More than 10 companies have approached NPI to register an interest in buying the life insurer since it announced it was up for sale three weeks ago.
Generali's advisers are inspecting documents made available by NPI to the interested parties, which include Halifax, AMP, Norwich Union, Liberty Life and at least six other financial institutions.
Talks between Generali and NPI are likely to reach an advanced stage after NPI draws up a shortlist of bidders within the next three weeks. The mutual has already signed off an information memorandum on its sale. It hopes to present a recommended offer to its 600,000 policyholders by the end of the year.
A spokesman for Generali said: "Talks such as this on a group level can happen quite often, so we don't choose to comment on stories about them." NPI also declined to comment.
Alastair Lyons, chief executive of NPI, has indicated that he is looking for a foreign buyer which has no presence in the UK personal pensions market, NPI's specialist field.
Generali has had a presence in the UK under its own name since the beginning of the century, although it has failed to make any real inroads into the pensions market.
Analysts say the purchase of NPI would provide Generali with a way into the lucrative market in stakeholder pensions, a form of private pension being developed by the Government as part of its welfare reforms. A deal with Generali would also allow NPI's management to retain their day-to- day independence.
Bids from AMP and Abbey National, which were beaten by Prudential in the race to buy Scottish Amicable last year, would not meet Mr Lyons' criteria. AMP already has a presence in the UK pensions market through Pearl Assurance, while Abbey National owns Scottish Mutual.
Analysts said a UK insurer would need to pay less up front for NPI than a foreign buyer. A foreign buyer might have to inject hundreds of millions of pounds to restore NPI's finances, but a UK insurer could absorb the mutual insurer's liabilities using its existing long-term fund.