Variable Interest Entities

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Variable Interest EntitiesThe Company, in the normal course of business, engages in certain activities that involve variable interest entities ("VIEs"), which generally are legal entities in which the equity investors as a group lack any of the characteristics of a controlling interest, among other criteria. The primary beneficiary of a VIE is generally the enterprise that has both the power to direct the activities most significant to the economic performance of the VIE and the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. The Company evaluates its interest in certain entities to determine if these entities meet the definition of a VIE and whether the Company is the primary beneficiary and should consolidate the entity based on the variable interests it held both at inception and when there is a change in circumstances that requires a reconsideration. If the Company is determined to be the primary beneficiary of a VIE, it must account for the VIE as a consolidated subsidiary. If the Company is determined not to be the primary beneficiary of a VIE but holds a variable interest in the entity, such variable interests are accounted for under accounting standards as deemed appropriate. As of and for the periods ended September 30, 2020 and December 31, 2019, we are not the primary beneficiary of any VIEs.

Unconsolidated VIEs

The table below summarizes select information related to variable interests held by the Company as of September 30, 2020 and December 31, 2019, of which we are not the primary beneficiary:


		September 30, 2020				December 31, 2019
		Total Assets		Maximum Exposure		Total Assets		Maximum Exposure
	(in millions)
Investments in unconsolidated affiliates		$	18.7	$	18.7	$	440.2	$	440.2
Notes receivable		21.6		27.9		—		—
Forward Purchase Agreements		26.0		26.0		—		—

Investments in Unconsolidated Affiliates

The Company holds variable interests in certain unconsolidated affiliates, which are primarily comprised of our investments in the sponsors of FTAC, Trebia and FTAC II, Blue Ribbon and funds that hold minority ownership interests primarily in healthcare-related entities. Cannae does not have the power to direct the activities that most significantly impact the economic performance of these unconsolidated affiliates; and, therefore we are not the primary beneficiary.

As of December 31, 2019, total assets in the table above includes the Company's equity method investment in Dun & Bradstreet and SFS. In the three months ended June 30, 2020, our and other limited partners' commitments to provide capital to SFS were fully satisfied. Accordingly, SFS is considered to be sufficiently capitalized such that it is able to finance its ongoing operations and is no longer considered a variable interest entity. Upon consummation of the D&B IPO on July 6, 2020, our investment in Dun & Bradstreet changed from an investment in a limited partnership to an investment in the common stock of a corporation. The limited partners of the D&B Predecessor did not have the ability to unilaterally remove the general partner and as a result, our investment in the D&B Predecessor was considered a VIE. As a result of the change in form of our investment from a limited partnership to a corporation, Dun & Bradstreet is no longer considered a VIE subsequent to the D&B IPO.

The principal risk to which these investments and funds are exposed is the credit risk of the underlying investees. We do not provide any implicit or explicit liquidity guarantees or principal value guarantees to these VIEs. The assets are included in Investments in unconsolidated affiliates on the Condensed Consolidated Balance Sheets and accounted for under the equity method of accounting.

See Note D for further discussion of our accounting for investments in unconsolidated affiliates.

Notes Receivable

Notes receivable includes notes outstanding from unconsolidated affiliates considered VIEs for which we are not the primary beneficiary. The assets are included in Prepaid expenses and other current assets on the Condensed Consolidated Balance Sheets. Maximum exposure to loss includes the total principal balance under our DIP Loan with Blue Ribbon of $27.5 million as of September 30, 2020.

Forward Purchase Agreements

In conjunction with the Forward Purchase Agreements, the Company made investments in the sponsors of FTAC, Trebia and FTAC II, which are considered VIEs for which we are not the primary beneficiary and are included in Investments in unconsolidated affiliates. The assets represented by the Forward Purchase Agreements are accounted for as investments in equity securities pursuant to ASC 321 and are included in Equity securities on the Condensed Consolidated Balance Sheet as of September 30, 2020. See Notes C and D for further information on our accounting for equity securities.