a reduction in the carrying value of AFS debt securities from higher interest rates offset by an increase in retained earnings, the favourable impact of a weaker Canadian dollar and common share buybacks. The number of common shares outstanding was 1,865 million as at December 31, 2022 and 1,943 million as at December 31, 2021. Impact of Fair Value Accounting Fair value accounting policies affect the measurement of both our assets and our liabilities. The difference between the reported amounts of our assets and liabilities determined as of the balance sheet date and the immediately preceding balance sheet date in accordance with the applicable fair value accounting principles is reported as investment-related experience and the direct impact of equity markets and interest rates and variable annuity guarantees, each of which impacts net income. We reported $45.1 billion of net realized and unrealized investment losses in investment income in 2022 (2021 – losses of $4.0 billion). As outlined under “Critical Actuarial and Accounting Policies” below, net insurance contract liabilities under IFRS are determined using Canadian Asset Liability Method (“CALM”), as required by the Canadian Institute of Actuaries (“CIA”). The measurement of policy liabilities includes the estimated value of future policyholder benefits and settlement obligations to be paid over the term remaining on in-force policies, including the costs of servicing the policies, reduced by the future expected policy revenues and future expected investment income on assets supporting the policies. Investment returns are projected using the current asset portfolios and projected reinvestment strategies. Experience gains and losses are reported when current period activity differs from what was assumed in the policy liabilities at the beginning of the period. We classify gains and losses by assumption type. For example, current period investing activities that increase (decrease) the future expected investment income on assets supporting the policies will result in an investment-related experience gain (loss). See description of investment-related experience in “Non-GAAP and Other Financial Measures” below. Public Equity Risk and Interest Rate Risk At December 31, 2022, excluding impacts from asset-based fees earned on assets under management and policyholder account value, the impact of a 10% decline in equity markets was estimated to be a charge of $560 million and the impact of a 50 basis point decline in interest rates, across all durations and markets, on our earnings was estimated to be a charge of $100 million. See “Risk Management and Risk Factors” below. Impact of Foreign Exchange Rates We have worldwide operations, including in Canada, the United States and various markets in Asia, and generate revenues and incur expenses in local currencies in these jurisdictions, all of which are translated into Canadian dollars. The bulk of our exposure to foreign exchange rates is to movements in the U.S. dollar. Items impacting our Consolidated Statements of Income are translated to Canadian dollars using average exchange rates for the respective quarterly period. For items impacting our Consolidated Statements of Financial Position, period end rates are used for currency translation purposes. The following table provides the most relevant foreign exchange rates for 2022 and 2021. Quarterly Full Year Exchange rate 4Q22 3Q22 2Q22 1Q22 4Q21 2022 2021 (1) Average U.S. dollar 1.3575 1.3057 1.2765 1.2663 1.2601 1.3015 1.2536 Japanese yen 0.0096 0.0094 0.0098 0.0109 0.0111 0.0099 0.0114 Hong Kong dollar 0.1736 0.1664 0.1627 0.1622 0.1618 0.1662 0.1613 Period end U.S. dollar 1.3549 1.3740 1.2900 1.2496 1.2678 1.3549 1.2678 Japanese yen 0.0103 0.0095 0.0095 0.0103 0.0110 0.0103 0.0110 Hong Kong dollar 0.1736 0.1750 0.1644 0.1595 0.1626 0.1736 0.1626 (1) Average rates for the quarter are from Bank of Canada which are applied against Consolidated Statements of Income items for each period. Average rate for the full year is a 4-point average of the quarterly average rates. Net income attributed to shareholders and core earnings from the Company’s foreign operations are translated to Canadian dollars, and in general, our net income attributed to shareholders and core earnings benefit from a weakening Canadian dollar and are adversely affected by a strengthening Canadian dollar. However, in a period of net losses in foreign operations, the weakening of the Canadian dollar has the effect of increasing the losses. The relative impact of foreign exchange in any given period is driven by the movement of currency rates as well as the proportion of earnings generated in our foreign operations. Changes in foreign currency exchange rates from 2021 to 2022, primarily due to the weakening of the Canadian dollar compared with the U.S. dollar, increased core earnings by approximately $57 million in 2022. The impact of foreign currency exchange rates on items excluded from core earnings does not provide relevant information given the nature of these items. 16 | 2022AnnualReport | Management’sDiscussionandAnalysis