AIG has $600 million Fannie, Freddie preferred: source

A sign on an office building for AIG, American International Group, is pictured in Los Angeles, California in this May 8, 2008 file photo.

NEW YORK (Reuters) - American International Group Inc (AIG.N), the world's largest insurer, holds between $550 million and $600 million in Fannie Mae and Freddie Mac preferred shares, according to a source familiar with the investment.

Investors have been biting their nails over companies' holdings of the agencies' preferred shares, with concern that the recent government takeover of the giant home-funding companies could wipe out value.

Insurers in total own about $4 billion in Fannie Mae FNM.N and Freddie Mac FRE.N preferred stock, according to earlier figures compiled by rating agency A.M. Best.

(Reporting by Lilla Zuill, editing by Gerald E. McCormick)