Brown & Brown Inc. has reached its goal of $1 billion in annual revenues, and has embarked on its new $2 billion goal.

“It didn't come without a lot of work for a lot of teammates,” said J. Powell Brown, president and CEO of the Daytona Beach, Fla.-based brokerage, of reaching the initial $1 billion goal.

Gross revenues totaled $1.12 billion in 2011, a 15.0% increase from 2010, while brokerage revenues also increased 15.0% to $1.11 billion. This surge moved Brown & Brown up to seventh place in Business Insurance's 2012 ranking of the world's largest brokers from eighth place last year.

The outlook is bright, observers say. The property/casualty market is hardening, and “the pricing improvements there are going to help drive Brown & Brown's revenue,” said Mark Hughes, Atlanta-based director and research analyst with SunTrust Robinson Humphrey Inc.

One way the brokerage plans to reach the $2 billion mark is to continue its active acquisition strategy, said Mr. Brown. “Our goal is always about good people. It's not about geography” or other factors, said Mr. Brown. “We believe that good people run good businesses and attract more good people.”

Acquisitions will continue at the same rapid pace this year. “We're looking to invest in all of our divisions of our company—that's retail, wholesale and services,” Mr. Brown said.

The brokerage's largest deal during the past year was its January acquisition of San Diego-based Arrowhead General Insurance Agency Inc., a national insurance program manager with $106.1 million in 2011 revenues.

%%BREAK%%

Brett Huff, senior vp and analyst with Little Rock, Ark.-based financial services firm Stephens Inc., said the brokerage is “smart to buy smaller brokers, simply because they can sometimes get them for a price that allows a very good return on capital and allows them to grow beyond what they could grow organically.”

This past year the company saw areas of improvement and others that “continued to struggle in the economy,” said Mr. Brown, adding “our business is a proxy for the middle-market economy,” with concentrations in states that have been hit hard by the economy, including Arizona, California, Florida and Michigan.

Mr. Huff said the brokerage probably is more exposed than any other publicly held broker to small business accounts. Unlike its competitors, who have a mix of larger international firms, Brown & Brown is “just now beginning to see some of their customers begin to grow again,” said Mr. Huff.

“They've been through a tough time in the last four years, but I think the ship is turning around,” said Chicago-based William Blair & Co. L.L.C. analyst Adam Klauber.

“We think that the economy seems to be getting better,” barring “something very unusual happening in Europe,” said Mr. Brown.

Meanwhile, “we continue to work diligently on behalf of our clients, and we try to seek new clients aggressively, but that's not something new,” he said.

%%BREAK%%

“We continue to be a decentralized organization,” with individual leaders running their business “as if they were their owners,” said Mr. Brown. “We are linked with a common culture and a greater good in terms of being associated with a large organization in terms of bringing benefits to our customers,” he said.

Brown & Brown “maintains a unique sales culture,” that is driven partly by how its organization is decentralized, said Mr. Huff.

Commercial retail brokerage revenues increased 10.8%, to $580.7 million in 2011 from 2010. “We continue to invest in retail businesses all over the country,” said Mr. Brown. “We were very pleased with the people that joined our team, and the client relationships and the services that they provided to their customers,” Mr. Brown said. “We think the economy is looking better, which bodes better for that business segment.”

Employee benefits revenue increased 11.8%, to $192 million in revenue. “Employee benefits is growing,” said Mr. Brown. “The top line has gone up because we continue to acquire businesses in that segment.”

Wholesale revenues increased 13.8%, to $155.2 million. “There's been upward rate pressure in that segment longer than anywhere else, and we've had organic growth in that segment longer than anywhere else in the recent past,” Mr. Brown said.

Services revenue more than doubled to $93.1 million from $46.3 million, which reflects in part the Arrowhead acquisition. “We've acquired several businesses that are very good businesses, and want to continue to invest in our services area,” Mr. Brown said.

%%BREAK%%

Personal lines revenue increased by 8.8% to $73.7 million. “We think personal lines is a great business, and we absolutely want to invest in that with the right people,” Mr. Brown said.

Reinsurance declined in revenues by 16.2% to $17.4 million. Mr. Brown said last year the brokerage hired a new leader, Mike Cross, for that unit, and has been “very pleased with him.” Brown & Brown will be growing that business in the future, “but in transition, we had a couple of changes which resulted in slightly less revenue.”

The brokerage's head count increased by 14.7% to 6,061, which primarily reflects acquisitions, but some additional hiring as well, said Mr. Brown.

Mr. Brown, who took a leave of absence last year for health reasons, said he has been “feeling very good.”