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)

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