MILAN (Reuters) - Postal company Royal Mail RMG.L is set to lose its place in the FTSE 100 .FTSE, while insurer Hiscox HSX.L is likely to join Britain's top stock index in a reshuffle next week, analysts said.

Royal Mail vans are parked in the Leytonstone post office depot in London, Britain early July 6, 2017. REUTERS/Russell Boyce

Demotion from the blue-chip index would come just as Royal Mail heads into its busiest time of year, as Britons send millions of greeting cards to family and friends in the run-up to Christmas.

The possible swap comes after Royal Mail unveiled a broad review of its operations as it battles to cut costs after reporting a 25 percent drop in half-year profit.

Royal Mail was demoted from the FTSE-100 in September last year, only to return in March. But its market value has fallen back again, making it likely to be ejected once more.

Its shares have lost one third of their value this year, whereas Hiscox has gained nearly 15 percent.

In quarterly reshuffles, index provider FTSE Russell demotes FTSE-100 laggards to the FTSE 250, and promotes the largest mid-caps.

Royal Mail’s market capitalisation is around 3.23 billion pounds, compared with Hiscox’s 4.8 billion. Royal Mail shares would have to gain 12 percent in the next week, analysts calculated, for it to avoid relegation.

A FTSE Russell spokeswoman declined to comment.

“The prime candidate to replace Royal Mail is Hiscox,” Helal Miah, investment research analyst at The Share Centre, said in a note.

The Lloyd’s of London underwriter reported this month a 14.3 percent rise in nine-month gross written premiums, but warned growth could moderate over the balance of the year.

"Hiscox shares have recovered well since the October sell-off putting them in prime position to replace Royal Mail, but hot on their heels are Spirax-Sarco Engineering SPX.L," said Miah.

According to the analyst, there were unlikely to be any more changes between the FTSE 100 and FTSE 250 at this reshuffle, but domestically-focused stocks could be at risk in future.

“Companies in danger of being relegated in future reshuffles are those exposed to the UK market, including well-known retailers and those exposed to the UK housing market,” he said.

The review will be based on Dec. 4 prices and announced on the following day before becoming effective on Dec. 21.

A note this month from Societe Generale also said Hiscox was most likely to replace Royal Mail in the FTSE 100.

It said Spirax-Sarco Engineering, Jardine Lloyd Thompson JLT.L, Aveva AVV.L, Hikma HIK.L, Meggitt MGGT.L and Auto Trader AUTOA.L followed on the reserve list.

Just Eat JE.L, Rightmove RMV.L and John Wood WG.L are the next closest firms to being demoted, the French bank said.