RBS Insurance could struggle to fetch a decent price because of poor market conditions, a lack of capital and earlier failed sale attempts, according to reports.
Analysts put the value of the business at around £4bn before the credit crunch, but fetching that value for a planned flotation in 2012 could be difficult.
"The history is that lots of people have prodded RBSI with their bargepole and walked away," said Investec analyst Kevin Ryan told Reuters. "It comes down to the issue that although the top 10 insurers have something like 80 percent of the market, they still compete with each other like terriers in a sack."
There are concerns that Solvency 2 will prevent any trade players making a bid, hence that excludes a second option.
Buyout firms might also be put off by the fact that they were excluded from the early stages of the sale process in 2008.
