65,801)
Net increase (decrease) from contract owner    transactions	8,105,146	37,342,911	(13,358,577)	(12,547,077)
Total increase (decrease) in net assets	14,767,642	46,884,856	(15,545,655)	2,699,518
Net assets at beginning of year	138,789,021	91,904,165	109,875,527	107,176,009
Net assets at end of year	$   153,556,663	$  138,789,021	$     94,329,872	$   109,875,527

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	RG1 Sub-Account		MFF Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (325,493)	$     (233,343)	$       (178,831)	$       (189,087)
Net realized gains (losses)	1,462,217	(1,989,290)	779,030	623,831
Net change in unrealized appreciation/depreciation	(2,203,494)	6,841,914	(781,522)	1,023,518
Net (decrease) increase from operations	(1,066,770)	4,619,281	(181,323)	1,458,262
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	1,809,104	2,076,208	257,235	87,063
Transfers between Sub-Accounts
(including the Fixed Account), net	3,236,035	(1,196,271)	27,256	(116,039)
Withdrawals, surrenders, annuitizations
and contract charges	(3,110,420)	(3,294,175)	(2,507,509)	(1,727,192)
Net accumulation activity	1,934,719	(2,414,238)	(2,223,018)	(1,756,168)
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	(6,726)	(5,457)	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	5	(825)	3	(69)
Net annuitization activity	(6,721)	(6,282)	3	(69)
Net increase (decrease) from contract owner    transactions	1,927,998	(2,420,520)	(2,223,015)	(1,756,237)
Total increase (decrease) in net assets	861,228	2,198,761	(2,404,338)	(297,975)
Net assets at beginning of year	34,696,477	32,497,716	12,234,367	12,532,342
Net assets at end of year	$     35,557,705	$    34,696,477	$       9,830,029	$     12,234,367

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	EME Sub-Account		EM1 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (400,766)	$     (337,474)	$       (437,643)	$       (287,567)
Net realized (losses) gains	(2,112,396)	(4,529,739)	2,994,338	208,109
Net change in unrealized appreciation/depreciation	(6,970,297)	14,340,213	(9,923,358)	5,472,939
Net (decrease) increase from operations	(9,483,459)	9,473,000	(7,366,663)	5,393,481
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	408,039	310,758	5,191,493	7,548,344
Transfers between Sub-Accounts
(including the Fixed Account), net	138,128	1,561,489	4,017,240	642,145
Withdrawals, surrenders, annuitizations
and contract charges	(6,626,517)	(5,688,750)	(2,993,420)	(2,351,826)
Net accumulation activity	(6,080,350)	(3,816,503)	6,215,313	5,838,663
Annuitization Activity:
Annuitizations	63,811	5,345	-	-
Annuity payments and contract charges	(33,040)	(27,374)	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	28,169	(35,023)	-	-
Net annuitization activity	58,940	(57,052)	-	-
Net (decrease) increase from contract owner    transactions	(6,021,410)	(3,873,555)	6,215,313	5,838,663
Total (decrease) increase in net assets	(15,504,869)	5,599,445	(1,151,350)	11,232,144
Net assets at beginning of year	52,175,479	46,576,034	33,610,615	22,378,471
Net assets at end of year	$     36,670,610	$    52,175,479	$     32,459,265	$     33,610,615

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	GGS Sub-Account		GG1 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$         222,825	$     (399,185)	$           11,181	$         (49,389)
Net realized gains (losses)	278,145	(182,443)	74,948	(23,866)
Net change in unrealized appreciation/depreciation	669,954	1,427,904	24,962	154,545
Net increase from operations	1,170,924	846,276	111,091	81,290
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	197,470	316,671	28,234	44,579
Transfers between Sub-Accounts
(including the Fixed Account), net	931,277	678,583	(159,788)	232,805
Withdrawals, surrenders, annuitizations
and contract charges	(3,873,858)	(3,478,674)	(455,705)	(827,197)
Net accumulation activity	(2,745,111)	(2,483,420)	(587,259)	(549,813)
Annuitization Activity:
Annuitizations	-	5,178	-	-
Annuity payments and contract charges	(15,685)	(18,728)	(1,996)	(1,947)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(5,640)	(24,807)	(97)	(101)
Net annuitization activity	(21,325)	(38,357)	(2,093)	(2,048)
Net decrease from contract owner transactions	(2,766,436)	(2,521,777)	(589,352)	(551,861)
Total decrease in net assets	(1,595,512)	(1,675,501)	(478,261)	(470,571)
Net assets at beginning of year	27,603,523	29,279,024	3,072,039	3,542,610
Net assets at end of year	$     26,008,011	$    27,603,523	$       2,593,778	$       3,072,039

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	GGR Sub-Account		GG2 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (438,994)	$     (407,270)	$         (43,540)	$         (43,968)
Net realized gains	3,659,137	3,071,738	165,559	260,069
Net change in unrealized appreciation/depreciation	(7,824,199)	3,547,131	(405,842)	124,591
Net (decrease) increase from operations	(4,604,056)	6,211,599	(283,823)	340,692
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	434,023	774,541	5,158	72,575
Transfers between Sub-Accounts
(including the Fixed Account), net	(2,222,724)	(1,844,502)	(66,116)	(173,482)
Withdrawals, surrenders, annuitizations
and contract charges	(8,230,272)	(8,527,451)	(644,795)	(1,145,842)
Net accumulation activity	(10,018,973)	(9,597,412)	(705,753)	(1,246,749)
Annuitization Activity:
Annuitizations	14,340	-	-	-
Annuity payments and contract charges	(115,487)	(58,157)	(1,964)	(1,829)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	11,975	(15,205)	45	(259)
Net annuitization activity	(89,172)	(73,362)	(1,919)	(2,088)
Net decrease from contract owner transactions	(10,108,145)	(9,670,774)	(707,672)	(1,248,837)
Total decrease in net assets	(14,712,201)	(3,459,175)	(991,495)	(908,145)
Net assets at beginning of year	68,407,784	71,866,959	4,004,065	4,912,210
Net assets at end of year	$     53,695,583	$    68,407,784	$       3,012,570	$       4,004,065

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	RES Sub-Account		RE1 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (266,448)	$       (25,251)	$       (102,447)	$         (71,914)
Net realized gains	2,791,004	1,071,512	331,006	135,897
Net change in unrealized appreciation/depreciation	(12,350,744)	12,732,144	(1,310,807)	1,562,516
Net (decrease) increase from operations	(9,826,188)	13,778,405	(1,082,248)	1,626,499
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	1,332,172	1,369,807	110,376	160,631
Transfers between Sub-Accounts
(including the Fixed Account), net	(3,126,379)	(3,845,412)	376,916	(265,407)
Withdrawals, surrenders, annuitizations
and contract charges	(14,005,026)	(16,881,758)	(3,306,404)	(2,563,199)
Net accumulation activity	(15,799,233)	(19,357,363)	(2,819,112)	(2,667,975)
Annuitization Activity:
Annuitizations	23,638	29,681	-	-
Annuity payments and contract charges	(99,229)	(112,284)	(2,448)	(2,055)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	25,345	(48,072)	69	(207)
Net annuitization activity	(50,246)	(130,675)	(2,379)	(2,262)
Net decrease from contract owner transactions	(15,849,479)	(19,488,038)	(2,821,491)	(2,670,237)
Total decrease in net assets	(25,675,667)	(5,709,633)	(3,903,739)	(1,043,738)
Net assets at beginning of year	138,046,224	143,755,857	16,215,376	17,259,114
Net assets at end of year	$   112,370,557	$  138,046,224	$     12,311,637	$     16,215,376

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	GTR Sub-Account		GT2 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (354,095)	$     (524,141)	$    (3,721,553)	$    (2,045,863)
Net realized (losses) gains	(1,827,783)	(2,722,457)	4,482,568	(803,343)
Net change in unrealized appreciation/depreciation	2,430,147	6,496,978	(10,072,819)	13,370,121
Net increase (decrease) from operations	248,269	3,250,380	(9,311,804)	10,520,915
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	680,997	746,578	419,924,472	275,234,122
Transfers between Sub-Accounts
(including the Fixed Account), net	848,302	657,421	105,954,293	82,778,660
Withdrawals, surrenders, annuitizations
and contract charges	(11,119,515)	(10,784,107)	(22,175,874)	(5,665,087)
Net accumulation activity	(9,590,216)	(9,380,108)	503,702,891	352,347,695
Annuitization Activity:
Annuitizations	2,541	15,666	-	-
Annuity payments and contract charges	(71,687)	(68,832)	(2,072)	(2,029)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(19,035)	(20,189)	(81)	(162)
Net annuitization activity	(88,181)	(73,355)	(2,153)	(2,191)
Net (decrease) increase from contract owner    transactions	(9,678,397)	(9,453,463)	503,700,738	352,345,504
Total (decrease) increase in net assets	(9,430,128)	(6,203,083)	494,388,934	362,866,419
Net assets at beginning of year	83,182,897	89,385,980	374,030,587	11,164,168
Net assets at end of year	$     73,752,769	$    83,182,897	$   868,419,521	$   374,030,587

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	GSS Sub-Account		MFK Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income	$      3,885,749	$     4,309,753	$      7,322,277	$      6,699,523
Net realized gains	2,894,408	2,089,696	7,327,698	3,863,911
Net change in unrealized appreciation/depreciation	2,851,977	232,090	5,718,871	(95,451)
Net increase from operations	9,632,134	6,631,539	20,368,846	10,467,983
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	3,392,381	2,443,434	26,558,221	33,275,827
Transfers between Sub-Accounts
(including the Fixed Account), net	(2,526,229)	2,306,290	(22,504,527)	25,231,618
Withdrawals, surrenders, annuitizations
and contract charges	(29,902,894)	(30,646,372)	(43,432,519)	(45,202,211)
Net accumulation activity	(29,036,742)	(25,896,648)	(39,378,825)	13,305,234
Annuitization Activity:
Annuitizations	35,648	21,231	-	124,637
Annuity payments and contract charges	(131,706)	(172,359)	(28,050)	(25,171)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	5,549	6,534	(6,365)	(9,099)
Net annuitization activity	(90,509)	(144,594)	(34,415)	90,367
Net (decrease) increase from contract owner    transactions	(29,127,251)	(26,041,242)	(39,413,240)	13,395,601
Total (decrease) increase in net assets	(19,495,117)	(19,409,703)	(19,044,394)	23,863,584
Net assets at beginning of year	182,422,116	201,831,819	398,410,866	374,547,282
Net assets at end of year	$   162,926,999	$  182,422,116	$   379,366,472	$   398,410,866

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	EGS Sub-Account		HYS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$   (1,700,823)	$  (1,801,212)	$      6,694,185	$      7,854,342
Net realized gains (losses)	5,195,511	3,163,874	(1,663,443)	(5,220,494)
Net change in unrealized appreciation/depreciation	(5,766,397)	16,591,684	(2,362,572)	10,196,832
Net (decrease) increase from operations	(2,271,709)	17,954,346	2,668,170	12,830,680
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	1,519,327	1,241,227	1,850,064	888,751
Transfers between Sub-Accounts
(including the Fixed Account), net	(1,766,537)	(1,926,520)	(607,041)	(1,092,178)
Withdrawals, surrenders, annuitizations
and contract charges	(14,628,254)	(15,896,050)	(16,150,520)	(13,939,425)
Net accumulation activity	(14,875,464)	(16,581,343)	(14,907,497)	(14,142,852)
Annuitization Activity:
Annuitizations	64,034	25,850	45,210	11,220
Annuity payments and contract charges	(112,517)	(76,180)	(71,120)	(89,677)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(269)	(38,762)	(29,757)	(57,516)
Net annuitization activity	(48,752)	(89,092)	(55,667)	(135,973)
Net decrease from contract owner transactions	(14,924,216)	(16,670,435)	(14,963,164)	(14,278,825)
Total (decrease) increase in net assets	(17,195,925)	1,283,911	(12,294,994)	(1,448,145)
Net assets at beginning of year	142,268,348	140,984,437	99,394,800	100,842,945
Net assets at end of year	$   125,072,423	$  142,268,348	$     87,099,806	$     99,394,800

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	MFC Sub-Account		IGS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$      5,302,344	$     6,900,949	$       (199,043)	$       (352,389)
Net realized (losses) gains	(885,227)	(3,141,410)	1,381,325	(4,415,102)
Net change in unrealized appreciation/depreciation	(2,491,984)	7,457,171	(8,348,282)	12,746,238
Net increase (decrease) from operations	1,925,133	11,216,710	(7,166,000)	7,978,747
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	732,679	778,202	723,550	753,435
Transfers between Sub-Accounts
(including the Fixed Account), net	(4,284,365)	(3,566,424)	(1,153,199)	(1,825,373)
Withdrawals, surrenders, annuitizations
and contract charges	(14,474,851)	(15,163,458)	(8,227,026)	(9,194,565)
Net accumulation activity	(18,026,537)	(17,951,680)	(8,656,675)	(10,266,503)
Annuitization Activity:
Annuitizations	-	1,474	13,142	32,505
Annuity payments and contract charges	(9,368)	(8,557)	(26,696)	(25,301)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(1,348)	(2,270)	8,795	(14,533)
Net annuitization activity	(10,716)	(9,353)	(4,759)	(7,329)
Net decrease from contract owner transactions	(18,037,253)	(17,961,033)	(8,661,434)	(10,273,832)
Total decrease in net assets	(16,112,120)	(6,744,323)	(15,827,434)	(2,295,085)
Net assets at beginning of year	89,107,908	95,852,231	66,861,752	69,156,837
Net assets at end of year	$     72,995,788	$    89,107,908	$     51,034,318	$     66,861,752

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	IG1 Sub-Account		MII Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$      (186,216)	$     (233,681)	$       (104,361)	$         108,739
Net realized gains (losses)	2,266,309	(1,661,309)	(2,126,151)	(2,475,757)
Net change in unrealized appreciation/depreciation	(5,431,548)	4,961,500	951,034	6,171,841
Net (decrease) increase from operations	(3,351,455)	3,066,510	(1,279,478)	3,804,823
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	1,842,154	2,666,100	573,059	343,353
Transfers between Sub-Accounts
(including the Fixed Account), net	1,122,831	(356,966)	(1,876,325)	(864,825)
Withdrawals, surrenders, annuitizations
and contract charges	(2,652,125)	(2,981,179)	(6,635,187)	(6,840,628)
Net accumulation activity	312,860	(672,045)	(7,938,453)	(7,362,100)
Annuitization Activity:
Annuitizations	-	-	17,416	11,475
Annuity payments and contract charges	-	-	(33,901)	(32,557)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	99	(115)	(5,865)	(18,264)
Net annuitization activity	99	(115)	(22,350)	(39,346)
Net increase (decrease) from contract owner    transactions	312,959	(672,160)	(7,960,803)	(7,401,446)
Total (decrease) increase in net assets	(3,038,496)	2,394,350	(9,240,281)	(3,596,623)
Net assets at beginning of year	27,188,090	24,793,740	55,418,037	59,014,660
Net assets at end of year	$     24,149,594	$    27,188,090	$     46,177,756	$     55,418,037

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	MI1 Sub-Account		MIS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$   (1,167,495)	$     (563,981)	$    (2,936,236)	$    (4,024,338)
Net realized (losses) gains	(7,214,597)	(7,525,535)	10,265,533	4,920,662
Net change in unrealized appreciation/depreciation	3,308,356	21,107,265	(8,477,280)	38,176,157
Net (decrease) increase from operations	(5,073,736)	13,017,749	(1,147,983)	39,072,481
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	2,468,044	3,560,400	4,941,279	3,776,093
Transfers between Sub-Accounts
(including the Fixed Account), net	(11,029,644)	4,838,958	(9,321,755)	(12,102,400)
Withdrawals, surrenders, annuitizations
and contract charges	(20,879,495)	(12,933,860)	(47,535,979)	(48,044,004)
Net accumulation activity	(29,441,095)	(4,534,502)	(51,916,455)	(56,370,311)
Annuitization Activity:
Annuitizations	-	10,596	44,815	65,515
Annuity payments and contract charges	(2,956)	(2,764)	(441,257)	(372,281)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	256	(1,326)	1,472	(25,759)
Net annuitization activity	(2,700)	6,506	(394,970)	(332,525)
Net decrease from contract owner transactions	(29,443,795)	(4,527,996)	(52,311,425)	(56,702,836)
Total (decrease) increase in net assets	(34,517,531)	8,489,753	(53,459,408)	(17,630,355)
Net assets at beginning of year	192,674,447	184,184,694	374,470,706	392,101,061
Net assets at end of year	$   158,156,916	$  192,674,447	$   321,011,298	$   374,470,706

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	M1B Sub-Account		MCS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (765,592)	$  (1,020,618)	$       (343,244)	$       (311,347)
Net realized gains (losses)	1,365,568	614,017	(162,810)	(604,551)
Net change in unrealized appreciation/depreciation	(845,710)	6,942,527	(1,293,631)	6,160,747
Net (decrease) increase from operations	(245,734)	6,535,926	(1,799,685)	5,244,849
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	588,346	596,268	259,621	222,475
Transfers between Sub-Accounts
(including the Fixed Account), net	(3,360,989)	(2,829,628)	(610,400)	2,003,345
Withdrawals, surrenders, annuitizations
and contract charges	(12,225,635)	(13,156,454)	(3,190,975)	(2,850,587)
Net accumulation activity	(14,998,278)	(15,389,814)	(3,541,754)	(624,767)
Annuitization Activity:
Annuitizations	-	2,530	-	15,495
Annuity payments and contract charges	(5,011)	(4,022)	(7,616)	(7,054)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(138)	(303)	1,487	(3,019)
Net annuitization activity	(5,149)	(1,795)	(6,129)	5,422
Net decrease from contract owner transactions	(15,003,427)	(15,391,609)	(3,547,883)	(619,345)
Total (decrease) increase in net assets	(15,249,161)	(8,855,683)	(5,347,568)	4,625,504
Net assets at beginning of year	63,674,137	72,529,820	24,915,455	20,289,951
Net assets at end of year	$     48,424,976	$    63,674,137	$     19,567,887	$     24,915,455

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	MC1 Sub-Account		MMS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (211,573)	$     (242,463)	$    (1,472,427)	$    (1,814,056)
Net realized gains (losses)	434,600	(509,620)	-	-
Net change in unrealized appreciation/depreciation	(1,156,994)	4,305,962	-	-
Net (decrease) increase from operations	(933,967)	3,553,879	(1,472,427)	(1,814,056)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	92,590	241,078	5,749,297	7,711,175
Transfers between Sub-Accounts
(including the Fixed Account), net	(500,708)	(891,854)	19,835,279	17,373,035
Withdrawals, surrenders, annuitizations
and contract charges	(3,002,106)	(3,449,660)	(41,816,757)	(52,479,905)
Net accumulation activity	(3,410,224)	(4,100,436)	(16,232,181)	(27,395,695)
Annuitization Activity:
Annuitizations	-	1,038	193,878	302,433
Annuity payments and contract charges	(1,538)	(1,020)	(160,292)	(336,938)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	63	(342)	(27,229)	(11,666)
Net annuitization activity	(1,475)	(324)	6,357	(46,171)
Net decrease from contract owner transactions	(3,411,699)	(4,100,760)	(16,225,824)	(27,441,866)
Total decrease in net assets	(4,345,666)	(546,881)	(17,698,251)	(29,255,922)
Net assets at beginning of year	15,073,695	15,620,576	113,721,713	142,977,635
Net assets at end of year	$     10,728,029	$    15,073,695	$     96,023,462	$   113,721,713

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	MM1 Sub-Account		NWD Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$    (2,396,162)	$   (2,883,955)	$        (956,720)	$        (908,193)
Net realized gains	-	-	8,392,205	2,681,838
Net change in unrealized appreciation/depreciation	-	-	(14,624,715)	17,195,895
Net (decrease) increase from operations	(2,396,162)	(2,883,955)	(7,189,230)	18,969,540
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	3,052,697	2,569,132	1,449,456	689,082
Transfers between Sub-Accounts
(including the Fixed Account), net	53,527,157	38,156,057	896,622	(2,978,621)
Withdrawals, surrenders, annuitizations
and contract charges	(88,933,627)	(60,311,787)	(9,562,337)	(8,270,371)
Net accumulation activity	(32,353,773)	(19,586,598)	(7,216,259)	(10,559,910)
Annuitization Activity:
Annuitizations	-	56,798	13,280	15,041
Annuity payments and contract charges	(27,656)	(27,632)	(52,917)	(26,329)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(1,061)	(1,476)	3,813	(13,347)
Net annuitization activity	(28,717)	27,690	(35,824)	(24,635)
Net decrease from contract owner transactions	(32,382,490)	(19,558,908)	(7,252,083)	(10,584,545)
Total (decrease) increase in net assets	(34,778,652)	(22,442,863)	(14,441,313)	8,384,995
Net assets at beginning of year	158,401,447	180,844,310	69,127,087	60,742,092
Net assets at end of year	$   123,622,795	$  158,401,447	$     54,685,774	$     69,127,087

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	M1A Sub-Account		RIS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$    (1,250,462)	$   (1,385,031)	$          212,925	$          (36,685)
Net realized gains (losses)	9,910,344	(1,076,462)	(2,839,308)	(3,319,974)
Net change in unrealized appreciation/depreciation	(16,413,135)	26,206,763	(1,910,466)	6,741,449
Net (decrease) increase from operations	(7,753,253)	23,745,270	(4,536,849)	3,384,790
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	513,982	484,578	432,111	501,147
Transfers between Sub-Accounts
(including the Fixed Account), net	(614,378)	(17,819,747)	(905,203)	(671,244)
Withdrawals, surrenders, annuitizations
and contract charges	(11,882,631)	(12,331,914)	(4,721,794)	(5,242,889)
Net accumulation activity	(11,983,027)	(29,667,083)	(5,194,886)	(5,412,986)
Annuitization Activity:
Annuitizations	-	-	3,435	4,668
Annuity payments and contract charges	(10,473)	(8,597)	(14,350)	(16,808)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	822	(2,318)	(2,442)	(4,878)
Net annuitization activity	(9,651)	(10,915)	(13,357)	(17,018)
Net decrease from contract owner transactions	(11,992,678)	(29,677,998)	(5,208,243)	(5,430,004)
Total decrease in net assets	(19,745,931)	(5,932,728)	(9,745,092)	(2,045,214)
Net assets at beginning of year	80,056,321	85,989,049	42,251,199	44,296,413
Net assets at end of year	$     60,310,390	$    80,056,321	$     32,506,107	$     42,251,199

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	RI1 Sub-Account		SIS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$            26,719	$      (629,902)	$       1,614,515	$       1,553,487
Net realized losses	(9,675,153)	(15,817,810)	(272,861)	(596,207)
Net change in unrealized appreciation/depreciation	(2,640,814)	25,553,954	(141,430)	2,358,826
Net (decrease) increase from operations	(12,289,248)	9,106,242	1,200,224	3,316,106
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	2,551,004	2,119,126	685,234	471,492
Transfers between Sub-Accounts
(including the Fixed Account), net	1,399,067	(876,886)	2,662,657	2,954,221
Withdrawals, surrenders, annuitizations
and contract charges	(14,817,447)	(15,387,666)	(6,667,875)	(6,283,968)
Net accumulation activity	(10,867,376)	(14,145,426)	(3,319,984)	(2,858,255)
Annuitization Activity:
Annuitizations	-	2,267	4,641	23,036
Annuity payments and contract charges	(2,780)	(3,127)	(30,389)	(35,888)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	376	(425)	2,938	1,416
Net annuitization activity	(2,404)	(1,285)	(22,810)	(11,436)
Net decrease from contract owner transactions	(10,869,780)	(14,146,711)	(3,342,794)	(2,869,691)
Total (decrease) increase in net assets	(23,159,028)	(5,040,469)	(2,142,570)	446,415
Net assets at beginning of year	113,396,073	118,436,542	39,058,974	38,612,559
Net assets at end of year	$     90,237,045	$  113,396,073	$     36,916,404	$     39,058,974

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	SI1 Sub-Account		TEC Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$         404,866	$        398,183	$       (221,785)	$       (207,685)
Net realized gains (losses)	64,492	(217,778)	1,312,661	617,770
Net change in unrealized appreciation/depreciation	(195,560)	710,294	(1,093,071)	2,121,114
Net increase (decrease) from operations	273,798	890,699	(2,195)	2,531,199
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	834,847	53,217	80,861	129,365
Transfers between Sub-Accounts
(including the Fixed Account), net	542,739	865,883	356,586	20,767
Withdrawals, surrenders, annuitizations
and contract charges	(2,118,287)	(2,471,468)	(1,691,719)	(1,368,959)
Net accumulation activity	(740,701)	(1,552,368)	(1,254,272)	(1,218,827)
Annuitization Activity:
Annuitizations	-	-	-	1,799
Annuity payments and contract charges	(3,303)	(3,214)	(3,414)	(2,604)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(183)	(335)	(127)	(1,084)
Net annuitization activity	(3,486)	(3,549)	(3,541)	(1,889)
Net decrease from contract owner transactions	(744,187)	(1,555,917)	(1,257,813)	(1,220,716)
Total (decrease) increase in net assets	(470,389)	(665,218)	(1,260,008)	1,310,483
Net assets at beginning of year	10,489,949	11,155,167	15,842,093	14,531,610
Net assets at end of year	$     10,019,560	$    10,489,949	$     14,582,085	$     15,842,093

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	TE1 Sub-Account		TRS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$        (25,788)	$       (25,827)	$      6,096,491	$      7,073,716
Net realized gains (losses)	183,554	119,729	(2,769,230)	(9,321,443)
Net change in unrealized appreciation/depreciation	(166,157)	166,829	(513,636)	43,345,284
Net (decrease) increase from operations	(8,391)	260,731	2,813,625	41,097,557
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	50,073	113,456	7,287,457	6,749,347
Transfers between Sub-Accounts
(including the Fixed Account), net	(10,029)	34,354	(2,379,971)	(6,101,083)
Withdrawals, surrenders, annuitizations
and contract charges	(351,568)	(405,404)	(66,302,208)	(69,914,778)
Net accumulation activity	(311,524)	(257,594)	(61,394,722)	(69,266,514)
Annuitization Activity:
Annuitizations	-	-	328,459	421,971
Annuity payments and contract charges	-	-	(590,765)	(605,182)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	(123,567)	(161,559)
Net annuitization activity	-	-	(385,873)	(344,770)
Net decrease from contract owner transactions	(311,524)	(257,594)	(61,780,595)	(69,611,284)
Total (decrease) increase in net assets	(319,915)	3,137	(58,966,970)	(28,513,727)
Net assets at beginning of year	1,776,216	1,773,079	506,544,820	535,058,547
Net assets at end of year	$       1,456,301	$      1,776,216	$   447,577,850	$   506,544,820

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	MFJ Sub-Account		UTS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income	$       4,968,703	$      6,347,081	$       3,279,060	$       2,963,376
Net realized (losses) gains	(19,163,907)	(24,595,166)	10,818,373	10,509,303
Net change in unrealized appreciation/depreciation	14,724,697	73,206,441	(4,977,596)	4,886,592
Net increase from operations	529,493	54,958,356	9,119,837	18,359,271
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	33,086,471	35,405,597	1,962,473	1,957,646
Transfers between Sub-Accounts
(including the Fixed Account), net	(15,321,538)	(17,562,522)	(1,102,279)	(3,473,462)
Withdrawals, surrenders, annuitizations
and contract charges	(100,111,041)	(91,188,599)	(21,767,374)	(24,410,951)
Net accumulation activity	(82,346,108)	(73,345,524)	(20,907,180)	(25,926,767)
Annuitization Activity:
Annuitizations	-	199,457	68,016	263,415
Annuity payments and contract charges	(24,238)	(29,160)	(152,914)	(107,790)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(4,635)	(13,434)	(36,555)	(64,734)
Net annuitization activity	(28,873)	156,863	(121,453)	90,891
Net decrease from contract owner transactions	(82,374,981)	(73,188,661)	(21,028,633)	(25,835,876)
Total decrease in net assets	(81,845,488)	(18,230,305)	(11,908,796)	(7,476,605)
Net assets at beginning of year	724,908,318	743,138,623	165,648,150	173,124,755
Net assets at end of year	$   643,062,830	$  724,908,318	$   153,739,354	$   165,648,150

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	MFE Sub-Account		MVS Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$       1,836,045	$      1,454,288	$          214,314	$          (32,550)
Net realized (losses) gains	(1,250,241)	(7,930,782)	4,784,422	(3,060,919)
Net change in unrealized appreciation/depreciation	4,756,412	18,283,727	(6,433,295)	14,394,902
Net increase (decrease) from operations	5,342,216	11,807,233	(1,434,559)	11,301,433
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	4,512,983	8,534,981	1,560,714	1,274,846
Transfers between Sub-Accounts
(including the Fixed Account), net	6,416,240	(636,392)	(1,462,773)	937,980
Withdrawals, surrenders, annuitizations
and contract charges	(11,092,566)	(9,859,860)	(15,445,829)	(16,768,332)
Net accumulation activity	(163,343)	(1,961,271)	(15,347,888)	(14,555,506)
Annuitization Activity:
Annuitizations	-	-	13,436	-
Annuity payments and contract charges	(5,415)	(9,000)	(104,120)	(111,308)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(345)	(695)	(6,318)	(10,276)
Net annuitization activity	(5,760)	(9,695)	(97,002)	(121,584)
Net decrease from contract owner transactions	(169,103)	(1,970,966)	(15,444,890)	(14,677,090)
Total increase (decrease) in net assets	5,173,113	9,836,267	(16,879,449)	(3,375,657)
Net assets at beginning of year	111,476,038	101,639,771	122,377,852	125,753,509
Net assets at end of year	$   116,649,151	$  111,476,038	$   105,498,403	$   122,377,852

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	MV1 Sub-Account		AAN Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (578,891)	$     (980,753)	$           (2,530)	$                     -
Net realized gains (losses)	7,851,039	(12,070,497)	(103)	-
Net change in unrealized appreciation/depreciation	(10,684,885)	32,476,805	14,949	-
Net (decrease) increase from operations	(3,412,737)	19,425,555	12,316	-
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	5,877,787	9,119,713	1,915,802	-
Transfers between Sub-Accounts
(including the Fixed Account), net	(7,617,136)	(2,828,609)	382,797	-
Withdrawals, surrenders, annuitizations
and contract charges	(24,562,258)	(22,612,378)	(15,746)	-
Net accumulation activity	(26,301,607)	(16,321,274)	2,282,853	-
Annuitization Activity:
Annuitizations	-	1,115	-	-
Annuity payments and contract charges	(8,428)	(11,606)	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(632)	(1,454)	-	-
Net annuitization activity	(9,060)	(11,945)	-	-
Net (decrease) increase from contract owner    transactions	(26,310,667)	(16,333,219)	2,282,853	-
Total (decrease) increase in net assets	(29,723,404)	3,092,336	2,295,169	-
Net assets at beginning of year	219,524,012	216,431,676	-	-
Net assets at end of year	$   189,800,608	$  219,524,012	$       2,295,169	$                      -

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	AAW Sub-Account		VKM Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$               (38)	$                    -	$       (256,078)	$       (181,284)
Net realized (losses) gains	(1)	-	2,267,652	1,441,328
Net change in unrealized appreciation/depreciation	(668)	-	(3,638,876)	1,601,633
Net (decrease) increase from operations	(707)	-	(1,627,302)	2,861,677
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	14,590	-	1,180,837	2,149,239
Transfers between Sub-Accounts
(including the Fixed Account), net	9,666	-	1,604,746	1,091,195
Withdrawals, surrenders, annuitizations
and contract charges	-	-	(1,123,916)	(502,106)
Net accumulation activity	24,256	-	1,661,667	2,738,328
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	24,256	-	1,661,667	2,738,328
Total increase in net assets	23,549	-	34,365	5,600,005
Net assets at beginning of year	-	-	14,589,309	8,989,304
Net assets at end of year	$            23,549	$                     -	$     14,623,674	$     14,589,309

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	OBV Sub-Account		OCA Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$           55,002	$       (61,068)	$       (410,541)	$       (457,152)
Net realized gains (losses)	373,844	(231,357)	(278,018)	(647,622)
Net change in unrealized appreciation/depreciation	(608,198)	1,587,695	(93,688)	2,963,015
Net (decrease) increase from operations	(179,352)	1,295,270	(782,247)	1,858,241
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	10,438	243,081	1,224,360	2,291,058
Transfers between Sub-Accounts
(including the Fixed Account), net	556,313	(59,826)	330,957	(1,915,029)
Withdrawals, surrenders, annuitizations
and contract charges	(1,089,038)	(1,195,994)	(3,699,323)	(3,867,887)
Net accumulation activity	(522,287)	(1,012,739)	(2,144,006)	(3,491,858)
Annuitization Activity:
Annuitizations	-	-	-	2,324
Annuity payments and contract charges	-	-	(2,278)	(1,716)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	(77)	(214)
Net annuitization activity	-	-	(2,355)	394
Net decrease from contract owner transactions	(522,287)	(1,012,739)	(2,146,361)	(3,491,464)
Total (decrease) increase in net assets	(701,639)	282,531	(2,928,608)	(1,633,223)
Net assets at beginning of year	13,178,352	12,895,821	26,312,656	27,945,879
Net assets at end of year	$     12,476,713	$    13,178,352	$     23,384,048	$     26,312,656

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	OGG Sub-Account		OMG Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (201,893)	$     (160,375)	$    (4,820,441)	$    (3,867,495)
Net realized losses	(1,392,825)	(2,664,369)	(23,494,767)	(22,696,273)
Net change in unrealized appreciation/depreciation	(1,658,822)	6,864,537	19,150,868	87,193,750
Net (decrease) increase from operations	(3,253,540)	4,039,793	(9,164,340)	60,629,982
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	2,649,918	2,149,983	3,084,994	2,562,910
Transfers between Sub-Accounts
(including the Fixed Account), net	409,087	(743,099)	(21,325,654)	(31,713,271)
Withdrawals, surrenders, annuitizations
and contract charges	(4,141,458)	(2,855,922)	(66,408,906)	(55,204,886)
Net accumulation activity	(1,082,453)	(1,449,038)	(84,649,566)	(84,355,247)
Annuitization Activity:
Annuitizations	-	-	-	9,204
Annuity payments and contract charges	-	-	(14,722)	(14,475)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	269	(2,773)
Net annuitization activity	-	-	(14,453)	(8,044)
Net decrease from contract owner transactions	(1,082,453)	(1,449,038)	(84,664,019)	(84,363,291)
Total (decrease) increase in net assets	(4,335,993)	2,590,755	(93,828,359)	(23,733,309)
Net assets at beginning of year	32,916,492	30,325,737	470,911,158	494,644,467
Net assets at end of year	$     28,580,499	$    32,916,492	$   377,082,799	$   470,911,158

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	OMS Sub-Account		AAQ Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (136,236)	$     (151,749)	$                  (3)	$                     -
Net realized gains (losses)	260,424	(650,000)	-	-
Net change in unrealized appreciation/depreciation	(501,351)	2,869,798	(13)	-
Net (decrease) increase from operations	(377,163)	2,068,049	(16)	-
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	49,738	60,226	28,287	-
Transfers between Sub-Accounts
(including the Fixed Account), net	(1,042,095)	(440,445)	43,142	-
Withdrawals, surrenders, annuitizations
and contract charges	(1,813,606)	(1,036,222)	-	-
Net accumulation activity	(2,805,963)	(1,416,441)	71,429	-
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net (decrease) increase from contract owner    transactions	(2,805,963)	(1,416,441)	71,429	-
Total (decrease) increase in net assets	(3,183,126)	651,608	71,413	-
Net assets at beginning of year	11,503,067	10,851,459	-	-
Net assets at end of year	$       8,319,941	$    11,503,067	$            71,413	$                      -

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	PRA Sub-Account		AAP Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income	$         280,920	$        271,035	$         165,174	$                     -
Net realized gains (losses)	85,345	(47,805)	(7)	-
Net change in unrealized appreciation/depreciation	(354,512)	259,295	(126,838)	-
Net increase from operations	11,753	482,525	38,329	-
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	39,542	30,522	6,277,837	-
Transfers between Sub-Accounts
(including the Fixed Account), net	555,628	1,333,686	1,315,727	-
Withdrawals, surrenders, annuitizations
and contract charges	(716,516)	(434,367)	(1,568)	-
Net accumulation activity	(121,346)	929,841	7,591,996	-
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net (decrease) increase from contract owner transactions	(121,346)	929,841	7,591,996	-
Total (decrease) increase in net assets	(109,593)	1,412,366	7,630,325	-
Net assets at beginning of year	5,600,897	4,188,531	-	-
Net assets at end of year	$       5,491,304	$      5,600,897	$       7,630,325	$                      -

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	BBD Sub-Account		PCR Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income	$           13,965	$                    -	$      9,881,844	$      8,599,119
Net realized (losses) gains	(28)	-	3,854,601	(7,675,748)
Net change in unrealized appreciation/depreciation	(23,066)	-	(20,646,109)	12,790,780
Net (decrease) increase from operations	(9,129)	-	(6,909,664)	13,714,151
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	494,441	-	7,532,124	7,718,981
Transfers between Sub-Accounts
(including the Fixed Account), net	84,135	-	4,650,918	(2,659,143)
Withdrawals, surrenders, annuitizations
and contract charges	(440)	-	(5,752,805)	(4,976,220)
Net accumulation activity	578,136	-	6,430,237	83,618
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	578,136	-	6,430,237	83,618
Total increase (decrease) in net assets	569,007	-	(479,427)	13,797,769
Net assets at beginning of year	-	-	74,448,884	60,651,115
Net assets at end of year	$          569,007	$                     -	$     73,969,457	$     74,448,884

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	PMB Sub-Account		BBE Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income	$         897,027	$        630,592	$                908	$                     -
Net realized gains (losses)	974,243	(2,675)	(11)	-
Net change in unrealized appreciation/depreciation	(781,543)	1,162,235	10	-
Net increase from operations	1,089,727	1,790,152	907	-
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	3,187,880	4,978,474	365,256	-
Transfers between Sub-Accounts
(including the Fixed Account), net	(784,093)	3,516,158	51,710	-
Withdrawals, surrenders, annuitizations
and contract charges	(2,581,117)	(2,347,216)	-	-
Net accumulation activity	(177,330)	6,147,416	416,966	-
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net (decrease) increase from contract owner    transactions	(177,330)	6,147,416	416,966	-
Total increase in net assets	912,397	7,937,568	417,873	-
Net assets at beginning of year	24,113,288	16,175,720	-	-
Net assets at end of year	$     25,025,685	$    24,113,288	$          417,873	$                      -

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	6TT Sub-Account		PRR Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$      1,626,785	$     8,479,138	$         470,227	$       (331,366)
Net realized gains	12,269,505	1,721,402	5,711,228	1,133,890
Net change in unrealized appreciation/depreciation	(55,464,424)	31,259,794	4,424,935	6,519,698
Net (decrease) increase from operations	(41,568,134)	41,460,334	10,606,390	7,322,222
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	335,102,537	392,135,992	683,195	605,091
Transfers between Sub-Accounts
(including the Fixed Account), net	164,602,057	169,501,807	(12,657,430)	(280,371)
Withdrawals, surrenders, annuitizations
and contract charges	(30,508,018)	(8,211,478)	(14,051,768)	(12,488,348)
Net accumulation activity	469,196,576	553,426,321	(26,026,003)	(12,163,628)
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase (decrease) from contract owner    transactions	469,196,576	553,426,321	(26,026,003)	(12,163,628)
Total increase (decrease) in net assets	427,628,442	594,886,655	(15,419,613)	(4,841,406)
Net assets at beginning of year	616,967,109	22,080,454	118,890,037	123,731,443
Net assets at end of year	$1,044,595,551	$  616,967,109	$   103,470,424	$   118,890,037

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	PTR Sub-Account		AAR Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$      3,564,444	$     2,880,267	$           (2,647)	$                     -
Net realized gains (losses)	10,512,039	17,578,394	(2)	-
Net change in unrealized appreciation/depreciation	(6,477,484)	4,843,793	13,426	-
Net increase from operations	7,598,999	25,302,454	10,777	-
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	2,399,013	2,365,898	1,677,371	-
Transfers between Sub-Accounts
(including the Fixed Account), net	(14,587,371)	24,037,754	549,260	-
Withdrawals, surrenders, annuitizations
and contract charges	(49,400,924)	(38,408,702)	(965)	-
Net accumulation activity	(61,589,282)	(12,005,050)	2,225,666	-
Annuitization Activity:
Annuitizations	-	9,840	-	-
Annuity payments and contract charges	(15,101)	(14,527)	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(1,610)	(2,866)	-	-
Net annuitization activity	(16,711)	(7,553)	-	-
Net (decrease) increase from contract owner    transactions	(61,605,993)	(12,012,603)	2,225,666	-
Total (decrease) increase in net assets	(54,006,994)	13,289,851	2,236,443	-
Net assets at beginning of year	420,201,410	406,911,559	-	-
Net assets at end of year	$   366,194,416	$  420,201,410	$       2,236,443	$                      -

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	AAS Sub-Account		3XX Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment (loss) income	$             (139)	$                    -	$           24,866	$         (34,852)
Net realized gains	-	-	188,521	100,953
Net change in unrealized appreciation/depreciation	1,664	-	(975,850)	74,008
Net increase (decrease) from operations	1,525	-	(762,463)	140,109
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	17,262	-	180,699	722,413
Transfers between Sub-Accounts
(including the Fixed Account), net	239,142	-	1,423,911	565,549
Withdrawals, surrenders, annuitizations
and contract charges	(30)	-	(215,240)	(96,816)
Net accumulation activity	256,374	-	1,389,370	1,191,146
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	256,374	-	1,389,370	1,191,146
Total increase in net assets	257,899	-	626,907	1,331,255
Net assets at beginning of year	-	-	2,915,660	1,584,405
Net assets at end of year	$          257,899	$                     -	$       3,542,567	$       2,915,660

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	5XX Sub-Account		SBI Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$         741,367	$     (766,995)	$         (23,231)	$                     -
Net realized gains (losses)	10,330,919	2,225,721	(41,071)	-
Net change in unrealized appreciation/depreciation	8,524,790	1,442,945	(256,722)	-
Net increase (decrease) from operations	19,597,076	2,901,671	(321,024)	-
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	75,211,011	41,535,207	3,068,899	1,073
Transfers between Sub-Accounts
(including the Fixed Account), net	33,400,275	37,492,337	1,660,559	-
Withdrawals, surrenders, annuitizations
and contract charges	(14,851,141)	(7,175,310)	(159,046)	-
Net accumulation activity	93,760,145	71,852,234	4,570,412	1,073
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net increase from contract owner transactions	93,760,145	71,852,234	4,570,412	1,073
Total increase in net assets	113,357,221	74,753,905	4,249,388	1,073
Net assets at beginning of year	148,879,348	74,125,443	1,073	-
Net assets at end of year	$   262,236,569	$  148,879,348	$       4,250,461	$              1,073

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	SSA Sub-Account		VSC Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (178,114)	$     (213,893)	$    (1,774,895)	$    (1,965,157)
Net realized gains (losses)	3,230,755	(694,147)	1,847,760	(1,773,741)
Net change in unrealized appreciation/depreciation	(3,142,346)	2,775,001	(7,627,055)	29,920,133
Net (decrease) increase from operations	(89,705)	1,866,961	(7,554,190)	26,181,235
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	8,470,072	1,782,117	3,945,091	2,335,111
Transfers between Sub-Accounts
(including the Fixed Account), net	4,000,922	1,957,425	(560,531)	(20,212,577)
Withdrawals, surrenders, annuitizations
and contract charges	(1,622,919)	(1,021,604)	(12,873,408)	(8,525,834)
Net accumulation activity	10,848,075	2,717,938	(9,488,848)	(26,403,300)
Annuitization Activity:
Annuitizations	-	-	-	6,127
Annuity payments and contract charges	-	-	(2,896)	(2,648)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	199	(1,228)
Net annuitization activity	-	-	(2,697)	2,251
Net increase (decrease) from contract owner    transactions	10,848,075	2,717,938	(9,491,545)	(26,401,049)
Total increase (decrease) in net assets	10,758,370	4,584,899	(17,045,735)	(219,814)
Net assets at beginning of year	15,434,805	10,849,906	126,734,777	126,954,591
Net assets at end of year	$     26,193,175	$    15,434,805	$   109,689,042	$   126,734,777

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	2XX Sub-Account		SVV Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (142,431)	$     (142,415)	$    (2,399,758)	$    (3,250,565)
Net realized gains (losses)	2,326,503	1,596,338	12,769,935	(2,938,574)
Net change in unrealized appreciation/depreciation	(3,160,600)	326,744	(23,716,810)	30,931,191
Net (decrease) increase from operations	(976,528)	1,780,667	(13,346,633)	24,742,052
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	761,018	2,150,164	4,084,034	11,602,724
Transfers between Sub-Accounts
(including the Fixed Account), net	240,008	1,700,755	(3,118,844)	(155,849)
Withdrawals, surrenders, annuitizations
and contract charges	(597,405)	(370,698)	(13,572,353)	(8,807,786)
Net accumulation activity	403,621	3,480,221	(12,607,163)	2,639,089
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	(2,544)	(5,754)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	(105)	(523)
Net annuitization activity	-	-	(2,649)	(6,277)
Net increase (decrease) from contract owner    transactions	403,621	3,480,221	(12,609,812)	2,632,812
Total (decrease) increase in net assets	(572,907)	5,260,888	(25,956,445)	27,374,864
Net assets at beginning of year	11,548,624	6,287,736	245,751,191	218,376,327
Net assets at end of year	$     10,975,717	$    11,548,624	$   219,794,746	$   245,751,191

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	SGC Sub-Account		S13 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (418,552)	$  (1,093,333)	$       (251,550)	$       (357,916)
Net realized gains	11,511,104	7,778,380	4,153,318	1,931,370
Net change in unrealized appreciation/depreciation	(10,552,639)	4,836,249	(4,318,009)	2,266,958
Net increase (decrease) from operations	539,913	11,521,296	(416,241)	3,840,412
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	307,842	393,642	2,531,779	4,462,793
Transfers between Sub-Accounts
(including the Fixed Account), net	(3,695,813)	(5,381,302)	2,477,465	(145,345)
Withdrawals, surrenders, annuitizations
and contract charges	(8,506,105)	(7,457,581)	(1,497,071)	(1,036,755)
Net accumulation activity	(11,894,076)	(12,445,241)	3,512,173	3,280,693
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	(3,809)	(3,539)	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(156)	(700)	-	-
Net annuitization activity	(3,965)	(4,239)	-	-
Net (decrease) increase from contract owner    transactions	(11,898,041)	(12,449,480)	3,512,173	3,280,693
Total (decrease) increase in net assets	(11,358,128)	(928,184)	3,095,932	7,121,105
Net assets at beginning of year	63,936,768	64,864,952	24,767,620	17,646,515
Net assets at end of year	$     52,578,640	$    63,936,768	$     27,863,552	$     24,767,620

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	SDC Sub-Account		S15 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$   (3,190,460)	$  (1,401,890)	$    (1,198,558)	$       (546,780)
Net realized gains	6,086,217	3,010,311	2,046,723	736,456
Net change in unrealized appreciation/depreciation	(9,383,407)	2,927,552	(3,414,688)	173,076
Net (decrease) increase from operations	(6,487,650)	4,535,973	(2,566,523)	362,752
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	4,211,701	3,253,544	31,112,280	22,863,253
Transfers between Sub-Accounts
(including the Fixed Account), net	(27,211,794)	32,676,734	20,425,797	22,019,259
Withdrawals, surrenders, annuitizations
and contract charges	(92,350,783)	(72,895,333)	(9,939,250)	(6,324,197)
Net accumulation activity	(115,350,876)	(36,965,055)	41,598,827	38,558,315
Annuitization Activity:
Annuitizations	-	13,493	-	-
Annuity payments and contract charges	(25,553)	(26,518)	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	(432)	(2,405)	-	-
Net annuitization activity	(25,985)	(15,430)	-	-
Net (decrease) increase from contract owner    transactions	(115,376,861)	(36,980,485)	41,598,827	38,558,315
Total (decrease) increase in net assets	(121,864,511)	(32,444,512)	39,032,304	38,921,067
Net assets at beginning of year	638,001,577	670,446,089	139,938,767	101,017,700
Net assets at end of year	$   516,137,066	$  638,001,577	$   178,971,071	$   139,938,767

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	7XX Sub-Account		6XX Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$   (7,266,635)	$  (6,201,635)	$    (2,990,651)	$    (1,885,826)
Net realized gains	88,125,618	10,165,358	41,852,791	10,429,332
Net change in unrealized appreciation/depreciation	(145,665,536)	102,385,089	(47,984,269)	36,964,375
Net (decrease) increase from operations	(64,806,553)	106,348,812	(9,122,129)	45,507,881
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	348,024,369	508,316,327	173,964,422	226,238,216
Transfers between Sub-Accounts
(including the Fixed Account), net	152,297,889	241,899,854	55,980,480	115,445,788
Withdrawals, surrenders, annuitizations
and contract charges	(70,080,402)	(33,536,070)	(42,818,573)	(23,126,816)
Net accumulation activity	430,241,856	716,680,111	187,126,329	318,557,188
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	(1)	(11)
Net annuitization activity	-	-	(1)	(11)
Net increase from contract owner transactions	430,241,856	716,680,111	187,126,328	318,557,177
Total increase in net assets	365,435,303	823,028,923	178,004,199	364,065,058
Net assets at beginning of year	1,355,951,680	532,922,757	710,247,154	346,182,096
Net assets at end of year	$1,721,386,983	$1,355,951,680	$   888,251,353	$   710,247,154

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	8XX Sub-Account		1XX Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (429,886)	$  (1,661,207)	$       (212,522)	$       (127,564)
Net realized gains	65,402,564	18,523,875	925,493	1,183,105
Net change in unrealized appreciation/depreciation	(95,398,898)	40,077,164	(1,639,215)	773,936
Net (decrease) increase from operations	(30,426,220)	56,939,832	(926,244)	1,829,477
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	12,368,927	57,788,558	1,494,955	1,733,876
Transfers between Sub-Accounts
(including the Fixed Account), net	353,308	33,144,302	1,995,383	1,408,109
Withdrawals, surrenders, annuitizations
and contract charges	(23,032,197)	(20,963,058)	(467,350)	(909,637)
Net accumulation activity	(10,309,962)	69,969,802	3,022,988	2,232,348
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	132	-
Net annuitization activity	-	-	132	-
Net (decrease) increase from contract owner    transactions	(10,309,962)	69,969,802	3,023,120	2,232,348
Total (decrease) increase in net assets	(40,736,182)	126,909,634	2,096,876	4,061,825
Net assets at beginning of year	547,564,582	420,654,948	9,947,413	5,885,588
Net assets at end of year	$   506,828,400	$  547,564,582	$     12,044,289	$       9,947,413

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	SLC Sub-Account		S12 Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$   (3,619,458)	$  (6,245,264)	$       (165,359)	$       (184,868)
Net realized gains	75,934,724	39,697,526	2,431,981	724,731
Net change in unrealized appreciation/depreciation	(96,829,319)	18,847,795	(3,359,745)	878,144
Net (decrease) increase from operations	(24,514,053)	52,300,057	(1,093,123)	1,418,007
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	2,470,584	2,049,043	1,115,752	2,313,837
Transfers between Sub-Accounts
(including the Fixed Account), net	(7,395,614)	(25,932,592)	1,264,737	631,761
Withdrawals, surrenders, annuitizations
and contract charges	(49,619,572)	(39,285,593)	(602,926)	(426,102)
Net accumulation activity	(54,544,602)	(63,169,142)	1,777,563	2,519,496
Annuitization Activity:
Annuitizations	-	13,917	-	-
Annuity payments and contract charges	(14,832)	(13,794)	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	257	(4,402)	-	-
Net annuitization activity	(14,575)	(4,279)	-	-
Net (decrease) increase from contract owner   transactions	(54,559,177)	(63,173,421)	1,777,563	2,519,496
Total (decrease) increase in net assets	(79,073,230)	(10,873,364)	684,440	3,937,503
Net assets at beginning of year	365,984,873	376,858,237	12,595,699	8,658,196
Net assets at end of year	$   286,911,643	$  365,984,873	$     13,280,139	$     12,595,699

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	S14 Sub-Account		4XX Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income	$      1,629,373	$     1,391,562	$      4,553,938	$      1,077,337
Net realized gains	2,155,114	1,246,757	21,242,752	4,200,152
Net change in unrealized appreciation/depreciation	(3,197,435)	(125,667)	(16,993,229)	9,675,165
Net increase from operations	587,052	2,512,652	8,803,461	14,952,654
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	2,759,253	4,058,630	186,444,166	142,509,147
Transfers between Sub-Accounts
(including the Fixed Account), net	(1,768,996)	2,330,843	35,735,973	78,093,196
Withdrawals, surrenders, annuitizations
and contract charges	(3,133,842)	(1,829,354)	(23,643,912)	(16,567,384)
Net accumulation activity	(2,143,585)	4,560,119	198,536,227	204,034,959
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net (decrease) increase from contract owner transactions	(2,143,585)	4,560,119	198,536,227	204,034,959
Total (decrease) increase in net assets	(1,556,533)	7,072,771	207,339,688	218,987,613
Net assets at beginning of year	30,197,858	23,125,087	444,483,583	225,495,970
Net assets at end of year	$     28,641,325	$    30,197,858	$   651,823,271	$   444,483,583

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	S16 Sub-Account		LGF Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment loss	$      (617,211)	$     (637,726)	$         (92,278)	$         (71,347)
Net realized (losses) gains	(150,432)	(2,844,801)	442,780	(26,393)
Net change in unrealized appreciation/depreciation	(2,596,509)	10,902,386	(741,808)	873,283
Net (decrease) increase from operations	(3,364,152)	7,419,859	(391,306)	775,543
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	930,702	1,321,094	657,497	933,887
Transfers between Sub-Accounts
(including the Fixed Account), net	132,527	(6,023,756)	641,014	207,863
Withdrawals, surrenders, annuitizations
and contract charges	(2,996,164)	(2,595,999)	(431,400)	(301,152)
Net accumulation activity	(1,932,935)	(7,298,661)	867,111	840,598
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net (decrease) increase from contract owner    transactions	(1,932,935)	(7,298,661)	867,111	840,598
Total (decrease) increase in net assets	(5,297,087)	121,198	475,805	1,616,141
Net assets at beginning of year	38,555,488	38,434,290	5,093,897	3,477,756
Net assets at end of year	$     33,258,401	$    38,555,488	$       5,569,702	$       5,093,897

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	SC3 Sub-Account		SRE Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income	$         233,275	$        532,337	$      5,304,514	$    10,771,086
Net realized gains (losses)	426,243	(971,771)	(1,570,819)	(15,112,553)
Net change in unrealized appreciation/depreciation	(1,044,310)	1,114,603	(14,420,225)	19,722,752
Net (decrease) increase from operations	(384,792)	675,169	(10,686,530)	15,381,285
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	49,464	19,814	4,290,298	3,001,387
Transfers between Sub-Accounts
(including the Fixed Account), net	(61,747)	12,702	(1,443,737)	(3,608,515)
Withdrawals, surrenders, annuitizations
and contract charges	(1,175,218)	(1,628,645)	(15,434,338)	(11,851,488)
Net accumulation activity	(1,187,501)	(1,596,129)	(12,587,777)	(12,458,616)
Annuitization Activity:
Annuitizations	-	1,236	-	3,158
Annuity payments and contract charges	(1,346)	(1,057)	(2,693)	(2,871)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	16	(172)	191	(668)
Net annuitization activity	(1,330)	7	(2,502)	(381)
Net decrease from contract owner transactions	(1,188,831)	(1,596,122)	(12,590,279)	(12,458,997)
Total (decrease) increase in net assets	(1,573,623)	(920,953)	(23,276,809)	2,922,288
Net assets at beginning of year	5,520,469	6,441,422	132,272,111	129,349,823
Net assets at end of year	$       3,946,846	$      5,520,469	$   108,995,302	$   132,272,111

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	IGB Sub-Account		CMM Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$      2,530,923	$     1,378,302	$    (2,128,329)	$    (1,890,270)
Net realized gains	5,124,534	441,090	867	-
Net change in unrealized appreciation/depreciation	(780,744)	2,409,607	-	-
Net increase (decrease) from operations	6,874,713	4,228,999	(2,127,462)	(1,890,270)
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	46,054,347	42,252,650	22,655,860	45,435,343
Transfers between Sub-Accounts
(including the Fixed Account), net	2,810,505	19,082,647	72,461,473	(770,307)
Withdrawals, surrenders, annuitizations
and contract charges	(8,785,019)	(6,327,026)	(56,029,037)	(40,322,046)
Net accumulation activity	40,079,833	55,008,271	39,088,296	4,342,990
Annuitization Activity:
Annuitizations	-	-	62,178	-
Annuity payments and contract charges	-	-	(18,473)	(12,410)
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	(1,878)	(1,621)
Net annuitization activity	-	-	41,827	(14,031)
Net increase from contract owner transactions	40,079,833	55,008,271	39,130,123	4,328,959
Total increase in net assets	46,954,546	59,237,270	37,002,661	2,438,689
Net assets at beginning of year	119,314,751	60,077,481	113,075,492	110,636,803
Net assets at end of year	$   166,269,297	$  119,314,751	$   150,078,153	$   113,075,492

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	WTF Sub-Account		USC Sub-Account
	December 31,	December 31,	December 31,	December 31,
	2011	2010	2011	2010
Operations:
Net investment income (loss)	$             3,662	$       (11,417)	$           (1,137)	$           (1,003)
Net realized gains (losses)	89,769	(18,543)	5,386	(787)
Net change in unrealized appreciation/depreciation	(250,177)	252,417	(7,604)	12,177
Net (decrease) increase from operations	(156,746)	222,457	(3,355)	10,387
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	180	7,602	-	-
Transfers between Sub-Accounts
(including the Fixed Account), net	92,113	(201,774)	3,755	(5,363)
Withdrawals, surrenders, annuitizations
and contract charges	(189,668)	(215,624)	(326)	(296)
Net accumulation activity	(97,375)	(409,796)	3,429	(5,659)
Annuitization Activity:
Annuitizations	-	-	-	-
Annuity payments and contract charges	-	-	-	-
Transfers between Sub-Accounts, net	-	-	-	-
Adjustments to annuity reserves	-	-	-	-
Net annuitization activity	-	-	-	-
Net (decrease) increase from contract owner    transactions	(97,375)	(409,796)	3,429	(5,659)
Total (decrease) increase in net assets	(254,121)	(187,339)	74	4,728
Net assets at beginning of year	930,311	1,117,650	56,768	52,040
Net assets at end of year	$          676,190	$         930,311	$            56,842	$            56,768

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

	AAL Sub-Account
	December 31,	December 31,
	2011	2010
Operations:
Net investment income	$           32,571	$                    -
Net realized gains	124,254	-
Net change in unrealized appreciation/depreciation	91,924	-
Net increase from operations	248,749	-
Contract Owner Transactions:
Accumulation Activity:
Purchase payments received	9,620,457	-
Transfers between Sub-Accounts
(including the Fixed Account), net	5,001,485	-
Withdrawals, surrenders, annuitizations
and contract charges	(285,912)	-
Net accumulation activity	14,336,030	-
Annuitization Activity:
Annuitizations	-	-
Annuity payments and contract charges	-	-
Transfers between Sub-Accounts, net	-	-
Adjustments to annuity reserves	-	-
Net annuitization activity	-	-
Net increase from contract owner transactions	14,336,030	-
Total increase in net assets	14,584,779	-
Net assets at beginning of year	-	-
Net assets at end of year	$     14,584,779	$                     -

The accompanying notes are an integral part of these financial statements.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

NOTES TO FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2011

1. BUSINESS AND ORGANIZATION

Sun Life of Canada (U.S.) Variable Account F (the “Variable Account”) is a separate account of Sun Life Assurance Company of Canada (U.S.) (the “Sponsor”) and was established on July 13, 1989 as a funding vehicle for the variable portion of Regatta contracts, Regatta Gold contracts, Regatta Classic contracts, Regatta Platinum contracts, Regatta Extra contracts, Regatta Choice contracts, Regatta Access contracts, Regatta Flex 4 contracts, Regatta Flex II contracts, Regatta Choice II contracts, Sun Life Financial Masters Extra contracts, Sun Life Financial Masters Choice contracts, Sun Life Financial Masters Access contracts, Sun Life Financial Masters Flex contracts, Sun Life Financial Masters IV contracts, Sun Life Financial Masters VII contracts, Sun Life Financial Masters Extra II contracts, Sun Life Financial Masters Choice II contracts, Sun Life Financial Masters Flex II contracts, Sun Life Financial Masters I Share contracts (collectively the “Contracts”), and certain other fixed and variable annuity contracts issued by the Sponsor.  The Variable Account is registered with the Securities and Exchange Commission under the Investment Company Act of 1940, as amended, as a unit investment trust existing in accordance with the regulations of the Delaware Insurance Department.

The assets of the Variable Account are divided into “Sub-Accounts”. Each Sub-Account is invested in shares of a specific mutual fund (collectively the “Funds”), or series thereof, registered under the Investment Company Act of 1940, as amended.  The contract owners of the Variable Account direct the deposits into the Sub-Accounts of the Variable Account.

Under applicable insurance law, the assets and liabilities of the Variable Account are clearly identified and distinguished from the Sponsor’s other assets and liabilities.  Assets applicable to the Variable Account are not chargeable with liabilities arising out of any other business the Sponsor may conduct.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).  The preparation of financial statements in conformity with GAAP requires the Sponsor’s management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from these estimates.

Investment Valuation and Transactions

Investments made in mutual funds are carried at fair value and are valued at their closing net asset value as determined by the respective mutual fund, which in turn value their investments at fair value, as of December 31, 2011.  Transactions are recorded on a trade date basis.  Realized gains and losses on sales of investments are determined on the first in, first out basis.  Dividend income and realized gain distributions are reinvested in additional fund shares and recognized on the ex-dividend date.

Units

The number of units credited is determined by dividing the dollar amount allocated to a Sub-Account by the unit value for that Sub-Account for the period during which the purchase payment was received.  The unit value for each Sub-Account is established at $10.00 for the first period of that Sub-Account and is subsequently measured based on the performance of the investments and the contract charges selected by the contract holder, as discussed in note 4.

Purchase Payments

Upon issuance of new Contracts, the initial purchase payment is credited to the contract in the form of units.  All subsequent purchase payments are applied using the unit values for the period during which the purchase payment is received.

Transfers

Transfers between Sub-Accounts requested by contract owners are recorded in the new Sub-Account upon receipt of the redemption proceeds at the net asset value at the time of receipt.  In addition, transfers can be made between the Sub-Accounts and the “Fixed Account”.  The Fixed Account is part of the general account of the Sponsor in which purchase payments or contract values may be allocated or transferred.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Withdrawals

At any time during the accumulation phase (the period before the first annuity payment), the contract owner may elect to receive a cash withdrawal payment under the contract.  If the contract owner requests a full withdrawal, the contract owner will receive the value of their account at the end of period, less the contract maintenance charge for the current contract year and any applicable withdrawal charge.

If the contract owner requests a partial withdrawal, the contract owner will receive the amount requested less any applicable withdrawal charge and the account value will be reduced by the amount requested.  Any requests for partial withdrawals that would result in the value of the contract owner’s account being reduced to an amount less than the contract maintenance charge for the current contract year is treated as a request for a full withdrawal.

Annuitization

On the annuity commencement date, the contract's accumulation account is canceled and its adjusted value is applied to provide an annuity. The adjusted value will be equal to the value of the accumulation account for the period that ends immediately before the annuity commencement date, reduced by any applicable premium taxes or similar taxes and a proportionate amount of the contract maintenance charge.

Annuity Payments

The amount of the first variable annuity payment is determined in accordance with the annuity payment rates found in the contract.  The number of units to be credited in respect of a particular Sub-Account is determined by dividing that portion of the first variable annuity payment attributable to that Sub-Account by the annuity unit value of that Sub-Account for the period that ends immediately before the annuity commencement date. The number of units of each Sub-Account credited to the contract then remains fixed, unless an exchange of units is made. The dollar amount of each variable annuity payment after the first may increase, decrease or remain constant, depending on the investment performance of the Sub-Accounts.

Federal Income Taxes

The operations of the Variable Account are part of the operations of the Sponsor and are not taxed separately. The Sponsor qualifies for the federal income tax treatment granted to life insurance companies under Subchapter L of the Internal Revenue Code (the “Code”). Under existing federal income tax law, investment income and realized gain distributions earned by the Variable Account on contract owner reserves are not taxable, and therefore, no provision has been made for federal income taxes.  In the event of a change in applicable tax law, the Sponsor will review this policy and if necessary a charge may be made in future years.

Accounting for Uncertain Tax Provisions

Management evaluates whether or not there are uncertain tax positions that require financial statement recognition and has determined that no reserves for uncertain tax positions are required at December 31, 2011. The 2007 through 2010 tax years generally remain subject to examination by U.S. federal and most state tax authorities.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of income and expenses during the period. The most significant estimates are fair value measurements of investments and the calculation of the reserve for variable annuities.  Actual results could vary from the amounts derived from management's estimates.

Subsequent events

Management has evaluated events subsequent to December 31, 2011 and through the issuance date of the Variable Account’s financial statements, noting there are no subsequent events requiring accounting or disclosure.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

New and Adopted Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2010-06 “Improving Disclosures about Fair Value Measurements,” which provides amendments to FASB Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements and Disclosures” that will provide more robust disclosures about the following:

Ø The different classes of assets and liabilities measured at fair value;

Ø The valuation techniques and inputs used;

Ø The transfers between Levels 1, 2, and 3; and

Ø The activity in Level 3 fair value measurements.

On January 1, 2010 the Variable Account adopted the provisions of ASU No. 2010-06 which require new disclosures and clarifications of existing disclosures, which are effective for interim and annual reporting periods beginning after December 31, 2009. The adoption of this guidance did not have a material impact on the Variable Account’s financial statements.  Effective January 1, 2011, the Variable Account adopted the provisions of the standards relating to disclosures about purchases, sales, issuances and settlements in the roll-forward of activities in Level 3.  The adoption of this guidance did not have a material impact on the Variable Account’s financial statements.  The required disclosures are included in note 8 of the Variable Account’s financial statements.

Accounting Pronouncements Not Yet Adopted

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS,” which change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements.  Some of the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements, while other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.  Many of the requirements in this update are not meant to result in a change in application of the requirements of Topic 820, but to improve upon an entities consistency in application across jurisdictions to ensure that U.S. GAAP and International Financial Reporting Standards (“IFRS”) fair value measurement and disclosure requirements are described in the same way.  The amendments in ASU 2011-04 are effective, on a retrospective basis, for fiscal years and interim periods within those fiscal years beginning after December 15, 2011.  The Company will adopt ASU 2011-04 on January 1, 2012 and does not expect its requirements to significantly impact the Variable Account’s financial statements.

3. RELATED PARTY TRANSACTIONS

Massachusetts Financial Services Company and Sun Capital Advisers LLC, affiliates of the Sponsor, are investment advisers to certain of the Funds and charge management fees at an annual rate ranging from 0.50% to 1.05% and 0.13% to 1.05% of the Funds’ average daily net assets, respectively. For additional related party transactions, see notes 4 and 5.

4. CONTRACT CHARGES

Mortality and expense risk charges

Charges for mortality and expense risks, the optional death benefit riders and optional living benefit riders are based on the average daily Variable Account assets and are deducted from the Variable Account at the end of each valuation period to cover the risks assumed by the Sponsor.  These charges are reflected in the Statement of Operations.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

4. CONTRACT CHARGES (CONTINUED)

The deductions are calculated at different levels based upon the elections made by the contract holder and are transferred periodically to the Sponsor. At December 31, 2011, the deduction is at an effective annual rate as follows:

	Level 1	Level 2	Level 3	Level 4	Level 5	Level 6
Regatta	1.25%	-	-	-	-	-
Regatta Gold	1.25%	-	-	-	-	-
Regatta Classic	1.00%	-	-	-	-	-
Regatta Platinum	1.25%	-	-	-	-	-
Regatta Extra	1.30%	1.45%	1.55%	1.70%	-	-
Regatta Choice	0.85%	1.00%	1.10%	1.15%	1.25%	1.40%
Regatta Access	1.00%	1.15%	1.25%	1.40%	1.50%	1.65%
Regatta Flex 4	0.95%	1.10%	1.20%	1.35%	1.45%	1.60%
Regatta Flex II	1.30%	1.50%	1.55%	1.70%	1.75%	1.90%
Regatta Choice II	1.05%	1.25%	1.30%	1.45%	1.50%	1.65%
Sun Life Financial Masters Extra	1.40%	1.60%	1.65%	1.80%	1.85%	2.00%
Sun Life Financial Masters Choice	1.05%	1.25%	1.30%	1.45%	1.50%	1.65%
Sun Life Financial Masters Access	1.35%	1.55%	1.60%	1.75%	1.80%	1.95%
Sun Life Financial Masters Flex	1.30%	1.50%	1.55%	1.70%	1.75%	1.90%
Sun Life Financial Masters IV	1.05%	1.25%	1.30%	1.45%	1.65%	1.70%
Sun Life Financial Masters VII	1.00%	1.05%	1.20%	1.25%	1.30%	1.40%
Sun Life Financial Masters Extra II	1.70%	2.10%	-	-	-	-
Sun Life Financial Masters Choice II	1.35%	1.60%	1.75%	-	-	-
Sun Life Financial Masters Flex II	1.65%	2.05%
Sun Life Financial Masters I Share	0.50%		-	-	-	-

Distribution and administrative expense charges

For assuming the risk that surrender charges may be insufficient to compensate the Sponsor for the costs of distributing the Contracts, the Sponsor makes a deduction from the Sub-Account at the end of each valuation period for the first seven account years at an effective annual rate of 0.15% of the average daily value of the contract invested in the Sub-Account attributable to Regatta, Sun Life Financial Masters VII, Sun Life Financial Masters Extra, Sun Life Financial Masters Extra II, Sun Life Financial Masters Choice and Sun Life Financial Masters Choice II, and at an effective annual rate of 0.20% of the average daily value of the contract invested in the Sub-Account attributable to Sun Life Financial Masters IV, Sun Life Financial Masters Access, Sun Life Financial Masters Flex and Sun Life Financial Masters Flex II. There are no distribution charges associated with the other contracts listed in footnote 1.

Additionally, for Regatta, Regatta Gold, Regatta Classic, Regatta Platinum, Regatta Extra, Regatta Access, Regatta Choice, Regatta Flex 4, Regatta Flex II, Regatta Choice II, Sun Life Financial Masters Extra, Sun Life Financial Masters Choice, Sun Life Financial Masters Access, Sun Life Financial Masters Flex, Sun Life Financial Masters IV, Sun Life Financial Masters VII, Sun Life Financial Masters Extra II, Sun Life Financial Masters Flex II, Sun Life Financial Masters I Share, and Sun Life Financial Masters Choice II contracts, an administrative expense charge is deducted from the assets of the Variable Account at an annual effective rate equal to 0.15% of the average daily Variable Account value.  This charge is designed to reimburse the Sponsor for expenses incurred in administering the Contracts, the accounts and the Variable Account that are not covered by the annual account administration fee (“Account Fee”).

Distribution and administrative expense charges are reflected in the Statement of Operations.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

4. CONTRACT CHARGES (CONTINUED)

Administration charges (“Account Fee”)

Each year on the account anniversary date, an Account Fee equal to the lesser of $30 or 2% of the participant’s account value in the case of Regatta, $35 in the case of Regatta Extra contracts, and $50 in the case of Regatta Choice, Regatta Gold, Regatta Platinum, Regatta Classic, Regatta Access, Regatta Flex 4, Regatta Flex II, Regatta Choice II, Sun Life Financial Masters Extra, Sun Life Financial Masters Choice, Sun Life Financial Masters Access, Sun Life Financial Masters Flex, Sun Life Financial Masters IV, Sun Life Financial Masters VII, Sun Life Financial Masters Extra II, Sun Life Financial Masters Flex II, Sun Life Financial Masters I Share, and Sun Life Financial Masters Choice II contracts (after account year 5, the Account Fee for Regatta Gold, Regatta Platinum, Regatta Extra, and Regatta Choice contracts, may be changed annually, but it may not exceed the lesser of $50 or 2% of the participant’s account value) is deducted from the participant’s account, reflected in the statement of changes in net assets, to reimburse the Sponsor for certain administrative expenses. After the annuity commencement date, the Account Fee will be deducted pro rata from each variable annuity payment made during the year.

Surrender charges

The Sponsor does not deduct a sales charge from the purchase payments. However, a surrender charge (contingent deferred sales charge) of up to 6% of certain amounts withdrawn will be deducted to cover certain expenses relating to the sale of Regatta, Regatta Gold, Regatta Flex 4, and Regatta Platinum contracts; 8% for Regatta Extra, Regatta Choice II, Regatta Flex II, Sun Life Financial Masters Choice, Sun Life Financial Masters Choice II, Sun Life Financial Masters Flex, Sun Life Financial Masters Flex II, Sun Life Financial Masters Extra, Sun Life Financial Masters Extra II, Sun Life Financial Masters IV, and Sun Life Financial Masters VII; and for 7% for Regatta Choice if the contract holder requests a full withdrawal prior to reaching the pay-out phase.

Optional living benefit rider charges (“Benefit Fee”)

	Single Life Quarterly Charge	Joint Life Quarterly Charge	Single Life Annual Charge	Joint Life Annual Charge
Secured Returns 2	0.1250%	N/A	0.50%	N/A
Secured Returns for Life	0.1250%	N/A	0.50%	N/A
Secured Returns for Life Plus	0.1250%	N/A	0.50%	N/A
Income on Demand	0.1625%	0.2125%	0.65%	0.85%
Retirement Asset Protector	0.1875%	N/A	0.75%	N/A
Retirement Income Escalator	0.1875%	0.2375%	0.75%	0.95%
Income on Demand II	0.1625%	0.2125%	0.65%	0.85%
Income on Demand II Plus	0.2375%	0.2875%	0.95%	1.15%
Income on Demand II Escalator	0.2375%	0.2875%	0.95%	1.15%
Retirement Income Escalator II	0.2375%	0.2875%	0.95%	1.15%
Sun Income Riser	0.2250%	0.2750%	0.90%	1.10%
Income on Demand III Escalator	0.2750%	0.3250%	1.10%	1.30%
Sun Income Riser III	0.2750%	0.3000%	1.10%	1.20%
Sun Income Maximizer	0.2750%	0.3000%	1.10%	1.20%
Sun Income Maximizer Plus	0.3125%	0.3625%	1.25%	1.45%
Sun Income Advisor	0.2250%	0.2750%	0.90%	1.10%

Sun Income Advisor was only available on Sun Life Financial Masters I Share contracts.

Sun Income Maximizer, Sun Income Maixmizer Plus, and Sun Income Riser III were available on Sun Life Financial Masters Choice II contracts, Sun Life Financial Masters Extra II contracts, and Sun Life Financial Masters Flex II contracts.  The remaining optional living benefits above were available on Sun Life Financial Masters Extra, Sun Life Financial Masters Choice, Sun Life Financial Masters Flex, and Sun Life Financial Masters Access contracts.

Secured Returns for Life and Secured Returns for Life Plus were the only optional living benefits available on Sun Life Financial Masters IV and Sun Life Financial Masters VII contracts.

Secured Returns, Secured Returns 2, Secured Returns for Life, Secured Returns for Life Plus, Income on Demand, and Retirement Asset Protector were the only optional living benefits available on Regatta Flex II and Regatta Choice II contracts.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

4. CONTRACT CHARGES (CONTINUED)

For the year ended December 31, 2011, the Sponsor received the following amounts related to the above mentioned Account Fee,  surrender charges and Benefit Fees. These charges are reflected in the ‘‘Withdrawals, surrenders, annuitizations and contract charges’’ line in the Statement of Changes in Net Assets for each Sub-Account.

	Account Fee		Surrender Charges		Benefit Fee
AVB	$	13,162	$	57,379	$	458,285
AAA		134		-		90,739
AN4		2,184		6,167		67,910
IVB		15,253		107,344		285,981
AAU		-		-		66
9XX		131,892		406,902		6,345,682
NMT		-		-		-
MCC		33,524		158,624		330,073
NNG		5		-		-
CMG		4,984		15,547		130,443
NMI		3,548		5,648		42,515
CSC		10		-		-
FVB		15,442		59,629		486,771
FL1		48,274		167,431		1,724,755
F10		1,665		6,115		2,530
F15		9,467		31,476		120,898
F20		12,409		36,845		124,021
FVM		46,591		168,319		473,474
SGI		94,245		301,548		3,151,726
S17		14,382		48,348		298,604
ISC		27,550		91,640		564,499
AAZ		-		-		-
BBC		-		-		-
FVS		14,830		20,767		177,934
BBA		-		-		-
SIC		8,910		14,059		119,211
BBB		-		-		-
FMS		60,998		105,256		1,540,983
TDM		28,699		56,231		-
FTI		71,834		53,242		-
AAX		-		-		-
FTG		10,675		36,056		85,593
HBF		4,303		8,123		143,577
HVD		1,675		1,733		34,168
HVG		316		83		5,466
HVI		469		368		6,959
HVE		2,577		1,181		45,546
HVM		18		-		300
HVC		1,048		825		10,263
HVS		2,439		9,488		72,211
HVN		187		263		2,848
HRS		1,062		1,184		24,288
HVR		681		1,839		12,359

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

4. CONTRACT CHARGES (CONTINUED)

	Account Fee		Surrender Charges		Benefit Fee
HSS	$	2,635	$	2,184	$	44,981
AI8		-		-		-
VKC		1,387		3,564		37,666
VLC		5,776		23,092		103,186
VKU		8,515		18,376		369,746
AAY		-		-		88
AAM		-		-		-
LRE		19,359		48,475		388,026
LA9		33,826		24,434		60,098
LAV		10,015		33,673		180,448
MIT		156,057		8,208		-
MFL		55,581		116,112		-
BDS		25,467		73		-
MF7		33,316		119,911		832,280
RGS		53,987		1,619		-
RG1		9,442		13,763		145,094
MFF		3,761		16,650		362
EME		16,040		479		-
EM1		9,709		38,295		182,913
GGS		10,720		1,613		-
GG1		923		-		-
GGR		28,861		1,347		-
GG2		1,384		103		-
RES		79,174		322		-
RE1		5,519		8,094		-
GTR		28,639		433		-
GT2		85,739		293,556		6,439,479
GSS		60,887		1,792		-
MFK		110,605		300,619		1,839,134
EGS		89,499		4,566		-
HYS		37,317		5,211		-
MFC		41,371		59,316		-
IGS		25,150		-		-
IG1		6,204		27,153		87,007
MII		19,618		-		-
MI1		40,079		202,149		82,380
MIS		193,873		6,768		-
M1B		21,211		18,687		-
MCS		10,559		-		-
MC1		6,661		51		-
MMS		67,286		2,651		-
MM1		66,719		300,145		-
NWD		25,245		3,012		-
M1A		42,034		54,479		-
RIS		14,393		2,033		-
RI1		47,984		78,602		52,712
SIS		10,179		5,168		-
SI1		2,834		129		-

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

4. CONTRACT CHARGES (CONTINUED)

	Account Fee		Surrender Charges		Benefit Fee
TEC	$	5,879	$	925	$	-
TE1		820		-		-
TRS		193,863		10,245		-
MFJ		219,503		684,234		1,824,708
UTS		56,694		6,350		-
MFE		32,131		102,732		456,561
MVS		40,472		317		-
MV1		49,679		204,914		708,937
AAN		14		-		477
AAW		-		-		-
VKM		3,626		8,484		103,324
OBV		4,557		12,693		82,720
OCA		8,205		14,240		56,946
OGG		8,412		25,401		65,495
OMG		110,208		324,765		42,546
OMS		3,844		27,703		-
AAQ		-		-		-
PRA		1,245		4,234		153
AAP		10		-		55
BBD		-		-		81
PCR		25,321		61,039		365,620
PMB		7,315		15,359		95,857
BBE		-		-		-
6TT		139,321		410,508		8,853,106
PRR		29,822		68,829		220,473
PTR		90,530		276,773		563,371
AAR		-		-		714
AAS		-		-		-
3XX		587		644		24,538
5XX		34,593		186,448		1,828,897
SBI		46		14		7,357
SSA		3,694		15,750		112,094
VSC		40,752		142,269		198,840
2XX		2,437		1,676		70,029
SVV		46,716		187,129		1,671,176
SGC		28,306		56,207		495
S13		6,369		26,914		245,035
SDC		128,860		626,264		270
S15		25,394		180,850		1,107,419
7XX		269,359		1,026,968		15,634,675
6XX		165,426		573,973		7,448,409
8XX		105,141		279,465		4,885,469
1XX		2,774		1,680		87,753
SLC		95,782		317,228		-
S12		2,959		10,518		99,096
S14		8,913		29,728		128,827
4XX		83,156		349,260		5,163,724
S16		11,048		48,092		156,918
LGF		1,053		2,930		21,719

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

4. CONTRACT CHARGES (CONTINUED)

	Account Fee		Surrender Charges		Benefit Fee
SC3	$	2,843	$	54	$	-
SRE		70,472		106,427		128,817
IGB		26,122		94,996		1,222,056
CMM		22,538		620,822		663,409
WTF		551		145		-
USC		10		-		-
AAL		61		968		30,714

Premium Taxes

A deduction, when applicable, is made for premium taxes or similar state or local taxes.  It is currently the policy of the Sponsor to deduct the taxes at the annuity commencement date.  However, the Sponsor reserves the right to deduct such taxes when incurred.

5. RESERVE FOR VARIABLE ANNUITIES

Reserve for variable annuities represents the actuarial present value of future contract benefits for those contract holders who are in the payout phase of their contract and who chose the variable payout option. Annuity reserves are calculated using the 1983 Individual Annuitant Mortality Table and an assumed interest rate of at least 3% or 4% per year, for Regatta, Regatta Gold, Regatta Classic, and Regatta Platinum as stated in each participant’s contract or certificate, as applicable if the contract’s annuity commencement date is before January 1, 2000.  Annuity reserves are calculated using the 2000 Individual Annuitant Mortality Table at an assumed interest rate of at least 3% or 4% per year, for Regatta, Regatta Gold, Regatta Classic, and Regatta Platinum as stated in each participant’s contract or certificate, as applicable if the contract’s annuity commencement date is on or after January 1, 2000.  Annuity reserves are calculated using the 2000 Individual Annuitant Mortality Table at an assumed interest rate of 3% for Regatta Extra, Regatta Access, Regatta Choice, Regatta Choice II, Regatta Flex II, Regatta Flex 4, Sun Life Financial Masters Choice, Sun Life Financial Masters Access, Sun Life Financial Masters Extra, Sun Life Financial Masters Flex, Sun Life Financial Masters IV, Sun Life Financial Masters VII, Sun Life Financial Masters Choice II, Sun Life Financial Masters Extra II, Sun Life Financial Masters Flex II and Sun Life Financial Masters I Share.  The Individual Annuitant Mortality Tables utilized are subject to change in conjunction with changes in the tables currently adopted by the National Association of Insurance Commissioners (“NAIC”).The mortality risk is fully borne by the Sponsor and may result in additional amounts being transferred into the variable annuity account by the Sponsor to cover greater longevity of annuities than expected.  Required adjustments to the reserves are accomplished by transfers to or from the Sponsor.

6. INVESTMENT PURCHASES AND SALES

The cost of purchases and proceeds from sales of investments for the year ended December 31, 2011 were as follows:

	Purchases		Sales
AVB	$	14,851,491	$	7,826,966
AAA		39,212,396		638,490
AN4		3,042,117		1,762,774
IVB		14,035,473		13,618,743
AAU		62,600		661
9XX		258,740,792		54,846,197
NMT		3,787		2,419
MCC		14,769,210		27,311,757
NNG		2,276		103,427
CMG		7,326,879		5,337,614
NMI		2,691,835		3,526,644
CSC		4,214		750
FVB		32,263,837		9,222,331
FL1		35,923,225		33,419,677
F10		727,641		2,061,160
F15		4,851,021		7,665,590
F20		5,112,730		8,449,809
FVM		31,591,054		32,664,254

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

6.  INVESTMENT PURCHASES AND SALES (CONTINUED)

	Purchases		Sales
SGI	$	111,190,272	$	67,642,080
S17		2,654,948		9,761,635
ISC		35,635,479		24,232,819
AAZ		1,319,405		5,077
BBC		104,299		559
FVS		13,727,818		17,403,692
BBA		510,788		685
SIC		11,124,413		7,141,654
BBB		189,022		426
FMS		22,428,727		40,433,040
TDM		6,526,177		11,426,647
FTI		23,338,836		63,430,573
AAX		310,598		636
FTG		5,215,452		7,393,268
HBF		7,600,784		1,068,790
HVD		1,046,907		562,867
HVG		117,814		98,503
HVI		84,401		119,354
HVE		1,068,214		357,126
HVM		31,441		2,233
HVC		107,980		90,780
HVS		4,083,362		889,548
HVN		88,274		21,213
HRS		796,936		264,415
HVR		236,995		167,070
HSS		1,029,771		544,662
AI8		12,770		17
VKC		5,132,852		4,411,227
VLC		7,447,805		8,369,251
VKU		28,219,265		4,203,300
AAY		1,708,783		2,167
AAM		53,029		58
LRE		24,637,609		15,889,523
LA9		18,593,069		13,293,714
LAV		19,497,617		17,593,421
MIT		11,351,730		52,996,845
MFL		6,541,702		41,371,508
BDS		16,273,068		22,283,653
MF7		58,232,980		45,345,063
RGS		3,830,762		17,681,589
RG1		10,425,619		8,823,119
MFF		1,227,508		3,629,357
EME		7,474,384		12,073,883
EM1		19,191,867		11,998,086
GGS		4,047,515		6,312,068

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

6.  INVESTMENT PURCHASES AND SALES (CONTINUED)

	Purchases		Sales
GG1	$	393,465	$	942,820
GGR		1,398,856		11,957,970
GG2		248,153		999,410
RES		2,746,079		18,887,351
RE1		1,717,640		4,641,647
GTR		4,095,737		13,790,774
GT2		539,372,864		36,517,593
GSS		19,450,795		44,638,661
MFK		82,355,354		114,301,064
EGS		3,770,819		20,395,589
HYS		21,333,976		29,573,198
MFC		14,236,144		26,969,705
IGS		9,388,178		13,256,831
IG1		8,545,198		6,153,180
MII		2,829,248		10,888,547
MI1		10,148,329		40,759,875
MIS		7,908,091		63,157,224
M1B		2,275,388		18,044,269
MCS		3,559,629		7,452,243
MC1		1,079,476		4,702,811
MMS		49,605,585		67,276,606
MM1		79,844,273		114,621,864
NWD		12,373,993		15,273,342
M1A		12,434,215		19,771,835
RIS		2,445,532		7,438,408
RI1		12,804,945		23,648,382
SIS		7,373,579		9,104,796
SI1		2,494,096		2,833,234
TEC		2,690,921		4,170,392
TE1		362,590		699,902
TRS		21,857,752		77,418,289
MFJ		65,705,797		143,107,440
UTS		10,955,219		28,668,237
MFE		34,790,892		33,123,605
MVS		13,705,113		21,124,650
MV1		35,541,857		48,328,239
AAN		2,354,559		74,236
AAW		24,256		38
VKM		16,034,667		14,622,402
OBV		1,404,942		1,872,227
OCA		4,235,324		6,792,149
OGG		6,593,946		7,878,292
OMG		16,837,616		106,322,345
OMS		1,492,095		4,434,294
AAQ		71,430		4
PRA		2,402,829		2,243,255
AAP		7,757,795		625
BBD		612,778		20,677

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

6.  INVESTMENT PURCHASES AND SALES (CONTINUED)

	Purchases		Sales
PCR	$	40,497,403	$	24,185,322
PMB		9,584,692		8,864,995
BBE		418,608		734
6TT		526,055,007		46,387,045
PRR		13,128,782		35,657,967
PTR		49,667,699		102,471,472
AAR		2,225,467		2,448
AAS		256,388		153
3XX		2,396,504		793,235
5XX		152,762,218		51,970,415
SBI		5,147,044		599,345
SSA		18,547,480		5,421,765
VSC		16,282,602		27,549,241
2XX		6,274,797		4,002,543
SVV		30,405,851		35,335,404
SGC		9,042,414		16,372,778
S13		18,834,275		12,907,870
SDC		47,042,866		162,343,467
S15		75,690,997		34,221,916
7XX		599,636,837		122,894,380
6XX		308,498,539		106,198,069
8XX		100,088,252		65,468,845
1XX		10,825,485		7,603,138
SLC		76,719,921		81,628,655
S12		6,110,085		2,314,294
S14		13,253,817		12,994,619
4XX		295,969,996		77,501,039
S16		4,619,250		7,169,396
LGF		3,102,807		2,327,974
SC3		638,569		1,594,141
SRE		19,401,805		26,687,761
IGB		73,150,576		28,035,943
CMM		158,981,992		121,977,453
WTF		132,335		226,048
USC		10,029		2,256
AAL		15,746,611		1,253,118

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

7. CHANGES IN UNITS OUTSTANDING

The changes in units outstanding for the year ended December 31, 2011 were as follows:

	Units	Units	Net Increase
	Issued	Redeemed	(Decrease)
AVB	15,401,243	14,747,550	653,693
AAA	9,445,034	5,343,558	4,101,476
AN4	4,233,790	4,073,445	160,345
IVB	44,107,642	44,090,206	17,436
AAU	9,771	3,656	6,115
9XX	165,519,674	151,650,592	13,869,082
NMT	10,369	10,174	195
MCC	53,056,727	54,129,220	(1,072,493)
NNG	18,324	27,372	(9,048)
CMG	9,392,173	9,156,756	235,417
NMI	3,358,521	3,427,762	(69,241)
CSC	3,446	3,296	150
FVB	18,994,345	16,927,420	2,066,925
FL1	86,898,084	86,462,853	435,231
F10	837,909	952,176	(114,267)
F15	4,142,306	4,392,550	(250,244)
F20	4,052,154	4,363,092	(310,938)
FVM	56,578,449	56,469,214	109,235
SGI	151,187,017	147,935,716	3,251,301
S17	6,640,328	7,275,847	(635,519)
ISC	38,418,736	37,819,887	598,849
AAZ	199,371	70,008	129,363
BBC	14,245	4,255	9,990
FVS	6,736,665	6,904,114	(167,449)
BBA	64,494	17,793	46,701
SIC	7,254,055	7,050,469	203,586
BBB	24,722	5,927	18,795
FMS	64,297,211	65,592,042	(1,294,831)
TDM	12,949,288	13,228,202	(278,914)
FTI	52,402,406	54,507,114	(2,104,708)
AAX	48,129	16,409	31,720
FTG	6,586,871	6,718,955	(132,084)
HBF	4,959,184	4,432,956	526,228
HVD	1,660,171	1,621,516	38,655
HVG	431,056	427,111	3,945
HVI	526,296	531,898	(5,602)
HVE	2,508,767	2,414,096	94,671
HVM	34,121	30,694	3,427
HVC	512,170	508,539	3,631
HVS	2,940,022	2,656,115	283,907
HVN	238,404	227,643	10,761
HRS	1,359,872	1,282,864	77,008
HVR	644,998	634,740	10,258
HSS	2,002,387	1,946,618	55,769
AI8	1,700	478	1,222
VKC	2,314,138	2,247,400	66,738

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

7. CHANGES IN UNITS OUTSTANDING (CONTINUED)

	Units	Units	Net (Decrease)
	Issued	Redeemed	Increase
VLC	10,253,574	10,361,202	(107,628)
VKU	16,592,763	14,435,355	2,157,408
AAY	248,243	77,451	170,792
AAM	10,147	4,963	5,184
LRE	22,512,332	21,655,465	856,867
LA9	11,357,326	11,621,331	(264,005)
LAV	10,726,042	10,685,366	40,676
MIT	11,497,819	14,199,775	(2,701,956)
MFL	36,524,074	38,914,048	(2,389,974)
BDS	1,925,755	2,422,845	(497,090)
MF7	34,024,874	33,478,921	545,953
RGS	1,620,890	2,666,439	(1,045,549)
RG1	11,014,454	10,768,087	246,367
MFF	1,566,518	1,712,680	(146,162)
EME	719,077	925,501	(206,424)
EM1	6,918,860	6,464,698	454,162
GGS	876,976	1,009,442	(132,466)
GG1	173,625	209,548	(35,923)
GGR	434,212	964,298	(530,086)
GG2	119,098	164,118	(45,020)
RES	1,112,845	2,066,530	(953,685)
RE1	2,936,056	3,128,394	(192,338)
GTR	799,408	1,207,761	(408,353)
GT2	227,173,130	179,146,097	48,027,033
GSS	10,522,731	12,093,343	(1,570,612)
MFK	109,435,994	112,473,960	(3,037,966)
EGS	7,294,957	8,472,321	(1,177,364)
HYS	4,537,337	5,258,387	(721,050)
MFC	13,653,772	14,711,667	(1,057,895)
IGS	4,336,635	4,837,804	(501,169)
IG1	6,892,915	6,790,416	102,499
MII	704,410	1,091,309	(386,899)
MI1	69,044,197	72,002,719	(2,958,522)
MIS	20,386,591	25,550,259	(5,163,668)
M1B	9,309,984	10,526,991	(1,217,007)
MCS	2,052,809	2,761,962	(709,153)
MC1	2,350,513	2,695,385	(344,872)
MMS	5,211,676	6,536,293	(1,324,617)
MM1	47,400,659	50,665,827	(3,265,168)
NWD	4,481,247	4,920,292	(439,045)
M1A	12,452,817	13,047,010	(594,193)
RIS	957,042	1,306,702	(349,660)
RI1	19,347,342	19,881,859	(534,517)
SIS	948,163	1,143,929	(195,766)
SI1	354,873	401,838	(46,965)
TEC	1,033,569	1,264,164	(230,595)
TE1	90,061	119,572	(29,511)
TRS	2,983,832	5,699,536	(2,715,704)

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

7. CHANGES IN UNITS OUTSTANDING (CONTINUED)

	Units	Units	Net (Decrease)
	Issued	Redeemed	Increase
MFJ	37,629,218	43,527,735	(5,898,517)
UTS	882,534	1,620,370	(737,836)
MFE	10,665,536	10,719,812	(54,276)
MVS	2,088,967	3,008,131	(919,164)
MV1	41,932,374	43,613,204	(1,680,830)
AAN	372,208	143,827	228,381
AAW	4,884	2,326	2,558
VKM	4,941,690	4,828,195	113,495
OBV	4,696,783	4,766,374	(69,591)
OCA	4,940,187	5,104,755	(164,568)
OGG	6,006,171	6,077,943	(71,772)
OMG	121,067,414	127,334,634	(6,267,220)
OMS	919,553	1,067,989	(148,436)
AAQ	7,311	251	7,060
PRA	852,384	862,212	(9,828)
AAP	1,127,049	363,188	763,861
BBD	87,745	25,244	62,501
PCR	25,152,888	24,535,996	616,892
PMB	2,918,980	2,917,188	1,792
BBE	58,009	16,533	41,476
6TT	257,859,818	218,110,412	39,749,406
PRR	23,427,459	25,107,946	(1,680,487)
PTR	91,814,576	95,881,265	(4,066,689)
AAR	360,210	137,381	222,829
AAS	32,186	8,115	24,071
3XX	1,213,239	1,096,855	116,384
5XX	80,238,411	72,272,207	7,966,204
SBI	1,222,112	729,714	492,398
SSA	8,853,722	7,776,201	1,077,521
VSC	50,208,060	51,159,834	(951,774)
2XX	2,738,607	2,710,617	27,990
SVV	103,499,302	104,925,833	(1,426,531)
SGC	17,488,381	18,611,456	(1,123,075)
S13	11,695,246	11,413,915	281,331
SDC	213,876,697	224,956,767	(11,080,070)
S15	65,470,537	61,449,828	4,020,709
7XX	186,770,722	155,204,916	31,565,806
6XX	113,845,537	98,909,931	14,935,606
8XX	37,410,471	38,209,590	(799,119)
1XX	3,248,201	3,077,777	170,424
SLC	132,620,591	138,306,874	(5,686,283)
S12	5,478,659	5,288,683	189,976
S14	7,600,247	7,781,163	(180,916)
4XX	202,819,707	186,280,319	16,539,388
S16	12,823,685	12,978,885	(155,200)
LGF	2,080,023	1,985,280	94,743
SC3	720,840	788,755	(67,915)

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

7. CHANGES IN UNITS OUTSTANDING (CONTINUED)

	Units	Units	Net (Decrease)
	Issued	Redeemed	Increase
SRE	38,377,180	39,377,118	(999,938)
IGB	51,874,211	48,586,233	3,287,978
CMM	54,326,639	50,528,102	3,798,537
WTF	227,526	233,965	(6,439)
USC	12,503	12,235	268
AAL	3,503,959	2,111,815	1,392,144

The changes in units outstanding for the year ended December 31, 2010 were as follows:

	Units	Units	Net Increase
	Issued	Redeemed	(Decrease)
AVB	12,972,688	12,186,247	786,441
AN4	4,077,846	3,997,144	80,702
IVB	46,873,556	47,357,766	(484,210)
9XX	120,375,583	107,370,851	13,004,732
NMT	10,520	11,565	(1,045)
MCC	57,458,369	59,306,967	(1,848,598)
NNG	38,706	39,194	(488)
CMG	9,163,066	9,080,819	82,247
NMI	3,492,626	3,586,939	(94,313)
CSC	3,585	3,517	68
FVB	13,220,046	12,510,406	709,640
FL1	89,342,677	88,494,154	848,523
F10	1,022,526	1,226,554	(204,028)
F15	4,207,105	4,072,509	134,596
F20	4,029,672	4,449,888	(420,216)
FVM	59,693,605	60,363,922	(670,317)
SGI	138,840,292	132,866,559	5,973,733
S17	7,491,752	8,421,086	(929,334)
ISC	34,490,069	32,780,765	1,709,304
FVS	7,133,285	7,124,837	8,448
SIC	7,062,953	6,357,079	705,874
FMS	67,304,187	67,483,278	(179,091)
TDM	14,674,679	15,189,431	(514,752)
FTI	62,933,242	65,243,140	(2,309,898)
FTG	6,957,337	6,971,915	(14,578)
HBF	2,733,073	2,219,779	513,294
HVD	1,464,011	1,382,931	81,080
HVG	393,829	353,140	40,689
HVI	548,597	535,902	12,695
HVE	2,335,251	2,129,967	205,284

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

7. CHANGES IN UNITS OUTSTANDING (CONTINUED)

	Units	Units	Net Increase
	Issued	Redeemed	(Decrease)
HVM	22,271	21,491	780
HVC	537,520	537,842	(322)
HVS	1,505,784	1,133,418	372,366
HVN	227,979	226,539	1,440
HRS	1,125,086	971,698	153,388
HVR	574,752	499,565	75,187
HSS	1,903,531	1,759,894	143,637
VLC	9,825,362	9,494,711	330,651
VKU	9,564,041	8,938,211	625,830
VKC	1,977,157	1,721,946	255,211
LRE	18,960,630	17,665,315	1,295,315
LA9	12,786,989	13,574,553	(787,564)
LAV	10,841,417	10,987,713	(146,296)
MIT	13,308,359	16,626,206	(3,317,847)
MFL	44,806,649	47,673,586	(2,866,937)
BDS	2,226,987	2,505,709	(278,722)
MF7	28,504,592	25,906,349	2,598,243
RGS	1,870,806	2,971,316	(1,100,510)
RG1	9,742,474	9,960,386	(217,912)
EME	774,370	926,901	(152,531)
EM1	5,279,878	4,851,228	428,650
GGS	868,114	993,495	(125,381)
GG1	222,628	257,320	(34,692)
GGR	481,456	1,016,788	(535,332)
GG2	133,106	222,654	(89,548)
RES	1,230,790	2,516,037	(1,285,247)
RE1	3,510,235	3,719,932	(209,697)
GTR	837,372	1,264,386	(427,014)
GT2	91,740,595	56,668,772	35,071,823
GSS	11,943,890	13,321,139	(1,377,249)
MFK	112,283,206	111,212,647	1,070,559
EGS	8,341,620	9,789,455	(1,447,835)
MFF	1,671,864	1,828,947	(157,083)
HYS	5,118,999	5,931,526	(812,527)
MFC	16,875,819	18,056,993	(1,181,174)
IGS	4,977,801	5,659,383	(681,582)
IG1	6,475,422	6,451,412	24,010
MII	819,943	1,200,363	(380,420)
MI1	78,762,378	79,139,167	(376,789)
MIS	23,346,146	29,617,716	(6,271,570)
M1B	11,870,360	13,277,649	(1,407,289)
MCS	2,370,249	2,557,181	(186,932)
MC1	3,141,205	3,598,139	(456,934)
MMS	5,001,419	7,180,488	(2,179,069)
MM1	49,442,134	51,400,055	(1,957,921)
NWD	5,290,954	6,130,532	(839,578)

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

7. CHANGES IN UNITS OUTSTANDING (CONTINUED)

	Units	Units	Net (Decrease)
	Issued	Redeemed	Increase
M1A	15,990,422	17,776,067	(1,785,645)
RIS	1,083,338	1,481,826	(398,488)
RI1	22,492,970	23,295,744	(802,774)
SIS	1,176,424	1,351,491	(175,067)
SI1	427,497	529,487	(101,990)
TEC	979,905	1,253,086	(273,181)
TE1	67,658	95,077	(27,419)
TRS	3,173,538	6,429,625	(3,256,087)
MFJ	36,362,847	41,916,709	(5,553,862)
UTS	883,867	1,944,533	(1,060,666)
MFE	10,964,659	11,085,747	(121,088)
MVS	2,388,145	3,339,556	(951,411)
MV1	47,185,183	48,366,963	(1,181,780)
VKM	3,306,464	3,075,886	230,578
OBV	4,986,479	5,133,304	(146,825)
OCA	5,475,547	5,743,384	(267,837)
OGG	6,407,391	6,513,737	(106,346)
OMG	143,942,428	150,650,472	(6,708,044)
OMS	1,113,611	1,195,431	(81,820)
PRA	856,895	779,526	77,369
PCR	25,150,299	25,136,487	13,812
PMB	2,681,278	2,425,387	255,891
6TT	140,219,161	89,519,464	50,699,697
PRR	27,186,243	28,046,205	(859,962)
PTR	100,117,670	100,942,846	(825,176)
3XX	830,259	723,460	106,799
5XX	46,022,587	39,597,630	6,424,957
SBI	107	-	107
SSA	5,538,757	5,235,337	303,420
VSC	55,739,601	58,621,175	(2,881,574)
2XX	2,706,327	2,422,754	283,573
SVV	108,587,217	108,169,892	417,325
SGC	20,830,593	22,163,024	(1,332,431)
S13	9,807,311	9,454,769	352,542
SDC	238,215,039	241,744,654	(3,529,615)
S15	48,264,582	44,559,849	3,704,733
7XX	144,802,637	87,767,993	57,034,644
6XX	90,982,919	64,038,586	26,944,333
8XX	44,757,395	39,308,253	5,449,142
1XX	2,141,514	1,956,740	184,774
SLC	153,411,819	160,452,105	(7,040,286)
S12	5,373,957	5,099,435	274,522
S14	7,859,621	7,474,053	385,568
4XX	132,033,928	114,709,964	17,323,964
S16	14,473,252	15,154,186	(680,934)

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

7. CHANGES IN UNITS OUTSTANDING (CONTINUED)

	Units	Units	Net Increase
	Issued	Redeemed	(Decrease)
LGF	1,702,883	1,589,223	113,660
SC3	1,067,145	1,169,428	(102,283)
SRE	43,601,321	44,751,151	(1,149,830)
IGB	34,804,066	30,067,690	4,736,376
CMM	42,967,185	42,530,611	436,574
WTF	295,963	327,022	(31,059)
USC	12,778	13,291	(513)

8. FAIR VALUE MEASUREMENTS

The Sub-Accounts’ investments are carried at fair value.  Fair Value is an exit price, representing the amount that would be received from a sale of an asset or paid to transfer a liability in an orderly transaction between market participants.  As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.  As a basis for considering such assumptions, US GAAP establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value (i.e., Level 1, 2 and 3). Level 1 inputs are observable inputs that reflect quoted prices for identical assets or liabilities in active markets that the Variable Account has the ability to access at the measurement date. Level 2 inputs are observable inputs, other than quoted prices included in Level 1, for the asset or liability or prices for similar assets and liabilities. Level 3 inputs are unobservable inputs reflecting the reporting entity’s estimates of the assumptions that market participants would use in pricing the asset or liability. Topic 820 requires that a fair value measurement technique include an adjustment for risks inherent in a particular valuation technique (such as a pricing model) and/or the risks inherent in the inputs to the model, if market participants would also include such an adjustment.

The Variable Account has categorized its financial instruments, based on the priority of the inputs to the valuation technique, into the three level hierarchy described above.  If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument.

As of December 31, 2011, the inputs used to price the Funds are observable and represent Level 1 assets under the Topic 820 hierarchy levels. There were no Level 2 or 3 investments in the Variable Account during the year ended December 31, 2011. As of December 31, 2011, the Level 1 assets held by the Sub-Accounts was $16,926.0 million.  There were no transfers between Level 1 and Level 2 during the period.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS

The summary of units outstanding, unit value (some of which may be rounded), net assets, investment income ratio, expense ratio (excluding expenses of the underlying funds) and the total return, for each of the five years in the period ended December 31, is as follows:

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
AVB
2011	5,947,187	$9.4799	to	$9.9498	$57,458,501	2.18%	0.65%	to	2.10%	(5.09)%	to	(3.69)%
2010	5,293,494	9.9167	to	10.2048	53,564,306	2.43	1.35	to	2.35	1.14	to	8.81
2009	4,507,053	9.2498	to	9.3787	42,044,269	0.81	1.35	to	2.10	21.13	to	22.06
2008	1,484,739	7.6393	to	7.6837	11,378,225	2.36	1.35	to	2.05	(23.61)	to	(23.16)
AAA
2011	4,101,476	9.3695	to	9.4614	38,568,416	-	0.65	to	2.10	(6.30)	to	(5.39)
AN4
2011	1,252,450	6.9298	to	8.6713	8,892,693	2.71	0.65	to	2.30	(17.97)	to	(16.59)
2010	1,092,105	8.4482	to	8.6813	9,392,167	1.83	1.35	to	2.30	1.70	to	11.09
2009	1,011,403	7.6787	to	7.8147	7,854,209	3.28	1.35	to	2.30	36.03	to	37.36
2008	258,506	5.6447	to	5.6893	1,466,176	-	1.35	to	2.30	(43.55)	to	(43.11)
IVB
2011	11,207,531	5.6135	to	5.8472	64,608,169	3.88	1.30	to	2.35	(21.33)	to	(20.48)
2010	11,190,095	7.1355	to	7.3535	81,416,221	2.68	1.30	to	2.35	1.85	to	2.94
2009	11,674,305	7.0059	to	7.1432	82,821,276	1.06	1.30	to	2.35	31.20	to	32.61
2008	12,644,113	5.3309	to	5.3866	67,893,236	0.26	1.30	to	2.55	(46.69)	to	(46.13)
AAU
2011	6,115	10.4824	to	10.4943	64,141	-	1.35	to	1.75	4.82	to	4.94
9XX
2011	61,777,993	9.9024	to	12.3742	757,127,151	2.53	0.65	to	2.35	(5.90)	to	(4.27)
2010	47,908,911	12.7432	to	13.0170	619,370,616	1.27	1.35	to	2.30	1.20	to	8.28
2009	34,904,179	11.8467	to	12.0216	417,990,165	3.19	1.35	to	2.55	17.83	to	19.28
2008	1,673,259	10.0629	to	10.0781	16,852,673	6.00	1.35	to	2.10	0.63	to	0.78
NMT
2011	3,533	10.8100			38,189	-	1.65			(13.38)
2010	3,338	12.4799			41,663	-	1.65			15.48
2009	4,383	10.8073			47,363	0.10	1.65			24.97
2008	8,756	8.6480	to	8.7482	76,146	-	1.35	to	1.65	(44.50)	to	(44.33)
2007	8,690	15.5826	to	15.7150	135,980	0.53	1.35	to	1.65	17.31	to	17.67
MCC
2011	13,269,893	8.0594	to	9.8089	110,566,702	-	0.65	to	2.35	(14.18)	to	(12.68)
2010	14,342,386	9.3906	to	9.7833	138,265,475	-	1.30	to	2.35	2.84	to	15.60
2009	16,190,984	8.2105	to	8.4629	135,548,553	-	1.30	to	2.35	23.82	to	25.15
2008	16,749,454	6.6062	to	6.7622	112,464,281	-	1.30	to	2.55	(45.21)	to	(44.50)
2007	6,356,718	12.0821	to	12.1839	77,182,125	0.25	1.30	to	2.30	20.82	to	21.84

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
NNG
2011	2,170	$11.1378	to	$11.2150	$24,200	0.09%	1.65%	to	1.75%	(4.34)%	to	(4.24)%
2010	11,218	11.5747	to	11.7119	130,018	0.12	1.65	to	1.85	19.30	to	19.54
2009	11,706	9.7021	to	9.7495	113,666	0.65	1.75	to	1.85	24.32	to	24.45
2008	22,574	7.8041	to	7.8343	176,374	0.27	1.75	to	1.85	(40.57)	to	(40.51)
2007	14,570	13.1322	to	13.1694	191,573	-	1.35	to	1.85	15.29	to	15.88
CMG
2011	2,948,066	9.6039	to	10.7156	29,170,579	0.09	0.65	to	2.30	(5.06)	to	(3.46)
2010	2,712,649	10.1161	to	10.4978	28,087,424	0.05	1.35	to	2.30	0.68	to	19.63
2009	2,630,402	8.5261	to	8.7754	22,841,383	0.26	1.35	to	2.35	23.36	to	24.62
2008	1,610,257	6.9442	to	7.0418	11,258,978	0.04	1.35	to	2.10	(40.87)	to	(40.41)
2007	640,690	11.7433	to	11.8174	7,548,709	-	1.35	to	2.10	17.43	to	18.17
NMI
2011	1,007,217	7.7217	to	11.0208	10,671,777	0.82	1.30	to	2.10	(17.94)	to	(17.27)
2010	1,076,458	9.4101	to	13.3287	13,809,157	0.69	1.30	to	2.30	0.50	to	12.25
2009	1,170,771	8.4513	to	11.8797	13,421,698	1.86	1.30	to	2.35	34.70	to	36.15
2008	1,018,267	6.2580	to	8.7297	8,660,311	1.36	1.30	to	2.10	(49.57)	to	(49.16)
2007	522,074	12.3894	to	17.1796	8,752,767	0.08	1.35	to	2.30	16.91	to	24.52
CSC
2011	1,172	11.7697	to	11.9334	13,935	0.90	1.65	to	1.85	(7.86)	to	(7.68)
2010	1,022	12.7743	to	12.9257	13,175	1.03	1.65	to	1.85	24.13	to	24.38
2009	954	10.3922			9,933	0.93	1.65			22.93
2008	956	8.4535			8,097	0.50	1.65			(29.35)
2007	1,509	11.9646	to	11.9984	18,101	0.26	1.55	to	1.65	(4.19)	to	(4.10)
FVB
2011	7,396,640	10.1324	to	10.5126	76,682,725	1.64	0.65	to	2.10	(5.84)	to	(4.45)
2010	5,329,715	10.6772	to	11.0801	58,332,583	1.60	1.35	to	2.30	1.23	to	16.17
2009	4,620,075	9.2805	to	9.5381	43,671,580	2.27	1.35	to	2.30	35.14	to	36.46
2008	2,412,176	6.8929	to	6.9899	16,761,837	2.12	1.35	to	2.10	(35.54)	to	(35.04)
2007	1,234,324	10.6929	to	10.7604	13,240,999	3.47	1.35	to	2.10	6.93	to	7.60
FL1
2011	22,654,962	9.4938	to	10.5974	221,030,866	0.80	0.65	to	2.35	(5.06)	to	(3.41)
2010	22,219,731	10.0146	to	10.3056	226,649,086	1.05	1.30	to	2.30	1.40	to	15.41
2009	21,371,208	8.7663	to	8.9297	189,572,250	1.53	1.30	to	2.30	32.35	to	33.71
2008	7,352,882	6.6235	to	6.6786	48,955,023	2.15	1.30	to	2.30	(33.77)	to	(33.21)
F10
2011	472,101	11.0993	to	11.7448	5,402,924	1.69	1.35	to	2.25	(2.66)	to	(1.77)
2010	586,368	11.4029	to	11.9562	6,869,231	1.73	1.35	to	2.25	10.01	to	11.03
2009	790,396	10.3649	to	10.7688	8,368,031	3.25	1.35	to	2.25	21.17	to	22.28
2008	1,173,750	8.5543	to	8.8065	10,204,299	3.71	1.35	to	2.25	(26.86)	to	(26.18)
2007	585,651	11.6955	to	11.9301	6,929,208	3.24	1.35	to	2.25	5.97	to	6.95

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
F15
2011	2,439,910	$11.1620	to	$11.8482	$28,232,570	1.76%	1.30%	to	2.25%	(2.75)%	to	(1.81)%
2010	2,690,154	11.4777	to	12.0663	31,790,466	2.02	1.30	to	2.25	0.70	to	11.32
2009	2,555,558	10.4105	to	10.8391	27,230,849	4.12	1.30	to	2.25	22.21	to	23.40
2008	1,989,150	8.5186	to	8.7840	17,220,907	2.98	1.30	to	2.25	(28.94)	to	(28.24)
2007	1,457,747	11.9744	to	12.2416	17,658,270	3.26	1.30	to	2.30	6.55	to	7.65
F20
2011	3,280,196	10.8545	to	11.5582	37,084,576	1.83	1.30	to	2.30	(3.51)	to	(2.52)
2010	3,591,134	11.2492	to	11.8574	41,774,592	2.00	1.30	to	2.30	0.77	to	12.84
2009	4,011,350	9.9637	to	10.5078	41,446,559	3.24	1.30	to	2.55	25.27	to	26.88
2008	3,412,422	8.0187	to	8.2819	27,908,761	2.45	1.30	to	2.30	(34.35)	to	(33.68)
2007	2,944,857	12.2148	to	12.4873	36,444,849	2.52	1.30	to	2.30	7.42	to	8.53
FVM
2011	14,937,626	9.5660	to	10.7565	157,792,397	0.02	0.65	to	2.35	(12.94)	to	(11.43)
2010	14,828,391	11.7343	to	12.2246	178,592,880	0.12	1.30	to	2.35	(0.13)	to	26.90
2009	15,498,708	9.3461	to	9.6332	147,656,427	0.48	1.30	to	2.35	36.47	to	37.94
2008	16,082,303	6.8485	to	6.9838	111,490,874	0.25	1.30	to	2.35	(41.03)	to	(40.40)
2007	11,884,177	11.6141	to	11.7169	138,777,417	0.47	1.30	to	2.35	16.14	to	17.17
SGI
2011	42,483,720	9.8870	to	11.0258	461,684,334	1.22	0.65	to	2.35	(8.49)	to	(6.90)
2010	39,232,419	11.4936	to	11.9272	462,402,911	1.98	1.35	to	2.30	1.72	to	17.56
2009	33,258,686	9.8573	to	10.1455	334,386,149	0.68	1.35	to	2.35	17.43	to	18.63
2008	17,385,339	8.4022	to	8.5521	147,791,354	1.76	1.35	to	2.30	(20.70)	to	(19.92)
2007	7,791,583	10.6128	to	10.6798	82,974,328	-	1.35	to	2.10	6.13	to	6.80
S17
2011	5,135,868	9.3025	to	9.5769	48,625,842	0.02	1.35	to	2.10	(3.61)	to	(2.87)
2010	5,771,387	9.5951	to	9.8597	56,433,177	2.06	1.35	to	2.30	7.72	to	8.77
2009	6,700,721	8.9075	to	9.0651	60,404,458	2.81	1.35	to	2.30	27.26	to	28.49
2008	4,966,898	6.9997	to	7.0549	34,950,364	5.05	1.35	to	2.30	(30.00)	to	(29.45)
ISC
2011	11,052,281	10.1516	to	10.6628	115,893,306	5.67	0.65	to	2.30	0.03	to	1.72
2010	10,453,432	10.1481	to	10.5514	108,775,441	6.60	1.30	to	2.30	1.33	to	11.21
2009	8,744,128	9.1653	to	9.4879	82,084,273	7.92	1.30	to	2.50	32.21	to	33.83
2008	6,865,436	6.9325	to	7.0894	48,332,687	5.43	1.30	to	2.50	(31.42)	to	(30.57)
2007	3,983,472	10.1431	to	10.2071	40,544,176	1.80	1.35	to	2.10	1.43	to	2.07
AAZ
2011	129,363	10.3317	to	10.3537	1,338,333	-	1.35	to	2.10	3.32	to	3.54
BBC
2011	9,990	10.5283	to	10.5493	105,338	-	1.35	to	2.05	5.28	to	5.49

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
FVS
2011	2,017,094	$10.9261	to	$20.0806	$38,970,383	0.68%	0.65%	to	2.50%	(6.16)%	to	(4.38)%
2010	2,184,543	14.4922	to	21.1502	44,583,047	0.79	1.30	to	2.50	1.78	to	26.56
2009	2,176,095	11.5328	to	16.7205	35,186,583	1.64	1.30	to	2.50	25.93	to	27.48
2008	1,779,602	9.1117	to	13.1231	22,554,357	1.14	1.30	to	2.50	(34.70)	to	(33.89)
2007	1,960,878	13.8819	to	19.8610	37,692,750	0.66	1.30	to	2.50	(4.83)	to	(3.66)
BBA
2011	46,701	10.9918	to	11.0137	514,029	-	-	to	-	9.92	to	10.14
SIC
2011	2,800,517	10.2082	to	12.4669	34,368,378	5.95	0.65	to	2.30	0.22	to	1.91
2010	2,596,931	11.8722	to	12.3200	31,584,484	4.50	1.35	to	2.30	0.71	to	9.42
2009	1,891,057	10.9558	to	11.2596	21,088,738	7.24	1.35	to	2.30	22.86	to	24.05
2008	997,893	8.9508	to	9.0765	8,998,750	6.90	1.35	to	2.10	(13.11)	to	(12.44)
2007	556,077	10.3009	to	10.3659	5,745,387	2.79	1.35	to	2.10	3.01	to	3.66
BBB
2011	18,795	10.0473	to	10.0673	189,112	-	1.35	to	2.05	0.47	to	0.67
FMS
2011	16,848,114	10.3632	to	14.9512	243,685,985	2.29	0.65	to	2.35	(3.36)	to	(1.68)
2010	18,142,945	11.7357	to	15.3150	269,667,669	1.61	1.30	to	2.35	1.10	to	9.75
2009	18,322,036	10.7695	to	13.9615	248,924,483	2.27	1.30	to	2.35	23.09	to	24.41
2008	10,659,488	8.7183	to	11.2279	116,498,829	3.43	1.30	to	2.35	(38.59)	to	(37.93)
2007	6,318,116	14.1466	to	18.0981	111,152,728	1.37	1.30	to	2.35	1.03	to	2.13
TDM
2011	3,451,536	12.9690	to	13.8097	46,486,794	0.95	1.30	to	2.30	(17.79)	to	(16.95)
2010	3,730,450	15.7752	to	16.6280	60,725,526	1.67	1.30	to	2.30	14.88	to	16.06
2009	4,245,202	13.7314	to	14.3272	59,780,455	4.87	1.30	to	2.30	68.62	to	70.35
2008	6,078,724	8.1300	to	8.4105	50,460,099	2.68	1.30	to	2.35	(53.82)	to	(53.32)
2007	4,360,786	17.6061	to	18.0187	77,853,382	1.85	1.30	to	2.35	25.74	to	27.10
FTI
2011	13,164,270	12.2681	to	16.3841	207,290,349	1.65	1.30	to	2.55	(12.91)	to	(11.79)
2010	15,268,978	14.0221	to	18.6504	273,652,493	1.99	1.30	to	2.55	5.64	to	7.00
2009	17,578,876	13.2120	to	17.5014	295,586,812	3.56	1.30	to	2.55	33.55	to	35.26
2008	22,475,438	9.8476	to	12.9916	280,682,732	2.33	1.30	to	2.55	(41.91)	to	(41.16)
2007	23,555,118	16.8727	to	22.1685	502,292,060	1.98	1.30	to	2.55	12.50	to	13.95
AAX
2011	31,720	9.7779	to	9.8168	310,599	-	0.65	to	2.05	(2.22)	to	(1.83)
FTG
2011	2,191,897	10.1820	to	14.7339	30,804,560	1.33	1.30	to	2.30	(9.11)	to	(8.18)
2010	2,323,981	11.1685	to	16.0551	35,600,674	1.34	1.30	to	2.30	0.74	to	6.00
2009	2,338,559	10.6117	to	15.1541	33,875,343	3.23	1.30	to	2.30	28.09	to	29.40
2008	2,275,331	8.2593	to	11.7171	25,517,931	1.77	1.30	to	2.35	(43.69)	to	(43.08)
2007	2,128,221	14.6136	to	20.5944	41,968,435	1.30	1.30	to	2.35	(0.07)	to	1.01

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
HBF
2011	1,299,312	$12.2069	to	$12.4569	$16,106,376	1.08%	1.35%	to	2.10%	(0.45)%	to	0.31%
2010	773,084	12.2622	to	12.4184	9,572,118	0.12	1.35	to	2.10	0.75	to	8.95
2009	259,790	11.3416	to	11.3988	2,957,383	0.05	1.35	to	2.10	13.42	to	13.99
HVD
2011	419,954	10.1789	to	10.4978	4,371,146	3.86	1.35	to	2.10	4.83	to	5.63
2010	381,299	9.7101	to	9.9383	3,761,330	4.58	1.35	to	2.10	0.95	to	13.57
2009	300,219	8.6154	to	8.7509	2,613,269	-	1.35	to	2.10	22.48	to	23.42
2008	116,273	7.0493	to	7.0906	822,517	19.06	1.35	to	1.90	(29.46)	to	(29.06)
HVG
2011	109,345	7.2785	to	7.4448	807,966	0.15	1.35	to	1.90	(4.89)	to	(4.36)
2010	105,400	7.6526	to	7.7839	815,820	0.17	1.35	to	1.90	7.78	to	8.38
2009	64,711	7.1003	to	7.1818	462,965	-	1.35	to	1.90	13.76	to	14.40
2008	43,321	6.2416	to	6.2781	271,371	1.69	1.35	to	1.90	(39.09)	to	(38.75)
HVI
2011	129,405	8.4231	to	8.6870	1,114,733	2.81	1.35	to	2.10	4.82	to	5.62
2010	135,007	8.0357	to	8.2246	1,103,265	2.88	1.35	to	2.10	9.45	to	10.28
2009	122,312	7.3422	to	7.4577	908,107	-	1.35	to	2.10	19.06	to	19.97
2008	71,105	6.1669	to	6.2162	440,962	10.28	1.35	to	2.10	(39.15)	to	(38.68)
HVE
2011	673,679	7.2383	to	7.4651	4,976,865	1.22	1.35	to	2.10	(13.41)	to	(12.74)
2010	579,008	8.3591	to	8.5555	4,914,149	1.41	1.35	to	2.10	1.46	to	7.71
2009	373,724	7.8201	to	7.9431	2,952,460	0.05	1.35	to	2.10	30.66	to	31.67
2008	153,543	5.9849	to	6.0328	923,861	5.38	1.35	to	2.10	(41.81)	to	(41.36)
HVM
2011	8,964	8.5450	to	8.7402	77,544	0.70	1.35	to	1.90	(3.20)	to	(2.66)
2010	5,537	8.8274	to	8.9788	49,237	0.89	1.35	to	1.90	11.95	to	12.58
2009	4,757	7.8852	to	7.9757	37,661	-	1.35	to	1.90	19.55	to	20.22
2008	1,521	6.5957	to	6.6343	10,047	3.05	1.35	to	1.90	(35.17)	to	(34.81)
HVC
2011	135,012	9.2104	to	9.4989	1,267,264	0.46	1.35	to	2.10	(4.81)	to	(4.08)
2010	131,381	9.6756	to	9.9030	1,289,234	0.67	1.35	to	2.10	1.60	to	21.15
2009	131,703	8.0479	to	8.1744	1,070,309	-	1.35	to	2.10	31.41	to	32.42
2008	64,289	6.1242	to	6.1732	395,811	1.82	1.35	to	2.10	(40.12)	to	(39.66)
HVS
2011	745,930	11.0178	to	11.3626	8,425,130	2.35	1.35	to	2.10	3.09	to	3.88
2010	462,023	10.6873	to	10.9382	5,028,611	2.59	1.35	to	2.10	0.44	to	3.47
2009	89,657	10.4080	to	10.5713	943,853	-	1.35	to	2.10	3.25	to	4.04
2008	10,776	10.1182	to	10.1611	109,325	9.36	1.35	to	1.75	0.36	to	0.77

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
HVN
2011	64,413	$6.1068	to	$6.2982	$401,560	-%	1.35%	to	2.10%	(14.56)%	to	(13.90)%
2010	53,652	7.1473	to	7.3153	389,238	0.10	1.35	to	2.10	13.53	to	14.40
2009	52,212	6.2954	to	6.3944	332,142	-	1.35	to	2.10	31.82	to	32.83
2008	36,987	4.7757	to	4.8140	177,544	0.68	1.35	to	2.10	(53.65)	to	(53.30)
HRS
2011	365,057	6.7150	to	6.9052	2,498,612	0.16	1.35	to	2.10	(11.53)	to	(10.85)
2010	288,049	7.5898	to	7.7455	2,215,321	0.26	1.35	to	2.10	3.59	to	20.50
2009	134,661	6.3466	to	6.4276	861,819	-	1.35	to	2.10	31.91	to	32.92
2008	34,039	4.8112	to	4.8356	164,218	1.41	1.35	to	2.10	(51.89)	to	(51.64)
HVR
2011	160,878	8.3441	to	8.6054	1,371,418	0.34	1.35	to	2.10	4.60	to	5.40
2010	150,620	7.9771	to	8.1645	1,220,000	1.32	1.35	to	2.10	1.12	to	5.89
2009	75,433	7.5908	to	7.7102	578,764	-	1.35	to	2.10	30.58	to	31.58
2008	22,935	5.8258	to	5.8599	134,085	4.24	1.35	to	1.90	(43.17)	to	(42.85)
HSS
2011	519,574	9.4389	to	9.7346	5,015,924	0.02	1.35	to	2.10	(2.99)	to	(2.25)
2010	463,805	9.7297	to	9.9582	4,587,826	0.47	1.35	to	2.10	2.10	to	27.86
2009	320,168	7.6677	to	7.7883	2,481,257	-	1.35	to	2.10	30.16	to	31.16
2008	107,313	5.8910	to	5.9382	635,831	0.64	1.35	to	2.10	(42.47)	to	(42.03)
AI8
2011	1,222	10.2183	to	10.2328	12,500	-	1.35	to	1.85	2.18	to	2.33
VKC
2011	608,083	10.4786	to	10.9591	6,491,582	0.58	0.65	to	2.10	(1.29)	to	0.17
2010	541,345	10.6152	to	10.8455	5,813,854	0.85	1.35	to	2.10	1.68	to	20.53
2009	286,134	8.8743	to	8.9980	2,559,424	1.10	1.35	to	2.10	36.24	to	37.28
2008	64,684	6.5138	to	6.5544	422,645	0.51	1.35	to	2.10	(34.86)	to	(34.46)
VLC
2011	2,647,256	8.3548	to	8.7759	22,814,813	1.37	1.30	to	2.30	(4.36)	to	(3.38)
2010	2,754,884	8.7353	to	9.0827	24,645,773	0.13	1.30	to	2.30	1.41	to	14.19
2009	2,424,233	7.7727	to	7.9538	19,071,269	4.34	1.30	to	2.10	25.71	to	26.74
2008	1,778,846	6.1599	to	6.2700	11,079,024	1.96	1.35	to	2.30	(37.29)	to	(36.67)
2007	1,104,540	9.8387	to	9.9008	10,902,301	-	1.35	to	2.10	(1.61)	to	(0.99)
VKU
2011	4,795,893	10.4145	to	10.8734	51,651,570	1.59	0.65	to	2.10	(3.37)	to	(1.94)
2010	2,638,485	10.9300	to	11.1670	29,230,936	1.96	1.35	to	2.10	1.34	to	10.52
2009	2,012,655	9.8917	to	10.1041	20,224,707	2.67	1.35	to	2.50	19.43	to	20.83
2008	521,533	8.2827	to	8.3619	4,349,163	1.79	1.35	to	2.50	(17.17)	to	(16.38)
AAY
2011	170,792	10.0109	to	10.0506	1,712,175	-	0.65	to	2.05	0.11	to	0.51
AAM
2011	5,184	10.3278	to	10.3366	53,540	-	1.35	to	1.65	3.28	to	3.37

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
LRE
2011	6,403,042	$8.2773	to	$9.0510	$57,264,390	2.04%	0.65%	to	2.35%	(19.92)%	to	(18.53)%
2010	5,546,175	10.8727	to	11.1887	61,493,993	1.38	1.35	to	2.35	2.09	to	21.04
2009	4,250,860	9.0745	to	9.2522	39,060,057	3.64	1.30	to	2.35	65.86	to	67.64
2008	2,539,966	5.4621	to	5.5191	13,975,390	6.16	1.30	to	2.55	(45.38)	to	(44.81)
LA9
2011	3,079,831	10.2431	to	15.0377	41,524,761	-	0.65	to	2.55	(12.34)	to	(10.63)
2010	3,343,836	14.3291	to	16.9372	50,950,452	-	1.30	to	2.55	0.79	to	21.33
2009	4,131,400	11.9616	to	13.9599	52,098,239	-	1.30	to	2.55	41.84	to	43.66
2008	4,668,640	8.4333	to	9.7176	41,167,153	-	1.30	to	2.55	(39.83)	to	(39.05)
2007	5,069,578	14.0149	to	15.9436	73,578,930	-	1.30	to	2.55	18.17	to	19.70
LAV
2011	3,280,677	13.3338	to	14.4163	45,971,939	0.19	1.30	to	2.30	(6.68)	to	(5.73)
2010	3,240,001	14.2886	to	15.3001	48,288,792	0.32	1.30	to	2.30	1.37	to	17.48
2009	3,386,297	12.2869	to	13.0302	43,116,785	0.19	1.30	to	2.35	23.08	to	24.34
2008	2,597,685	9.9573	to	10.4851	26,664,191	0.59	1.30	to	2.35	(30.35)	to	(29.60)
2007	2,132,144	14.3086	to	14.9014	31,216,819	0.58	1.30	to	2.30	4.25	to	5.33
MIT
2011	18,480,552	8.9485	to	32.4419	288,462,302	1.86	1.00	to	1.85	0.09	to	0.96
2010	21,182,508	8.9359	to	32.2588	329,127,899	1.82	1.00	to	1.85	14.31	to	15.30
2009	24,500,355	7.8132	to	28.0862	330,454,824	2.37	1.00	to	1.85	22.94	to	24.01
2008	28,659,325	6.3519	to	22.7364	312,978,185	1.52	1.00	to	1.85	(36.16)	to	(35.60)
2007	36,869,229	9.9446	to	35.4439	616,787,038	1.18	1.00	to	1.85	3.98	to	4.88
MFL
2011	9,632,098	10.5865	to	15.7844	134,401,254	1.56	1.00	to	2.55	(0.85)	to	0.72
2010	12,022,072	10.6014	to	15.7028	168,194,841	1.56	1.00	to	2.55	13.16	to	14.96
2009	14,889,009	9.3019	to	13.6875	182,378,997	2.11	1.00	to	2.55	21.81	to	23.75
2008	17,800,165	7.5820	to	11.0833	177,022,413	1.22	1.00	to	2.55	(36.78)	to	(35.77)
2007	19,982,665	11.9080	to	17.2918	310,717,943	1.00	1.00	to	2.55	2.98	to	4.63
BDS
2011	4,609,175	17.6516	to	20.0962	89,181,631	4.84	1.15	to	1.85	4.66	to	5.42
2010	5,106,265	16.8481	to	19.0628	93,795,374	4.34	1.15	to	1.85	8.81	to	9.60
2009	5,384,987	15.4686	to	17.3936	90,448,318	6.48	1.15	to	1.85	25.59	to	26.50
2008	5,203,097	12.3042	to	13.7497	69,202,403	7.02	1.15	to	1.85	(12.19)	to	(11.55)
2007	6,896,916	14.1153	to	15.5456	103,879,319	6.26	1.15	to	1.85	1.60	to	2.35
MF7
2011	9,806,250	10.4364	to	16.7714	153,556,663	4.83	0.65	to	2.50	3.65	to	5.61
2010	9,260,297	11.9321	to	15.9598	138,789,021	3.96	1.15	to	2.50	0.52	to	9.40
2009	6,662,054	10.9792	to	14.5888	91,904,165	5.40	1.15	to	2.50	24.47	to	26.19
2008	4,635,465	8.7578	to	11.6903	51,141,515	6.74	1.00	to	2.50	(13.00)	to	(11.66)
2007	6,110,178	9.9948	to	13.2334	76,655,526	5.69	1.00	to	2.55	(0.05)	to	2.24

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
RGS
2011	7,453,731	$10.1798	to	$15.9514	$94,329,872	0.95%	1.00%	to	1.85%	(2.77)%	to	(1.93)%
2010	8,499,280	10.4589	to	16.2874	109,875,527	1.15	1.00	to	1.85	15.05	to	16.04
2009	9,599,790	9.0816	to	14.0549	107,176,009	1.82	1.00	to	1.85	30.28	to	31.41
2008	11,214,418	6.9635	to	10.7101	95,812,820	0.65	1.00	to	1.85	(39.77)	to	(39.24)
2007	14,862,669	11.5494	to	17.6526	208,241,408	0.23	1.00	to	1.85	6.69	to	7.62
RG1
2011	3,585,793	9.1984	to	16.7056	35,557,705	0.74	0.65	to	2.35	(3.57)	to	(1.89)
2010	3,339,426	9.5576	to	17.1228	34,696,477	0.93	1.10	to	2.30	1.72	to	15.66
2009	3,557,338	8.3649	to	14.8193	32,497,716	1.44	1.10	to	2.30	29.39	to	30.98
2008	2,883,536	6.4648	to	11.3256	21,338,733	0.44	1.00	to	2.30	(40.21)	to	(39.41)
2007	2,707,973	10.8166	to	18.7295	34,458,186	0.16	1.00	to	2.25	6.17	to	8.99
MFF
2011	776,655	9.9684	to	19.4686	9,830,029	-	1.00	to	2.25	(2.92)	to	(0.10)
2010	922,817	11.2140	to	19.8409	12,234,367	-	1.00	to	2.25	12.91	to	14.35
2009	1,079,900	9.8917	to	17.3864	12,532,342	-	1.00	to	2.30	34.29	to	36.08
2008	1,316,168	7.3320	to	12.8024	11,206,403	-	1.00	to	2.30	(38.97)	to	(38.16)
2007	1,464,903	11.9589	to	20.7435	20,689,801	-	1.00	to	2.30	18.20	to	19.78
EME
2011	1,418,256	23.0239	to	28.1271	36,670,610	0.53	1.00	to	1.85	(20.04)	to	(19.34)
2010	1,624,680	28.7931	to	34.9969	52,175,479	0.71	1.00	to	1.85	21.46	to	22.51
2009	1,777,211	23.7055	to	28.6673	46,576,034	2.42	1.00	to	1.85	65.46	to	66.90
2008	1,900,227	14.3267	to	17.2377	29,955,875	1.39	1.00	to	1.85	(55.93)	to	(55.54)
2007	2,587,959	32.5066	to	38.9119	91,911,417	2.02	1.00	to	1.85	33.14	to	34.29
EM1
2011	2,229,533	8.5224	to	31.9085	32,459,265	0.35	0.65	to	2.50	(20.75)	to	(19.25)
2010	1,775,371	16.1794	to	39.7356	33,610,615	0.56	1.15	to	2.50	2.77	to	22.05
2009	1,346,721	13.4397	to	32.5736	22,378,471	1.63	1.15	to	2.50	63.92	to	66.19
2008	710,442	8.1987	to	19.6098	8,295,305	1.08	1.15	to	2.50	(56.32)	to	(55.71)
2007	808,424	18.7701	to	44.3000	22,821,441	1.85	1.15	to	2.50	31.88	to	33.72
GGS
2011	1,256,337	16.9987	to	24.7647	26,008,011	2.26	1.00	to	1.85	4.10	to	5.00
2010	1,388,803	16.3289	to	23.6760	27,603,523	-	1.00	to	1.85	2.68	to	3.57
2009	1,514,184	15.9031	to	22.9489	29,279,024	11.75	1.00	to	1.85	2.14	to	3.02
2008	1,783,352	15.5702	to	22.3616	33,534,157	8.21	1.00	to	1.85	8.36	to	9.30
2007	1,951,821	14.3685	to	25.1849	33,658,588	-	1.00	to	1.85	6.68	to	7.61
GG1
2011	155,653	15.0563	to	17.8579	2,593,778	1.96	1.15	to	2.05	3.58	to	4.53
2010	191,576	14.4984	to	17.1353	3,072,039	-	1.15	to	2.05	2.24	to	3.18
2009	226,268	14.1448	to	16.6581	3,542,610	13.42	1.15	to	2.05	1.65	to	2.58
2008	410,545	13.8804	to	16.2887	6,320,695	7.46	1.15	to	2.05	7.86	to	8.85
2007	284,890	12.8359	to	15.0094	4,022,897	-	1.15	to	1.85	6.46	to	7.23

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
GGR
2011	2,773,868	$9.1041	to	$28.4107	$53,695,583	0.68%	1.15%	to	1.85%	(8.11)%	to	(7.45)%
2010	3,303,954	9.9029	to	30.7722	68,407,784	0.80	1.00	to	1.85	9.74	to	10.69
2009	3,839,286	9.0195	to	27.9081	71,866,959	1.19	1.00	to	1.85	37.23	to	38.42
2008	4,323,307	6.5693	to	20.2403	59,243,931	1.03	1.00	to	1.85	(40.07)	to	(39.55)
2007	5,626,403	10.9557	to	33.6111	124,791,013	1.69	1.00	to	1.85	11.17	to	12.13
GG2
2011	205,718	12.8853	to	18.4763	3,012,570	0.36	1.15	to	2.10	(8.62)	to	(7.74)
2010	250,738	14.0654	to	20.0359	4,004,065	0.57	1.15	to	2.10	9.19	to	10.25
2009	340,286	12.8483	to	18.1818	4,912,210	0.74	1.15	to	2.10	36.50	to	37.83
2008	440,668	9.3883	to	13.1983	4,602,950	0.76	1.00	to	2.30	(40.48)	to	(39.68)
2007	494,318	15.6997	to	21.9248	8,590,818	1.43	1.00	to	2.10	10.65	to	11.90
RES
2011	7,166,923	7.1290	to	24.0719	112,370,557	1.19	1.15	to	1.85	(8.45)	to	(7.79)
2010	8,120,608	7.7831	to	26.1691	138,046,224	1.40	1.15	to	1.85	10.58	to	11.38
2009	9,405,855	7.0348	to	23.5528	143,755,857	1.68	1.15	to	1.85	29.99	to	30.94
2008	11,057,121	5.4090	to	18.0325	129,451,544	0.67	1.15	to	1.85	(37.61)	to	(37.16)
2007	14,094,806	8.6654	to	28.7651	257,818,176	0.84	1.15	to	1.85	11.13	to	11.94
RE1
2011	969,870	10.1236	to	15.8830	12,311,637	0.87	1.10	to	2.25	(9.09)	to	(8.02)
2010	1,162,208	11.0907	to	17.2860	16,215,376	1.16	1.10	to	2.25	9.89	to	11.18
2009	1,371,905	10.0513	to	15.5629	17,259,114	1.46	1.10	to	2.25	29.06	to	30.57
2008	1,840,427	7.7566	to	11.9309	17,668,776	0.37	1.10	to	2.30	(38.03)	to	(37.27)
2007	1,853,837	12.4596	to	19.0382	28,036,878	0.61	1.10	to	2.30	10.36	to	11.72
GTR
2011	3,221,964	15.3179	to	29.8872	73,752,769	0.96	1.15	to	1.85	(0.33)	to	0.40
2010	3,630,317	15.3603	to	29.8429	83,182,897	0.80	1.15	to	1.85	3.58	to	4.33
2009	4,057,331	14.8223	to	28.6751	89,385,980	8.00	1.15	to	1.85	13.03	to	13.85
2008	4,598,290	13.1070	to	25.2490	89,967,387	5.42	1.15	to	1.85	(16.99)	to	(16.39)
2007	6,117,487	15.7818	to	30.2720	140,411,531	2.22	1.15	to	1.85	6.84	to	7.62
GT2
2011	83,798,499	10.0846	to	18.2205	868,419,521	1.02	0.65	to	2.10	(0.83)	to	0.63
2010	35,771,466	10.2960	to	18.2065	374,030,587	0.33	1.15	to	2.10	0.47	to	4.10
2009	699,643	15.3452	to	17.4988	11,164,168	7.75	1.15	to	2.05	12.42	to	13.46
2008	873,958	13.6216	to	15.4312	12,354,205	5.24	1.15	to	1.85	(17.15)	to	(16.56)
2007	1,161,693	16.4422	to	18.5035	19,774,396	1.99	1.15	to	2.05	6.39	to	7.37
GSS
2011	8,225,599	15.4818	to	25.1330	162,926,999	3.72	1.15	to	1.85	5.42	to	6.18
2010	9,796,211	14.6711	to	23.7279	182,422,116	3.64	1.15	to	1.85	2.81	to	3.56
2009	11,173,460	14.2550	to	22.9687	201,831,819	4.99	1.15	to	1.85	2.56	to	3.31
2008	12,130,442	13.8850	to	22.2887	213,486,283	5.57	1.15	to	1.85	6.53	to	7.31
2007	15,336,252	13.0202	to	24.6917	247,658,015	5.01	1.00	to	1.85	5.19	to	6.10

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
MFK
2011	28,525,248	$10.3897	to	$15.0863	$379,366,472	3.56%	0.65%	to	2.55%	4.39%	to	6.42%
2010	31,563,214	11.3128	to	14.2266	398,410,866	3.43	1.00	to	2.55	0.13	to	3.45
2009	30,492,655	11.1096	to	13.7522	374,547,282	3.88	1.00	to	2.55	1.57	to	3.19
2008	19,623,926	10.9374	to	13.3271	236,492,256	5.08	1.00	to	2.55	5.53	to	7.21
2007	24,954,225	10.3645	to	12.4309	281,758,050	4.76	1.00	to	2.55	4.17	to	5.83
EGS
2011	9,986,814	5.7827	to	24.9499	125,072,423	0.17	1.00	to	1.85	(2.29)	to	(1.45)
2010	11,164,178	5.9152	to	25.4132	142,268,348	0.09	1.00	to	1.85	13.67	to	14.66
2009	12,612,013	5.2011	to	22.2504	140,984,437	0.28	1.00	to	1.85	35.19	to	36.36
2008	14,615,786	3.8453	to	16.3806	119,597,619	0.25	1.00	to	1.85	(38.50)	to	(37.96)
2007	18,485,750	6.2491	to	26.5065	238,240,356	-	1.00	to	1.85	18.99	to	20.03
HYS
2011	4,271,067	15.2218	to	30.4675	87,099,806	8.60	1.00	to	1.85	2.21	to	3.10
2010	4,992,117	14.8922	to	29.6663	99,394,800	9.47	1.00	to	1.85	13.40	to	14.38
2009	5,804,644	13.1329	to	26.0372	100,842,945	10.05	1.00	to	1.85	47.58	to	48.86
2008	6,745,555	8.8989	to	17.5591	78,775,038	9.54	1.00	to	1.85	(30.97)	to	(30.37)
2007	8,811,448	12.8913	to	30.7416	145,304,823	7.61	1.00	to	1.85	0.03	to	0.90
MFC
2011	4,304,415	13.1833	to	18.0081	72,995,788	8.28	1.00	to	2.55	1.22	to	2.83
2010	5,362,310	12.9647	to	17.5485	89,107,908	9.35	1.00	to	2.55	12.44	to	14.22
2009	6,543,484	11.4778	to	15.3945	95,852,231	9.78	1.00	to	2.55	45.89	to	48.21
2008	9,170,448	7.8311	to	10.4078	91,248,270	9.27	1.00	to	2.55	(31.44)	to	(30.35)
2007	9,231,715	11.3703	to	14.9734	132,587,722	7.08	1.00	to	2.55	(1.04)	to	0.54
IGS
2011	3,253,080	13.1219	to	18.5655	51,034,318	1.09	1.00	to	1.85	(12.54)	to	(11.78)
2010	3,754,249	14.9958	to	21.0746	66,861,752	0.90	1.00	to	1.85	13.03	to	14.01
2009	4,435,831	13.2602	to	18.5107	69,156,837	1.15	1.00	to	1.85	35.51	to	36.68
2008	5,162,799	9.7806	to	13.5618	59,050,183	1.33	1.00	to	1.85	(40.94)	to	(40.43)
2007	6,494,572	16.5529	to	22.7974	124,612,558	1.41	1.00	to	1.85	14.42	to	15.41
IG1
2011	2,183,236	9.0238	to	21.2527	24,149,594	0.90	0.65	to	2.30	(13.15)	to	(11.69)
2010	2,080,737	10.3907	to	24.1998	27,188,090	0.68	1.00	to	2.30	1.39	to	13.72
2009	2,056,727	9.2587	to	21.3236	24,793,740	0.75	1.00	to	2.30	34.52	to	36.31
2008	1,645,540	6.9084	to	15.6748	16,461,538	1.09	1.00	to	2.10	(41.23)	to	(40.56)
2007	1,455,023	11.7343	to	26.4253	26,435,969	1.10	1.00	to	2.30	13.87	to	18.28
MII
2011	2,220,602	15.8711	to	25.5126	46,177,756	1.21	1.15	to	1.85	(3.34)	to	(2.64)
2010	2,607,501	16.4109	to	26.2685	55,418,037	1.64	1.00	to	1.85	7.09	to	8.02
2009	2,987,921	15.3166	to	24.4127	59,014,660	3.33	1.00	to	1.85	23.05	to	24.12
2008	3,503,901	12.4412	to	19.7453	56,116,944	1.05	1.00	to	1.85	(32.68)	to	(32.10)
2007	4,858,869	18.4723	to	29.1921	113,714,035	1.65	1.00	to	1.85	5.35	to	6.27

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
MI1
2011	16,726,064	$9.0046	to	$22.7753	$158,156,916	1.03%	0.65%	to	2.35%	(4.08)%	to	(2.41)%
2010	19,684,586	9.3878	to	23.4684	192,674,447	1.41	1.15	to	2.35	0.83	to	7.53
2009	20,061,375	8.8376	to	21.8362	184,184,694	3.25	1.15	to	2.35	22.17	to	23.67
2008	22,385,237	7.2338	to	17.6653	167,431,706	0.93	1.15	to	2.35	(33.19)	to	(32.37)
2007	18,793,055	10.8274	to	26.1320	211,701,396	0.76	1.15	to	2.35	4.83	to	9.23
MIS
2011	31,914,695	6.5343	to	12.0968	321,011,298	0.57	1.00	to	1.85	(1.07)	to	(0.21)
2010	37,078,363	6.6013	to	12.1391	374,470,706	0.31	1.00	to	1.85	11.06	to	12.02
2009	43,349,933	5.9408	to	10.8514	392,101,061	0.81	1.00	to	1.85	3.56	to	38.74
2008	22,457,175	4.3169	to	7.8323	134,937,104	0.63	1.00	to	1.85	(38.38)	to	(37.85)
2007	30,064,891	7.0025	to	12.6193	286,174,371	0.36	1.00	to	1.85	9.46	to	10.41
M1B
2011	4,131,256	9.6664	to	15.2936	48,424,976	0.28	1.00	to	2.55	(1.99)	to	(0.43)
2010	5,348,263	9.7925	to	15.3914	63,674,137	0.10	1.00	to	2.55	9.95	to	11.70
2009	6,755,552	8.8427	to	13.8072	72,529,820	0.56	1.00	to	2.55	36.22	to	38.38
2008	6,598,033	6.4453	to	9.9977	53,180,723	0.34	1.00	to	2.55	(38.96)	to	(37.98)
2007	8,274,394	10.4829	to	16.1531	107,971,328	-	1.00	to	2.55	8.41	to	10.15
MCS
2011	3,961,768	4.5726	to	5.1023	19,567,887	-	1.15	to	1.85	(7.73)	to	(7.06)
2010	4,670,921	4.9504	to	5.5689	24,915,455	-	1.00	to	1.85	26.86	to	27.96
2009	4,857,853	3.8983	to	4.3522	20,289,951	0.07	1.00	to	1.85	39.68	to	40.89
2008	5,304,731	2.7880	to	3.0536	15,794,789	-	1.15	to	1.85	(52.25)	to	(51.90)
2007	7,235,851	5.8323	to	6.3480	44,914,140	-	1.15	to	1.85	7.80	to	8.59
MC1
2011	1,221,431	6.3459	to	14.4067	10,728,029	-	1.15	to	2.50	(8.62)	to	(7.36)
2010	1,566,303	6.8986	to	15.5588	15,073,695	-	1.15	to	2.50	25.67	to	27.40
2009	2,023,237	5.4533	to	12.2184	15,620,576	-	1.15	to	2.50	38.38	to	40.29
2008	2,534,232	3.9148	to	8.7136	14,019,215	-	1.00	to	2.50	(52.65)	to	(51.92)
2007	2,822,330	8.2136	to	18.1607	31,670,209	-	1.00	to	2.55	6.78	to	8.49
MMS
2011	7,697,443	10.1591	to	13.8753	96,023,462	-	1.15	to	1.85	(1.85)	to	(1.13)
2010	9,022,060	10.3396	to	14.0690	113,721,713	-	1.15	to	1.85	(1.85)	to	(1.14)
2009	11,201,129	10.5238	to	14.2660	142,977,635	-	1.15	to	1.85	(1.85)	to	(1.14)
2008	15,465,643	10.7978	to	14.4657	198,802,618	2.02	1.00	to	1.85	0.14	to	1.01
2007	14,742,422	10.7767	to	16.0468	188,524,112	4.78	1.00	to	1.85	2.90	to	3.80
MM1
2011	12,602,049	9.1760	to	10.5394	123,622,795	-	1.00	to	2.55	(2.54)	to	(1.00)
2010	15,867,217	9.4155	to	10.6456	158,401,447	-	1.00	to	2.55	(2.55)	to	(1.00)
2009	17,825,138	9.6619	to	10.7531	180,844,310	-	1.00	to	2.55	(2.55)	to	(1.00)
2008	22,125,007	9.9147	to	10.8617	228,570,494	1.77	1.00	to	2.55	(0.80)	to	0.78
2007	21,267,373	9.9894	to	10.7777	219,489,293	4.47	1.00	to	2.55	1.91	to	3.54

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
NWD
2011	3,937,734	$9.7602	to	$19.7461	$54,685,774	-%	1.00%	to	1.85%	(12.03)%	to	(11.27)%
2010	4,376,779	11.0608	to	22.2840	69,127,087	-	1.00	to	1.85	34.06	to	35.22
2009	5,216,357	8.2255	to	16.5026	60,742,092	-	1.00	to	1.85	59.95	to	61.33
2008	6,367,778	5.1269	to	10.2431	45,645,465	-	1.00	to	1.85	(40.70)	to	(40.18)
2007	8,362,104	8.6186	to	17.1469	99,019,794	-	1.00	to	1.85	0.65	to	1.53
M1A
2011	3,562,208	11.6151	to	19.3627	60,310,390	-	1.00	to	2.55	(12.83)	to	(11.44)
2010	4,156,401	13.2567	to	21.9094	80,056,321	-	1.00	to	2.55	32.75	to	34.85
2009	5,942,046	9.9357	to	16.2796	85,989,049	-	1.00	to	2.55	58.57	to	61.09
2008	8,571,360	6.2340	to	10.1266	77,933,950	-	1.00	to	2.55	(41.31)	to	(40.37)
2007	9,051,054	10.5672	to	17.0170	138,196,204	-	1.00	to	2.55	(0.35)	to	1.25
RIS
2011	2,377,975	10.8900	to	19.9511	32,506,107	1.99	1.15	to	1.85	(12.53)	to	(11.90)
2010	2,727,635	12.4438	to	22.6449	42,251,199	1.39	1.15	to	1.85	8.58	to	9.37
2009	3,126,123	11.4543	to	20.7048	44,296,413	3.19	1.15	to	1.85	28.51	to	29.45
2008	3,693,283	8.9085	to	15.9949	40,321,119	1.80	1.15	to	1.85	(43.56)	to	(43.14)
2007	5,162,219	15.7747	to	28.1322	98,199,663	1.14	1.15	to	1.85	11.05	to	11.86
RI1
2011	5,379,665	12.5734	to	17.9807	90,237,045	1.71	1.15	to	2.55	(13.33)	to	(12.08)
2010	5,914,182	14.4251	to	20.4619	113,396,073	1.16	1.15	to	2.55	0.36	to	9.07
2009	6,716,956	13.3402	to	18.7700	118,436,542	3.05	1.15	to	2.55	27.17	to	29.00
2008	7,836,028	10.4310	to	14.5578	107,197,293	1.49	1.00	to	2.55	(44.07)	to	(43.17)
2007	7,944,489	18.5446	to	25.6706	191,456,875	0.92	1.00	to	2.55	9.92	to	11.67
SIS
2011	2,148,862	16.0481	to	17.8981	36,916,404	5.73	1.15	to	1.85	2.74	to	3.48
2010	2,344,628	15.6123	to	17.2956	39,058,974	5.39	1.15	to	1.85	8.23	to	9.01
2009	2,519,695	14.4181	to	15.8656	38,612,559	10.27	1.15	to	1.85	25.32	to	26.23
2008	2,463,406	11.4995	to	12.5692	29,958,353	8.29	1.15	to	1.85	(14.66)	to	(14.04)
2007	3,392,931	13.4684	to	14.6222	48,007,878	5.51	1.15	to	1.85	1.56	to	2.30
SI1
2011	636,505	14.4966	to	16.5451	10,019,560	5.49	1.15	to	2.30	1.91	to	3.11
2010	683,470	14.2245	to	16.0462	10,489,949	5.17	1.15	to	2.30	7.52	to	8.78
2009	785,460	13.2301	to	14.7509	11,155,167	10.70	1.15	to	2.30	24.32	to	25.78
2008	956,921	10.6423	to	11.7277	10,869,245	8.07	1.15	to	2.30	(15.21)	to	(14.21)
2007	1,425,992	12.5520	to	13.6707	18,942,966	5.10	1.15	to	2.30	0.85	to	2.04
TEC
2011	2,826,156	4.7476	to	5.5223	14,582,085	-	1.15	to	1.85	(0.70)	to	0.02
2010	3,056,751	4.7761	to	5.5218	15,842,093	-	1.15	to	1.85	18.41	to	19.27
2009	3,329,932	4.0295	to	4.6305	14,531,610	-	1.15	to	1.85	73.37	to	74.63
2008	3,206,181	2.3219	to	2.6520	8,055,874	-	1.15	to	1.85	(51.83)	to	(51.49)
2007	4,080,642	4.8154	to	5.4664	21,166,638	-	1.15	to	1.85	17.99	to	18.83

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
TE1
2011	130,600	$10.3887	to	$23.5580	$1,456,301	-%	1.15%	to	1.85%	(0.81)%	to	(0.11)%
2010	160,111	10.4740	to	23.5955	1,776,216	-	1.15	to	1.85	18.00	to	18.84
2009	187,530	8.8766	to	19.8656	1,773,079	-	1.15	to	1.85	73.17	to	74.41
2008	183,490	5.1259	to	11.3963	989,205	-	1.15	to	1.85	(52.00)	to	(51.66)
2007	314,493	10.6793	to	23.5856	3,552,821	-	1.15	to	2.05	17.53	to	18.61
TRS
2011	19,776,275	13.2398	to	34.3749	447,577,850	2.66	1.15	to	1.85	0.04	to	0.77
2010	22,491,979	13.2205	to	34.1964	506,544,820	2.81	1.15	to	1.85	7.93	to	8.72
2009	25,748,066	12.2364	to	31.5325	535,058,547	3.94	1.15	to	1.85	15.91	to	16.75
2008	29,892,193	10.5464	to	27.0755	537,334,088	3.47	1.15	to	1.85	(23.01)	to	(22.45)
2007	39,711,318	13.6838	to	42.0157	899,656,744	3.01	1.15	to	1.85	2.38	to	3.13
MFJ
2011	45,326,523	10.4630	to	15.1069	643,062,830	2.38	0.65	to	2.55	(0.93)	to	1.00
2010	51,225,040	11.6925	to	15.0409	724,908,318	2.57	1.00	to	2.55	1.01	to	8.59
2009	56,778,902	10.8771	to	13.8787	743,138,623	3.49	1.00	to	2.55	14.80	to	16.63
2008	53,879,494	9.4214	to	11.9241	605,101,294	3.15	1.00	to	2.55	(23.74)	to	(22.52)
2007	57,895,390	12.2852	to	15.4222	840,502,026	2.67	1.00	to	2.55	1.41	to	3.03
UTS
2011	5,272,233	16.8280	to	54.0596	153,739,354	3.42	1.15	to	1.85	5.14	to	5.91
2010	6,010,069	15.9966	to	51.1708	165,648,150	3.28	1.15	to	1.85	11.80	to	12.61
2009	7,070,735	14.3014	to	45.5539	173,124,755	5.05	1.15	to	1.85	30.91	to	31.86
2008	8,400,706	10.9193	to	34.6333	155,230,961	1.91	1.15	to	1.85	(38.23)	to	(37.78)
2007	11,423,450	17.6690	to	55.8021	329,601,898	1.34	1.15	to	1.85	26.19	to	27.11
MFE
2011	3,652,256	11.1565	to	35.3163	116,649,151	3.23	0.65	to	2.35	4.33	to	6.15
2010	3,706,532	18.9809	to	33.4566	111,476,038	3.08	1.00	to	2.35	0.98	to	12.47
2009	3,827,620	17.0227	to	29.8078	101,639,771	4.55	1.00	to	2.35	29.97	to	31.77
2008	3,731,129	13.0308	to	22.6677	72,955,216	1.66	1.00	to	2.35	(38.74)	to	(37.88)
2007	3,613,171	21.1610	to	36.5673	109,039,810	1.09	1.00	to	2.35	25.25	to	26.99
MVS
2011	6,332,031	12.9442	to	18.6211	105,498,403	1.62	1.15	to	1.85	(1.85)	to	(1.13)
2010	7,251,195	13.1542	to	18.8348	122,377,852	1.43	1.15	to	1.85	9.45	to	10.24
2009	8,202,606	11.9883	to	17.0851	125,753,509	1.84	1.15	to	1.85	18.26	to	19.12
2008	9,654,222	9.9861	to	14.3424	124,630,580	1.92	1.15	to	1.85	(33.90)	to	(33.41)
2007	13,437,738	15.0910	to	21.5393	258,734,352	1.62	1.15	to	1.85	5.92	to	6.69
MV1
2011	12,369,770	10.6076	to	16.7661	189,800,608	1.36	0.65	to	2.50	(2.78)	to	(0.93)
2010	14,050,600	12.4122	to	17.0183	219,524,012	1.21	1.00	to	2.50	1.46	to	10.11
2009	15,232,380	11.3930	to	15.4866	216,431,676	1.61	1.00	to	2.50	17.29	to	19.10
2008	13,424,854	9.6688	to	13.0299	159,243,510	1.45	1.00	to	2.55	(34.59)	to	(33.54)
2007	8,166,089	14.7056	to	19.6462	138,202,958	1.35	1.00	to	2.55	4.91	to	6.59

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
AAN
2011	228,381	$10.0346	to	$10.0560	$2,295,169	-%	1.35%	to	2.10%	0.35%	to	0.56%
AAW
2011	2,558	9.2014	to	9.2119	23,549	-	1.35	to	1.75	(7.99)	to	(7.88)
VKM
2011	1,270,344	11.2415	to	11.6637	14,623,674	0.23	1.35	to	2.30	(9.31)	to	(8.43)
2010	1,156,849	12.4665	to	12.7369	14,589,309	-	1.35	to	2.10	0.48	to	30.49
2009	926,271	9.6270	to	9.7612	8,989,304	-	1.35	to	2.10	54.06	to	55.24
2008	99,801	6.2488	to	6.2877	626,133	0.54	1.35	to	2.10	(37.51)	to	(37.12)
OBV
2011	1,674,843	7.2981	to	7.5719	12,476,713	2.09	1.35	to	2.10	(1.72)	to	(0.97)
2010	1,744,434	7.4258	to	7.6460	13,178,352	1.20	1.35	to	2.10	10.31	to	11.16
2009	1,891,259	6.7316	to	6.8786	12,895,821	-	1.35	to	2.10	19.05	to	19.96
2008	626,984	5.6546	to	5.7342	3,574,079	1.96	1.35	to	2.10	(44.81)	to	(44.38)
2007	199,285	10.2449	to	10.3095	2,048,287	0.09	1.35	to	2.10	2.45	to	3.10
OCA
2011	1,706,163	10.5815	to	14.4868	23,384,048	0.11	0.65	to	2.55	(3.88)	to	(2.01)
2010	1,870,731	10.9252	to	14.8892	26,312,656	-	1.30	to	2.55	0.50	to	7.73
2009	2,138,568	10.0820	to	13.8285	27,945,879	0.01	1.30	to	2.55	40.48	to	42.28
2008	2,290,263	7.1367	to	9.7242	21,043,470	-	1.30	to	2.55	(47.05)	to	(46.37)
2007	2,405,555	13.4033	to	18.1418	41,294,194	0.01	1.30	to	2.55	10.94	to	12.37
OGG
2011	2,105,725	9.6945	to	14.0727	28,580,499	1.05	0.65	to	2.30	(10.63)	to	(9.12)
2010	2,177,497	14.4679	to	15.5868	32,916,492	1.21	1.30	to	2.30	0.50	to	14.20
2009	2,283,843	12.7984	to	13.6487	30,325,737	1.94	1.30	to	2.30	36.15	to	37.54
2008	2,451,893	9.4003	to	9.9232	23,751,907	1.28	1.30	to	2.30	(41.71)	to	(41.11)
2007	2,653,815	16.1268	to	16.8504	43,790,664	1.05	1.30	to	2.30	3.63	to	4.69
OMG
2011	27,952,286	10.9734	to	14.2086	377,082,799	0.60	1.30	to	2.55	(2.85)	to	(1.61)
2010	34,219,506	11.2437	to	14.4482	470,911,158	0.93	1.30	to	2.55	12.87	to	14.32
2009	40,927,550	9.9155	to	12.6447	494,644,467	1.66	1.30	to	2.55	24.73	to	26.33
2008	48,485,735	7.9130	to	10.0143	465,958,080	1.23	1.30	to	2.55	(40.20)	to	(39.43)
2007	44,367,479	13.1710	to	16.5411	706,504,514	0.74	1.30	to	2.55	1.48	to	2.79
OMS
2011	448,379	13.7877	to	19.4849	8,319,941	0.42	1.30	to	2.30	(4.62)	to	(3.65)
2010	596,815	14.3827	to	20.2332	11,503,067	0.41	1.30	to	2.30	20.23	to	21.46
2009	678,635	11.9020	to	16.6671	10,851,459	0.65	1.30	to	2.30	33.73	to	35.10
2008	760,213	8.8544	to	12.3428	9,053,263	0.28	1.30	to	2.30	(39.44)	to	(38.81)
2007	870,402	14.5452	to	20.1827	17,001,852	0.17	1.30	to	2.30	(3.67)	to	(2.68)
AAQ
2011	7,060	10.1102	to	10.1202	71,413	-	1.35	to	1.70	1.10	to	1.20

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
PRA
2011	447,883	$11.8723	to	$12.6023	$5,491,304	6.94%	1.35%	to	2.30%	(0.38)%	to	0.58%
2010	457,711	11.9181	to	12.5294	5,600,897	7.57	1.35	to	2.30	10.49	to	11.57
2009	380,342	10.7865	to	11.2306	4,188,531	7.02	1.35	to	2.30	18.78	to	19.93
2008	411,581	9.1402	to	9.3641	3,799,922	6.07	1.35	to	2.10	(17.62)	to	(16.98)
2007	340,476	11.0947	to	11.2797	3,802,578	8.56	1.35	to	2.25	5.88	to	6.86
AAP
2011	763,861	9.9739	to	10.0150	7,630,325	6.79	0.65	to	2.10	(0.26)	to	0.15
BBD
2011	62,501	9.0900	to	9.1261	569,007	6.68	0.65	to	2.05	(9.10)	to	(8.74)
PCR
2011	7,266,721	9.7508	to	10.4158	73,969,457	14.31	0.65	to	2.35	(9.73)	to	(8.16)
2010	6,649,829	10.8013	to	11.4155	74,448,884	15.26	1.30	to	2.35	4.75	to	22.91
2009	6,636,017	8.8825	to	9.2879	60,651,115	6.19	1.30	to	2.35	38.20	to	39.69
2008	5,813,511	6.3854	to	6.6490	38,163,263	6.32	1.30	to	2.55	(45.23)	to	(44.52)
2007	977,885	11.7108	to	11.9855	11,610,424	4.99	1.30	to	2.35	20.33	to	21.63
PMB
2011	1,020,777	10.2089	to	25.8937	25,025,685	5.32	0.65	to	2.30	3.89	to	5.64
2010	1,018,985	15.5140	to	24.6843	24,113,288	4.90	1.30	to	2.30	(0.27)	to	10.71
2009	763,094	14.1130	to	22.3073	16,175,720	5.93	1.30	to	2.30	27.59	to	28.89
2008	593,875	11.0277	to	17.3159	9,715,387	6.51	1.30	to	2.15	(16.44)	to	(15.71)
2007	635,006	13.1766	to	20.5534	12,385,714	5.76	1.30	to	2.25	3.43	to	4.44
BBE
2011	41,476	10.0609	to	10.0824	417,873	0.68	1.35	to	2.10	0.61	to	0.82
6TT
2011	92,518,029	9.9407	to	11.3711	1,044,595,551	1.81	0.65	to	2.25	(4.00)	to	(2.44)
2010	52,768,623	11.5909	to	11.7375	616,967,109	4.55	1.35	to	2.25	1.27	to	9.84
2009	2,068,926	10.6560	to	10.6863	22,080,454	1.16	1.35	to	2.10	6.56	to	6.86
PRR
2011	6,421,218	13.6738	to	16.7335	103,470,424	2.14	1.30	to	2.35	9.06	to	10.23
2010	8,101,705	12.4675	to	15.1880	118,890,037	1.45	1.30	to	2.35	5.57	to	6.71
2009	8,961,667	11.6153	to	14.2408	123,731,443	3.07	1.30	to	2.35	15.61	to	16.86
2008	9,486,271	10.1007	to	12.1928	112,568,613	3.52	1.30	to	2.55	(9.43)	to	(8.27)
2007	4,125,528	11.0670	to	13.2982	53,416,156	4.64	1.30	to	2.35	8.05	to	9.22
PTR
2011	24,120,523	13.1584	to	15.7088	366,194,416	2.61	1.30	to	2.55	0.98	to	2.27
2010	28,187,212	13.0311	to	15.3681	420,201,410	2.41	1.30	to	2.55	5.36	to	6.71
2009	29,012,388	12.3681	to	14.4089	406,911,559	5.19	1.30	to	2.55	11.16	to	12.59
2008	26,948,277	11.1260	to	12.8042	337,147,301	4.48	1.30	to	2.55	2.12	to	3.44
2007	20,114,681	10.8948	to	12.3852	243,883,703	4.78	1.30	to	2.55	5.97	to	7.34
AAR
2011	222,829	10.0243	to	10.0457	2,236,443	-	1.35	to	2.10	0.24	to	0.46

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
AAS
2011	24,071	$10.7052	to	$10.7266	$257,899	-%	1.35%	to	2.05%	7.05%	to	7.27%
3XX
2011	358,397	9.7487	to	9.9895	3,542,567	2.32	1.35	to	2.10	(18.21)	to	(17.59)
2010	242,013	11.9196	to	12.1212	2,915,660	0.01	1.35	to	2.10	2.33	to	3.11
2009	135,214	11.6483	to	11.7554	1,584,405	4.28	1.35	to	2.10	26.54	to	27.51
2008	7,549	9.2051	to	9.2190	69,521	0.25	1.35	to	2.10	(7.95)	to	(7.81)
5XX
2011	21,180,067	10.7163	to	12.5047	262,236,569	2.01	0.65	to	2.30	9.16	to	10.99
2010	13,213,863	11.0947	to	11.3458	148,879,348	0.99	1.35	to	2.35	0.33	to	3.49
2009	6,788,906	10.8299	to	10.9627	74,125,443	1.73	1.35	to	2.35	5.81	to	6.89
2008	260,820	10.2403	to	10.2557	2,673,696	0.63	1.35	to	2.10	2.40	to	2.56
SBI
2011	492,505	8.5574	to	8.7044	4,250,461	0.02	0.65	to	2.25	(14.66)	to	(13.26)
2010	107	10.0305	to	10.0305	1,073	-	1.65			0.30
SSA
2011	2,632,636	9.3802	to	10.9384	26,193,175	0.72	0.65	to	2.30	(1.15)	to	0.52
2010	1,555,115	9.4891	to	10.7582	15,434,805	-	1.30	to	2.30	1.39	to	14.94
2009	1,251,695	8.3399	to	9.3596	10,849,906	0.97	1.30	to	2.30	18.07	to	19.28
2008	645,382	7.0636	to	7.8469	4,695,884	0.39	1.30	to	2.30	(38.60)	to	(37.97)
2007	643,565	11.5044	to	12.6500	7,577,757	0.69	1.30	to	2.30	(8.24)	to	(7.30)
VSC
2011	12,024,401	8.8182	to	10.5658	109,689,042	0.23	0.65	to	2.35	(7.32)	to	(5.71)
2010	12,976,175	9.5147	to	9.9126	126,734,777	0.12	1.30	to	2.35	1.49	to	22.46
2009	15,857,749	7.8530	to	8.0945	126,954,591	0.06	1.30	to	2.35	33.29	to	34.72
2008	18,181,464	5.8697	to	6.0083	108,453,439	0.02	1.30	to	2.55	(39.72)	to	(38.95)
2007	10,111,572	9.7546	to	9.8411	99,172,712	-	1.30	to	2.35	(2.45)	to	(1.59)
2XX
2011	837,562	10.5009	to	13.2484	10,975,717	0.43	0.65	to	2.10	(8.46)	to	(7.11)
2010	809,572	14.1248	to	14.3637	11,548,624	-	1.35	to	2.10	1.08	to	19.70
2009	525,999	11.8545	to	12.0001	6,287,736	0.46	1.35	to	2.35	27.01	to	28.31
2008	22,414	9.3391	to	9.3523	209,422	0.22	1.35	to	2.05	(6.61)	to	(6.48)
SVV
2011	25,668,113	8.2963	to	10.3275	219,794,746	0.65	0.65	to	2.30	(6.22)	to	(4.64)
2010	27,094,644	8.8470	to	9.1989	245,751,191	0.24	1.30	to	2.30	1.24	to	11.21
2009	26,677,319	8.0247	to	8.2714	218,376,327	0.18	1.30	to	2.35	25.99	to	27.34
2008	12,154,042	6.3694	to	6.4953	78,407,076	0.77	1.30	to	2.35	(39.39)	to	(38.74)
2007	2,540,048	10.5313	to	10.5978	26,839,611	0.52	1.35	to	2.10	5.31	to	5.98
SGC
2011	4,999,791	10.1822	to	10.6890	52,578,640	1.02	1.30	to	2.55	(0.14)	to	1.14
2010	6,122,866	10.1961	to	10.5682	63,936,768	-	1.30	to	2.55	19.02	to	20.54
2009	7,455,297	8.5669	to	8.7673	64,864,952	1.22	1.30	to	2.55	22.48	to	24.05
2008	215,255	7.0092	to	7.0676	1,517,022	2.11	1.30	to	2.30	(29.91)	to	(29.32)

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
							Investment
		Unit Value			Net		Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets		Ratio1	lowest to highest2			lowest to highest3
S13
2011	2,669,109	$10.2605	to	$11.0959	$27,863,552		0.85%	0.65%	to	2.10%	0.19%	to	1.67%
2010	2,387,778	10.2409	to	10.4631	24,767,620		-	1.35	to	2.10	1.52	to	19.98
2009	2,035,236	8.6010	to	8.7209	17,646,515		1.35	1.35	to	2.10	22.75	to	23.69
2008	461,987	7.0070	to	7.0506	3,248,365		1.40	1.35	to	2.10	(29.93)	to	(29.49)
SDC
2011	50,037,729	9.9840	to	10.4806	516,137,066		1.18	1.30	to	2.55	(2.03)	to	(0.78)
2010	61,117,799	10.1910	to	10.5627	638,001,577		1.51	1.30	to	2.55	(0.20)	to	1.08
2009	64,647,414	10.2112	to	10.4496	670,446,089		1.95	1.30	to	2.55	1.13	to	2.43
2008	3,609,661	10.0968	to	10.2017	36,702,316		2.00	1.30	to	2.55	0.97	to	2.02
S15
2011	17,502,438	9.8879	to	10.3509	178,971,071		0.93	0.65	to	2.10	(1.92)	to	(0.48)
2010	13,481,729	10.2516	to	10.4739	139,938,767		1.22	1.35	to	2.10	0.01	to	0.78
2009	9,776,996	10.2503	to	10.3929	101,017,700		1.78	1.35	to	2.10	1.35	to	2.12
2008	5,738,613	10.1141	to	10.1769	58,238,982		1.67	1.35	to	2.10	1.14	to	1.77
7XX
2011	132,031,901	10.1353	to	13.1593	1,721,386,983		1.19	0.65	to	2.35	(4.11)	to	(2.45)
2010	100,466,095	13.2989	to	13.5846	1,355,951,680		0.99	1.35	to	2.30	0.96	to	10.31
2009	43,431,451	12.1726	to	12.3144	532,922,757		0.03	1.35	to	2.30	20.80	to	21.98
2008	3,745,513	10.0806	to	10.0958	37,790,183		-	1.35	to	2.10	0.81	to	0.96
6XX
2011	71,730,436	10.2172	to	12.4992	888,251,353		1.27	0.65	to	2.55	(1.93)	to	(0.02)
2010	56,794,830	12.3121	to	12.5907	710,247,154		1.32	1.35	to	2.35	0.66	to	8.16
2009	29,850,497	11.4993	to	11.6404	346,182,096		0.04	1.35	to	2.35	16.42	to	17.61
2008	3,332,280	9.8788	to	9.8977	32,962,278		-	1.35	to	2.30	(1.21)	to	(1.02)
8XX
2011	37,705,543	10.0750	to	13.5723	506,828,400		1.57	0.65	to	2.30	(6.11)	to	(4.53)
2010	38,504,662	14.0152	to	14.3163	547,564,582		1.34	1.35	to	2.30	1.11	to	12.08
2009	33,055,520	12.6336	to	12.7730	420,654,948		0.03	1.35	to	2.25	23.90	to	25.04
2008	3,096,720	10.2006	to	10.2150	31,612,159		-	1.35	to	2.05	2.01	to	2.15
1XX
2011	860,442	11.0483	to	14.1528	12,044,289		-	0.65	to	2.25	(3.42)	to	(1.84)
2010	690,018	14.2309	to	14.5204	9,947,413		-	1.35	to	2.25	1.09	to	24.16
2009	505,244	11.5527	to	11.6946	5,885,588		-	1.35	to	2.35	28.30	to	29.61
2008	46,329	9.0099	to	9.0227	417,717		-	1.35	to	2.05	(9.90)	to	(9.77)
SLC
2011	32,153,502	8.6350	to	9.0649	286,911,643		0.63	1.30	to	2.55	(8.54)	to	(7.37)
2010	37,839,785	9.4413	to	9.7860	365,984,873		-	1.30	to	2.55	14.20	to	15.66
2009	44,880,071	8.2672	to	8.4607	376,858,237		0.68	1.30	to	2.55	14.84	to	16.31

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
S12
2011	1,500,444	$8.6961	to	$8.9528	$13,280,139	0.41%	1.35%	to	2.10%	(8.36)%	to	(7.66)%
2010	1,310,468	9.4899	to	9.6958	12,595,699	-	1.35	to	2.10	1.96	to	15.36
2009	1,035,946	8.2892	to	8.4047	8,658,196	0.53	1.35	to	2.10	14.94	to	15.82
2008	257,078	7.2115	to	7.2565	1,860,629	1.47	1.35	to	2.10	(27.88)	to	(27.44)
S14
2011	2,326,972	10.3769	to	12.5235	28,641,325	7.11	0.65	to	2.35	1.58	to	3.35
2010	2,507,888	11.8365	to	12.1976	30,197,858	7.11	1.30	to	2.35	0.56	to	10.96
2009	2,122,320	10.7816	to	10.9924	23,125,087	8.28	1.30	to	2.35	27.37	to	28.74
2008	1,225,378	8.4648	to	8.5386	10,424,727	6.30	1.30	to	2.35	(15.35)	to	(14.61)
4XX
2011	53,824,196	10.0220	to	12.2353	651,823,271	2.46	0.65	to	2.25	1.03	to	2.68
2010	37,284,808	11.7482	to	12.0005	444,483,583	1.98	1.35	to	2.30	0.47	to	5.83
2009	19,960,844	11.2092	to	11.3398	225,495,970	2.17	1.35	to	2.30	6.13	to	7.16
2008	1,540,689	10.5661	to	10.5820	16,292,247	0.26	1.35	to	2.10	5.66	to	5.82
S16
2011	3,190,123	10.1503	to	10.5521	33,258,401	-	1.35	to	2.35	(10.19)	to	(9.27)
2010	3,345,323	11.3017	to	11.6302	38,555,488	-	1.35	to	2.35	1.63	to	21.13
2009	4,026,257	9.4258	to	9.6104	38,434,290	0.03	1.30	to	2.35	26.90	to	28.27
2008	3,999,122	7.4152	to	7.4925	29,871,985	0.25	1.30	to	2.55	(25.85)	to	(25.08)
LGF
2011	663,785	8.1864	to	8.5485	5,569,702	0.07	1.35	to	2.10	(6.79)	to	(6.08)
2010	569,042	8.7830	to	9.1019	5,093,897	0.05	1.35	to	2.10	0.85	to	17.59
2009	455,382	7.5264	to	7.7405	3,477,756	0.23	1.35	to	2.10	34.20	to	35.23
2008	304,806	5.6083	to	5.7240	1,727,419	-	1.35	to	2.10	(45.48)	to	(45.06)
2007	223,425	10.2859	to	10.4178	2,312,144	-	1.35	to	2.10	4.53	to	5.33
SC3
2011	253,031	13.3426	to	16.7212	3,946,846	6.77	1.35	to	2.55	(9.94)	to	(8.84)
2010	320,946	14.8160	to	18.4073	5,520,469	11.07	1.35	to	2.55	12.34	to	13.73
2009	423,229	13.1880	to	16.2432	6,441,422	3.54	1.35	to	2.55	26.77	to	28.33
2008	536,020	10.4035	to	12.7026	6,378,152	2.15	1.35	to	2.55	(46.15)	to	(45.48)
2007	608,427	19.3181	to	23.3818	13,338,079	1.33	1.35	to	2.55	(15.36)	to	(14.31)
SRE
2011	9,929,655	9.2038	to	11.2921	108,995,302	6.03	0.65	to	2.55	(10.09)	to	(8.34)
2010	10,929,593	11.3996	to	12.4068	132,272,111	10.38	1.30	to	2.55	2.60	to	13.45
2009	12,079,423	10.1769	to	10.9415	129,349,823	3.06	1.30	to	2.55	26.51	to	28.14
2008	14,063,340	8.0442	to	8.5432	117,968,404	1.95	1.30	to	2.55	(46.31)	to	(45.61)
2007	10,404,402	14.9817	to	15.7163	161,037,838	1.28	1.30	to	2.55	(15.56)	to	(14.47)

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

9. FINANCIAL HIGHLIGHTS (CONTINUED)

	At December 31					For the year ended December 31
						Investment
		Unit Value			Net	Income	Expense Ratio			Total Return
	Units	lowest to highest			Assets	Ratio1	lowest to highest2			lowest to highest3
IGB
2011	13,453,290	$10.4456	to	$12.6212	$166,269,297	3.37%	0.65%	to	2.35%	4.28%	to	6.09%
2010	10,165,312	11.1662	to	11.9811	119,314,751	3.25	1.30	to	2.35	0.18	to	6.11
2009	5,428,936	10.6366	to	11.2972	60,077,481	4.11	1.30	to	2.35	17.79	to	19.05
2008	2,115,205	9.0304	to	9.4941	19,711,311	5.41	1.30	to	2.35	(14.75)	to	(13.83)
2007	2,196,971	10.5929	to	11.0236	23,839,225	4.94	1.30	to	2.35	1.07	to	2.16
CMM
2011	14,892,335	9.2761	to	10.3511	150,078,153	0.00	0.65	to	2.30	(2.29)	to	(0.65)
2010	11,093,798	9.4938	to	10.4923	113,075,492	-	1.30	to	2.30	(2.30)	to	(0.07)
2009	10,657,224	9.7534	to	10.6359	110,636,803	0.01	1.30	to	2.10	(2.09)	to	(1.29)
2008	4,996,815	9.9446	to	10.7798	52,722,915	1.26	1.30	to	2.30	(0.55)	to	0.62
2007	161,444	10.5037	to	10.7137	1,712,816	4.50	1.35	to	2.05	2.46	to	3.19
WTF
2011	56,247	11.7091	to	12.2887	676,190	2.12	1.35	to	2.05	(19.37)	to	(18.79)
2010	62,686	14.3506	to	15.1320	930,311	0.57	1.35	to	2.25	23.72	to	24.86
2009	93,745	11.5992	to	12.1194	1,117,650	-	1.35	to	2.25	62.45	to	63.94
2008	137,209	7.1403	to	7.3924	1,001,434	-	1.35	to	2.25	(50.22)	to	(49.75)
2007	109,329	14.3426	to	14.7127	1,593,216	-	1.35	to	2.25	6.92	to	7.91
USC
2011	4,964	11.3133	to	11.6306	56,842	-	1.65	to	2.05	(5.47)	to	(5.08)
2010	4,696	11.9677	to	12.2534	56,768	-	1.65	to	2.05	20.83	to	21.32
2009	5,209	9.9049	to	10.1001	52,040	-	1.65	to	2.05	39.31	to	39.88
2008	5,569	7.1099	to	7.2205	39,860	-	1.65	to	2.05	(40.93)	to	(40.69)
2007	5,229	12.0360	to	12.1732	63,311	-	1.65	to	2.05	3.22	to	3.64
AAL
2011	1,392,144	10.4297	to	10.5425	14,584,779	1.53	0.65	to	2.25	4.30	to	5.43

1 Represents the dividends, excluding distributions of capital gains, received by the Sub-Account from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. The ratio excludes those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the Sub-Account is affected by the timing of the declaration of dividends by the underlying fund in which the Sub-Accounts invest.

2 Ratio represents the annualized contract expenses of the Sub-Account, consisting primarily of mortality and expense charges. The ratio includes only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund are excluded.

3 Ratio represents the total return for the year indicated, including changes in value of the underlying fund, and expenses assessed through the reduction of units.  The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in reduction in the total return presented.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

10. TAX DIVERSIFICATION REQUIREMENTS

Under the provisions of Section 817(h) of the Code, a variable annuity contract, other than a pension plan contract, is not treated as an annuity contract for federal tax purposes for any period in which the investments of the segregated asset account on which the contract is based are not adequately diversified.  The Code provides that the “adequately diversified” requirement may be met if the underlying investments satisfy either a statutory safe harbor test or diversification requirements set forth in regulations issued by the Secretary of Treasury.  The Sponsor believes that the Variable Account satisfies the current requirements of the regulations, and it intends that the Variable Account will continue to meet such requirements.

11. SUMMARY OF FUND CHANGES

A summary of the name changes related to sub-accounts held by the contract owners of the Variable Account during the current year, is as follows:

Sub-Account	Changed From	Effective Date
NMT	Columbia Marsico 21st Century Fund, Variable Series Class A	May 2, 2011
MCC	Columbia Marsico 21st Century Fund, Variable Series Class B	May 2, 2011
NNG	Columbia Marsico Growth Fund, Variable Series Class A	May 2, 2011
CMG	Columbia Marsico Growth Fund, Variable Series Class B	May 2, 2011
NMI	Columbia Marsico International Opportunity Fund, Variable Series Class B	May 2, 2011
OMS	Oppenheimer Main Street Small Cap Fund/VA (Service Shares)	May 2, 2011

There were no funds held by the contract owners of the Variable Account that were closed or merged within the past two years.

A summary of the commencement dates related to sub-accounts held by the contract owners of the Variable Account (if commenced within the past five years) is as follows:

Sub-Account(s)	Commencement of Operations
AAM, AAN, AAP, AAQ, AAR, AAS, AAU, AAW, AAX, AAY, AAZ, AI8, BBB, BBA, BBC, BBD, BBE	October 31, 2011
AAA, AAL	May 2, 2011
6TT	August 17, 2009
HBF	May 4, 2009
SLC	February 23, 2009
1XX, 2XX, 3XX, 4XX, 5XX, 6XX, 7XX, 8XX, 9XX	October 6, 2008
AN4, AVB, FLI, IVB, LRE, S12, S13, S14, S15, S16, S17, SDC, SGC, VKC, VKM, VKU	March 10, 2008
HRS4, HSS4, HVC4, HVD4, HVE4, HVG4, HVI4, HVM4, HVN4,HVR4,HVS4	December 17, 2007
CMG, FVB, FVM, ISC, MCC, OBV, SGI, SIC, SVV, VSC	March 5, 2007

4 First activity in Sub Account 2008.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F (REGATTA)

(A Separate Account of Sun Life Assurance Company of Canada (U.S.))

11. SUMMARY OF FUND CHANGES (CONTINUED)

A summary of sub-accounts held by the contract owners of the Variable Account, with commencement dates earlier than the past five years, but for which the first activity occurred within the last five years, is as follows:

Sub-Account	Year of First Activity
SBI	2010

PART C

OTHER INFORMATION

Item 24. FINANCIAL STATEMENTS AND EXHIBITS

(a)	The following Financial Statements are included in the Registration Statement:
	A.	Condensed Financial Information - Accumulation Unit Values (Part A)
	B.	Financial Statements of the Depositor (Part B)
		1.	Report of Independent Registered Public Accounting Firm;
		2.	Consolidated Statements of Operations, Years Ended December 31, 2011, 2010 and 2009;
		3.	Consolidated Balance Sheets, December 31, 2011 and 2010;
		4.	Consolidated Statements of Comprehensive (Loss) Income, Years Ended December 31, 2011, 2010 and 2009;
		5.	Consolidated Statements of Stockholder's Equity, Years Ended December 31, 2011, 2010 and 2009;
		6.	Consolidated Statements of Cash Flows, Years Ended December 31, 2011, 2010 and 2009; and
		7.	Notes to Consolidated Financial Statements.
	C.	Financial Statements of the Registrant (Part B)
		1.	Report of Independent Registered Public Accounting Firm.
		2.	Statement of Assets and Liabilities, December 31, 2011;
		3.	Statement of Operations, Year Ended December 31, 2011;
		4.	Statements of Changes in Net Assets, Years Ended December 31, 2011 and December 31, 2010; and
		5.	Notes to Financial Statements.

(b) The following Exhibits are incorporated in the Registration Statement by reference unless otherwise indicated:

(1)	Resolution of Board of Directors of the Depositor dated December 3, 1985 authorizing the establishment of the Registrant (Incorporated herein by reference to the Registration Statement on Form N-4, File No. 333-37907, filed on October 14, 1997);
(2)	Not Applicable;
(3)(a)	Marketing Services Agreement between Sun Life Assurance Company of Canada (U.S.), Sun Life of Canada (U.S.) Distributors, Inc. and Clarendon Insurance Agency, Inc. (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-37907, filed on January 16, 1998);
(3)(b)(i)	Principal Underwriter’s Agreement by and between Sun Life Assurance Company of Canada (U.S.) and Clarendon Insurance Agency, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 16 to the Registration Statement on Form N-4, File No. 333-83364, filed on or about April 27, 2009);
(3)(b)(ii)	Amendment No. 1 to Principal Underwriter’s Agreement by and between Sun Life Assurance Company of Canada (U.S.) and Clarendon Insurance Agency, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 16 to the Registration Statement on Form N-4, File No. 333-83364, filed on or about April 27, 2009);
(3)(b)(iii)	Amendment No. 2 to Principal Underwriter’s Agreement by and between Sun Life Assurance Company of Canada (U.S.) and Clarendon Insurance Agency, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 12 to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form N-6, File No. 333-100829, filed on April 30, 2009.)
(3)(b)(iv)	Amendment No. 3 to Principal Underwriter’s Agreement by and between Sun Life Assurance Company of Canada (U.S.) and Clarendon Insurance Agency, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 12 to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form N-6, File No. 333-100829, filed on April 30, 2009.)
(3)(c)(i)	Sales Operations and General Agent Agreement (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-37907, filed on January 16, 1998);
(3)(c)(ii)	Broker-Dealer Supervisory and Service Agreement (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-37907, filed on January 16, 1998);
(3)(c)(iii)	General Agent Agreement (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-37907, filed on January 16, 1998);
(4)(a)	Flexible Payment Combination Fixed/Variable Group Annuity Contract (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-74844, filed on February 14, 2002);
(4)(b)	Certificate to be issued in connection with Contract filed as Exhibit 4(a) (Incorporated herein by reference to the Registration Statement on Form N-4, File No. 333-74844, filed on December 10, 2001);
(4)(c)	Flexible Payment Combination Fixed/Variable Individual Annuity Contract (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-74844, filed on February 14, 2002);
(4)(d)	Sun Income Riser III Rider to Flexible Payment Combination Fixed/Variable Individual Annuity Contract filed as Exhibit (4)(c) (Incorporated herein by reference to the Registration Statement on Form N-4, File No. 333-168710, filed on August 10, 2010);
(4)(e)	Sun Income Maximizer Rider to Flexible Payment Combination Fixed/Variable Individual Annuity Contract filed as Exhibit (4)(c) (Incorporated herein by reference to the Registration Statement on Form N-4, File No. 333-168710, filed on August 10, 2010;
(4)(f)	Sun Income Maximizer Plus Rider to Flexible Payment Combination Fixed/Variable Individual Annuity Contract filed as Exhibit (4)(c) (Incorporated herein by reference to the Registration Statement on Form N-4, File No. 333-168710, filed on August 10, 2010;
(5)(a)	Application to be used with Contract filed as Exhibit 4(a) (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-74884, filed on February 14, 2002);
(5)(b)	Application to be used with Certificate filed as Exhibit 4(b) and Contract filed as Exhibit 4(c) (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-74884, filed on February 14, 2002);
(6)(a)	Certificate of Incorporation of the Depositor (Incorporated herein by reference to the Depositor's Form 10-K, File No. 333-82824, filed on March 29, 2004);
(6)(b)	By-Laws of the Depositor, as amended March 19, 2004 (Incorporated herein by reference to the Depositor's Form 10-K, File No. 333-82824, filed on March 29, 2004);
(7)	Not Applicable;
(8)(a)	Amended and Restated Participation Agreement by and among MFS/Sun Life Services Trust, Sun Life Assurance Company of Canada (U.S.), Sun Life Insurance and Annuity Company of New York, and Massachusetts Financial Services Company (Incorporated herein by reference to Post-Effective Amendment No. 3 to the Registration Statement on Form N-4, File No. 333-107983, filed on May 28, 2004);
(8)(b)	Participation Agreement dated February 17, 1998 by and among the Depositor, AIM Variable Insurance Funds, Inc., AIM Distributors, Inc., and Clarendon Insurance Agency, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-82957, filed on February 3, 2000);
(8)(c)	Amended and Restated Participation Agreement dated December 18, 2004, by and among Sun Capital Advisers Trust, Sun Capital Advisers, Inc., Sun Life Assurance Company of Canada (U.S.) and Sun Life Insurance and Annuity Company of New York (Incorporated herein by reference to Post-Effective Amendment No. 8 to the Registration Statement on Form N-4, File No. 333-83516, filed on April 26, 2005);
(8)(d)	Amended and Restated Participation Agreement dated September 1, 2004 by and among Sun Life Assurance Company of Canada (U.S.), Variable Insurance Products Funds, and Fidelity Distributors Corporation. (Incorporated herein by reference to Post-Effective Amendment No. 8 to the Registration Statement on Form N-4, File No. 333-83516, filed on April 26, 2005);
(8)(e)	Participation Agreement dated May 1, 2001 by and among Sun Life Assurance Company of Canada (U.S.), the Depositor, Alliance Capital Management L.P., and Alliance Fund Distributors, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 7 to the Registration Statement on Form N-4, File No. 333-82957, filed on July 27, 2001);
(8)(f)	Participation Agreement dated February 17, 1998 by and among Sun Life Assurance Company of Canada (U.S.), Lord Abbett Series Fund, Inc. and Lord, Abbett & Co. (Incorporated herein by reference to the Registration Statement of Keyport Variable Account A on Form N-4, File No. 333-112506, filed on February 5, 2004);
(8)(g)	Participation Agreement Among Franklin Templeton Variable Insurance Products Trust, Franklin Templeton Distributors, Inc., Sun Life Assurance Company of Canada (U.S.), Sun Life Insurance and Annuity Company of New York and Clarendon Insurance Agency, Inc. (Incorporated herein by reference to the Registration Statement of KBL Variable Account A on Form N-4, File No. 333-102278, filed on December 31, 2002);
(8)(h)	Participation Agreement Among Sun Life Assurance Company of Canada (U.S.), Sun Life Insurance and Annuity Company of New York, PIMCO Variable Insurance Trust, and PIMCO Funds Distributors LLC (Incorporated herein by reference to the Registration Statement of Keyport Variable Account A on Form N-4, File No. 333-112506, filed on February 5, 2004);
(8)(i)	Participation Agreement Among Oppenheimer Variable Account Funds, Oppenheimer Funds, Inc. and Sun Life Assurance Company of Canada (U.S.) (Incorporated herein by reference to the Registration Statement of Keyport Variable Account A on Form N-4, File No. 333-112506, filed on February 5, 2004);
(8)(j)	Participation Agreement dated February 15, 2005 among Nations Separate Account Trust, BACAP Distributors, LLC, Sun Life Assurance Company of Canada (U.S.) and Sun Life Insurance and Annuity Company of New York (Incorporated herein by reference to Post-Effective Amendment No. 8 to Registration Statement on Form N-4, File No. 333-83516, filed on April 26, 2005);
(8)(k)	Participation Agreement, dated December 3, 2007, by and among Sun Life Assurance Company of Canada (U.S.), Sun Life Insurance and Annuity Company of New York, Lazard Asset Management Securities LLC, and Lazard Retirement Series, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 25 to the Registration Statement on Form N-4, File No. 333-83516, filed on February 12, 2008);
(8)(l)	Participation Agreement, dated May 1, 2004, by and among Sun Life Assurance Company of Canada (U.S.), The Universal Institutional Funds, Inc., Morgan Stanley & Co. Incorporated and Morgan Stanley Investment Management Inc. (Incorporated herein by reference to Post-Effective Amendment No. 5 to the Registration Statement on Form N-6 of Sun Life of Canada (US) Variable Account G, File No. 333-111688, filed on April 27, 2007);
(8)(m)	Participation Agreement, dated December 3, 2007, by and among Sun Life Assurance Company of Canada (U.S.), The Huntington Funds, Edgewood Services, Inc., and Huntington Asset Advisors, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 25 to the Registration Statement on Form N-4, File No. 333-83516, filed on February 12, 2008);
(8)(n)	Participation Agreement, dated May 13, 2004, by and among Sun Life Assurance Company of Canada (U.S.), Merrill Lynch Variable Series Funds, Inc., Merrill Lynch Investment Managers, L.P. and FAM Distributors, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 2 to the Registration Statement of Sun Life of Canada (U.S.) Variable Account G on Form N-6, File No. 333-111688, filed with the Securities and Exchange Commission on December 30, 2005.)
(8)(o)	Participation Agreement, dated September 30, 2002, by and among Sun Life Assurance Company of Canada (U.S.), Sun Life Insurance and Annuity Company of New York, First Eagle Sogen Variable Funds, Inc. and Arnhold and S. Bleichroeder, Inc. (Incorporated herein by reference to the Registration Statement of Sun Life of Canada (U.S.) Variable Account I on Form N-6, File No. 333-143353, filed with the Securities and Exchange Commission on May 30, 2007);
(8)(p)	Participation Agreement, dated August 1, 2011, among Putnam Variable Trust, Putnam Retail Management Limited Partnership, Sun Life Assurance Company of Canada (U.S.) and Sun Life Insurance and Annuity Company of New York (Incorporated herein by reference to Pre-Effective Amendment No. 2 the Registration Statement of Sun Life (U.S.) Variable Account K on Form N-4, File No. 333-173301, filed on August 10, 2011);
(8)(q)	Participation Agreement, dated August 1, 2011, among Sun Life Assurance Company of Canada (U.S.), Sun Life Insurance and Annuity Company of New York, PIMCO Equity Series VIT, and PIMCO Investments LLC (Incorporated herein by reference to Pre-Effective Amendment No. 2 the Registration Statement of Sun Life (U.S.) Variable Account K on Form N-4, File No. 333-173301, filed on August 10, 2011);
(8)(r)	Participation Agreement, dated May 1, 2011, among Wells Fargo Variable Trust, Sun Life Assurance Company of Canada (U.S.) and Sun Life Insurance and Annuity Company of New York (Incorporated herein by reference to Pre-Effective Amendment No. 1 the Registration Statement on Form N-4, File No. 333-173301, filed on June 8, 2011);
(8)(s)	Participation Agreement dated April 24, 2009, by and among  Sun Life Assurance Company of Canada (U.S.), Sun Life Insurance and Annuity Company of New York, JPMorgan Insurance Trust, JPMorgan Investment Advisors Inc., J. P. Morgan Investment Management Inc., and, JPMorgan Funds Management, Inc. (Incorporated herein by reference to Pre-Effective Amendment No. 1 the Registration Statement on Form N-4, File No. 333-173301, filed on June 8, 2011);
(9)	Opinion of Counsel as to the legality of the securities being registered and Consent to its use (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, File No. 333-168712, filed on October 26, 2010);
(10)(a)	Consent of Independent Registered Public Accounting Firm;*
(10)(b)	Representation of Counsel pursuant to Rule 485(b);*
(11)	Financial Statement Schedules I and VI (Incorporated herein by reference to the Depositor's Form 10-K Annual Report for the fiscal year ended December 31, 2011, filed on March 29, 2012);
(12)	Not Applicable;
(13)	Schedule for Computation of Performance Quotations (Incorporated herein by reference to Post-Effective Amendment No. 10 to the Registration Statement on Form N-4, File No. 33-41628, filed on April 29, 1998);
(14)(a)	Powers of Attorney;*
(14)(b)	Resolution of the Board of Directors of the depositor dated March 27, 2012, authorizing the use of powers of attorney for Officer signatures (Incorporated herein by reference to Post-Effective Amendment No. 44 to the Registration Statement on Form N-4, File No. 333-83516, filed on April 27, 2012);
(15)	Organizational Chart (Incorporated herein by reference to Post-Effective Amendment No. 44 to the Registration Statement on Form N-4, File No. 333-83516, filed on April 27, 2012).

* Filed herewith

Item 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

Name and Principal Business Address	Positions and Offices With Depositor
Thomas A. Bogart Sun Life Assurance Company of Canada 150 King Street West, SC 114D10 Toronto, Ontario Canada M5H 1J9	Director
Scott M. Davis Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Senior Vice President and General Counsel and Director
Colm J. Freyne Sun Life Assurance Company of Canada 150 King Street West Toronto, Ontario Canada M5H 1J9	Director
Larry R. Madge Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA  02481	Senior Vice President and Chief Financial Officer and Treasurer and Director
Kenneth A. McCullum Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Senior Vice President and General Manager, Life and Annuities, Inforce Management and Director
Westley V. Thompson Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	President, SLF U.S., and Director and Chairman
Kerri R. Ansello Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Senior Counsel and Secretary
Priscilla S. Brown Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Senior Vice President and Head of U.S. Marketing
David J. Healy Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Senior Vice President, Sun Life Financial U.S. Operations
Stephen C. Peacher Sun Life Assurance Company of Canada 150 King Street West Toronto, ON M5H 1J9	Executive Vice President and Chief Investment Officer
Fred M. Tavan Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Vice President, Chief Actuary
Sean N. Woodroffe Sun Life Assurance Company of Canada (U.S.) One Sun Life Executive Park Wellesley Hills, MA 02481	Vice President, Human Resources

Item 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR REGISTRANT

No person is directly or indirectly controlled by the Registrant. The Registrant is a separate account of Sun Life Assurance Company of Canada (U.S.), which is ultimately controlled by Sun Life Financial Inc.

The organization chart of Sun Life Financial is incorporated by reference to Pre-Effective Amendment No. 44 to the Registration Statement on Form N-4, File No. 333-83516, filed April 27, 2012.

None of the companies listed in such Exhibit 15 is a subsidiary of the Registrant; therefore, the only financial statements being filed are those of Sun Life Assurance Company of Canada (U.S.).

Item 27. NUMBER OF CONTRACT OWNERS

As of February 29, 2012, there were 6,596 qualified and 3,800 non-qualified contract owners.

Item 28. INDEMNIFICATION

Pursuant to Section 145 of the Delaware Corporation Law, Article 8 of the By-laws of Sun Life Assurance Company of Canada (U.S.) provides for the indemnification of directors, officers and employees of Sun Life Assurance Company of Canada (U.S.).

Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Sun Life Assurance Company of Canada (U.S.) pursuant to the certificate of incorporation, by-laws, or otherwise, Sun Life (U.S.) has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Sun Life (U.S.) of expenses incurred or paid by a director, officer, controlling person of Sun Life (U.S.) in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Sun Life (U.S.) will submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Act, unless in the opinion of their counsel the matter has been settled by controlling precedent, and will be governed by the final adjudication of such issue.

Item 29. PRINCIPAL UNDERWRITERS

(a) Clarendon Insurance Agency, Inc., a wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.), acts as general distributor for the Registrant, Sun Life of Canada (U.S.) Variable Accounts C, D, E, G, I, K, and L, Keyport Variable Account A, KMA Variable Account, Keyport Variable Account I, KBL Variable Account A, KBL Variable Annuity Account, Sun Life (N.Y.) Variable Accounts A, B, C, D, J, and N.

(b)	Name and Principal	Position and Offices
	Business Address*	with Underwriter
	Kenneth A. McCullum	President and Director
	Larry R. Madge	Director
	Scott M. Davis	Director
	Kerri R. Ansello	Secretary
	Michael S. Bloom	Assistant Secretary
	Paul Finnegan	Anti-Money Laundering Compliance Officer
	Kathleen T. Baron	Chief Compliance Officer
	William T. Evers	Assistant Vice President and Senior Counsel
	Jane F. Jette	Financial/Operations Principal and Treasurer
	Michelle A. Greco	Senior Counsel
	Jie Cheng	Tax Assistant Vice President
	Maryellen Percucco	Assistant Secretary

*The principal business address of all directors and officers of the principal underwriter, is One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481.

(c) Inapplicable.

Item 30. LOCATION OF ACCOUNTS AND RECORDS

Accounts, books and other documents required to be maintained by Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated thereunder are maintained, in whole or in part, by Sun Life Assurance Company of Canada (U.S.) at its offices at One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481 or at the offices of Clarendon Insurance Agency, Inc., at One Sun Life Executive Park, Wellesley Hills, Massachusetts 02481.

Item 31. MANAGEMENT SERVICES

Not Applicable.

Item 32. UNDERTAKINGS

The Registrant hereby undertakes:

(a)	To file a post-effective amendment to this Registration Statement as frequently as is necessary to ensure that the audited financial statements in the Registration Statement are never more than 16 months old for so long as payments under the variable annuity Contracts may be accepted;
(b)	To include either (1) as part of any application to purchase a Contract offered by the prospectus, a space that an Applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the Applicant can remove to send for a Statement of Additional Information;
(c)	To deliver any Statement of Additional Information and any financial statements required to be made available under SEC Form N-4 promptly upon written or oral request.
(d)	Representation with respect to Section 26(f)(2)(A) of the Investment Company Act of 1940: Sun Life Assurance Company of Canada (U.S.) represents that the fees and charges deducted under the Contracts, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the insurance company.
	The Registrant is relying on the no-action letter issued by the Division of Investment Management of the Securities and Exchange Commission to American Council of Life Insurance, Ref. No. IP-6-88, dated November 28, 1988, the requirements for which have been complied with by the Registrant.

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets all of the requirements of Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment to the Registration Statement and has caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf, in the Town of Wellesley Hills, and Commonwealth of Massachusetts on this 27th day of April, 2012.

SUN LIFE OF CANADA (U.S.) VARIABLE ACCOUNT F
(Registrant)
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
(Depositor)
By: /s/ Westley V. Thompson*
	Westley V. Thompson
	President, SLF U.S.

*By:	/s/ Elizabeth B. Love
	Elizabeth B. Love
	Counsel

As required by the Securities Act of 1933, this Post-Effective Amendment to the Registration Statement has been signed below by the following persons in the capacities with the Depositor, Sun Life Assurance Company of Canada (U.S.), and on the dates indicated.

SIGNATURE	TITLE	DATE
/s/ Westley V. Thompson*	President, SLF U.S. and Director	April 27, 2012
Westley V. Thompson	(Principal Executive Officer)
/s/ Larry R. Madge*	Senior Vice President and Chief Financial Officer	April 27, 2012
Larry R. Madge	and Treasurer
	(Principal Financial Officer)
/s/ Vincent A. Montiverdi*	Vice President and Controller	April 27, 2012
Vincent A. Montiverdi	(Principal Accounting Officer)
*By: /s/ Elizabeth B. Love	Attorney-in-Fact for:	April 27, 2012
Elizabeth B. Love	Thomas A. Bogart, Director
	Scott M. Davis, Director
	Colm J. Freyne, Director
	Kenneth A. McCullum, Director

*Elizabeth B. Love has signed this document on the indicated date on behalf of the above Directors for the Depositor pursuant to powers or attorney duly executed by such persons and a resolution of the Board of Directors authorizing use of powers of attorney for Officer signatures. Resolution of the Board of Directors is incorporated herein by reference to Post-Effective Amendment No. 44 to the Registration Statement on Form N-4, File No. 333-83516, filed on or about April 27, 2012. Powers of attorney are included as Exhibit 14(a).

EXHIBIT INDEX

(10)(a)	Consent of Independent Registered Public Accounting Firm
(10)(b)	Representation of Counsel pursuant to Rule 485(b)
(14)(a)	Powers of Attorney