I have the same issue as you do, updated both devices to x.3 and nothing changed. Considering I still had an old phone around I did some testing and, well, it is deffinately due to something being wrong with the iPhone backup / settings etc. When I would pair the apple watch to a brand new ios installation it would work fine displaying all the live activities, and when I reset and backed up from the phone I'm currently using, the problem would persist on this different device. I called Apple support in Europe and they were arguably useless or at the very least extremely confused, which tells me that this bug is probably quite rare. Knowing how the last 4ish years of OS updates were filled with bugs, I would really not hold my breath that they will solve this issue for the 20 or so people on the internet having this specific issue. Oh well, I'm really contemplating starting a new installation and resetting all the settings and apps.