<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
2-99959
33-29851
33-31711
33-41858
33-43008
For Quarter Ended June 30, 1997 Commission File Number 33-58853
----------------- 333-11699
333-13087
---------
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2461439
- ------------------------------- ------------------------
(State or other jurisdiction of (IRS Employer I. D. No.)
incorporation or organization)
One Sun Life Executive Park, Wellesley Hills, MA. 02181
- ------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (617) 237-6030
NONE
------------------------------------------
Former name, former address, and former
fiscal year, if changed since last report.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
(1) Yes X No
(2) Yes X No
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
INDEX
PAGE
PART I: FINANCIAL INFORMATION NUMBER
Item 1: Financial Statements:*
Balance Sheets -
June 30, 1997 and December 31, 1996 3
Statements of Operations -
Three Months Ended
June 30, 1997 and June 30, 1996 4
Statement of Operations -
Six Months Ended
June 30, 1997 and June 30, 1996 5
Statements of Capital Stock and Surplus -
Six Months Ended
June 30, 1997 and June 30, 1996 6
Statements of Cash Flows -
Six Months Ended
June 30, 1997 and June 30, 1996 7
Notes to Unaudited Financial Statements 8
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11
PART II: OTHER INFORMATION
Item 5: Other Information 13
*The balance sheet at December 31, 1996 has been taken from the audited
financial statements at that date. All other statements are unaudited.
-2-
<PAGE>
Sun Life Assurance Company of Canada (U.S.)
(Wholly-owned subsidiary of
Sun Life Assurance Company of Canada)
Statutory Statements of Admitted Assets, Liabilities and
Capital Stock and Surplus
<TABLE>
<CAPTION>
(SEE NOTE
(UNAUDITED) BELOW)
(IN 000'S) JUNE 30, DECEMBER 31,
1997 1996
-------------------------- ---------------
<S> <C> <C>
Admitted Assets
Bonds............................................................... $ 2,086,128 $ 2,190,103
Common stocks....................................................... 145,663 144,043
Mortgage loans on real estate....................................... 844,505 938,932
Properties acquired in satisfaction of debt......................... 16,676 23,391
Investment real estate.............................................. 76,385 76,995
Policy loans........................................................ 41,797 40,554
Cash & short-term investments....................................... 679,454 90,059
Other invested assets............................................... 53,318 51,378
Life insurance premiums and annuity considerations due &
uncollected....................................................... 9,598 11,282
Investment income due and accrued................................... 53,019 68,191
Receivable from parent, subsidiaries and affiliates................. 23,432 20,829
Other assets........................................................ 948,898 880,142
-------------------------- ---------------
General account assets.............................................. 4,978,873 4,535,899
Separate account assets
Unitized.......................................................... 8,089,770 6,919,219
Non-unitized...................................................... 2,387,199 2,108,835
-------------------------- ---------------
Total Admitted Assets........................................... $ 15,455,842 $ 13,563,953
-------------------------- ---------------
-------------------------- ---------------
Liabilities
Aggregate reserve for life policies and contracts................... $ 2,165,667 $ 2,099,980
Supplementary contracts............................................. 2,350 2,205
Policy and contract claims.......................................... 2,999 2,108
Provision for policyholders' dividends and coupons payable.......... 30,000 27,500
Liability for premium and other deposit funds....................... 1,672,130 1,898,309
Surrender values on cancelled policies.............................. 123 72
Interest maintenance reserve........................................ 29,594 28,675
Commissions to agents due and accrued............................... 3,516 3,245
General expenses due or accrued..................................... 3,854 4,654
Transfers from Separate Accounts due or accrued..................... (291,165) (232,743)
Taxes, licenses and fees due or accrued, excluding FIT.............. 905 342
Federal income taxes due or accrued................................. 48,963 49,479
Unearned investment income.......................................... 51 19
Amounts withheld or retained by company as agent or trustee......... 49 27
Remittances and items not allocated................................. 942 1,359
Borrowed money...................................................... 600,000 0
Asset valuation reserve............................................. 57,160 53,911
Other liabilities................................................... 26,113 29,739
-------------------------- ---------------
General account liabilities......................................... 4,353,251 3,968,881
Separate account liabilities
Unitized.......................................................... 8,089,642 6,919,094
Non-unitized...................................................... 2,387,199 2,108,835
-------------------------- ---------------
Total Liabilities............................................... 14,830,092 12,996,810
-------------------------- ---------------
Common capital stock................................................ 5,900 5,900
Surplus notes....................................................... 315,000 315,000
Gross paid in and contributed surplus............................... 199,355 199,355
Unassigned funds.................................................... 105,495 46,888
Surplus............................................................. 619,850 561,243
Total common capital stock and surplus.............................. 625,750 567,143
-------------------------- ---------------
Total Liabilities, Capital Stock and Surplus.................... $ 15,455,842 $ 13,563,953
-------------------------- ---------------
-------------------------- ---------------
</TABLE>
Note: The balance sheet at December 31, 1996 has been taken from the audited
financial statements at that date.
See notes to unaudited statutory financial statements.
-3-
<PAGE>
Sun Life Assurance Company of Canada (U.S.)
(Wholly-owned subsidiary of
Sun Life Assurance Company of Canada)
STATUTORY STATEMENTS OF OPERATIONS
(IN 000'S)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
1997 1996
---------- ----------
<S> <C> <C>
Income
Premiums and annuity considerations....................................................... $ 63,541 $ 72,018
Deposit-type funds........................................................................ 605,977 480,060
Considerations for supplementary contracts without life contingencies and dividend
accumulations........................................................................... 182 601
Net investment income..................................................................... 69,347 75,934
Amortization of interest maintenance reserve.............................................. 288 187
Other income.............................................................................. 19,704 16,283
---------- ----------
Total..................................................................................... 759,039 645,083
---------- ----------
Benefits and expenses
Death benefits............................................................................ 3,859 2,064
Annuity benefits.......................................................................... 36,058 36,359
Surrender benefits and other fund withdrawals............................................. 488,832 414,418
Interest on policy or contract funds...................................................... 112 183
Payments on supplementary contracts without life contingencies and of dividend
accumulations........................................................................... 247 296
Increase aggregate reserves for life and accident and health policies and contracts....... 35,725 46,979
Decrease in liability for premium and other deposit funds................................. (136,251) (115,801)
Increase (decrease) in reserve for supplementary contracts without life contingencies and
for dividend and coupon accumulations................................................... (44) 331
---------- ----------
Total..................................................................................... 428,538 384,829
Commissions on premiums and annuity considerations (direct business only)................. 36,979 28,853
Commissions and expense allowances on reinsurance assumed................................. 4,314 4,482
General insurance expenses................................................................ 10,346 9,839
Insurance taxes, licenses and fees, excluding federal income taxes........................ 2,032 2,393
Decrease in loading on and cost of collection in excess of loading on deferred and
uncollected premiums.................................................................... (152) (174)
Net transfers to Separate Accounts........................................................ 238,345 193,743
---------- ----------
Total..................................................................................... 720,402 623,965
---------- ----------
Net gain from operations before dividends to policyholders and FIT........................ 38,637 21,118
Dividends to policyholders................................................................ 9,490 7,665
---------- ----------
Net gain from operations after dividends to policyholders and before FIT.................. 29,147 13,453
Federal income tax expense (benefit) (excluding tax on capital gains)..................... 5,765 (3,696)
---------- ----------
Net gain from operations after dividends to policyholders and FIT and before realized
capital gains........................................................................... 23,382 17,149
Net realized capital gains (losses) less capital gains tax and transferred to the IMR..... 1,779 (391)
---------- ----------
Net income................................................................................ $ 25,161 $ 16,758
---------- ----------
---------- ----------
</TABLE>
See notes to unaudited statutory financial statements.
-4-
<PAGE>
Sun Life Assurance Company of Canada (U.S.)
(Wholly-owned subsidiary of
Sun Life Assurance Company of Canada)
STATUTORY STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
(IN 000'S) JUNE 30,
1997 1996
---------- ----------
<S> <C> <C>
Income
Premiums and annuity considerations..................................................... $ 126,405 $ 142,530
Deposit-type funds...................................................................... 1,160,500 908,720
Considerations for supplementary contracts without life contingencies and dividend
accumulations......................................................................... 550 1,285
Net investment income................................................................... 141,330 150,107
Amortization of interest maintenance reserve............................................ 381 477
Other income............................................................................ 38,671 31,809
---------- ----------
Total................................................................................... 1,467,837 1,234,928
---------- ----------
Benefits and expenses
Death benefits.......................................................................... 6,370 4,802
Annuity benefits........................................................................ 70,927 69,523
Surrender benefits and other fund withdrawals........................................... 893,648 834,889
Interest on policy or contract funds.................................................... 155 521
Payments on supplementary contracts without life contingencies and of dividend
accumulations......................................................................... 451 1,143
Increase aggregate reserves for life and accident and health policies and contracts..... 65,687 90,092
Decrease in liability for premium and other deposit funds............................... (226,178) (215,720)
Increase in reserve for supplementary contracts without life contingencies and for
dividend and coupon accumulations..................................................... 145 190
---------- ----------
Total................................................................................... 811,205 785,440
Commissions on premiums and annuity considerations (direct business only)............... 70,987 53,069
Commissions and expense allowances on reinsurance assumed............................... 8,356 9,020
General insurance expenses.............................................................. 19,516 19,585
Insurance taxes, licenses and fees, excluding federal income taxes...................... 3,844 3,933
Increase (decrease) in loading on and cost of collection in excess of loading on
deferred and uncollected premiums..................................................... (230) 907
Net transfers to Separate Accounts...................................................... 473,070 310,775
---------- ----------
Total................................................................................... 1,386,748 1,182,729
---------- ----------
Net gain from operations before dividends to policyholders and FIT...................... 81,089 52,199
Dividends to policyholders.............................................................. 16,113 13,292
---------- ----------
Net gain from operations after dividends to policyholders and before FIT................ 64,976 38,907
Federal income tax expense (benefit) (excluding tax on capital gains)................... 5,360 (5,250)
---------- ----------
Net gain from operations after dividends to policyholders and FIT and before realized
capital gains......................................................................... 59,616 44,157
---------- ----------
Net realized capital gains less capital gains tax and transferred to the IMR............ 2,019 1,089
---------- ----------
Net income.............................................................................. $ 61,635 $ 45,246
---------- ----------
---------- ----------
</TABLE>
See notes to unaudited statutory financial statements.
-5-
<PAGE>
Sun Life Assurance Company of Canada (U.S.)
(Wholly-owned subsidiary of
Sun Life Assurance Company of Canada)
STATUTORY STATEMENTS OF CHANGES IN CAPITAL STOCK AND SURPLUS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
(IN 000'S) 1997 1996
---------- ----------
<S> <C> <C>
Capital and surplus, Beginning of period.................................................. $ 567,143 $ 792,452
Net income................................................................................ 61,635 45,246
Change in net unrealized capital losses................................................... 248 3,751
Change in non-admitted assets and related items........................................... (31) (958)
Change in asset valuation reserve......................................................... (3,248) (3,509)
Other changes in surplus in Separate Accounts Statement................................... 3 0
Decrease in surplus notes................................................................. 0 (335,000)
Miscellaneous gains and losses in surplus................................................. 0 0
---------- ----------
Net change in capital and surplus for the period.......................................... 58,607 (290,470)
---------- ----------
Capital and surplus, End of period........................................................ $ 625,750 $ 501,982
---------- ----------
---------- ----------
</TABLE>
See notes to unaudited statutory financial statements.
-6-
<PAGE>
Sun Life Assurance Company of Canada)
(Wholly-owned subsidiary of
Sun Life Assurance Company of Canada)
STATUTORY STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
(IN 000'S) 1997 1996
---------------------- ------------
<S> <C> <C>
Cash Provided
Premiums, annuity considerations and deposit funds received...... $ 1,288,821 $ 1,053,902
Considerations for supplementary contracts and dividend
accumulations received......................................... 550 1,285
Net investment income received................................... 159,309 186,218
Other income received............................................ 38,671 31,974
---------------------- -------------
Total receipts................................................... 1,487,351 1,273,379
---------------------- -------------
Benefits paid (other than dividends)............................. 970,455 911,228
Insurance expenses and taxes paid (other than federal income and
capital gains taxes)........................................... 102,669 97,570
Net cash transfers to Separate Accounts.......................... 531,492 348,666
Dividends paid to policyholders.................................. 13,613 11,292
Federal income tax (recoveries) payments (excluding tax on
capital gains)................................................. 4,727 (2,747)
Other--net....................................................... 155 521
---------------------- -------------
Total payments................................................... 1,623,111 1,366,530
---------------------- -------------
Net cash from operations......................................... (135,760) (93,151)
---------------------- -------------
Proceeds from long-term investments sold, matured or repaid
(after deducting taxes on capital gains of $1,149,195 for
1997, $1,722,195 for 1996)..................................... 604,144 959,929
Issuance (repayment) of surplus notes............................ 0 0
Other cash provided.............................................. 618,395 1,203
---------------------- -------------
Total cash provided.............................................. 1,222,539 961,132
---------------------- -------------
Cash Applied
Cost of long-term investments acquired........................... 421,879 641,673
Other cash applied............................................... 75,505 446,948
---------------------- -------------
Total cash applied............................................... 497,384 1,088,621
---------------------- -------------
Net change in cash and short-term investments.................... 589,395 (220,640)
Cash and short-term investments:
Beginning of year................................................ 90,059 317,325
---------------------- -------------
End of year...................................................... $ 679,454 $ 96,685
---------------------- -------------
---------------------- -------------
</TABLE>
See notes to unaudited statutory financial statements.
-7-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) GENERAL
In management's opinion all adjustments, which include only normal recurring
adjustments, necessary for a fair presentation of the financial statements have
been made.
(2) MANAGEMENT AND SERVICE CONTRACTS
Expenses under the agreement with the parent which provides for the parent
to provide certain services amounted to approximately $3,638,000 and $6,758,000
for the three and six month periods in 1997 and $5,256,000 and $10,268,000 for
the same periods in 1996.
(3) INVESTMENTS IN SUBSIDIARIES
The following is combined unaudited summarized financial information of the
subsidiaries as of June 30, 1997 and 1996 and for the six months ended:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
(000'S)
-------
Intangible assets........................................................... $ 10,449 $ 11,171
Other assets, net of liabilities............................................ 138,629 132,245
---------- ----------
Total net assets............................................................ $ 149,078 $ 143,416
---------- ----------
---------- ----------
Total income................................................................ $ 428,535 $ 329,090
Total expenses.............................................................. (380,489) (285,661)
Income tax expense.......................................................... (21,641) (19,454)
---------- ----------
Net income.................................................................. $ 26,405 $ 23,975
---------- ----------
---------- ----------
</TABLE>
The following is combined unaudited summarized financial information of the
subsidiaries as of June 30, 1997 and 1996 for the three months ended:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
(000'S)
-------
Total Income.............................................................................. $ 220,985 $ 172,849
Total expenses............................................................................ (193,614) (148,059)
Income tax expense........................................................................ (12,082) (10,995)
---------- ----------
Net income................................................................................ $ 15,289 $ 13,795
---------- ----------
---------- ----------
</TABLE>
In determining the equity in income of subsidiaries for the periods, the
Registrant has excluded expenses of approximately $9,167,000 and $16,624,000
for the three month and six month periods in 1997 and $8,632,000 and
$15,010,000 for the same periods in 1996, representing payables to the
Registrant in lieu of federal income taxes.
-8-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
(4) INVESTMENT INCOME
Net investment income consisted of:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
----------------------
1997 1996
---------- ----------
(000'S)
-------
<S> <C> <C>
Interest income from bonds................................................................ $ 91,026 $ 93,243
Interest from investment income in common stock of affiliates............................. 22,641 18,388
Interest income from mortgage loans....................................................... 41,216 48,139
Real estate investment income............................................................. 6,270 4,992
Interest income from policy loans......................................................... 1,496 1,332
Other..................................................................................... (90) 1,195
---------- ----------
Gross investment income................................................................... 162,559 167,289
Interest on surplus notes and borrowed money.............................................. 15,648 12,204
Investment expenses....................................................................... 5,581 4,978
---------- ----------
$ 141,330 $ 150,107
---------- ----------
---------- ----------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
JUNE 30,
--------------------
1997 1996
--------- ---------
(000'S)
-------
<S> <C> <C>
Interest income from bonds.................................................................. $ 48,211 $ 47,218
Interest from investment income in common stock of affiliates............................... 11,040 8,920
Interest income from mortgage loans......................................................... 19,897 23,752
Real estate investment income............................................................... 3,426 2,437
Interest income from policy loans........................................................... 871 822
Other....................................................................................... (526) 577
--------- ---------
Gross investment income..................................................................... 82,919 83,726
Interest on surplus notes and borrowed money................................................ 10,227 5,504
Investment expenses......................................................................... 3,345 2,288
--------- ---------
$ 69,347 $ 75,934
--------- ---------
--------- ---------
</TABLE>
-9-
<PAGE>
SUN LIFE ASSURANCE COMPANY OF CANADA (U.S.)
NOTES TO UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
(5) OTHER
As a result of the external financing arrangement described in Item 5, other
information, the Registrant received $600 million of cash in exchange for a $600
million short-term note payable to Holdco. The cash is currently invested in
short-term securities.
-10-
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 31, 1997 AND 1996
NET INCOME
Total net income from operations increased by $16.3 million for the six
months ended June 30, 1997 as compared to the same period in 1996. Net income
associated with the reinsurance agreements with the parent increased by $3.7
million in 1997. Prior to reinsurance, earnings from the life line of business
remained relatively flat. The remaining earnings of approximately $12.6 million
is attributable to the Registrant's retirement products and services lines of
business, which markets combination fixed/variable annuities and group pension
guaranteed investment contracts. This increase in earnings reflects profits
being generated from the large in-force block of annuity business held in both
the general account and the separate accounts. Strong market performance in the
separate accounts generated a significant increase in mortality and expense
fees, which are calculated as a percentage of net assets. The beginning of
period assets held in the unitized separate accounts increased by over 31% or
$1.7 billion for the period ending June 30, 1997 as compared to the same period
in 1996. The profits associated with the growth in this business line more than
offset the additional strain associated with sales of new business for the six
months ended June 30, 1997, as compared to the same period in 1996.Federal
income tax expense increased, reflecting the increase in earnings.
INCOME
Total income increased by $233 million for the period ended June 30, 1997 as
compared to the same period in 1996. Reinsurance had the effect of increasing
net income by approximately $1.5 million. Premiums and annuity considerations
decreased by $10.7 million, reflecting decreased annuitizations. Sales of
combination fixed/variable annuities (net of annuitizations) increased by $251.8
million, reflecting the introduction of a new dollar cost averaging program for
annuities. Under the dollar cost averaging program, deposits are made into the
fixed portion of the annuity contract and receive a bonus rate of interest for
the policy year. During the year, the fixed deposit is exchanged to the variable
portion of the contract in equal periodic installments. Considerations for
supplementary contracts decreased by $.7 million. Net investment income and
amortization of the interest maintenance reserve decreased by $8.9 million,
reflecting a decrease in the general account invested assets from year end of
over $200 million after adjusting for the $600 million transfer described in
Note 5 of the Notes to Unaudited Financial Statements.
BENEFITS AND EXPENSES
Benefits and expenses after dividends to policyholder increased by $206.8
million for the period ended June 30, 1997 as compared to the same period in
1996. Reinsurance had the effect of decreasing benefits and expenses by $2.2
million. Deaths, annuity payments and surrender benefits and other fund
withdrawals increased by $57.9 million, reflecting surrenders of a block of
annuity business for which the seven year surrender charge period has
expired. Initial sales of this particular block of business issued seven
years prior totalled over $316 million. Partially offsetting this increase is
a reduction in the group pension surrenders. Interest on policy or contract
funds decreased by $.4 million. Payments on supplementary contracts decreased
by $.7 million. Policy reserves decreased by $17.5 million, reflecting fewer
annuitizations and increased surrender activity. The change in the liability
for premium and other deposit funds decreased by $10.4 million, reflecting
the increase in surrenders. Commissions increased by $17.9 million,
reflecting the increase in total sales of combination fixed/variable
annuities. Net transfers to the separate accounts increased by $162.2
million, reflecting increased exchange activity out of the general account
into the separate accounts.
-11-
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 31, 1996 AND 1995
NET INCOME
Net income from operations increased by $8.4 million for the three months
ended June 30, 1997 as compared to the same period in 1996. Net income
associated with the reinsurance agreements increased by $.3 million. The
remaining earnings of approximately $8.1 million is attributable to the
retirement products and services line of business. The primary factors leading
to the increased earnings correspond to those discussed under the six months
results. Profits are being generated from the large in-force block of annuity
business held in both the general and separate accounts. Strong market
performance in the separate account assets generated a significant increase in
the mortality and expense fees. The profits associated with the growth in this
business line more that offset the additional strain associated with sales of
new business for the three moths ended June 30, 1997 as compared to the same
period in 1996. Federal income tax expense increased, reflecting the increase in
earnings.
INCOME
Total income increased by $114 million for the three months ended June 30,
1997 as compared to the same period in 1996. Reinsurance had the effect of
increasing net income by approximately $2 million. Premiums and annuity
considerations decreased by $7 million, reflecting fewer annuitizations. Sales
of combination fixed/variable annuities increased by $125.9 million, reflecting
the introduction of the dollar cost averaging program described above. A
reduction of sales of guaranteed investment contracts partially offset this
increase. Net investment income and amortization of the interest maintenance
reserve decreased by $6.5 million, reflecting the decrease in the general
account assets described above. Considerations for supplementary contracts
decreased by $.4 million for the three months ended June 30, 1997 as compared to
the same period in 1996.
BENEFITS AND EXPENSES
Benefits and expenses after dividends to policyholders increased by $98.3
million for the three months ended June 30, 1997 as compared to the same period
in 1996. Reinsurance had the effect of increasing benefits and expenses by $1.6
million. Deaths, annuity payments and surrender benefits and other fund
withdrawals increased by $74 million, reflecting the increased surrenders of
fixed annuities due to the introduction of the dollar cost averaging program and
surrenders of the block of annuity business for which the surrender charge
period expired. Initial sales of this block of business issued seven years
prior, totalled $79.7 million. Policy reserves decreased by $9.5 million,
reflecting fewer annuitizations and increased surrenders. The change in
liability for premium and other deposit funds decreased by $20.5 million,
reflecting the increased surrender activity. Commission increased by $8.1
million, reflecting the increase in sales. Net transfers to separate accounts
increased by $44.6 million, reflecting increased exchange activity out of the
general account into the separate accounts.
-12-
<PAGE>
PART II: OTHER INFORMATION
Item 5: Other Information
The Registrant's parent company, Sun Life Assurance Company of Canada has
established a wholly-owned subsidiary, Sun Life of Canada (U.S.) Holdings,
Inc. ("Holdco"), a Delaware corporation, to serve as the holding company for
the Registrant and its subsidiaries, and for general corporate financing
purposes. As of May 1, 1997, Holdco owns all of the outstanding common stock
of the Registrant. The management and day-to-day operations of the Registrant
have not changed, and the Registrant believes that this transaction does not
constitute a change of control. Holdco was organized in connection with a
financing arrangement under Rule 144A of the Securities Act of 1933 that
raised $600 million on May 6, 1997. The proceeds of this financing
arrangement are to be used for general corporate purposes including (but not
limited to) funding existing corporate operations as well as for possible
future acquisition and business opportunities of Sun Life Assurance Company
of Canada and its subsidiaries, including the Registrant. It is expected that
approximately half of the proceeds will be used by the Registrant for its
business purposes.
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Sun Life Assurance Company
of Canada (U.S.)
Date August 8, 1997 /s/ Margaret Sears Mead
-------------- -----------------------
Margaret Sears Mead
Assistant Vice President and Secretary
Date August 8, 1997 /s/ Robert P. Vrolyk
-------------- ----------------------
Robert P. Vrolyk
Principal Financial Officer and
Vice President and Actuary
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 7
<LEGEND>
This schedule contains summary financial information extracted from the balance
sheet and statement of operations found on pages 3 and 5 of the company's Form
10Q for the year-to-date.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 2,086,128
<DEBT-MARKET-VALUE> 2,109,566
<EQUITIES> 145,663
<MORTGAGE> 844,505
<REAL-ESTATE> 93,061
<TOTAL-INVEST> 3,943,925
<CASH> 679,454
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 15,455,842
<POLICY-LOSSES> 2,168,017
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 3,122
<POLICY-HOLDER-FUNDS> 1,672,130
<NOTES-PAYABLE> 0
0
0
<COMMON> 5,900
<OTHER-SE> 619,850
<TOTAL-LIABILITY-AND-EQUITY> 15,455,842
1,287,456
<INVESTMENT-INCOME> 141,711
<INVESTMENT-GAINS> 2,019
<OTHER-INCOME> 38,671
<BENEFITS> 1,300,389
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<INCOME-PRETAX> 66,995
<INCOME-TAX> 5,360
<INCOME-CONTINUING> 61,635
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> 61,635
<EPS-PRIMARY> 0
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<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
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<CUMULATIVE-DEFICIENCY> 0
</TABLE>
