2021 Annual Report

Sun Life Financial Inc.

Annual Report

• 02Financialhighlights

• 03Message from the Chair

  Message from

• 04the CEO

Tableof Contents

Management's

09discussion and analysis

105Consolidated financial statements and notes

191Sources of earnings

194Board of directors andexecutive team

195Subsidiaries and associates

201Major offices

205Corporate and informationshareholder

Front Cover Artwork:Circle of Trust 2020 | Acrylic on CanvasArtist:Jane Waterous

Gallery Affiliation:Galerie de Bellefeuille

Starting this year, the cover of our Annual Report will feature work from artists who bring forward diverse voices, perspectives and views.

The circle is resonant for Sun Life. It's prominent in our brand, symbolizes our inclusive culture and reminds us of the role we play in our Clients' lives.

Jane Waterous is an internationally renowned artist, focusing on themes of Love, Life, Laughter and Family.

Sun Life at a glance

We're driven by our purpose and it's our people who make us a leading international financial services organization.

50,000employees*

27markets*118,400advisors*

*At the end of 2021. Rounded to the nearest hundred. Represents full-time equivalent employees, temporary employees and employees in Asia joint ventures.

Moments that matter - Micah's story

Dealing with symptoms affecting his nervous system, Micah received a probable diagnosis of multiple sclerosis (MS). He turned to PinnacleCare, a Sun Life company in the U.S., for a second opinion.

Micah's personal health advisor, along with a team of researchers and specialists, navigated the complex health-care system on his behalf. They were there for him when he needed it most.

Through PinnacleCare, Micah connected with a top neurological expert with a specialty in MS. It was confirmed Micah had received a misdiagnosis.

Thanks to the work of his PinnacleCare team, Micah is now able to refocus his medical care journey.

"It feels like you have a team constantly working to advocate for you."

Balanced and diversified business

Business pillars

*Excludes Corporate underlying net income of $(48)M

Refer to page 203 for endnotes.

FinancialHighlights

Delivering value to our shareholders

Dec-16

Dec-17

Dec-18

Dec-19

Dec-20

Represents Total Shareholder Retuas described in our 2021 Management Information Circular. Data source: Bloomberg.

Reported net incomein $ millions

10%5-Year

CAGR4

$2,149$3,934

Underlying net income2in $ millions

9%5-Year

CAGR4

$2,546$3,533

Sales growth2

Insurance

6%5-Year

CAGR4

Wealth and asset management

11%

Value of new business2,5in $ millions9%5-Year

CAGR4

Dividend per common share

7%5-Year

CAGR4

$968

$1,346

$1.75

$2.31

5-Year CAGR4

Strong capital and financial flexibility

Life insurance capital adequacy test (LICAT) ratio1,6

145%

Sun Life Financial Inc.

124%

Sun Life Assurance

25.5%

Target - 25%

Medium-term financial objectives2,7

Based on underlying net income

Refer to page 203 for endnotes.

5-year progress on medium-term financial objectives9

10%

Growth in earnings per share

14.2%Retuon equity

40%

Dividend payout ratio

Message fromthe Chair

In 2021, Sun Life delivered strong financial performance and long-term value for our shareholders. Equally important, we were there for our Clients when they needed us most. Delivering on our purpose of helping Clients achieve lifetime financial security and live healthier lives proved more important this past year than ever before.

These results were made possible by the determination, commitment and resilience of our employees and advisors as the pandemic proved to be relentless. The Board and

I continue to be inspired by how our people achieve meaningful outcomes for Clients while trying to balance the responsibilities and challenges of maintaining their own and their families' well-being.

Sun Life's diversified business model, combined with our robust risk management and disciplined approach to capital allocation, once again proved to be a key strength.

The companyachieved 10% growthin underlying net income in 2021.

The company achieved 10% growth in underlying net income in 2021. In terms of capital allocation,

Sun Life managed more than 10 capital transactions that continued to help us build scale and add capabilities across our businesses. Our agreement to acquire DentaQuest in the U.S. and the ACB bancassurance transaction in Vietnam are great examples.

Sun Life also continues to make significant investments in areas that contribute to our Client Impact Strategy including digital leadership. Thinking and acting like a digital company is core to Sun Life's strategy. This philosophy has helped enhance our digital capabilities across the organization and transform both our Client experience and the way we work.

As I have noted in my previous letters to shareholders, Sun Life has been repeatedly recognized for our sustainability strategy. While many companies continue to play a larger role addressing issues including theenvironment, diversity, equity and inclusion, Sun Life has taken even bolder steps in our sustainability journey.

In 2021 we established the role of Chief Sustainability Officer reporting directly to the CEO and we embedded sustainability into the strategy of each of our businesses. We also committed an additional $20 billion in new sustainable investments over the next five years and set a goal of net-zero greenhouse gas emissions by 2050 as an asset owner and manager.

Diversity, equity and inclusion remains integral to our sustainabilityplan. As part of Sun Life's focus, meaningful progress is being made towards achieving our 2025 diversity targets. This focus also extends to your Board of Directors. I'm proud of the broad range of business and strategic expertise we have added to the Board the past year with the addition of Deepak Chopra, David Ho, Helen Mallovy Hicks and Marie-Lucie Morin. We have increased boardroom representation in gender and from underrepresented communities to further enhance our capabilities. Sun Life's values and purpose resonate deeply with all of our Directors.

I would be remiss if I didn't congratulate our new President and CEO, Kevin Strain, who succeeded Dean Connor in August 2021. Kevin is off to a great start and the Board is confident in his ability to lead Sun Life's continued success for all our stakeholders well into the future.

My 12-year term as a Director ends after the Annual Meeting in May. It has been a pleasure and an honour to serve and represent our shareholders and policyholders the past 12 years, five of which I served as Chair. I would also like to recognize Martin Glynn who is retiring after the Annual Meeting having completed his 12­year term. Martin has been an excellent Director and an important contributor to all of our Board discussions.

I am pleased to welcome Scott Powers as the next Chair of Sun Life's Board. Scott has been a highly respected and valued Board member since 2015. He brings strong leadership, a strategic approach to governance and extensive experience in financial services.

During my tenure on the Board, I have seen tremendous growth and transformation take place across the company under the leadership of both Dean and Kevin. This transformation was an important factor enabling Sun Life to deliver a Total Shareholder Retuof 18.75%, compounded annually, for the ten years ending in 2021, a leader among our global industry peers.

On behalf of the Board and all of Sun Life's dedicated employees and advisors, our deepest appreciation to our Clients, shareholders and other stakeholders for your continued loyalty and trust.

William (Bill) D. Anderson

Chair of the Board

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Sun Life Financial Inc. published this content on 29 March 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 March 2022 18:40:13 UTC.