Palomar, which should be a great, great session. Adam Klauber, our running insurance team here. For the, if you're going to see the disclosures, I think they're on our website. Check those out. More important, we've got, you know, great company, Palomar, Mac Armstrong, founder and CEO, and Chris Uchida, CFO, who's probably been with Mac forever also. I'll just say two, you know, two seconds about the company and then turn it over to Mac. You know, as we've searched out in the last 10, 15 years, not just good insurance companies, but insurance companies that, one, are using technology and analytics to really form a different business model. Palomar is one of the, one of the few that's actually been able to do it and be very successful.
I think the second part of it, it's not just the technology, it's the, you know, a unique strategy and unique business model wrapped around the technology combined with a very good management team. So really, really good story. And with that, Mac, if you want to take over.
Terrific. Excuse me. Thanks, Adam. Greatly appreciate it. And thank you to the team at William Blair for allowing us the chance to participate in this exceptional conference. We look forward to it every year. As Adam said, I'm Mac Armstrong, Chairman and CEO. I founded the business in 2014, and I'm joined by Chris Uchida, our CFO. It's a nice occasion to tell the Palomar story in detail, how the business really has emerged as a market leader in the specialty insurance space. Moreover, you know, what we're doing to elevate the franchise over the next several years. I'll go forward. I won't read that. Just turning to page three, you know, if I had to succinctly characterize our journey this last decade, it would really be about profitable growth and evolution.
We've evolved from a single market focus when we initially launched in 2014 with Earthquake to a specialty property focus, to now, really a distinct specialty market with a unique portfolio. Importantly, we maintained our margins along the way. We've learned a lot. There have been some body blows and some missteps that have formed our greatest lessons. I really think that as we sit here today, the business is in excellent stead and is as well positioned as it's ever been. You know, I simply, we're putting together a specialty market leader.
Just to give a quick kind of level set of where Palomar currently sits, as Adam said, we are a data-driven specialty insurer that's trying to marry data analytics and technology with a traditional underwriting acumen, and a sophisticated reinsurance strategy to access markets that we think can generate compelling risk-adjusted returns, whether they're dislocated or in need of innovation. We are an A-rated company by AM Best. We are now Financial Size Category 11, following the 55% growth of our surplus over the last 12 months. We have a portfolio, and we'll spend more time on this, of five distinct product categories. Earthquake, where we are now the third largest writer of Earthquake in the U.S., in the Marine and other property, which consists of seven product categories, such as Builders' Risk and Flood.
Fronting, our niche-oriented casualty business, and lastly, our high potential and high growth crop franchise. We have built a portfolio of both commercial and residential business, which allows us to navigate market cycles effectively and avoid wide swings driven by pricing changes or market capacity. Additionally, we write on both an admitted and an E&S basis, again, offering us, I think, more stability in our insularity from market-driven cycles. We have an open architecture distribution model. It is differentiated in the fact that we developed an appetite, and we are somewhat agnostic on how we aggregate risk. We work with retail producers, we work with wholesale brokers, we work with, on a selective basis, program managers, and then also partner with 25 different insurance companies who view us as a product specialist to complement their product offering.
I think more than anything, we're dogmatic on consistent earnings, and we are focused acutely on that. What's enabling that, in addition to the underwriting, is really a sophisticated and innovative, and robust reinsurance risk transfer strategy. You know, clearly, we'll give the commercial, we do have a strong management team, but importantly, it's a management team that's really been bolstered over the last 24 months as we've ascended into new categories and really grown the business meaningfully. Just quickly on the financial profile of the business. As I mentioned, we are focused on consistent earnings, and managing the volatility in the portfolio and ultimately the earnings base. We've made considerable efforts to reduce the volatility in our business, most notably reducing continental hurricane exposure that can provide disproportionate risk-adjusted loss and return.
I think what's happened is over the, really, since the last four or five years, we've been able to more than treble our income. I think it's been doing so in a consistent fashion as we have been able to beat our earnings, 10 quarters in a row, and we've beaten raise guidance nine times since 2022. That included a generationally hard property cat reinsurance market. When you can see the net income growth, I think it's also important to point out just what most recently turned inspired on the heels of our June 1st reinsurance renewal, we raised guidance for the third time this year, taking adjusted net income targets to $195 million-$205 million from the previously announced range of $186 million-$200 million.
We're pleased that this stock has responded to the performance, but more than anything, we're just pleased with the consistency and the results. The next slide just outlines our strategy. In 2022, we introduced our Palomar 2X strategic framework. What that really does is set a goal of doubling our adjusted net income in an intermediate timeframe while maintaining an ROE over 20%. When we say intermediate timeframe, we think about it in three to five years. I think Chris calls Palomar 2X more of a philosophy because it does not have a finite objective. It's a goal that resets every year. Core tenets of the philosophy include a focus on organic growth, anchoring the business with Earthquake, may it be our, you know, largest line for as long as possible, and then building around that, the Earthquake business with lower volatility lines, both earnings and cyclicality alike.
We've been able to enter into adjacent markets via a replicable process where we can leverage some combination of technology, people, infrastructure, relationships, whether they be reinsurance or distribution. In doing so, allow us to kind of buttress these products with a comprehensive reinsurance strategy, again, that is designed to minimize earnings volatility. We introduced this on the heels of our 2021 full year results, and I'm pleased to report that, you know, that first cohort, we're able to achieve the goal of doubling the underwriting income or the adjusted net income, excuse me, within a three-year timeframe. On the heels of 2024, we had indeed doubled the adjusted net income. You know, we can't rest on our laurels. This is a philosophy. It's a, it's the goalposts are constantly moving. We are thinking about how we achieve the 2022 and 2023 objectives.
Our focus on those cohorts has really allowed us to invest considerably in the organization, and look long-term at avenues for profitable growth. As we sit here today, we should be able to achieve the 2022 objective within three years and actually the 2023 objectives within two years. Doubling the net income from 2023 in two years' time. What does all these directives mean, or what does these objectives mean for 2025? I think the answer in some ways is simple. It is just keep doing what we are doing, but recognize that we are a fast-growing, dynamic organization. We must continue to evolve. The charge in the near term for 2025 is simple. It starts with integrate and operate. We must monetize the investment that we made throughout 2024 in the first part of this year.
Most notably, we've acquired two small businesses, First Indemnity of America and Advanced Ag Protection. We've got to integrate them into Palomar. They will make us a better organization if they are brought into the fabric of our company. We must also let our new leaders, whether it's our new COO or our Head of Crop or Dead of E&S Casualty, you know, and our Head of Claims, build the organization, but also allow this business to scale long-term. To that effect, you know, we want to continue to build new markets, what we say deliberately. Our crop and casualty lines have exceptional leadership, and they also have the capital support necessary to become market-leading franchises. We're not going to overextend our appetite. We're not burning our way into the market. We're going to take a deliberate approach.
You know, I sleep well, and I think Chris does this too, knowing that we have experts like Benson Latham, a guy who's twice over built a market-leading crop franchise, and David Sapia, who's built an E&S casualty franchise at firms like AXIS and HDI. I like the fact that we cede 70% of our crop business to best-in-class reinsurers. They validate our approach to risk management, and they also insulate us from volatile swings. I like the fact that our average net limit from a casualty standpoint is less than $1 million. Furthermore, our reserves is about 0.2x our surplus. Again, we're going to walk before we run and build new market leaders deliberately. Thirdly, we want to remember what we like and, more importantly, what we do not like.
Last year, we had a mantra of grow where we want. And we're going to continue to adhere to that, and we're going to maintain a well-defined appetite and not chase premium, but rather chase profitable growth. We want to continue to avoid surprises and volatility from wind and SES, severe convective storm, that is, and so callback exposure where we need to. Furthermore, you know, we're not going to chase what might be opportunity if it disrupts the existing franchise. Most notably, California homeowners, there's been dislocation. We're not going to go into that market because we have an existing franchise in earthquake where we partner with 25 different insurance companies in that marketplace that affords us the ability to be a great partner, but also stay away from channel conflict. Not going to California homeowners. And then fourthly, we want to continue to generate consistent earnings.
We're going to beat that drum, or beat the dead horse, with the addition of new talent, in particular on the investment side, and the claims side and actuarial, you know, we can find new sources of earnings growth, and preserve a healthy reserve place. You know, our surplus allows us the ability, especially as the book starts to evolve, to get further investment leverage, and in turn, bolster our results. Page six just kind of gives you a little bit of detail of how the business has evolved since we went public in 2019. As I mentioned, we started off as really more of a specialty property franchise, and now we are really a specialty insurer that has a portfolio that's unique, if not one of one. Getting to critical mass in Earthquake has allowed us many economic advantages.
It's a highly profitable line when you achieve critical mass, even after you spend the copious amounts of money that we do on reinsurance. It really does create an exceptional anchor to our earnings base, and it does not weigh down or inflate reserves. It grows our surplus rapidly. What that really means is it allows us to enter new markets conservatively with the comprehensive reinsurance strategy and a very, very modest appetite from a gross and net line size. The combination of this conservatism from a gross and net line standpoint, a strong reinsurance standpoint, and then this earthquake ballast, if you would, has led to strong returns on a relative basis. You can see the five product categories: earthquake, inland marine, and other property, casualty, and crop. Within that, there are over 35 specialty products embedded.
The combination of residential and commercial business, coupled with E&S and admitted business, really helps us navigate the P&C market cycles. Additionally, the nascency of some of these product categories provides exceptional growth levers, whether it be broadening of your distribution or your geographic footprint, increased risk participation, or adjacent market entry. You know, the good thing is our TAM is growing, and our market share outside of Earthquake is modest. Just a little more color on the product suite. This slide gives you detail on the mix of the business at the end of the first quarter. You know, Earthquake remains our largest line at 30%, and we expect to see continued mid to high teens growth in 2025. The casualty book consists of niche categories like real estate E&O, environmental liability, contractors liability, miscellaneous professional lines.
The average net limit at the end of the first quarter was $1 million. It is our fastest growing category currently. The Inland Marine and other property is the third largest, and it kind of, again, it best categorizes or captures the sentiment of remember what we like, as we continue to reduce our North American hurricane exposure and the volatility in the earnings base associated with that. It also allows us the ability to lean into certain segments in the residential market, like flood, and like Hawaiian hurricane. Crop is another strong growth driver for us. We've made considerable investments in this market, or in this product category, adding talent throughout the country, and particularly in the Midwest. We brought on 60 people on the crop side in the last 12 months. We are one of 12 approved insurance providers.
This means that you have the ability to access, you've received approval from the U.S. Department of Agriculture to access the federal crop insurance company. We are one of 12 participants in a $20 billion market. Our expectation is that we will write $200 million of premium in that line of business this year. Fronting, that is the last category. It has one partnership. It was an AM Best rated insurance company that did not have the requisite licensing in the state of California that we were fronting for. That part, they did receive the licensing, so that partnership is in runoff. That has created a bit of a drag on the fronting income.
Fronting is also, you know, it's probably the category that we are investing the least in, as we like it as a nice leg of the stool, but we think there's more opportunity in those other four product categories ahead of us. Just quickly, you know, Palomar is an organic growth story, but we have made two strategic acquisitions, and we want to spend a moment just offering a little context on them to help frame the investment thesis and the opportunity that those two provide. In the case of the surety company, First Indemnity of America, it really opens up a new specialty market and it gives us the opportunity to build a national presence in an, in the economically attractive surety segment. We had been assessing the surety market for the better part of three or four years before we entered into an agreement with First Indemnity of America.
Ultimately, we made the choice it was better to buy versus build because of the underwriting acumen possessed by that team, as well as the claims handling and the licensing that they possessed. It's not only allowed us in a very profitable segment last year, the company had a 22% ROE, but we're partnering with a really experienced team. You know, on the heels of us buying this, we did receive a T-listing, which will open up the market and let us write bonds on federal contract surety opportunities. Our objective is to build a, not just a regional rider, but a nationwide rider and hopefully generate over $100 million of premium in the surety space in time. Advanced Ag was a distribution partner of ours, and that we had made a strategic investment in.
We bought a small stake in it, and when we got into the crop space, they opened up distribution for us and had long-standing relationships and a solid technology platform that allowed us to enter that market in a more expedient fashion. Acquiring Advanced Ag really gives us more scale and enhances the crop franchise by bringing certainly talent from a servicing, marketing, and claims handling standpoint, and then also a technology platform that complements the system that we are building internally. We have said that our intermediate goal on the crop side is to get to about $500 million of premium, call it 2.5% market share. Bringing AAP into the fold quicker gives us more conviction around that intermediate goal, but I also think that we can build a $1 billion crop franchise in due time.
Central to what we're doing on the crop and really all of our lines of business is, risk transfer. And it is a, you know, a fulcrum component to our overall business model and certainly to what we're doing with respect to Palomar 2X. You know, it delivers on the same key drivers that I've tried to touch upon of consistent earnings, profitable growth, and minimal volatility. What we've done is we've really established a conservative risk tolerance that protects our capital, and consistent underwriting income, and really tries to take out the impact of a shock loss or a major event such as an earthquake or hurricane. We'll talk about our six-month renewal on a slide, but it, again, in terms of giving us, comfort, you know, we like the fact that our retention is less than 2% of our surplus.
From an earthquake standpoint, it's less than a month of earnings. You know, one of the key components to the risk transfer strategy and our overall underwriting philosophy is prudently managing our gross and net lines. Our maximum gross line on a property business is $3.5 million, and our maximum is on a casualty business is $3 million. After netting down for excessive loss or per risk coverage or certainly, quota share, it's meaningfully below that. Again, when we think about shock losses, we're relatively insulated. What we are doing is we're really trying to build risk transfer programs that allow us to scale, and we use a range of tools to do so, both facultative and treaty reinsurance, and then, of course, both treaty and individual risk protection through the form of quota share reinsurance, excessive loss, and per risk coverage.
All of our products touch them in some way. As the programs mature and evolve, what you'll more often than not see is the incorporation of excessive loss, quota share, and some type of stop loss or per risk coverage that bolsters the conservatism, really bolsters the ultimate return of our products. The chart there shows all of our product categories and how they're using reinsurance. This just gives a quick snapshot on two things. One, how for our most mature lines, we use reinsurance to support the earnings base and generate hopefully consistent returns, but then also gives an update on what we just placed at six-one. You know, with Earthquake, which is our largest line of business, we have been able to use reinsurance to not only buttress the balance sheet and the capital base, but also respond to market conditions effectively.
When you look at the program that just renewed, the strategy really incorporates quota share reinsurance, and incorporates catastrophe bonds and excessive loss into a comprehensive reinsurance program that's allowed us to build, you know, market leading share in a pretty dynamic market. We leaned in when market pricing was up on the property cat side, was up 30% three years ago, and now as the market's softening, we're well positioned to get scale on our residential book as pricing comes down. Our reinsurance program in this circumstance is 100 people strong, is supported by 100 panels, panelists, and no one constitutes more than 3% of the overall limit, which totals about $3.53 billion. At six-one this year, we were able to procure another $455 million of limit to support our growth. We were able to buy down our retentions.
Our win retention last year was $15.5 million. We brought that down to $11 million, which is basically the equivalent of what our cat load is, in our guidance that we provided this year. Furthermore, we've maintained the quake retention despite a growing 20% plus last year at $20 million. Again, well within these guideposts of less than 5% of surplus on an after-tax basis and a quarter of earnings. Additionally, we also bought a standalone cover for our Hawaiian hurricane book, which will allow us to really be more attractive to the market as earthquake provides a great source of diversification and correlation to reinsurers. This next slide just quickly highlights the team, a few additions that we've made. We brought on a new COO in Rudy Hervé. He joined us from SCOR. Althea Garvey is our new Chief Claims Officer.
She cut her teeth at Lexington and AIG. James Long is our CTO. He joined us from RenaissanceRE, and Tim Carter is our Chief People Officer. We've also brought on Benson Latham and David Sapia to lead our crop and casualty efforts. These are folks that are terrific leaders with long-standing history and reputations in the market, and they're helping us build a market leader with the distinct portfolio. Just quickly, full year guidance, we're now standing at $195 million-$205 million of adjusted net income. It's up from the previous range of $186 million-$200 million, and what we initially went out with for the full year of $180 million-$192 million. That guidance reflects the impact of the 6-1 placement, but also the full $8 million-$10 million, or excuse me, $12 million of cat load.
This will generate, call it 50% year-over-year growth from a bottom-line perspective, and will allow us to achieve that Palomar 2X goal in three years for 2022 and actually two years for 2023. With that, we're happy to provide some color on modeling or open the floor to Q&A.
Chris, anything you want to add on the modeling?
I'd say just from a time standpoint, I would say from the modeling, these slides are all available on the website, so you can look at those. I will say the crop business and the growth that we're expecting there will provide some seasonality to our model. When you think about the third quarter, take a look at these slides, take a look at some of the bullets on the next few slides and go through those.
For anyone that's modeling this, the third quarter will have a little bit of a different skew to it than it has in the past, which is kind of slow and steady earnings growth from a written premium and earned premium standpoint. There's going to be a little bit of noise and differential that we want to point out in Q3 and make sure people are aware of. If there's any questions on that, happy to address those. Overall, we've put a lot of good notes on these next few slides, and all of this is available on our website if you guys want to look at it in a little more detail.
Great. Sure. Thanks. Keep wrapping.
California is the largest state, followed by Washington and Oregon, but we write it in around 17 States. It's nationwide, yeah, but really where the exposure is.
Like the New Madrid fault provides us a good source of premium too. You think Southern Illinois and Missouri.
I'll jump in for a second. When you started the company, you had the foresight of building a new core system, which is policy admin and then related systems. Can you talk about, you know, some, you know, years later now, some of the advantages, number one, rolling out new products and going to new niches, how does that help you? And two, as a lot of your business is really centered around analytics, how does that mirror or help having your own system versus using a vendor system or whatever?
Yeah, no, so yeah, we built the system on top of the Pega platform. It has really allowed us to scale the business effectively, and particularly on our more mature property lines.
In some cases, you can pre-underwrite, like in residential earthquake, you pre-underwrite everything into a system. You're getting a uniform return, whether that's a policy that's in Washington or Missouri or Southern California. I think the other thing that's allowed us to do for new lines is there's a very good, what we call an MVP, that we can get, a MVP product suite that, once a product we go to greenlight it, we can get it so it's Minimum Viable, which is what the M and the V stand for. You can enhance it over time with kind of more customized development. I think having a system that's scalable and replicable, and particularly what we call our quick capture framework, allows us to get into lines of business more effectively than maybe others.
What about on the data side?
How does that allow you to integrate and use?
Yeah, I think there's, it's twofold. One, it's, you know, it's the data side that we can use for portfolio management. So it's easy to extract the data to help us, transfer risk, and buy reinsurance. And then it's also incorporated at the desk level. So for underwriters, and we're continuing to add tools, some that are, you know, AI enabled, like we just put a new partnership in place, or excuse me, incorporated a new tool that allows our underwriters to scrape more property information than had previously been available to, and particularly on current building quality, in our earthquake platform. So, I think the platform we have is API driven, which is allowing us to probably get, be a little more effective in incorporation of, you know, certain AI enabled tools. Great.
One question I get a lot is, you make a lot of money in earthquake. It's a great line of business. Moved into some other lines of business that are really good niches in insurance, which has got, you know, very, very low barriers to entry. Why aren't a lot of other competitors jumping into earthquake or some of these other small lines?
Yeah, I mean, I think Earthquake, I would bifurcate between the residential and the commercial. And I would also say like large commercial and small commercial, you know, we'll see new entrants in large commercial earthquake, because there are fewer barriers to entry. You can basically work with an MGA and give them capacity and limit.
That is why there is probably a little bit of, not probably, that is why they are seeing some rate pressure in large commercial, earthquake. In mid-size accounts, you need to have a system. You need to have distribution expertise. Furthermore, you need to have the reinsurance strategy. This applies to all of the book, but you need to have comprehensive reinsurance. Small commercial and residential business are very similar in that, you know, they are low average premium, average premiums. You need to have scale to optimize your reinsurance. You need to have a system that is easily, well, easily, easy to transact with. I think last of all, it is capital intensive. If you are going to go into the earthquake market, you have to put big capital up. You have to aggregate the business.
Furthermore, you have to make sure you're not stacking limits. Someone that wants to go into California earthquake can't be writing homeowners business because it's going to stack their limit and lead to disproportionately or less attractive returns than you do see from us on writing this pure play.
Great. With that answer, thanks.