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Variable Interest Entity and Noncontrolling Interests (Tables) | 12 Months Ended
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Dec. 31, 2020
Variable Interest Entity and Noncontrolling Interest Disclosure [Abstract] |
Carrying amount of assets and liabilities of consolidated VIE | The following table provides the carrying amount and balance sheet caption in which the assets and liabilities of Watford are reported:
| December 31,
| 2020 |  | 2019
Assets |  |  |
Investments accounted for using the fair value option (1) | $ | 1,790,385 |  |  | $ | 1,898,091 |
Fixed maturities available for sale, at fair value | 655,249 |  |  | 745,708 |
Equity securities, at fair value | 52,410 |  |  | 65,338 |
Cash | 211,451 |  |  | 102,437 |
Accrued investment income | 14,679 |  |  | 14,025 |
Premiums receivable | 224,377 |  |  | 273,657 |
Reinsurance recoverable on unpaid and paid losses and LAE | 286,590 |  |  | 170,973 |
Ceded unearned premiums | 122,339 |  |  | 132,577 |
Deferred acquisition costs, net | 53,705 |  |  | 64,044 |
Receivable for securities sold | 37,423 |  |  | 16,287 |
Goodwill and intangible assets | 7,650 |  |  | 7,650 |
Other assets | 75,801 |  |  | 60,070 |
Total assets of consolidated VIE | $ | 3,532,059 |  |  | $ | 3,550,857 |
Liabilities |  |  |
Reserves for losses and loss adjustment expenses | $ | 1,519,583 |  |  | $ | 1,263,628 |
Unearned premiums | 407,714 |  |  | 438,907 |
Reinsurance balances payable | 63,269 |  |  | 77,066 |
Revolving credit agreement borrowings | 155,687 |  |  | 484,287 |
Senior notes | 172,689 |  |  | 172,418 |
Payable for securities purchased | 25,881 |  |  | 18,180 |
Other liabilities | 193,494 |  |  | 171,714 |
Total liabilities of consolidated VIE | $ | 2,538,317 |  |  | $ | 2,626,200 |
Redeemable noncontrolling interests | $ | 52,398 |  |  | $ | 52,305 |
(1) Included in “other investments” on the Company’s balance sheet.
Summary of VIE cash flows | The following table summarizes Watford’s cash flow from operating, investing and financing activities.
| Year Ended December 31,
| 2020 |  | 2019 |  | 2018
Total cash provided by (used for): |  |  |  |
Operating activities | 181,736 |  |  | 239,284 |  |  | 229,315 |
Investing activities | 258,589 |  |  | (140,620) |  |  | (285,281) |
Financing activities | (335,776) |  |  | (61,433) |  |  | (2,406) |
Activity in non-redeemable noncontrolling interests | The following table sets forth activity in the non-redeemable noncontrolling interests:
| December 31,
| 2020 |  | 2019
Balance, beginning of year | $ | 762,777 |  |  | $ | 791,560 |
Additional paid in capital attributable to noncontrolling interests | 1,334 |  |  | (2,929) |
Repurchases attributable to non-redeemable noncontrolling interests (1) | (2,867) |  |  | (75,056) |
Amounts attributable to noncontrolling interests | 53,076 |  |  | 40,072 |
Other amounts attributable to noncontrolling interests | (375) |  |  | — |
Other comprehensive (income) loss attributable to noncontrolling interests | 9,062 |  |  | 9,130 |
Balance, end of year | $ | 823,007 |  |  | $ | 762,777 |
(1) During 2020 and 2019, Watford’s board of directors authorized the investment in Watford’s common shares through a share repurchase program.
Activity in redeemable noncontrolling interest | The following table sets forth activity in the redeemable noncontrolling interests:
| December 31,
| 2020 |  | 2019 |  | 2018
Balance, beginning of year | $ | 55,404 |  |  | $ | 206,292 |  |  | $ | 205,922 |
Redemption of noncontrolling interests | — |  |  | (157,709) |  |  | — |
Accretion of preference share issuance costs | 93 |  |  | 244 |  |  | 370 |
Other | 3,051 |  |  | 6,577 |  |  | — |
Balance, end of year | $ | 58,548 |  |  | $ | 55,404 |  |  | $ | 206,292 |
Portion of income or loss attributable to noncontrolling interests | The portion of income or loss attributable to third party investors is recorded in the consolidated statements of income in ‘net (income) loss attributable to noncontrolling interests’ as summarized in the table below:
| December 31,
| 2020 |  | 2019 |  | 2018
Amounts attributable to non-redeemable noncontrolling interests | $ | (53,076) |  |  | $ | (40,072) |  |  | $ | 48,507 |
Amounts attributable to redeemable noncontrolling interests | (7,114) |  |  | (16,909) |  |  | (18,357) |
Net (income) loss attributable to noncontrolling interests | $ | (60,190) |  |  | $ | (56,981) |  |  | $ | 30,150 |
Total assets and maximum loss exposure of VIE | The following table presents the total assets of the Bellemeade entities, as well as the Company’s maximum exposure to loss associated with these VIEs, calculated as the maximum historical observable spread between the one month LIBOR, the basis for the contractual payments to bond holders, and short term invested trust asset yields.
|  |  | Maximum Exposure to Loss
Bellemeade Entities (Issue Date) | Total VIE Assets |  | On-Balance Sheet (Asset) Liability |  | Off-Balance Sheet |  | Total
Dec 31, 2020 |  |  |  |  |  |  |
Bellemeade 2017-1 Ltd. (Oct-17) | $ | 145,573 |  |  | $ | (245) |  |  | $ | 844 |  |  | $ | 599 |
Bellemeade 2018-1 Ltd. (Apr-18) | 250,095 |  |  | (903) |  |  | 2,245 |  |  | 1,342 |
Bellemeade 2018-2 Ltd. (Aug-18) | 108,395 |  |  | (138) |  |  | 280 |  |  | 142 |
Bellemeade 2018-3 Ltd. (Oct-18) | 302,563 |  |  | (1,320) |  |  | 3,262 |  |  | 1,942 |
Bellemeade 2019-1 Ltd. (Mar-19) | 219,256 |  |  | (1,361) |  |  | 8,461 |  |  | 7,100 |
Bellemeade 2019-2 Ltd. (Apr-19) | 398,316 |  |  | (730) |  |  | 5,201 |  |  | 4,471 |
Bellemeade 2019-3 Ltd. (Jul-19) | 528,084 |  |  | (861) |  |  | 5,079 |  |  | 4,218 |
Bellemeade 2019-4 Ltd. (Oct-19) | 468,737 |  |  | (890) |  |  | 6,676 |  |  | 5,786 |
Bellemeade 2020-1 Ltd. (Jun-20) (1) | 275,068 |  |  | (178) |  |  | 1,012 |  |  | 834 |
Bellemeade 2020-2 Ltd. (Sep-20) (2) | 423,420 |  |  | (556) |  |  | 6,839 |  |  | 6,283 |
Bellemeade 2020-3 Ltd. (Nov-20) (3) | 418,158 |  |  | (631) |  |  | 9,605 |  |  | 8,974 |
Bellemeade 2020-4 Ltd. (Dec-20) (4) | 321,393 |  |  | (156) |  |  | 6,816 |  |  | 6,660 |
Total | $ | 3,859,058 |  |  | $ | (7,969) |  |  | $ | 56,320 |  |  | $ | 48,351 |
Dec 31, 2019 |  |  |  |  |  |  |
Bellemeade 2017-1 Ltd. (Oct-17) | $ | 216,429 |  |  | $ | (442) |  |  | $ | 2,794 |  |  | $ | 2,352 |
Bellemeade 2018-1 Ltd. (Apr-18) | 328,482 |  |  | (1,574) |  |  | 5,757 |  |  | 4,183 |
Bellemeade 2018-2 Ltd. (Aug-18) | 437,009 |  |  | (877) |  |  | 2,524 |  |  | 1,647 |
Bellemeade 2018-3 Ltd. (Oct-18) | 426,806 |  |  | (1,113) |  |  | 3,937 |  |  | 2,824 |
Bellemeade 2019-1 Ltd. (Mar-19) | 257,358 |  |  | (226) |  |  | 3,027 |  |  | 2,801 |
Bellemeade 2019-2 Ltd. (Apr-19) | 525,959 |  |  | (78) |  |  | 2,579 |  |  | 2,501 |
Bellemeade 2019-3 Ltd. (Jul-19) | 656,523 |  |  | (585) |  |  | 9,273 |  |  | 8,688 |
Bellemeade 2019-4 Ltd. (Oct-19) | 577,267 |  |  | (302) |  |  | 12,193 |  |  | 11,891 |
Total | $ | 3,425,833 |  |  | $ | (5,197) |  |  | $ | 42,084 |  |  | $ | 36,887 |
(1) An additional $79 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (2) An additional $26 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (3) An additional $34 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table. (4) An additional $16 million capacity was provided directly to Arch MI U.S. by a separate panel of reinsurers and is not reflected in this table.

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