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Top insurance brokers, No. 2: Aon P.L.C.

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2016 brokerage revenue: $11.61 billion

Percentage increase (decrease): (0.5%)

Aon P.L.C. has seen significant changes over the past few months after unwinding a large portion of the benefits business it acquired seven years ago with the purchase of Hewitt Associates Inc.

The sale of its benefits outsourcing business to Blackstone Group L.P. for $4.8 billion will allow Aon to focus on its core business of providing broking and consulting services, its senior management says.

The deal slimmed Aon down, with staff numbers reduced by about 20,000, and is expected to save Aon $400 million in annual costs, but the firm also added to its business over the past year through several smaller strategic acquisitions, including a purchase in the burgeoning cyber risk management sector.

Aon reported brokerage revenue of $11.61 billion in 2016, a slight decrease from the prior year as it maintained its No. 2 ranking on Business Insurance’s list of the world’s largest insurance brokers.

The decrease was largely due to foreign exchange fluctuations, and organic growth on a consistent currency basis was 4%, said Michael J. O’Connor, CEO of Aon Risk Solutions, its large account brokerage unit.

“If you look at the macroeconomic and geopolitical picture around the world, there’s been a lot of things going on in the past year, and that created opportunities for us in certain geographies and certain product areas … and then there were also places where there were some real headwinds, so I think we look at it as a solid year,” Mr. O’Connor said.

Aon reported similar organic growth rates in the first quarter of 2017, with much of the growth driven by its health solutions unit.

Going forward, the sale of the outsourcing unit will allow Aon to “double down on risk, retirement and health,” Mr. O’Connor said.

The deal with Blackstone was surprising, given how big a part of the Hewitt business it accounted for, but it’s too early to tell how it will affect Aon, said Paul Newsome, managing director, at Sandler O’Neill & Partners L.P. in Chicago.

“When the dust settles, you hope you have something that is fastergrowing and has higher margins, but we don’t know to what extent that will be true and we’ll have to see how that develops over the next couple of quarters,” he said.

Aon will likely use most of the money it raised through the sale to repurchase shares, Mr. Newsome said.

The reduction in overall revenue may also affect Aon’s financial performance, according to analysts at Credit Suisse Securities (USA) L.L.C., which issued a research note on the outsourcing sale last month.

“For a mature industry defined by slow but stable growth and recurring revenues, size should also factor into valuation as well and one observation is that Aon’s revenue base has not been this small since 2010,” the note said.

While the deal will shrink Aon’s overall business, the firm made eight smaller acquisitions in 2016.

Several of the deals involved health-related businesses, but on the risk management side, in October Aon bought Stroz Friedberg Inc., a New York-based firm specializing in cyber incident response and cyber security.

“We had industry-leading capabilities on cyber risk, but the reality was that there were still many unmet needs for our clients in terms of getting our hands around this topic,” Mr. O’Connor said.

In addition, to the purchase, Aon made some key hires in the cyber area, he said, including former FBI cyber security expert James C. Trainor as senior vice president, and Jason Hogg, a former private equity executive who specialized in cyber security investments, as head of its cyber solutions unit.

Like several other large brokers with London market operations, Aon is being investigated by the U.K.’s Financial Conduct Authority for allegedly sharing competitively sensitive information within the aviation insurance sector.

Mr. O’Connor declined to elaborate on comments made when the investigation was disclosed in April, when the firm said it is working with the FCA and that the aviation broking sector under investigation represented less than $100 million of its global revenue.