Council representatives said they were 'absolutely amazed'. They believed MMI's liquidation to be more likely after meetings with the Association of British Insurers, the Department of Trade and Industry and Neil Hamilton, the corporate affairs minister, had left an impression of 'gloom and despondency'.
Brian Wright, MMI's chief executive, said claims payment had been temporarily suspended to allow the insurer to take stock. He said: 'It is now clear that a number of parties are interested in purchasing various parts of the group, including our household, motor, health, life and pensions businesses.'
After the debacle over the illusory rescue talks with La Guarantie Mutuelle des Fonctionnaires, councils are eager for more details. Martin Pilgrim, secretary for finance at the Association of Metropolitan Authorities, said: 'Are we getting into another GMF position, where the shadow of discussions is always there but it's hard to find the body?'
MMI, which has about 1 million personal policyholders, is still unable to accept new business and is unlikely to renew insurance cover.
Some council sources fear that MMI's move is a defensive action taken to prevent it being forced into liquidation. They are concerned about the degree of reliance MMI is placing upon its hopes of recovering up to pounds 40m from the Inland Revenue, of selling its personal lines business, and of persuading local authorities to accept reduced insurance cover.
The impression that council representatives gained from their meetings yesterday was that other insurers were not interested in MMI. One source said: 'Nobody sees any mileage in picking up the personal business from what is essentially a discredited company. You can't believe what's in the claims record.'
Tony Lancaster, chairman and chief executive of GAN Minster, the French-owned insurer, yesterday denied his company was interested in MMI's personal business, as had been rumoured. General Accident has also been named as a potential purchaser.
Cork Gully and Ernst & Young are understood to have joined the battalions of accountants examining MMI. Cork Gully, the insolvency specialist, is said to be advising MMI while Ernst & Young has been lined up as provisional liquidator.
Representatives of Britain's more than 500 local authorities gather in London today to consider their future insurance needs and the MMI situation. MMI will not attend.
CE Heath, the insurance broker, has proposed a new mutual insurer that it could run as a 'captive' on the councils' behalf.Reuse content