Prudential, one of the UK's biggest insurers, has pulled out of the race for Equitable Life's £7bn with-profit fund, dealing a blow to efforts to offload what is left of the troubled mutual.

Prudential was seen as one of the strongest candidates to acquire the remnants of Equitable, primarily because of its about £70bn with-profit fund. It also knows Equitable well, having completed the transfer of £1.7bn of with-profit annuities from the mutual at the beginning of this year.