(Exact name of registrant as specified in its charter)

(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.

Yes [x] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date.

Registrant has 6,437 shares of common stock outstanding on August 12, 2004, all of which are owned by Sun Life of Canada (U.S.) Holdings, Inc.

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For the six-month periods ended June 30,

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For the three-month periods ended June 30,

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For the six-month periods ended June 30,

For the three-month periods ended June 30,

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For the six-month periods ended June 30, 2004 and 2003

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For the six-month periods ended June 30,

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For the six-month periods ended June 30,

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2. TRANSACTIONS WITH AFFILIATES

2. TRANSACTIONS WITH AFFILIATES (continued)

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Pursuant to General Instruction H(2)(a) to Form 10-Q, the registrant ("the Company") elects to omit the Management's Discussion and Analysis of Financial Condition and Results of Operations. Below is an analysis of the Company's results of operations that explains material changes in the Statement of Operations between the six-month periods ended June 30, 2004 and June 30, 2003.

This Form 10-Q includes forward-looking statements by the Company under the Private Securities Litigation Reform Act of 1995. These statements are not matters of historical fact; they relate to such topics as future product sales, volume growth, market share, market risk and financial goals. It is important to understand that these forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those that the statements anticipate. These risks and uncertainties may concern, among other things:

Changes in any of the assumptions that serve to increase or decrease the estimated future gross profits will cause the amortization of DAC to decrease or increase, respectively, in the current period. This will cause fluctuation in earnings from period to period. These changes in assumptions resulted in a (decrease) increase in DAC amortization of $(79.6) million and ($12.0) million for the six-month periods ended June 30, 2004 and 2003, respectively.

DAC is also adjusted for amounts relating to the recognition of unrealized investment gains and losses. This adjustment, net of tax, is included with the change in net unrealized investment gains or losses that is credited or charged directly to accumulated other comprehensive income (loss). DAC decreased by $(43.2) million and $(132.3) million for the unrealized gains at June 30, 2004 and December 31, 2003, respectively, relating to this adjustment.

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The Company's net income was $178.0 million and $40.9 million for the six-month periods ended June 30, 2004 and 2003, respectively. Income before income taxes, minority interest share of income and cumulative effect of change in accounting principle was $247.6 million and $53.6 million for the six-month periods ended June 30, 2004 and 2003, respectively. The $194.0 million pretax increase was due to improvements in the Wealth Management Segment (increase of $110.9 million) and Corporate Segment (increase of $83.6 million), offset by losses in the Individual Protection Segment (decrease of $0.4 million) and the Group Protection Segment (decrease of $0.1 million). Federal income tax expense was $67.1 million and $12.7 million for the six-month periods ended June 30, 2004 and 2003, respectively. The increase in the current year is primarily due to the increase in pre-tax income. The results of operations by segment are discussed more fully below.

The Company's net income (loss) from operations reflects the operations of its four business segments: Wealth Management, Individual Protection, Group Protection and Corporate.

The following provides a summary of net income (loss) from operations by segment.

The Wealth Mangement Segment sells a full range of retirement-oriented insurance products that provide fixed, indexed or variable returns to policyholders. Annuities are insurance products designed to offer individuals protection against the risk of outliving their financial assets during retirement. Annuities offer a tax-deferred means of accumulating savings for retirement needs and provide a tax-efficient source of income in the payout period. The Company earns spread income from fixed and indexed annuities; variable annuities primarily produce fee income. Through 2002, this segment also marketed guaranteed investment contracts ("GIC's") to unrelated third parties.

The segment's principal products are categorized as follows:

Fixed Annuities - Fixed annuity products are principally single premium deferred annuities ("SPDA"). A SPDA policyholder typically makes a single premium payment at the time of issuance. The Company obligates itself to credit interest to the policyholder's account at a rate that is guaranteed for an initial term and is reset annually thereafter, subject to a guaranteed minimum rate. Interest crediting continues until the policy is surrendered, the policyholder dies, or when the policyholder turns age 90.

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Variable Annuities - Variable annuities offer a selection of underlying investment alternatives that may satisfy a variety of policyholder risk/return objectives. Under a variable annuity, the policyholder has the opportunity to select separate account investment options (consisting of underlying mutual funds), which pass the investment risk directly to the policyholder in return for the potential of higher returns. Variable annuities also include guaranteed fixed interest options. The Company has several different variable annuity products that currently offer various separate account investment choices, depending on the product, and guaranteed fixed interest options.

Equity-Indexed Annuities - Equity-indexed annuities credit interest to the policyholder at a "participation rate" equal to a portion of the change in value of a specified equity index. Earnings on the Company's equity-indexed annuity products are based on a percentage of the increase in the Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index") ("S&P", "S&P 500", and "Standard & Poor's" are trademarks of The McGraw Hill Companies, Inc. and have been licensed for use by the Company). The Company's equity-indexed products also provide a guarantee of principal at the end of the term. Thus, unlike a direct equity investment, even if the S&P 500 Index declines, there is no market risk to the policyholder's principal.

Institutional Investment Contracts - Institutional contracts are contracts to institutional investors or to trusts that issued GIC's to unrelated third parties. These contracts may contain any of a number of features including variable or fixed interest rates, equity index options, and may be denominated in foreign currencies.

In 1997, the Company discontinued the marketing of group pension and GIC products in the U.S. Although these products are not currently sold in the U.S., there continues to be a block of U.S. group retirement business in-force, including GIC's, pension plans and group annuities. A significant portion of these pension contracts cannot be surrendered, resulting in limited liquidity exposure to the Company.

The Company uses derivative instruments to manage the risks inherent in the contract options of many of these products.

The Company markets its annuity products via two affiliated broker-dealers, MFS/Sun Life Financial Distributors, Inc. and Clarendon Insurance Agency, Inc., and an affiliated retail distribution organization, Independent Financial Marketing Group, Inc. The annuity products are also distributed through a variety of unaffiliated retail organizations including securities brokers, financial institutions, insurance agents and financial advisers. Investment funds available under these products are managed by several investment managers, including Massachusetts Financial Services Company, an affiliate of the Company, and Sun Capital Advisers, Inc., a subsidiary of the Company.

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The following is a summary of operations for the Wealth Management Segment for the six-month periods ended June 30 (in 000's):

The pre-tax income was $195.3 million and $84.4 million for the six-month periods ended June 30, 2004 and 2003, respectively. The significant changes from the six-month period ended June 30, 2003 were as follows:

Total revenues were $674.2 million and $736.8 million for the six-month periods ended June 30, 2004 and 2003 respectively. The decrease of $62.6 million was primarily due to a decrease in net investment income partially offset by improvement in derivative income and fee income.

Net Investment income - was $467.9 million and $637.2 million for the six-month periods ended June 30, 2004 and 2003, respectively. Investment income, excluding the mark to market of the trading portfolio and partnership income, was $472.2 million and $570.1 million for the six-month periods ended June 30, 2004 and 2003, respectively. The decrease of $97.9 million during 2004, as compared to 2003, was the result of a lower average investment yield ($46.7 million), and a decrease in average invested assets ($5.1 million). In addition, net investment income was reduced in the current year by $46.1 million due to the SPWL reinsurance agreement. Investment income (loss) related to the changes in the market value of securities in the trading portfolio and changes in the value of the partnership investments was ($4.3) million and $67.1 million for the six month periods ended June 30, 2004 and 2003, respectively. The change in the market value is related to the change in the interes t rate environment.

Net Derivative (losses) - were $(19.7) million and $(119.2) million for the six-month periods ended June 30, 2004 and 2003, respectively. Derivative losses primarily represent fair value changes of derivative instruments and the net interest received or paid on swap agreements.

All derivatives are recognized on the balance sheet at fair value. Net interest received or paid on swap agreements and changes in the fair value of derivatives are reported in current period operations as a component of net derivative income (losses). The Company believes that these derivatives provide economic hedges and the cost of formally documenting the effectiveness of the fair value of the hedged assets in accordance with the provisions of SFAS No. 133 is not justified.

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The Company issues annuity contracts and GICs that contain a derivative instrument that is "embedded" in the contract. Upon issuing the contract, the embedded derivative is separated from the host contract (annuity contract or GIC contract) and is carried at fair value. The Company also purchases call options and futures on the S&P 500 Index and total return swaps to economically hedge its obligation under certain of these equity-indexed annuity contracts. Each GIC contract is highly-individualized but typically involves the issuance of foreign currency denominated contracts backed by cross currency swaps or equity linked cross currency swaps. The combination of these swaps with interest rate swaps allows the Company to lock in U.S. dollar fixed rate payments for the life of the contract.

As a component of its investment strategy and to reduce its exposure to interest rate risk, the Company utilizes interest rate swap agreements. Interest rate swap agreements are agreements to exchange with a counterparty interest rate payments of differing character (e.g., fixed-rate payments exchanged for variable-rate payments) based on an underlying principal balance (notional principal) to hedge against interest rate changes. The Company also utilizes put options on the S&P 500 Index to hedge against stock market exposure inherent in the mortality and expense risk charges and guaranteed minimum death benefit features of the Company's variable annuities.

Net derivative losses for the Wealth Management Segment consisted of the following (in 000's):

Net Realized investment gains - were $59.6 million and $63.7 million for the six-month periods ended June 30, 2004 and 2003, respectively. Sales of investments generally are made to maximize total return and take advantage of prevailing market conditions. The Company incurred write-downs of fixed maturities for other-than-temporary impairments of $9.2 million and $24.5 million for the six-month periods ended June 30, 2004 and 2003, respectively.

Fees and other income - consist primarily of separate account fees, including mortality and expense charges earned on variable annuity balances, and surrender charges. Separate account fees, based on the market values of the assets in the separate accounts supporting the contracts, were $106.8 million and $91.4 million for the six-month periods ended June 30, 2004 and 2003, respectively. Variable product fees represented 1.42% and 1.36% of the average variable annuity separate account balances for the six-month periods ended June 30, 2004 and 2003, respectively. The increase in separate account income was due to an increase in average separate account assets. Average separate account assets were $15.0 billion and $13.8 billion for the six-month periods ended June 30, 2004 and 2003, respectively.

Surrender charges represent revenues earned on the early withdrawal of fixed, equity-indexed and variable annuity policyholder balances. Surrender charges on fixed, equity-indexed and variable annuity surrenders generally are assessed at declining rates applied to policyholder surrenders during the first five to seven years of the contract. Total surrender charges were $14.2 million and $18.1 million for the six-month periods ended June 30, 2004 and 2003, respectively.

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Interest credited - to policyholders was $327.2 million and $411.8 million for the six-month periods ended June 30, 2004 and 2003, respectively. The decrease of $84.6 million during the six-month period ended June 30, 2004, as compared to the six-month period ended June 30, 2003, was the result of a lower average interest credited rate ($33.0 million) offset by an increase in average policyholder balances of ($17.5 million). In addition, the current year does not include interest on the reinsured SPWL policies. The prior year included interest of $36.6 million on the SPWL policies. The prior year also included a reserve adjustment of $32.5 million during the first quarter of 2003, which was recorded as a component of interest credited to policyholders. (Interest credited to policyholders was accurately recorded at the policy level at all times).

Policyholder benefits - were $62.4 million and $88.6 million for the six-month periods ended June 30, 2004 and 2003, respectively. The $26.2 million decrease in 2004 compared to 2003 was primarily due to a decrease in reserves and death benefits of $16.7 million and $9.8 million, respectively.

Other operating expenses - were $79.4 million and $67.3 million for the six-month periods ended June 30, 2004 and 2003, respectively. The increase of $12.1 million occurred primarily within general operating expenses due to higher allocated operating expenses.

Amortization of DAC - relates to the costs of acquiring new business, which vary with and are primarily related to, the production of new annuity business. Such acquisition costs included commissions, costs of policy issuance, underwriting and selling expenses. Amortization expense was $(10.5) million and $44.4 million for the six-month periods ended June 30, 2004 and 2003, respectively. The decrease in DAC amortization for the six-month period ended June 30, 2004 was primarily due to favorable changes in the equity markets utilized in the estimated future gross profit assumptions used to calculate DAC amortization.

Amortization of value of business acquired ("VOBA") - relates to the actuarially-determined present value of projected future gross profits from policies in force at the date that the Company acquired Keyport Life Insurance Company (November 1, 2001). This amount is amortized in proportion to the projected emergence of profits over the estimated lives of the contracts. Amortization was $3.1 million and $1.4 million for the six-month periods ended June 30, 2004 and 2003, respectively. During 2004, the Company revised its gross profit estimates resulting in a decrease to VOBA amortization of $5.8 million.

Cumulative effect of change in accounting principle- On January 1, 2004, the Company adopted American Institute of Certified Public Accountants' Statement of Position 03-01 ("SOP 03-01"), "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts". The major provisions of the SOP that affect the Company require: (a) establishment of reserves primarily related to death benefit and income benefit guarantees provided under variable annuity contracts; and, (b) deferral of sales inducements that meet certain criteria, and amortization using the same method used for DAC.

The cumulative effect, reported after tax and net of related effects on DAC, upon adoption of SOP 03-01 at January 1, 2004, decreased net income and stockholder's equity by $0.9 million and reduced accumulated other comprehensive income by $2.1 million. The decrease in net income was comprised of an increase in benefit reserves (primarily for variable annuity contracts) of $34.4 million, pretax, an increase in DAC of $29.5 million, pretax, and the recognition of the unrealized gain on investments in separate accounts of $3.5 million, pretax.

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The Company primarily markets variable life insurance products. These products include variable universal life ("VUL") products marketed to individuals and the corporate owned life insurance ("COLI") and bank-owned life insurance ("BOLI") markets. VUL products are insurance products that allow for flexible premiums and the policyholder directs how the cash value is invested, and thus bears the investment risk. The Company's management expects the variable life business to grow and become more significant in the future. Additionally, the Company also administers closed blocks of SPWL, universal life and variable life insurance business.

The following provides a summary of the operations for the Individual Protection Segment for the six-month periods ended June 30 (in 000's):

Earnings for the Individual Protection Segment were relatively consistent for the six-month period ended June 30, 2004, as compared to the six-month period ended June 30, 2003. Pretax loss increased by $0.4 million. This increase was attributed primarily to additional DAC amortization on the closed blocks of business and the VUL block of $1.9 million, increased operating expenses associated with new products of $1.9 million and increased interest credited of $1.2 million primarily in the COLI product. These increases in expenses were partially offset by an increase in net investment income of $1.3 million, which is primarily in the COLI block and increased fees and other income of $4.3 million primarily in the BOLI and VUL products. Both revenues and expenditures increased from growth in the overall volume of inforce business.

The Group Protection Segment markets and administers group life insurance, stop loss insurance and long-term and short-term disability products to small and mid-size employers as part of those companies' employee benefit plans. This segment operates only in the State of New York through a subsidiary, Sun Life Insurance and Annuity Company of New York.

The following provides a summary of operations for the Group Protection Segment for the six-month periods ended

June 30 (in 000's):

Total revenues increased by approximately $2.6 million in comparison to 2003. The increase in revenue was primarily attributed to higher premiums in the group life insurance and long-term disability lines of business of approximately $2.2 million and $0.3 million, respectively.

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Total expenditures increased by approximately $2.8 million in comparison to 2003. The expense increase is due to increased benefits to policyholders of approximately $1.9 million due primarily to the growing insurance block of business, particularly group life. The expense increase is also attributed to higher operating expenses and commission payments of approximately $0.5 million and $0.3 million, respectively.

The Corporate Segment consists of the unallocated capital of the Company, its consolidated investments in variable interest entities ("VIEs"), its debt financing and items not otherwise attributable to the other segments.

The following provides a summary of operations for the Corporate Segment for the six-month periods ended

June 30 in (000's):