(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. Yes [X] No [_]

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 issuer's classes of common stock, as of the last practicable date.

Registrant has 6,001 shares of common stock outstanding on May 16, 2005, all of which are owned by Sun Life Assurance Company of Canada (U.S.).

2

(in thousands)

For the three months ended March 31,

(1) See Note 2.

3

(in thousands, except share data)

4

(in thousands)

For the three months ended March 31,

(1) See Note 2.

5

(in thousands)

For the three months ended March 31, 2005

6

(in thousands)

For the three months ended March 31,

Continued on next page

(1) See Note 2.

7

(in thousands)

For the three months ended March 31,

(1) See Note 2.

8

Sun Life Insurance and Annuity Company of New York (the "Company") is engaged in the sale of fixed and variable annuity contracts, group life, variable universal life, group 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. The Company is a direct wholly-owned subsidiary of Sun Life Assurance Company of Canada (U.S.) ("Sun Life U.S."). The Company is an indirect wholly-owned subsidiary of Sun Life Assurance Company of Canada - U.S. Operations Holdings, Inc. ("SLC - U.S. Ops Holdings") and is an indirect wholly-owned subsidiary of Sun Life Financial Inc. ("SLF"), a reporting company under the Securities Exchange Act of 1934.

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 months ended March 31, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K/A (Amendment No. 1) for the year ended December 31, 2004.

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 fair value of financial instruments, goodwill, deferred policy acquisition costs ("DAC"), the liabilities for future policyholder benefits and other-than-temporary impairments of investments.

9

Subsequent to the issuance of its 2004 financial statements, the Company determined that DAC and amortization of DAC were misstated. As a result, the accompanying 2004 financial statements have been restated from the amounts previously reported in the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2004. A summary of the significant effects of the restatement is as follows (in 000's):

Additionally, the Company restated the amount of the cumulative effect of the change in accounting principle in the accompanying financial statements from the amount previously reported in its March 31, 2004 financial statements to give effect to an October 2004 American Institute of Certified Public Accountants ("AICPA") Technical Bulletin addressing financial accounting and reporting issues related to AICPA Statement of Position 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts" ("SOP 03-1"). The provisions of this AICPA Technical Bulletin were incorporated into the preparation of the Company's annual financial statements for the year ended December 31, 2004. The Company's previously issued financial statements for March 31, 2004 reported the cumulative effect of the change in accounting principle as a reduction to net income of $0.2 million. After consideration of th e AICPA Technical Bulletin and the above noted error in DAC, the cumulative effect of the adoption of SOP 03-1 has been determined to be $0.9 million, net of tax, as of March 31, 2004.

10

The Company has agreements with Sun Life U.S. and certain affiliates, under which the Company receives, as requested, certain investment and administrative services on a cost reimbursement basis. Expenses under these agreements amounted to approximately $4.1 million and $2.9 million for the three months ended March 31, 2005 and 2004, respectively.

The Company paid $275,000 and $79,000 for the three months ended March 31, 2005 and 2004, respectively, in commission fees to Sun Life Financial Distributors, Inc., an affiliate.

The Company paid $0.7 million and $0.8 million for the three months ended March 31, 2005 and 2004, respectively, in commission fees to Independent Financial Marketing Group, Inc., an affiliate.

The Company paid $0.6 million for the three months ended March 31, 2005 in investment advisory fees to Sun Capital Advisers LLC, a registered investment adviser and affiliate.

Management believes intercompany revenues and expenses are calculated on a reasonable basis; however, these amounts may not necessarily be indicative of the costs that would be incurred if the Company operated on a stand-alone basis.

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

The Company 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, the Company periodically evaluates the financial condition of its reinsurers and monitors concentration of credit risk.

11

The Company 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. Each segment is defined consistent with the way results are evaluated by the chief operating decision-maker. Net investment income is allocated based on segmented assets by line of business. The Company does not materially depend on one or a few customers, brokers or agents for a significant portion of its operations.

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

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

The individual insurance products offered by the Individual Protection Segment are universal life, variable universal life and conversions from the Company's group life product.

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

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

12

As part of an industry wide investigation, state regulators are investigating certain compensation arrangements and other business practices between insurance companies and brokers. Certain of the Company's affiliates have received requests for information from state regulators and are cooperating with respect to these matters.

The Company's variable annuity contracts and variable life insurance policies are subject to various levels of regulation under federal securities laws administered by the U.S. Securities and Exchange Commission (the "SEC") and under certain state securities laws. On or about October 30, 2003, the Company 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 the Company's separate accounts. The Company responded to this request and an additional related request. On March 4, 2004, the Boston District Office of the SEC notified the Company that it intended to commence an examination of the Company 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. The Company is cooperating with the SEC in these matters.

As a result of these investigations and examinations, the Company is engaged in discussions with the SEC that may lead to settled administrative actions involving the Company. Although Sun Life U.S. has accrued for the potential settlement, management cannot reasonably estimate an amount to be recorded in the Company's financial statements at this time.

In addition, the SEC and other regulators have conducted or are conducting investigations and examinations of certain of the Company'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, and recordkeeping requirements. While it is not possible to predict the final outcome of these matters, management expects that their ultimate resolution will not be material to the financial condition of the Company.

Other than as described immediately above, the Company 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 the Company.

In the normal course of business, the Company 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. The Company also has agreed to indemnify its directors and certain of its officers and employees in accordance with the Company's by-laws. Due to the nature of these indemnification agreements, it is not possible to estimate the Company's potential liability. Accordingly, no liability has been recorded for these agreements in the accompanying financial statements.

The Company 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 of an annuity.

13

The table below represents information regarding the Company's variable annuity contracts with guarantees at March 31, 2005 (in 000's):

The following summarizes the reserve for the minimum guaranteed death benefit at March 31, 2005 (in 000's):

There was no requirement for a reserve for guaranteed minimum income benefits as of March 31, 2005 and December 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 and 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 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 is re-evaluated regularly, and adjustments are made to the liability balance through a charge or credit to policyowner benefits.

14

Pursuant to General Instruction H(2)(a) of Quarterly Report on Form 10-Q ("Form 10-Q"), the registrant, Sun Life Insurance and Annuity Company of New York ("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 Condensed Statements of Operations between the three months ended March 31, 2005 and March 31, 2004.

This Form 10-Q may include 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 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:

As discussed in Note 2 to the unaudited condensed financial statements, the 2004 financial statements have been restated. This discussion and analysis gives effect to the restatement.

Acquisition costs related to the issuance of fixed and variable annuities and life insurance products are deferred and amortized, generally in proportion to total estimated gross profits. Estimated gross profits are reviewed periodically and adjusted retrospectively when the Company revises its estimates. Estimated gross profits include assumptions related to investment yields and interest rates, mortality, lapse, expense, and asset growth rates. Although realization of deferred policy acquisition costs ("DAC") is not assured, the Company believes that all of these costs will be realized. The amount of DAC considered realizable, however, could be reduced if the estimates of gross profits or total revenues discussed above are reduced.

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. There were no changes in assumptions for the three months ended March 31, 2005. These changes in assumptions resulted in a decrease in DAC amortization of $(1.3) million for the three months ended March 31, 2004.

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 (loss) income. DAC decreased by $(2.9) million and $(14.9) million for the unrealized gains at March 31, 2005 and December 31, 2004, respectively, relating to this adjustment.

15

The Company's net (loss) income was $(29,000) and $2.2 million for the three-months ended March 31, 2005 and 2004, respectively. The decrease in income was primarily attributed to operating results in the Wealth Management Segment, as discussed below.

The Company'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 months ended March 31, 2005 and 2004, 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.

Total revenues were $25.7 million and $31.0 million for the three months ended March 31, 2005 and 2004, respectively. The decrease of $5.3 million was primarily due to the following:

Investment income - remained consistent at $22.1 million for the three months ended March 31, 2005 and 2004, respectively. The 2005 result in comparison with the prior year reflects a lower average investment yield ($0.8 million) offset by an increase in average invested assets ($0.8 million).

Realized investment gains - were $0.1 million and $4.0 million for the three months ended March 31, 2005 and 2004, 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 $0.3 million and $0.2 million for the three months ended March 31, 2005 and 2004, respectively.

Fee and other income - was $3.5 million and $4.4 million for the three months ended March 31, 2005 and 2004, respectively. Fee and other income consists primarily of separate account fees and similar charges, including mortality and expense ("M&E") charges earned on variable annuity balances. M&E charges, which are based on the market values of the assets in the separate accounts supporting the contracts, were $2.3 million and $2.1 million for the three months ended March 31, 2005 and 2004, respectively. Variable product fees represented 1.43% and 1.41% of the average variable annuity separate account balances for the three months ended March 31, 2005 and 2004, respectively. Average separate account assets were $643.1 million and $589.5 million for the three months ended March 31, 2005 and 2004, respectively.

16

Surrender charges are also included in fee and other income. Surrender charges represent revenues earned on the early withdrawal of fixed and variable annuity policyholder balances. Surrender charges on fixed 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 $0.7 million and $0.6 million for the three months ended March 31, 2005 and 2004, respectively.

Total benefits and expenditures were $25.5 million and $25.7 million for the three months ended March 31, 2005 and 2004, respectively. The decrease of $0.2 million was primarily due to the following:

Policyholder benefits - were $0.4 million and $1.4 million for the three months ended March 31, 2005 and 2004, respectively. The $1.0 million decrease in 2005 compared to 2004 was primarily due to a decrease in minimum death benefits on variable annuity contracts.

Interest credited - to policyholders was $19.6 million and $19.7 million for the three months ended March 31, 2005 and 2004, respectively. The decrease of $0.1 million during the three months ended March 31, 2005, as compared to the three months ended March 31, 2004, was the result of a lower average interest credited rate ($0.4 million) offset by an increase in average policyholder balances ($0.3 million).

Other operating expenses - were $2.9 million and $2.5 million for the three months ended March 31, 2005 and 2004, respectively. The increase of $0.4 million occurred primarily within general operating expenses due to higher allocated operating expenses.

Amortization of deferred policy acquisition costs - 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 include commissions, costs of policy issuance, underwriting and selling expenses. Amortization expense was $2.5 million and $2.0 million for the three months ended March 31, 2005 and 2004, respectively.

The Group Protection Segment markets and administers group life insurance, stop loss insurance and long-term and short-term disability products. These products are sold to companies that provide group benefits for their employees. The Group Protection Segment had pretax income (loss) of $0.1 million and $(0.5) million for the three months ended March 31, 2005 and 2004, respectively.

17

Total revenues for the three months ended March 31, 2005 increased by $0.7 million in comparison to the three months ended March 31, 2004. The increase in revenue was due to higher (lower) premiums in the group life insurance, long-term disability, and stop-loss lines of business of $1.1 million, $0.5 million, and $(0.9) million, respectively.

Total expenditures for the three months ended March 31, 2005 increased by $0.2 million in comparison to the three months ended March 31, 2004, which was primarily attributed to an increase in the allocation of operating expenses.

The Individual Protection Segment products offered by the Company are universal life, variable universal life and conversions from its group life products. Pretax (loss) income was $(133,000) and $93,000 for the three months ended March 31, 2005 and 2004, respectively.

The Corporate Segment includes the unallocated capital of the Company and items not otherwise attributable to the other segments. Pretax (loss) income within the Corporate Segment was $(227,000) and $28,000 for the three months ended March 31, 2005 and 2004, respectively.

The decrease in net income was mainly due to an increase in the allocation of operating expenses of $268,000.

18

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

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission's ("SEC's") rules and forms, and that such information is accumulated and communicated to the Company's management, including the Company's principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.

In connection with the preparation of this Form 10-Q, the Company's management carried out an evaluation under the supervision and with the participation of the Company's principal executive officer and principal financial officer, as of March 31, 2005, of the effectiveness of the design and operation of the Company's disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon this evaluation, management concluded that the Company's disclosure controls and procedures were not effective because of the error related to DAC described below under "Restatement."

As previously disclosed in the Company's Annual Report on Form 10-K/A (Amendment No. 1) for the year ended December 31, 2004, the Company restated its financial statements for the years ended December 31, 2004 and 2003 and selected financial data for the quarterly periods ended December 31, 2004, September 30, 2004, June 30, 2004, March 31, 2004, December 31, 2003 and September 30, 2003 following the identification of certain errors related to DAC and the related amortization of DAC.

In response to the matters discussed under "Restatement" above, the Company plans to continue to review and make necessary changes to the overall design of its control environment, including the development of additional policies and procedures to improve the Company's disclosure controls and procedures and internal control over financial reporting. With respect to the DAC error, the Company plans to implement specific measures requiring all similar system conversions to include specific review and testing of data and reports by specific legal entities (i.e., KBL, Keyport) and to require documentation evidencing proof of such review and testing in order to provide reasonable assurance that similar errors will not occur in the future. Management believes that the DAC error was the result of a material weakness in the Company's internal control over financial reporting and has discussed the matter with the Audit Committee of the Company's Board of Directors and the Company's independent re gistered public accounting firm. Until management's remediation plan is fully implemented, the Company's Finance and Actuarial functions are examining the DAC summarizations to verify that DAC is attributed to the appropriate legal entity. The Company's unaudited condensed financial statements included in Part I, Item 1 of this Form 10-Q were prepared after the DAC error was detected and corrected.

19

There has been no change in the Company'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, 2005 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. The discussion under "Management's Remediation Plan" above describes changes to the Company's internal control over financial reporting subsequent to March 31, 2005 that have or will materially affect, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

As part of an industry wide investigation, state regulators are investigating certain compensation arrangements and other business practices between insurance companies and brokers. Certain of the Company's affiliates have received requests for information from state regulators and are cooperating with respect to these matters.

The Company's variable annuity contracts and variable life insurance policies are subject to various levels of regulation under federal securities laws administered by the SEC and under certain state securities laws. On or about October 30, 2003, the Company 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 the Company's separate accounts. The Company responded to this request and an additional related request. On March 4, 2004, the Boston District Office of the SEC notified the Company that it intended to commence an examination of the Company 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. The Compan y is cooperating with the SEC in these matters.

As a result of these investigations and examinations, the Company is engaged in discussions with the SEC that may lead to settled administrative actions involving the Company. Although Sun Life U.S. has accrued for the potential settlement, management cannot reasonably estimate an amount to be recorded in the Company's financial statements at this time.

20

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.

None.

(b) None.

21

22