UPDATE 2-Fairholme increases stake in AIG to 26.6 pct

* Fairholme increases AIG stake to 26.6 pct from 24 pct

* Latest step in fund’s role as AIG reduces U.S. stake
(Adds detail on Fairholme and its AIA stake)

NEW YORK, Oct 14 (BestGrowthStock) – Fairholme Capital Management
LLC increased its stake in American International Group Inc
(AIG.N: ) to 26.6 percent, deepening the fund’s role in the
insurer as it prepares to emerge from U.S. government support.

Fairholme Manager Bruce Berkowitz already held a 24 percent
stake in AIG, according to a regulatory filing on Thursday.

The incremental increase in Fairholme’s AIG holdings is
another step in Berkowitz’s support of the insurer, as AIG
tries to restore its financial stability.

Fairholme, already AIG’s largest private shareholder, said
last week that it planned to invest about $1 billion in the
initial public offering of AIA Group Ltd, AIG’s Asian life
insurance unit. [ID:nLDE69328B]

Last month, as AIG unveiled its plan to accelerate the
payback of U.S. government bailout money, Berkowitz disclosed
that he had signed a confidentiality and standstill agreement
with the insurer, which analysts interpreted as a sign that he
was willing to put up additional capital for AIG.
[ID:nN01252922]

He has spent about $2 billion this year buying AIG common
shares, preferred shares and bonds. Fairholme said it had about
$18 billion of assets under management as of Sept. 30.
(Reporting by Maria Aspan, editing by Maureen Bavdek, Dave
Zimmerman)

UPDATE 2-Fairholme increases stake in AIG to 26.6 pct