Up to six companies may be in the running but SBC Warburg, the investment bank advising ScotAm, refused to give details about the precise number and the identity of the bidders.
Two of the bidders have already declared their hand. They are Abbey National, which bid pounds 1.4bn, and Prudential, which came in with a higher offer of pounds 1.9bn. Australian Mutual Provident (AMP) is another name widely tipped to be in the frame.
The bidding process looks certain to push the price tag of the insurer above pounds 2bn , which will lead to greater payouts to ScotAm's 1.1 million policyholders.
"We believe the process we are publishing today will maximise the value for policyholders and will be seen to have done so," said Sandy Stewart, chairman of ScotAm.
ScotAm, which is not subject to Takeover Panel rules because it is not a quoted company, has demanded that all bidders put forward firm proposals by next Friday.
It will then publicise the terms of the bids, if required to do so by the bidders, hold further talks with the suitors and give them until mid- March to submit a final, binding offer.
At the end of the process, which is timetabled for the end of next month, ScotAm will recommend only one of the offers to its policyholders, who eventually will be asked to vote on whether to sacrifice the insurer's mutual status.
Policyholders should receive complete details of the recommended bid in a circular in May.
Each proposal received will be evaluated by the board, SBC Warburg and Tillinghast-Towers Perrin, an actuarial firm. The board will also consult the Department of Trade and Industry and an independent actuary.
The board will assess the bid on 14 criteria, including the financial security of policyholders and the level of service they will receive.
ScotAm attracted bidders after it recently announced plans to demutualise and float on the stock market in three to five years. Policyholders would have shared pounds 75m between them and the flotation would have released another pounds 200m to pounds 400m in payouts to policyholders. The directors stood to receive share bonuses worth as much as pounds 14.4m.