A consortium of five investors has warned the board of NFU Mutual to consider demutualising, or face a hostile takeover bid.
The group of investors, which expressed interest in the mutual several months ago, said it would shelve plans to buy out the company if NFU Mutual opts for privatisation of its own accord.
A spokesman for the consortium said the fact that the mutual is seeking advice from bankers Dresdner Kleinwort Wasserstein could signal its intentions.
He said: "The consortium believes the hiring of bankers by NFU Mutual means it is going to convert itself to a listed company.
"If the board is going to recommend a conversion, the members are not going to accept a bid from an outside party."
But he said the consortium would still consider a bid if the mutual was not converted "in the next few months".
But NFU Mutual said it intends to retain its independent status.
A spokeswoman said: "Our mutuality enables us to deliver good value products and wider cover than we could if we were not a mutual."
Former NFU Mutual director John Murray initially approached the five venture capitalists in the hope of launching a bid but talks broke down. He was seeking alternative investment in the city but nothing has been heard for several months.
Murray said if NFU Mutual were taken into private corporate ownership, members could receive windfalls of between £20,000 and £25,000.
The company had annual gross written premiums of £655m in 2000.
Both interested parties have criticised NFU Mutual for eroding its value by selling insurance to non-farming customers at knockdown rates via its subsidiary Avon Insurance.