Moody’s also noted that although both CSG and UBS have been exposed to the downturn in equity markets through their investment banking and wealth management activities, their results have been showing increasing divergence since late 2000. CSG has been hit harder by exposure to ‘fallen angels’ - companies that have lost their investment grade status. “Moreover, CSG has been hit by the large equity losses suffered by its insurance affiliate Winterthur,” said Alexandra Sleator, senior vice-president at Moody’s and author of the report.
On Tuesday, fellow rating agency Standard and Poor’s lowered the long-term counterparty credit rating on CSG to ‘A’ from ‘A+’ with a stable outlook. S&P also lowered its insurer financial strength and counterparty credit ratings on Winterthur Swiss Insurance to 'A' from 'AA-' with negative outlook. S&P credit analyst Diane Hinton said the rating actions are based on CSG’s continued poor consolidated operating performance and capitalisation, which has been substantially affected by poor investment performance and capital needs at Winterthur.