Admiral could float one third of the company, or a £225m stake, on the London Stock Exchange when it goes for an initial public offering (IPO) in the autumn.
The offering will value the company at around £680m and will include an option to sell an additional 15% of the company.
The news comes as Admiral announced a 30% increase in adjusted core profit for the first half of 2004. The company put the £45m profit down to rapid growth of elepant.co.uk and Diamond.
Admiral was unavailable for comment.