JUNEAU — Union representatives said Wednesday that former Alaska attorney general Dan Sullivan dropped the ball in settling a professional malpractice lawsuit against a former state actuary for $500 million.

Sullivan, who was attorney general from June 2009 to November 2010, is currently the Republican nominee for the U.S. Senate seat held by Democrat Mark Begich. Wednesday’s news conference with union representatives in Anchorage was promoted by Begich’s campaign. It came as the NEA Advocacy Fund, a super political action committee affiliated with the National Education Association, a major teachers’ union, unveiled an ad criticizing the settlement. Sullivan campaign spokesman Mike Anderson called it an attempt to rewrite history.

In 2007 — at the leading edge of the Great Recession — the state sued Mercer Inc. for at least $1.8 billion and potentially $2.8 billion or more, alleging the company had made mistakes that contributed to a shortfall in public employee pension funds. At the time of the settlement, Sullivan was attorney general.

The 2010 settlement emerged as a campaign issue when Sullivan touted it in a recent ad, featuring a woman identified as a teacher. She says her pension took a “big hit” after the financial crisis but that Sullivan “fought back, forcing a Wall Street firm to pay for their malpractice, returning almost half a billion dollars into the retirement fund for Alaskans.”

In announcing the settlement, Sullivan said the state was prepared to go to trial but faced risks in doing so, including the potential for future countersuits and drawn-out appeals. He said he felt good in settling, calling the settlement significant and a great result. He said he believed it to be the largest of its kind.

Of the $500 million, the Department of Law said just over $400 million was returned to the public employees’ and teachers’ retirement funds, with the remainder going for court costs and to outside lawyers.

As part of the settlement, Mercer admitted no liability or wrongdoing.

Anderson said the Sullivan campaign stands by its ad.

Stock market declines and soaring health care costs also contributed to Alaska’s multibillion-dollar pension shortfall, the state has said.