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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q



---

(Mark One)

|  |  |                                                 
|- |  | ------------------------------------------------
|x |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
|  |  | OF THE SECURITIES EXCHANGE ACT OF 1934          

For the quarterly period ended June 30, 2003

OR

|  |  |                                                  
|- |  | -------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
|  |  | OF THE SECURITIES EXCHANGE ACT OF 1934           

For the transition period from
 to

Commission File Number 000-30898

AMERUS GROUP CO.

(Exact name of Registrant as specified in its charter)


|                                                                    |  |                                                
|------------------------------------------------------------------- |  | -----------------------------------------------
|IOWA
(State or other jurisdiction of
incorporation or organization) |  | 42-1458424
(I.R.S. Employer
Identification No.)

699 Walnut Street
Des Moines, Iowa 50309-3948
(Address of principal executive offices)

Registrants telephone number, including area code (515) 362-3600

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past
90 days.              Yes
x No o

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).              Yesx No o

The number of shares outstanding of each of the Registrants classes of common
stock on August 4, 2003 was as follows:

|             |  |                  
|------------ |  | -----------------
|Common Stock |  | 39,090,662 shares

Exhibit index - Page 44
Page 1 of 53

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TABLE OF CONTENTS



|                                                   |                                                                                               |                                                 |  |  |  |  |  | 
|-------------------------------------------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------- |  |  |  |  |  | 
|PART I - FINANCIAL INFORMATION                    
|                                                   | Item 1. Financial Statements                                                                 
|                                                   |                                                                                               | CONSOLIDATED BALANCE SHEETS                    
|                                                   |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME              
|                                                   |                                                                                               | CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|                                                   |                                                                                               | CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
|                                                   |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS          
|                                                   |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS     
|                                                   | Item 2. Managements Discussion And Analysis Of Financial Condition And Results Of Operations
|                                                   | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                                   | Item 4. Controls and Procedures                                                              
|                                                   | PART II - OTHER INFORMATION                                                                  
|                                                   | Item 1. Legal Proceedings                                                                    
|                                                   | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                                   | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                        
|INDEX TO EXHIBITS                                 
|Statement Re: Computation of Earnings Per Share   
|Computation of Ratios of Earnings to Fixed Charges
|Certification of Chief Executive Officer          
|Certification of Chief Financial Officer          
|Certification of Chief Executive Officer          
|Certification of Chief Financial Officer          



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INDEX

|                               |  |                                                                                                                                         |    |          |    | 
|------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------- | -- | -------- | -- | 
|                               |  |                                                                                                                                         |    | Page No.
|                               |  |                                                                                                                                         |    |         
|PART
I - FINANCIAL INFORMATION |  |                                                                                                                                         | 4  |         
|Item 1.                        |  | Financial Statements                                                                                                                    |    |          | 4  | 
|                               |  | Consolidated Balance Sheets
June 30, 2003 (Unaudited) and December 31, 2002                                                             |    |          | 4  | 
|                               |  | Consolidated Statements of Income (Unaudited)
For the Three and Six Months Ended June 30, 2003 and 2002                                 |    |          | 6  | 
|                               |  | Consolidated Statements of Comprehensive Income (Unaudited)
For the Three and Six Months Ended June 30, 2003 and 2002                   |    |          | 7  | 
|                               |  | Consolidated Statements of Stockholders Equity
For the Six Months Ended June 30, 2003 (Unaudited) and
the Year Ended December 31, 2002 |    |          | 8  | 
|                               |  | Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30, 2003 and 2002                                       |    |          | 9  | 
|                               |  | Notes to Consolidated Financial Statements
(Unaudited)                                                                                  |    |          | 11 | 
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and
Results of Operations                                                   |    |          | 25 | 
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                                                              |    |          | 37 | 
|Item 4.                        |  | Controls and Procedures                                                                                                                 |    |          | 39 | 
|PART
II -  OTHER INFORMATION   |  |                                                                                                                                         | 40 |         
|Item 1.                        |  | Legal Proceedings                                                                                                                       |    |          | 40 | 
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                                                     |    |          | 40 | 
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                                                        |    |          | 41 | 
|Signatures                     |  |                                                                                                                                         | 43 |         
|Index to Exhibits              |  |                                                                                                                                         | 44 |         

2



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SAFE HARBOR STATEMENT

All statements, trend analyses and other information contained in this
report relative to markets for our products and trends in our operations or
financial results, as well as other statements including words such as
anticipate, believe, plan, estimate, expect, intend, and other
similar expressions, constitute forward-looking statements under the Private
Securities Litigation Reform Act of 1995. Factors that may cause our actual
results to differ materially from those contemplated by these forward-looking
statements include, among others, the following possibilities: (a) general
economic conditions and other factors, including prevailing interest rate
levels and stock and bond market performance, which may affect our ability to
sell our products, the market value of our investments and the lapse rate and
profitability of policies; (b) our ability to achieve anticipated levels of
operational efficiencies and cost-saving initiatives and to meet cash
requirements based upon projected liquidity sources; (c) customer response to
new products, distribution channels and marketing initiatives; (d) mortality,
morbidity, and other factors which may affect the profitability of our
insurance products; (e) our ability to develop and maintain effective risk
management policies and procedures and to maintain adequate reserves for future
policy benefits and claims; (f) changes in the federal income tax and other
federal laws, regulations, and interpretations, including currently proposed
federal measures that may significantly affect the insurance business including
limitations on antitrust immunity, minimum solvency requirements, and changes
to the tax advantages of life insurance and annuity products or programs with
which they are used; (g) increasing competition in the sale of insurance and
annuities and the recruitment of sales representatives; (h) regulatory changes,
interpretations or pronouncements, including those relating to the regulation
of insurance companies and the regulation and sale of their products; (i) our
ratings and those of our subsidiaries by independent rating organizations which
we believe are particularly important to the sale of our products; (j) the
performance of our investment portfolios; (k) the impact of changes in
standards of accounting; (l) our ability to integrate the business and
operations of acquired entities; (m) expected protection products and
accumulation products margins; (n) the impact of anticipated investment
transactions; and (o) unanticipated litigation or regulatory investigations or
examinations.

There can be no assurance that other factors not currently anticipated by
us will not materially and adversely affect our results of operations. You are
cautioned not to place undue reliance on any forward-looking statements made by
us or on our behalf. Forward-looking statements speak only as of the date the
statement was made. We undertake no obligation to update or revise any
forward-looking statement.

3



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PART I - FINANCIAL INFORMATION




Item 1. Financial Statements




AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS
($ in thousands)

|             |                                      |                                                     |                           |                   |         |             |            |              |         |            |            | 
|------------ | ------------------------------------ | --------------------------------------------------- | ------------------------- | ----------------- | ------- | ----------- | ---------- | ------------ | ------- | ---------- | ---------- | 
|             |                                      |                                                     |                           |                   |         | June 30,    |            | December 31,
|             |                                      |                                                     |                           |                   |         | 2003        |            | 2002        
|             |                                      |                                                     |                           |                   |         |             |            |             
|             |                                      |                                                     |                           |                   |         | (unaudited) |            |             
|             |                                      |                                                     |                           | Assets            |         |             |            |              |         |            |            | 
|Investments: |                                      |                                                     |                           |                   |         |             |            |             
|             |                                      | Securities available-for-sale at fair value:        |                           |                   |         |             |            |              |         |           
|             |                                      |                                                     | Fixed maturity securities |                   | $       | 13,949,747  |            |              | $       | 13,328,902 |           
|             |                                      |                                                     | Equity securities         |                   |         | 71,285      |            |              |         | 63,345     |           
|             |                                      |                                                     | Short-term investments    |                   |         | 29,831      |            |              |         | 32,318     |           
|             |                                      | Securities held for trading purposes at fair value: |                           |                   |         |             |            |              |         |           
|             |                                      |                                                     | Fixed maturity securities |                   |         | 1,854,975   |            |              |         | 1,843,868  |           
|             |                                      |                                                     | Equity securities         |                   |         | 1,921       |            |              |         |           |           
|             |                                      | Mortgage loans                                      |                           |                   | 911,549 |             |            |              | 883,034 |           
|             |                                      | Real estate                                         |                           |                   | 314     |             |            |              | 476     |           
|             |                                      | Policy loans                                        |                           |                   | 492,007 |             |            |              | 496,753 |           
|             |                                      | Other investments                                   |                           |                   | 590,245 |             |            |              | 283,794 |           
|             |                                      |                                                     |                           |                   |         |             |            |              |         |            |           
|             |                                      |                                                     |                           | Total investments |         |             | 17,901,874 |              |         |            | 16,932,490 | 
|             | Cash and cash equivalents            |                                                     |                           | 645,836           |         |             |            | 102,612      |        
|             | Accrued investment income            |                                                     |                           | 186,437           |         |             |            | 185,660      |        
|             | Premiums, fees and other receivables |                                                     |                           | 43,683            |         |             |            | 13,082       |        
|             | Reinsurance receivables              |                                                     |                           | 957,530           |         |             |            | 865,930      |        
|             | Deferred policy acquisition costs    |                                                     |                           | 862,278           |         |             |            | 884,239      |        
|             | Value of business acquired           |                                                     |                           | 405,512           |         |             |            | 454,159      |        
|             | Goodwill                             |                                                     |                           | 224,075           |         |             |            | 218,995      |        
|             | Property and equipment               |                                                     |                           | 49,657            |         |             |            | 74,188       |        
|             | Other assets                         |                                                     |                           | 322,817           |         |             |            | 326,397      |        
|             | Separate account assets              |                                                     |                           | 242,123           |         |             |            | 235,913      |        
|             |                                      |                                                     |                           |                   |         |             |            |              |         |            |           
|             |                                      |                                                     |                           | Total assets      |         | $           | 21,841,822 |              |         | $          | 20,293,665 | 
|             |                                      |                                                     |                           |                   |         |             |            |              |         |            |           

See accompanying notes to consolidated financial statements.

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AMERUS GROUP CO.
CONSOLIDATED BALANCE SHEETS (continued)
($ in thousands)

|                      |                                                                                                                                                                                                   |                                         |                                            |           |             |            |              |           |            |            | 
|--------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | ------------------------------------------ | --------- | ----------- | ---------- | ------------ | --------- | ---------- | ---------- | 
|                      |                                                                                                                                                                                                   |                                         |                                            |           | June 30,    |            | December 31,
|                      |                                                                                                                                                                                                   |                                         |                                            |           | 2003        |            | 2002        
|                      |                                                                                                                                                                                                   |                                         |                                            |           |             |            |             
|                      |                                                                                                                                                                                                   |                                         |                                            |           | (unaudited) |            |             
|                      |                                                                                                                                                                                                   |                                         | Liabilities and Stockholders Equity       |           |             |            |              |           |            |            | 
|Liabilities:          |                                                                                                                                                                                                   |                                         |                                            |           |             |            |              |          
|                      | Policy reserves and policyowner funds:                                                                                                                                                            |                                         |                                            |           |             |            |              |           |           
|                      |                                                                                                                                                                                                   | Future life and annuity policy benefits |                                            | $         | 16,725,762  |            |              | $         | 16,244,016 |           
|                      |                                                                                                                                                                                                   | Policyowner funds                       |                                            |           | 1,524,760   |            |              |           | 1,335,144  |           
|                      |                                                                                                                                                                                                   |                                         |                                            |           |             |            |              |           |            |           
|                      |                                                                                                                                                                                                   |                                         | 18,250,522                                 |           |             |            | 17,579,160   |          
|                      | Accrued expenses and other liabilities                                                                                                                                                            |                                         |                                            | 819,138   |             |            |              | 283,836   |           
|                      | Dividends payable to policyowners                                                                                                                                                                 |                                         |                                            | 399,139   |             |            |              | 303,062   |           
|                      | Policy and contract claims                                                                                                                                                                        |                                         |                                            | 37,714    |             |            |              | 39,569    |           
|                      | Income taxes payable                                                                                                                                                                              |                                         |                                            | 38,797    |             |            |              | 61,325    |           
|                      | Deferred income taxes                                                                                                                                                                             |                                         |                                            | 85,463    |             |            |              | 16,499    |           
|                      | Notes payable                                                                                                                                                                                     |                                         |                                            | 552,586   |             |            |              | 511,353   |           
|                      | Separate account liabilities                                                                                                                                                                      |                                         |                                            | 242,123   |             |            |              | 235,913   |           
|                      |                                                                                                                                                                                                   |                                         |                                            |           |             |            |              |           |            |           
|                      |                                                                                                                                                                                                   |                                         | Total liabilities                          |           |             | 20,425,482 |              |           |            | 19,030,717 | 
|Stockholders equity: |                                                                                                                                                                                                   |                                         |                                            |           |             |            |              |          
|                      | Preferred Stock, no par value, 20,000,000 shares
authorized, none issued                                                                                                                          |                                         |                                            |          |             |            |              |          |           
|                      | Common Stock, no par value, 230,000,000 shares
authorized; 43,728,197 shares issued and
39,083,495 shares outstanding in 2003;
43,656,280 shares issued and 39,011,578 shares
outstanding in 2002 |                                         |                                            | 43,728    |             |            |              | 43,656    |           
|                      | Additional paid-in capital                                                                                                                                                                        |                                         |                                            | 1,181,049 |             |            |              | 1,179,646 |           
|                      | Accumulated other comprehensive income (loss)                                                                                                                                                     |                                         |                                            | 162,364   |             |            |              | 88,522    |           
|                      | Unearned compensation                                                                                                                                                                             |                                         |                                            | (1,921    | )           |            |              | (458      | )         
|                      | Unallocated ESOP shares                                                                                                                                                                           |                                         |                                            | (1,406    | )           |            |              | (1,443    | )         
|                      | Retained earnings                                                                                                                                                                                 |                                         |                                            | 189,018   |             |            |              | 109,517   |           
|                      | Treasury stock, at cost (4,644,702 shares in 2003
and 2002)                                                                                                                                       |                                         |                                            | (156,492  | )           |            |              | (156,492  | )         
|                      |                                                                                                                                                                                                   |                                         |                                            |           |             |            |              |           |            |           
|                      |                                                                                                                                                                                                   |                                         | Total stockholders equity                 |           |             | 1,416,340  |              |           |            | 1,262,948  | 
|                      |                                                                                                                                                                                                   |                                         |                                            |           |             |            |              |           |            |           
|                      |                                                                                                                                                                                                   |                                         | Total liabilities and stockholders equity |           | $           | 21,841,822 |              |           | $          | 20,293,665 | 
|                      |                                                                                                                                                                                                   |                                         |                                            |           |             |            |              |           |            |           

See accompanying notes to consolidated financial statements.

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AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF INCOME
($ in thousands, except share data)

|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  
|--------------------------------------------- | -------------------------------------------------------------------------------- | - | ----------------------------------- | ---------- | --------------------------------- | - | ------- | ---------- | ---- | - | ------- | ---------- |  | - | ------- | ---------- | -
|                                              |                                                                                  |   | For The Three Months Ended June 30, |            | For The Six Months Ended June 30,
|                                              |                                                                                  |   | 2003                                |            | 2002                              |   | 2003    |            | 2002
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |     
|                                              |                                                                                  |   | (unaudited)                        
|Revenues:                                     |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |           
|                                              | Insurance premiums                                                               |   | $                                   | 79,637     |                                   |   | $       | 91,853     |      |   | $       | 161,242    |  |   | $       | 182,333    |  
|                                              | Product charges                                                                  |   |                                     | 48,789     |                                   |   |         | 35,016     |      |   |         | 95,534     |  |   |         | 74,058     |  
|                                              | Net investment income                                                            |   |                                     | 249,646    |                                   |   |         | 251,897    |      |   |         | 502,863    |  |   |         | 491,667    |  
|                                              | Realized/unrealized gains (losses) on investments                                |   |                                     | 58,969     |                                   |   |         | (75,911    | )    |   |         | 66,824     |  |   |         | (100,623   | )
|                                              | Other income                                                                     |   |                                     | 18,149     |                                   |   |         | 20,465     |      |   |         | 35,316     |  |   |         | 32,933     |  
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  
|                                              |                                                                                  |   | 455,190                             |            |                                   |   | 323,320 |            |      |   | 861,779 |            |  |   | 680,368 |           
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  
|Benefits and expenses:                        |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |           
|                                              | Policyowner benefits                                                             |   |                                     | 256,114    |                                   |   |         | 212,283    |      |   |         | 474,169    |  |   |         | 418,446    |  
|                                              | Underwriting, acquisition and other expenses                                     |   |                                     | 33,443     |                                   |   |         | 45,602     |      |   |         | 73,799     |  |   |         | 83,791     |  
|                                              | Demutualization costs                                                            |   |                                     |           |                                   |   |         | 179        |      |   |         |           |  |   |         | 464        |  
|                                              | Restructuring costs                                                              |   |                                     | 12,670     |                                   |   |         | 6,416      |      |   |         | 15,864     |  |   |         | 8,211      |  
|                                              | Amortization of deferred policy acquisition costs
and value of business acquired |   |                                     | 49,578     |                                   |   |         | 28,324     |      |   |         | 99,974     |  |   |         | 68,164     |  
|                                              | Dividends to policyowners                                                        |   |                                     | 29,740     |                                   |   |         | 19,221     |      |   |         | 64,314     |  |   |         | 47,624     |  
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  
|                                              |                                                                                  |   | 381,545                             |            |                                   |   | 312,025 |            |      |   | 728,120 |            |  |   | 626,700 |           
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  
|Income before interest and income tax expense |                                                                                  |   | 73,645                              |            |                                   |   | 11,295  |            |      |   | 133,659 |            |  |   | 53,668  |           
|Interest expense                              |                                                                                  |   | 7,575                               |            |                                   |   | 6,337   |            |      |   | 14,374  |            |  |   | 12,364  |           
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  
|Income before income tax expense              |                                                                                  |   | 66,070                              |            |                                   |   | 4,958   |            |      |   | 119,285 |            |  |   | 41,304  |           
|Income tax expense                            |                                                                                  |   | 22,359                              |            |                                   |   | 696     |            |      |   | 39,784  |            |  |   | 12,128  |           
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  
|Net income                                    |                                                                                  | $ | 43,711                              |            |                                   | $ | 4,262   |            |      | $ | 79,501  |            |  | $ | 29,176  |           
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  
|Net income per common share:                  |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |           
|                                              | Basic                                                                            |   | $                                   | 1.12       |                                   |   | $       | 0.11       |      |   | $       | 2.03       |  |   | $       | 0.72       |  
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  
|                                              | Diluted                                                                          |   | $                                   | 1.11       |                                   |   | $       | 0.10       |      |   | $       | 2.02       |  |   | $       | 0.71       |  
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  
|Weighted average common shares outstanding:   |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |           
|                                              | Basic                                                                            |   |                                     | 39,161,780 |                                   |   |         | 40,155,276 |      |   |         | 39,112,346 |  |   |         | 40,749,054 |  
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  
|                                              | Diluted                                                                          |   |                                     | 39,404,467 |                                   |   |         | 40,661,337 |      |   |         | 39,354,894 |  |   |         | 41,311,695 |  
|                                              |                                                                                  |   |                                     |            |                                   |   |         |            |      |   |         |            |  |   |         |            |  

See accompanying notes to consolidated financial statements.

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AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
($ in thousands)

|                                   |                                                                   |                                                                             |         |                                     |         |                                   |        |         |         |      |         |         |         |   |        |        |         |  
|---------------------------------- | ----------------------------------------------------------------- | --------------------------------------------------------------------------- | ------- | ----------------------------------- | ------- | --------------------------------- | ------ | ------- | ------- | ---- | ------- | ------- | ------- | - | ------ | ------ | ------- | -
|                                   |                                                                   |                                                                             |         | For The Three Months Ended June 30, |         | For The Six Months Ended June 30,
|                                   |                                                                   |                                                                             |         | 2003                                |         | 2002                              |        | 2003    |         | 2002
|                                   |                                                                   |                                                                             |         |                                     |         |                                   |        |         |         |     
|                                   |                                                                   |                                                                             |         | (unaudited)                        
|Net income                         |                                                                   | $                                                                           | 43,711  |                                     |         | $                                 | 4,262  |         |         | $    | 79,501  |         |         | $ | 29,176 |       
|Other comprehensive income (loss): |                                                                   |                                                                             |         |                                     |         |                                   |        |         |         |      |         |         |         |   |        |       
|                                   | Unrealized gains (losses) on securities:                          |                                                                             |         |                                     |         |                                   |        |         |         |      |         |         |         |   |        |        |        
|                                   |                                                                   | Unrealized holding gains (losses) arising during period                     |         |                                     | 101,516 |                                   |        |         | 27,724  |      |         |         | 131,376 |   |        |        | (31,860 | )
|                                   |                                                                   | Less: Reclassification adjustment for gains (losses)
included in net income |         |                                     | 5,397   |                                   |        |         | (37,697 | )    |         |         | 17,773  |   |        |        | (41,461 | )
|                                   |                                                                   |                                                                             |         |                                     |         |                                   |        |         |         |      |         |         |         |   |        |       
|                                   | Other comprehensive income (loss), before tax                     |                                                                             |         | 96,119                              |         |                                   |        | 65,421  |         |      |         | 113,603 |         |   |        | 9,601  |        
|                                   | Income tax expense related to items of other
comprehensive income |                                                                             |         | (33,642                             | )       |                                   |        | (22,897 | )       |      |         | (39,761 | )       |   |        | (3,360 | )      
|                                   |                                                                   |                                                                             |         |                                     |         |                                   |        |         |         |      |         |         |         |   |        |       
|                                   |                                                                   |                                                                             | 62,477  |                                     |         |                                   | 42,524 |         |         |      | 73,842  |         |         |   | 6,241  |       
|                                   |                                                                   |                                                                             |         |                                     |         |                                   |        |         |         |      |         |         |         |   |        |       
|Comprehensive income (loss)        |                                                                   | $                                                                           | 106,188 |                                     |         | $                                 | 46,786 |         |         | $    | 153,343 |         |         | $ | 35,417 |       
|                                   |                                                                   |                                                                             |         |                                     |         |                                   |        |         |         |      |         |         |         |   |        |       

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
June 30, 2003
($ in thousands)



|                             |                                                                          |   |              |     |         |   |               |        |               |   |             |        |  
|---------------------------- | ------------------------------------------------------------------------ | - | ------------ | --- | ------- | - | ------------- | ------ | ------------- | - | ----------- | ------ | -
|                             |                                                                          |   |              |     |         |   |               |        |               |   | Accumulated
|                             |                                                                          |   |              |     |         |   | Additional    |        | Other        
|                             |                                                                          |   |              |     |         |   | Paid-In       |        | Comprehensive
|                             |                                                                          |   | Common Stock |     | Capital |   | Income (Loss)
|                             |                                                                          |   |              |     |         |   |              
|Balance at December 31, 2001 |                                                                          | $ | 43,506       |     |         | $ | 1,177,688     |        |               | $ | 12,669      |       
|2002:                        |                                                                          |   |              |     |         |   |               |        |               |   |             |       
|                             | Net income                                                               |   |              |    |         |   |               |       |               |   |             |       |  
|                             | Net unrealized gain (loss) on securities                                 |   |              |    |         |   |               |       |               |   |             | 73,646 |  
|                             | Net unrealized gain (loss) on derivatives
designated as cash flow hedges |   |              |    |         |   |               |       |               |   |             | 3,434  |  
|                             | Stock issued under various incentive
plans, net of forfeitures           |   |              | 150 |         |   |               | 5,730  |               |   |             |       |  
|                             | Stock issued under exercise of warrants                                  |   |              |    |         |   |               | (3,802 | )             |   |             |       |  
|                             | Purchase of treasury stock                                               |   |              |    |         |   |               |       |               |   |             |       |  
|                             | Dividends declared on common stock                                       |   |              |    |         |   |               |       |               |   |             |       |  
|                             | Allocation of shares in leveraged ESOP                                   |   |              |    |         |   |               | 30     |               |   |             |       |  
|                             | Minimum pension liability adjustment                                     |   |              |    |         |   |               |       |               |   |             | (1,227 | )
|                             |                                                                          |   |              |     |         |   |               |        |               |   |             |       
|Balance at December 31, 2002 |                                                                          |   | 43,656       |     |         |   | 1,179,646     |        |               |   | 88,522      |       
|2003 (unaudited):            |                                                                          |   |              |     |         |   |               |        |               |   |             |       
|                             | Net income                                                               |   |              |    |         |   |               |       |               |   |             |       |  
|                             | Net unrealized gain (loss) on securities                                 |   |              |    |         |   |               |       |               |   |             | 72,089 |  
|                             | Net unrealized gain (loss) on derivatives
designated as cash flow hedges |   |              |    |         |   |               |       |               |   |             | 1,753  |  
|                             | Stock issued under various incentive
plans, net of forfeitures           |   |              | 72  |         |   |               | 8,490  |               |   |             |       |  
|                             | PRIDES purchase contract adjustment
and allocated fees and expenses      |   |              |    |         |   |               | (7,087 | )             |   |             |       |  
|                             | Allocation of shares in leveraged ESOP                                   |   |              |    |         |   |               |       |               |   |             |       |  
|                             |                                                                          |   |              |     |         |   |               |        |               |   |             |       
|Balance at June 30, 2003     |                                                                          | $ | 43,728       |     |         | $ | 1,181,049     |        |               | $ | 162,364     |       
|                             |                                                                          |   |              |     |         |   |               |        |               |   |             |       

[Additional columns below]

[Continued from above table, first column(s) repeated]

|                             |                                                                          |   |              |        |        |   |             |        |          |   |               |         |   |   |          |          |       |   |           |          |  
|---------------------------- | ------------------------------------------------------------------------ | - | ------------ | ------ | ------ | - | ----------- | ------ | -------- | - | ------------- | ------- | - | - | -------- | -------- | ----- | - | --------- | -------- | -
|                             |                                                                          |   |              |        |        |   | Unallocated |        |          |   |               |         |   |   |          |          | Total
|                             |                                                                          |   | Unearned     |        | ESOP   |   | Retained    |        | Treasury |   | Stockholders
|                             |                                                                          |   | Compensation |        | Shares |   | Earnings    |        | Stock    |   | Equity       
|                             |                                                                          |   |              |        |        |   |             |        |          |   |              
|Balance at December 31, 2001 |                                                                          | $ | (727         | )      |        | $ | (224        | )      |          | $ | 62,187        |         |   | $ | (56,582  | )        |       | $ | 1,238,517 |         
|2002:                        |                                                                          |   |              |        |        |   |             |        |          |   |               |         |   |   |          |          |       |   |           |         
|                             | Net income                                                               |   |              |       |        |   |             |       |          |   |               | 62,866  |   |   |          |         |       |   |           | 62,866   |  
|                             | Net unrealized gain (loss) on securities                                 |   |              |       |        |   |             |       |          |   |               |        |   |   |          |         |       |   |           | 73,646   |  
|                             | Net unrealized gain (loss) on derivatives
designated as cash flow hedges |   |              |       |        |   |             |       |          |   |               |        |   |   |          |         |       |   |           | 3,434    |  
|                             | Stock issued under various incentive
plans, net of forfeitures           |   |              | 269    |        |   |             |       |          |   |               |        |   |   |          | 1        |       |   |           | 6,150    |  
|                             | Stock issued under exercise of warrants                                  |   |              |       |        |   |             |       |          |   |               |        |   |   |          | 12,205   |       |   |           | 8,403    |  
|                             | Purchase of treasury stock                                               |   |              |       |        |   |             | (2,522 | )        |   |               |        |   |   |          | (112,116 | )     |   |           | (114,638 | )
|                             | Dividends declared on common stock                                       |   |              |       |        |   |             |       |          |   |               | (15,536 | ) |   |          |         |       |   |           | (15,536  | )
|                             | Allocation of shares in leveraged ESOP                                   |   |              |       |        |   |             | 1,303  |          |   |               |        |   |   |          |         |       |   |           | 1,333    |  
|                             | Minimum pension liability adjustment                                     |   |              |       |        |   |             |       |          |   |               |        |   |   |          |         |       |   |           | (1,227   | )
|                             |                                                                          |   |              |        |        |   |             |        |          |   |               |         |   |   |          |          |       |   |           |         
|Balance at December 31, 2002 |                                                                          |   | (458         | )      |        |   | (1,443      | )      |          |   | 109,517       |         |   |   | (156,492 | )        |       |   | 1,262,948 |         
|2003 (unaudited):            |                                                                          |   |              |        |        |   |             |        |          |   |               |         |   |   |          |          |       |   |           |         
|                             | Net income                                                               |   |              |       |        |   |             |       |          |   |               | 79,501  |   |   |          |         |       |   |           | 79,501   |  
|                             | Net unrealized gain (loss) on securities                                 |   |              |       |        |   |             |       |          |   |               |        |   |   |          |         |       |   |           | 72,089   |  
|                             | Net unrealized gain (loss) on derivatives
designated as cash flow hedges |   |              |       |        |   |             |       |          |   |               |        |   |   |          |         |       |   |           | 1,753    |  
|                             | Stock issued under various incentive
plans, net of forfeitures           |   |              | (1,463 | )      |   |             |       |          |   |               |        |   |   |          |         |       |   |           | 7,099    |  
|                             | PRIDES purchase contract adjustment
and allocated fees and expenses      |   |              |       |        |   |             |       |          |   |               |        |   |   |          |         |       |   |           | (7,087   | )
|                             | Allocation of shares in leveraged ESOP                                   |   |              |       |        |   |             | 37     |          |   |               |        |   |   |          |         |       |   |           | 37       |  
|                             |                                                                          |   |              |        |        |   |             |        |          |   |               |         |   |   |          |          |       |   |           |         
|Balance at June 30, 2003     |                                                                          | $ | (1,921       | )      |        | $ | (1,406      | )      |          | $ | 189,018       |         |   | $ | (156,492 | )        |       | $ | 1,416,340 |         
|                             |                                                                          |   |              |        |        |   |             |        |          |   |               |         |   |   |          |          |       |   |           |         

See accompanying notes to consolidated financial statements.

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AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in thousands)

|                                      |                                                                                   |                                                                                                                   |                                                        |                        |          |                                   |         |            |          |         |         |  
|------------------------------------- | --------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------ | ---------------------- | -------- | --------------------------------- | ------- | ---------- | -------- | ------- | ------- | -
|                                      |                                                                                   |                                                                                                                   |                                                        |                        |          | For The Six Months Ended June 30,
|                                      |                                                                                   |                                                                                                                   |                                                        |                        |          | 2003                              |         | 2002      
|                                      |                                                                                   |                                                                                                                   |                                                        |                        |          |                                   |         |           
|                                      |                                                                                   |                                                                                                                   |                                                        |                        |          | (unaudited)                      
|Cash flows from operating activities  |                                                                                   |                                                                                                                   |                                                        |                        |          |                                   |         |           
|                                      | Net income                                                                        |                                                                                                                   | $                                                      | 79,501                 |          |                                   | $       | 29,176     |         
|                                      | Adjustments to reconcile net income to net cash
provided by operating activities: |                                                                                                                   |                                                        |                        |          |                                   |         |            |         
|                                      |                                                                                   | Product charges on universal life
and annuity products                                                            |                                                        |                        | (82,612  | )                                 |         |            | (70,159  | )      
|                                      |                                                                                   | Interest credited to policyowner account
balances                                                                 |                                                        |                        | 251,959  |                                   |         |            | 222,872  |        
|                                      |                                                                                   | Change in option value of equity-indexed products
and market value adjustments on total
return strategy annuities |                                                        |                        | 27,209   |                                   |         |            | (35,867  | )      
|                                      |                                                                                   | Realized/unrealized (gains) losses on investments                                                                 |                                                        |                        | (66,824  | )                                 |         |            | 100,623  |        
|                                      |                                                                                   | DAC and VOBA amortization                                                                                         |                                                        |                        | 99,974   |                                   |         |            | 68,164   |        
|                                      |                                                                                   | DAC and VOBA capitalized                                                                                          |                                                        |                        | (195,997 | )                                 |         |            | (201,575 | )      
|                                      |                                                                                   | Change in:                                                                                                        |                                                        |                        |          |                                   |         |            |          |        
|                                      |                                                                                   |                                                                                                                   | Accrued investment income                              |                        |          | (777                              | )       |            |          | (8,229  | )      
|                                      |                                                                                   |                                                                                                                   | Reinsurance receivables                                |                        |          | (14,526                           | )       |            |          | (73,100 | )      
|                                      |                                                                                   |                                                                                                                   | Securities held for trading purposes:                  |                        |          |                                   |         |            |          |         |        
|                                      |                                                                                   |                                                                                                                   |                                                        | Fixed maturities       |          |                                   | 18,566  |            |          |         | 215,125 |  
|                                      |                                                                                   |                                                                                                                   |                                                        | Equity securities      |          |                                   | (1,813  | )          |          |         | 12,471  |  
|                                      |                                                                                   |                                                                                                                   |                                                        | Short-term investments |          |                                   |        |            |          |         | (3,780  | )
|                                      |                                                                                   |                                                                                                                   | Liabilities for future policy benefits                 |                        |          | 83,772                            |         |            |          | 434,465 |        
|                                      |                                                                                   |                                                                                                                   | Accrued expenses and other liabilities                 |                        |          | 474,559                           |         |            |          | (29,499 | )      
|                                      |                                                                                   |                                                                                                                   | Policy and contract claims and other
policyowner funds |                        |          | 57,126                            |         |            |          | 28,122  |        
|                                      |                                                                                   |                                                                                                                   | Income taxes:                                          |                        |          |                                   |         |            |          |         |        
|                                      |                                                                                   |                                                                                                                   |                                                        | Current                |          |                                   | (22,528 | )          |          |         | (33,277 | )
|                                      |                                                                                   |                                                                                                                   |                                                        | Deferred               |          |                                   | 29,269  |            |          |         | 25,637  |  
|                                      |                                                                                   | Other, net                                                                                                        |                                                        |                        | (1,012   | )                                 |         |            | (41,007  | )      
|                                      |                                                                                   |                                                                                                                   |                                                        |                        |          |                                   |         |            |         
|                                      |                                                                                   | Net cash provided by operating activities                                                                         |                                                        |                        | 735,846  |                                   |         |            | 640,162  |        
|                                      |                                                                                   |                                                                                                                   |                                                        |                        |          |                                   |         |            |         
|Cash flows from investing activities: |                                                                                   |                                                                                                                   |                                                        |                        |          |                                   |         |           
|                                      | Purchase of fixed maturities available-for-sale                                   |                                                                                                                   |                                                        | (5,601,015             | )        |                                   |         | (3,033,669 | )       
|                                      | Proceeds from sale of fixed maturities available-for-sale                         |                                                                                                                   |                                                        | 4,175,359              |          |                                   |         | 1,686,139  |         
|                                      | Maturities, calls and principal reductions of
fixed maturities available-for-sale |                                                                                                                   |                                                        | 1,157,234              |          |                                   |         | 507,723    |         
|                                      | Purchase of equity securities                                                     |                                                                                                                   |                                                        | (7,155                 | )        |                                   |         | (35,945    | )       
|                                      | Proceeds from sale of equity securities                                           |                                                                                                                   |                                                        | 12,180                 |          |                                   |         | 3,604      |         
|                                      | Change in short-term investments, net                                             |                                                                                                                   |                                                        | (1,933                 | )        |                                   |         | (334       | )       
|                                      | Purchase of mortgage loans                                                        |                                                                                                                   |                                                        | (80,332                | )        |                                   |         | (36,558    | )       

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AMERUS GROUP CO.
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Continued)
($ in thousands)

|                                                 |                                                                           |                                           |         |                                   |          |      |         |          |          |  
|------------------------------------------------ | ------------------------------------------------------------------------- | ----------------------------------------- | ------- | --------------------------------- | -------- | ---- | ------- | -------- | -------- | -
|                                                 |                                                                           |                                           |         | For The Six Months Ended June 30,
|                                                 |                                                                           |                                           |         | 2003                              |          | 2002
|                                                 |                                                                           |                                           |         |                                   |          |     
|                                                 |                                                                           |                                           |         | (unaudited)                      
|                                                 | Proceeds from repayment and sale of mortgage loans                        |                                           |         | 55,689                            |          |      |         | 53,520   |         
|                                                 | Purchase of real estate and other invested assets                         |                                           |         | (200,854                          | )        |      |         | (29,551  | )       
|                                                 | Proceeds from sale of real estate and other
invested assets               |                                           |         | (4,153                            | )        |      |         | 30,230   |         
|                                                 | Change in policy loans, net                                               |                                           |         | 4,746                             |          |      |         | 6,045    |         
|                                                 | Other assets, net                                                         |                                           |         | (798                              | )        |      |         | (8,977   | )       
|                                                 |                                                                           |                                           |         |                                   |          |      |         |          |         
|                                                 |                                                                           | Net cash (used in) investing activities   |         |                                   | (491,032 | )    |         |          | (857,773 | )
|                                                 |                                                                           |                                           |         |                                   |          |      |         |          |         
|Cash flows from financing activities:            |                                                                           |                                           |         |                                   |          |      |         |         
|                                                 | Deposits to policyowner account balances                                  |                                           |         | 1,030,023                         |          |      |         | 998,428  |         
|                                                 | Withdrawals from policyowner account balances                             |                                           |         | (773,630                          | )        |      |         | (859,614 | )       
|                                                 | Change in debt, net                                                       |                                           |         | (102,517                          | )        |      |         | (80,957  | )       
|                                                 | Stock issued under various incentive plans, net of
forfeitures            |                                           |         | 7,099                             |          |      |         | 13,558   |         
|                                                 | Purchase of treasury stock                                                |                                           |         |                                  |          |      |         | (89,252  | )       
|                                                 | Proceeds from issuance of OCEANs                                          |                                           |         |                                  |          |      |         | 178,494  |         
|                                                 | Proceeds from issuance of PRIDES                                          |                                           |         | 137,398                           |          |      |         |         |         
|                                                 | Retirement of company-obligated mandatorily
redeemable capital securities |                                           |         |                                  |          |      |         | (20,150  | )       
|                                                 | Adoption and allocation of shares in leveraged ESOP                       |                                           |         | 37                                |          |      |         |         |         
|                                                 |                                                                           |                                           |         |                                   |          |      |         |          |         
|                                                 |                                                                           | Net cash provided by financing activities |         |                                   | 298,410  |      |         |          | 140,507  |  
|                                                 |                                                                           |                                           |         |                                   |          |      |         |          |         
|                                                 |                                                                           | Net increase (decrease) in cash           |         |                                   | 543,224  |      |         |          | (77,104  | )
|Cash and cash equivalents at beginning of period |                                                                           |                                           | 102,612 |                                   |          |      | 179,376 |         
|                                                 |                                                                           |                                           |         |                                   |          |      |         |          |         
|Cash and cash equivalents at end of period       |                                                                           | $                                         | 645,836 |                                   |          | $    | 102,272 |         
|                                                 |                                                                           |                                           |         |                                   |          |      |         |          |         
|Supplemental disclosure of cash activities:      |                                                                           |                                           |         |                                   |          |      |         |         
|                                                 | Interest paid                                                             |                                           | $       | 15,449                            |          |      | $       | 11,402   |         
|                                                 |                                                                           |                                           |         |                                   |          |      |         |          |         
|                                                 | Income taxes paid                                                         |                                           | $       | 15,967                            |          |      | $       | 26,921   |         
|                                                 |                                                                           |                                           |         |                                   |          |      |         |          |         

See accompanying notes to consolidated financial statements.

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.AMERUS GROUP CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)






|(1) |  | CONSOLIDATION AND BASIS OF PRESENTATION
|--- |  | ---------------------------------------

The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States (GAAP) for interim financial information and the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by GAAP for annual financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. All adjustments were of a normal
recurring nature, unless otherwise noted in the Notes to Consolidated Financial
Statements. Operating results for the six months ended June 30, 2003 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003. The consolidated balance sheet at December 31, 2002 has
been derived from the audited financial statements at that date but does not
include all of the information and footnotes required by GAAP for complete
financial statements. For further information and for capitalized terms not
defined in this Form 10-Q, refer to the consolidated financial statements and
notes thereto included in the Companys Annual Report on Form 10-K for the year
ended December 31, 2002.

The accompanying consolidated financial statements include the accounts
and operations of the Company and its wholly-owned subsidiaries, principally
AmerUs Life Insurance Company (ALIC), AmerUs Annuity Group Co. (AAG), AmerUs
Capital Management Group, Inc. (ACM), and ILICO Holdings, Inc., the holding
company of Indianapolis Life Insurance Company (ILIC) and its subsidiaries
(collectively, ILICO). Effective June 30, 2003, IL Annuity and Insurance
Company (IL Annuity), a wholly-owned subsidiary of ILIC, was merged into ILIC.
All significant intercompany transactions and balances have been eliminated in
consolidation.

The Company has certain stock-based employee compensation plans which are
accounted for under the recognition and measurement principles of APB Opinion
No. 25, Accounting for Stock Issued to Employees, and related
interpretations. The plans are stock option plans for which no stock-based
employee compensation cost is reflected in net income, as all options granted
under those plans had an exercise price equal to the market value of the
underlying common stock on the date of grant. The following table illustrates
the effect on net income and earnings per share if the Company had applied the
fair value recognition provisions of Statement of Financial Accounting
Standards (SFAS) 123, Accounting for Stock-Based Compensation, to stock-based
employee compensation ($ in thousands, except share data):

|                                                                                                                                            |                       |   |                                     |      |                                   |   |       |      |      |   |        |      |  |   |        |      | 
|------------------------------------------------------------------------------------------------------------------------------------------- | --------------------- | - | ----------------------------------- | ---- | --------------------------------- | - | ----- | ---- | ---- | - | ------ | ---- |  | - | ------ | ---- | 
|                                                                                                                                            |                       |   | For The Three Months Ended June 30, |      | For The Six Months Ended June 30,
|                                                                                                                                            |                       |   | 2003                                |      | 2002                              |   | 2003  |      | 2002
|                                                                                                                                            |                       |   |                                     |      |                                   |   |       |      |     
|Net income, as reported                                                                                                                     |                       | $ | 43,711                              |      |                                   | $ | 4,262 |      |      | $ | 79,501 |      |  | $ | 29,176 |     
|Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects |                       |   | (980                                | )    |                                   |   | (997  | )    |      |   | (2,078 | )    |  |   | (3,102 | )   
|                                                                                                                                            |                       |   |                                     |      |                                   |   |       |      |      |   |        |      |  |   |        |     
|Pro forma net income                                                                                                                        |                       | $ | 42,731                              |      |                                   | $ | 3,265 |      |      | $ | 77,423 |      |  | $ | 26,074 |     
|                                                                                                                                            |                       |   |                                     |      |                                   |   |       |      |      |   |        |      |  |   |        |     
|Earnings per share:                                                                                                                         |                       |   |                                     |      |                                   |   |       |      |      |   |        |      |  |   |        |     
|                                                                                                                                            | Basic - as reported   |   | $                                   | 1.12 |                                   |   | $     | 0.11 |      |   | $      | 2.03 |  |   | $      | 0.72 | 
|                                                                                                                                            |                       |   |                                     |      |                                   |   |       |      |      |   |        |      |  |   |        |     
|                                                                                                                                            | Basic - pro forma     |   | $                                   | 1.09 |                                   |   | $     | 0.08 |      |   | $      | 1.98 |  |   | $      | 0.64 | 
|                                                                                                                                            |                       |   |                                     |      |                                   |   |       |      |      |   |        |      |  |   |        |     
|                                                                                                                                            | Diluted - as reported |   | $                                   | 1.11 |                                   |   | $     | 0.10 |      |   | $      | 2.02 |  |   | $      | 0.71 | 
|                                                                                                                                            |                       |   |                                     |      |                                   |   |       |      |      |   |        |      |  |   |        |     
|                                                                                                                                            | Diluted - pro forma   |   | $                                   | 1.08 |                                   |   | $     | 0.08 |      |   | $      | 1.97 |  |   | $      | 0.63 | 
|                                                                                                                                            |                       |   |                                     |      |                                   |   |       |      |      |   |        |      |  |   |        |     

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Certain amounts in the 2002 financial statements have been reclassified to
conform to the 2003 financial statement presentation.



|(2) |  | EARNINGS PER SHARE
|--- |  | ------------------

Basic earnings per share of common stock are computed by dividing net
income by the weighted-average number of common shares outstanding during the
period. Diluted earnings per share assumes the issuance of common shares
applicable to stock options and warrants calculated using the treasury stock
method.

Diluted earnings per share applicable to the Companys Optionally
Convertible Equity-linked Accreting Notes (OCEANsSM) are determined using the
if-converted method for the number of days in the period in which the common
stock price conversion condition is met. The common stock price conversion
condition was not met for the six months ended June 30, 2003 and 2002. No
undistributed net income has been allocated to the convertible securities
holders since their participation in dividends with common stockholders is
limited to the amount of the annual regular dividend.

Diluted
earnings per share applicable to the Companys PRIDESSM securities
are determined using the treasury stock method as it is currently anticipated
that holders of the PRIDES are more likely to tender cash in the future for the
securities forward contract. The PRIDES did not have any dilution impact for
earnings per share for the six months ended June 30, 2003.



|(3) |  | CLOSED BLOCK
|--- |  | ------------

The Company has established two closed blocks, which we refer to as the
Closed Block. The first was established on June 30, 1996 in connection with
the reorganization of ALIC from a mutual company to a stock company. The
second was established as of March 31, 2000 in connection with the
reorganization of ILIC from a mutual company to a stock company. Insurance
policies which had a dividend scale in effect as of each Closed Block
establishment date were included in the Closed Block. The Closed Block was
designed to provide reasonable assurance to owners of insurance policies
included therein that, after the reorganization of ALIC and ILIC, assets would
be available to maintain the dividend scales and interest credits in effect
prior to the reorganization if the experience underlying such scales and
credits continues.

Summarized financial information of the Closed Block as of June 30, 2003
and December 31, 2002 and for the three months and six months ended June 30,
2003 and 2002 are as follows:

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##### Table of Contents



|                                                                                         |                   |   |                  |           |              |   |           |           | 
|---------------------------------------------------------------------------------------- | ----------------- | - | ---------------- | --------- | ------------ | - | --------- | --------- | 
|                                                                                         |                   |   | June 30,         |           | December 31,
|                                                                                         |                   |   | 2003             |           | 2002        
|                                                                                         |                   |   |                  |           |             
|                                                                                         |                   |   | ($ in thousands)
|Liabilities:                                                                             |                   |   |                  |           |              |   |           |          
|Future life and annuity policy benefits                                                  |                   | $ | 2,836,934        |           |              | $ | 2,840,041 |          
|Policyowner funds                                                                        |                   |   | 9,371            |           |              |   | 4,400     |          
|Accrued expenses and other liabilities                                                   |                   |   | 47,930           |           |              |   | 44,295    |          
|Dividends payable to policyowners                                                        |                   |   | 173,368          |           |              |   | 147,177   |          
|Policy and contract claims                                                               |                   |   | 10,312           |           |              |   | 10,390    |          
|Policyowner dividend obligation                                                          |                   |   | 213,365          |           |              |   | 118,623   |          
|                                                                                         |                   |   |                  |           |              |   |           |          
|                                                                                         | Total Liabilities |   |                  | 3,291,280 |              |   |           | 3,164,926 | 
|                                                                                         |                   |   |                  |           |              |   |           |          
|Assets:                                                                                  |                   |   |                  |           |              |   |           |          
|Fixed maturity securities available-for-sale at fair value                               |                   |   | 2,075,335        |           |              |   | 1,970,659 |          
|Mortgage loans                                                                           |                   |   | 85,062           |           |              |   | 90,872    |          
|Policy loans                                                                             |                   |   | 349,114          |           |              |   | 354,784   |          
|Other investments                                                                        |                   |   | 1,938            |           |              |   | 1,047     |          
|Cash and cash equivalents                                                                |                   |   | 4,846            |           |              |   | 6,178     |          
|Accrued investment income                                                                |                   |   | 32,073           |           |              |   | 30,726    |          
|Premiums and fees receivable                                                             |                   |   | 14,827           |           |              |   | 16,999    |          
|Other assets                                                                             |                   |   | 48,819           |           |              |   | 23,917    |          
|                                                                                         |                   |   |                  |           |              |   |           |          
|                                                                                         | Total Assets      |   |                  | 2,612,014 |              |   |           | 2,495,182 | 
|                                                                                         |                   |   |                  |           |              |   |           |          
|Maximum future earnings to be recognized from assets and
liabilities of the Closed Block |                   | $ | 679,266          |           |              | $ | 669,744   |          
|                                                                                         |                   |   |                  |           |              |   |           |          

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##### Table of Contents



|                                                       |  |                                     |         |      |  |   |         |  
|------------------------------------------------------ |  | ----------------------------------- | ------- | ---- |  | - | ------- | -
|                                                       |  | For The Three Months Ended June 30,
|                                                       |  | 2003                                |         | 2002
|                                                       |  |                                    
|                                                       |  | ($ in thousands)                   
|Operations:                                            |  |                                     |         |      |  |   |         |  
|Insurance premiums                                     |  | $                                   | 55,009  |      |  | $ | 68,323  |  
|Universal life and annuity product charges             |  |                                     | 2,685   |      |  |   | 544     |  
|Net investment income                                  |  |                                     | 37,577  |      |  |   | 38,934  |  
|Realized gains (losses) on investments                 |  |                                     | 275     |      |  |   | (5,378  | )
|Policyowner benefits                                   |  |                                     | (56,690 | )    |  |   | (72,634 | )
|Underwriting, acquisition and other expenses           |  |                                     | (1,115  | )    |  |   | (1,481  | )
|Dividends to policyowners                              |  |                                     | (27,738 | )    |  |   | (16,970 | )
|                                                       |  |                                     |         |      |  |   |         |  
|Contribution from the Closed Block before income taxes |  | $                                   | 10,003  |      |  | $ | 11,338  |  
|                                                       |  |                                     |         |      |  |   |         |  

|                                                       |  |                                   |          |      |  |   |          |  
|------------------------------------------------------ |  | --------------------------------- | -------- | ---- |  | - | -------- | -
|                                                       |  | For The Six Months Ended June 30,
|                                                       |  | 2003                              |          | 2002
|                                                       |  |                                   |          |     
|                                                       |  | ($ in
thousands)                 
|Operations:                                            |  |                                   |          |      |  |   |          |  
|Insurance premiums                                     |  | $                                 | 117,815  |      |  | $ | 134,111  |  
|Product charges                                        |  |                                   | 6,224    |      |  |   | 3,441    |  
|Net investment income                                  |  |                                   | 77,316   |      |  |   | 76,977   |  
|Realized gains (losses) on investments                 |  |                                   | 7,344    |      |  |   | (754     | )
|Policyowner benefits                                   |  |                                   | (128,519 | )    |  |   | (144,749 | )
|Underwriting, acquisition and other expenses           |  |                                   | (2,246   | )    |  |   | (2,736   | )
|Dividends to policyowners                              |  |                                   | (57,649  | )    |  |   | (43,304  | )
|                                                       |  |                                   |          |      |  |   |          |  
|Contribution from the Closed Block before income taxes |  | $                                 | 20,285   |      |  | $ | 22,986   |  
|                                                       |  |                                   |          |      |  |   |          |  

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##### Table of Contents





|(4) |  | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
|--- |  | ---------------------------------------------

The Company accounts for derivatives as provided by Statement of Financial
Accounting Standard (SFAS) 133 Accounting for Derivative Instruments and
Hedging Activities, as amended by SFAS 137 and SFAS 138, which requires that
all derivative instruments, including certain derivative instruments embedded
in other contracts, be reported on the balance sheet at fair value. Accounting
for gains and losses resulting from changes in the values of derivatives is
dependent upon the use of the derivative and its qualification for special
hedge accounting.

During the first six months of 2003 and 2002, realized/unrealized gains
(losses) on investments included an unrealized gain of $15.4 million and an
unrealized loss of $34.8 million, respectively, from the change in fair value
on call options used as a natural hedge of embedded options within
equity-indexed products. Additionally, the first six months of 2003 and 2002
included an unrealized gain of $19.6 million and an unrealized loss of $19.5
million, respectively, from the change in fair value on the trading securities
backing the total return strategy products. Policyowner benefits included an
offsetting adjustment to (increase) reduce contract liabilities for fair value
changes in options embedded within the equity-indexed products and fair value
changes on total return strategy annuity contracts of $(27.2) million and $35.9
million for the first six months of 2003 and 2002, respectively. AOCI included
an unrealized gain of $1.8 million and $0.3 million from the fair value change
in interest rate swaps used to hedge the floating rate funding agreement
liability during the first six months of 2003 and 2002, respectively. In 2002,
the Company undesignated a cash flow hedge and is now amortizing the amount in
AOCI to earnings over the remaining life of the swap, which amounted to $2.5
million and $0.7 million in expense in the first six months of 2003 and 2002,
respectively. The Company estimates that $1.4 million of after-tax derivative
losses, included in AOCI will be reclassified into earnings within the next
twelve months.

The following table summarizes the income (loss) impact of the market
value adjustments on trading securities and derivatives and the cash flow hedge
amortization for the first six months ended June 30, 2003 and 2002:

|                                                     |                 |   |                                   |       |      |   |         |         |  
|---------------------------------------------------- | --------------- | - | --------------------------------- | ----- | ---- | - | ------- | ------- | -
|                                                     |                 |   | For The Six Months Ended June 30,
|                                                     |                 |   | 2003                              |       | 2002
|                                                     |                 |   |                                   |       |     
|                                                     |                 |   | ($ in thousands)                 
|Fixed maturity securities held for trading           |                 | $ | 19,608                            |       |      | $ | (19,450 | )      
|Options on equity-indexed products                   |                 |   | 15,419                            |       |      |   | (34,786 | )      
|Equity-indexed and total return strategy
liabilities |                 |   | (27,209                           | )     |      |   | 35,867  |        
|Cash flow hedge amortization                         |                 |   | (2,478                            | )     |      |   | (697    | )      
|DAC amortization impact of
net adjustments above     |                 |   | (609                              | )     |      |   | (2,662  | )      
|                                                     |                 |   |                                   |       |      |   |         |        
|                                                     | Pre-tax total   |   |                                   | 4,731 |      |   |         | (21,728 | )
|Income taxes                                         |                 |   | (1,656                            | )     |      |   | 7,605   |        
|                                                     |                 |   |                                   |       |      |   |         |        
|                                                     | After-tax total |   | $                                 | 3,075 |      |   | $       | (14,123 | )
|                                                     |                 |   |                                   |       |      |   |         |        

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##### Table of Contents





|(5) |  | NOTES PAYABLE                          
|--- |  | ---------------------------------------
|   
|    |  | Notes payable consist of the following:

|                                                                                                               |  |                  |         |              |  |   |         | 
|-------------------------------------------------------------------------------------------------------------- |  | ---------------- | ------- | ------------ |  | - | ------- | 
|                                                                                                               |  | June 30,         |         | December 31,
|                                                                                                               |  | 2003             |         | 2002        
|                                                                                                               |  |                  |         |             
|                                                                                                               |  | ($ in thousands)
|Federal Home Loan Bank community investment
long-term advances maturing at various dates
through June 12, 2012 |  | $                | 13,609  |              |  | $ | 13,871  | 
|OCEANs due on March 6, 2032                                                                                    |  |                  | 186,978 |              |  |   | 186,233 | 
|PRIDES notes (A)                                                                                               |  |                  | 143,750 |              |  |   |        | 
|Senior notes bearing interest at 6.95%
due June, 2005                                                          |  |                  | 125,000 |              |  |   | 125,000 | 
|Revolving credit agreement                                                                                     |  |                  | 10,000  |              |  |   | 113,000 | 
|Surplus notes bearing interest at 8.66% due on
April 11, 2011                                                  |  |                  | 25,000  |              |  |   | 25,000  | 
|AmerUs Capital I 8.85% Capital
Securities Series A due
February 1, 2007                                        |  |                  | 48,095  |              |  |   | 48,095  | 
|AmerUs Capital II 7.00% Quarterly
Income Preferred Securities
due July 27, 2003                                |  |                  | 154     |              |  |   | 154     | 
|                                                                                                               |  |                  |         |              |  |   |         | 
|                                                                                                               |  | $                | 552,586 |              |  | $ | 511,353 | 
|                                                                                                               |  |                  |         |              |  |   |         | 

(A)  On May 28, 2003, the Company issued $125.0 million of PRIDES which were
registered on Form S-3 filed with the Securities and Exchange Commission. On
June 5, 2003, the underwriters exercised their over-allotment
option in full and the
Company issued an additional $18.8 million of PRIDES. The PRIDES initially
consist of a $25 senior note and a contract requiring the holder to purchase
the Companys common stock. The note has a minimum term of 4.75 years, which
may be extended by the
Company in certain circumstances. The PRIDES have quarterly payments of
interest at an annual rate of 5.5 percent and quarterly contract
adjustment payments at an annual rate of 0.75 percent, both payable on February 16, May 16,
August 16 and November 16 of each year, commencing August 16, 2003. Under the
purchase contract, holders of each contract are required to purchase the
Companys common stock on the settlement date of August 16, 2006 based on a
specified settlement rate, which will vary according to the applicable market
value of the Companys common stock at the settlement date. The value of the
common stock to be issued upon settlement of each purchase contract will not
exceed $25, the stated value of the PRIDES, unless the applicable market value
of the Companys common stock (which is measured by the common stock price over
a 20-day trading day period) increases to more than $33.80 per share. The
present value of the contract adjustment payments, amounting to $2.9 million,
has been reflected as an other liability with a corresponding charge to
additional paid-in capital. Subsequent contract adjustment payments will be
allocated between the liability and interest expense based on a constant rate
over the life of the PRIDES. Expenses incurred with the offering were
allocated

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##### Table of Contents



between the senior notes and the purchase contracts. The expenses
allocated to the senior notes, amounting to $0.7 million, have been capitalized
and will be recognized as interest expense over the term of the notes. The
amount allocated to the purchase contracts, totaling $4.2 million, was charged
to additional paid-in capital.



|(6) |  | FEDERAL INCOME TAXES
|--- |  | --------------------

The effective income tax rate for the three months and six months ending
June 30, 2003 and 2002, respectively, varied from the prevailing corporate rate
primarily as a result of tax-exempt income in 2003 and non-deductible
demutualization costs, low income housing and rehabilitation credits, and
tax-exempt income in 2002.



|(7) |  | RESTRUCTURING CHARGES
|--- |  | ---------------------

During the third quarter of 2001, the Company began consolidating various
functions in connection with a restructuring of its protection products and
accumulation products operations and investment activities. The objective of
the restructuring plan is to eliminate duplicative functions for all business
units and to reduce ongoing costs. Corporate administrative functions are being
transitioned so they are performed primarily in Des Moines, Iowa. Protection
products administrative processes are being transitioned so they are performed
primarily in Des Moines; Woodbury, New York; or outsourced. Accumulation
products functions have been transitioned so they are primarily performed in
Topeka, Kansas. Investment activities have been restructured to eliminate
certain real estate management services which have been outsourced.

The Company has listed its office building located in Indianapolis,
Indiana, with a real estate broker. During the second quarter of 2003, the
Company began to substantially vacate this location as a result of the position
eliminations taking place. In addition, the Company also selected a new
location in the second quarter of 2003 for those employees who are going to
continue to work in Indianapolis. The new space is to be ready for occupancy
sometime during August 2003, at which time the majority of the remaining
Indianapolis employees will move to the new location. On June 30, 2003, the
Company determined that the plan of sale criteria in SFAS 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, had been met. Accordingly,
the carrying value of the building was adjusted to its fair value less costs to
sell, amounting to $15.5 million, which was based upon comparable properties
recently marketed in Indianapolis. The resulting $7.7 million pre-tax
impairment loss has been recorded as restructuring costs in the consolidated
statement of income. The carrying value of the building that is held for sale
is included in the other assets line item of the consolidated balance sheet.

During the second quarter of 2003, the Company initiated and executed a
restructuring plan to merge one of its subsidiaries, IL Annuity, into its
parent, ILIC. The merger was effective June 30, 2003
and total restructuring costs associated with this plan amounted to $2.4
million pre-tax, which primarily consisted of legal, accounting, and printing
costs and the write off of $2.2 million of insurance licenses.

Restructuring charges have been included in operating expenses in the
consolidated statement of income and include severance and termination benefits
for additional benefits provided to previously terminated individuals during
the first six months of 2003 and benefits associated with the elimination of
approximately 80 positions for the six months ended June 30, 2002. The other
costs in the six months ended June 30, 2003, primarily related to the
impairment loss on the Indianapolis office building, expenses associated with
the merger of IL Annuity into ILIC, and systems conversion costs. Other costs
in the six months ended June 30, 2002, primarily consisted of systems
conversion and relocation of employees. A summary of the pre-tax restructuring
charges are as follows ($ in thousands):

17



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##### Table of Contents



|                                   |  |              |       |        |  |             |        |             |  |          |     |          |  |            |         |   |  |   |       | 
|---------------------------------- |  | ------------ | ----- | ------ |  | ----------- | ------ | ----------- |  | -------- | --- | -------- |  | ---------- | ------- | - |  | - | ----- | 
|                                   |  | Accrual at   |       |        |  |             |        |             |  |          |     | Payments |  | Accrual at
|                                   |  | December 31, |       | 2003   |  | Other       |        | and         |  | June 30,
|                                   |  | 2002         |       | Charge |  | Adjustments |        | Write-downs |  | 2003    
|                                   |  |              |       |        |  |             |        |             |  |         
|Severance and termination benefits |  | $            | 5,133 |        |  | $           | 913    |             |  | $        | (77 | )        |  | $          | (2,937  | ) |  | $ | 3,032 | 
|Other costs                        |  |              | 1,012 |        |  |             | 15,028 |             |  |          |    |          |  |            | (15,834 | ) |  |   | 206   | 
|                                   |  |              |       |        |  |             |        |             |  |          |     |          |  |            |         |   |  |   |       | 
|                                   |  | $            | 6,145 |        |  | $           | 15,941 |             |  | $        | (77 | )        |  | $          | (18,771 | ) |  | $ | 3,238 | 
|                                   |  |              |       |        |  |             |        |             |  |          |     |          |  |            |         |   |  |   |       | 

|                                   |  |              |       |        |  |             |       |          |  |          |      |   |  |   |        |            |  |   |       | 
|---------------------------------- |  | ------------ | ----- | ------ |  | ----------- | ----- | -------- |  | -------- | ---- | - |  | - | ------ | ---------- |  | - | ----- | 
|                                   |  | Accrual at   |       |        |  |             |       |          |  |          |      |   |  |   |        | Accrual at
|                                   |  | December 31, |       | 2002   |  | Other       |       | Cash     |  | June 30,
|                                   |  | 2001         |       | Charge |  | Adjustments |       | Payments |  | 2002    
|                                   |  |              |       |        |  |             |       |          |  |         
|Severance and termination benefits |  | $            | 2,065 |        |  | $           | 5,373 |          |  | $        | (77  | ) |  | $ | (4,809 | )          |  | $ | 2,552 | 
|Other costs                        |  |              | 36    |        |  |             | 3,130 |          |  |          | (215 | ) |  |   | (2,895 | )          |  |   | 56    | 
|                                   |  |              |       |        |  |             |       |          |  |          |      |   |  |   |        |            |  |   |       | 
|                                   |  | $            | 2,101 |        |  | $           | 8,503 |          |  | $        | (292 | ) |  | $ | (7,704 | )          |  | $ | 2,608 | 
|                                   |  |              |       |        |  |             |       |          |  |          |      |   |  |   |        |            |  |   |       | 

Additional charges will be incurred for continuing restructuring
activities primarily involving severance or relocation benefits for affected
employees and various administrative, financial, and actuarial system
conversion costs. Expenditures for all restructuring activities are expected
to be completed by the fourth quarter of 2003.



|(8) |  | COMMITMENTS AND CONTINGENCIES
|--- |  | -----------------------------

In recent years, the life insurance industry, including the Company and
its subsidiaries, have been subject to an increase in litigation pursued on
behalf of purported classes of insurance purchasers, questioning the conduct of
insurers in the marketing of their products. The Company is often involved in
litigation and other proceedings, including class actions, reinsurance claims
and regulatory proceedings, arising in the ordinary course of its business.
Some of these claims and legal actions are in jurisdictions where juries are
given substantial latitude in assessing damages, including punitive damages.
Although
no assurances can be given and no determinations can be made at this time, the
Company believes that the ultimate liability, if any, with respect to these
claims and legal actions, would have no material effect on its results of
operations and financial position.



|(9) |  | SIGNIFICANT SECOND QUARTER TRANSACTIONS
|--- |  | ---------------------------------------

During the second quarter of 2003, one of the Companys subsidiaries, IL
Annuity, settled an arbitration with a reinsurer on a block of its annuity
business and amended its reinsurance agreement with that reinsurer. In
conjunction with those actions, the Company released a liability (which had
been accrued as part of the Companys acquisition of ILICO) related to the
reinsurance arrangement in the pre-
18Table of Contents

tax amount of $8.2 million. The release of
the liability has been recorded as an offset to underwriting, acquisition and
other expenses.

During the second quarter of 2003, as part of the Companys continuing
review of the Closed Block, the Company identified that the settlements
provided for under the reinsurance agreement between the open and closed block
of business at ILIC had been incorrectly processed. The error impacted the
Companys financial statements over the period from May 2001 through March 2003
by incorrectly increasing pre-tax income by $4.3 million. As the Company has
determined that the error was not material to any prior individual quarter or
annual financial statements, the Company has recorded the impact of the error
in its second quarter of 2003 financial statements.



|(10) |  | OPERATING SEGMENTS
|---- |  | ------------------

The Company has two operating segments: Protection Products and
Accumulation Products. Products generally distinguish a segment. A brief
description of each segment follows:

Protection Products. The primary product offerings consist of
interest-sensitive whole life, term life, universal life and equity-indexed
life insurance policies. These products are marketed on a national basis
primarily through a Preferred Producer agency system, a Personal Producing
General Agent (PPGA) distribution system and Independent Marketing
Organizations (IMOs).

Accumulation Products. The primary product offerings consist of
individual fixed annuities and equity-indexed annuities, marketed on a national
basis primarily through IMOs and independent brokers, and insurance contracts
issued through funding agreements.

The Company uses the same accounting policies and procedures to measure
operating segment income and assets as it uses to measure its consolidated
income from operations and assets with the exception of the elimination of
certain items which management believes are not necessarily indicative of
overall operating trends. These items are shown between adjusted pre-tax
operating income and income from continuing operations on the following
operating segment tables and are as follows:



| | 1) |  | Realized gains and losses on open block investments.                                                                 
| | -- |  | ---------------------------------------------------------------------------------------------------------------------
|
| | 2) |  | Market value changes and amortization of assets and
liabilities associated with the application of SFAS 133, such as:

| |  |   |  |                                                                                                                   
| |  | - |  | ------------------------------------------------------------------------------------------------------------------
| |  |  |  | Unrealized gains and losses on open block options and
securities held for trading.                                
| |  |   |  |                                                                                                                   
| |  |  |  | Change in option value of equity-indexed products and
market value adjustments on total return strategy annuities.
| |  |   |  |                                                                                                                   
| |  |  |  | Cash flow hedge amortization.                                                                                     



| | 3) |  | Amortization of deferred policy acquisition costs (DAC) and
value of business acquired (VOBA) related to the realized gains and
losses on the open block investments and the SFAS 133 adjustments.
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 4) |  | Demutualization costs.                                                                                                                                                                            
|
| | 5) |  | Restructuring costs.                                                                                                                                                                              
|
| | 6) |  | Non-recurring reinsurance adjustments.                                                                                                                                                            
|
| | 7) |  | Other income from non-insurance operations.                                                                                                                                                       

These items will fluctuate from period to period depending on the
prevailing interest rate and economic environment, or are not continuing in
nature, or are not part of the core insurance operations. As a result,
management believes they do not reflect the Companys ongoing earnings capacity
of its operating segments.

Premiums, product charges, policyowner benefits, insurance expenses,
amortization of DAC and VOBA and dividends to policyowners are attributed
directly to each operating segment. Net investment
19Table of Contents

income and closed block
realized gains and losses on investments are allocated based on
directly-related assets required for transacting the business of that segment.
Other revenues and benefits and expenses which are deemed not to be associated
with any specific segment are grouped together in the All Other category.
These items primarily consist of holding company revenues and expenses and the
operations of the Companys real estate management subsidiary.

Assets are segmented based on policy liabilities directly attributable to
each segment. There are no significant intersegment transactions.
Depreciation and amortization, excluding amortization of DAC and VOBA as
previously discussed, are not significant. There have been no material changes
in segment assets since December 31, 2002.

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##### Table of Contents



Operating Segment Income
($ in thousands)

|                                                |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         |         |        | 
|----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ---------- | ------- | -------------------------------- |  | ------------ | ------- | --------- |  | ------------ | ----- | ----- | - |  | ------- | ------- | ------ | 
|                                                |                                                                                                                   |            |         | Three Months Ended June 30, 2003
|                                                |                                                                                                                   |            |         |                                 
|                                                |                                                                                                                   |            |         | Protection                       |  | Accumulation |         |           |  |              |       | Total
|                                                |                                                                                                                   |            |         | Products                         |  | Products     |         | All Other |  | Consolidated
|                                                |                                                                                                                   |            |         |                                  |  |              |         |           |  |             
|Revenues:                                       |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         |        
|                                                | Insurance premiums                                                                                                |            | $       | 76,512                           |  |              | $       | 1,059     |  |              | $     | 485   |   |  | $       | 78,056  |       
|                                                | Product charges                                                                                                   |            |         | 39,804                           |  |              |         | 8,985     |  |              |       |      |   |  |         | 48,789  |       
|                                                | Net investment income                                                                                             |            |         | 80,706                           |  |              |         | 166,122   |  |              |       | 2,818 |   |  |         | 249,646 |       
|                                                | Realized gains (losses) on closed block investments                                                               |            |         | 275                              |  |              |         |          |  |              |       |      |   |  |         | 275     |       
|                                                | Other income                                                                                                      |            |         | 993                              |  |              |         | 15,647    |  |              |       | 391   |   |  |         | 17,031  |       
|                                                |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         |         |       
|                                                |                                                                                                                   |            | 198,290 |                                  |  |              | 191,813 |           |  |              | 3,694 |       |   |  | 393,797 |        
|Benefits and expenses:                          |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         |        
|                                                | Policyowner benefits                                                                                              |            |         | 92,614                           |  |              |         | 120,861   |  |              |       | (130  | ) |  |         | 213,345 |       
|                                                | Underwriting, acquisition, and other expenses                                                                     |            |         | 21,175                           |  |              |         | 16,779    |  |              |       | 3,655 |   |  |         | 41,609  |       
|                                                | Amortization of DAC and VOBA, net of
open block gain/loss adjustment of $3,907                                    |            |         | 20,918                           |  |              |         | 24,753    |  |              |       |      |   |  |         | 45,671  |       
|                                                | Dividends to policyowners                                                                                         |            |         | 29,740                           |  |              |         |          |  |              |       |      |   |  |         | 29,740  |       
|                                                |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         |         |       
|                                                |                                                                                                                   |            | 164,447 |                                  |  |              | 162,393 |           |  |              | 3,525 |       |   |  | 330,365 |        
|                                                |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         |         |       
|Adjusted pre-tax operating income               |                                                                                                                   | $          | 33,843  |                                  |  | $            | 29,420  |           |  | $            | 169   |       |   |  | 63,432  |        
|                                                |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         |        
|                                                | Realized gains (losses) on open block investments                                                                 |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         | 16,374  |       
|                                                | Unrealized gains (losses) on open block options and
trading investments                                           |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         | 42,320  |       
|                                                | Change in option value of equity-indexed
products and market value adjustments
on total return strategy annuities |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         | (35,811 | )     
|                                                | Cash flow hedge amortization                                                                                      |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         | (1,065  | )     
|                                                | Amortization of DAC and VOBA due to open
block gains and losses                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         | (3,907  | )     
|                                                | Non-recurring reinsurance adjustments                                                                             |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         | 3,854   |       
|                                                | Restructuring costs                                                                                               |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         | (12,670 | )     
|                                                | Other income from non-insurance operations                                                                        |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         | 1,118   |       
|                                                |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         |        
|Income before interest and income tax (expense) |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  | 73,645  |        
|Interest (expense)                              |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  | (7,575  | )      
|Income tax (expense)                            |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  | (22,359 | )      
|                                                |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         |        
|                                                |                                                                                                                   | Net income |         |                                  |  |              |         |           |  |              |       |       |   |  |         | $       | 43,711 | 
|                                                |                                                                                                                   |            |         |                                  |  |              |         |           |  |              |       |       |   |  |         |        

21



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##### Table of Contents



Operating Segment Income
($ in thousands)
(unaudited)

|                                                |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         |         |       | 
|----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ---------- | ------- | -------------------------------- | - | ------------ | ------- | --------- |  | ------------ | ----- | ----- |  |  | ------- | ------- | ----- | 
|                                                |                                                                                                                   |            |         | Three Months Ended June 30, 2002
|                                                |                                                                                                                   |            |         |                                 
|                                                |                                                                                                                   |            |         | Protection                       |   | Accumulation |         |           |  |              |       | Total
|                                                |                                                                                                                   |            |         | Products                         |   | Products     |         | All Other |  | Consolidated
|                                                |                                                                                                                   |            |         |                                  |   |              |         |           |  |             
|Revenues:                                       |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         |        
|                                                | Insurance premiums                                                                                                |            | $       | 90,135                           |   |              | $       | 1,507     |  |              | $     | 211   |  |  | $       | 91,853  |      
|                                                | Product charges                                                                                                   |            |         | 24,292                           |   |              |         | 10,724    |  |              |       |      |  |  |         | 35,016  |      
|                                                | Net investment income                                                                                             |            |         | 83,418                           |   |              |         | 166,544   |  |              |       | 1,935 |  |  |         | 251,897 |      
|                                                | Realized gains (losses) on closed block investments                                                               |            |         | (5,378                           | ) |              |         |          |  |              |       |      |  |  |         | (5,378  | )    
|                                                | Other income                                                                                                      |            |         | 992                              |   |              |         | 17,897    |  |              |       | 1,036 |  |  |         | 19,925  |      
|                                                |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         |         |      
|                                                |                                                                                                                   |            | 193,459 |                                  |   |              | 196,672 |           |  |              | 3,182 |       |  |  | 393,313 |        
|Benefits and expenses:                          |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         |        
|                                                | Policyowner benefits                                                                                              |            |         | 106,226                          |   |              |         | 125,702   |  |              |       | 394   |  |  |         | 232,322 |      
|                                                | Underwriting, acquisition, and other expenses                                                                     |            |         | 23,702                           |   |              |         | 18,390    |  |              |       | 3,510 |  |  |         | 45,602  |      
|                                                | Amortization of DAC and VOBA, net of
open block gain/loss adjustment of $6,840                                    |            |         | 14,506                           |   |              |         | 20,658    |  |              |       |      |  |  |         | 35,164  |      
|                                                | Dividends to policyowners                                                                                         |            |         | 19,221                           |   |              |         |          |  |              |       |      |  |  |         | 19,221  |      
|                                                |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         |         |      
|                                                |                                                                                                                   |            | 163,655 |                                  |   |              | 164,750 |           |  |              | 3,904 |       |  |  | 332,309 |        
|                                                |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         |         |      
|Adjusted pre-tax operating income               |                                                                                                                   | $          | 29,804  |                                  |   | $            | 31,922  |           |  | $            | (722  | )     |  |  | 61,004  |        
|                                                |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         |        
|                                                | Realized gains (losses) on open block investments                                                                 |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         | (35,755 | )    
|                                                | Unrealized gains (losses) on open block options and
trading investments                                           |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         | (34,778 | )    
|                                                | Change in option value of equity-indexed
products and market value adjustments
on total return strategy annuities |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         | 20,736  |      
|                                                | Cash flow hedge amortization                                                                                      |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         | (697    | )    
|                                                | Amortization of DAC and VOBA due to open
block gains and losses                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         | 6,840   |      
|                                                | Demutualization costs                                                                                             |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         | (179    | )    
|                                                | Restructuring costs                                                                                               |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         | (6,416  | )    
|                                                | Other income from non-insurance operations                                                                        |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         | 540     |      
|                                                |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         |        
|Income before interest and income tax (expense) |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  | 11,295  |        
|Interest (expense)                              |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  | (6,337  | )      
|Income tax (expense)                            |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  | (696    | )      
|                                                |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         |        
|                                                |                                                                                                                   | Net income |         |                                  |   |              |         |           |  |              |       |       |  |  |         | $       | 4,262 | 
|                                                |                                                                                                                   |            |         |                                  |   |              |         |           |  |              |       |       |  |  |         |        

22



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##### Table of Contents



Operating Segment Income
($ in thousands)

|                                                |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  |         |         |        | 
|----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ---------- | ------- | ------------------------------ |  | ------------ | ------- | --------- |  | ------------ | ------ | ----- | - |  | ------- | ------- | ------ | 
|                                                |                                                                                                                   |            |         | Six Months Ended June 30, 2003
|                                                |                                                                                                                   |            |         |                               
|                                                |                                                                                                                   |            |         | Protection                     |  | Accumulation |         |           |  |              |        | Total
|                                                |                                                                                                                   |            |         | Products                       |  | Products     |         | All Other |  | Consolidated
|                                                |                                                                                                                   |            |         |                                |  |              |         |           |  |             
|Revenues:                                       |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  |         |        
|                                                | Insurance premiums                                                                                                |            | $       | 156,673                        |  |              | $       | 2,242     |  |              | $      | 747   |   |  | $       | 159,662 |       
|                                                | Product charges                                                                                                   |            |         | 76,142                         |  |              |         | 19,392    |  |              |        |      |   |  |         | 95,534  |       
|                                                | Net investment income                                                                                             |            |         | 164,452                        |  |              |         | 333,899   |  |              |        | 4,512 |   |  |         | 502,863 |       
|                                                | Realized gains (losses) on closed block investments                                                               |            |         | 7,344                          |  |              |         |          |  |              |        |      |   |  |         | 7,344   |       
|                                                | Other income                                                                                                      |            |         | 2,046                          |  |              |         | 30,413    |  |              |        | 531   |   |  |         | 32,990  |       
|                                                |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  |         |         |       
|                                                |                                                                                                                   |            | 406,657 |                                |  |              | 385,946 |           |  |              | 5,790  |       |   |  | 798,393 |        
|Benefits and expenses:                          |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  |         |        
|                                                | Policyowner benefits                                                                                              |            |         | 193,282                        |  |              |         | 245,418   |  |              |        | (110  | ) |  |         | 438,590 |       
|                                                | Underwriting, acquisition, and other expenses                                                                     |            |         | 41,616                         |  |              |         | 32,714    |  |              |        | 7,635 |   |  |         | 81,965  |       
|                                                | Amortization of DAC and VOBA, net of
open block gain/loss adjustment of $10,452                                   |            |         | 40,482                         |  |              |         | 49,040    |  |              |        |      |   |  |         | 89,522  |       
|                                                | Dividends to policyowners                                                                                         |            |         | 64,314                         |  |              |         |          |  |              |        |      |   |  |         | 64,314  |       
|                                                |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  |         |         |       
|                                                |                                                                                                                   |            | 339,694 |                                |  |              | 327,172 |           |  |              | 7,525  |       |   |  | 674,391 |        
|                                                |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  |         |         |       
|Adjusted pre-tax operating income               |                                                                                                                   | $          | 66,963  |                                |  | $            | 58,774  |           |  | $            | (1,735 | )     |   |  | 124,002 |        
|                                                |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  |         |        
|                                                | Realized gains (losses) on open block investments                                                                 |            |         |                                |  |              |         |           |  |              |        |       |   |  |         | 24,453  |       
|                                                | Unrealized gains (losses) on open block options and
trading investments                                           |            |         |                                |  |              |         |           |  |              |        |       |   |  |         | 35,027  |       
|                                                | Change in option value of equity-indexed
products and market value adjustments
on total return strategy annuities |            |         |                                |  |              |         |           |  |              |        |       |   |  |         | (27,209 | )     
|                                                | Cash flow hedge amortization                                                                                      |            |         |                                |  |              |         |           |  |              |        |       |   |  |         | (2,478  | )     
|                                                | Amortization of DAC and VOBA due to open
block gains and losses                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  |         | (10,452 | )     
|                                                | Non-recurring reinsurance adjustments                                                                             |            |         |                                |  |              |         |           |  |              |        |       |   |  |         | 3,854   |       
|                                                | Restructuring costs                                                                                               |            |         |                                |  |              |         |           |  |              |        |       |   |  |         | (15,864 | )     
|                                                | Other income from non-insurance operations                                                                        |            |         |                                |  |              |         |           |  |              |        |       |   |  |         | 2,326   |       
|                                                |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  |         |        
|Income before interest and income tax (expense) |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  | 133,659 |        
|Interest (expense)                              |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  | (14,374 | )      
|Income tax (expense)                            |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  | (39,784 | )      
|                                                |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  |         |        
|                                                |                                                                                                                   | Net income |         |                                |  |              |         |           |  |              |        |       |   |  |         | $       | 79,501 | 
|                                                |                                                                                                                   |            |         |                                |  |              |         |           |  |              |        |       |   |  |         |        

23



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##### Table of Contents



Operating Segment Income
($ in thousands)
(unaudited)

|                                                |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  |         |         |        | 
|----------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ---------- | ------- | ------------------------------ | - | ------------ | ------- | --------- |  | ------------ | ------ | ----- |  |  | ------- | ------- | ------ | 
|                                                |                                                                                                                   |            |         | Six Months Ended June 30, 2002
|                                                |                                                                                                                   |            |         |                               
|                                                |                                                                                                                   |            |         | Protection                     |   | Accumulation |         |           |  |              |        | Total
|                                                |                                                                                                                   |            |         | Products                       |   | Products     |         | All Other |  | Consolidated
|                                                |                                                                                                                   |            |         |                                |   |              |         |           |  |             
|Revenues:                                       |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  |         |        
|                                                | Insurance premiums                                                                                                |            | $       | 178,692                        |   |              | $       | 2,809     |  |              | $      | 832   |  |  | $       | 182,333 |       
|                                                | Product charges                                                                                                   |            |         | 53,319                         |   |              |         | 20,739    |  |              |        |      |  |  |         | 74,058  |       
|                                                | Net investment income                                                                                             |            |         | 163,843                        |   |              |         | 324,887   |  |              |        | 2,937 |  |  |         | 491,667 |       
|                                                | Realized gains (losses) on closed block investments                                                               |            |         | (754                           | ) |              |         |          |  |              |        |      |  |  |         | (754    | )     
|                                                | Other income                                                                                                      |            |         | 1,945                          |   |              |         | 28,442    |  |              |        | 1,550 |  |  |         | 31,937  |       
|                                                |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  |         |         |       
|                                                |                                                                                                                   |            | 397,045 |                                |   |              | 376,877 |           |  |              | 5,319  |       |  |  | 779,241 |        
|Benefits and expenses:                          |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  |         |        
|                                                | Policyowner benefits                                                                                              |            |         | 210,034                        |   |              |         | 242,392   |  |              |        | 1,190 |  |  |         | 453,616 |       
|                                                | Underwriting, acquisition, and other expenses                                                                     |            |         | 45,281                         |   |              |         | 31,388    |  |              |        | 7,122 |  |  |         | 83,791  |       
|                                                | Amortization of DAC and VOBA, net of
open block gain/loss adjustment of $5,286                                    |            |         | 28,839                         |   |              |         | 44,611    |  |              |        |      |  |  |         | 73,450  |       
|                                                | Dividends to policyowners                                                                                         |            |         | 47,624                         |   |              |         |          |  |              |        |      |  |  |         | 47,624  |       
|                                                |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  |         |         |       
|                                                |                                                                                                                   |            | 331,778 |                                |   |              | 318,391 |           |  |              | 8,312  |       |  |  | 658,481 |        
|                                                |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  |         |         |       
|Adjusted pre-tax operating income               |                                                                                                                   | $          | 65,267  |                                |   | $            | 58,486  |           |  | $            | (2,993 | )     |  |  | 120,760 |        
|                                                |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  |         |        
|                                                | Realized gains (losses) on open block investments                                                                 |            |         |                                |   |              |         |           |  |              |        |       |  |  |         | (45,633 | )     
|                                                | Unrealized gains (losses) on open block options and
trading investments                                           |            |         |                                |   |              |         |           |  |              |        |       |  |  |         | (54,236 | )     
|                                                | Change in option value of equity-indexed
products and market value adjustments
on total return strategy annuities |            |         |                                |   |              |         |           |  |              |        |       |  |  |         | 35,867  |       
|                                                | Cash flow hedge amortization                                                                                      |            |         |                                |   |              |         |           |  |              |        |       |  |  |         | (697    | )     
|                                                | Amortization of DAC and VOBA due to open
block gains and losses                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  |         | 5,286   |       
|                                                | Demutualization costs                                                                                             |            |         |                                |   |              |         |           |  |              |        |       |  |  |         | (464    | )     
|                                                | Restructuring costs                                                                                               |            |         |                                |   |              |         |           |  |              |        |       |  |  |         | (8,211  | )     
|                                                | Other income from non-insurance operations                                                                        |            |         |                                |   |              |         |           |  |              |        |       |  |  |         | 996     |       
|                                                |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  |         |        
|Income before interest and income tax (expense) |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  | 53,668  |        
|Interest (expense)                              |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  | (12,364 | )      
|Income tax (expense)                            |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  | (12,128 | )      
|                                                |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  |         |        
|                                                |                                                                                                                   | Net income |         |                                |   |              |         |           |  |              |        |       |  |  |         | $       | 29,176 | 
|                                                |                                                                                                                   |            |         |                                |   |              |         |           |  |              |        |       |  |  |         |        

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Item 2. Managements Discussion And Analysis Of Financial Condition And Results Of Operations

The following analysis of the consolidated results of operations and
financial condition of AmerUs Group Co. should be read in conjunction with the
consolidated financial statements and related notes.

RESULTS OF OPERATIONS

We are a holding company whose subsidiaries are primarily engaged in the
business of marketing, underwriting and distributing a broad range of
individual life, annuity and insurance deposit products to individuals and
businesses in 50 states, the District of Columbia and the U.S. Virgin Islands.
We have two reportable operating segments: protection products and accumulation
products. The primary offerings of the protection products segment are
interest-sensitive whole life, term life, universal life and equity-indexed
life insurance policies. The primary offerings of the accumulation products
segment are individual fixed annuities and funding agreements.

FINANCIAL HIGHLIGHTS

Our financial highlights are as follows:

|                                  |                       |                                        |        |                                     |        |                                   |        |        |        |      |        |        |         |   |        |        |         | 
|--------------------------------- | --------------------- | -------------------------------------- | ------ | ----------------------------------- | ------ | --------------------------------- | ------ | ------ | ------ | ---- | ------ | ------ | ------- | - | ------ | ------ | ------- | 
|                                  |                       |                                        |        | For The Three Months Ended June 30, |        | For The Six Months Ended June 30,
|                                  |                       |                                        |        |                                     |        |                                  
|                                  |                       |                                        |        | 2003                                |        | 2002                              |        | 2003   |        | 2002
|                                  |                       |                                        |        |                                     |        |                                   |        |        |        |     
|                                  |                       |                                        |        | ($ in thousands, except share data)
|Segment pre-tax operating income: |                       |                                        |        |                                     |        |                                   |        |        |        |      |        |        |         |   |        |       
|                                  | Protection Products   |                                        | $      | 33,843                              |        |                                   | $      | 29,804 |        |      | $      | 66,963 |         |   | $      | 65,267 |        
|                                  | Accumulation Products |                                        |        | 29,420                              |        |                                   |        | 31,922 |        |      |        | 58,774 |         |   |        | 58,486 |        
|                                  | Other operations      |                                        |        | 169                                 |        |                                   |        | (722   | )      |      |        | (1,735 | )       |   |        | (2,993 | )      
|                                  |                       |                                        |        |                                     |        |                                   |        |        |        |      |        |        |         |   |        |        |        
|                                  |                       | Total segment pre-tax operating income |        |                                     | 63,432 |                                   |        |        | 61,004 |      |        |        | 124,002 |   |        |        | 120,760 | 
|Non-segment expense, net (A)      |                       |                                        | 19,721 |                                     |        |                                   | 56,742 |        |        |      | 44,501 |        |         |   | 91,584 |       
|                                  |                       |                                        |        |                                     |        |                                   |        |        |        |      |        |        |         |   |        |        |        
|                                  | Net income            |                                        | $      | 43,711                              |        |                                   | $      | 4,262  |        |      | $      | 79,501 |         |   | $      | 29,176 |        
|                                  |                       |                                        |        |                                     |        |                                   |        |        |        |      |        |        |         |   |        |        |        
|Diluted earnings per share        |                       | $                                      | 1.11   |                                     |        | $                                 | 0.10   |        |        | $    | 2.02   |        |         | $ | 0.71   |       
|                                  |                       |                                        |        |                                     |        |                                   |        |        |        |      |        |        |         |   |        |        |        

|                     |  |          |            |              |  |   |            | 
|-------------------- |  | -------- | ---------- | ------------ |  | - | ---------- | 
|                     |  | June 30, |            | December 31,
|                     |  | 2003     |            | 2002        
|                     |  |          |            |             
|Total assets         |  | $        | 21,846,715 |              |  | $ | 20,293,665 | 
|Stockholders equity |  | $        | 1,416,340  |              |  | $ | 1,262,948  | 



|(A) |  | Non-segment expense, net consists primarily of open block gains and losses, SFAS 133 related market value adjustments,
non-insurance operations, non-recurring reinsurance adjustments, restructuring costs, interest expense and income taxes.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Operating segment income increased for the protection products segment in
the 2003 periods, compared to the respective periods in 2002. The increase in
our protection products pre-tax operating segment income was primarily

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attributable to increased product margins. The increase was partially offset
by higher DAC and VOBA amortization
expense resulting from the increased product margins. Operating income
for the accumulation products segment decreased in the three months and
increased in the six months ended June 30, 2003 as compared to the respective
periods in 2002. Our accumulation products pre-tax operating segment income
decreased for the three months ended June 30, 2003 compared to the same period
in 2002 primarily due to decreased spreads and lower contributions from IMO
operations.

Net income increased in the 2003 periods compared to the respective 2002
periods primarily due to increased realized gains on open block investments and
increased net unrealized gains from SFAS 133 related market value adjustments
on trading securities, derivatives and certain equity-indexed contracts.

Total assets increased $1.6 billion during the first six months of 2003
primarily as a result of additional invested assets under management and the
utilization of securities lending arrangements and dollar-roll repurchase
investment transactions. Assets also increased due to higher reinsurance
receivables as more business is subject to reinsurance coverages as a result of
additional treaties entered into in the fourth quarter of 2002.

Stockholders equity increased $153.4 million for the first six months of
2003 primarily as a result of year-to-date net income of $79.5 million and the
increase in accumulated other comprehensive income for unrealized investment
gains of $73.8 million.

PROTECTION PRODUCTS

Our protection products segment primarily consists of interest-sensitive
whole life, term life, universal life and equity-indexed life insurance
policies. These products are marketed on a national basis primarily through a
Preferred Producer agency system, PPGA distribution system and IMOs. Included
in protection products is the closed block of ALIC and the closed block of ILIC
established when the companies reorganized from mutual companies to stock
companies. When protection products are sold, we invest the premiums we
receive in our investment portfolio and establish a liability representing our
commitment to the policyholder. We manage investment spread by seeking to
maximize the return on these invested assets, consistent with our
asset/liability and credit quality needs. We enter into reinsurance
arrangements in order to reduce the effects of mortality risk and the statutory
capital strain from writing new business. All income statement line items are
presented net of reinsurance amounts. Protection products in force totaled
$83.3 billion at June 30, 2003 and $80.6 billion at December 31, 2002.
Protection products in force is a non-GAAP financial measure utilized by
investors, analysts and the Company to assess the Companys position in the
industry. We do not believe there is a comparable GAAP financial measure. A
summary of our protection products segment operations follows:

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|                                                                |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |         | 
|--------------------------------------------------------------- | -------------------------------------------------------------------- | --------------------------- | ------ | ----------------------------------- | ------- | --------------------------------- | ------ | ---------------- | ------- | ---- | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                                                                |                                                                      |                             |        | For The Three Months Ended June 30, |         | For The Six Months Ended June 30,
|                                                                |                                                                      |                             |        | 2003                                |         | 2002                              |        | 2003             |         | 2002
|                                                                |                                                                      |                             |        |                                     |         |                                   |        |                  |         |     
|                                                                |                                                                      |                             |        |                                     |         |                                   |        | ($ in thousands) |         |      |        |        
|Revenues:                                                       |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |        
|                                                                | Insurance premiums                                                   |                             | $      | 76,512                              |         |                                   | $      | 90,135           |         |      | $      | 156,673 |         |   | $      | 178,692 |        
|                                                                | Product charges                                                      |                             |        | 42,441                              |         |                                   |        | 24,292           |         |      |        | 76,142  |         |   |        | 53,319  |        
|                                                                | Net investment income                                                |                             |        | 80,706                              |         |                                   |        | 83,418           |         |      |        | 164,452 |         |   |        | 163,843 |        
|                                                                | Realized gains (losses) on closed block investments                  |                             |        | 275                                 |         |                                   |        | (5,378           | )       |      |        | 7,344   |         |   |        | (754    | )      
|                                                                | Other income                                                         |                             |        | 993                                 |         |                                   |        | 992              |         |      |        | 2,046   |         |   |        | 1,945   |        
|                                                                |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        
|                                                                |                                                                      | Total revenues              |        |                                     | 200,927 |                                   |        |                  | 193,459 |      |        |         | 406,657 |   |        |         | 397,045 | 
|                                                                |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        
|Benefits and expenses:                                          |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |        
|                                                                | Policyowner benefits                                                 |                             |        | 92,614                              |         |                                   |        | 106,226          |         |      |        | 193,282 |         |   |        | 210,034 |        
|                                                                | Underwriting, acquisition and other expenses                         |                             |        | 23,812                              |         |                                   |        | 23,702           |         |      |        | 41,616  |         |   |        | 45,281  |        
|                                                                | Amortization of DAC and VOBA, net of open block
gain/loss adjustment |                             |        | 20,918                              |         |                                   |        | 14,506           |         |      |        | 40,482  |         |   |        | 28,839  |        
|                                                                | Dividends to policyowners                                            |                             |        | 29,740                              |         |                                   |        | 19,221           |         |      |        | 64,314  |         |   |        | 47,624  |        
|                                                                |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        
|                                                                |                                                                      | Total benefits and expenses |        |                                     | 167,084 |                                   |        |                  | 163,655 |      |        |         | 339,694 |   |        |         | 331,778 | 
|                                                                |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        
|Adjusted pre-tax operating income - Protection Products segment |                                                                      | $                           | 33,843 |                                     |         | $                                 | 29,804 |                  |         | $    | 66,963 |         |         | $ | 65,267 |        
|                                                                |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        

Adjusted pre-tax operating income from our protection products increased
13.6% in the second quarter of 2003 and 2.6% in the first six months of 2003
compared to the respective 2002 periods. The increase in income was due to
higher product margins, which was partially offset by increased DAC and VOBA
amortization. The key drivers of our protection products business include
sales, persistency, net investment income, mortality and expenses.

Sales.Sales are presented as annualized premium, which is measured in
accordance with industry practice, and represent the amount of new business
sold during the period. Sales are a non-GAAP financial measure for an insurance
company for which there is no comparable GAAP financial measure. We use sales
to measure the productivity of our distribution network and as a basis for
compensation of sales and marketing employees and agents. Sales are also a
leading indicator of future revenue trends. However, revenues are driven by
prior period sales as well as current period sales and therefore, a
reconciliation of sales to revenues would not be meaningful or determinable.
The following table summarizes annualized premium by life insurance product:

|                                      |                               |  |                                     |        |                                   |  |                  |        |      |  |        |        |  |  |        |        | 
|------------------------------------- | ----------------------------- |  | ----------------------------------- | ------ | --------------------------------- |  | ---------------- | ------ | ---- |  | ------ | ------ |  |  | ------ | ------ | 
|                                      |                               |  | For The Three Months Ended June 30, |        | For The Six Months Ended June 30,
|                                      |                               |  | 2003                                |        | 2002                              |  | 2003             |        | 2002
|                                      |                               |  |                                     |        |                                   |  |                  |        |     
|                                      |                               |  |                                     |        |                                   |  | ($ in thousands) |        |      |  |       
|Traditional life insurance:           |                               |  |                                     |        |                                   |  |                  |        |      |  |        |        |  |  |        |       
|                                      | Whole life                    |  | $                                   | 18     |                                   |  | $                | 1,140  |      |  | $      | 220    |  |  | $      | 2,260  | 
|                                      | Interest-sensitive whole life |  |                                     | 5,818  |                                   |  |                  | 11,282 |      |  |        | 12,838 |  |  |        | 21,486 | 
|                                      | Term life                     |  |                                     | 3,628  |                                   |  |                  | 5,967  |      |  |        | 7,340  |  |  |        | 8,515  | 
|Universal life                        |                               |  | 9,438                               |        |                                   |  | 6,399            |        |      |  | 16,378 |        |  |  | 14,725 |       
|Equity-indexed life                   |                               |  | 11,750                              |        |                                   |  | 12,095           |        |      |  | 25,227 |        |  |  | 20,760 |       
|                                      |                               |  |                                     |        |                                   |  |                  |        |      |  |        |        |  |  |        |        | 
|Direct first year annualized premiums |                               |  | 30,652                              |        |                                   |  | 36,883           |        |      |  | 62,003 |        |  |  | 67,746 |       
|Private label term life premiums      |                               |  | 1,756                               |        |                                   |  | 1,048            |        |      |  | 3,693  |        |  |  | 4,644  |       
|                                      |                               |  |                                     |        |                                   |  |                  |        |      |  |        |        |  |  |        |        | 
|                                      | Total                         |  | $                                   | 32,408 |                                   |  | $                | 37,931 |      |  | $      | 65,696 |  |  | $      | 72,390 | 
|                                      |                               |  |                                     |        |                                   |  |                  |        |      |  |        |        |  |  |        |        | 

Direct first year annualized premiums decreased 16.9% in the second
quarter and 8.5% on a year-to-date basis in 2003 compared to the same periods
in 2002. We experienced a temporary decline in sales early in the second
quarter of 2003, but results have improved during the later part of
the quarter. In addition, in the second quarter of 2002, we experienced our highest quarterly sales
level in our history. We continue to focus our
marketing efforts on equity-indexed life products. In the first six months of
2003, sales of equity-indexed life products

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were $25.2 million as compared to
$20.8 million for 2002. We are a leading writer of equity-indexed life
products in the United States.

Premiums and Product charges.We recognize premiums on traditional life
insurance policies as revenues when the premiums are due. Amounts received as
payments for universal life and equity-indexed life insurance policies are not
recorded as premium revenue, but are instead recorded as a policyholder
liability. Revenues from the universal life and equity-indexed life policies
consist of product charges for the cost of insurance, policy administration and
policy surrender and are included on the line item product charges. All
revenue is reported net of reinsurance ceded.

Insurance premium revenue was lower in the second quarter and first six
months of 2003 as compared to the same periods in 2002 primarily due to lower
sales of traditional products and from new reinsurance agreements in place.
Product charge revenue was higher in the second quarter and first six months of
2003 as compared to the same periods in 2002 due to the growth in the
equity-indexed life block of business and fluctuations in reinsurance premiums
between periods.

Persistency.Annualized lapse rates were 6.3 % in the first six months
of 2003 compared to 7.7% in the first six months of 2002. Our persistency
experience remained within our pricing assumptions.

Net Investment Income.Net investment income decreased for the second
quarter and increased for the first six months of 2003 as compared to the same
periods a year ago. The decrease in net investment income for the second
quarter was a result of record low interest rates. The year-to-date increase
was primarily due to growth in assets, partially offset by lower effective
yields as compared to 2002. The year-to-date effective yield of the investment
portfolio was 6.85% compared to 7.16% a year ago.

Mortality and Benefit Expense.We experienced favorable mortality in the
second quarter and first six months of 2003 as compared to the same periods a
year ago. In addition, due to the additional reinsurance arrangements we have
in place for mortality, policyowner benefits declined in the second quarter and
first six months of 2003 compared to the same periods in 2002.

Underwriting, Acquisition and Other Expenses.Expenses decreased for the
second quarter and year-to-date periods of 2003 compared to the respective
periods in 2002. The decrease was primarily due to increased reimbursement
from reinsurers of commission and expense allowances as more policies are
subject to reinsurance and from expense changes resulting from the
restructuring activities.

Amortization of DAC and VOBA.The amortization of DAC and VOBA increased
for the second quarter and year-to-date periods of 2003 as compared to the same
periods a year ago. DAC and VOBA are generally amortized in proportion to
gross margins, which increased in both periods of 2003 compared to 2002.

Dividends to Policyowners.Dividend expense increased for the second
quarter and first six months of 2003 compared to the respective 2002 periods
due to the maturing of the closed block and realized investment gains of the
closed block. Dividend expense includes increases or decreases to the closed
block policyholder dividend obligation liability carried on the consolidated
balance sheet. To the extent cumulative actual earnings of the closed block
exceed the cumulative expected earnings based on the actuarial calculation at
the time of formation of the closed block (which we refer to as the closed
block glide path), a policyholder dividend obligation is recorded. The higher
realized gains in both periods of 2003 as compared to 2002 increased closed
block earnings, which in turn were added to the policyholder dividend
obligation liability. In addition, the reinsurance adjustment related to the
settlement activity of the closed block caused an increase in the dividend
expense and related policyholder dividend obligation liability. See
Non-Recurring Expenses for additional information. As a result of this
accounting treatment, operating earnings only include the predetermined closed
block glide path.

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Outlook.We expect to increase sales through our multiple distribution
channels and to continue to shift to higher return products, in particular the
equity-indexed life products. We also expect to continue to realize operating
efficiencies created by the restructuring of the protection products operations
and centralization of our administrative functions.

ACCUMULATION PRODUCTS

Our accumulation products segment primary offerings consist of individual
fixed annuities and funding agreements. The fixed annuities are marketed on a
national basis primarily through IMOs and independent brokers. Similar to our
protection products segment, we invest the premiums we receive from
accumulation product deposits in our investment portfolio and establish a
liability representing our commitment to our policyholder. We manage
investment spread by seeking to maximize the return on our invested assets
consistent with our asset/liability management and credit quality needs. When
appropriate, we periodically reset the interest rates credited to our
policyholder liability. Accumulation products in force totaled $11.5 billion
at June 30, 2003 and $11.3 billion at December 31, 2002. Accumulation products
in force is a non-GAAP financial measure utilized by investors, analysts and
the Company to assess the Companys position in the industry. We do not
believe there is a comparable GAAP financial measure. A summary of our
accumulation products segment operations follows:

|                                                                  |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |         | 
|----------------------------------------------------------------- | -------------------------------------------------------------------- | --------------------------- | ------ | ----------------------------------- | ------- | --------------------------------- | ------ | ---------------- | ------- | ---- | ------ | ------- | ------- | - | ------ | ------- | ------- | 
|                                                                  |                                                                      |                             |        | For The Three Months Ended June 30, |         | For The Six Months Ended June 30,
|                                                                  |                                                                      |                             |        | 2003                                |         | 2002                              |        | 2003             |         | 2002
|                                                                  |                                                                      |                             |        |                                     |         |                                   |        |                  |         |     
|                                                                  |                                                                      |                             |        |                                     |         |                                   |        | ($ in thousands) |         |      |        |        
|Revenues:                                                         |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |        
|                                                                  | Immediate annuity and supplementary contract premiums                |                             | $      | 1,059                               |         |                                   | $      | 1,507            |         |      | $      | 2,242   |         |   | $      | 2,809   |        
|                                                                  | Product charges                                                      |                             |        | 8,985                               |         |                                   |        | 10,724           |         |      |        | 19,392  |         |   |        | 20,739  |        
|                                                                  | Net investment income                                                |                             |        | 166,122                             |         |                                   |        | 166,544          |         |      |        | 333,899 |         |   |        | 324,887 |        
|                                                                  | Other income                                                         |                             |        | 2,780                               |         |                                   |        | 2,956            |         |      |        | 5,855   |         |   |        | 5,803   |        
|                                                                  |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        
|                                                                  |                                                                      | Total revenues              |        |                                     | 178,946 |                                   |        |                  | 181,731 |      |        |         | 361,388 |   |        |         | 354,238 | 
|                                                                  |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        
|Benefits and expenses:                                            |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |        
|                                                                  | Policyowner benefits                                                 |                             |        | 120,861                             |         |                                   |        | 125,702          |         |      |        | 245,418 |         |   |        | 242,392 |        
|                                                                  | Underwriting, acquisition and other expenses                         |                             |        | 6,666                               |         |                                   |        | 7,878            |         |      |        | 13,135  |         |   |        | 15,432  |        
|                                                                  | Amortization of DAC and VOBA, net of open block
gain/loss adjustment |                             |        | 24,753                              |         |                                   |        | 20,658           |         |      |        | 49,040  |         |   |        | 44,611  |        
|                                                                  |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        
|                                                                  |                                                                      | Total benefits and expenses |        |                                     | 152,280 |                                   |        |                  | 154,238 |      |        |         | 307,593 |   |        |         | 302,435 | 
|                                                                  |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        
|IMO Operations:                                                   |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |        
|                                                                  | Other income                                                         |                             |        | 12,867                              |         |                                   |        | 14,941           |         |      |        | 24,558  |         |   |        | 22,639  |        
|                                                                  | Other expenses                                                       |                             |        | 10,113                              |         |                                   |        | 10,512           |         |      |        | 19,579  |         |   |        | 15,956  |        
|                                                                  |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        
|                                                                  |                                                                      | Net IMO operating income    |        |                                     | 2,754   |                                   |        |                  | 4,429   |      |        |         | 4,979   |   |        |         | 6,683   | 
|                                                                  |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        
|Adjusted pre-tax operating income - Accumulation Products segment |                                                                      | $                           | 29,420 |                                     |         | $                                 | 31,922 |                  |         | $    | 58,774 |         |         | $ | 58,486 |        
|                                                                  |                                                                      |                             |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |        |         |        

Adjusted pre-tax operating income from our accumulation products
operations decreased 7.8% in the second quarter of 2003 and increased 0.5% in
the first six months of 2003 compared to the respective 2002 periods. The
decrease in the second quarter was primarily due to decreased spreads and lower
contribution from IMO operations.
The drivers of profitability in our accumulation products business are
deposits, persistency, investment spread, expenses and IMO operations.

Deposits.Deposits are presented as collected premiums, which is measured
in accordance with industry practice, and represent the amount of new business
sold during the period. Deposits are a non-GAAP financial measure for an
insurance company for which there is no comparable GAAP financial measure. We
use deposits to

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measure the productivity of our distribution network and as a
basis for compensation of sales and marketing employees and agents. The
following table summarizes our accumulation products segment deposits:

|                                   |                    |                          |         |                                     |         |                                   |         |                  |         |      |         |         |         |   |           |         |           | 
|---------------------------------- | ------------------ | ------------------------ | ------- | ----------------------------------- | ------- | --------------------------------- | ------- | ---------------- | ------- | ---- | ------- | ------- | ------- | - | --------- | ------- | --------- | 
|                                   |                    |                          |         | For The Three Months Ended June 30, |         | For The Six Months Ended June 30,
|                                   |                    |                          |         | 2003                                |         | 2002                              |         | 2003             |         | 2002
|                                   |                    |                          |         |                                     |         |                                   |         |                  |         |     
|                                   |                    |                          |         |                                     |         |                                   |         | ($ in thousands) |         |      |         |        
|Annuities                          |                    |                          |         |                                     |         |                                   |         |                  |         |      |         |         |         |   |           |        
|                                   | Fixed annuities:   |                          |         |                                     |         |                                   |         |                  |         |      |         |         |         |   |           |         |          
|                                   |                    | Deferred fixed annuities |         | $                                   | 101,200 |                                   |         | $                | 245,936 |      |         | $       | 243,862 |   |           | $       | 470,391   | 
|                                   |                    | Equity-indexed annuities |         |                                     | 367,255 |                                   |         |                  | 157,137 |      |         |         | 600,445 |   |           |         | 326,643   | 
|                                   | Variable annuities |                          |         | 901                                 |         |                                   |         | 1,818            |         |      |         | 1,888   |         |   |           | 4,481   |          
|                                   |                    |                          |         |                                     |         |                                   |         |                  |         |      |         |         |         |   |           |         |           | 
|                                   | Total Annuities    |                          |         | 469,356                             |         |                                   |         | 404,891          |         |      |         | 846,195 |         |   |           | 801,515 |          
|Funding agreements                 |                    |                          |        |                                     |         |                                   | 75,000  |                  |         |      |        |         |         |   | 350,000   |        
|                                   |                    |                          |         |                                     |         |                                   |         |                  |         |      |         |         |         |   |           |         |           | 
|                                   |                    | Total                    |         |                                     | 469,356 |                                   |         |                  | 479,891 |      |         |         | 846,195 |   |           |         | 1,151,515 | 
|Reinsurance assumed                |                    |                          |        |                                     |         |                                   |        |                  |         |      |        |         |         |   |          |        
|Reinsurance ceded                  |                    |                          | (7,551  | )                                   |         |                                   | (2,905  | )                |         |      | (15,619 | )       |         |   | (4,382    | )      
|                                   |                    |                          |         |                                     |         |                                   |         |                  |         |      |         |         |         |   |           |         |           | 
|Total deposits, net of reinsurance |                    | $                        | 461,805 |                                     |         | $                                 | 476,986 |                  |         | $    | 830,576 |         |         | $ | 1,147,133 |        
|                                   |                    |                          |         |                                     |         |                                   |         |                  |         |      |         |         |         |   |           |         |           | 

Direct annuity deposits increased 5.6% year-to-date for 2003 compared to
2002. The increase was from our sales of equity-indexed annuities as consumers
continue to favor these products. We slowed our 2003 deferred fixed annuity
sales due to the low interest rate environment and have focused on sales of our
higher returning equity-indexed products.

We placed fixed rate funding agreements totaling $75 million and $350
million in the second quarter and first six months of 2002, respectively.
Funding agreements are insurance contracts for which we receive deposit funds
and for which we agree to repay the deposit and a contractual return for the
duration of the contract. Total funding agreements as of June 30, 2003 amounted
to $1.125 billion.

Reinsurance ceded increased in the second quarter and first six months of
2003 compared to the respective 2002 periods as we entered into a new modified
coinsurance reinsurance agreement in the third quarter of 2002 to cede 25% of
certain equity-indexed annuity products.

Product Charges.The deposits we receive on accumulation products are not
recorded as revenue but instead as a policyholder liability. Surrender charges
are recorded as revenue as an annuity product charge. Annuity product charges
decreased in the second quarter and year-to-date periods of 2003 as compared to
the respective 2002 periods, due to lower withdrawals of products within the
surrender charge period.

Persistency.Withdrawals represent funds taken out of accumulation
products by policyowners not including those due to the death of policyowners.
Annuity withdrawal rates without internal replacements continued to improve in
2003 and amounted to 8.6% and 10.9% for the first six months of 2003 and 2002,
respectively. Annuity withdrawals totaled $661.1 million and $812.5 million
for the first six months of 2003 and 2002, respectively.

Our withdrawal experience remained within our pricing assumptions.
Withdrawal rates declined for the first six months of 2003 as compared to 2002
as our annuity products provide a favorable investment return in this current
low interest rate and uncertain equity market environment.

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Investment Spread.Investment results and interest crediting rates were
as follows for deferred fixed annuities:

|                       |                   |  |                                   |      |      |  |      |      |  
|---------------------- | ----------------- |  | --------------------------------- | ---- | ---- |  | ---- | ---- | -
|                       |                   |  | For The Six Months Ended June 30,
|                       |                   |  | 2003                              |      | 2002
|                       |                   |  |                                   |      |     
|Investment yield       |                   |  | 6.03                              | %    |      |  | 6.72 | %   
|Average crediting rate |                   |  | 4.17                              | %    |      |  | 4.73 | %   
|                       |                   |  |                                   |      |      |  |      |     
|                       | Investment spread |  |                                   | 1.86 | %    |  |      | 1.99 | %
|                       |                   |  |                                   |      |      |  |      |     

The investment spread on deferred fixed annuities decreased thirteen basis
points to 186 basis points in the first six months of 2003 compared to the
first six months of 2002. Crediting rates were lowered throughout 2002 and the
first six months of 2003 to correspond with the decline in investment yields
caused by lower rates on new and reinvested funds. In addition, during the
first quarter of 2003, we held cash in anticipation of better investment
opportunities in future periods. This increased the decline in our investment
yield in 2003. At June 30, 2003, the account value of deferred fixed annuities
totaled $7.1 billion of which $2.7 billion did not have a differential between
the credited rate and minimum guarantee rate and as such, could not be lowered.
Additionally, deferred fixed annuities with account values totaling $1.2
billion have multi-year interest rate guarantees for which the credited rate
cannot be decreased until the end of the multi-year period. At the end of the
multi-year guarantee period, we will have the ability to lower the crediting
rate to the minimum guaranteed rate by an average of approximately 275 basis
points. Also, at June 30, 2003, account values of equity-indexed annuities
totaled $3.8 billion, which provide guaranteed rates based on a cumulative
floor over the term of the product. Due to these limitations on the ability to
lower interest crediting rates and the potential for additional credit defaults
and lower reinvestment rates on investments, we could experience spread
compression in future periods.

The level of margins on funding agreements increased $6.6 million in the
first six months of 2003 compared to the first six months of 2002. The
increase was primarily due to the $875 million of the agreements placed
throughout 2002.

IMO Operations.IMOs have contractual arrangements to promote our
insurance products to their networks of agents and brokers. Additionally, they
also contract with third party insurance companies. We own five such IMOs. The
income from IMO operations primarily represents annuity commissions received by
our IMOs from those third party insurance companies. Net IMO operating income
decreased $1.7 million between the first six months of 2003 and the first six
months of 2002 due to increased expenses.

Outlook.We anticipate increased product sales from our IMOs but
decreased product sales from other distribution channels as we manage our sales
in this current low interest rate environment. We also expect to continue the
shift of our product mix to higher return products, in particular the
equity-indexed annuity products. In addition, we will continue to manage our
spreads as we strive for our desired profitability in this economic
environment.

OTHER

The other segment primarily consists of holding company revenues and
expenses and operations of our real estate management subsidiary. The adjusted
pre-tax operating loss in the first six months of 2003 decreased as compared
with the first six months of 2002 due to higher investment income of our real
estate management subsidiary.

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INCOME STATEMENT RECONCILIATION

A reconciliation of our segment pre-tax operating income to net income as
shown in our consolidated statements of income follows:

|                                                     |                                                           |                                                                                                                   |                                        |        |                                     |        |                                   |        |                  |        |         |        |         |         |         |        |         |         | 
|---------------------------------------------------- | --------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | -------------------------------------- | ------ | ----------------------------------- | ------ | --------------------------------- | ------ | ---------------- | ------ | ------- | ------ | ------- | ------- | ------- | ------ | ------- | ------- | 
|                                                     |                                                           |                                                                                                                   |                                        |        | For The Three Months Ended June 30, |        | For The Six Months Ended June 30,
|                                                     |                                                           |                                                                                                                   |                                        |        | 2003                                |        | 2002                              |        | 2003             |        | 2002   
|                                                     |                                                           |                                                                                                                   |                                        |        |                                     |        |                                   |        |                  |        |        
|                                                     |                                                           |                                                                                                                   |                                        |        |                                     |        |                                   |        | ($ in thousands) |        |         |        |        
|Segment pre-tax operating income:                    |                                                           |                                                                                                                   |                                        |        |                                     |        |                                   |        |                  |        |         |        |         |         |         |       
|                                                     | Protection Products                                       |                                                                                                                   | $                                      | 33,843 |                                     |        | $                                 | 29,804 |                  |        | $       | 66,963 |         |         | $       | 65,267 |        
|                                                     | Accumulation Products                                     |                                                                                                                   |                                        | 29,420 |                                     |        |                                   | 31,922 |                  |        |         | 58,774 |         |         |         | 58,486 |        
|                                                     | Other operations                                          |                                                                                                                   |                                        | 169    |                                     |        |                                   | (722   | )                |        |         | (1,735 | )       |         |         | (2,993 | )      
|                                                     |                                                           |                                                                                                                   |                                        |        |                                     |        |                                   |        |                  |        |         |        |         |         |         |        |        
|                                                     |                                                           |                                                                                                                   | Total segment pre-tax operating income |        |                                     | 63,432 |                                   |        |                  | 61,004 |         |        |         | 124,002 |         |        |         | 120,760 | 
|Non-segment items - increases (decreases) to income: |                                                           |                                                                                                                   |                                        |        |                                     |        |                                   |        |                  |        |         |        |         |         |         |       
|                                                     | Realized and unrealized losses on assets and liabilities: |                                                                                                                   |                                        |        |                                     |        |                                   |        |                  |        |         |        |         |         |         |        |        
|                                                     |                                                           | Realized gains (losses) on open block investments                                                                 |                                        |        | 16,374                              |        |                                   |        | (35,755          | )      |         |        | 24,453  |         |         |        | (45,633 | )      
|                                                     |                                                           | Unrealized gains (losses) on open block options and
trading investments                                           |                                        |        | 42,320                              |        |                                   |        | (34,778          | )      |         |        | 35,027  |         |         |        | (54,236 | )      
|                                                     |                                                           | Change in option value of equity-indexed products
and market value adjustments on total return
strategy annuities |                                        |        | (35,811                             | )      |                                   |        | 20,736           |        |         |        | (27,209 | )       |         |        | 35,867  |        
|                                                     |                                                           | Cash flow hedge amortization                                                                                      |                                        |        | (1,065                              | )      |                                   |        | (697             | )      |         |        | (2,478  | )       |         |        | (697    | )      
|                                                     |                                                           | Amortization of DAC & VOBA due to open block
realized gains and losses                                            |                                        |        | (3,907                              | )      |                                   |        | 6,840            |        |         |        | (10,452 | )       |         |        | 5,286   |        
|                                                     | Non-recurring income (expenses):                          |                                                                                                                   |                                        |        |                                     |        |                                   |        |                  |        |         |        |         |         |         |        |        
|                                                     |                                                           | Reinsurance adjustments                                                                                           |                                        |        | 3,854                               |        |                                   |        |                 |        |         |        | 3,854   |         |         |        |        |        
|                                                     |                                                           | Demutualization costs                                                                                             |                                        |        |                                    |        |                                   |        | (179             | )      |         |        |        |         |         |        | (464    | )      
|                                                     |                                                           | Restructuring costs                                                                                               |                                        |        | (12,670                             | )      |                                   |        | (6,416           | )      |         |        | (15,864 | )       |         |        | (8,211  | )      
|                                                     | Other income from non-insurance operations                |                                                                                                                   |                                        | 1,118  |                                     |        |                                   | 540    |                  |        |         | 2,326  |         |         |         | 996    |        
|                                                     |                                                           |                                                                                                                   |                                        |        |                                     |        |                                   |        |                  |        |         |        |         |         |         |        |        
|                                                     |                                                           |                                                                                                                   | Income from continuing operations      |        |                                     | 73,645 |                                   |        |                  | 11,295 |         |        |         | 133,659 |         |        |         | 53,668  | 
|Interest expense                                     |                                                           |                                                                                                                   | (7,575                                 | )      |                                     |        | (6,337                            | )      |                  |        | (14,374 | )      |         |         | (12,364 | )     
|Income tax expense                                   |                                                           |                                                                                                                   | (22,359                                | )      |                                     |        | (696                              | )      |                  |        | (39,784 | )      |         |         | (12,128 | )     
|                                                     |                                                           |                                                                                                                   |                                        |        |                                     |        |                                   |        |                  |        |         |        |         |         |         |        |        
|                                                     |                                                           |                                                                                                                   | Net income                             |        | $                                   | 43,711 |                                   |        | $                | 4,262  |         |        | $       | 79,501  |         |        | $       | 29,176  | 
|                                                     |                                                           |                                                                                                                   |                                        |        |                                     |        |                                   |        |                  |        |         |        |         |         |         |        |        

Realized and Unrealized Gains (Losses) on Assets and Liabilities.
Realized gains (losses) on open block investments will fluctuate from period to
period depending on the prevailing interest rate, the economic environment and
the timing of investment sales. The realized losses on open block investments,
amounting to $35.8 million in the second quarter of 2002 and $45.6 million the
first six months of 2002, primarily consisted of realized losses and writedowns
on investments mainly related to Worldcom, Inc. and its related entities.

Unrealized losses on open block investments are generated from our options
and trading securities. We use options to hedge our equity-indexed products.
In accordance with SFAS 133, we adjusted our options to market value, which,
due to the economic environment and stock market conditions, resulted in an
unrealized gain of $25.0 million and $15.4 million in the second quarter and
first six months of 2003, respectively, and an unrealized loss of $28.0 million
and $34.8 million in the second quarter and first six months of 2002,
respectively. In addition, we also have trading securities that back our total
return strategy fixed annuity products. The market value adjustment on the
trading
securities resulted in a gain of $17.3 million and $19.6 million in the
second quarter and first six months of 2003, respectively, and a loss of $6.8
million and $19.4 million in the second quarter and first six months of 2002,
respectively. Most of the unrealized gains and losses on the options and
trading securities are offset by similar adjustments to the option portion of
the equity-indexed product reserves and to the total return strategy annuity
reserves. The reserve adjustments are reflected in policyowner benefits
expense in the consolidated statements of income and are included in the fair
value change of ($35.8) million and ($27.2) million in the second quarter and
first

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six months of 2003, respectively, and $20.7 million and $35.9 million in
the second quarter and first six months of 2002, respectively, explained in the
following paragraph.

The fair value change in options embedded within our equity-indexed
products and the fair value changes on our total return strategy fixed annuity
contracts are being recorded in accordance with SFAS No. 133. As previously
discussed, these fair value changes are offset by similar adjustments to
unrealized gains (losses) on investments related to the fair value changes on
the options that hedge the equity-indexed products and on the trading
securities that back the total return strategy products.

Non-recurring Income (Expenses).Reinsurance related adjustments consist
of the release of a $8.2 million liability in conjunction with the settlement
and amendment of a reinsurance arrangement and a $4.3 million true-up of
pre-2003 reinsurance settlements under a reinsurance arrangement between ILIC
open block and closed block.

Restructuring costs relate to our consolidation of various functions in
connection with a restructuring of our protection products and accumulation
products operations and investment activities which began in the third quarter
of 2001. The objective of the restructuring plan is to eliminate duplicative
functions for all business units and to reduce on-going operating costs.
Corporate administrative functions are being transitioned so they are performed
primarily in Des Moines, Iowa. Protection products administration processes
are being transitioned so they are performed in Des Moines; Woodbury, New York;
or outsourced. Accumulation products functions have been transitioned to
Topeka, Kansas. Investment activities have been restructured to eliminate
certain real estate management services which have been outsourced.

The Company listed its office building located in Indianapolis, Indiana,
with a real estate broker. During the second quarter of 2003, the Company has
begun to substantially vacate this location as a result of the position
eliminations taking place. In addition, the Company also selected a new
location in the second quarter of 2003 for those employees who are going to
continue to work in Indianapolis. The new space is to be ready for occupancy
sometime during August 2003, at which time the majority of the remaining
Indianapolis employees will move to the new location. On June 30, 2003, the
Company determined that the plan of sale criteria in SFAS 144, Accounting for
the Impairment or Disposal of Long-Lived Assets, had been met. Accordingly,
the carrying value of the building was adjusted to its fair value less costs to
sell, amounting to $15.5 million, which was based upon comparable properties
recently marketed in Indianapolis. The resulting $7.7 million pre-tax
impairment loss has been recorded as restructuring costs in the consolidated
statement of income. The carrying value of the building that is held for sale
is included in the other assets line item of the consolidated balance sheet.

During the second quarter of 2003, the Company initiated and executed a
restructuring plan to merge one of its subsidiaries, IL Annuity, into its
parent, ILIC. The merger was effective June 30, 2003 and total restructuring
costs associated with this plan amounted to $2.4 million pre-tax, which
primarily consisted of legal, accounting, and printing costs and the write off
of $2.2 million of insurance licenses.

The restructuring charges expensed in the first six months of 2003
included pre-tax severance and termination benefits of $0.8 million for
severance accrual adjustments and other pre-tax costs of $15.0 million
primarily related to the impairment loss on the Indianapolis office, expenses
associated with the merger of IL Annuity into ILIC, and systems conversion
costs. For the first six months of 2002, restructuring charges included
pre-tax severance and termination benefits of $5.3 million for the elimination
of approximately 80 positions and other pre-tax costs of $2.9 million. An
accrual for severance and termination benefits not yet paid amounted to $3.2
million at June 30, 2003. Additional charges will be incurred for continuing
restructuring activities primarily involving severance or relocation
benefits for affected employees and various administrative, financial and
actuarial system conversion costs. Expenditures for all restructuring
activities are expected to be completed by the fourth quarter of 2003.

Interest expense increased for the second quarter and year-to-date periods
of 2003 as compared to the same periods a year ago. The increase was primarily
due to interest associated with the PRIDESSM securities of $125 million issued
in the second quarter of 2003.

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Liquidity And Capital Resources

AmerUs Group Co.

As a holding company, AmerUs Group Co.s cash flows from operations
consist of dividends from subsidiaries, if declared and paid, interest from
income on loans and advances to subsidiaries (including a surplus note issued
to us by ALIC), investment income on our assets and fees which we charge our
subsidiaries, offset by the expenses incurred for debt service, salaries and
other expenses.

We intend to rely primarily on dividends, interest income and fees from
our insurance subsidiaries in order to make dividend payments to our
shareholders. The payment of dividends by our insurance subsidiaries is
regulated under various state laws. Generally, under the various state
statutes, our insurance subsidiaries dividends may be paid only from the
earned surplus arising from their respective businesses and must receive the
prior approval of the respective state regulators to pay any dividend that
would exceed certain statutory limitations. The current statutes generally
limit any dividend, together with dividends paid out within the preceding 12
months, to the greater of (i) 10% of the respective companys policyowners
statutory surplus as of the preceding year end or (ii) the statutory net gain
from operations for the previous calendar year. Generally, the various state
laws give the state regulators discretion to approve or disapprove requests for
dividends in excess of these limits. Based on these limitations and 2002
results, our life insurance subsidiaries could pay us an estimated $82.3
million in dividends in 2003 without obtaining regulatory approval. Our
subsidiaries paid us $46.6 million in the first six months of 2003. We also
consider risk-based capital levels, capital and liquidity operating needs, and
other factors prior to paying dividends from the insurance subsidiaries.

We have a $175 million revolving credit facility with a syndicate of
lenders (which we refer to as the Revolving Credit Agreement). As of June 30,
2003, there was a $10 million outstanding loan balance under the facility. The
Revolving Credit Agreement provides for typical events of default and covenants
with respect to the conduct of business and requires the maintenance of various
financial levels and ratios. Among other covenants, we (a) cannot have a
leverage ratio greater than 0.35:1.0, (b) cannot have an interest coverage
ratio less than 2.50:1.0, (c) are prohibited from paying cash dividends on
common stock in excess of an amount equal to 3% of consolidated net worth as of
the last day of the preceding fiscal year, and (d) must cause our insurance
subsidiaries to maintain certain levels of risk-based capital. We closely
monitor all of these covenants to ensure continued compliance.

On May 28, 2003, we issued $125 million of PRIDES securities. On June 5,
2003, the underwriters exercised their over-allotment option in full and we issued an
additional $18.8 million of PRIDES. The PRIDES initially consist of a $25
senior note and a contract requiring the holder to purchase AmerUs Group common
stock. The note has a minimum term of 4.75 years, which may be extended by
AmerUs Group in certain circumstances. The PRIDES offer quarterly payments at
an annual rate of 5.5 percent and quarterly contract adjustment
payments at an annual rate of 0.75 percent, both payable on February 16, May 16, August 16 and
November 16 of each year, commencing August 16, 2003. Under the purchase
contract, holders of each contract are required to purchase AmerUs Group Co.
common stock at the settlement date of August 16, 2006 based on a specified
settlement rate, which will vary according to the applicable market value of
AmerUs Group Co. common stock at the settlement date. The value of AmerUs
Group Co. common stock to be issued upon settlement of each purchase contract
will not exceed $25, the stated value of the PRIDES, unless the applicable
market value of AmerUs Group Co. common stock (which is measured by the common
stock price over a 20-day trading day period) increases to more than $33.80 per
share. The PRIDES were registered with the Securities and Exchange Commission
on Form S-3 by means of a prospectus supplement filed on May 22, 2003, as
further supplemented on May 23, 2003.

The proceeds from the PRIDES were used to repay borrowings on the
Companys Revolving Credit Agreement and for general operating purposes. The
senior note component of the PRIDES ranks equally with all other senior debt of
the Company.

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Our Board of Directors approved a stock purchase program effective August
9, 2002, under which we may purchase up to three million shares of our common
stock at such times and under such conditions, as we deem advisable. The
purchases may be made in the open market or by such other means as we determine
to be appropriate, including privately negotiated purchases. The purchase
program supercedes all prior purchase programs. Approximately 2.3 million
shares remain available for repurchase under this program. We consider a
variety of factors such as liquidity needs, capital levels and stock price in
determining whether to repurchase shares. We do not anticipate any purchases of
our common stock in 2003.

We manage liquidity on a continuing basis. One way is to minimize our
need for capital. We accomplish this by attempting to use our capital as
efficiently as possible and by developing capital-efficient products in our
insurance subsidiaries. We also manage our mix of sales by focusing on the
more capital-efficient products. In addition, we use reinsurance agreements,
where cost-effective, to reduce capital strain in the insurance subsidiaries.
We also focus on optimizing the consolidated capital structure to properly
balance the levels and sources of borrowing and the issuance of equity
securities.

Insurance Subsidiaries

The cash flows of our insurance subsidiaries consist primarily of premium
income, deposits to policyowner account balances, income from investments,
sales, maturities and calls of investments and repayments of investment
principal. Cash outflows are primarily related to withdrawals of policyowner
account balances, investment purchases, payment of policy acquisition costs,
payment of policyowner benefits, payment of debt, income taxes and current
operating expenses. Insurance companies generally produce a positive cash flow
from operations, as measured by the amount by which cash flows are adequate to
meet benefit obligations to policyowners and normal operating expenses as they
are incurred. The remaining cash flow is generally used to increase the asset
base to provide funds to meet the need for future policy benefit payments and
for writing new business.

Management believes that the current level of cash and available-for-sale
and short-term securities, combined with expected net cash inflows from
operations, maturities of fixed maturity investments, principal payments on
mortgage-backed securities and its insurance products, will be adequate to meet
the anticipated short-term cash obligations of the life insurance subsidiaries.

Matching the investment portfolio maturities to the cash flow demands of
the type of insurance being provided is an important consideration for each
type of protection product and accumulation product. We continuously monitor
benefits and surrenders to provide projections of future cash requirements. As
part of this monitoring process, we perform cash flow testing of assets and
liabilities under various scenarios to evaluate the adequacy of reserves. In
developing our investment strategy, we establish a level of cash and securities
which, combined with expected net cash inflows from operations, maturities of
fixed maturity investments and principal payments on mortgage-backed
securities, are believed adequate to meet anticipated short-term and long-term
benefit and expense payment obligations. There can be no assurance that future
experience regarding benefits and surrenders will be similar to historic
experience since withdrawal and surrender levels are influenced by such factors
as the interest rate environment and general economic conditions and the
claims-paying and financial strength ratings of the insurance subsidiaries.

We take into account asset/liability management considerations in the
product development and design process. Contract terms for the
interest-sensitive products include surrender and withdrawal provisions which
mitigate the risk of losses due to early withdrawals. These provisions
generally do one or more of the following: limit the
amount of penalty-free withdrawals, limit the circumstances under which
withdrawals are permitted, or assess a surrender charge or market value
adjustment relating to the underlying assets. The following table summarizes
statutory liabilities for interest-sensitive life products and annuities by
their contractual withdrawal provisions at June 30, 2003 (including liabilities
in the closed blocks and the general account):

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|                                                        |                                 |   |                 |        | 
|------------------------------------------------------- | ------------------------------- | - | --------------- | ------ | 
|                                                        |                                 |   | ($ in millions)
|                                                        |                                 |   |                
|Not subject to discretionary withdrawal                 |                                 | $ | 515             |       
|Subject to discretionary withdrawal with adjustments:   |                                 |   |                 |       
|                                                        | Specified surrender charges (A) |   |                 | 7,459  | 
|                                                        | Market value adjustments        |   |                 | 3,295  | 
|                                                        |                                 |   |                 |       
|                                                        | Subtotal                        |   |                 | 10,754 | 
|                                                        |                                 |   |                 |       
|Subject to discretionary withdrawal without adjustments |                                 |   | 1,805           |       
|                                                        |                                 |   |                 |       
|Total                                                   |                                 | $ | 13,074          |       
|                                                        |                                 |   |                 |       



|(A) |  | Includes $998 million of statutory liabilities with a contractual surrender charge of less
than five percent of the account balance.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------

In addition to the interest-sensitive products, an insurance subsidiary is
party to a $250 million fixed rate funding agreement. Under the agreement, a
five-year floating rate insurance contract was issued to a commercial paper
conduit which was swapped to a fixed-rate. During 2002, our insurance
subsidiaries placed additional funding agreements totaling $875 million in six
to ten year fixed rate insurance contracts. The assets backing the funding
agreements are legally segregated and are not subject to claims that arise out
of any other business of the insurance subsidiaries. The funding agreements
are further backed by the general account assets of the insurance subsidiaries.
The segregated assets and liabilities are included with general account assets
in the financial statements. The funding agreements may not be cancelled
unless there is a default under the agreement, but the insurance subsidiaries
may terminate the agreement at any time.

We also have variable separate account assets and liabilities representing
funds that are separately administered, principally for variable annuity
contracts, and for which the contractholder bears the investment risk.
Separate account assets and liabilities are reported at fair value and amounted
to $242.1 million at June 30, 2003. Separate account contractholders have no
claim against the assets of the general account. The operations of the
separate accounts are not included in the accompanying consolidated financial
statements.

Through their respective memberships in the Federal Home Loan Banks (FHLB)
of Des Moines and Topeka, ALIC and American are eligible to borrow under
variable-rate short term fed funds arrangements to provide additional
liquidity. These borrowings are secured and interest is payable at the current
rate at the time of each advance. There were no borrowings under these
arrangements outstanding at June 30, 2003. In addition, ALIC has long-term
fixed rate advances from FHLB outstanding of $13.6 million at June 30, 2003.

The insurance subsidiaries may also obtain liquidity through sales of
investments. The investment portfolio as of June 30, 2003 had a carrying value
of $17.9 billion, including closed block investments.

The level of capital in the insurance companies is regulated by risk-based
capital formulas and is monitored by rating agencies. In order to maintain
appropriate capital levels, it may be necessary from time to time for AmerUs
Group Co. to provide additional capital to the insurance companies.

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In the current economic environment, including the declines in interest
rates and in the bond and equity markets, insurance regulators are closely
monitoring the capital and liquidity position of insurance companies in their
periodic financial examinations. IL Annuity, a wholly-owned subsidiary of
ILIC, which is no longer writing business, has undergone its periodic financial
examination. These discussions were concluded without any material effect upon
the Companys consolidated financial position or results of operations.
Effective June 30, 2003, we merged IL Annuity into ILIC.

The Company participates in dollar-roll repurchase agreement transactions.
Such transactions involve the lending of a mortgage-backed security to a
holding institution and a simultaneous agreement to purchase a substantially
similar security for forward settlement at a lower dollar price. The proceeds
are invested in short-term investments at a positive spread until the
settlement date of the similar security. During this same time period, the
Company will continue to reflect the mortgage-backed security sold to the
holding institution as a fixed maturity security, the cash received for such
security as cash and short-term investments, and the Companys repurchase
obligation as an other liability. The amount outstanding to repurchase
securities under dollar-roll repurchase agreements was $68.9 million at June
30, 2003.

The Company also participates in a securities lending program whereby
certain fixed maturity securities from the investment portfolio are loaned to
other institutions for a short period of time. The Company receives a fee in
exchange for the loan of securities and requires initial collateral equal to
102 percent of the market value of the loaned securities to be separately
maintained. Securities with a market value of $429.9 million were on loan
under the program and the Company was liable for cash collateral under its
control of $447.2 million at June 30, 2003.

At June 30, 2003, the statutory surplus of the insurance subsidiaries was
approximately $780 million. Management believes that each life insurance
company has statutory capital which provides adequate risk based capital that
exceeds required levels.

In the future, in addition to cash flows from operations and borrowing
capacity, the insurance subsidiaries may obtain their required capital from
AmerUs Group Co.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

The main objectives in managing our investment portfolios and our
insurance subsidiaries are to maximize investment income and total investment
returns while minimizing credit risks in order to provide maximum support to
the insurance underwriting operations. Investment strategies are developed
based on many factors including asset liability management, regulatory
requirements, fluctuations in interest rates and consideration of other market
risks. Investment decisions are centrally managed by investment professionals
based on guidelines established by management and approved by the boards of
directors.

Market risk represents the potential for loss due to adverse changes in
the fair value of financial instruments. The market risks related to our
financial instruments primarily relate to the investment portfolio, which
exposes us to risks related to interest rates, credit quality and prepayment
variation. Analytical tools and monitoring systems are in place to assess each
of these elements of market risk.

Interest rate risk is the price sensitivity of a fixed income security to
changes in interest rates. Management views these potential changes in price
within the overall context of asset and liability management. Actuarial
professionals estimate the payout pattern of our liabilities, primarily lapses,
to determine duration, which is the present value of the fixed income
investment portfolios after consideration of the duration of these liabilities
and other factors, which management believes mitigates the overall effect of
interest rate risk.

For variable and equity-indexed products, profitability on the portion of
the policyholders account balance invested in the fixed general account
option, if any, is also affected by the spreads between interest yields on

37



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##### Table of Contents



investments and rates credited to the policies. For the variable products, the
policyholder assumes essentially all the investment earnings risk for the
portion of the account balance invested in the separate accounts. For the
equity-indexed products, we purchase call options that are designed to match
the return owed to contract holders who elect to participate in one or more
market indices. Profitability on the portion of the equity-indexed products
tied to market indices is significantly impacted by the spread on interest
earned on investments and the sum of (1) the cost of underlying call options
purchased to match the returns owed to contract holders and (2) the minimum
interest guarantees owed to the contract holder, if any. Profitability on the
equity-indexed products is also impacted by changes in the fair value of the
embedded option which provides the contract holder the right to participate in
market index returns after the next anniversary date of the contract. This
impacts profitability as we primarily purchase one-year call options to fund
the returns owed to the contract holders at the inception of each contract
year. This practice matches with the contract holders rights to switch to
different indices on each anniversary date. The value of the forward starting
options embedded in the equity-indexed products can fluctuate with changes in
assumptions as to future volatility of the market indices, risk free interest
rates, market returns and the lives of the contracts.

The following table provides information about our fixed maturity
investments and mortgage loans for both our trading and other than trading
portfolios at June 30, 2003. The table presents amortized cost and related
weighted average interest rates by expected maturity dates. The amortized cost
approximates the cash flows of principal amounts in each of the periods. The
cash flows are based on the earlier of the call date or the maturity date or,
for mortgage-backed securities, expected payment patterns. Actual cash flows
could differ from the expected amounts.

|                                                    |  |          |     |      |  |      |       |      |  |      |       |      |  |                     |       |      |  |            |       |   |  |           |       |   |  |   |       |   |  |   |        |  |  |   |        | 
|--------------------------------------------------- |  | -------- | --- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ------------------- | ----- | ---- |  | ---------- | ----- | - |  | --------- | ----- | - |  | - | ----- | - |  | - | ------ |  |  | - | ------ | 
|                                                    |  |          |     |      |  |      |       |      |  |      |       |      |  | Expected Cash Flows |       |      |  |            |       |   |  |           |       |   |  |   |       |   |  |  
|                                                    |  | 6 months |     |      |  |      |       |      |  |      |       |      |  |                     |       |      |  |            |       |   |  | Amortized |       |   |  |  
|                                                    |  | 2003     |     | 2004 |  | 2005 |       | 2006 |  | 2007 |       | 2008 |  | Thereafter          |       | Cost |  | Fair Value
|                                                    |  |          |     |      |  |      |       |      |  |      |       |      |  |                     |       |      |  |           
|                                                    |  |          |     |      |  |      |       |      |  |      |       |      |  | ($ in millions)     |       |      |  |            |       |   |  |           |       |   |  |   |       |   |  |  
|Fixed maturity securities
available-for-sale        |  | $        | 911 |      |  | $    | 1,425 |      |  | $    | 1,333 |      |  | $                   | 1,098 |      |  | $          | 1,067 |   |  | $         | 1,284 |   |  | $ | 6,019 |   |  | $ | 13,137 |  |  | $ | 13,950 | 
|Average interest rate                               |  |          | 6.5 | %    |  |      | 6.4   | %    |  |      | 6.6   | %    |  |                     | 6.1   | %    |  |            | 6.7   | % |  |           | 5.5   | % |  |   | 5.5   | % |  |   |        |  |  |   |        | 
|Fixed maturity securities
held for trading purposes |  | $        | 59  |      |  | $    | 222   |      |  | $    | 184   |      |  | $                   | 176   |      |  | $          | 147   |   |  | $         | 173   |   |  | $ | 894   |   |  | $ | 1,855  |  |  | $ | 1,855  | 
|Average interest rate                               |  |          | 3.9 | %    |  |      | 1.3   | %    |  |      | 1.9   | %    |  |                     | 3.8   | %    |  |            | 2.5   | % |  |           | 3.7   | % |  |   | 4.2   | % |  |   |        |  |  |   |        | 
|Mortgage loans                                      |  | $        | 26  |      |  | $    | 63    |      |  | $    | 65    |      |  | $                   | 64    |      |  | $          | 61    |   |  | $         | 68    |   |  | $ | 564   |   |  | $ | 911    |  |  | $ | 1,014  | 
|Average interest rate                               |  |          | 7.9 | %    |  |      | 7.9   | %    |  |      | 7.9   | %    |  |                     | 7.8   | %    |  |            | 7.8   | % |  |           | 7.7   | % |  |   | 7.6   | % |  |   |        |  |  |   |        | 
|Total                                               |  | $        | 996 |      |  | $    | 1,710 |      |  | $    | 1,582 |      |  | $                   | 1,338 |      |  | $          | 1,275 |   |  | $         | 1,525 |   |  | $ | 7,477 |   |  | $ | 15,903 |  |  | $ | 16,819 | 
|                                                    |  |          |     |      |  |      |       |      |  |      |       |      |  |                     |       |      |  |            |       |   |  |           |       |   |  |   |       |   |  |   |        |  |  |   |        | 

In accordance with our strategy of minimizing credit quality risk, we
consistently invest in high quality marketable securities. Fixed maturity
securities are comprised of U.S. Treasury, government agency, mortgage-backed
and corporate securities. Approximately 67% of fixed maturity securities are
issued by the U.S. Treasury or U.S. government agencies or are rated A or
better by Moodys, Standard and Poors, or the NAIC. Less than 7.5 % of the
bond portfolio is below investment grade. Fixed maturity securities have an
average maturity of approximately 6.65 years.

Prepayment risk refers to the changes in prepayment patterns that can
either shorten or lengthen the expected timing of the principal repayments and
thus the average life and the effective yield of a security. Such risk exists
primarily within the portfolio of mortgage-backed securities. Management
monitors such risk regularly. We invest primarily in those classes of
mortgage-backed securities that have average or lower prepayment risk.

Our use of derivatives is generally limited to hedging purposes and has
principally consisted of using interest rate swaps and options. These
instruments, viewed separately, subject us to varying degrees of market and
credit risk. However when used for hedging, the expectation is that these
instruments would reduce overall market risk. Credit risk arises from the
possibility that counterparties may fail to perform under the terms of the
contracts.

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Equity price risk is the potential loss arising from changes in the value
of equity securities. In general, equities have more year-to-year price
variability than intermediate term grade bonds. However, returns over longer
time frames have been consistently higher. Our equity securities are readily
marketable.

All of the above risks are monitored on an ongoing basis. A combination
of in-house systems and proprietary models and externally licensed software are
used to analyze individual securities as well as each portfolio. These tools
provide the portfolio managers with information to assist them in the
evaluation of the market risks of the portfolio.




Item 4. Controls and Procedures

(a)  Based upon their evaluation as of the end of the period covered by
this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures as
defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as
amended, are effective for recording, processing, summarizing and reporting the
information we are required to disclose in our reports filed under such act.

(b)  There were no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to the date
of the evaluation referred to above.

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##### Table of Contents






PART II - OTHER INFORMATION




Item 1. Legal Proceedings

In recent years, the life insurance industry, including the Company and
its subsidiaries, have been subject to an increase in litigation pursued on
behalf of purported classes of insurance purchasers, questioning the conduct of
insurers in the marketing of their products. The Company is often involved in
litigation and other proceedings, including class actions, reinsurance claims
and regulatory proceedings, arising in the ordinary course of its business.
Some of these claims and legal actions are in jurisdictions where juries are
given substantial latitude in assessing damages, including punitive damages.
Although no assurances can be given and no determinations can be made at this
time, the Company believes that the ultimate liability, if any, with respect to
these claims and legal actions, would have no material effect on its results of
operations and financial position.

As previously disclosed, one of the Companys subsidiaries, IL Annuity,
was party to an arbitration proceeding brought by a reinsurer of a block of its
annuity business. On June 23, 2003, IL Annuity and the reinsurer settled that
proceeding and amended their reinsurance agreement. For more information, see
note 9 to the consolidated financial statements.




Item 4. Submission of Matters to a Vote of Security Holders

At the annual meeting of the Companys shareholders on May 8, 2003, a
majority of the Companys shareholders approved (1) the reelection of David A.
Arledge, John W. Norris, Jr. and John A. Wing; (2) the approval of the AmerUs
Group Co. 2003 Stock Incentive Plan and reservation of shares for issuance
thereunder; and (3) the ratification of the appointment by the Board of
Directors of the Company of Ernst & Young LLP as the Companys independent
auditors. The result of the vote is as follows:

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##### Table of Contents



|                                  |  |           
|--------------------------------- |  | ----------
|Election of David Arledge         |  |           
|                                  |  |           
|For:                              |  | 29,298,848
|Withheld:                         |  | 519,601   
|                                  |  |           
|Election of John W. Norris, Jr.   |  |           
|                                  |  |           
|For:                              |  | 29,421,139
|Withheld:                         |  | 397,310   
|                                  |  |           
|Election of John A. Wing          |  |           
|                                  |  |           
|For:                              |  | 29,417,966
|Withheld:                         |  | 400,483   
|                                  |  |           
|Approval of the AmerUs Group      |  |           
|2003 Stock Incentive Plan         |  |           
|                                  |  |           
|For:                              |  | 26,992,747
|Against:                          |  | 2,417,156 
|Abstaining:                       |  | 408,546   
|                                  |  |           
|Ratification of Ernst & Young LLP |  |           
|                                  |  |           
|For:                              |  | 28,336,395
|Against:                          |  | 1,319,358 
|Abstaining:                       |  | 162,696   

The term of the following other directors of the Company continued after the
meeting: John R. Albers; Roger K. Brooks; Alecia A. DeCoudreaux; Thomas F.
Gaffney; Andrew J. Paine, Jr.; Jack C. Pester; and F.A. Wittern, Jr.




Item 6. Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits
| | --- |  | --------

A list of exhibits included as part of this report is set forth in the
Exhibit Index which immediately precedes such exhibits and is hereby
incorporated by reference herein.



| | (b) |  | The following reports on Form 8-K were filed during the quarter ended June 30, 2003:                                                                                                  
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Form 8-K dated May 8, 2003 announcing the release of first quarter
2003 earnings. Supplemental financial information of AmerUs Group Co.
was attached.                                
|
| |     |  | Form 8-K dated May 15, 2003 providing Chief Executive Officer and
Chief Financial Officer certifications pursuant to Section 1350 of
Chapter 63 of Title 18 of the United States Code.
|
| |     |  | Form 8-K dated May 22, 2003 announcing the pricing of $125 million of
PRIDES securities.                                                                                              

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| |  |  | Form 8-K dated May 28, 2003 providing various exhibits related to the
issuance of PRIDES securities.                                                                                   
| |  |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Form 8-K dated June 27, 2003 providing Chief Executive Officer and
Chief Financial Officer certifications pursuant to Section 1350 of
Chapter 63 of Title 18 of the United States Code.

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.

|                       |  |  |  |    |     |                                      
|---------------------- |  |  |  | -- | --- | -------------------------------------
|DATED: August 13, 2003 |  |  |  |    |     | AMERUS GROUP CO.                     
|                       |  |  |  |    |     |                                      
|                       |  |  |  | By | /s/ | Melinda S. Urion                     
|                       |  |  |  |    |    
|                       |  |  |  |    |     | Melinda S. Urion                     
|                       |  |  |  |    |     | Executive Vice President,            
|                       |  |  |  |    |     | Chief Financial Officer and Treasurer
|                       |  |  |  |    |     | (Principal Financial Officer)        
|                       |  |  |  |    |     |                                      
|                       |  |  |  | By | /s/ | Brenda J. Cushing                    
|                       |  |  |  |    |    
|                       |  |  |  |    |     | Brenda J. Cushing                    
|                       |  |  |  |    |     | Senior Vice President and Controller 
|                       |  |  |  |    |     | (Principal Accounting Officer)       

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AMERUS GROUP CO. AND SUBSIDIARIES




INDEX TO EXHIBITS

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.1     |  | Plan of Reorganization dated October 27, 1995, filed as Exhibit 2.1 to
the Registration Statement of AmerUs Life Holdings, Inc. on Form S-1,
Registration Number 333-12239, is hereby incorporated by reference.                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.2     |  | Amended and Restated Agreement and Plan of Merger, dated as of September
19, 1997 and as amended and restated as of October 8, 1997, by and among
AmerUs Life Holdings, Inc., AFC Corp. and AmVestors Financial Corporation
(AmVestors), filed as Exhibit 2.2 to the Registration Statement of
AmerUs Life Holdings, Inc. on Form S-4, Registration Number 333-40065 is
hereby incorporated by reference.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.3     |  | Agreement and Plan of Merger, dated as of August 13, 1997 and as amended as of September
5, 1997, among AmerUs Life Holdings, Inc., a wholly owned subsidiary of AmerUs Life Holdings, Inc. and Delta Life
Corporation, filed as Exhibit 2.2 to Form 8-K of AmerUs Life Holdings, Inc. dated October 8, 1997, is hereby incorporated
by reference.                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.4     |  | Combination and Investment Agreement, dated February 18, 2000, among American Mutual
Holding Company, AmerUs Life Holdings, Inc., Indianapolis Life Insurance Company and The Indianapolis Life Group of
Companies, Inc., filed as Exhibit 2.1 to AmerUs Life Holdings, Inc.s report on Form 8-K/A on March 6, 2000, is hereby
incorporated by reference.                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.5     |  | Purchase Agreement, dated as of February 18, 2000, by and between American Mutual
Holding Company and AmerUs Life Holdings, Inc., filed as Exhibit 2.5 on Form 10-K, dated March 8, 2000, is hereby
incorporated by reference.                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.6     |  | Agreement and Plan of Merger, dated December 17, 1999, by and between American Mutual
Holding Company and AmerUs Life Holdings, Inc., filed as Exhibit 2.6 on Form 10-K, dated March 8, 2000, is hereby
incorporated by reference.                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.7     |  | Amendment No. 1 to Agreement and Plan of Merger, dated February 18, 2000, by and between
American Mutual Holding Company and AmerUs Life Holdings, Inc., filed as Exhibit 2.7 on Form 10-K, dated March 8, 2000, is
hereby incorporated by reference.                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.8     |  | Letter Agreement, dated December 17, 1999, by and between American Mutual Holding
Company and AmerUs Life Holdings, Inc., filed as Exhibit 2.8 on Form 10-K, dated March 8, 2000, is hereby incorporated by
reference.                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.9     |  | Notification Agreement, dated as of February 18, 2000, by and among American Mutual
Holding Company, AmerUs Life Holdings, Inc. and Bankers Trust Company, filed as Exhibit 2.9 on Form 10-K, dated March 8,
2000, is hereby incorporated by reference.                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.10    |  | Amendment No. 2 to Agreement and Plan of Merger, dated April 3, 2000, by
and between American Mutual Holding Company and AmerUs Life Holdings,
Inc., filed as Exhibit 2.10 on Form 10-Q, dated May 15, 2000, is hereby
incorporated by reference.                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.11    |  | Amendment No. 1 to the Purchase Agreement, dated April 3, 2000, by and
between American Mutual Holding Company and AmerUs Life Holdings, Inc.,
filed as Exhibit 2.11 on Form 10-Q, dated May 15, 2000, is hereby
incorporated by reference.                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.12    |  | Amendment to Combination and Investment Agreement dated February 18, 2000
among American Mutual Holding Company, AmerUs Life Holdings, Inc.,
Indianapolis Life Insurance Company and The Indianapolis Life Group of
Companies, Inc., dated September 18, 2000, filed as Exhibit 2.2 to Form
8-K12G3 of the Registrant dated September 21, 2000, is hereby incorporated
by reference.                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|2.13    |  | Stock Purchase Agreement, dated January 1, 2002, by and among AmerUs
Annuity Group Co.,
and the Stockholders of Family First Advanced Estate Planning and
Family First Insurance Services, filed as Exhibit 2.13
on Form 10-Q dated August 12, 2002, is hereby incorporated by reference.                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                            
|3.1     |  | Amended and Restated Articles of Incorporation of the Registrant filed as Exhibit 3.1 on Form
10-Q, dated November 14, 2000 is hereby incorporated by reference.                                                                                                                                                                                                                                           

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|3.2     |  | Amended and Restated Bylaws of the Registrant, filed as Exhibit 4.2 on
Form S-8, dated June 13, 2003, is hereby incorporated by reference.                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.1     |  | Amended and Restated Trust Agreement dated as of February 3, 1997 among
AmerUs Life Holdings, Inc., Wilmington Trust Company, as property trustee,
and the administrative trustees named therein (AmerUs Capital I business
trust), filed as Exhibit 3.6 to the registration statement of AmerUs Life
Holdings, Inc. and AmerUs Capital I on Form S-1, Registration Number
333-13713, is hereby incorporated by reference.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.2     |  | Indenture dated as of February 3, 1997 between AmerUs Life Holdings, Inc.
and Wilmington Trust Company relating to the Companys 8.85% Junior
Subordinated Debentures, Series A, filed as Exhibit 4.1 to the
registration statement of AmerUs Life Holdings, Inc. and AmerUs Capital I
on Form S-1, Registration Number, 333-13713, is hereby incorporated by
reference.                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.3     |  | Guaranty Agreement dated as of February 3, 1997 between AmerUs Life
Holdings, Inc., as guarantor, and Wilmington Trust Company, as trustee,
relating to the 8.85% Capital Securities, Series A, issued by AmerUs
Capital I, filed as Exhibit 4.4 to the registration statement on Form S-1,
Registration Number, 333-13713, is hereby incorporated by reference.                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.4     |  | Amended and Restated Declaration of Trust of AmerUs Capital II, dated as of July 27, 1998,
among AmerUs Life Holdings, Inc., First Union Trust Company and the administrative trustees
named therein, relating to AmerUs Life Holdings, Inc.s 7.0% ACES Units, filed as Exhibit 4.5
on Form 10-Q, dated August 13, 1998, is hereby incorporated by reference.                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.5     |  | Certificate of Trust of AmerUs Capital III filed as Exhibit 4.7 to the registration statement of
AmerUs Life Holdings, Inc., AmerUs Capital II and AmerUs Capital III, on Form S-3 (No.
333-50249), is hereby incorporated by reference.                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.6     |  | Common Trust Securities Guarantee Agreement, dated as of July 27, 1998, by AmerUs Life
Holdings, Inc., relating to AmerUs Life Holdings, Inc.s 7.0% ACES Units, filed as Exhibit 4.7
on Form 10-Q, dated August 13, 1998, is hereby incorporated by reference.                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.7     |  | QUIPS Guarantee Agreement, dated as of July 27, 1998, by AmerUs Life Holdings, Inc.,
relating to AmerUs Life Holdings, Inc.s 7.0% ACES Units, filed as Exhibit 4.8 on Form 10-Q,
dated August 13, 1998, is hereby incorporated by reference.                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.8     |  | Master Unit Agreement, dated as of July 27, 1998, between AmerUs Life
Holdings, Inc. and First Union National Bank relating to AmerUs Life
Holdings, Inc.s 7.0% ACES Units, filed as Exhibit 4.9 on Form 10-Q, dated
August 13, 1998, is hereby incorporated by reference.                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.9     |  | Senior Indenture, dated as of June 16, 1998, by and between AmerUs Life
Holdings, Inc. and First Union National Bank, as Indenture Trustee,
relating to the AmerUs Life Holdings, Inc.s 6.95% Senior Notes, filed as
Exhibit 4.14 on Form 10-Q, dated August 13, 1998, is hereby incorporated
by reference.                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.10    |  | Subordinated Indenture, dated as of July 27, 1998, by and between AmerUs
Life Holdings, Inc. and First Union National Bank, as Indenture Trustee,
relating to AmerUs Life Holdings, Inc.s 6.86% Junior Subordinated
Deferrable Interest Debentures, filed as Exhibit 4.15 on Form 10-Q, dated
August 13, 1998, is hereby incorporated by reference.                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.11    |  | First Supplement to Indenture dated February 3, 1997 among American
Mutual Holding Company, AmerUs Life Holdings, Inc. and Wilmington Trust
Company as Trustee, relating to the Companys 8.85% Junior Subordinated
Debentures, Series A, dated September 20, 2000, filed as Exhibit 4.14 on
Form 10-Q dated November 14, 2000, is hereby incorporated by reference.                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.12    |  | Assignment and Assumption Agreement to Amended and Restated Trust
Agreement, dated February 3, 1997 between American Mutual Holding Company
and AmerUs Life Holdings, Inc., dated September 20, 2000, filed as Exhibit
4.15 on Form 10-Q dated November 14, 2000, is hereby incorporated by
reference.                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.13    |  | Assignment and Assumption to Guaranty Agreement, dated February 3, 1997
between American Mutual Holding Company and AmerUs Life Holdings, Inc.,
dated September 20, 2000, filed as Exhibit 4.16 on Form 10-Q, dated
November 14, 2000, is hereby incorporated by reference.                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                           
|4.14    |  | First Supplement to Subordinated Indenture, dated July 27, 1998, relating
to AmerUs Life Holdings, Inc.s 6.86% Junior Subordinated Deferrable
Interest Debentures, among American Mutual Holding Company, AmerUs Life
Holdings, Inc. and First Union National Bank, as Indenture Trustee, dated
September 20, 2000, filed as Exhibit 4.17 on Form 10-Q, dated November 14,
2000, is hereby incorporated by reference.    

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|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                          
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.15    |  | First Supplement to Master Unit Agreement dated July 27, 1998, relating
to AmerUs Life Holdings, Inc.s 7.0% ACES units, between American Mutual
Holding Company and First Union National Bank, as Unit Agent, dated
September 20, 2000, filed as Exhibit 4.18 on Form 10-Q, dated November 14,
2000, is hereby incorporated by reference.                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.16    |  | Assignment and Assumption Agreement to the QUIPS Guarantee Agreement
dated July 27, 1998, relating to AmerUs Life Holdings, Inc.s 7.0% ACES
units, between American Mutual Holding Company and AmerUs Life Holdings,
Inc., dated September 20, 2000, filed as Exhibit 4.19 on Form 10-Q, dated
November 14, 2000, is hereby incorporated by reference.                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.17    |  | Assignment and Assumption Agreement to the Common Trust Securities
Guarantee Agreement dated July 27, 1998, relating to AmerUs Life Holdings,
Inc.s 7.0% ACES units, between American Mutual Holding Company and AmerUs
Life Holdings, Inc., dated September 20, 2000, filed as Exhibit 4.20 on
Form 10-Q, dated November 14, 2000, is hereby incorporated by reference.
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.18    |  | First Supplement to Purchase Contracts between American Mutual Holding
Company and Holders, as specified, dated September 20, 2000, filed as
Exhibit 4.21 on Form 10-Q, dated November 14, 2000, is hereby incorporated
by reference.                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.19    |  | First Supplement to Senior Indenture dated June 16, 1998, relating to
AmerUs Life Holdings,
Inc.s 6.95% Senior Notes, among American Mutual Holding Company, AmerUs
Life Holdings, Inc. and First Union National Bank, as Trustee, dated
September 20, 2000, filed as Exhibit 4.23 on Form 10-Q, dated November 14,
2000, is hereby incorporated by reference.          
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.20    |  | Indenture dated as of March 6, 2002 between AmerUs Group Co. and BNY
Midwest Trust Company, as Trustee, filed as Exhibit 4.1 on form 8-K/A,
dated February 28, 2002, is hereby incorporated by reference.                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.21    |  | Registration Rights Agreement dated as of March 6, 2002 between AmerUs
Group Co. and Credit Suisse First Boston Corporation, filed as Exhibit 4.2
on Form 8-K/A, dated February 28, 2002, is hereby incorporated by
reference.                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.22    |  | Form of Purchase Contract Agreement between AmerUs Group Co. and Wachovia
Bank, National Association (formerly known as First Union National Bank),
as Purchase Contract Agent, filed as Exhibit 4.1 on Form 8-A12B, dated May
22, 2003, is hereby incorporated by reference.                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.23    |  | Form of Pledge Agreement among AmerUs Group Co., BNY Midwest Trust
Company, as Collateral Agent, Custodial Agent and Securities Intermediary
and Wachovia Bank, National Association (formerly known as First Union
National Bank), as Purchase Contract Agent, filed as Exhibit 4.2 on Form
8-A12B dated May 22, 2003, is hereby incorporated by reference.             
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.24    |  | Form of Remarketing Agreement among AmerUs Group Co., Wachovia Bank,
National Association (formerly known as First Union National Bank), as
Purchase Contract Agent, and the Remarketing Agent named therein, filed as
Exhibit 4.3 on Form 8-A12B dated May 22, 2003, is hereby incorporated by
reference.                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.25    |  | Form of Income PRIDES (included in Exhibit 4.1 as Exhibit A thereto),
filed as Exhibit 4.1 on Form 8-A12B, dated May 22, 2003, is hereby
incorporated by reference.                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.26    |  | Officers Certificate attaching form of Senior Notes initially due 2008,
filed as Exhibit 4.7 on Form 8-A12B, dated May 22, 2003, is hereby
incorporated by reference.                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|4.27    |  | Form of Purchase Agreement between AmerUs Group Co. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, filed as Exhibit 1.1 on Form 8-K,
dated as of May 28, 2003, is hereby incorporated by reference.                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|10.1    |  | AmerUs Group Co. 2003 Stock Incentive Plan, filed as Exhibit 4.3 on Form
S-8 dated June 13, 2003, is hereby incorporated by reference.                                                                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|10.2    |  | AmerUs Group Co. MIP Deferral Plan, filed as Exhibit 4.3 on Form S-8
dated June 27, 2003, is hereby incorporated by reference.                                                                                                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|11*     |  | Statement Re: Computation of Earnings Per Share.                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|12*     |  | Computation of Ratios of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|31.1*   |  | Certification of Chief Executive Officer of Periodic Report Pursuant
to Rule 13(a)  15(e) or Rule 15(d)  15(e).                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                          
|31.2*   |  | Certification of Chief Financial Officer of Periodic Report Pursuant
to Rule 13(a)  15(e) or Rule 15(d)  15(e).                                                                                                                                                                                                                                                        

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|        |  |                                                                                                
|------- |  | -----------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                
|No.     |  | Description                                                                                    
|        |  |                                                                                                
|32.1*   |  | Certification of Chief Executive Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350.
|        |  |                                                                                                
|32.2*   |  | Certification of Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350.

* Included herein.

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