What does the retrospective approach in deposit accounting evaluate?

The retrospective approach in deposit accounting primarily focuses on evaluating the initial deposit and past payments made by the insurer to determine how these funds have been utilized over time and the corresponding liabilities. This approach allows for a historical assessment of the cash flows related to deposits, ensuring that the payments made are appropriately matched with the obligations that arise from them.

By analyzing past payments, insurers can gain insights into the adequacy of the deposits concerning future benefits or claims that may need to be paid out. This historical perspective is crucial for accurate financial reporting and regulatory compliance, as it provides a clearer picture of the insurer's obligations and the financial health of the deposit accounting over time.

While current market conditions, current liabilities, and overall profit margins are important aspects of financial analysis, they are not the primary focus of the retrospective approach, which is centered on examining past transactions related to deposits.