(b) Fair valuemeasurement Fair value of capital instruments is determined using the following hierarchy: Level 1 – Fair value is determined using quoted market prices where available. Level 2 – When quoted market prices are not available, fair value is determined with reference to quoted prices of similar debt instruments or estimated using discounted cash flows based on observable market rates. The Company measures capital instruments at amortized cost in the Consolidated Statements of Financial Position. As at December 31, 2022, the fair value of capital instruments was $5,737 (2021 – $7,213). Fair value of capital instruments was determined using Level 2 valuation techniques (2021 – Level 2). Note 12 Equity Capital and Earnings Per Share The authorized capital of MFC consists of: • an unlimited number of common shares without nominal or par value; and • an unlimited number of Class A, Class B and Class 1 preferred shares without nominal or par value, issuable in series. (a) Preferredsharesandotherequityinstruments The following table presents information about the outstanding preferred shares and other equity instruments as at December 31, 2022 and 2021. Number of (4) Annual dividend/ Earliest redemption shares Face Net amount (1) (2),(3) As at December 31, 2022 Issue date distribution rate date (in millions) amount 2022 2021 Preferred shares Class A preferred shares Series 2 February 18, 2005 4.65% n/a 14 $ 350 $ 344 $ 344 Series 3 January 3, 2006 4.50% n/a 12 300 294 294 Class 1 preferred shares (5),(6) Series 3 March 11, 2011 2.348% June 19, 2026 7 163 160 160 (7) Series 4 June 20, 2016 floating June 19, 2026 1 37 36 36 (8) Series 7 February 22, 2012 4.312% March 19, 2022 10 250 – 244 (5),(6),(9) Series 9 May 24, 2012 5.978% September 19, 2027 10 250 244 244 (5),(6) Series 11 December 4, 2012 4.731% March 19, 2023 8 200 196 196 (5),(6) Series 13 June 21, 2013 4.414% September 19, 2023 8 200 196 196 (5),(6) Series 15 February 25, 2014 3.786% June 19, 2024 8 200 195 195 (5),(6) Series 17 August 15, 2014 3.80% December 19, 2024 14 350 343 343 (5),(6) Series 19 December 3, 2014 3.675% March 19, 2025 10 250 246 246 (8) Series 23 November 22, 2016 4.85% March 19, 2022 19 475 – 467 (5),(6) Series 25 February 20, 2018 4.70% June 19, 2023 10 250 245 245 Other equity instruments (10) Limited recourse capital notes (11) Series 1 February 19, 2021 3.375% May 19, 2026 n/a 2,000 1,982 1,982 (11) Series 2 November 12, 2021 4.100% February 19, 2027 n/a 1,200 1,189 1,189 (11) Series 3 June 16, 2022 7.117% June 19, 2027 n/a 1,000 990 – Total 131 $ 7,475 $ 6,660 $ 6,381 (1) Holders of Class A and Class 1 preferred shares are entitled to receive non-cumulative preferential cash dividends on a quarterly basis, as and when declared by the Board of Directors. Non-deferrable distributions are payable to all LRCN holders semi-annually at the Company’s discretion. (2) Redemption of all preferred shares is subject to regulatory approval. MFC may redeem each series, in whole or in part, at par, on the earliest redemption date or every five years thereafter, except for Class A Series 2, Class A Series 3 and Class 1 Series 4 preferred shares. Class A Series 2 and Series 3 preferred shares are past their respective earliest redemption date and MFC may redeem these preferred shares, in whole or in part, at par at any time, subject to regulatory approval, as noted. MFC may redeem the Class 1 Series 4 preferred shares, in whole or in part, at any time, at $25.00 per share if redeemed on June 19, 2026 (the earliest redemption date) and on June 19 every five years thereafter, or at $25.50 per share if redeemed on any other date after June 19, 2021, subject to regulatory approval, as noted. (3) Redemption of all LRCN series notes is subject to regulatory approval. MFC may at its option redeem each series in whole or in part, at a redemption price equal to par, together with accrued and unpaid interest. The redemption period for Series 1 is every five years during the period from May 19 to and including June 19, commencing in 2026. The redemption period for Series 2 is every five years during the period from February 19 to and including March 19, commencing in 2027. After the first redemption date, the redemption period for Series 3 is every five years during the period from May 19 to and including June 19, commencing in 2032. (4) Net of after-tax issuance costs. (5) On the earliest redemption date and every five years thereafter, the annual dividend rate will be reset to the five-year Government of Canada bond yield plus a yield specified for each series. The specified yield for Class 1 preferred shares is: Series 3 – 1.41%, Series 9 – 2.86%, Series 11 – 2.61%, Series 13 – 2.22%, Series 15 – 2.16%, Series 17 – 2.36%, Series 19 – 2.30% and Series 25 – 2.55%. (6) On the earliest redemption date and every five years thereafter, Class 1 preferred shares are convertible at the option of the holder into a new series that is one number higher than their existing series, and the holders are entitled to non-cumulative preferential cash dividends, payable quarterly if and when declared by the Board of Directors, at a rate equal to the three-month Government of Canada Treasury bill yield plus the rate specified in footnote 5 above. 195