4. U.S. Our U.S. segment provides a range of life insurance products and insurance-based wealth accumulation products, and has an in-force long-term care insurance business and an in-force annuity business. The insurance products we offer are designed to provide estate, business and income-protection solutions for high net worth, emerging affluent markets and the middle market, and to leverage the asset management expertise and products managed by our Global Wealth and Asset Management business. Behavioural insurance features are standard on all our new insurance product offerings. The primary distribution channel is licensed financial advisors. We aim to establish lifelong customer relationships that benefit from our holistic protection and wealth product offerings in the future. Our in-force long-term care insurance policies provide coverage for the cost of long-term services and support. Our in-force annuity business includes fixed deferred, variable deferred, and payout products. In 2022, our U.S. segment contributed 27% of the Company’s core earnings from operating segments and, as at December 31, 2022, accounted for 17% of the Company’s assets under management and administration. Profitability U.S. reported net income attributed to shareholders of $3,950 million in 2022 compared with $2,080 million in 2021. Net income attributed to shareholders is comprised of core earnings, which was $1,700 million in 2022 compared with $1,936 million in 2021, and items excluded from core earnings, which amounted to a net gain of $2,250 million in 2022 compared with a net gain of $144 million in 2021. The changes in net income attributed to shareholders and core earnings expressed in Canadian dollars were due to the factors described below and, in addition, the change in core earnings reflected a $58 million favourable impact from the strengthening of the U.S. dollar compared with the Canadian dollar. Expressed in U.S. dollars, the functional currency of the segment, 2022 net income attributed to shareholders was US$3,077 million compared with US$1,667 million in 2021 and core earnings were US$1,311 million in 2022 compared with US$1,544 million in 2021. Items excluded from core earnings are outlined in the table below and amounted to a net gain of US$1,766 million in 2022 compared with a net gain of US$123 million in 2021. The US$233 million or 15% decrease in core earnings was driven by lower in-force earnings in Annuities of US$147 million related to the 1 of our U.S. variable annuity block in 2022, lower new business gains, higher net unfavourable two transactions to reinsure over 80% policyholder experience, and the non-recurrence of prior year gains from the Annuity Guaranteed Minimum Withdrawal Benefit offer program. Compared with 2021, less favourable long-term care and annuities policyholder experience was partially offset by improved, although still unfavourable, life insurance policyholder experience. In addition, higher investment income on allocated capital increased core earnings by US$24 million compared with 2021 (see Corporate and Other segment). The table below presents net income attributed to shareholders for the U.S. for 2022 and 2021 consisting of core earnings and items excluded from core earnings. For the years ended December 31, Canadian$ US$ ($ millions) 2022 2021 2022 2021 Coreearnings $ 1,700 $ 1,936 $ 1,311 $ 1,544 (1) Itemsexcludedfromcoreearnings: Investment-related experience related to fixed income trading, market value increases in excess of expected alternative assets investment returns, asset mix changes and credit experience 1,183 1,341 930 1,074 (2) Direct impact of equity markets and interest rates and variable annuity guarantee liabilities 197 (727) 151 (578) Change in actuarial methods and assumptions 36 (314) 27 (249) Reinsurance transactions, tax-related items and other 834 (156) 658 (124) Totalitemsexcludedfromcoreearnings 2,250 144 1,766 123 Netincome(loss)attributedtoshareholders $ 3,950 $ 2,080 $ 3,077 $ 1,667 (1) For explanations of items excluded from core earnings, see “Items excluded from core earnings” table in the total Company “Profitability” section above. (2) The direct impact of markets in 2022 was a gain of US$151 million and included a gain of US$396 million related to fixed income reinvestment rates, partially offset by a charge of US$245 million related to the direct impact of equity markets and variable annuity guarantee liabilities. The direct impact of markets in 2021 was a charge of US$578 million and included a charge of US$493 million related to fixed income reinvestment rates and a charge of US$85 million related to the direct impact of equity markets and variable annuity guarantee liabilities. Business Performance U.S. APE sales in 2022 of US$633 million increased 1% compared with 2021 due to an increase in international sales, partially offset by lower sales of domestic life insurance products. Demand for domestic life insurance products purchased primarily to protect household 1 Represents a reduction in guarantee value on our total U.S. variable annuity block compared with December 31, 2021. Guarantee value on our U.S. variable annuity Guaranteed Minimum Withdrawal Benefits block reduced by more than 90% compared with December 31, 2021. 29