The world's 10 largest reinsurance brokerages increased their collective gross revenue by 7.4% in 2013, the largest gain in at least a decade, despite softer reinsurance pricing. Much of the increase can be attributed to JLT Reinsurance Brokers Ltd. and its late 2013 acquisition of the reinsurance brokerage operations of Towers Watson & Co.

The reinsurance market is seeing softer rates in many lines. In addition, many large global insurers, or cedents, are buying less reinsurance and changing their program structure. The result “is clearly going to have an impact on the intermediaries,” said Dennis Sugrue, a credit analyst at Standard & Poor's Corp. in London.

“There was a lot of talk in Monte Carlo (at the Rendez-Vous de Septembre reinsurance gathering) and in subsequent discussions with cedents about reducing the frictional costs” involved in risk transfer, which challenges reinsurance brokerages to prove the value they provide for fees and commissions, Mr. Sugrue said.

The decline in demand for reinsurance coverage “probably hurts the smaller (reinsurance) brokers more than the larger ones,” said Brian Schneider, a senior director, insurance, at Fitch Ratings Ltd. in Chicago.

“The increasing sophistication of primary companies' modeling means that they are buying less reinsurance and so, perhaps, do not rely on brokers as much as in the past,” he said. Still reinsurance remains a “broker-driven market,” he said.

Reinsurance brokerages are, in some senses, like swans that look serene on the surface but are “pedaling like fury” below it, said Eamonn Flanagan, a director at Shore Capital Group Ltd. in Liverpool, England.

The current dynamics of the reinsurance industry mean that revenue growth is most likely to come through acquisition rather than organically, said Toby Esser, CEO of Cooper Gay Swett & Crawford Ltd., the No. 5 reinsurance brokerage in Business Insurance's 2014 reinsurance brokerage ranking with $158.5 million in 2013 gross brokerage revenue, a 15% increase over 2012.

The various factors mean that if brokerages want substantial growth, they likely will have to be sold.

“It is a very tough environment” for reinsurance brokers, Mr. Flanagan said.

The world's largest reinsurance brokerage, Aon Benfield, a unit of London-based Aon P.L.C., reported flat gross reinsurance brokerage revenue at $1.51 billion for 2013.

Guy Carpenter & Co. L.L.C., the reinsurance brokerage arm of Marsh McLennan Cos. Inc., posted a 4.8% increase in gross 2013 brokerage revenue with $1.13 billion.

Willis Re, the reinsurance arm of London-based Willis Group Holdings P.L.C., posted a 2.7% increase with reinsurance brokerage revenue increasing to $860.0 million.

While the Towers Watson reinsurance brokerage acquisition boosted JLT Re's standing among the world's largest reinsurance brokers, it already was “becoming a nuisance” to the big three reinsurance brokerages and already had a great deal of support from primary clients looking for an alternative to those three firms, Mr. Flanagan said.

The business, which rebranded as JLT Re in September, posted reinsurance brokerage revenue of $375.9 million for 2013, up 90.2% from 2012.

Aside from adding scale, JLT's purchase of the Towers Watson business probably boosted JLT to the top or No. 2 spot for analytics, which are vital to reinsurance brokers but can be a hidden cost, he said.

Many cedents were frustrated by a perceived lack of choice of reinsurance brokerages, Mr. Flanagan said.

“Bringing the two businesses together has given us opportunities,” said Mike Reynolds, global CEO of JLT Re. “We have a seat at the table with big clients.”

The market was looking for alternatives to the big three reinsurance brokerages, Mr. Reynolds said.