Sun Life Financial : Annual Report (consolidated financial statements 2025 e)

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31, (in millions of Canadian dollars, except for per share amounts)

2025

2024

Insurance service result

Insurance revenue (Note 10)

$ 23,982

$ 22,637

Insurance service expenses (Note 10)

(20,414)

(19,631)

Reinsurance contract held net income (expenses) (Note 10)

(94)

85

Net insurance service result

3,474

3,091

Investment result

Investment result excluding result for account of segregated fund holders: Net investment income (loss) (Note 5)

8,859

7,415

Insurance finance income (expenses) from insurance contracts issued (Note 5)

(6,787)

(5,139)

Insurance finance income (expenses) from reinsurance contracts held (Note 5)

69

51

Decrease (increase) in investment contract liabilities

(323)

(393)

Net investment result excluding result for account of segregated fund holders

1,818

1,934

Investment result for insurance contracts for account of segregated fund holders: Investment income (loss) on investments for account of segregated fund holders

1,901

2,316

Insurance finance income (expenses) (Note 21)

(1,901)

(2,316)

Net investment result for insurance contracts for account of segregated fund holders

–

–

Net investment result

1,818

1,934

Fee income (Note 16)

9,059

8,581

Other expenses (income)

Other income

–

(163)

Operating expenses and commissions (Note 17)

9,027

8,766

Interest expenses

526

664

Total other expenses (income)

9,553

9,267

Income (loss) before income taxes

4,798

4,339

Less: Income tax expense (benefit) (Note 19)

1,016

1,040

Total net income (loss)

3,782

3,299

Less: Net income (loss) allocated to the participating account (Note 20)

194

42

Net income (loss) attributable to non-controlling interests

37

128

Shareholders’ net income (loss)

3,551

3,129

Less: Dividends on preferred shares and distributions on other equity instruments

79

80

Common shareholders’ net income (loss)

$ 3,472

$ 3,049

Average exchange rates during the reporting periods: U.S. dollars

1.40

1.37

Earnings (loss) per share (Note 25)

Basic

$ 6.17

$ 5.27

Diluted

$ 6.15

$ 5.26

Dividends per common share

$ 3.520

$ 3.240

The attached notes form part of these Consolidated Financial Statements.

For the years ended December 31, (in millions of Canadian dollars)

2025

2024

Total net income (loss)

$ 3,782

$ 3,299

Other comprehensive income (loss), net of taxes:

Unrealized gains (losses)

230

166

Reclassifications to net income (loss) and provision for credit losses recognized into income

25

(62)

Change in unrealized gains (losses) on cash flow hedges:

Unrealized gains (losses)

(11)

111

Reclassifications to net income (loss)

8

(106)

Share of other comprehensive income (loss) in joint ventures and associates:

Unrealized gains (losses)

(203)

196

Reclassifications to net income (loss)

–

5

Total items that may be reclassified subsequently to income

Items that will not be reclassified subsequently to income:

(850)

1,656

Remeasurement of defined benefit plans

19

19

Share of other comprehensive income (loss) in joint ventures and associates

8

(7)

Revaluation of property, plant and equipment

–

1

Total items that will not be reclassified subsequently to income

27

13

Total other comprehensive income (loss), net of taxes

(823)

1,669

Total comprehensive income (loss)

2,959

4,968

Less: Comprehensive income (loss) allocated to the participating account (Note 20)

200

39

Non-controlling interests’ comprehensive income (loss) (Note 20)

37

138

Shareholders’ comprehensive income (loss)

$ 2,722

$ 4,791

Unrealized foreign currency translation gains (losses)

$ –

$ (2)

Unrealized gains (losses) on investments at fair value through other comprehensive income

(47)

(44)

Reclassifications to net income (loss) and provision for credit losses recognized into income on

investments at fair value through other comprehensive income

(3)

14

Unrealized gains (losses) on cash flow hedges

(4)

(15)

Reclassifications to net income (loss) for cash flow hedges

5

11

Total items that may be reclassified subsequently to income

(49)

(36)

Items that will not be reclassified subsequently to income:

Remeasurement of defined benefit plans

(4)

(7)

Total items that will not be reclassified subsequently to income

(4)

(7)

Total income tax benefit (expense) included in other comprehensive income (loss)

$ (53)

$ (43)

The attached notes form part of these Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

As at December 31, (in millions of Canadian dollars)

2025

2024

Assets

Cash, cash equivalents and short-term securities (Note 5)

$ 14,841

$ 13,873

Debt securities (Notes 5 and 6)

85,618

81,955

Equity securities (Notes 5 and 6)

12,250

9,974

Mortgages and loans (Notes 5 and 6)

59,433

57,619

Derivative assets (Notes 5 and 6)

1,534

1,971

Other financial invested assets (Note 5)

14,374

13,306

Financial invested assets

188,050

178,698

Investment properties (Note 5)

9,432

9,290

Other non-financial invested assets (Note 5)

1,693

1,829

Invested assets

199,175

189,817

Other assets (Note 8)

7,753

7,021

Reinsurance contract held assets (Note 10)

6,138

6,318

Insurance contract assets (Note 10)

335

355

Deferred tax assets (Note 19)

3,803

3,910

Intangible assets (Note 9)

5,155

5,058

Goodwill (Note 9)

9,530

9,456

Total general fund assets

231,889

221,935

Investments for account of segregated fund holders (Note 21)

166,566

148,786

Total assets

$ 398,455

$ 370,721

Liabilities and equity Liabilities

Insurance contract liabilities excluding those for account of segregated fund holders (Note 10)

$ 155,910

$ 147,269

Reinsurance contract held liabilities (Note 10)

2,049

1,825

Investment contract liabilities (Note 5)

11,796

11,678

Derivative liabilities (Notes 5 and 6)

2,065

2,077

Deferred tax liabilities (Note 19)

301

286

Other liabilities (Note 11)

25,905

26,292

Senior debentures (Note 12)

200

200

Subordinated debt (Note 13)

8,171

6,179

Total general fund liabilities

206,397

195,806

Insurance contract liabilities for account of segregated fund holders (Note 21)

20,108

20,097

Investment contract liabilities for account of segregated fund holders (Note 21)

146,458

128,689

Total liabilities

$ 372,963

$ 344,592

Equity

Issued share capital and contributed surplus

$ 10,220

$ 10,526

Shareholders’ retained earnings and accumulated other comprehensive income

14,312

15,031

Total shareholders’ equity

24,532

25,557

Equity in the participating account

696

496

Non-controlling interests’ equity

264

76

Total equity

$ 25,492

$ 26,129

Total liabilities and equity

$ 398,455

$ 370,721

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

1.37

1.44

The attached notes form part of these Consolidated Financial Statements.

Approved on behalf of the Board of Directors on February 11, 2026.

Balance, beginning of year

8,192

8,327

Stock options exercised

42

47

Common shares purchased for cancellation

(334)

(182)

Balance, end of year

7,900

8,192

Contributed surplus

Balance, beginning of year

95

94

Share-based payments

(9)

5

Stock options exercised

(5)

(4)

Balance, end of year

81

95

Retained earnings

Balance, beginning of year(1)

12,817

12,370

Net income (loss)

3,551

3,129

Dividends on common shares

(1,975)

(1,875)

Dividends on preferred shares and distributions on other equity instruments

(79)

(80)

Common shares purchased for cancellation (Note 14) and other

(1,373)

(727)

Changes attributable to acquisition (Note 3)

(14)

–

Balance, end of year

12,927

12,817

Accumulated other comprehensive income (loss), net of taxes (Note 26)

Balance, beginning of year(1)

2,214

552

Total other comprehensive income (loss) for the year

(829)

1,662

Balance, end of year

1,385

2,214

Total shareholders’ equity, end of year

Equity in the participating account:

$ 24,532

$ 25,557

Balance, beginning of year

$ 496

$ 457

Net income (loss)

194

42

Total other comprehensive income (loss) for the year (Note 26)

6

(3)

Total equity in the participating account, end of year

Non-controlling interests:

$ 696

$ 496

Balance, beginning of year

$ 76

$ 161

Net income (loss)

37

128

Changes attributable to acquisition (Note 3)

221

–

Total other comprehensive income (loss) for the year (Note 26)

–

10

Distribution to non-controlling interests

(70)

(223)

Total non-controlling interests’ equity, end of year

$ 264

$ 76

Total equity

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

$ 25,492

$ 26,129

The attached notes form part of these Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, (in millions of Canadian dollars)

2025

2024

Cash flows provided by (used in) operating activities

Income (loss) before income taxes

$ 4,798

$ 4,339

Adjustments:

Interest expense related to financing activities

363

398

(Decrease) increase in investment contract liabilities

323

393

Changes in insurance contract liabilities and assets

3,219

2,133

Changes in reinsurance contract held assets and liabilities

25

(136)

Realized and unrealized (gains) losses and foreign currency changes on invested assets

(765)

129

Sales, maturities and repayments of invested assets

59,959

52,512

Purchases of invested assets

(71,218)

(61,251)

Income taxes received (paid)

(978)

(1,138)

Mortgage securitization (Note 5)

(423)

(265)

Other operating activities

7,496

5,418

Net cash provided by (used in) operating activities

2,799

2,532

Cash flows provided by (used in) investing activities

Net (purchase) sale of property and equipment

(145)

(143)

Investment in and transactions with joint ventures and associates (Note 15)

(44)

(17)

Dividends and other proceeds related to joint ventures and associates (Note 15)

55

160

Acquisitions, net of cash and cash equivalents acquired (Note 3)(1)

25

–

Other investing activities

(211)

(337)

Net cash provided by (used in) investing activities

(320)

(337)

Cash flows provided by (used in) financing activities

Increase in (repayment of) borrowed funds (Note 11)

28

23

Issuance of subordinated debt, net of issuance costs (Note 13)

1,991

746

Increase in (repayment of) borrowings from credit facility

(308)

(340)

Redemption of senior debentures and subordinated debt (Notes 12 and 13)

–

(750)

Issuance of common shares on exercise of stock options

37

43

Transactions with non-controlling interests

(78)

(223)

Common shares purchased for cancellation (Note 14)

(1,707)

(855)

Dividends paid on common and preferred shares

(2,064)

(1,962)

Payment of lease liabilities

(180)

(175)

Interest expense paid

(355)

(389)

Net cash provided by (used in) financing activities

(2,636)

(3,882)

Changes due to fluctuations in exchange rates

(198)

471

Increase (decrease) in cash and cash equivalents

(355)

(1,216)

Net cash and cash equivalents, beginning of year

9,954

11,170

Net cash and cash equivalents, end of year

9,599

9,954

Short-term securities, end of year

5,156

3,744

Net cash, cash equivalents and short-term securities, end of year (Note 5)

$ 14,755

$ 13,698