British insurer Prudential quietly pulled out of the auction for the Asian business of the troubled American insurer AIG, reported the Sunday Times newspaper. The move comes amid mounting concern over the financial strength of UK insurers.

Prudential’s chief executive Mark Tucker believes that the asking price of 7 billion pounds ($10 billion) put up by AIG, which received another bailout from American taxpayers last week, was too lofty.

AIG’s estimation of the business was reportedly based on a Watson Wyatt report published last summer, before the full impact of the global recession was sensed. 

Now the auction seems to be in troubled water as China Life, the state-backed Chinese insurer, has also backed out and other bids could not match up to AIG’s expectations.

This back out by Prudential has also put to rest its plans for a fundraising. The group had been trying to talk sovereign wealth funds and Chinese insurance groups into providing bid finance in exchange for a large stake.