Royal Bank of Scotland’s £7bn ($13.6bn) auction for its UK insurance business has received a lukewarm response from potential buyers, with Warren Buffett’s Berkshire Hathaway pulling out of the bidding and there are doubts over the level of interest from Germany’s Allianz.

RBS has targeted eight potential trade buyers, including American International Group, Allstate and Travelers of the US, Generali of Italy, Zurich Financial, and the Chinese insurer Ping An. The sale is part of its plans to bolster a balance sheet weakened by mortgage-related writedowns.

Berkshire, an insurance-to-sweets conglomerate, had expressed an initial interest in the business, which includes the general and life insurers Direct Line and Churchill, but said it had decided not to bid.

“We have looked at it but we are not participating in the bidding,” Berkshire told the Financial Times. It declined to comment on the reasons for its decision. Interested bidders must submit initial bids by May 28.

RBS declined to comment, but people close to the situation said the bank was not worried about Berkshire’s decision not to bid.

Zurich Financial Services, which reported better than expected financial results yesterday, said it continued to look at opportunities that fitted its strategy and met its financial targets, but refused to comment on RBS.

RBS had received more than 15 expressions of interest from trade and financial buyers but decided to ban private equity groups from bidding because of the problems in the leveraged finance markets.