Fthr re Agreement

Sun Life Fin.Services of Canada Inc
27 December 2001




SUN LIFE FINANCIAL SERVICES OF CANADA INC.
MATERIAL CHANGE REPORT

ITEM 1     Reporting Issuer
           Sun Life Financial Services of Canada Inc., 150 King Street West,
           Suite 1400, Toronto, Ontario M5H 1J9

ITEM 2     Date of Material Change
           December 17, 2001

ITEM 3     Summary of Material Change
           
           Sun Life Financial Services of Canada Inc. ('Sun Life Financial') and
           Clarica Life Insurance Company ('Clarica') announced on December 17, 
           2001 a definitive agreement to combine operations on their shared    
           vision of a world-class international financial services institution
           headquartered in Canada.  Pursuant to the proposed transaction,      
           Clarica will become a wholly-owned subsidiary of Sun Life Financial,
           maintaining the Clarica name.  The combined Canadian operations of   
           Clarica and Sun Life Financial will be based in Waterloo.  The
           board of directors of Clarica will recommend the acceptance of the 
           proposed transaction to Clarica's shareholders and voting            
           policyholders.

ITEM 4     Full Description of Material Change

           General

           On December 17, 2001 Clarica and Sun Life Financial entered into a 
           definitive agreement (the 'Transaction Agreement') pursuant to which
           Sun Life Financial will acquire all of the outstanding common shares
           of Clarica ('Clarica Shares') through a capital reorganization of 
           Clarica and Clarica shareholders will receive 1.5135 common shares
           in the capital of Sun Life Financial ('Sun Life Financial Shares')
           for each Clarica Share held (the 'Transaction').  The completion 
           of the Transaction is subject to the satisfaction or waiver of       
           certain conditions, including:

*          the approval of the Transaction by at least two-thirds of the votes  
            cast at the Special Meeting referred to below by Clarica            
            shareholders, voting separately as a class, and by at least two-    
            thirds of Clarica's shareholders and voting policyholders, voting   
            together;

*          the approval of the Transaction by, among others, the Minister of
           Finance (Canada) and the Superintendent of Financial Institutions
           (Canada); and

*          the receipt of approval or expiration or termination of waiting      
           periods under Canadian and United States competition or antitrust
           laws.

Clarica's shareholders and voting policyholders will be asked to consider and, 
if deemed advisable, approve the Transaction at a special meeting (the 'Special 
Meeting') which is expected to be held on or about March 1, 2002.

If the Transaction is completed, the Clarica shareholders will own, in the 
aggregate, approximately 32% of the outstanding Sun Life Financial Shares and 
Sun Life Financial will own all of the outstanding Clarica Shares.  The timing 
of completion of the Transaction will depend upon, among other things, the 
timing of the receipt of all required regulatory approvals, and is currently 
anticipated to close in the second quarter of 2002.

Certain Terms of the Transaction Agreement

Non-Solicitation

The Transaction Agreement provides that, except as contemplated below, Clarica 
and its representatives will not:

*     solicit, initiate or encourage any inquiry or the making of any proposal 
to Clarica or its shareholders or policyholders from any person which 
constitutes, or may reasonably be expected to lead to, in one transaction or a 
series of transactions, an Alternative Proposal (which is defined, generally, as
any of the following or an announcement of its intention to do any of the 
following:  any merger, amalgamation, arrangement, share exchange, take-over 
bid, recapitalization, consolidation or business combination involving Clarica 
or any of its material subsidiaries; any acquisition of assets representing 30% 
or more of the book value (on a consolidated basis) of the assets of Clarica and
its subsidiaries, taken as a whole; any acquisition of beneficial ownership of 
30% or more of the Clarica Shares; any reinsurance arrangement outside the 
ordinary course of business involving a substantial part of the insurance 
liabilities of 
Clarica; or any material acquisition by Clarica of any assets or securities of 
another person);

*     enter into or participate in or continue any discussions or negotiations 
regarding, agree to or endorse or recommend, or enter into or propose to enter 
into any agreement, arrangement or understanding in relation to, an Alternative 
Proposal; or

*     furnish to any person any information with respect to the business, 
properties, operations, prospects or condition (financial or otherwise) of 
Clarica or any of its subsidiaries in circumstances under which it knows, or it 
ought reasonably to know, that such information will be used by the recipient in
connection with, or in order to make or evaluate making, an Alternative 
Proposal.

Clarica's Ability to Respond to Superior Proposal

Notwithstanding, the restrictions described above, the board of directors of 
Clarica may, at any time before the Special Meeting, consider, participate in 
discussions or negotiations with, or provide information to, any person who has 
delivered to Clarica a bona fide written Alternative Proposal (with respect to 
which Clarica has not breached its non-solicitation covenant) provided that 
Clarica's board of directors, after consultation with its financial and legal 
advisors, has determined that it is necessary for the directors to take that 
action in order to discharge properly their fiduciary duties under the Insurance
Companies Act (Canada) (the 'ICA') and that such Alternative Proposal is or, if 
consummated in accordance with its terms, would reasonably be expected to be a 
Superior Proposal.  A 'Superior Proposal' is defined in the Transaction 
Agreement as an Alternative Proposal that (i) if completed in accordance with 
its terms, would result in or would reasonably be expected to result in a 
transaction more favourable to Clarica and its subsidiaries than the Transaction
and (ii) is reasonably capable of completion without undue delay having regard 
to the nature, scope and size of Clarica and its business and the regulatory 
environment in which it and its subsidiaries operate.

Certain Notices to Sun Life Financial

Clarica has agreed to notify Sun Life Financial as soon as possible of any 
bonafide written Alternative Proposal of which Clarica's senior management or 
board of directors becomes aware, or any request for non-public information in 
connection with an Alternative Proposal or for access to Clarica's properties, 
books or records by any person that advises that it is considering making, or  
has made, an Alternative Proposal. Clarica may provide a person who proposes a 
bona fide written Alternative Proposal with access to non-public information if 
the Clarica board of directors determines that such Alternative Proposal is a 
Superior Proposal, and such person has entered into a confidentiality agreement 
with Clarica substantially similar to the confidentiality agreement entered into
by Clarica and Sun Life .

Sun Life Financial's Opportunity to Match

Clarica may accept, approve, recommend or enter into an agreement, arrangement 
or understanding in respect of an Alternative Proposal on the basis that it 
constitutes a Superior Proposal, provided that:

* it gives prompt notice to Sun Life Financial that it proposes to do so;

* after consultation with its financial and legal advisors, Clarica's board of 
directors determines that it would be necessary for the directors to take that 
action in order to discharge properly their fiduciary duties under the ICA;

* it provides to Sun Life Financial a copy of the agreement relating to the 
Alternative Proposal, if any; and

* it provides Sun Life Financial with the opportunity, for a period of five 
business days from the later of (i) the date Clarica notifies Sun Life Financial
of any bonafide written Alternative Proposal of which Clarica's senior 
management or board of directors has become aware, or any request for non-public
information relating to Clarica or any of its subsidiaries in connection with an
Alternative Proposal, and (ii) the date that Clarica notifies Sun Life Financial
that it proposes to accept, approve, recommend or enter into an agreement in 
respect of an Alternative Proposal on the basis that it constitutes a Superior 
Proposal, to negotiate to amend the Transaction Agreement and the terms of the 
Transaction to provide for terms that to Clarica and the Clarica shareholders 
are (in the good faith determination of the board of directors of Clarica) as 
favourable as, or superior to, the terms of the Superior Proposal.

If at any time during such five business day period Sun Life Financial elects to
make a proposal that, in the good faith belief of the directors of Sun Life 
Financial, provides for terms that to Clarica and the Clarica shareholders are 
as favourable as, or superior to, the terms of the Superior Proposal and 
delivers to Clarica an executed amendment to the Transaction Agreement 
reflecting the new proposal, the board of directors of Clarica will be required 
to:

* call and hold a meeting of Clarica's board of directors (or the appropriate 
committee thereof) to consider Sun Life Financial's proposal within 48 hours 
after receipt of such proposal;

* in good faith consider such proposal and permit Sun Life Financial and its 
representatives to make a presentation to the meeting in respect of the relative
merits of Sun Life Financial's proposal and the Superior Proposal (but not 
otherwise to attend or participate in the meeting or the deliberation of the 
board of directors of Clarica); and 

* not later than the date the meeting of Clarica's board of directors is 
required to be held as set forth above, determine and advise Sun Life Financial 
as to whether Clarica's board of directors has determined that Sun Life 
Financial's proposal provides for terms that to Clarica and its shareholders are
as favourable as, or superior to, the terms of the Superior Proposal.

In the event that Clarica's board of directors determines that the Sun Life 
Financial proposal provides for terms that to Clarica and its shareholders are 
as favourable as, or superior to, the terms of the Superior Proposal, it will 
cause Clarica immediately thereafter to execute the amendment to the Transaction
Agreement delivered by Sun Life Financial and not take any actions in 
furtherance or support of the Superior Proposal. If, however, Clarica's board of
directors continues to believe, in good faith, and after consultation with its 
financial advisors and outside counsel, that the Superior Proposal continues to 
be a Superior Proposal, and therefore rejects Sun Life Financial's amended 
proposal, then, subject to payment of the Termination Fee (described below) to 
Sun Life Financial, Clarica may terminate the Transaction Agreement.

Clarica will not have any of the rights described above after the Special 
Meeting if the Transaction is approved at the Special Meeting.


Termination

The Transaction Agreement my be terminated at any time prior to closing (even if
the Clarica shareholders and policyholders have approved the Transaction at the 
Special Meeting);

(a)    by mutual agreement of Sun Life Financial and Clarica;

(b)    by Sun Life Financial or Clarica if the Transaction or any part of it is 
illegal or otherwise prohibited by law, or if any final and non-appealable 
judgment, injunction, order or decree of a court or regulatory authority 
prohibiting Sun Life Financial or Clarica from proceeding with or completing the
Transaction or any part of it is entered;

(c)    by Sun Life Financial or Clarica if any of the conditions to the closing 
of the Transaction relating to the receipt of all required regulatory approvals 
becomes incapable of satisfaction;

(d)    by Sun Life Financial or Clarica if the closing does not occur on or 
prior to September 30, 2002; subject to the extension of such date to December 
31, 2002 in certain circumstances in the event that the delay in closing is the 
result of an injunction or order made by a court or regulatory authority or the 
parties not having obtained any required regulatory approval;

(e)    by Sun Life Financial if:

(i)   Clarica's board of directors fails to recommend or withdraws,  modifies  
or  changes  its  approval  or recommendation of the Transaction Agreement or  
the Transaction in a manner adverse to Sun Life Financial;

(ii)   following the announcement of an Alternative Proposal, Clarica's board of
directors fails to affirm its approval or recommendation of the Transaction 
Agreement or the Transaction within five business days after any written request
to do so from Sun Life Financial;

(iii)   Clarica has breached its non-solicitation obligations; or

(iv)   Clarica's board of directors accepts, approves, recommends or enters into
an agreement (other than a confidentiality agreement) with any person with 
respect to a Superior Proposal;

(f)    by either Sun Life Financial or Clarica, if at the Special Meeting the 
requisite votes of the shareholders and voting policyholders to approve the 
Transaction, are not obtained;

(g)    by Clarica where Clarica has delivered to Sun Life Financial notice that 
it intends to accept, recommend, approve or enter into an agreement in respect 
of an Alternative Proposal on the basis that it constitutes a Superior Proposal 
and Sun Life Financial has failed to amend the Transaction Agreement to provide 
for terms that, in the determination of Clarica's board of directors, are as 
favourable as, or superior to, the terms of the Superior Proposal;

(h)    by Sun Life Financial, if Clarica has breached any of its 
representations, warranties, agreements, covenants or obligations in the 
Transaction Agreement in any material respect and such breach is not curable or 
if curable is not cured within 15 days after notice;

(i)    by Clarica, if Sun Life Financial has breached any of its 
representations, warranties, agreements, covenants or obligations in the 
Transaction Agreement in any material respect and such breach is not curable or 
if curable is not cured within 15 days after notice;
           
(j)    by Sun Life Financial, if there has been since the date of the 
Transaction Agreement (or, if there exists or has previously occurred, there has
been disclosed, generally or to Sun Life Financial), any change, event, 
occurrence or development that would reasonably be expected to have a material 
adverse effect on Clarica or that would materially and adversely affect the 
ability of Clarica to perform its obligations under the Transaction Agreement; 
or

(k)    by Clarica, if there has been since the date of the Transaction Agreement
(or, if there exists or has previously occurred, there has been disclosed, 
generally or to Clarica), any change, event, occurrence or development that 
would reasonably be expected to have a material adverse effect on Sun Life 
Financial or that would materially and adversely affect the ability of Sun Life 
Financial to perform its obligations under the Transaction Agreement.

Termination Fee and Expense Reimbursement  

Clarica will be required to pay a termination fee of $310 million (the 
'Termination Fee') or $50 million in respect of the reimbursement of expenses 
(the 'Expense Reimbursement Amount') to Sun Life Financial in the event that:

* the Transaction Agreement is terminated by Sun Life Financial in the 
circumstances described in paragraph (e) under '- Termination' above, in which 
case the Termination Fee must be paid to Sun Life Financial within three 
business days following such termination;

* (i) prior to the date of the Special Meeting a bona fide Alternative Proposal 
has been made, or any proposal or expression of interest by a third party 
regarding an Alternative Proposal has been publicly disclosed or announced, 
(ii) the Transaction Agreement is terminated by either party because the 
Transaction is not approved by shareholders and policyholders at the Special 
Meeting and (iii) either (A) the Alternative Proposal referred to in (i) above 
is subsequently completed or (B) within 12 months after the date of the Special 
Meeting another bonafide Alternative Proposal is made or a proposal or 
expression of interest by a third party regarding an Alternative Proposal is 
publicly disclosed or announced and such Alternative Proposal is subsequently 
completed, in which case the Termination Fee must be paid to Sun Life Financial 
immediately prior to the completion of either such Alternative Proposal;

* the Transaction Agreement is terminated by Sun Life Financial (i) as the 
result of a breach by Clarica of the Transaction Agreement as described in 
paragraph (h) under '- Termination' above and prior to such termination a bona 
fide Alternative Proposal has not been made, and at such time no proposal or 
expression of interest by a third party regarding an Alternative Proposal has 
been publicly disclosed or announced, or (ii) as 'the result of a material 
adverse change with respect to Clarica described in paragraph (j) under 
'- Termination' above, in which case the Expense Reimbursement Amount must be 
paid to Sun Life Financial within three business days following notice of such 
termination;

* the Transaction Agreement is terminated by Sun Life Financial as the result of
a breach by Clarica of the Transaction Agreement as described in paragraph (h)  
under '-Termination' above and prior to such termination a bona fide Alternative
Proposal has been made, or any proposal or expression of interest by a third 
party regarding an Alternative Proposal has been publicly disclosed or 
announced, or (ii) as the result of a material adverse change with respect to 
Clarica described in paragraph (j) under '--Termination' above,  in which case  
the Expense Reimbursement Amount must be paid to Sun Life Financial within three
Business Days following such termination;

*  the Transaction Agreement is terminated by Sun Life Financial as the result 
of a breach by Clarica of the Transaction Agreement as described in paragraph 
(h) under '--Termination' above and prior to such termination a bona fide 
Alternative Proposal has been made, or any proposal or expression of interest by
a third party regarding an Alternative Proposal has been publicly disclosed or 
announced, in which case (i) the Expense Reimbursement Amount must be paid to 
Sun Life Financial within three Business Days following such termination and 
(ii) if at any time within 12 months following the date of such termination, 
Clarica enters into any agreement for an Alternative Proposal or consummates a 
transaction that constitutes an Alternative Proposal, the Termination Fee (less 
the Expense Reimbursement Amount paid under clause (i) must be paid to Sun Life 
Financial immediately prior to the completion of either such Alternative 
Proposal; and 

*   the Transaction Agreement is terminated by Clarica as the result of Sun Life
Financial having failed to match a Superior Proposal as described in paragraph 
(g) under '- Termination', in which case the Termination Fee must be paid to Sun
Life Financial prior to such termination.

Sun Life Financial will be required to pay the Expense Reimbursement Amount to 
Clarica in the event that the Transaction Agreement is terminated by Clarica as 
the result of a breach by Sun Life Financial of the Transaction Agreement as 
described in paragraph (i) under '- Termination' above or as the result of a 
material adverse change with respect to Sun Life Financial described in 
paragraph (k) under 'Termination' above, in which case the Expense Reimbursement
Amount must be paid to Clarica within three business days following notice of 
such termination.

ITEM 5.     Reliance on Section

            Not applicable. 

ITEM 6.     Omitted Information

            Not applicable.

ITEM 7.     Contact Officer

            Thomas A. Bogart, Executive Vice-President and Chief Legal
            Officer, Sun Life Financial Services of Canada Inc.

            Telephone: [phone] 
            Fax: [phone] 

ITEM 8.     Statement of Senior Officer

            The foregoing accurately discloses the material change referred to  
            herein. 

            SIGNED this 27th day of December, 2001 at Toronto, Ontario 
            Per:'Thomas A. Bogart'
                 
            Thomas A. Bogart 
            Executive Vice-president and Chief Legal Officer