VARIABLE INTEREST ENTITIES (VIEs)

9 Months Ended

Sep. 30, 2022

VARIABLE INTEREST ENTITIES (VIEs) [Abstract]

VARIABLE INTEREST ENTITIES (VIEs)

Note 8 — Variable Interest Entities (“VIEs”):

Consolidated VIEs

Diamond Anglo Ship Management Pte. Ltd. — Diamond Anglo Ship Management Pte. Ltd. (“DASM”) was formed in January 2018 by Diamond S and Anglo Eastern Investment Holdings Ltd. (“AE Holdings”), a third-party, to provide ship management services to some of Diamond S’ vessels.

On July 1, 2022, the Company and AE Holding terminated their joint venture agreement, which resulted in the Company selling its 51% interest in DASM to AE Holdings. The Company received $0.8 million in cash for the sale of its interest, after certain deductions, and recognized a $0.1 million gain on the sale of the joint venture.

Prior to July 1, 2022, DASM was owned 51% by the Company and 49% by AE Holdings, AE Holdings did not participate in the income or equity of DASM, and the Company was considered to be the primary beneficiary of DASM as the Company had the ability to direct the activities that most significantly impacted DASM’s economic performance. The results of operations of DASM were included in the accompanying condensed consolidated financial statements through June 30, 2022 and the balance sheet of DASM was included in the accompanying condensed consolidated financial statements as of December 31, 2021.

Unconsolidated VIEs

As of September 30, 2022, all of the six commercial pools in which the Company participates were determined to be VIEs for which the Company is not considered a primary beneficiary.

The following table presents the carrying amounts of assets and liabilities in the condensed consolidated balance sheet related to the unconsolidated VIEs as of September 30, 2022:

(Dollars in thousands)	Condensed Consolidated Balance Sheet
Investments in Affiliated Companies	$	36,708

In accordance with accounting guidance, the Company evaluated its maximum exposure to loss related to these unconsolidated VIEs by assuming a complete loss of the Company’s investment in these VIEs. The table below compares the Company’s liability in the condensed consolidated balance sheet to the maximum exposure to loss at September 30, 2022:

(Dollars in thousands)		Condensed Consolidated Balance Sheet	Maximum Exposure to Loss
Other Liabilities	$	–	$	36,708

In addition, as of September 30, 2022, the Company had approximately $218.2 million of trade receivables from the pools that were determined to be a VIE. These trade receivables, which are included in voyage receivables in the accompanying condensed consolidated balance sheet, have been excluded from the above tables and the calculation of INSW’s maximum exposure to loss. The Company does not record the maximum exposure to loss as a liability because it does not believe that such a loss is probable of occurring as of September 30, 2022.