(Exact name of registrant as specified in its charter)

(Registrant's telephone number, including area code)

(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.

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

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

Registrant has 6,001 shares of common stock outstanding on May 14, 2004, all of which are owned by Sun Life Assurance Company of Canada (U.S.).

2

(in thousands)

3

(in thousands, except share data)

The accompanying notes are an integral part of the financial statements.

4

(in thousands)

For the three months ended March 31,

The accompanying notes are an integral part of the financial statements.

5

(in thousands)

For the three months ended March 31, 2004 and 2003

(Unaudited)

The accompanying notes are an integral part of the financial statements.

6

(in thousands)

For the three months ended March 31,

The accompanying notes are an integral part of the financial statements.

7

(in thousands)

For the three months ended March 31,

The accompanying notes are an integral part of the financial statements.

8

On October 9, 2002, Sun Life Insurance and Annuity Company of New York ("Sun NY Predecessor"), which was a wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.) ("Sun Life U.S."), and Keyport Benefit Life Insurance Company ("KBL"), which was a wholly-owned subsidiary of Keyport Life Insurance Company ("Keyport"), an affiliate, filed an Agreement and Plan of Merger ("Merger Agreement") with the New York State Insurance Department. On December 31, 2002 at 5:00 p.m., Sun NY Predecessor and KBL completed the merger. Pursuant to the Merger Agreement, KBL merged with and into Sun NY Predecessor, with Sun NY Predecessor as the surviving company ("SLNY"), and SLNY issued 4,001 additional shares of common stock to Keyport in exchange for the assets and liabilities of KBL. As a result of the additional common stock issuance, SLNY became a subsidiary of both Keyport and Sun Life U.S., with Keyport owning 67% of the common stock of SLNY.

SLNY is licensed and authorized to write all the business that was previously being written by KBL and SLNY. The merger had no effect on the existing rights and benefits of policyholders or contract holders of either company. Keyport, KBL, Sun Life U.S., Sun NY Predecessor, and SLNY were at all times relevant to the merger indirect wholly-owned subsidiaries of Sun Life Assurance Company of Canada ("SLOC"). SLOC is an indirect wholly-owned subsidiary of Sun Life Financial Inc. ("SLF"), a reporting company under the Securities Exchange Act of 1934.

SLNY is engaged in the sale of fixed and variable annuity contracts, group life, variable universal life, stop loss and group disability insurance contracts. These contracts are sold by insurance agents, some of whom are registered representatives of national and regional stock brokerage firms and brokers. On October 21, 2003, SLNY announced that it was introducing a portfolio of Variable Universal Life ("VUL") insurance products to customers in New York State.

On December 31, 2003, Keyport was merged into Sun Life U.S. with Sun Life U.S being the surviving company. Consequently, SLNY is now a wholly-owned subsidiary of Sun Life U.S.

The accompanying unaudited condensed financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") for stock life insurance companies and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. These financial statements should be read in conjunction with the financial statements and notes thereto included in SLNY's Annual Report on Form 10-K for the year ended December 31, 2003.

9

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The most significant estimates are those used in determining the fair value of financial instruments, deferred policy acquisition costs ("DAC"), goodwill, other-than-temporary impairments of investment and the liabilities for future contract and policyholder benefits.

Certain amounts in the prior period's financial statements have been reclassified to conform to the 2004 presentation.

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:

SLNY offers various guarantees to certain policyholders including a return of no less than (a) total deposits made on the contract less any customer withdrawals, (b) total deposits made on the contract less any customer withdrawals plus a minimum return or (c) the highest contract value on a specified anniversary date minus any customer withdrawals following the contract anniversary. These guarantees include benefits that are payable in the event of death, upon annuitization, or at specified dates during the accumulation period.

10

The table below represents information regarding SLNY's variable annuity contracts with guarantees at March 31, 2004 (000's):

The minimum guaranteed death benefit was $0.6 million at January 1, 2004 and March 31, 2004. SLNY did not have a liability for minimum income benefits or any asset or liability associated the minimum accumulation or withdrawal benefits as of January 1, 2004 and March 31, 2004.

The liability for death and income benefit guarantees is established equal to a benefit ratio multiplied by the cumulative contract charges earned, plus accrued interest less contract benefit payments. The benefit ratio is calculated as the estimated present value of all expected contract benefits divided by the present value of all expected contract charges. The benefit ratio may be in excess of 100%. For guarantees in the event of death, benefits represent the current guaranteed minimum death payments in excess of the current account balance. For guarantees at annuitization, benefits represent the present value of the minimum guaranteed annuity benefits in excess of the current account balance.

Projected benefits and assessments used in determining the liability for guarantees are developed using models and stochastic scenarios that are also used in the development of estimated expected future gross profits. Underlying assumptions for the liability related to income benefits include assumed future annuitization elections based upon factors such as eligibility conditions and the annuitant's attained age.

The liability for guarantees will be re-evaluated periodically, and adjustments will be made to the liability balance through a charge or credit to policyowner benefits.

Guaranteed minimum accumulation benefits or withdrawal benefits are considered to be derivatives under Financial Accounting Standards Board Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities", and are recognized at fair value through earnings.

The Company currently offers enhanced or bonus crediting rates to policyholders on certain of its annuity products. Through December 31, 2003, the expenses associated with certain of these bonuses was deferred and amortized. Others were expensed as incurred. Effective January 1, 2004, upon adoption of SOP 03-01, the expenses associated with offering a bonus are deferred and amortized over the life of the related contract in a pattern consistent with the amortization of DAC.

11

SLNY has agreements with Sun Life U.S. and certain other affiliates, under which SLNY receives, as requested, certain investment and administrative services on a cost reimbursement basis. Expenses under these agreements amounted to approximately $2.9 million and $2.6 million for the three-month period ended March 31, 2004 and 2003, respectively. Management believes intercompany expenses are calculated on a reasonable basis, however, these amounts may not necessarily be indicative of the costs that would be incurred if SLNY operated on a stand-alone basis.

SLNY paid approximately $79,000 and $19,000 in commission fees to MFS/Sun Life Financial Distributors, Inc. an affiliate, for the three-month period ended March 31, 2004 and 2003, respectively.

During the first quarter of 2004 and 2003, SLNY paid approximately $797,000 and $747,000, respectively, in commission fees to Independent Financial Marketing Group, Inc., an affiliate.

The effects of reinsurance for the three months ended March 31, were as follows (in 000's):

SLNY is contingently liable for the portion of the policies reinsured under each of its existing reinsurance agreements in the event the reinsurance companies are unable to pay their portion of any reinsured claim. Management believes that any liability from this contingency is unlikely. However, to limit the possibility of such losses, SLNY periodically evaluates the financial condition of its reinsurers and monitors concentration of credit risk.

SLNY conducts business principally in three operating segments and maintains a corporate segment to provide for the capital needs of the various operating segments and to engage in other financing-related activities. Net investment income is allocated based on segmented assets. SLNY does not materially depend on one or a few customers, brokers or agents for a significant portion of its operations. Management evaluates the results of the operating segments on an after-tax basis.

12

The Wealth Management Segment markets and administers both individual and group fixed and variable annuity products.

The Group Protection Segment markets and administers group life insurance, stop loss insurance, long-term disability and short-term disability products. These products are sold to companies that provide group benefits for their employees.

The individual insurance products offered by the Individual Protection Segment are primarily conversions from SLNY's group life products. On October 21, 2003, SLNY announced that it received approval to sell Variable Universal Life ("VUL") insurance products to customers in New York State.

The Corporate Segment includes the unallocated capital of SLNY and items not otherwise attributable to the other segments.

The following amounts pertain to the various business segments (in 000's):

13

SLNY's variable annuity contracts and variable life insurance policies are subject to various levels of regulation under federal securities laws administered by the Securities and Exchange Commission (the "SEC") and under certain state securities laws. On or about October 30, 2003, SLNY received a request from the SEC for information regarding its policies, practices and procedures with respect to subaccount "market timing," its policies, practices and procedures with respect to receiving and processing exchange orders from contract owners, and its oversight of such activities in SLNY's separate accounts. SLNY responded to this request and an additional related request. On March 4, 2004, the Boston District Office of the SEC notified SLNY that it intended to commence an examination of SLNY and certain of its affiliates pursuant to Section 31(b) of the Investment Company Act of 1940 and the Securities Exchange Act of 1934 relating to these and certain other subjects. SLNY is cooperating with the SEC in these matters. In addition, the SEC and other regulators have conducted or are conducting investigations and examinations of certain of SLNY's affiliates relating to various issues, including market timing and late trading of mutual funds and variable insurance products, directed brokerage, revenue-sharing and other arrangements with distributors.

SLNY is not aware of any contingent liabilities arising from litigation, income taxes or other matters that could have a material effect upon the financial condition, results of operations or cash flows of SLNY.

In the normal course of business, SLNY has entered into agreements that include indemnities in favor of third parties, such as engagement letters with advisors and consultants, outsourcing agreements, underwriting and agency agreements, information technology agreements, distribution agreements and service agreements. SLNY has also agreed to indemnify its directors and certain of its officers and employees in accordance with SLNY's by-laws. Due to the nature of these indemnification agreements, it is not possible to estimate SLNY's potential liability.

14

Pursuant to General Instruction H(2)(a) to Form 10-Q, the registrant ("SLNY") elects to omit the Management's Discussion and Analysis of Financial Condition and Results of Operations. Below is an analysis of SLNY's results of operations that explains material changes in the Statement of Operations between the three-month periods ended March 31, 2004 and March 31, 2003.

This discussion includes forward-looking statements by SLNY under the Private Securities Litigation Reform Act of 1995. These statements are not matters of historical fact; they relate to such topics as 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:

15

Net income was $3.2 million and $0.6 million for the three months ended March 31, 2004 and 2003, respectively. The increase in income was primarily attributed to the increase in the Wealth Management Segment, as discussed below.

SLNY's net income from operations reflects the operations of its four business segments: Wealth Management, Individual Protection, Group Protection and Corporate.

The following provides a summary of operations by segment for the three-month period ended March 31, 2004 and 2003, respectively (in 000's):

The Wealth Management Segment focuses on the savings and retirement needs of individuals preparing for retirement or who have already retired. It primarily markets to affluent consumers, selling individual and group fixed and variable annuities. Its major product lines are fixed and variable annuities. In certain variable annuities, contractholders have the choice of allocating payments either to a fixed account, which provides a guaranteed rate of return, or to variable accounts. In the variable accounts, the contractholder can choose from a range of investment options and styles. The return depends upon investment performance of the options selected. The Wealth Management Segment had pretax net income of approximately $5.8 million and $1,000 for the three-month period ended March 31, 2004 and 2003, respectively.

16

The $5.6 million increase in revenues is primarily attributed to increases in investment income, realized gains on the sale of bonds and fee income.

Investment income for the first quarter of 2004 increased by approximately $2.5 million, as compared to the same period in 2003. The increase in investment income was due to an increase in the average bonds and mortgage loan balances. The amortized cost of bonds and mortgage loans were $23.6 million and $14.9 million, respectively, higher at March 31, 2004 as compared to March 31, 2003. Realized gains on the sale of bonds increased by approximately $1.3 million during the three-month period ended March 31, 2004, as compared to the same period in 2003. Fee income for the first quarter of 2004 increased by $1.7 million compared to the same period in 2003. The increase was primarily due to a $1.4 final settlement on the termination of a reinsurance treaty.

In the first quarter of 2003, interest credited was increased by $2.5 million due to a reserve adjustment. Interest credited to policyholders was accurately recorded at the policy level at all times.

(in thousands)

The Group Protection Segment markets and administers group life insurance, stop loss insurance and long-term disability products. These products are sold to companies that provide group benefits for their employees. The Group Protection Segment had a pretax (loss) income of approximately ($505,000) and $237,000 for the three months ended March 31, 2004 and 2003, respectively.

17

Total revenues in the first quarter of 2004 increased by approximately $1.6 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 $1.4 million and $0.2 million, respectively.

Total expenditures increased by approximately $2.4 million in comparison to 2003. The expense increase is due to increased benefits to policyholders of approximately $1.8 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 $0.3 million and $0.1 million, respectively

(in thousands)

(in thousands)

The Corporate Segment includes the unallocated capital of SLNY and items not otherwise attributable to the other segments. Pretax income within the Corporate Segment was approximately $28,000 and $503,000 for the three months ended March 31, 2004 and 2003, respectively.

The decrease in net income was mainly due to a decrease in net investment income of approximately $323,000.

Total stockholders' equity of SLNY at March 31, 2004 and December 31, 2003 was $305.5 million and $291.6 million, respectively. SLNY's management considers its capital resources to be adequate.

18

SLNY's primary investment objective is to maximize after-tax returns on the products issued within acceptable risk parameters. SLNY is exposed to two primary types of investment risk:

For a more detailed discussion of SLNY's interest rate risk management policies, practices and procedures, see "Interest rate risk management" in the "Quantitative and Qualitative Disclosures about Market Risk" section below (Item 3).

SLNY manages exposure to credit risk through internal analyses of a given investment. SLNY's fixed income credit analysts apply a wide range of qualitative input and quantitative tools in assessing an issuer's credit risk. The credit analysts apply industry and financial knowledge to assess an issuer's ability to succeed within a broader economic framework. SLNY's analysts work with legal staff and portfolio management to assess transaction structure and risks to promote appropriate covenant protection as well as investment diversification and asset allocation. SLNY relies on its credit analysts' ability to analyze a wide range of public and private bond issues and structures and to acquire the investments needed to profitably fund SLNY's liability requirements.

SLNY regularly reviews its bond portfolios relative to any change in specific issuer performance, external and internal ratings, industry conditions, financial ratios and changes in investment value. Such analysis is undertaken to determine that the integrity of SLNY's investments remains sound and to review for other-than-temporary impairments.

Within the pricing of its products, SLNY has included provisions for expected default losses over the long term. This expectation is reassessed on a regular basis to determine the adequacy of the estimate. However, actual losses may prove to be above or below the expected loss rate. The overall economic environment will also impact the market value of the portfolio through both interest rate changes and the response of credit spreads to changes in the business cycle. SLNY's credit function and capital base generally permit it to pursue a buy and hold strategy that balances assets and liabilities with the intent of withstanding near-term swings in the broader economy.

The composition of the investments in SLNY's general account portfolio at March 31, 2004 and December 31, 2003 was as follows (in 000's):

19

ASSET/LIABILITY RISK MANAGEMENT (continued)

The fixed maturity portion of the portfolio consists of publicly traded and privately placed debt securities. SLNY diversifies its fixed maturities by industry sectors, government (domestic and foreign), and mortgage-backed ("MBS") and asset-backed ("ABS") securities. ABS include structured equipment and receivable investments. The composition of SLNY's fixed maturity portfolio by sector and the unrealized gains and losses contained therein as of March 31, 2004 and December 31, 2003 was as follows (in 000's):

20

As of March 31, 2004, the portfolio carried $77.4 million in gross unrealized gains relative to $7.8 million in unrealized losses. The net unrealized gain as of March 31, 2004 of $69.5 million is a $20.3 million improvement over the $49.2 million in net unrealized gains at year end 2003, reflecting improvement in corporate bond spreads, particularly in lower-rated issues and industries. As a percentage of fair value, the largest contributors of unrealized losses were found in the Transportation sector, driven by ongoing restructuring in the airline sub-sector. A brief discussion concerning the sectors of SLNY's corporate bond holdings is as follows:

21

22

23

The Securities Valuation Office ("SVO") of the National Association of Insurance Commissioners evaluates all public and private bonds purchased as investments by insurance companies. The SVO assigns one of six investment categories to each security it reviews. Category 1 is the highest quality rating, and Category 6 is the lowest. Categories 1 and 2 are the equivalent of investment grade debt as defined by rating agencies such as Standard & Poor's ("S&P") and Moody's (i.e., BBB-/Baa3 or higher), while Categories 3-6 are the equivalent of below-investment grade securities.

24

As of March 31, 2004, the majority of SLNY's fixed maturity investments were investment grade, with 95.0% of fixed maturity securities classified as Category 1 and 2 by the SVO. Below investment grade bonds were 5.0% of fixed maturity investments and 4.7% of total invested assets as of March 31, 2004. The fair value of investments in SVO categories 3-6 increased by $23.8 million since December 31, 2003 as bond sales, particularly in Category 6, were offset by improvements in fair value of below investment grade holdings. The following table provides the SVO ratings for SLNY's bond portfolio along with an equivalent S&P rating agency designation at March 31, 2004 and December 31, 2003 (in 000's):

The composition by credit quality of the securities with gross unrealized losses in SLNY's fixed maturity securities portfolio was as follows at March 31, 2004 and December 31, 2003 (in 000's):

25

At March 31, 2004, $4.6 million or 58.9%, of the gross unrealized losses were on securities rated investment grade. In general, unrealized losses on investment grade securities reflect changes in interest rates or changes in credit spreads since the securities were acquired and these losses are generally considered to be temporary in nature. SLNY's policy is to subject any security with a gross unrealized loss of greater than 20% to a comprehensive asset review process. Securities at any level of the SVO rating scale would be subject to such review should a drop in market valuation or any other event signal a potential problem.

Securities that have been triggered for the impairment review process may either be determined to be impaired or placed on a watchlist for monitoring. Should it be determined that a security is impaired, SLNY may sell the security and realize a loss or hold the security following an appropriate adjustment in carrying value to reflect fair value.

During the first quarter of 2004, SLNY incurred write-downs of fixed maturities totaling $0.2 million for other-than-temporary impairment. However, SLNY did not incur any write-downs of fixed maturities for other-than-temporary impairment during the first quarter of 2003. Gross realized losses on the voluntary disposal of fixed maturity securities totaled $138 thousand and $2.6 million for the three-month period ended March 31, 2004 and for the year ended December 31, 2003, respectively.

The carrying value of fixed maturity securities with unrealized losses by maturity date at March 31, 2004 and December 31, 2003 were as follows (000s):

SLNY's mortgage holdings amounted to $122.9 million and $108.0 million at March 31, 2004 and December 31, 2003, respectively, representing 6.3% and 5.7%, respectively, of total invested assets. All of SLNY's mortgage holdings at March 31, 2004 were in good standing.

26

This discussion covers market risks associated with investment portfolios that support SLNY's general account liabilities. This discussion does not cover market risks associated with investment portfolios that support separate account products. For those products, the policyholder, rather than SLNY, assumes market risk.

SLNY has investment policies and guidelines that define the overall framework for managing market and other investment risks, including the accountabilities and controls over its investment activities. In addition, SLNY has specific investment policies that delineate the investment limits and strategies that are appropriate given SLNY's liquidity, surplus, product and regulatory requirements.

SLNY's management believes that stringent underwriting standards and practices have resulted in high-quality portfolios that have the effect of limiting credit risk. The management of interest rate risk exposure is discussed below.

A well-diversified portfolio of fixed interest investments primarily supports SLNY's fixed interest rate liabilities. They are also supported by small amounts of floating rate notes. These interest-bearing investments include both publicly issued and privately placed bonds. Public bonds can include treasury bonds, corporate bonds and money market instruments. SLNY also holds securitized assets, including MBS, collateralized mortgage obligations, commercial MBS and ABS. These securities are subject to the same standards applied to other portfolio investments, including relative value criteria and diversification guidelines. SLNY does not engage in leveraged transactions and it does not routinely invest in the more speculative forms of these instruments, such as interest-only, principal-only, inverse floater or residual tranches.

Changes in the level of domestic interest rates affect the market value of fixed interest assets and liabilities. SLNY manages risks from wide fluctuations in interest rates using analytical and modeling software acquired from outside vendors. Important assumptions include the timing of cash flows on mortgage-related assets and liabilities subject to policyholder surrenders.

Significant features of SLNY 's models include:

27

SLNY's Interest Rate Risk Committee meets monthly. After reviewing duration analyses, market conditions and forecasts, the committee develops specific asset management strategies. These strategies may involve managing to achieve small intentional mismatches, either in terms of total effective duration or for certain key rate durations, between liabilities and assets. SLNY manages these mismatches to a tolerance range of plus or minus 1.0.

Fixed interest liabilities held in SLNY's general account at March 31, 2004 had a fair value of $1.7 billion. Fixed income investments supporting those liabilities had a fair value of $1.7 billion at that date. SLNY performed a sensitivity analysis on these interest-sensitive liabilities and assets as of March 31, 2004. The analysis showed that if there were an immediate decrease of 100 basis points in interest rates, the fair value of the liabilities would show a net increase of $57.9 million and the corresponding assets would show a net increase of $59.5 million.

By comparison, fixed interest liabilities held in SLNY's general account at December 31, 2003 had a fair value of $1.6 billion. Fixed income investments supporting those liabilities had a fair value of $1.8 billion at that date. SLNY performed a sensitivity analysis on these interest-sensitive liabilities and assets on December 31, 2003. The analysis showed that if there were an immediate decrease of 100 basis points in interest rates, the fair value of the liabilities would show a net increase of $56.7 million and the corresponding assets would show a net increase of $60.6 million.

Based on an evaluation as of the end of the period covered by this report, SLNY's management, including SLNY's principal executive officer and principal financial officer, have concluded that SLNY's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) are effective. There has been no change in SLNY's internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the quarter ended March 31, 2004 that has materially affected, or is reasonably likely to materially affect, SLNY's internal control over financial reporting.

28

SLNY is engaged in various kinds of routine litigation incidental to the business which, in management's judgment, is not expected to be material to SLNY's business or financial condition.

Omitted pursuant to Instruction H (2) (b) of Form 10-Q.

Omitted pursuant to Instruction H (2) (b) of Form 10-Q.

Omitted pursuant to Instruction H (2) (b) of Form 10-Q.

29

SLNY did not file any reports on Form 8-K during the quarter ended March 31, 2004.

30

Signatures