We've reserved five or ten minutes at the end to deal with questions that come up. I'll read them off to the management team. We really encourage questions. Everybody gets the most out of the whole event if you do that. With that, let me introduce the team. We have Charles Sebeski, Head of Investor Relations, and Guy Zeltser, CEO. Guy, please go ahead.
Thank you, Michael. Great to meet everyone. Just a small correction. I am the Chief Financial Officer of the company. Our CEO is Richard McCathron. A small correction, but everything else was perfect. Thanks for the opportunity. I'm now going to share my screen. Please let me know, Michael, am I doing it in the right way?
You are.
Perfect. Thank you. All right. The only thing I will say, this is the normal legal disclaimer. I'm not going to read all of it. What I will say is there is nothing that we're sharing here that is different than what we have been sharing already publicly. Most of the slides here are taken from the latest Investor Day that we have hosted in New York City, which was about three months ago. I will talk about some numbers that have updated after we announced our Q2 earnings in the beginning of August. Other than that, everything is, again, public information already. Who we are. We are a tech-enabled or tech-native program carrier focusing on both personal and commercial lines. We have a legacy in homeowners, but we're already diversified into additional lines.
Our objective is through underwriting discipline to generate superior return on equity at a lower and lower volatility. We're based in San Jose, California, but the center of gravity of the company, our CEO, is based in Austin, Texas. We also have some additional operations in Dallas, Texas, New Jersey, which is where our insurance team is predominantly based. Our engineering arm is actually based in Poland, which is giving us access to great talent at a cost-advantageous structure. As you can see, in the last 12 months, we have written about $950 million of gross written premium. Roughly 40% of that translates to revenue. We have about $425 million of revenue in the last 12 months. We just earned, actually, net income positive for the first time from net operating activities. We have a book value of $333 million as of the end of the quarter.
The last thing I would say that is not on the page is that we are growing. If you think about where these numbers are going to be in the end of this year, we're going to have a gross written premium of roughly $1.1 billion. You're going to see it in one of the next slides. Revenue of between $460 and $465 million. Because of a recent transaction that we did, it's going to boost our shareholders' equity to the area of about $420 million by the end of 2025. What is it that we do? What is the investment thesis? As I mentioned, we are a program carrier. Through our technology that enables us to relatively easily onboard additional programs to our platform, we build a diversified portfolio. As you can see, we have many lines: rentals, commercial property.
As I mentioned, we have a legacy that started with homeowners. We also added casualty, cyber, small and medium business, and others. The common thing that we're doing, which I'll talk about in a second, is a very different approach to underwriting. That's the common theme. I'll talk more about how we're doing it, how we have done it, and how we're going to continue doing it. What we're aiming to do is to continue to grow this book, which will increase the book value of the company. We also expect to see a multiple expansion through the fact that our book is going to get more and more diversified, which should result in a higher return on equity at a lower volatility. What does that mean? What does that mean in the numbers and where we are going? This is, again, no news here.
This is something that we presented to the street three years ago. Sorry, three months ago. What we expect to generate in the next three years is we expect to nearly double our gross written premium from around $1.1 billion to more than $2 billion in 2028. We're going to roughly quadruple the adjusted net income from about $30 million on an annualized basis Q2 to Q4 of 2025 to more than $125 million in 2028. As I mentioned, we're going to be in the very, very healthy territory of high-teens return on equity also in 2028. Obviously, the question is, these are the numbers, but how are we going to do it? I think that's obviously the question. Let me talk about how we're going to accomplish that, these numbers, roughly doubling our gross written premium over the next three years in a very responsible way.
As I mentioned, it's not about growth at all costs. It's about doing it in a responsible manner. Lever number one, organic growth. We already have roughly 35 programs of more than 20 managing general agents that we work with. We have history with these programs. With some of the programs, we have a history of 10 years. With some of the programs, seven years, five years, but we have a history with them. We always start small from a risk retention perspective. We like to test it before you actually buy it. We have a history. We know these programs, and we feel comfortable that we can continue growing with these programs by a rate of between 10% and 15% a year. That's exactly in line with what we just completed in Q2. The second bucket is our ability to add new programs to the platform.
As I mentioned, we are tech-native. That is enabling us to add programs at a faster pace than the industry. More importantly, we take a very diligent approach to our underwriting. Just to give you an example of what that means in numbers, in 2024 alone, we reviewed more than 140 opportunities of programs that want to do business with us. We only cleared 4 of the 140. We are being very diligent. Even though it's only 4, it allowed us to add business of around $130 million of gross written premium of new business. That's what we're projecting into the future every year, between $100 million and $150 million. We are just going to follow through the same process that we have been doing. We just need to continue to execute. There's nothing new here that needs to happen. Third, new homes.
For the ones of you that have been paying attention to the story, we are one of the leading players in placing insurance policies with customers who are buying new homes from some of the largest builders in the country. We recently signed a strategic transaction with The Baldwin Group that is now going to give us access to 3x more new homes closed in the year. This is not only great for growth, but these policies historically have been performing at a loss ratio that is lower by up to 25% than the industry average. We just love this business. This is not only a growth lever, but it's also a critique to underwriting profitability. Last but not least, we're also going to grow our legacy homeowners' business outside new homes. We're going to be very, very selective there.
We only want to work with select partners that we know care about underwriting. We only want to focus on states in which new homes are not being built so we can get a geographical diversification. Think about states like Ohio, Pennsylvania, Tennessee, and so on and so forth that usually have less, what I would call, severe cat exposure like hurricane or wildfire. That's how we're going to grow in a very responsible way from $1 billion to $2 billion. Next is how all of it is going to translate to bottom-line profitability. As you can see, from a numbers perspective, what you need to believe in is that we can grow from one to two that I just talked about how. We need to do it in a responsible way. You don't need to believe that the underwriting performance is going to improve versus what we have today.
You just need to believe that we can hold the line. I'm going to talk a bit in a second about how we are doing it just to give you a bit more color. We are going to generate some more investment income as we're growing the book. We are going to grow expenses, which is an offset to that. We are going to do it in an efficient way. Just to give you an idea, in the last two to three years, while we grew top line by 20% to 30% a year, we actually cut expenses by about 30% in the last two years. We're not going to cut them. We're going to grow them, but we're going to do it in a pace that is significantly slower than the pace of top line growth.
All of that, as I mentioned in the beginning, is not going to result only in significantly higher profits, but also in profits that are more predictable with lower volatility. Just to give you a bit more color on what is the underwriting processes that we follow and what we're doing on the underwriting side. In front of you, this is the process that we follow when we think about how to partner with different programs or different MGAs. I'm not going to read you through each and every bucket here, but the idea is that there is a funnel, right? We're sourcing programs. As I mentioned, the beginning of this funnel in 2024 had 140 opportunities, which is a lot. Only four got to the launch phase. We take a very diligent approach.
What is also very important to understand about our underwriting approach, it doesn't end when we launch. It's an ongoing process. We continue to monitor these programs. As we mentioned in our Investor Day and we shared a few concrete examples, we also terminate programs if they don't deliver. The idea is we are here to deliver high return on equity. We are trying to be great partners. If something is not working, we will try to help the partner to find a different home. We are terminating. We did do it in the past. Happy to give more concrete examples if that's helpful. What I want you to take away from this slide is we're not only very diligent when sourcing for new programs, but we are also continuing to monitor the programs.
If they're doing well, we will actually increase the risk retention, which is exactly what we have been doing to enjoy more of these fruits. If we don't like what we're seeing, we will terminate. Now, let me focus a bit on what we're doing from an underwriting perspective in our legacy homeowners' program. There are two things that you can see that happened here over the last few years. Number one is we have moved to write new business predominantly through the builder channel that I talked about earlier.
We did it so we can re-underwrite the book, which I'll talk about in a second, and just focus on the builder channel in which we did not need to re-underwrite because inception to date, the loss ratio in the builder channel has been, the gross loss ratio has been in the 40% area, which is 25% lower than the industry. We just love this business as is. That's why this is the focus of new business, that was the focus in 2024 and most of 2025. The other side of the equation is the business outside new homes, which we have completely re-underwritten. We have taken more than 170, we have filed and approved and implemented more than 170 rate filings in the last few years. That resulted in a cumulative rate increase of more than 80%.
What we have done is we have also amended the terms and conditions of the policies in many of our key states to make sure that we have better alignment between us and our customers. All of that has resulted in the net loss ratio continuing to improve. I think the peak net loss ratio on aggregate of 47% that we reached in the second quarter of 2025. I don't expect us to do 47%. What we guided for, right, for the 2028 numbers that I just showed to be right, what you need to believe is in a loss ratio of between 60% and 65%, right? We just hit 47% because it was an exceptionally great quarter. We are definitely the result, we're here. We know what we're doing. All we need to do is to continue to execute with this machine that is already in place.
As I wrap up the presentation, there are three main takeaways I want you to take. We have a very strong track record of execution. If you look at what we said to investors three years ago in our previous Investor Day in New York, we put three metrics, three key metrics that we guided for from 2022 to 2025. We did better than all of them. As you can see, with growing revenue by 3.5x, moving from losing a lot of money to being breaking even, we put ambitious goals. Despite the fact that we were ambitious, we did better. That's in our blood. That's the DNA of the company. We are executors. The second thing, I think I just showed you the targets that I think that are very attractive.
Hopefully, if I've done a good enough job, they should not feel overly aggressive because they're just a continuation. Everything is a continuation of what we have been doing. Not only that these numbers are going to be attractive, we are also working on making sure that the book is less volatile, more diversified, such that the certainty of us achieving these results is higher. That's pretty much it. Happy to take any questions that you have.
Very good, Guy. Thank you very much. We did have a couple of questions come in already. Let me start with the first one. Everybody saw the Fed cut rates this afternoon. What will that mean to your business for home buyers, your bond portfolio, just the whole mix of things?
Yeah, it's a great question. I would say that generally speaking, and I think the last few years were a good example, our business is relatively resilient from changes to interest rates. Even when we saw rate increases, and I think people had questions about the new homes channel, the ability of people to actually afford houses, our results were pretty resilient. The reason why we like these builders, large builders, is they actually have their own mortgage arms. They have the ability to give actually better terms than maybe the traditional banks. This is why we've been seeing some of our partners, and Lennar is a good example. It's a public company. You can follow the results. They have been growing their business despite us operating in a high-interest environment. From that perspective, our business has been relatively resilient.
The other point that I would highlight is different components of our portfolio are obviously more sensitive or less sensitive to interest rates. We have many lines that are just not property-driven necessarily, that are more casualty or liability. They're just not as sensitive. They have a longer tail. The idea is that as we diversify the portfolio, especially across different lines of business, we are going to be even more resistant to these changes.
Very good. We had another question from Nate Henderson. I'll just read it to you. It's well-formed. Can you please expand on your new partnership with The Baldwin Group, what you bring to them and what they bring to you to help both of you grow?
Absolutely. A couple of things. First of all, just to put things in order, The Baldwin Group owns a subsidiary called Westwood Insurance Agency. Westwood, before the transaction with us, has access to 15 or 16 of the top 25 builders in the country. Westwood has been the lead player and, frankly, the only main player in this space since 1992. They are just best at this. They're best at serving builders and providing them with the right policy for their customers when they buy a new home. We owned or we had business with four of the top 25 builders in the country before the transaction: Lennar, Mattamy, Hovnanian, and Toll Brothers. The first aspect of the transaction is to sell our builder agencies or our holdings in the builder agencies to Westwood. We got in exchange $100 million in return.
The idea there is The Baldwin Group and Westwood know how to serve builders best, right? Now they have access to 20 of the top 25 builders. That's great for them because they will bring best practices to these other builders. Number two, when we think about what is the need that Westwood has, right, as someone that is placing insurance policies with customers, they need capacity. They need insurance companies to actually offer policies to all these customers. We have an insurance product. We are one of the few players that can offer a tailored product to homes in this space of new construction. We have capacity. Now, as someone that has a product, we now have access to 3x more homes. With these four builders that we had access to, we had access to 110,000 closings a year.
After we sold these to Westwood, now we're going to have access to 370,000, right, because it's all of the builders. It's good for Westwood because they have access to our product, which they did not have before. It's great for us because, as I mentioned, we have a great track record in this space. We can now scale. Frankly, because we have so much more access, we can still be selective and make sure that we picked up business in the communities that we want so we don't get overly concentrated. It's a win-win. The last role of this deal is all these other programs that are outside homeowners that we write on our own balance sheet. The Baldwin Group, right, they're essentially a house of MBAs. They have other types of programs. They have renters and homeowners that they already write with us. They already have casualty.
They have other lines that they already have experience working with us as a carrier. If you ask them, they will tell you that they love working with us. They can move business to us, right? They have a one-stop shop. They know us. We know them. They can just move more business. It's great for us because that's what we're trying to do. We are trying to partner with the best MGAs out there. Baldwin, as I mentioned, we already have two programs that we write with them, a renters program and homeowners. The loss ratio results with these two programs have been 30%, which is gold standard in the property space. It's truly a win-win deal.
Frankly, having seen a lot of M&A deals in my career, that's a very rare beast in which we as a company get money upfront, but still, it is value accretive to our P&L in the short and long term.
Great. Thank you. A question about your geographic concentration. You have a big presence in Florida, California, and Texas. All three of them are challenged for natural disasters. Yet your results, you're showing better underwriting results than your peers. Could you help us understand that?
Absolutely. There is a state-by-state approach, but let me start with Florida. That's the state that you mentioned first, Michael. Florida, if you think about our homeowners' program, HHIP, we only write newly constructed homes. We only set up policies through the builder channel. These policies, or these homes, I should say, have shown, and again, I think we already have a track record of three or four major hurricanes in Florida in the last few years, in which we saw that the average severity when a new home is hit by a hurricane is significantly lower than the average industry. It has to do with the fact that Florida is actually a great state that enforces its own building codes.
These homes are built according to very new building codes, and they put a lot of emphasis on how a home can be built in a way that will sustain a hurricane in a better way. The other property programs that we write in Florida are what's called non-admitted. These are policies that are usually priced significantly higher. Just to give you an idea, most of these other non-admitted programs, we have an estimated loss ratio of about 20% because the price of these policies is significantly higher, such that even if a hurricane hits, it's still a very attractive overall underwriting performance. That's Florida. In some of the other states, Texas and California, the keyword there is diversification. In Texas, we used to have much more concentration in Harris County, which is prone to hurricanes.
As part of what I talked about when we re-underwrote the book, we actually re-thought that. Now we have significantly less exposure there. Generally speaking, in Texas, we're much more diversified. We have some in DFW, some in Austin, some in San Antonio, some in Harris County, but not next to the coast. We've also been in different lines of business in Texas. We don't just have homeowners, but we have a few lines, and that helps us to diversify. In California, I would say it's a similar story. We do have business in California, but we're only writing new business in California through the builder channel. If it's not our own homeowners' program, it is again mostly the non-admitted policies that are priced significantly higher. That is allowing us to achieve superior results.
Great. Now, you do have all that business in homeowners, but someone in a questioner noticed that your mix of premium has shifted a lot, a lot more commercial property, a lot more casualty. Can you explain the motivation for that and how it's going?
Yeah, it's a great question. The motivation is twofold. One is the predictability or the volatility of the results, right? Obviously, when there is a hurricane in Florida, but you add casualty business, there is no one-for-one correlation. What it does is it increases the premium base overall, such that when the same single event is happening, we have much more premium and capital to support it, which is exactly what the best insurance companies will try to do. They will try to diversify. That's exactly what we are. We are a diversified program carrier. The second benefit of this diversification is the fact that in insurance, like many other industries, is having cycles. Sometimes property will have what's called hard market or soft markets. Some industries will do, some perils or lines of business will do well in certain years, and they will do less well in others.
If you are diversified, then again, your business is much more resilient from that perspective. You know we see very good examples of that. Homeowners was a very challenged, I will say, environment in 2021 to 2023, even 2024. However, in 2023 to 2024, auto, which was also challenged, became much better. Now auto has a lot of competition. Homeowners, however, is becoming much more attractive. There is now a regulatory environment that is more supportive in Florida. That's exactly the idea. You always have cycles. The more you diversify, the more you're resilient to these cycles.
OK. I think we have time for one more question. There was a question from someone who knows insurance. They're asking about how well your hybrid fronting program is going. In answering the question, would you explain what fronting is?
Yes. Great question. First of all, what fronting is. Fronting in the pure sense of it is when, if you're an MGA, right, if you just started your own shop and you said, you know what, I think I can do homeowners better than others. I have an idea on how to build an insurance product. If you want to sell this new insurance product, you have to write it on a regulated paper. You need a regulated carrier to host you, essentially. If you're the MGA and you own the product, in addition to writing it on a regulated paper, you also need reinsurance, right?
If you just started and you are covering a home in California that is, and the total coverage will be $2 million and you are now writing only 10 houses, your overall exposure is $20 million, but the premium that you collect is only $3,000 a piece. It's only $30,000, right? You need capital for the theoretical possibility to lose $20 million, right? You need to buy reinsurance. Fronting in the pure form of it is when an MGA will gather their own set of reinsurers, but they still need the balance sheet. They will come to a company like us and they will say, look, we have the reinsurance. We just need you to host us. We're just going to write our product on your paper. We have the reinsurance and we're just going to pay you what's called a front fee, which is usually about 5% of premium.
That's the pure fronting model. The most famous company that has been operating in that model in its purest form is State National. They used to be public. Now they're private. That's what fronting is. We used to call it a hybrid fronting, but I think the best way to think about it is a program carrier because we are not just doing the renting of the balance sheet. We are also providing reinsurance capacity. We're also participating in the risk in a pretty material way. It can be 10%, 20%, 30%, 40%, even 50%. That is a huge differentiation versus the other carriers, the other fronting carriers, because if you don't participate in the risk, then you don't bring much to the table.
If you do participate, not only that you're sending a signal to other reinsurers that you have skin in the game, there are also other reinsurers, and there are some very famous names out there that will only participate in deals if the carrier is taking, let's say, 20%. That's what fronting is. That's how we're different. The business is doing phenomenally well. Just to give you a quantification of that, when I joined Hippo five years ago and we acquired our carrier, we had about $100 million of this fronting, let's call it, or partnership with other MGAs. In 2025, this number is going to be more than $800 million. Right? We grew it 8x while not compromising on underwriting performance. The net loss ratio, net loss ratio of this business last year was 39%. The year before, 36%. This year also, let's say, low 40s.
The results speak for themselves. As I mentioned, we put a lot of underwriting discipline. Despite the high growth, we also hold the line on underwriting performance.
It's probably worth noting, and you could look up on your own, but S&P put out a report this week or the end of last week basically saying that reinsurers that support the MGA channel without somebody like us who is taking risk in that value chain, that they are going to have a negative view of that risk potential, that the reinsurance market is going to be too far removed from the origination of risk if there isn't somebody with meaningful risk along that value chain. You can look at the report themselves. I think, as Guy said, our program carrier model is about being a risk retainer and not a renter of the balance sheet. I think that S&P report on how they're going to be monitoring and evaluating reinsurers from a capital or credit rating perspective is a validation of the point that we're making here.
Thank you very much. An excellent presentation. We're out of time. Folks, I think I got to all the questions, but if I missed you, please contact your CIDOT representative and we'll run down an answer for you. Thanks, everyone, for attending. Thanks, gentlemen, from Hippo Holdings for your presentation. Very informative. Thanks again.
Thank you, Michael, for hosting us. Thank you, everyone.
Thank you.