Fair value and the fair value hierarchy of derivative instruments As at December 31, 2022 Fair value Level 1 Level 2 Level 3 Derivative assets Interest rate contracts $ 5,919 $ – $ 5,766 $ 153 Foreign exchange contracts 2,299 – 2,298 1 Equity contracts 366 – 361 5 Credit default swaps 4 – 4 – Total derivative assets $ 8,588 $ – $ 8,429 $ 159 Derivative liabilities Interest rate contracts $ 12,025 $ – $ 8,689 $ 3,336 Foreign exchange contracts 2,039 – 2,037 2 Equity contracts 225 – 216 9 Total derivative liabilities $ 14,289 $ – $ 10,942 $ 3,347 As at December 31, 2021 Fair value Level 1 Level 2 Level 3 Derivative assets Interest rate contracts $ 14,971 $ – $ 12,510 $ 2,461 Foreign exchange contracts 854 – 854 – Equity contracts 1,677 – 1,616 61 Credit default swaps 1 – 1 – Total derivative assets $ 17,503 $ – $ 14,981 $ 2,522 Derivative liabilities Interest rate contracts $ 7,829 $ – $ 7,419 $ 410 Foreign exchange contracts 2,182 – 2,181 1 Equity contracts 27 – 17 10 Total derivative liabilities $ 10,038 $ – $ 9,617 $ 421 Level 3 roll forward information for net derivative contracts measured using significant unobservable inputs is disclosed in note 4(g). (b) Hedgingrelationships The Company uses derivatives for economic hedging purposes. In certain circumstances, these hedges also meet the requirements of hedge accounting. Risk management strategies eligible for hedge accounting are designated as fair value hedges, cash flow hedges or net investment hedges, as described below. Fair value hedges The Company uses interest rate swaps to manage its exposure to changes in the fair value of fixed rate financial instruments due to changes in interest rates. The Company also uses cross currency swaps to manage its exposure to foreign exchange rate fluctuations, interest rate fluctuations, or both. The Company recognizes gains and losses on derivatives and the related hedged items in fair value hedges in investment income. These investment gains (losses) are shown in the following table. Ineffectiveness Hedged items in qualifying Gains (losses) Gains (losses) recognized in fair value hedging recognized on recognized for investment For the year ended December 31, 2022 relationships derivatives hedged items income Foreign currency swaps Fixed rate assets $7 $(5) $2 Total $7 $(5) $2 Ineffectiveness Hedged items in qualifying Gains (losses) Gains (losses) recognized in fair value hedging recognized on recognized for investment For the year ended December 31, 2021 relationships derivatives hedged items income Foreign currency swaps Fixed rate assets $ 4 $ (2) $ 2 Total $4 $(2) $2 171