Rising prices and improving economic conditions buoyed the collective fortunes of the largest publicly traded insurance brokers during 2011.

Marsh & McLennan Cos. Inc., Aon Corp., Willis Group Holdings P.L.C., Arthur J. Gallagher & Co. and Brown & Brown Inc. all posted higher revenue last year compared with 2010 (see chart). Willis and Gallagher, however, saw their 2011 profit decline compared with 2010.

MMC led the sector in terms of revenues, posting $11.53 billion for the year (see related story).

Meyer Shields, director at St. Louis-based Stifel, Nicolaus & Co. Inc., said the improving economy and higher insurance rates are good news for brokers.

“It's not the strongest recovery we've ever seen. It's not the strongest rate cycle we've ever seen. But it's helping,” Mr. Shields said.

The industry has realized that with limited investment income, boosting underwriting income is the only path to financial success, he said.

Bruce Ballentine, vp and senior credit officer at New York-based Moody's Investors Service, said that while brokers have been steady performers through the financial crisis and slow economic recovery, the insurance pricing change is welcome.

“The tone of underwriters and brokers over the past few quarters has been that pricing has bottomed out and is even firming in some areas,” Mr. Ballentine said.

While insurance price increases were modest and limited to certain lines of business, such as middle-market property/casualty and some specialty lines, the increases benefited brokers, Paul Newsome, managing director and senior insurance analyst at Sandler O'Neill & Partners L.P. in Chicago.

“Better prices hit brokers pretty quickly because, unlike insurance companies, (brokers) don't earn their commissions over time,” Mr. Newsome said.

During an analyst call, J. Patrick Gallagher, chairman, president and CEO of Gallagher, attributed the Itasca, Ill.-based brokerage's 5% uptick in organic growth more to adding new business than improving rates or the economy. “At the beginning of 2011, things still looked to be really tough out there; but during the year, we continued to build significant momentum that culminated with a very strong finish,” Mr. Gallagher said.

Despite the improved organic growth, the company's net income fell due to acquisition and integration costs surrounding its purchase of London-based brokerage Heath Lambert Ltd.

At Willis, several factors contributed to a 51.9% drop in the brokerage's net income compared with the previous year.

Speaking to analysts, Willis Chairman and CEO Joe Plumeri said ongoing issues at its loan protector unit, which services the troubled mortgage-services industry, combined with declining North American commissions and fees to limit Willis' profit.

“Going in to 2011, we expected improvement in economic conditions, perhaps unjustly so,” Mr. Plumeri said during the call. “Beyond the economic conditions, we definitely had a poor quarter. It wasn't just the economy.”

Mr. Plumeri cited reduced demand in Willis' two largest sectors, employee benefits and construction, as well as lost business due to mergers and acquisitions by Willis clients as factors.

Willis' results likely were an aberration and not indicative of the sector's long-term prospects, Mr. Ballentine said.

Emerging-market growth was one factor that led to double-digit rises in revenue and income for Aon Corp., said President and CEO Greg Case.

“We saw growth in emerging markets and across Asia-Pacific, including double-digit growth in countries such as Thailand, China, Japan and Malaysia,” Mr. Case said during an investor call, adding that there was evidence of firming pricing in catastrophe-exposed regions.

Citing better access to global insurance markets and more favorable tax rates, Aon early this year said it would relocate its corporate headquarters from Chicago to London.

The move makes sense, said Adam Klauber, an analyst at Chicago-based William Blair & Co. L.L.C. “In the long term, (international is) where the growth is,” he said.

For most brokers, mergers and acquisitions are a necessary part of international expansion.

In August 2011, Marsh acquired the brokerage business of South Africa-based Alexander Forbes Ltd. In March of 2011, Gallagher said it would buy U.K.-based HLG Holdings Ltd. to expand its international brokerage operations.

Mr. Ballentine said he expects the M&A trend to continue.

“The rated brokers tend to be industry leaders with lots of experience making acquisitions,” he said. “It's a core skill in this sector.”

Interest in acquisitions—whether it be international or in North America—continues, said Mr. Shields.

“We're still seeing most of the brokers out there looking for small acquisitions—be it a locality, product line or even an individual producer,” Mr. Shields said.