MetLife ( MET) cut its third-quarter earnings guidance late Tuesday, saying the downturn in the equity markets is hurting fee revenue in the variable annuity business and that variable investment income is declining. Shares of the insurer were dropping $6.35, or 17.2%, to $30.52 Wednesday morning. MetLife's stock has now fallen nearly 50% in 2008. The New York-based company said it expects third-quarter income from continuing operations to be in a range of $1 billion to $1.15 billion, or $1.38 to $1.58 a share. MetLife will report its full third-quarter results on Oct. 29. MetLife predicts variable investment income will miss its goal by about $117 million, or 16 cents a share, mostly because of negative hedge fund and private equity returns. Additionally, the drop in the S&P 500 during the quarter will likely contribute to a reduction of around $105 million, or 14 cents a share, in fee revenue from the variable annuity line. Premiums, fees and other revenue should total $8.6 billion, the company said, an increase of 16% from the same quarter a year ago. However, MetLife said operating earnings for the third quarter are expected to be in a range of $600 million to $675 million, or 83 cents to 93 cents a share. In the same quarter a year earlier, MetLife reported an operating profit of $1.16 billion, or $1.52 a share. Because of the volatility in the market, MetLife withdrew its full-year earnings projections. In its second-quarter earnings report, MetLife reduced its 2008 operating earnings forecast to a range of $5.70 to $5.90 a share from the previous target of $5.90 to $6.20 a share.