Brown & Brown Inc.'s achievements and its challenges bear a certain resemblance, says President and CEO J. Powell Brown.

“Our greatest achievements and our greatest challenges are a mirror of each other,” said Mr. Brown. “Our greatest achievements have been continuing to earn our clients' trust and confidence each and every year, and navigating through a very bumpy economy,” he said.

“Our biggest challenge is growing organically in a double-dip environment, "double dip' meaning insurance rates are down and insurable exposure units are shrinking,” said Mr. Brown, who succeeded his father as CEO on July 1, 2009, at the firm co-founded by his grandfather as Brown & Owen Insurance Agency in 1939.

Brown & Brown's brokerage revenue reflected the impact of those challenges. Brokerage revenue remained virtually flat, dropping to $964.9 million in 2009 from just under $966 million in 2008.

That put Brown & Brown at No. 7 in Business Insurance's 2010 ranking of the world's largest insurance brokers.

Commercial retail brokerage revenue dropped less than 1% to $548.1 million from $553.1 million a year earlier. Wholesale brokerage revenue dropped 7.7% to $140.2 million.

But “wholesale business is doing better this year,” Mr. Brown said. “It is volatile in terms of rate swings. It's very competitive, but it's faring better than it did the prior year.”

And reinsurance and employee benefits revenues rose. Reinsurance revenue increased 6.6% to $17.5 million and employee benefits revenues rose 5.6% to $158.2 million.

“We have more questions about health care from today than ever before,” said Mr. Brown. “It's like an insatiable thirst of knowledge about it.”

Profits, however, fell 7.7% in 2009 to $153.3 million from $166.1 million the previous year.

And the downward trend continued during the first quarter of 2010, with profits dropping 8.1% to $44.1 million from $48.0 million during the same period of 2009.

“I'm very happy with our team, but our results continue to be impacted by a very bumpy economy,” Mr. Brown said.

“We are a very decentralized company,” he said. “Regardless of the economic conditions, hiring and staffing decisions are made at a very local level.”

Mark Dwelle, an insurance analyst with RBC Capital Markets in Richmond, Va., agreed about the impact of the soft market and weak economy.

“They've struggled with organic growth, which I don't think is primarily their problem—I think it's a soft economy and weak insurance prices,” Mr. Dwelle said. “Their track record on acquisitions last year was a little less than they've normally done, so that didn't provide the offset that they've normally gotten from that.

“Looking ahead, my sense would be there are some signs of light at the end of the tunnel, but they still need some lift in the economy and firming in insurance prices to get back to Brown & Brown that we knew in most of the 2000s,” Mr. Dwelle said.

Brown & Brown completed 11 acquisitions in 2009, and nine through July 2, 2010. Mr. Brown noted in the company's annual report that the 11 acquisitions generated $26.5 million in revenue for Brown & Brown last year, the smallest amount of annualized revenue acquired since 2000.

Brown & Brown estimates that its acquisitions thus far this year will generate annualized revenues of $24.6 million.

He said the stock of potential acquisitions remains attractive.

“There are a number of independent agencies out there,” Mr. Brown said. “We think there are lots of potential opportunities in the future. It just depends on when somebody's considering selling.”

He also said Brown & Brown's acquisition philosophy is not driven by geography. “It's all about the people,” he said.

Mr. Brown said he's “very pleased” with the performance of Brown & Brown's sole international operation, London-based Decus Insurance Brokers Ltd.

“They do a little bit of a bunch of stuff—binding property, transactional property, some professional liability—we're very pleased with it,” he said.

Mr. Brown described Brown & Brown's target market as accounts that generate $2,500 to $250,000 in commissions.

“We think the middle market is a wonderful space to be in, and think there continues to be lots of growth and investment opportunities in the middle market,” he said.

The vast majority of middle-market companies do not have risk managers and are “looking for opportunity to save money in any way they can,” he said.

Concerning the continuing issue of contingent commissions, Mr. Brown said, “We have disclosed the existence of contingent commissions for a long time—both publicly and to our clients.” He said contingent commissions are “an integral part of the insurance process and are not negative. They are actually a positive in terms of linking the interest of the insured, the agent and the insurance company.”

Brown & Brown will undergo a major personnel change on Aug. 1, said Mr. Brown. That's when Jim W. Henderson, its vice chairman and chief operating officer, will retire after 25 years with Brown & Brown.

That's the second major retirement at the brokerage in little more than a year. Mr. Brown's father—J. Hyatt Brown—retired as CEO effective last July 1. The elder Mr. Brown remains as nonexecutive chairman, and remains quite active in retirement, according to his son.

He is “working 30 to 50 hours a week, involved in acquisitions and people recruiting, enhancing and selling business—he's a good salesman,” said the younger Mr. Brown.

Brown & Brown's stock closed at $19.47 on July 9, with at 52-week high of $20.44 and a 52-week low of $16.36.