Donald Laster, the insurance executive who built the Don Laster Agency Inc. into a niche success by specializing in benefits for employees and executives, has sold his company to Arthur J. Gallagher & Co. and plans to merge his entire practice into the insurance giant.

Financial details of the transaction, which was completed March 3, weren’t released. For Laster, who was elected in 2002 to Principal Financial Group Inc.’s Hall of Fame for insurance salesman, the purchase will give his clients access to far greater financial resources, a broader line of products and a greater range of technical capabilities that come with being part of a larger company.

The acquisition is the second in as many years for Arthur J. Gallagher in Iowa and helps the Itasca, Ill.-based company strengthen the services it offers here, particularly in Central Iowa. Laster’s list of clients, each of which is expected to move with Laster to Arthur Gallagher, includes such companies as Pioneer Hi-Bred International Inc., American Athletic Inc. and Newton Manufacturing Co. Gallagher bought Sioux City-based Grandy Pratt Co. in November 2002.

“This is a buyout and grow,” Laster said. “This old dog has a lot of hunting left in him.”

Laster’s agency specializes in human resource-related insurance products, particularly the types of policies that are needed by top executives, including compliance issues, tax opinion insurance, policies for mergers and acquisitions and insurance for directors and officers. He also serves as a consultant on human resources issues.

“Strategically, these are areas where Gallagher was small,” said Mike McCoy, who is area president for Arthur Gallagher and was a part owner of Grandy Pratt when it was purchased. “This adds more depth to our team.”

Laster, whose father started an insurance agency in 1947 and sold it in 1979, said it was getting more difficult for a small agency to thrive in an industry that is consolidating. At the same time, he said larger national firms are acquiring many of his clients. In order to keep pace with increasing demands from customers, Laster concluded he needed to be part of a larger organization himself. Laster began the Don Laster Agency in 1983.

“This is a decision a lot of agencies face,” Laster said. “Clients are looking for a broader scope. The needs for new resources have never been greater.”

At Gallagher, Laster will assume the role of executive vice president and his responsibilities will include Iowa’s division of Gallagher Benefit Services Inc. He will report to an executive in Kansas City. Gallagher Benefits has about $150 million in revenue annually.

Laster, who is 47 years old, has been considering a sale for a year, he said. But he wanted to see how well Grandy Pratt was integrated into Arthur Gallagher before he chose a similar path. His company has 7 employees.

“Since we did the merger, folks were checking in on me and seeing how it had gone,” McCoy said. “We were exploring the prospect of merging Don’s operations into our, and I think he got more comfortable with the idea.”

McCoy said Arthur Gallagher was not finished making acquisitions, and that it would continue to scour Central Iowa for more opportunities. It has made 100 purchases since it first sold shares to public in 1984, he said. Laster said his skills at starting and managing a small company will help Arthur Gallagher grow in Iowa.

“I know where the talent is in this town, and I know how to build a company,” he said.