STATE OF CONNECT CUT

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1 STATE OF CONNECT CUT INSURANCE DEPARTMENT ORDER ADOPTING REPORT OF EXAMINATION I, Anne Melissa Dowling, Acting Insurance Commissioner of the State of Connecticut, having fully considered and reviewed the Examination Report (the "Report") of the Sun Life and Health Insurance Company (U.S.) as of December 31, 2013, do hereby adopt the findings and recommendations contained therein based on the following findings and conclusions, TO WIT: 1. I, Anne Melissa Dowling, as the Acting Insurance Commissioner of the State of Connecticut, and as such is charged with the duty of administering and enforcing the provisions oftitle 38a of the Connecticut General Statutes ("CGS"). 2. The Company is a domestic insurer authorized to transact the business of insurance in the State of Connecticut. 3. On January 16, 2015, the verified Report of the Company was filed with the Connecticut Insurance Department ("Insurance Department"). 4. In accordance with Section 38a-I4(e)(3) of the CGS, the Company was atforded a period of thirty (30) days within which to submit to the Insurance Department a written submission or rebuttal with respect to any matters contained in the Report. 5. On March 12, 2015, the Company notified the Insurance Department of certain responses and comments on certain items contained in the Report. 6. Following review of the Report, it was deemed necessary and appropriate to modify the Report. A copy of the Report is attached hereto and incorporated herein as Exhibit A. P.O. Box 816 Hartford, CT An Equal Opportunity Employer

2 NOW, THEREFORE, it is ordered as follows: 1. That the Report of the Company hereby is adopted as filed with the Insurance Department. 2. That the Company shall comply with all of the recommendations set forth in the Report, and that failure by the Company to so comply shall result in sanctions or administrative action as provided by Title 38a of the COS. Dated at Hartford, Connecticut, this 1i h day of March, Anne Me issa Dowling Acting Insurance Commissioner

3 EXHIBIT A EXAMINATION REPORT OF THE SUN LIFE AND HEALTH INSllRANCE COMPANY (U.S.) AS OF DECEMBER 31,2013 BY THE CONNECTICUT INSllRANCE DEPARTMENT

4 TABLE OF CONTENTS Salutation Scope ofexamination History Organizational Chart Management and Control Related Party Agreements Insurance Coverage Territory and Plan of Operation Reinsurance Information Technology Controls Accounts and Records Financial Statements Assets Liabilities, Surplus and Other Funds Summary of Operations Uncollected Premiums and Agents' Balances in the Course of Collection Aggregate Reserve for Life Contracts Aggregate Reserve for Accident and Health Contracts Liability for Deposit-Type Contracts Contract Claims: Life and Accident and Health Corrunon Capital Stock Gr-ess Paid In and Contributed Surplus Unassigned Funds (Surplus) Recorrunendation Subsequent Events Conclusion Signature

5 January 16,2015 The Honorable Anne Meli ssa Dowling Acting Insurance Conunissioner State of Connecticut Insurance Department 153 Market Street, 6th Floor Hartford, Connecticut Dear Acting Commissioner: In compliance with your instructions and pursuant to the requirements of Section 38a-14 of the Connecticut General Statutes (CGS), the undersigned has conducted an examination of the condition and affairs of the: SUN LIFE AND HEALTH INSURANCE COMPANY (U.S.) (hereafter referred to as SLHICUS or the Company) a corporation with capital stock, incorporated under the laws of the State of Connecticut and having its statutory home office located at 175 Addison Road, Windsor, Connecticut and main administrative office located at One Sun Life Executive Park, Wellesley Hills, Massachusetts. The report of such examination is submitted herewith. SCOPE OF EXAMINATION The previous examination of the Company was conducted as of December 31, The current examination, which covers the subsequent five-year period, was conducted at the Company's statutory home office. As part of the examination planning procedures, the Financial Regulation Division of the Connecticut Insurance Department (the Department) reviewed the following material submitted by the Company for the examination period : Audit reports by the Company's independent certified public accountants, Deloitte & Touche, LLP (D&T); Board of Directors (Board) minutes; Conunittee minutes; Management's Discussion and Analysis; Annual Statements filed with the Department; statements of Actuarial Opinion; Reports of the Company's Internal Audit Department; and Documentation supporting Section 404 of the Sarbanes-Oxley Act of2002 (SOX).

6 A comprehensive review was made of the financial analysis files and documents submitted to the Financial Analysis Unit of the Department as well as Examination Jumpstart and Financial Analysis and Solvency Tracking System reports that were obtained from the NAIC database. Workpapers prepared by D&T, in connection with its annual statutory audit, were reviewed and relied upon to the extent deemed appropriate. The examination was conducted on a full scope, comprehensive basis in accordance with the procedures outlined in the NArC Financial Condition Examiners Handbook (the Handbook). The Handbook requires that we plan and perform the examination to evaluate the financial condition and identify prospective risks of the Company by obtaining information about the Company, including corporate governance, identifying inherent risks within the Company, and evaluating system controls and procedures used to mitigate those risks. An examination also includes assessing the principles used and significant estimates made by management as well as evaluating the overall financial statement presentation with respect to management compliance with the NArC Accounting Practices & Procedures Manual (Manual) and the NAIC Life Annual Statement Instructions. All accounts and activities of the Company were considered in accordance with the riskfocused examination process. Risk and Regulatory Consulting, LLC (RRC) was engaged by the Department to conduct an evaluation of the Information Technology (IT) controls. Claire Thinking, Inc. (CTI) was engaged by the Department to conduct an evaluation of the Company's pricing and underwriting, reserving, and liquidity processes. Comments in this report are generally limited to exceptions noted or to items considered to be of a material nature. Failure of items in this report to add to totals or for totals to agree with captioned amounts is due to rounding. HISTORY The Company was originally incorporated in Delaware on January 31, 1973, as Phoenix Life Insurance Company and it commenced business on January 1, In 1989, the Company's name was changed to Phoenix American Life Insurance Company. In 1991, the Company redomesticated from Delaware to Connecticut. On April 1, 2000, 97% of the outstanding common shares of the Company were sold to GE Financial Assurance Holdings, Inc., (GEFAHI) which was indirectly owned by General Electric Capital Corporation and ultimately owned by General Electric Company. 2

7 Effective January 1, 2001, the Company's certificate of incorporation was amended and restated to change the Company's name to GE Group Life Assurance Company. On November 18,2003, GEFAHI acquired the remaining 3% of the outstanding corrunon shares of the Company rendering the Company a wholly-owned subsidiary of GEFAHI. On that same date, a new holding company, Genworth Financial, Inc. (Genworth) was formed, and the Company became an indirect subsidiary of Genworth. In March 2006, the Company was re-named Genworth Life and Health Insurance Company. On May 18, 2007, the Commissioner of the Connecticut Insurance Department issued an order approving Sun Life Financial Inc.'s (SLF's) acquisition of the Company and four other legal entities that together comprised substantially all of the U.S. employee benefits group business of Genworth. SLF acquired control of the Company by assigning to its wholly-owned direct subsidiary, Sun Life Assurance Company of Canada (SLOC), its right to purchase all of the outstanding shares of capital stock of the Company. SLOC paid consideration of approximately $619.7M for the Company at closing, which was funded from available funds in the Sun Life Financial group of companies. This transaction closed on May 31, Following the receipt of all required board, shareholder, and regulatory approvals, the Company became known as SLHICUS, effective December 1,2007. SLOC is a Canadian life insurance company that does business in the United States via a branch (port of entry) entered through the State of Michigan. Effective May 31, 2007, the Company entered into reinsurance and related renewal rights and administrative services agreements with SLOC and an affiliate, Sun Life Insurance and Annuity Company of New York (SLNY). Pursuant to these agreements, the Company ceded substantially all of its group insurance business to SLOC and SLNY. Effective July 11, 2011, the Company discontinued offering new business. In October 2011, the Company began the process of converting certain of its group life and health policies to SLOC and SLNY, pursuant to the renewal rights agreements described above, providing policyholders the option not to participate in the conversion. On December 17, 2012, SLF announced the execution of a definitive agreement to sell its domestic U.S. annuity business and certain life insurance businesses to Delaware Life Holdings, LLC including all ofthe issued and outstanding shares ofstock ofthe Company's affiliate, Sun Life Assurance Company of Canada (U.S.) (Sun Life US) and its subsidiary SLNY. After receiving all required regulatory approvals, the sale transaction closed on August 2,2013, with an effective date of August 1,2013. Sun Life US and SLNY ceased being affiliates ofthe Company effective with the close ofthe sale transaction. Prior to the closing of the sale transaction, the group conversion agreement with SLNY was amended. Additionally, the Company executed a recapture and termination agreement with SLNY which terminated the existing reinsurance, renewal rights and administrative services agreements under which it had previously transferred its New York business to SLNY. The Company entered into a series of new agreements with SLNY under which the Company reinsures SLNY's group insurance policies on an indemnity coinsurance basis, the 3

8 SUN LIFE AND HEAlTH INSURANCE COMPANY (U.S.) Company administers the covered policies, and the Company has the right, following a transition period, to offer to each SLNY policyholder a replacement policy issued by the Company. As a result, the Company retained all risk associated with group insurance policies previously held by SLNY. The Company's May 31, 2007, reinsurance, renewal rights, and administrative services agreements with SLOC remain in place. ORGANIZADONAL CHART The following is a partial organizational chart as of December 31, 2013J of the Company and its parents: Sun Life Financial Inc. (Canada) I Sun Life Assurance Company of Canada (Michigan) I Sun Life and Health Insurance Company (U.S.) (C0 nnecticut) 4

9 Annual Stockholders Meetings MANAGEMENT AND CONTROL The amended and restated by-laws provide that an annual meeting of the stockholders of the Company shall be held on such date as may from time to time be determined by the Board for the purpose of electing directors and for the transaction of other business. Special meetings of the stockholders shall be held whenever called by the chairperson of the Board (Chairperson), the president or his designee, or on the call of stockholders holding together at least ten percent of the capital stock. At any meeting of the stockholders, the holders of a majority of all the shares of capital stock of the Company, present in person or represented by proxy, shall constitute a quorum of the shareholders for all purposes. Board of Directors The Company's by-laws state that the business and property of the Company shall be managed by the Board. At each annual meeting of stockholders, the stockholders entitled to vote shall elect the directors. Each director shall hold office until the next annual stockholders meeting, or until a successor shall have been duly qualified and elected, unless otherwise provided in the by-laws. The number of directors which shall constitute the whole Board shall be fixed from time to time by resolution of the Board but shall be no fewer than five. Special meetings of the Board may be called by the Chairperson or the president and shall be called upon by written request from the secretary at least two days before the meeting, but such notice may be waived by any director. At any meeting of the Board, a majority of directors shall constitute a quorum. The Board may, by one or more resolutions passed by a majority of the whole Board, designate from among its members one or more committees, each committee to consist of two or more directors of the Company. As ofdecember 31,2013, the Board designated an Officer Appointment Committee. 5

10 The following individuals were serving the Company as directors, as ofdecember 31, 2013: Director Scott Francis Beliveau Terrence James Mullen Scott Michael Davis Robert Ernest Klein, Jr. Matthew Stephen MacMillen Title and Principal Business Affiliation Vice-President, Stop Loss Sun Life Financial's U.S. Insurance Operations Senior Vice-President, Distribution Sun Life Financial's U.S. Insurance Operations Senior Vice-President arid General Counsel Sun Life Financial 's U.S. Insurance Operations Senior Vice-President, Voluntary and Multiline Sun Life Financial's U.S. Insurance Operations Senior Vice-President and Chief Financial Officer Sun Life Financial's U.S. Insurance Operations Officers According to the by-laws, the officers ofthe Company shall be elected by the Board and shall be a Chairperson, a president, one or more senior vice presidents, one or more vice presidents, a secretary and a treasurer and any other additional officers and assistant officers of the Company as shall be determined by the Board. Any two or more offices may be held by the same person. At its annual meeting, the Board shall elect the officers of the Company and each such officer shall hold office until the next annual meeting or until a successor shall have been duly qualified and elected or until death, resignation, retirement or removal by the Board. The following individuals were serving the Company as officers, as of December 31, 2013: Officer Robert Ernest Klein, Jr. Amy Ruth Gorham Kerri Riley Ansello Matthew Stephen MacMillen Scott Francis Beliveau Title President Vice President, Chief Actuary Senior Counsel and Secretary Senior Vice President and Chief Financial Officer and Treasurer Vice President, Stop Loss

11 David James Healy Terrence James Mullen. Scott Michael Davis Edmund Francis Milano Stephen Clarkson Peacher Senior Vice President Client and Technology Services Senior Vice President, Distribution Senior Vice President, General Counsel Vice President, Marketing Executive Vice President and Chief Investment Officer RELATED PARTY AGREEMENTS Under the terms of various management and service contracts, the Company reported approximately $74 million due from related parties at December 31, Material related party agreements are as follows: An administrative services agreement between the Company and SLOC, whereby SLOC performs various administrative services on behalf of the Company in connection with policies covered under a related reinsurance agreement. An administrative services agreement between the Company and SLOC, under which SLOC provides facilities, personnel, and administrative services to the Company on a cost reimbursement basis. An investment advisory agreement between the Company and Sun Capital Advisers LLC, under which Sun Capital Advisers LLC acts as investment manager for certain of the Company's portfolios. INSURANCE COVERAGE The Company is covered by a fiduciary liability policy issued by Continental Casualty Company. The limit of liability on the policy is $20,000,000 aggregate which exceeds the suggested minimum limits of insurance pursuant to the Handbook. This policy is in the name of SLF with the Company listed as a covered subsidiary. All other insurance coverages are by policies in the name of SLF with the Company listed as a covered subsidiary. The additional coverages are as follows: Insurance Carrier AIG Insurance Company of Canada Marsh Canada Limited AIG Insurance Company of Canada Sentry Insurance a Mutual Company Insurance Coverage Commercial General Liability Property Liability Commercial Umbrella Policy Workers Compensation 7

12 TERRITORY AND PLAN OF OPERATION The Company is a group life and health insurance carrier licensed in all 50 states as well as thy District of Columbia and Puerto Rico. The Company offers employment-based benefit products and services targeted primarily at employers with fewer than 1,000 employees, as well as select groups within larger companies that require highly customized benefit plans. As detailed in the History section, the business of the Company IS proceeding in accordance with certain agreements, effective July 31, Intercompany Reinsurance REINSURANCE Refer to the History section for a summary of intercompany reinsurance arrangements that have been executed since Non-affiliated Reinsurance The Company has a block of executive ordinary life and annuity policies in runoff that is 100%.indemnity reinsured by Phoenix Life Insurance Company (formerly Phoenix Home Life Mutual Insurance Company). The Company has agreements with unrelated companies whereby the companies reinsure certain mortality risks of the Company's group life contracts on a yearly-renewable term basis. The Company has agreements with unrelated companies whereby the companies reinsure certain morbidity risks of the Company's group long-term disability contracts and group stop loss contracts on a yearly-renewable term basis. INFORMATION TECHNOLOGY CONTROLS RRC conducted a risk-focused assessment and review of the Company's IT general controls. ' The examination was performed in accordance with the guidelines and procedures set forth in the Handbook., Exhibit C, Evaluation of Controls in Information Technology. RRC's objectives were to determine that IT resources align with the Company's objectives and to ensure that significant risks (strategic, operational, reporting, and compliance) arising out of its IT environment were appropriately mitigated by strategies and controls as outlined in the Handbook's Exhibit C Part Two -Evaluation of Controls in Information Technology Work Program. The aforementioned objectives were 8

13 achieved through an independent assessment of the Company's IT controls based upon a combination of inquiry, observation and examination of documentation. There were no material findings which affected the Department's overall reliance on the Company's IT controls. ACCOUNTS AND RECORDS The Company utilizes the Oracle General Ledger system which maintains the Company's financial and accounting records and supports all statutory reporting. Data is manually input into Efreedom which feeds into the financial statement software provided by the Freedom Group. The year-end trial balance for 2013 was reconciled to the Annual Statement. FINANCIAL STATEMENTS The following statements represent the Company's financial position, as filed by the Company as of December 31,2013. No adjustments were made to surplus as a result of the examination. ASSETS Bonds Stocks Mortgage Loans Cash, cash equivalents and short-term investments Investment income due and accrued Uncollected premiums and agents' balances in the course of collection Amounts recoverable from reinsurers Other amounts receivable under reinsurance contracts Accounts receivable relating to uninsured plans Current federal and foreign income tax recoverable and interest thereon Net deferred tax asset Receivables from parent, subsidiaries and affiliates Aggregate write-ins for other than invested assets Assets $212,328,469 1,053,784 25,723,181 2,815,286 1,596,492 15,309,569 8,025,401 3,319,393 1,135,216 Nonadmitted Assets $ 762,861 Net Admitted Assets $212,328,469 1,053,784 25,723,181 2,815,286 1,596,492 14,546,708 8,025,401 3,319,393 1,135,216 4,369,336 15,834,666 73,873,167 2,919,826 11,756,859 2,078,481 4,369,336 4,077,807 73,873, ,345 Total assets $368,303,786 $14, $353,

14 LIABILITIES, SURPLUS AND OTHER FUNDS Aggregate reserve for life contracts Aggregate reserve for accident and health contracts Liability for deposit-type contracts Contract claims: Life Contract claims: Accident and health Premiums and annuity considerations for life and accident and health contracts received in advance Other amounts payable on reinsurance Interest Maintenance Reserve Commissions to agents due or accrued Commissions and expense allowances payable to reinsurance assumed General expenses due or accrued Taxes, licenses and fees due or accrued, excluding federal income taxes Amounts withheld or retained by company as agent or trustee 'Miscellaneous liabilities: Asset valuation reserve Reinsurance in unauthorized and certified companies Funds held under reinsurance treaties with unauthorized and certified reinsurers Payable to parent, subsidiaries and affiliates Liability for amounts held under uninsured plans Aggregate write-ins for liabilities Total liabilities Common capital stock Gross paid in and contributed surplus Unassigned funds (surplus) Total surplus Total capital and surplus I Total liabilities and surplus $ 17,112,310 81,186,086 4,003,865 6,346,760 13,530,360 1,302,213 9,065,491 4,983,785 1,561,991 5,044, ,590 3,065,247 26, , ,864 9,162,861 11,854,506 28,396 1,411,346 $171,689,296 17,940, ,060,000 10,016, ,076, ,016,289 $

15 SUMMARY OF OPERATrONS Premiumsand annuity considerations for life and accident and health contracts $166,787,439 Net investment income 4,507,767 Amortization of Interest Maintenance Reserve 222,058 Commissions and expense allowances on reinsurance ceded 8,258,862 Aggregate write-ins for miscellaneous income 118,100 Totals 179,894,226 Death benefits 11,561,763 Disability benefits and benefits under accident and health contracts 36,895,108 Interest and adjustments on contract or deposit-type contract funds 249,780 Increase in aggregate reserves for life and accident and health contracts 98,298,396 Totals 147,005,047 Commissions on premiums, annuity considerations and deposit-type contract funds 13,684,974 Commissions and expense allowances on reinsurance assumed 30,449,979 General insurance expenses 19,578,410 Insurance taxes, licenses and fees, excluding federal income taxes 1,703,789 Aggregate write-ins for deductions 5,235,779 Totals 217,657,978 Net gain from operations before dividends to policyholders and federal income taxes (37,763,752) Net gain from operations after dividends to policyholders and before federal income taxes (37,763,752) Federal and foreign income taxes incurred (excluding tax on capital gains) (2,063,530 ) Net gain from operations after dividends to policyholders and federal income taxes and before realized capital gains or (losses) Net realized capital gains (losses), less capital gains tax (35,700,222) (103,043) Net income (35,803,265) CAPITAL AND SURPLUS ACCOUNT Capital and surplus, December 31, prior year 48,054,017 Net income (35,803,265) Change in net unrealized capital gains (losses) less capital gains tax (56,550) Change in net unrealized foreign exchange capital gain (loss) (9) Change in net deferred income tax 9,529,779 Change in nonadmitted assets (7,520,394) Change in liability for reinsurance in unauthorized companies (920,864) Change in asset valuation reserve (266,425) Capital changes: Paid in 14,940,000 Surplus adjustment: Paid in 154,060,000 Net change in capital and surplus for the year 133,962,272 Capital and surplus, December 31, current year $

16 UNCOLLECTED PREMIUMS AND AGENTS' BALANCES IN THE COURSE OF COLLECTION $14,546,708 During the review of the captioned account, for the Employee Group Benefits line of business, it was noted that the Company is aging uncollected premiums from the expiration of the grace period rather than the due date. These policies are calculated and billed to policyholders on a monthly basis. Grace period is a business decision and should not be utilized in the statutory nonadmit calculation. According to Statement of Statutory Accounting Principles No.6 of the Manual, monthly billed premium on group life, and accident and health policies are to be aged based on due date. Any uncollected premium balances greater than ninety days past the due date shall be nonadmitted.' It is recommended that the Company appropriately age uncollected premiums based on the due date rather than from the expiration ofa grace period, in accordance with the Manual. AGGREGATE RESERVE FOR LIFE CONTRACTS $17,112,310 AGGREGATE RESERVE FOR ACCIDENT AND HEALTH CONTRACTS $81,186,086 LIABILITY FOR DEPOSIT-TYPE CONTRACTS $4,003,865 CONTRACT CLAIMS: LIFE $6,346,760 ACCIDENT AND HEALTH $13,530,360 The captioned accounts were comprised of the following (in $OOOs): Exhibit 5 - Aggregate Reserves for Life Contracts Line of Business Gross Reinsurance 2013 Net Amount Ceded Amounts Life insurance $948,473 $948,471 $2 Annuities 1,906 1,906 0 Disability - active lives Disability - disabled lives 57,459 42,276 15,183 Deficiency reserves 2, ,927 Total Exhibit 5 $1,010,774 $993,662 $17,112 Exhibit 6 - Aggregate Reserve for Accident and Health Contracts Reserve Description Gross Reinsurance 2013 Net Amount Ceded Amounts Active life reserves $206 $151 $55 Claim reserves 292, ,852 81,131 Total Exhibit 6 $293,189 $212,003 $81,186 12

17 SUN LIFE AND HEALTH INSURANCE COIvLPANY (U.S.) Exhibit 7 - Deposit Type Contracts Product Description Gross Amount Reinsurance Ceded 2013 Net Amounts Supplementary contracts wlo life contingencies. $4,004 $0 $4,004 Total Exhibit 7 $4,004 $0 $4,004 EXIllBIT 8: Claims for Life and Accident and Health Contracts Line of Business Gross Reinsurance Amount Ceded! 2013 Net I Amounts Life $11,729 $5,382 $6,347 Health 15,497 1,967 13,530 Total Exhibit 8 $27,226 $7,349 $19,877 CTl conducted an evaluation of the Company's pricing and underwriting, reserving and liquidity processes. In performing the review, CTI relied upon information supplied by the Company and the Department. The information included the following: 2013 Statement of Actuarial Opinion; 2013 Actuarial Opinion Memorandum and supporting documentation; Work performed by D&T; 2013 Annual Statement; and Additional information requested and obtained during the course ofthe review. Pricing and Underwriting Risk CTl's pricing and underwriting procedures included: Discussions with pricing actuaries as to how pricing was determined; A walk-through by Company personnel of actual pricing cases sold and out for bid; and A detailed review of the pricing memoranda on all products, including a summary of the experience studies. Reserving Risk CTI's reserving procedures included: A thorough review of the Actuarial Opinion Memorandum, Actuarial Opinion and Regulatory Asset Adequacy Issues Summary; 13

18 A review of the SOXIModel Audit Rule controls for the reserving items; A walk through of the reserving process by the Company's valuation actuaries; A review of the reserve calculations from first principles of a sample set of claims; A review of the trend analysis used for claim reserve calculations including incurred but reported and in course of settlement reserves; and A review of the premium deficiency reserve worksheets. Liquidity Risk CTT's procedures included: A review of the liquidity reports commonly used by the Company, e.g., the charts of actual asset and liability cash flows over the last year and the expected flows for the next year; A high level review of the assets of the Company; and A review of the Standard and Poor's write-up on SLF's and affiliates liquidity. Conclusion Based on the risk-based assessment and review procedures performed, no material concerns were noted relating to pricing and.underwriting risk, reserve risk and liquidity risk. COMMON CAPITAL STOCK $17,940,000 The following table reflects common capital stock during the period under examination: 2013 $17,940, $3,000, $3,000, $3,000, $3,000,000 Prior to 2013, there were 3,000 shares of common stock authorized with a par value of $6,000 per share, of which 500 were issued and outstanding. All shares are owned by SLOe. The increase in common capital stock in 2013 was attrib.utable to: The Company issued 2,000 shares of common stock with a par value of $6,000 per share to SLOC on July 30, 2013, for the subscription price of $120 million. On February 10,2014, the Department approved a $49,000,000 contribution from SLOC in exchange for the Company issuing 490 shares of common stock with a 14

19 par value of $6,000 per share. The contribution was effective on December 31, A receivable was reported as an admitted asset as of December 31, GROSS PAID IN AND CONTRIBUTED SURPLUS $154,060,000 Effective July 31, 2013, the Company authorized a stock exchange from SLHICUS to SLA in exchange for $120 million. A second exchange was made effective December 31,2013, for approximately $34 million in securities. Gross Paid In and Contributed Surplus as of December 31, 2008 $0 Surplus Adjustment: Paid In 154,060,000 Gross Paid In and Contributed Surplus as of December 31, 2013 $154,060,000 UNASSIGNED FUNDS (SURPLUS) $10,016,289 The following is a reconciliation of unassigned funds (surplus) during the period under examination: Unassigned Funds (Surplus) as of December 31,2008 $34,110,396 Net Income (30,988,062) Change in Net Unrealized Capital Gains (Loss) less Capital Gains Tax (56,550) Change in Net Unrealized Foreign Exchange Capital Gain (Loss) (171,144) Change in Net Deferred Income Tax 7,309,309 Change in Nonadmitted Asset s (71,728) Change in Liability in Unauthorized Companies (920,864) Change in Asset Valuation Reserve (269,650) Cumulative Effect of Changes in Accounting Principles 1,074,580 Unassigned Funds (Surplus) as of December 31,2013 $10, RECOMlviENDATION 12 UNCOLLECTED PREMIUMS AND AGENTS' BALANCES IN THE COURSE OF COLLECTION It is recommended that the Company appropriately age uncollected premiums based on the due date rather than from the expiration of a grace period, in accordance with the Manual. 15

20 SUBSEQUENT EVENTS See the accolli1t captioned "Common Capital Stock" regarding a 2014 capital contribution. In connection with the sale of Sun Life Financial's U.S. annuity business, the Company began writing new business in New York on January 1,2014. In accordance with the July 31, 2013, renewal rights agreement between the Company and SLNY, the existing group life and group accident and health policies that were reinsured from SLNY to the Company were rewritten by the Company on May 1,2014. CONCLUSION The results of this examination disclosed that as of December 31,2013, the Company had admitted assets of $353,705,585, liabilities of $171,689,296, and surplus of $182,016,289. During the period under examination, admitted assets increased $267,900,778, liabilities increased $122,994,885, and surplus as regards policyholders increased $144,905,

21 SUN LIFE AND HEALTH INSURANCE COMJ>ANY (U.S.) SIGNATURE In addition' to the undersigned, William Arfanis, CFE, FLMI; Joseph Marcantonio, APE, CISA, AES; Ellen McCarthy; Lisa Pagliaro, APE; Kermeth Roulier, APE, CISA, AES; William Tacy, CFE, CIA, CISA, FLMI; Debra Zadzilko, ASA, MAAA of the Department; and the consulting firms ofrrc and CTI participated in this examination. I, Kevin Beaudoin, CFE, do solemnly swear that the foregoing report of examination is hereby represented to be a full and true statement of the condition and affairs of the subject insurer as of December 31, 2013, to the best of my information, knowledge and belief. Respectfully submitted, State of Connecticut ss County of Hartford Subscribed and sworn to before me, Peu...' C-.c 'C} A, [b<.-l+\.e r-,notary Public/Cemreissicner ofthe..superior Court, on this q"h, day of C=e br-clo d,/2015. My commission expires S e~+e CY\ b< r 30 1 a o 18 17