* Company says in talks with "a number of parties"
* First-half pretax profit up 8 percent
* Special interim dividend of 10 pence per share
* Shares rise more than 4 percent (Adds CFO comment, details, updates share price)
By Abhiram Nandakumar
Aug 1 (Reuters) - Direct Line Insurance Group, Britain's largest motor insurer, is in talks with "a number of parties" to sell its businesses in Germany and Italy, the company said on Friday.
Sources told Reuters last month that Direct Line was in advanced talks with at least four suitors to sell the businesses. One of the sources said they had a combined value of about $500 million.
Direct Line's shares rose more than 4 percent on Friday, ranking among the top gainers on the FTSE-250 index, after the company also reported an 8 percent rise in pretax profit and declared a special dividend.
By selling its German and Italian businesses, which combined make up the company's international division, Direct Line would leave itself with a presence only in Britain.
Gross written premiums from Direct Line's international division were 328.8 million pounds ($553.5 million) for the first half of 2014, about 18 percent of total gross written premiums.
"There is a question of whether the businesses might be worth more to someone else than us," Chief Financial Officer John Reizenstein said on a post-earnings conference call.
He declined to comment on the value of the businesses or the identity of the suitors.
Car insurers in Britain have been battling falling prices brought on by heated competition from price-comparison websites, while also coming under scrutiny over what regulators consider unnecessarily inflated premiums.
Direct Line began a cost-cutting programme last year, including plans to cut about 2,000 jobs. The company said that it was almost halfway towards meeting its cost-savings target of 1 billion pounds this year.
The company gets more than 40 percent of its revenue from motor insurance. It said rates stabilised in the second quarter after falling in the first, but that it was too early to say whether this signalled an "inflection point".
Pretax profit rose to 225.1 million pounds ($379.9 million) in the six months ended June 30 from 208.8 million pounds a year earlier.
Net insurance claims fell 3 percent to 1.03 billion pounds. Direct Line's brands include Churchill, Privilege and the Green Flag roadside recovery service.
The company, which also offers home, travel and pet insurance, declared a total interim dividend of 14.4 pence per share, including a special interim dividend of 10 pence.
Shares in the company were up 3 percent at 293.8 pence per share at 0930 GMT. ($1 = 0.5940 British Pounds) (Additional reporting by Richa Naidu in Bangalore; Editing by Gopakumar Warrier and Robin Paxton)