Lockton Cos. L.L.C.'s ability to meet the needs of large risk management accounts, retain clients and attract talent is helping push the broker closer to the $1 billion mark in annual revenue, observers say.

Kansas City, Mo.-based Lockton reports that it produced $904.4 million in brokerage revenues during 2011, up from $826.9 million in 2010. The growth helped Lockton remain at No. 9 in Business Insurance's 2012 ranking of the world's largest brokers.

The number of employees working for Lockton also grew in 2011, to 4,450 from 4,107 the prior year.

Much of the property/casualty and employee benefits broker's growth success has come from organic expansion rather than acquisitions, company leaders and observers say.

“They are just shy of a billion dollars now in revenue and to get there through organic growth... speaks to the success of their business model,” said John Wicher, principal at John Wicher & Associates in San Francisco.

Organic growth for the brokerage industry has been “very low,” averaging from flat to about 2%, said John L. Ward, CEO at Cincinnatus Partners L.L.C. in Cincinnati.

Lockton, meanwhile, is known for a customer retention rate that outperforms the industry average by a wide margin, Mr. Ward added. That, along with its leadership, has helped the company grow organically, which is less expensive than acquiring other brokers.

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“Just holding on to their existing customers better than the average broker is one of the reasons why their organic growth rate compares favorably,” Mr. Ward said.

Growing their industry specialty programs and opening up offices where it makes sense also has helped, Mr. Ward said.

Being privately owned helps fuel the company's organic expansion because Lockton faces fewer bureaucratic hurdles than publicly traded competitors, said David Lockton, company chairman. That in turn helps the company focus on its customers and stay out of its associates' way as they work to service insurance buyers, he said.

“The reason we have been able to achieve the size we have through organic growth is partly attributable to our private ownership,” Mr. Lockton said. “Our private ownership helps us attract the best talent in the industry.”

Lockton's commercial retail brokerage revenue reached $600.8 million for 2011, up from $565.4 million the prior year.

It saw opportunities in helping commercial customers meet their business challenges, including those presented by the firming insurance market, Mr. Lockton said.

“It has firmed across the board, but it's particularly acute for a couple lines of coverage, in particular workers compensation,” Mr. Lockton said. “We are doing a lot to restructure programs. We do a lot of very sophisticated actuarial analytics around collateral requirements. We had a lot of success in reducing collateral required by insurance carriers. This helps our clients free up credit.”

More than $161 million of Lockton's commercial retail brokerage revenue came from non-U.S. offices in 2011. Those offices were home to 1,666 employees.

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“As our clients continue to face the challenges of globalization, we continue to position ourselves to deliver solutions to the problems they encounter,” said John L. Lumelleau, Lockton president and CEO. “We are constantly looking to anticipate and then tailor our responses to our clients' needs.”

Lockton's employee benefits expertise produced $234.7 million in benefits revenue during 2011, up from $202.6 million the prior year. The company expects that demand for its benefits expertise and analytics capabilities will continue growing over the next several years, Mr. Lockton said.

“Client (benefits) costs will continue to rise unless they address the underlying cost of health care,” Mr. Lockton said.

“There is no savings in the (Patient Protection and Affordable Care Act's) reform of insurance, and what clients really need to be doing—and what we are helping them do—is to mange the underlying cost, which is the cost of health care and acute illnesses,” he said.

The PPACA is “clear as mud and needs to be navigated for our clients,” Mr. Lumelleau added.

“That is just in the United States,” he said. “We will continue to grow our benefits business around the world as well.”

But geographical expansion is just one among several drivers of Lockton's growth, sources said.

Lockton recruits “good people and has a culture of excellence,” which is why very few employees leave voluntarily, Mr. Wicher said. “I think that is ultimately reflected in how those employees view and treat their clients.”