Sun Life Financial Inc. today announced record operating earnings of $493 million — or $0.85 per share — for the first quarter of fiscal 2006, ended March 31.

Operating earnings per share were up 10% over the first quarter of fiscal 2005 while operating return on equity grew to 13.2%, up from 12.6% the year earlier. Operating earnings exclude a $2 million after-tax integration charge to earnings related to the acquisition of CMG Asia Ltd. and CommServe Financial Ltd. (collectively CMG Asia). Including this charge, EPS and ROE for the quarter were $0.84 and 13.1%, respectively.

“We made significant progress in the integration of CMG Asia during the quarter,” said Donald A. Stewart, Sun Life’s CEO. “This important advancement in Hong Kong positions us for continued growth in Asia, while demonstrating Sun Life Financial’s integration capabilities internationally.

“We further expanded the company’s distribution reach by entering into new distribution relationships in the United States, increasing our sales force and bancassurance alliances in India, and launching operations in additional cities in China. The quarter reflects our ability to grow through strategic acquisitions and by building scale organically through distribution,” he said.

Paul W. Derksen, executive vice president and chief financial officer, added: “Strong earnings performance and effective capital management contributed to the 10% increase in operating EPS and the 60bps improvement in operating ROE over the first quarter of 2005.”

Financial Highlights:

– Sun Life Financial repurchased more than 2 million common shares during the quarter at an average price of $49.34 under its share repurchase program.
– The company declared $160 million in common shareholder dividends during the quarter, representing a payout ratio of 32%.
– Sun Life Financial completed a $700 million domestic public offering of Series B Senior Unsecured 4.95% Fixed/Floating Debentures due in 2036.
– Sun Life Financial completed a domestic public offering of $250 million of Class A Non-Cumulative Preferred Shares Series 3 at $25 per share yielding 4.45% annually.

Operational Highlights:

– Sun Life Financial U.S. (SLF U.S.) and M Financial Group announced an agreement to offer Sun Life Financial’s insurance and annuity products and services to M Financial Group’s member firms and their high net-worth clients. With over 110 member firms in 35 states, M Financial Group is a distributor of financial products and services in the United States.
– SLF U.S. was chosen as the exclusive provider of group life and disability benefits to Medical Group Insurance Services, Inc., the largest provider of long-term disability insurance to physician group practices in the United States.
– Assets under management (AUM) at Sun Life Financial were a record $402 billion at March 31, driven in part by the US$8 billion increase during the quarter at MFS, where AUM reached a record US$170 billion.
– Sun Life Financial Canada’s Group Retirement Services business unit led the Canadian industry with 38% of defined contribution sales in 2005.