NEW YORK—The New York attorney general's office has dropped its appeal of a judge's July decision to overturn the bid-rigging convictions of two former Marsh Inc. executives.

The state had appealed a July 2 decision by New York County Supreme Court Judge James A. Yates that tossed out the convictions of former Marsh Managing Directors William Gilman and Edward J. McNenney.

In the opinion, the judge cited new evidence that “undermines the court's confidence in the verdict,” including documents that weren't disclosed at the time of the trial that would have proved “invaluable” to the defense as well as contradictory statements by witnesses who cooperated with the prosecution.

Prosecutors' appeal was withdrawn in a document signed Dec. 13 by New York attorney general and Governor-elect Andrew Cuomo and attorneys for Messrs. Gilman and McNenney. The document did not state the reason for the state's action.

Messrs. Gilman and McNenney, the first former Marsh executives to face trial in the case, were accused of colluding with employees at various insurers to rig the market for excess casualty insurance between 1998 and 2004.

Judge Yates convicted the men in February 2008 of violating New York antitrust law, but acquitted them of 20 counts of fraud and larceny.

They were sentenced to 16 weekends in jail but appealed the convictions.

The judge's decision in July to toss the convictions capped a series of failures by prosecutors targeting individual brokers named in then-New York attorney general Eliot Spitzer's investigation into alleged bid-rigging and other practices by brokers and insurers.

Last October, Judge Yates acquitted three other former Marsh executives of all charges in the case after a nearly 11-month trial. He later dismissed charges against three more defendants before their trial began.

Meanwhile, Messrs. Gilman and McNenney sued Marsh in late October, accusing their former employer of violating federal law and breach of contract, claiming it had fired them without cause and had not paid them severance to which they were contractually entitled.