2021 Review of Actuarial Methods and Assumptions The completion of the 2021 annual review of actuarial methods and assumptions resulted in an increase in insurance contract liabilities of $287, net of reinsurance, and a decrease in net income attributed to shareholders of $41 post-tax. Change in insurance contract liabilities, net of reinsurance Attributed to Change in net participating Attributed to income attributed policyholders’ shareholders’ to shareholders For the year ended December 31, 2021 Total (1) account account (post-tax) U.S. variable annuity product review $ 51 $ – $ 51 $ (40) Mortality and morbidity updates 350 – 350 (257) Lapses and policyholder behaviour updates 686 18 668 (534) Expense updates (653) (25) (628) 503 Investment related updates (257) (2) (255) 168 Other updates 110 231 (121) 119 Net impact $ 287 $ 222 $ 65 $ (41) (1) The change in insurance contract liabilities, net of reinsurance, attributable to the participating policyholders’ account was primarily driven by a reduction in the expected long- term interest rates within the valuation models to reflect the low interest rate environment. U.S. variable annuity product review The review of the Company’s variable annuity products in the U.S. resulted in a $40 post-tax charge to net income attributed to shareholders. The charge was primarily driven by updates to lapse assumptions to reflect emerging experience, partially offset by refinements to the Company’s segregated fund guaranteed minimum withdrawal benefit valuation models. Mortality and morbidity updates Mortality and morbidity updates resulted in a $257 post-tax charge to net income attributed to shareholders. The charge was driven by updates to older age mortality on certain products in the Company’s U.S. life insurance business, mortality assumption updates in Indonesia to reflect recent experience, as well as from refining assumptions on several reinsurance arrangements in Canada. Lapses and policyholder behaviour updates Updates to lapses and policyholder behaviour assumptions resulted in a $534 post-tax charge to net income attributed to shareholders. The Company completed a detailed review of lapse assumptions for non-participating policies within the Company’s U.S. life insurance business including those for universal life, variable universal life, and term products. The Company observed a trend of low lapse rates on the protection-focused universal life insurance products as consumers continue to value the product guarantees in the prolonged low interest rate environment. The Company lowered the overall lapse assumptions for these products to reflect actual experience, which resulted in a post-tax charge to net income attributed to shareholders. Other updates to lapse and policyholder behaviour assumptions were made across several products in Canada and Japan to reflect recent experience, resulting in a modest post-tax charge to net income attributed to shareholders. Expense updates Updates to expense assumptions resulted in a $503 post-tax gain to net income attributed to shareholders. The Company completed a detailed review of the investment expense assumptions across the Company. This resulted in a $263 post-tax gain to net income attributed to shareholders, primarily driven by scale benefits. The Company also completed a global expense study, which resulted in a $256 post-tax gain to net income attributed to shareholders. The favourable result primarily reflects a reallocation of expenses across certain business lines to align with actual experience, as well as from expense savings related to various expense efficiency initiatives. Investment-related updates Updates to investment return assumptions resulted in a $168 post-tax gain to net income attributed to shareholders. The primary driver of the gain was an update to the Company’s corporate bond default rates to reflect recent experience; the Company reduced default assumptions for certain credit ratings in Canada, the U.S., and Japan. This was partially offset by a reduction to the Company’s Canadian real estate investment return assumptions. 184 | 2022AnnualReport | NotestoConsolidatedFinancialStatements