2017 brokerage revenue: $1.86 billion

Percent increase (decrease): 5.4%

A healthy middle-market economy and generally favorable organic growth made 2017 a “good year” for Daytona Beach, Florida-based Brown & Brown Inc., according to J. Powell Brown, the brokerage’s president and CEO.

“We grew the business 4.4% organically in all four of our divisions,” said Mr. Brown. Organic growth for the retail segment grew 2.9%, national programs by 6.1%, wholesale brokerage by 6.6% and services by 5.1%.

“This organic growth in all divisions is one of the benefits of our diversified insurance program,” said Mr. Brown. “It is also a byproduct of having diversity within the organization. We expect growth and profitability in all four divisions going forward, and we are excited about the future.”

But Brown & Brown’s $1.86 billion in 2017 brokerage revenue, a 5.4% increase over last year, was not enough to keep the company from slipping to No. 8 on Business Insurance’s 2018 rating of the world’s largest brokerages, down from No. 6 last year.

Outside analysts noted its generally healthy organic growth.

Brown & Brown “had an OK year,” said Mark Dwelle, director of insurance equity research at RBC Capital Markets L.L.C. in Richmond, Virginia. “Their margins experienced a little bit of pressure, but they did see improved organic growth. Their acquisitions also have slowed down a little bit. On the whole, they continue to position well for continued earnings growth in 2018.”

“When you look on an organic basis, the results for Brown & Brown have been relatively disappointing in their retail, but growth in other operations have put them in line with peers,” said Elyse Greenspan, director of equity research for property/ casualty insurance at Wells Fargo Securities L.L.C. in New York.

Brown & Brown has been making internal investments in technology and a new compensation system for producers, Ms. Greenspan said. “Those two factors had an impact on their margins,” she said. “They see it as a trade-off.”

She added that “back into 2017 and even a couple years before that, the level of acquired revenue has been below their target. Acquired revenue has been lighter than expected, but they’ve been disciplined about not paying too high a price.”

“On the acquisition front, we look for businesses that fit culturally and make sense financially,” said Mr. Brown. “We are always looking to expand our capabilities and invest in all four divisions of our business.”

Brown & Brown made 11 acquisitions generating $17.5 million in additional revenue in 2017, said Mr. Brown. “It was not a significant acquisition year for us,” he said.

In the first quarter of this year, the brokerage closed two acquisitions generating $9.5 million in additional revenue.

Mr. Brown said generally favorable economic conditions are helping the brokerage despite flat insurance rates.

“Generally speaking, most communities throughout the country are doing well economically,” he said. “We are seeing generally flat insurance rates. Again, that’s not the biggest driver for our business — we are seeing more growth in exposure units for our insureds as the economy expands. That is good for them and good for our business, too ... Brown & Brown is really a proxy for the health of the middle-market economy.”

The hurricanes of 2017 had a minimal impact on he brokerage’s operations, he said.

“During Hurricane Irma, our offices in South Florida closed for one to three days,” said Mr. Brown. All phone calls were routed to other offices around the country, meaning there was no interruption of service to customers, he said. “Hurricane Harvey in Houston did not force our office to close, but we had teammates who could not get to the office because of floodwaters. It took up to three days to have everyone back in the office in Houston.”

Mr. Brown noted that the brokerage is actively engaged in insurtech. “Our company participates in an insurtech incubator — Plug-and-Play,” he said. “We are constantly beta-testing technology that we think can advance our business strategy going forward. We also are following opportunities in emerging technologies within a number of our large trading partners.”

“We are in the solutions business,” said Mr. Brown. “We must constantly and consistently provide options for our customers. We must also look to the future and recognize that some of our solutions and options for customers will be delivered through new or existing technology platforms.”

“We think beyond each quarter and look at how our investments pay off in future years,” he said.