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Bring water in a saucepan to a boil over medium heat; stir in rice. Reduce heat to low, cover, and simmer until rice is tender and liquid has been absorbed, about 20 minutes.
Combine cooked rice, 1 ½ cups milk, sugar, and salt in a clean saucepan; cook over medium heat, stirring often, until thick and creamy, about 15 minutes.
Stir in remaining ½ cup milk, egg, and raisins; cook 2 minutes, stirring constantly. Off heat, stir in butter and vanilla extract until combined.
Serve warm.