After a little over two years regulating insurance in New York, the state’s insurance superintendent, Eric R. Dinallo, has announced his resignation from the position.

Gov. David A. Paterson made the announcement yesterday (May 28) that Dinallo will resign from office, effective July 3, to become the Henry Kaufman Visiting Professor of Finance at New York University’s Stern School of Business.

The May 29 edition of the Wall Street Journal speculates that Dinallo will be among the candidates to seek the office of New York attorney general if the current holder of that post, Andrew Cuomo, runs against Paterson for governor next year.

Eric Dinallo

“Eric Dinallo has been a stalwart advocate for New Yorkers, a trusted advisor to me and my administration and a committed public servant,” Paterson said in a statement, noting the pair’s recent efforts to restore American International Group, working alongside representatives from the U.S. Treasury, the Federal Reserve Bank of New York and others.

Dinallo became the state’s 39th insurance superintendent after confirmation by the state Senate April 18, 2007, joining the insurance department from Willis Group Holdings, where he served as general counsel for the brokerage. From 2003 to 2006, he was the managing director and global head of regulatory affairs for Morgan Stanley.

He also served as chief of the securities bureau for former New York Attorney General Eliot Spitzer, conducting financial investigations, and was a former assistant district attorney in the New York County District Attorney’s office. Spitzer would later nominate Dinallo for the insurance superintendent post when he became governor.

In his own statement, Dinallo voiced his appreciation to have worked with Paterson “for the betterment of our state and our economy, and to have helped foster an insurance system that works fairly for all.”

“Our efforts aimed at financial fairness and economic protection for policyholders of all kinds, from new homeowners to the largest employers, are vitally important to New York’s future,” Dinallo said. “It has also been a true privilege to work with the talented and dedicated staff of the New York State Insurance Department, the best insurance regulators in the world, and I know that they will continue their tremendous efforts on behalf of our fellow New Yorkers.”

Leadership praised

Paterson said that under Dinallo’s leadership, the New York State Insurance Department effected the largest regulatory settlement in the U.S., a $2 billion insurance agreement settling a longstanding dispute stemming from the destruction of the World Trade Center.

The governor also said Dinallo played “an integral part” in the reform of the workers’ compensation system and facilitated more than $15 billion in new capital for the bond insurance industry.

Dinallo has testified before the U.S. House and Senate 11 times in the last two years as a leading proponent of regulation for credit default swaps, the mechanism that aided the fall of AIG. He has also has served as chair of the NAIC‘s Life and Annuities Committee since January 2008 and was given the organization’s Esprit de Corps award last year for outstanding service to state insurance regulation.

Paterson noted that Dinallo has ties to NYU, having earned his law degree there in 1990, where he served as Law Review and Essay editor.

“Though New York is losing a valuable and passionate public servant who has served our State in numerous capacities for more than a decade, the students of NYU are gaining a professor with a unique perspective and a reservoir of knowledge from which to learn,” the governor said.