Arthur J. Gallagher & Co.'s $276.5 million acquisition of Bollinger Inc. exemplifies the trend of insurance brokerages using sizeable acquisitions to diversify their operations.

While growth via acquisition has long helped brokerages bolster their core businesses, many recent deals have focused on acquiring companies that add ancillary operations in areas such as consulting and handling claims, said John L. Ward, Loveland, Ohio-based CEO of private equity firm Cincinnatus Partners L.L.C.

“One trend we are seeing is the big brokers diversifying outside of the core U.S. brokerage business,” Mr. Ward said. “The Bollinger acquisition by Gallagher is an example, because Bollinger is a very diverse business.”

In announcing its biggest buyout ever this month, Itasca, Ill.-based Gallagher highlighted Short Hills, N.J.-based Bollinger's sports programs division, a managing general underwriter for golf and country clubs across the United States on a retail and wholesale basis that is expected to generate more than $10 million in annual revenue. And Bollinger will add $20 million worth of annual revenue in employee benefits business.

“They have a program business and many other aspects of the business that will allow Gallagher to diversify,” Mr. Ward said.

For Gallagher, the Bollinger deal also provides a big footprint in the key Northeast market. With commercial and personal lines business, Bollinger operates eight offices in New Jersey, New York, Pennsylvania and Connecticut and is ranked No. 21 in U.S. business, according to the 2013 Business Insurance ranking. Gallagher is the third-largest broker of U.S. business.

J. Patrick Gallagher Jr., chairman and CEO, said in a statement announcing the Bollinger acquisition that the deal “gives us a unique opportunity to significantly expand our Northeastern operating platform.''

A spokeswoman for the brokerage said that although the acquisition of Bollinger is Gallagher's largest buyout according to purchase price, the company's 2011 acquisition of London-based HLG Holdings Ltd. is the largest based on total annual revenue.

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Meanwhile, Mr. Ward said brokers are looking to vary revenue streams by offering clients expertise in areas such as handling claims to augment their organic growth.

Diversification also was a primary impetus behind Brown & Brown Inc.'s $336.5 million June acquisition of Atlanta-based rival Beecher Carlson Holdings Inc. That was the biggest brokerage deal this year and the Gallagher purchase of Bollinger was the second-largest acquisition.

Giving Brown & Brown a foothold in the large-account arena, that deal was a departure from the Daytona Beach, Fla.-based broker's previous acquisition strategy, said Timothy J. Cunningham, managing director of Chicago-based investment banking and consulting firm Optis Partners L.L.C.

“It breaks the mold for Brown & Brown and puts them in a different segment of the business,” Mr. Cunningham said.

“The industry leaders all have expertise in searching for and zeroing in on acquisitions that fit their ambitions,” said Bruce Ballentine, New York-based vice president and senior credit officer at Moody's Investors Service Inc.

The Beecher Carlson purchase came little more than a year after Brown & Brown spent $400 million to diversify its offerings by acquiring managing general agency Arrowhead General Insurance Agency Inc.

Another example of the trend is the June purchase by Aon Global Risk Consulting, the risk consulting business of Aon P.L.C., of Dempsey Partners L.L.C., a Wilton, Conn.-based provider of claims preparation and forensic accounting services for an undisclosed sum.

“There is an emerging claims presence in the top brokers, which could fuel more M&A activity in the short term,” Mr. Ward said. “This is different from acquisitions that are done solely to build out the U.S. brokerage footprint.”

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Another reason for large brokerages to add new businesses rather than expand existing ones is that many of the large independent brokers that are the most likely acquisition targets by publicly-traded brokers recently have been recapitalized or changed private-equity backers.

“I see continued activity in the vertical acquisition front, but as big acquisitions become less available, there could be a shift to more horizontal acquisitions,” Mr. Ward said. “When you look at their acquisition activity in the sector, it has been very active the past few quarters.”

However, such deals “may be slowing down a bit just due to the fragmented nature of the segment and lack of suitably large independent brokers that remain,” he said.

Mr. Ballentine said acquisitions have been a way of life for brokers for years and there are plenty more acquisitions to come.

“The U.S. brokerage and agency sector is highly fragmented with hundreds of midsized firms and thousands of smaller firms that are targets for acquisition over time,” Mr. Ballentine said.

Likewise, Julie Herman, New York-based associate director for Standard & Poor's Insurance Ratings, said she expects the deals to continue.

“Even though there has been plenty of acquisition activity in the past year, you don't hear the brokers saying that it is drying up,'' Ms. Herman said. “It's an incredibly robust pipeline.''