By Juan Lagorio

NEW YORK (Reuters) - U.S. life insurers Lincoln National Corp (LNC.N: Quote, Profile, Research) and ACE Ltd (ACE.N: Quote, Profile, Research) reassured investors that they have enough capital, but credit rating agency Standard & Poor's cut its outlook for the industry on Friday.

The Progressive Corporation (PGR.N: Quote, Profile, Research) reported a net loss of $684.2 million in the third quarter saying September's market turmoil hammered its investment portfolio and sent shares down 9.4 percent to $11.70.

Shares of Lincoln, battered in recent days amid fears of capital needs, were up 21 percent to $22.03 on the New York Stock Exchange, while ACE stock was up 8.9 percent to $41.66 in late afternoon trade.

The Lincoln National and Ace announcements followed recent profit warnings at U.S. life and property insurer Hartford Financial Services Group Inc (HIG.N: Quote, Profile, Research), MetLife Inc (MET.N: Quote, Profile, Research) -- the largest life insurer in the United States -- and Prudential Financial Inc (PRU.N: Quote, Profile, Research).

S&P revised its outlook for life insurers to negative from stable, based on expectations of higher-than-normal credit losses, lower fee-based revenues, and a reduced financial flexibility.

Insurers have been under pressure to keep solid capital positions to maintain their ratings after their investments lost value as financial markets sank in recent weeks.

Higher ratings lower the cost of borrowing.

"We expect to revise the ratings or outlooks on several life insurers in the next few months because of the impact of these challenging macroeconomic conditions," S&P's credit analyst Kevin Ahern said in a statement.  Continued...