Top insurance brokers, No. 6: Hub International Ltd.

2017 brokerage revenue: $1.87 billion

Percentage increase (decrease): 13.5%

Hub International Ltd. continued to report robust revenue growth last year as the Chicago-based brokerage made changes in its upper management and built out specialty practices developing more structure around its operations.

While the changes are a natural progression for a broker that has seen significant acquisition-fueled growth over the past 10 years, they may also signal preparation for another change in ownership, observers say.

Hub reported brokerage revenue of $1.87 billion in 2017, a 13.5% increase over 2016, as it scooped up dozens of smaller brokerages in the United States and Canada.

The growth boosted its standing in Business Insurance’s 2018 ranking, as it became the world’s sixth-largest brokerage compared with its No. 7 slot last year.

The brokerage finished 2017 with 52 acquisitions and has announced another 35 so far in 2018, said CEO Marc Cohen.

“The pipeline for the second half of the year is equally as strong as it was in the first half, so we expect to surpass the 2017 number of deals,” he said.

Mr. Cohen took over the CEO role in January, succeeding longtime chief Martin Hughes, who remains executive chairman. Mr. Cohen, who was named president of Hub last year, joined the firm in 2001 when it bought Kaye Insurance Associates Inc., where he had worked since leaving college.

Hub’s acquisition plan in 2017 was part of its strategy to open new opportunities and add expertise, Mr. Cohen said.

“For example, we’ve acquired a number of employee benefit brokers in Canada to help us bring additional product to our Canadian clients and to our employees. We’ve started down the path of acquiring 401(k) planners in the United States, and we really started executing on a strategy to target managing general agents,” he said.

Hub has strong commercial property/casualty and personal lines operations in Canada, and adding employee benefits capabilities will create more of a “one-stop shop” for businesses, Mr. Cohen said.

And MGAs bring “interesting and unique specialization to the organization. They typically have real expertise in an industry group … and they have some exclusivity with carriers and product,” he said.

Hub has a long history of acquisition-driven growth but also reports comparatively strong organic growth, said Phil Trem, executive vice president at brokerage consulting firm Marsh, Berry & Co. Inc. in Woodmere, Ohio.

“Hub has continued to be a top-three acquirer in both the United States and Canada,” he said. “They are an organization, as we view them, that is really aggressive in trying to continue to build and integrate their company, both through organic growth focus and (being) active in the M&A market place.”

In addition to adding a significant number of acquisitions over the past year, in February Hub launched eight specialty practices: transportation, financial institutions, entertainment-sports, construction, agriculture, hospitality, real estate and health care.

The move is part of the brokerage’s natural evolution as it continues to grow, said Timothy J. Cunningham, managing director at Optis Partners L.L.C., a Chicago-based M&A advisory firm and consultancy.

“They’ve solidified eight industry verticals, which some of their larger competitors have been doing for years, so that’s a natural evolution. As they get bigger, they are building more structure around the company,” he said.

Together with execution of its succession plan, the added structure will better position the firm if it goes through another ownership change soon, he said.

Private-equity firms often have three-to-five-year time frames for investments in insurance brokerages.

Mr. Cohen would not comment on whether Hub is preparing for a change in ownership, saying Hub and Hellman & Friedman have a strong relationship and “we look forward to working with them on whatever decisions are made in the future.”

While private-equity interest in insurance brokerages remains strong and capital remains plentiful, Hub may be getting to the size where it will no longer be sold on to another private-equity investor, if Hellman & Friedman does look to sell, Mr. Trem said.

For example, it may be an attractive target for a more long-term investor, such as a pension fund or other sources of long-term capital, he said.

Such a structure may be attractive to Hub, as it would allow them to maintain their privately held status and avoid the costly and burdensome reporting requirements for public companies, Mr. Cunningham said.