UPDATE 1-HCC Insurance Q3 profit falls 40 pct; cuts '08 outlook

* Q3 EPS $0.51 vs $0.84 last year

* Sees 2008 EPS at $2.60-$2.90 vs estimate of $3.03

* Q3 net investment income fell 28 pct to $36 mln

* Sees further gross losses from hurricanes

Nov 4 (Reuters) - HCC Insurance Holdings Inc (HCC.N) posted a 40 percent fall in quarterly profit hurt by losses due to Hurricanes Gustav and Ike, primarily from offshore energy exposures, and investment losses, and cut its 2008 earnings outlook.

"There may be some further increase in the gross losses for the two hurricanes, but HCC's net loss is not expected to increase," Chief Executive Frank Bramanti said in a statement.

Third-quarter results were hurt by net losses of $24.5 million from hurricanes, realized investment losses of $17.2 million and $14.3 million in losses from alternative investments, Bramanti said.

HCC earned $59.1 million for the quarter, down from $97.9 million it recorded a year ago.

Net premium earned rose 2.5 percent to $505 million.

HCC will exit equity and equity-related investments, including hedge funds and alternative investments, and reinvest those funds in fixed income securities to eliminate the volatility in its investment income, Bramanti said.

Shares of the Houston, Texas-based company closed up 3 percent at $23.19 Tuesday on the New York Stock Exchange.

For the press release, please click [ID:nGNW53757a]. For the alerts, please click [ID:nWNAB7681]. (Reporting by Adheesha Sarkar in Bangalore; Editing by Gopakumar Warrier)