Sun Life Reports Fourth Quarter and Full Year 2025 Results

TORONTO, Feb. 11, 2026 /PRNewswire/ - Sun Life Financial Inc. (TSX: SLF) (NYSE: SLF) announced its results for the fourth quarter and full year ended December 31, 2025.

• Underlying net income⁽¹⁾ of $1,094 million increased $129 million or 13% from Q4'24 (full year - $4,201 million increased $345 million or 9% from 2024); underlying EPS⁽¹⁾⁽²⁾ of $1.96 increased 17% from Q4'24 (full year - $7.45 increased 12% from 2024 ); underlying return on equity ("ROE")⁽¹⁾ was 19.1% (full year - 18.2%).
  • Asset management & wealth underlying net income⁽¹⁾⁽³⁾: $534 million, up $48 million or 10% (full year - $1,976 million, up $153 million or 8%).
  • Group - Health & Protection underlying net income⁽¹⁾: $308 million, up $42 million or 16% (full year - $1,248 million, up $52 million or 4%).
  • Individual - Protection underlying net income⁽¹⁾⁽⁴⁾: $362 million, up $52 million or 17% (full year - $1,347 million, up $146 million or 12%).
  • Corporate expenses & other⁽¹⁾⁽⁴⁾: $(110) million net loss, an increase of $(13) million in net loss or 13% (full year - $(370) million net loss, an increase of $(6) million in net loss or 2%).
• Reported net income of $722 million increased $485 million or 205% from Q4'24 (full year - $3,472 million increased $423 million or 14% from 2024); reported EPS⁽²⁾ of $1.29 increased 215% from Q4'24 (full year - $6.15 increased 17% from 2024); reported ROE⁽¹⁾ was 12.6% (full year - 15.1%).
• Assets under management ("AUM")⁽¹⁾ of $1,605 billion increased $62 billion or 4% from December 31, 2024.

"Sun Life delivered strong fourth quarter performance driven by disciplined execution with underlying net income reaching $1.1 billion, contributing to 17% underlying earnings per share growth over Q4 last year and underlying return on equity of 19.1%," said Kevin Strain, President and CEO of Sun Life.

"Our diversified strategy combined with our focus on our Client and our Purpose proved its strength and resilience throughout the quarter. We saw robust earnings and sales in Asia, solid wealth sales in Canada, and meaningful progress at SLC Management, which exceeded its Investor Day earnings target. We're also pleased with the earnings and sales growth in our U.S. stop-loss business."

Strain added, "We closed 2025 with nine percent full year underlying net income growth, strong sales in asset management, wealth, health, and protection, and a 17% increase in New Business Contractual Service Margin. Our LICAT ratio was 157% and we advanced our Medium-Term Objectives with underlying ROE at 18.2%, underlying EPS growth at 12%, and a dividend payout ratio of 47%."

Financial and Operational Highlights

Financial and Operational Highlights - Quarterly Comparison (Q4'25 vs. Q4'24)

Underlying net income⁽¹⁾ of $1,094 million increased $129 million or 13% from prior year, driven by:

• Asset management & wealth⁽¹⁾ up $48 million: Improved credit experience and fee income in Canada wealth, higher fee income, net of expenses, in MFS⁽²⁾, and higher fee-related earnings, offset by lower net seed investment income, in SLC Management.
• Group - Health & Protection⁽¹⁾ up $42 million: Improved U.S. medical stop-loss morbidity experience and business growth in Canada, partially offset by higher distribution costs in U.S. Group Benefits.
• Individual - Protection⁽¹⁾⁽³⁾ up $52 million: Business growth, favourable mortality experience and higher investment earnings in Asia, and favourable mortality experience in the U.S., partially offset by lower contributions from joint ventures in Asia.
• Corporate expenses & other⁽¹⁾⁽³⁾ $(13) million increase in net loss reflecting higher financing costs supporting the acquisition of our remaining interests in SLC Management affiliates.

Reported net income of $722 million increased $485 million or 205% from prior year, driven by:

• Changes in tax-exempt investment income primarily in Corporate⁽⁴⁾ reflecting higher losses in the prior year;
• The increase in underlying net income; and
• The prior year impacts from an impairment charge of $186 million on an intangible asset related to bancassurance in Vietnam and a provision in U.S. Dental; partially offset by
• Unfavourable ACMA⁽⁵⁾ impacts.
• Market-related impacts were in line with the prior year as favourable equity market impacts and improved real estate experience⁽⁶⁾ were offset by unfavourable other market-related and interest rate impacts.

Underlying ROE was 19.1% and reported ROE was 12.6% (Q4'24 - 16.5% and 4.0%, respectively). SLF Inc. ended the quarter with a LICAT ratio of 157%.

Business Group Highlights

Asset Management: A global leader in asset management

Asset Management underlying net income of $370 million increased $10 million or 3% from prior year, driven by:

• MFS up $11 million (up $8 million on a U.S. dollar basis): Higher fee income from higher average net assets ("ANA") partially offset by higher expenses. Pre-tax net operating profit margin⁽¹⁾ was 40.0% for Q4'25, compared to 40.5% in the prior year.
• SLC Management down $1 million: Higher fee-related earnings offset by lower net seed investment income. Fee-related earnings⁽¹⁾ increased 25% driven by capital raising and higher property management fees. Fee-related earnings margin⁽¹⁾ was 27.5% for Q4'25, compared to 23.0% in the prior year.

Reported net income of $318 million decreased $8 million or 2% from prior year.  

Foreign exchange translation led to a decrease of $1 million in underlying net income and reported net income, respectively. 

Asset Management gross flows⁽²⁾ decreased $3.6 billion or 7%, driven by lower gross flows in SLC Management partially offset by higher gross flows in MFS.

Total AUM⁽¹⁾ at Q4'25 was $1,154 billion (Q4'24 - $1,121 billion), consisting of $894 billion (US$651 billion) in MFS (Q4'24 - $871 billion and US$606 billion, respectively) and $260 billion in SLC Management (Q4'24 - $250 billion). Total Asset Management net outflows of $19.5 billion in Q4'25 (Q4'24 - net outflows of $14.3 billion) reflected MFS net outflows of $25.4 billion (US$18.2 billion) (Q4'24 - net outflows of $28.5 billion and US$20.4 billion, respectively) from retail net outflows reflecting continued outflows in U.S. equity markets by retail investors, and institutional portfolio rebalancing, partially offset by SLC Management net inflows of $5.9 billion (Q4'24 - net inflows of $14.1 billion) from capital raising.

Effective January 1, 2026, we extended and formalized our asset management pillar in Sun Life Asset Management. In addition to MFS and SLC Management, Sun Life Asset Management includes Sun Life's stake in Aditya Birla Sun Life Asset Management, previously part of the Asia business segment, as well as Sun Life's pension risk transfer business, previously part of the Canada business segment. This new structure will help accelerate growth between our asset management, insurance, and wealth businesses and drive strategic partnerships to the benefit of our Clients. Effective January 1, 2026, Sun Life's asset management financial results will reflect this new structure.

MFS is focused on meeting Client needs by providing a diverse range of investment products. MFS continued to experience solid fixed income fund performance, generating net inflows⁽¹⁾ of US$5.5 billion for this asset class in the year.

BentallGreenOak ("BGO") closed its inaugural U.S. Industrial Strategies fund, bolstered by data centre co-investment, raising US$800 million in the fourth quarter. This fund reflects BGO's ability to deliver the next generation of digital infrastructure and energy-intensive logistics facilities. In addition, BGO and Stoneweg Spain⁽³⁾ have launched a strategic joint venture to deliver modern, flexible, and sustainable living solutions, with a planned total investment of €500 million.

InfraRed Capital Partners ("InfraRed") launched a digital infrastructure vehicle with Pantheon, a leading global private markets investor, to invest in the data centre and telecommunications towers sectors in Europe, North America, and Australasia, highlighting InfraRed's digital experience. InfraRed also made a majority investment in NxN Data Centers, a next generation data centre platform based in Spain, to deliver best-in-class data centre infrastructure in a fast-growing digital landscape.

For the second year in a row, the SLC Management team won the 2025 Insurance Investor North American Award for Health Insurance Provider Investment Strategy of the Year, reflecting our team's dedication to building thoughtful and resilient investment strategies with our Clients.

Canada: A leader in health, wealth, and insurance

Canada underlying net income of $417 million increased $51 million or 14% from prior year, driven by:

• Asset management & wealth up $41 million: Improved credit experience and higher fee income from higher AUM.
• Group - Health & Protection up $2 million: Business growth and favourable mortality experience mostly offset by less favourable morbidity experience.
• Individual - Protection up $8 million: Favourable insurance experience.

Reported net income of $307 million increased $54 million or 21% from prior year, driven by the increase in underlying net income and market-related impacts primarily reflecting improved interest rate impacts partially offset by unfavourable other market-related impacts.

Canada's sales⁽²⁾:

• Asset management gross flows & wealth sales of $7 billion were up 46%, driven by Group Retirement Services ("GRS") and higher mutual fund sales in Individual Wealth. GRS sales reflect strong defined benefit solution sales combined with timing of large case sales compared to the prior year, higher defined contribution sales from large case sales, and increased rollover volumes.
• Group - Health & Protection sales of $95 million were up 8%, reflecting higher health product sales.
• Individual - Protection sales of $133 million were down 6%, reflecting a combination of lower participating life sales and strong non-participating life sales.

In Individual Insurance, we maintained the leading market position in life and health for five consecutive years⁽¹⁾. Our momentum in non-participating products continued, with gross sales up 10% in 2025 compared to the prior year. Sun Life was also named Life and Health Insurer of the Year at the tenth annual Insurance Business Canada Awards, recognizing our commitment to delivering innovative solutions and exemplary Client service.

In Sun Life Health, we led the market in total sales⁽²⁾. Our 2025 sales were up 15% compared to the prior year, reflecting growth in large case Clients. In the fourth quarter, we launched a program to expand access to virtual healthcare for underserved communities across Canada, helping more Canadians to get the care they need. Through partnerships with Families Canada, United Way Greater Toronto, and Centraide of Greater Montreal, more than 10,000 participants will receive no-cost care through Dialogue, a leading virtual healthcare and wellness platform in Canada.

U.S.: A leader in health and benefits

U.S. underlying net income of US$150 million increased US$35 million or 30% ($210 million increased $49 million or 30%) from prior year, driven by:

• Group - Health & Protection up US$27 million: Higher Group Benefits results primarily reflecting improved medical stop-loss morbidity experience, partially offset by higher distribution costs.
• Individual - Protection up US$8 million: Favourable mortality experience.

Reported net income was US$93 million compared to reported net loss of US$1 million in the prior year (reported net income was $133 million compared to reported net loss of $7 million in the prior year), driven by the increase in underlying net income, market-related impacts primarily reflecting improved interest rate impacts, and a prior year provision in Dental, partially offset by DentaQuest acquisition, integration and restructuring costs.

Foreign exchange translation had no significant impact to the change in underlying net income and reported net income, respectively.

U.S. group sales of US$1,206 million were up 45% ($1,682 million, up 45%), primarily driven by medical stop-loss and large case employee benefits sales in Group Benefits, and higher Medicaid sales in Dental.

We continue to make benefits easier and more accessible through new digital capabilities and improved automation. In the fourth quarter, we collaborated with Pasito, an AI-powered platform that connects with more than 200 payroll providers to deliver personalized benefits guidance. This helps members choose plans that fit their needs, their budgets and best complement their health coverage, driving better engagement and member decision making.

We also streamlined the Supplemental Health claims process, strengthening straight-through processing and delivering more automated claims integration this year. These changes improved Client satisfaction⁽³⁾ scores by 20 points in 2025 and enabled faster claims payments to members by 55% year-over-year, even as claim volumes rose by more than 70% during the same time period.

Asia: A regional leader focused on fast-growing markets

Asia underlying net income of $207 million increased $32 million or 18% from prior year, driven by:

• Asset management & wealth down $3 million: Lower fee income related to the transitioning of the administration business to the centralized eMPF platform in Hong Kong.
• Individual - Protection⁽⁴⁾ up $35 million: Continued strong sales momentum and in-force business growth across most markets, favourable mortality experience in High Net Worth, higher investment earnings, and lower expenses, partially offset by lower contributions from joint ventures and unfavourable credit experience.

Reported net income of $131 million increased $120 million from prior year, driven by the increase in underlying net income and a prior year impairment charge on an intangible asset related to bancassurance in Vietnam, partially offset by unfavourable market-related and ACMA impacts. The market-related impacts were primarily from unfavourable interest rate and other market-related impacts, partially offset by improved equity market impacts.

Foreign exchange translation led to a decrease of $2 million in underlying net income and a decrease of $1 million in reported net income.

Asia's sales⁽¹⁾:

• Individual sales of $894 million were up 49%, driven by:
  • Higher sales in Hong Kong from growth across all channels; and
  • Higher sales in India and Indonesia primarily from the bancassurance channel; partially offset by
  • Lower sales in High Net Worth from the broker channel.
• Asset management gross flows & wealth sales of $2 billion were up 8%, driven by higher fixed income and equity fund sales in India, partially offset by lower fixed income fund sales in the Philippines.

New business CSM of $300 million in Q4'25 was up from $201 million in the prior year, driven by higher sales in Hong Kong. Despite strong competition, Hong Kong maintained strong margins, although reduced from the prior year.

We remain committed to improving the Client experience through enhanced digital capabilities. In Malaysia, Clients benefitted from a faster onboarding experience, with almost two-thirds of our Clients receiving automated underwriting decisions within two hours. In Indonesia, we introduced automated claims features, delivering a faster and more efficient claims process for our Clients, with digital submissions rising approximately eight percentage points from the prior year. We also launched Digital Check-In within our Client Service Centres, an online booking service which helps to reduce service centre wait times.

In December, we expanded our reach to our High-Net-Worth ("HNW") Clients by opening an office in the Dubai International Financial Centre. 

Corporate

Underlying net loss was $110 million compared to underlying net loss of $97 million in the prior year, reflecting higher financing costs supporting the acquisition of our remaining interests in SLC Management affiliates.

Reported net loss was $167 million compared to reported net loss of $346 million in the prior year, driven by changes in tax-exempt investment income⁽²⁾ reflecting higher losses in the prior year, partially offset by the change in underlying net loss.

In 2025, Sun Life was re-certified as a Great Place to Work® in Canada, the U.S., Vietnam, the Philippines, Indonesia, Malaysia, Singapore, India, and Ireland. SLC Management was also named one of Pensions & Investments⁽³⁾ 2025 Best Places to Work in Money Management for the sixth year in a row. These recognitions affirm our commitment to creating an environment where employees feel valued, supported, and inspired to reach their full potential, and motivated and equipped to excel in creating lasting value for our Clients.

Foreign exchange translation had no significant impact to the change in underlying net income and led to an increase of $3 million in reported net income.

About Sun Life

Sun Life is a leading international financial services organization providing asset management, wealth, insurance and health solutions to individual and institutional Clients. Sun Life has operations in a number of markets worldwide, including Canada, the U.S., the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. As of December 31, 2025, Sun Life had total assets under management of $1.60 trillion. For more information, please visit www.sunlife.com.

Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under the ticker symbol SLF.

A. How We Report Our Results

Sun Life Financial Inc., its subsidiaries and, where applicable, its joint ventures and associates are collectively referred to as "the Company", "Sun Life", "we", "our", and "us". We manage our operations and report our financial results in five business segments: Asset Management, Canada, U.S., Asia, and Corporate. Information concerning these segments is included in our annual and interim consolidated financial statements and accompanying notes ("Annual Consolidated Financial Statements" and "Interim Consolidated Financial Statements", respectively, and "Consolidated Financial Statements" collectively) and interim and annual management's discussion and analysis ("MD&A"). We prepare our unaudited Interim Consolidated Financial Statements using International Financial Reporting Standards ("IFRS"), the accounting requirements of the Office of the Superintendent of Financial Institutions ("OSFI"). Reported net income (loss) refers to Common shareholders' net income (loss) determined in accordance with IFRS.

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

1. Use of Non-IFRS Financial Measures

We report certain financial information using non-IFRS financial measures, as we believe that these measures provide information that is useful to investors in understanding our performance and facilitate a comparison of our quarterly and full year results from period to period. These non-IFRS financial measures do not have any standardized meaning and may not be comparable with similar measures used by other companies. For certain non-IFRS financial measures, there are no directly comparable amounts under IFRS. These non-IFRS financial measures should not be viewed in isolation from or as alternatives to measures of financial performance determined in accordance with IFRS. Additional information concerning non-IFRS financial measures and, if applicable, reconciliations to the closest IFRS measures are available in section H - Non-IFRS Financial Measures in this document, section M - Non-IFRS Financial Measures in our 2025 Annual MD&A, and the Supplementary Financial Information package on www.sunlife.com under Investors - Financial results and reports.

2. Forward-looking Statements

Certain statements in this document are forward-looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Additional information concerning forward-looking statements and important risk factors that could cause our assumptions, estimates, expectations and projections to be inaccurate and our actual results or events to differ materially from those expressed in or implied by such forward-looking statements can be found in section I - Forward-looking Statements in this document.

3. Additional Information

Additional information about SLF Inc. can be found in the Consolidated Financial Statements, the Annual and Interim MD&A and SLF Inc.'s Annual Information Form ("AIF") for the year ended December 31, 2025. These documents are filed with securities regulators in Canada and are available at www.sedarplus.ca. SLF Inc.'s Annual Consolidated Financial Statements, Annual MD&A and AIF are filed with the United States Securities and Exchange Commission ("SEC") in SLF Inc.'s annual report on Form 40-F and SLF Inc.'s Interim MD&A and Interim Consolidated Financial Statements are furnished to the SEC on Form 6-Ks and are available at www.sec.gov.

B. Financial Summary

C. Profitability

The following table reconciles our Common shareholders' net income ("reported net income") and underlying net income. All factors discussed in this document that impact underlying net income are also applicable to reported net income. Certain adjustments and notable items also impact the CSM, such as mortality experience and assumption changes; see section E - Contractual Service Margin in this document for more information.

Quarterly Comparison - Q4'25 vs. Q4'24

Underlying net income⁽¹⁾ of $1,094 million increased $129 million or 13%, driven by:

• Asset management & wealth⁽¹⁾ up $48 million: Improved credit experience and fee income in Canada wealth, higher fee income, net of expenses, in MFS, and higher fee-related earnings, offset by lower net seed investment income, in SLC Management.
• Group - Health & Protection⁽¹⁾ up $42 million: Improved U.S. medical stop-loss morbidity experience and business growth in Canada, partially offset by higher distribution costs in U.S. Group Benefits.
• Individual - Protection⁽¹⁾⁽²⁾ up $52 million: Business growth, favourable mortality experience and higher investment earnings in Asia, and favourable mortality experience in the U.S., partially offset by lower contributions from joint ventures in Asia.
• Corporate expenses & other⁽¹⁾⁽²⁾ $(13) million increase in net loss reflecting higher financing costs supporting the acquisition of our remaining interests in SLC Management affiliates.

Reported net income of $722 million increased $485 million or 205%, driven by:

• Changes in tax-exempt investment income primarily in Corporate⁽³⁾ reflecting higher losses in the prior year;
• The increase in underlying net income; and
• The prior year impacts from an impairment charge of $186 million on an intangible asset related to bancassurance in Vietnam and a provision in U.S. Dental; partially offset by
• Unfavourable ACMA impacts.
• Market-related impacts were in line with the prior year as favourable equity market impacts and improved real estate experience were offset by unfavourable other market-related and interest rate impacts.

Underlying ROE was 19.1% and reported ROE was 12.6% (Q4'24 - 16.5% and 4.0%, respectively).

1.       Market-related impacts

Market-related impacts represent the difference between actual versus expected market movements⁽⁴⁾. Market-related impacts resulted in a decrease of $179 million to reported net income, primarily driven by other market-related and interest rate impacts, and real estate experience. 

2.      Assumption changes and management actions

The net impact of assumption changes and management actions was a decrease of $31 million to reported net income and includes methods and assumptions changes on insurance contracts as well as related impacts. These included various small enhancements. For additional details refer to "Assumption Changes and Management Actions by Type" in section E - Contractual Service Margin in this document.

3.      Other adjustments

Other adjustments decreased reported net income by $162 million, driven by:

• DentaQuest acquisition, integration and restructuring costs and amortization of acquired intangible assets;
• Lower than expected tax-exempt investment income primarily in Corporate⁽³⁾; and
• Changes in SLC Management's acquisition-related liabilities⁽⁵⁾.

4.      Experience-related items 

In the fourth quarter of 2025, notable experience items included:

• Favourable mortality experience in Canada, the U.S. and Asia;
• Favourable morbidity experience in Canada partially offset by unfavourable morbidity experience in the U.S.;
• Unfavourable expense experience primarily in the U.S. reflecting claims volumes in Dental and distribution costs in Group Benefits;
• Net credit was favourable primarily from Canada and the U.S.; and
• Other experience was favourable primarily from the U.S., Asia, and Canada.

5.   Income taxes

The statutory tax rate is impacted by various items, such as lower taxes on income subject to tax in foreign jurisdictions, tax-exempt investment income, and other sustainable tax benefits.

The 2025 Canadian Federal Budget, which was announced on November 4, 2025, proposed changes clarifying that investment income supporting Canadian insurance risks is taxable in Canada, even when derived from assets held by a foreign affiliate of a Canadian insurance company. This proposed legislation would apply to Sun Life effective January 1, 2026 and is not expected to have a material impact on our consolidated financial statements when it becomes enacted.

On July 4, 2025, the United States Congress enacted the 2025 Budget Reconciliation Act, which introduced several tax provisions, including amendments to the Internal Revenue Code section governing the deductibility of executive compensation. Certain provisions apply to Sun Life, however they are not expected to have a material impact on our consolidated financial statements.

The Q4'25 effective income tax rate⁽¹⁾ on underlying net income and reported net income was 21.3% and 28.1% respectively.

6.   Impacts of foreign exchange translation

Foreign exchange translation led to a decrease of $3 million in underlying net income and had no significant impact to the change in reported net income.

D. Growth

1. Sales and Gross Flows

Total asset management gross flows & wealth sales decreased $1.1 billion or 2% year-over-year ($0.9 billion⁽¹⁾ or 1%⁽¹⁾, excluding foreign exchange translation).

• Asset Management gross flows decreased $3.5 billion⁽¹⁾ or 6%⁽¹⁾, driven by lower gross flows in SLC Management partially offset by higher gross flows in MFS.
• Canada asset management gross flows & wealth sales increased $2.3 billion or 46%, driven by GRS and higher mutual fund sales in Individual Wealth. GRS sales reflect strong defined benefit solution sales combined with timing of large case sales compared to the prior year, higher defined contribution sales from large case sales, and increased rollover volumes.
• Asia asset management gross flows & wealth sales increased $0.3 billion⁽¹⁾ or 12%⁽¹⁾, driven by higher fixed income and equity fund sales in India, partially offset by lower fixed income fund sales in the Philippines.

Total group health & protection sales increased $533 million or 42% from prior year ($540 million⁽¹⁾ or 43%⁽¹⁾, excluding foreign exchange translation).

• Canada group sales increased $7 million or 8%, reflecting higher health product sales.
• U.S. group sales increased $527 million⁽¹⁾ or 45%⁽¹⁾, primarily driven by medical stop-loss and large case employee benefits sales in Group Benefits, and higher Medicaid sales in Dental.

Total individual protection sales increased $284 million or 38% from prior year ($294 million⁽¹⁾ or 40%⁽¹⁾, excluding foreign exchange translation).

• Canada individual sales decreased $9 million or 6%, reflecting a combination of lower participating life sales and strong non-participating life sales.
• Asia individual sales increased $303 million⁽¹⁾ or 50%⁽¹⁾, driven by:
  • Higher sales in Hong Kong from growth across all channels; and
  • Higher sales in India and Indonesia primarily from the bancassurance channel; partially offset by
  • Lower sales in High Net Worth from the broker channel.

New business CSM represents growth derived from sales activity in the period. The impact of new insurance business resulted in a $440 million increase in CSM, compared to $306 million in the prior year, driven by higher sales primarily in Hong Kong. Despite strong competition, Hong Kong maintained strong margins, although reduced from the prior year.

2. Assets Under Management

AUM consists of general funds, the investments for segregated fund holders ("segregated funds") and third-party assets managed by the Company. Third-party AUM is comprised of institutional and managed funds, as well as other AUM related to our joint ventures.

AUM increased $62.2 billion or 4% from December 31, 2024, primarily driven by:

Segregated fund and third-party AUM net outflows of $20.2 billion during the quarter were comprised of:

Third-Party AUM increased by $41.7 billion or 3% from December 31, 2024, primarily driven by:

E. Contractual Service Margin

Contractual Service Margin represents a source of stored value for future insurance profits and qualifies as available capital for LICAT purposes. CSM is a component of insurance contract liabilities. The following table shows the change in CSM including its recognition into net income in the period, as well as the growth from new insurance sales activity.

Total CSM ended Q4'25 at $14.5 billion, an increase of $1.1 billion or 8% from December 31, 2024:

• Organic CSM movement was driven by the impact of new insurance business, reflecting strong sales and profit margins in Asia, primarily in Hong Kong, and individual protection sales in Canada.
• Unfavourable insurance experience in Canada and the U.S.
• Favourable impact of markets and other driven by interest and equity experience.
• Impact of change in assumptions include the favourable impact of mortality updates in Canada and model refinements across all business groups, partially offset by unfavourable policyholder behaviour and expense updates.
• Unfavourable currency impacts primarily in Asia.

Assumption Changes and Management Actions by Type

The impact on CSM of ACMA is attributable to insurance contracts and related impacts under the general measurement approach ("GMA") and variable fee approach ("VFA"). For insurance contracts measured under the GMA, the impacts flow through the CSM at locked-in discount rates. For insurance contracts measured under the VFA, the impact flows through the CSM at current discount rates. The following table sets out the impacts of ACMA on our reported net income and CSM for the three months ended December 31, 2025.

F. Financial Strength

1. Life Insurance Capital Adequacy Test

The Office of the Superintendent of Financial Institutions has developed the regulatory capital framework referred to as the Life Insurance Capital Adequacy Test for Canada. LICAT measures the capital adequacy of an insurer using a risk-based approach and includes elements that contribute to financial strength through periods when an insurer is under stress as well as elements that contribute to policyholder and creditor protection wind-up.

SLF Inc. is a non-operating insurance company and is subject to the LICAT guideline. Sun Life Assurance, SLF Inc.'s principal operating life insurance subsidiary, is also subject to the LICAT guideline.

SLF Inc.'s LICAT ratio of 157% as at December 31, 2025 increased five percentage points compared to December 31, 2024, driven by organic capital generation and subordinated debt issuance, partially offset by shareholder dividend payments, share buybacks, M&A⁽¹⁾ activity, and scenario switches.

Sun Life Assurance's LICAT ratio of 140% as at December 31, 2025 decreased six percentage points compared to December 31, 2024, driven by organic capital generation more than offset by dividend payments to SLF Inc., M&A activity, and scenario switches.

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

2. Capital

Our total capital consists of subordinated debt and other capital instruments, CSM, equity in the participating account and total shareholders' equity which includes common shareholders' equity, preferred shares and other equity instruments, and non-controlling interests. As at December 31, 2025, our total capital was $48.4 billion, an increase of $2.5 billion compared to December 31, 2024. The increase to total capital included reported net income of $3,472 million, an increase of $1,126 million in CSM, the issuance of $1,000 million principal amount of Series 2025-1 Subordinated Unsecured 4.14% Fixed/Floating Debentures and the issuance of $1,000 million principal amount of Series 2025-2 Subordinated Unsecured 4.56% Fixed/Floating Debentures, which are detailed below, net unrealized gains on FVOCI assets of $255 million, and non-controlling interests of $221 million reflecting our increased ownership interest in Bowtie⁽¹⁾. This was partially offset by the payment of $1,975 million of dividends on common shares of SLF Inc. ("common shares"), a decrease of $1,707 million from the repurchase and cancellation of common shares, which is detailed below, and unfavourable impacts from foreign exchange translation of $899 million included in other comprehensive income (loss) ("OCI").

In Q4'25, organic capital generation⁽²⁾ was $651 million, which measures the change in capital, net of dividends, above LICAT requirements excluding the impacts of markets and other non-recurring items. Organic capital generation was driven by underlying net income and new business CSM, partially offset by shareholder dividend payments.

Our capital and liquidity positions remain strong with a LICAT ratio of 157% at SLF Inc., a financial leverage ratio of 23.5%⁽²⁾ and $2.4 billion in cash and other liquid assets⁽²⁾ as at December 31, 2025 in SLF Inc.⁽³⁾ (December 31, 2024 - $1.4 billion).

Capital Transactions

On June 30, 2025, 2,664,916 of the 4,982,669 Class A Non-cumulative Floating Rate Preferred Shares Series 9QR (the "Series 9QR Shares") were converted into Class A Non-Cumulative Rate Reset Preferred Shares Series 8R (the "Series 8R Shares") on a one-for-one basis and 1,400 of its 6,217,331 Series 8R Shares were converted into Series 9QR Shares on a one-for-one basis. As a result, as of June 30, 2025, SLF Inc. has 8,880,847 Series 8R Shares and 2,319,153 Series 9QR Shares issued and outstanding.

On September 11, 2025, SLF Inc. issued $1 billion principal amount of Series 2025-1 Subordinated Unsecured 4.14% Fixed/Floating Debentures due 2037 (the "September 2025 Debenture Offering"). On December 3, 2025, SLF Inc. issued $1 billion principal amount of Series 2025-2 Subordinated Unsecured 4.56% Fixed/Floating Debentures due 2040 (the "December 2025 Debenture Offering"). The net proceeds from the September 2025 Debenture Offering and the December 2025 Debenture Offering will be used for general corporate purposes, which may include supporting the acquisition of SLF Inc.'s remaining interests in the SLC Management affiliates BentallGreenOak and Crescent Capital Group LP, investments in subsidiaries, repayment of indebtedness and other strategic investments.

Normal Course Issuer Bids

On August 29, 2024, SLF Inc. commenced a normal course issuer bid, which was in effect until June 6, 2025 (the "2024 NCIB").

On June 4, 2025, SLF Inc. announced that OSFI and the Toronto Stock Exchange ("TSX") had approved its previously announced early renewal of its normal course issuer bid. As of June 4, 2025, SLF Inc. had purchased on the TSX, other Canadian stock exchanges and/or alternative Canadian trading platforms 14,429,085 of the 15,000,000 common shares that it was authorized to repurchase under the 2024 NCIB. Under SLF Inc.'s renewed normal course issuer bid (the "2025 NCIB"), it is permitted to purchase up to 10,570,915 common shares, being equal to the remaining 570,915 common shares that it had not repurchased under the 2024 NCIB plus an additional 10,000,000 common shares. The 2025 NCIB commenced on June 9, 2025 and will continue until May 21, 2026 or such earlier date as SLF Inc. may determine. Any common shares purchased by SLF Inc. pursuant to the 2025 NCIB will be cancelled or used in connection with certain equity settled incentive arrangements.

Shares purchased and subsequently cancelled under both bids were as follows:

G. Performance by Business Segment

Information describing the business groups and their respective business units is included in our 2025 Annual MD&A. All factors discussed in this document that impact our underlying net income are also applicable to reported net income.

1. Asset Management

Profitability

Quarterly Comparison - Q4'25 vs. Q4'24

Asset Management underlying net income of $370 million increased $10 million or 3% driven by:

• MFS up $11 million (up $8 million on a U.S. dollar basis): Higher fee income from higher ANA partially offset by higher expenses. Pre-tax net operating profit margin⁽¹⁾ was 40.0% for Q4'25, compared to 40.5% in the prior year.
• SLC Management down $1 million: Higher fee-related earnings offset by lower net seed investment income. Fee-related earnings⁽¹⁾ increased 25% driven by capital raising and higher property management fees. Fee-related earnings margin⁽¹⁾ was 27.5% for Q4'25, compared to 23.0% in the prior year.

Reported net income of $318 million decreased $8 million or 2%.  

Foreign exchange translation led to a decrease of $1 million in underlying net income and reported net income, respectively.

Growth

2025 vs. 2024

Asset Management AUM of $1,154.0 billion increased $32.7 billion or 3% from December 31, 2024 driven by:

• Net asset value changes of $80.2 billion; partially offset by
• Net outflows of $39.9 billion; and
• Client distributions of $7.6 billion.

MFS' AUM increased US$45.6 billion or 8% from December 31, 2024, driven by:

• Increase in asset values from higher equity markets of US$87.1 billion, partially offset by net outflows of US$41.5 billion.

SLC Management's AUM increased $9.9 billion or 4% from December 31, 2024 driven by:

• Net inflows of $18.2 billion partially offset by Client distributions of $7.6 billion and asset value changes of $0.7 billion.
• Net inflows were comprised of capital raising and Client contributions, totaling $34.9 billion, partially offset by outflows of $16.7 billion.

SLC Management's FE AUM increased $7.0 billion or 4% from December 31, 2024, driven by:

• Net inflows of $25.8 billion partially offset by Client distributions of $13.4 billion and asset value changes of $5.5 billion.
• Net inflows were comprised of capital deployment and Client contributions, totaling $39.3 billion, partially offset by outflows of $13.4 billion.

2. Canada

Profitability

Quarterly Comparison - Q4'25 vs. Q4'24

Underlying net income of $417 million increased $51 million or 14%, driven by:

• Asset management & wealth up $41 million: Improved credit experience and higher fee income from higher AUM.
• Group - Health & Protection up $2 million: Business growth and favourable mortality experience mostly offset by less favourable morbidity experience.
• Individual - Protection up $8 million: Favourable insurance experience.

Reported net income of $307 million increased $54 million or 21%, driven by the increase in underlying net income and market-related impacts primarily reflecting improved interest rate impacts partially offset by unfavourable other market-related impacts.

Growth

Quarterly Comparison - Q4'25 vs. Q4'24

Canada's sales included:

• Asset management gross flows & wealth sales of $7.2 billion were up 46%, driven by GRS and higher mutual fund sales in Individual Wealth. GRS sales reflect strong defined benefit solution sales combined with timing of large case sales compared to the prior year, higher defined contribution sales from large case sales, and increased rollover volumes.
• Group - Health & Protection sales of $95 million were up 8%, reflecting higher health product sales.
• Individual - Protection sales of $133 million were down 6%, reflecting a combination of lower participating life sales and strong non-participating life sales.

3. U.S.

Profitability

Quarterly Comparison - Q4'25 vs. Q4'24

Underlying net income of US$150 million increased US$35 million or 30%, driven by:

• Group - Health & Protection up US$27 million: Higher Group Benefits results primarily reflecting improved medical stop-loss morbidity experience, partially offset by higher distribution costs.
• Individual - Protection up US$8 million: Favourable mortality experience.

Reported net income was US$93 million compared to reported net loss of US$1 million in the prior year, driven by the increase in underlying net income, market-related impacts primarily reflecting improved interest rate impacts, and a prior year provision in Dental, partially offset by DentaQuest acquisition, integration and restructuring costs.

Foreign exchange translation had no significant impact to the change in underlying net income and reported net income, respectively.

Growth

Quarterly Comparison - Q4'25 vs. Q4'24

U.S. group sales of US$1,206 million were up 45% primarily driven by medical stop-loss and large case employee benefits sales in Group Benefits, and higher Medicaid sales in Dental.

4. Asia

Profitability

Quarterly Comparison - Q4'25 vs. Q4'24

Underlying net income of $207 million increased $32 million or 18%, driven by:

• Asset management & wealth down $3 million: Lower fee income related to the transitioning of the administration business to the centralized eMPF platform in Hong Kong.
• Individual - Protection⁽¹⁾ up $35 million: Continued strong sales momentum and in-force business growth across most markets, favourable mortality experience in High Net Worth, higher investment earnings, and lower expenses, partially offset by lower contributions from joint ventures and unfavourable credit experience

Reported net income of $131 million increased $120 million, driven by the increase in underlying net income and a prior year impairment charge on an intangible asset related to bancassurance in Vietnam, partially offset by unfavourable market-related and ACMA impacts. The market-related impacts were primarily from unfavourable interest rate and other market-related impacts, partially offset by improved equity market impacts.

Foreign exchange translation led to a decrease of $2 million in underlying net income and a decrease of $1 million in reported net income.

Growth

Quarterly Comparison - Q4'25 vs. Q4'24

Asia's sales included:

• Individual sales of $894 million were up 50%⁽²⁾, driven by:
  • Higher sales in Hong Kong from growth across all channels; and
  • Higher sales in India and Indonesia primarily from the bancassurance channel; partially offset by
  • Lower sales in High Net Worth from the broker channel.
• Asset management gross flows & wealth sales of $2,224 million were up 12%⁽²⁾, driven by higher fixed income and equity fund sales in India, partially offset by lower fixed income fund sales in the Philippines.

New business CSM of $300 million, was up from $201 million in the prior year, driven by higher sales in Hong Kong. Despite strong competition, Hong Kong maintained strong margins, although reduced from the prior year.

5. Corporate

Profitability

Quarterly Comparison - Q4'25 vs. Q4'24

Underlying net loss was $110 million compared to underlying net loss of $97 million in the prior year, reflecting higher financing costs supporting the acquisition of our remaining interests in SLC Management affiliates.   

Reported net loss was $167 million compared to reported net loss of $346 million in the prior year, driven by changes in tax-exempt investment income⁽¹⁾ reflecting higher losses in the prior year, partially offset by the change in underlying net loss.

Foreign exchange translation had no significant impact to the change in underlying net income and led to an increase of $3 million in reported net income

H. Non-IFRS Financial Measures

1. Common Shareholders' View of Reported Net Income

The following table provides the reconciliation of the Drivers of Earnings ("DOE") analysis to the Statement of Operations total net income. The DOE analysis provides additional detail on the sources of earnings, primarily for protection and health businesses, and explains the actual results compared to the longer term expectations. The underlying DOE and reported DOE are both presented on a common shareholders' basis by removing the allocations to participating policyholders.

2. Underlying Net Income and Underlying EPS

Underlying net income is a non-IFRS financial measure that assists in understanding Sun Life's business performance by making certain adjustments to IFRS income. Underlying net income, along with common shareholders' net income (Reported net income), is used as a basis for management planning, and is also a key measure in our employee incentive compensation programs. This measure reflects management's view of the underlying business performance of the company and long-term earnings potential. For example, due to the longer term nature of our individual protection businesses, market movements related to interest rates, equity markets and investment properties can have a significant impact on reported net income in the reporting period. However, these impacts are not necessarily realized, and may never be realized, if markets move in the opposite direction in subsequent periods or in the case of interest rates, the fixed income investment is held to maturity. 

Underlying net income removes the impact of the following items from reported net income:

• Market-related impacts reflecting the after-tax difference in actual versus expected market movements;
• Assumptions changes and management actions;
• Other adjustments:
  i) MFS shares owned by management;
  ii) Acquisition, integration, and restructuring;
  iii) Intangible asset amortization;
  iv) Other items that are unusual or exceptional in nature.

For additional information about the adjustments removed from reported net income to arrive at underlying net income, refer to section M - Non-IFRS Financial Measures - 2 - Underlying Net Income and Underlying EPS in the 2025 Annual MD&A.

The following table sets out the post-tax amounts that were excluded from our underlying net income (loss) and underlying EPS and provides a reconciliation to our reported net income and EPS based on IFRS.