In the case of derivatives, collateral is collected from and pledged to counterparties and clearing houses to manage credit risk exposure in accordance with Credit Support Annexes to swap agreements and clearing agreements. Under master netting agreements, the Company has a right of offset in the event of default, insolvency, bankruptcy or other early termination. In the case of reverse repurchase and repurchase transactions, additional collateral may be collected from or pledged to counterparties to manage credit exposure according to bilateral reverse repurchase or repurchase agreements. In the event of default by a reverse purchase transaction counterparty, the Company is entitled to liquidate the collateral held to offset against the same counterparty’s obligation. The following table presents the effect of conditional master netting and similar arrangements. Similar arrangements may include global master repurchase agreements, global master securities lending agreements, and any related rights to financial collateral pledged or received. Related amounts not set off in the Consolidated Statements of Financial Position Amounts subject to Financial Net Net an enforceable and cash amount amounts master netting collateral including excluding Gross amounts of arrangement or pledged financing financing (1) (2) (3) As at December 31, 2022 financial instruments similar agreements (received) entity entity Financial assets Derivative assets $ 9,072 $ (7,170) $ (1,687) $ 215 $ 215 Securities lending 723 – (723) – – Reverse repurchase agreements 895 (779) (116) – – Total financial assets $ 10,690 $ (7,949) $ (2,526) $ 215 $ 215 Financial liabilities Derivative liabilities $ (15,151) $ 7,170 $ 7,834 $ (147) $(103) Repurchase agreements (895) 779 116 – – Total financial liabilities $ (16,046) $ 7,949 $ 7,950 $ (147) $(103) Related amounts not set off in the Consolidated Statements of Financial Position Amounts subject to Financial Net Net an enforceable and cash amount amounts master netting collateral including excluding Gross amounts of arrangement or pledged financing financing (1) (2) (3) As at December 31, 2021 financial instruments similar agreements (received) entity entity Financial assets Derivative assets $ 18,226 $ (8,410) $ (9,522) $ 294 $ 294 Securities lending 564 – (564) – – Reverse repurchase agreements 1,490 (183) (1,307) – – Total financial assets $ 20,280 $ (8,593) $ (11,393) $ 294 $ 294 Financial liabilities Derivative liabilities $ (10,940) $ 8,410 $ 2,250 $ (280) $ (79) Repurchase agreements (536) 183 353 – – Total financial liabilities $ (11,476) $ 8,593 $ 2,603 $ (280) $ (79) (1) Financial assets and liabilities include accrued interest of $488 and $862, respectively (2021 – $725 and $902, respectively). (2) Financial and cash collateral exclude over-collateralization. As at December 31, 2022, the Company was over-collateralized on OTC derivative assets, OTC derivative liabilities, securities lending and reverse repurchase agreements and repurchase agreements in the amounts of $507, $1,528, $63 and $nil, respectively (2021 – $599, $875, $36 and $2, respectively). As at December 31, 2022, collateral pledged (received) does not include collateral-in-transit on OTC instruments or initial margin on exchange traded contracts or cleared contracts. (3) Includes derivative contracts entered between the Company and its financing entity which it does not consolidate. The Company does not exchange collateral on derivative contracts entered with this entity. Refer to note 18. The Company also has certain credit linked note assets and variable surplus note liabilities which have unconditional offsetting rights. Under the netting agreements, the Company has rights of offset including in the event of the Company’s default, insolvency, or bankruptcy. These financial instruments are offset in the Consolidated Statements of Financial Position. 191