** Insurance software company's shares up 7 pct tolevels not seen since May 2005 as it announces it is in mergertalks with private equity firm Carlyle Group
** Co says in advanced talks with Carlyle for a deal at 40pper share in cash
** Shares jumped 9.8 pct to 39.25p after announcement,before paring gains slightly to trade at 38p
** Stock poised for best day since Aug. 2011; 1.2x its avgdaily volume gone through
** Shares currently third-largest gainers on the FTSEsmall-cap index (venkateshasoumithri.mamidipudi.thomsonreuters.com@reuters.net)